China To Allow Foreigners To Bid In First-Ever Dotcom Auction  BEIJING, Sep 4, 2000 -- (Agence France Presse) China will allow foreign investors to bid in its first-ever auction of Web content, Internet technologies and entire dotcoms, state media reported on Monday.
Despite strict rules limiting foreign investment in the Internet, a relaxed policy environment meant the September 29 sale, mainly involving private firms needing financing, would be open to overseas bids, the China Daily said. "Foreign investors are especially welcome to take part in the bid," said Lu Benfu, an Internet researcher at a government think tank, who has helped organize the auction. A number of foreign-funded companies have already said they would like to take part in the auction, which is organized by an agency affiliated with the foreign trade ministry. Foreign investment in the Internet is a gray area in China, pitting bureaucrats who want to keep it under tight control against others who think foreign money and expertise is needed to kick the economy into the 21st century. After entry into the World Trade Organization, China has promised to eventually allow 49 percent foreign holdings in Internet service providers, and 50 percent stakes in Internet content providers. However, it is estimated that foreign investors have already poured hundreds of millions of dollars into Chinese Internet firms, lured by official statistics about Internet use. Government statistics indicate the size of the online population almost doubled in the first six months of this year, to 16.9 million. The fact that the government will openly allow foreigners to participate in this month's auction could reflect a growing recognition that lack of funding is killing many dotcoms, despite the growth in Internet use. "The auction will help rescue those dotcom companies that are not doing well," Zhang Lei, president of SinoBIT.com, a web site that helps find venture capital for local companies, said according to the paper. The China Daily Business Weekly on Sunday said a large number of local Internet start-ups were under threat, as funding is becoming scarcer because of a worldwide cooling in the dotcom frenzy. The drop in the technology-heavy Nasdaq stock market has made many venture capitalists reluctant to invest in Internet companies, depriving Chinese dotcoms of their single most important source of financing. "It's not exaggerating to say 90 percent of Chinese dotcoms will go bankrupt by the end of this year," Zhi Tan, chief executive of 8848.net, a company that helps small enterprises get online, told the China Daily Business Weekly. ((c) 2000 Agence France Presse) --- Subscribe to our newsletter to receive the latest news --- |
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