Foreign firms to leap into China Internet

Foreign companies this week are setting their sights on China's fast-growing Internet services business, amid reports that the government will legalize outside investment in the industry as early as this quarter.

Australia's New Tel, Hong Kong giant Sun Hung Kai Properties, and US-based GRIC Communications yesterday all announced plans to offer Internet services and facilities in China.

New Tel, a startup offering telecommunications services in Asia as well as its home market, yesterday teamed up with China's Xinhua Holdings Ltd. in a plan to set up an Internet service provider in China and operate a Chinese and English-language portal. The companies will work with a number of state-owned enterprises in China, according to New Tel.

Initial content for the portal will come from 18 government ministry Web sites. New Tel will own between 35 per cent and 50 per cent of each site, according to a New Tel statement. Xinhua will take a minority stake in New Tel.

An ambitious Internet service center plan by Hong Kong property giant Sun Hung Kai also will bring that company into the Chinese market. The company's iAdvantage Ltd. subsidiary launched its iAdvantage Internet Service Centre in Hong Kong's Millennium City in Kwun Tong and announced it will open similar facilities in Tsuen Wan in May and Chai Wan by year's end. The centers will feature server co-location, connectivity, and support services for ISPs and corporations establishing an Internet presence.

Sun Hung Kai will take iAdvantage to China beginning in June, with facilities in Beijing and Shanghai. Centers in Guangzhou and Shenzhen will open by year's end, according to the company.

US-based ISP GRIC will extend its international network of service providers to China through a partnership announced yesterday with China Telecom. As a GRIC partner, China Telecom will make its infrastructure available to GRIC customers, who now use dialer and client software from GRIC to dial in to the Internet through participating ISPs in 145 countries. The deal will increase GRIC's available points of presence in China from eight to 50.

The deals come as China's Ministry of Information Industry reportedly said the government may open up its Internet service-provider industry soon, regardless whether China is admitted to the World Trade Organisation. Foreign-owned companies may be able to own as much as 50 per cent of a Chinese ISP starting in the first quarter, according to the report. A more open ISP market was among the terms of a pact last year between the US and China on China's joining the trade group.

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