AOL Forges Deal with Chinese Legend

12 June 2001

America Online yesterday unveiled a joint venture with China’s largest computer manufacturer Legend Holdings, in a bid to introduce its internet services to the enormous Chinese market.

The two companies will, “over time”, invest $100 million each into a Hong Kong-headquartered joint venture, 49%-owned by AOL with the remainder belonging to Legend. This new company will initially provide technology and expertise to Legend FM, owner of the licences for the Chinese company’s mainland web portal fm365.

The duo hope that the new venture will subsequently purchase the portal when China joins the World Trade Organisation (expected around the end of the year) and its strict laws on foreign ownership of mainland portal assets are eased.

“That would be the hope,” commented AOL president Michael Lynton. “But it has to be prospective until you get all the regulatory approvals.”

However, there are a number of hurdles to be cleared before AOL’s plans can be realised – not least the Chinese government’s well-known suspicion of foreign content. It remains unclear how great a stake in the portal itself the US company would be allowed to own, either by Beijing or by Legend.

News source: Financial Times