29 August 2000

The China International Trade Promotion Committee, a quasi-governmental body, will next month auction the assets of over thirty mainland-based commercial websites.

The trade body candidly admits that the sale reflects the difficulties currently afflicting China’s dotcom sector: "This auction is a form of rescue for some of the dotcoms that are not doing very well," said an official. "For others it is a chance to find partners and grow bigger."

Although foreign venture capitalists - mainly from the US, Hong Kong and Japan - along with media, computer and property companies, are thought to have invested around $1 billion in Chinese dotcom start-ups over the past two years, 70% to 80% of these are set to fail, according to information industry minister Wu Jichuan.

Observes Duncan Clark, partner at internet and telecommunications consultancy BDA China: "There is a flight to quality. In the past it could be embarrassing to mention the word profit, but now young entrepreneurs are having to show a pathway to profit."

News source: Financial Times