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Golden Internet age to come?
By Liu Baijia (China Daily)
Updated: 2005-11-23 06:51
The golden age for China's Internet industry has yet to come, despite some
deals worth billion dollars having already taken place.
So said veteran Chinese Internet entrepreneur Victor Koo, the former
president of the top Chinese Internet portal Sohu.com Inc.
Speaking in Beijing yesterday, he said this year has been a significant one
for the country's Internet industry; it entered the billion-dollar era, with
Yahoo! buying a 30 per cent stake of the Chinese e-commerce company Alibaba, and
at one time the Chinese search company Baidu's market capitalization reached
US$4 billion on the NASDAQ.
"However, the real golden age will come in three to five years and it will be
a golden age for big deals on the capital markets," said Koo, who has worked in
the Internet industry for 11 years.
He believed that by 2008/2010, when, respectively, the Olympic Games is held
in Beijing and the World Expo in Shanghai, China's economy will be on a much
larger scale and the Internet will be embedded in the daily lives of Chinese
people.
But Koo said that now is the time to prepare.
Applications following the convergence of computing, communications, and
consumer electronics (3C), online education and online payments all have a lot
of potential.
The former Sohu President resigned in March after leading the top Chinese web
portal to an initial public offering (IPO) on the NASDAQ in 2000 and making it
one of the most successful Internet companies in China. He has since decided to
focus on the 3C convergence area as the direction for his new company 1Verge.
Many Chinese Internet companies have succeeded in business and mobile
communications networks, but the convergence of the three networks will create
enormous opportunities.
Koo, a Stanford MBA graduate in 1994, has brought the investment concept of
the search fund into China. It means a company searches for investment
opportunities, controls the target company through capital investment, and
brings the target business to an IPO or acquisition.
Koo and two partners have started a fund with several million dollars to
bring the business model to China, and the first target has been identified.
The dotcom veteran said his fund will seek dominant stakes in small-size
companies in the area of consumer-targeted 3C convergence.
"In China, we have good applications on the Internet and a lot of
capital-seeking opportunities, but talent is the thing Chinese Internet
companies lack the most," said Koo.
Koo said the first deal is expected to be completed in six months. He and his
team will then take over the start-up and see it through to a public offering in
three to five years.
According to a study by the Graduate School of Business at Stanford
University, start-up companies face the biggest risks in the first 12 to 18
months.
Research shows that is because founders are capable of managing a small firm
at the infancy stage, but when it is in the fast lane and expanding, managing it
becomes increasingly difficult.
(China Daily 11/23/2005 page11)
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