Digital China Wants to Watch You

Posted on September 2, 2008
Filed Under China Business, China Law |

The South China Morning Post reports:

Digital China Holdings, the mainland’s largest distributor of information technology products, says a newly formed joint venture that starts operations next month will launch an initial public offering in a few years and bring in technology from its Israeli partner.

In July, Digital China said it would inject 500 million yuan (HK$572 million) and its Digital China Information Technology Service unit into the venture. Partners China Singapore Suzhou Industrial Park Ventures (CSVC) and Infinity i-China Investments of Israel will inject another 500 million yuan.

“CSVC and Infinity I-China Investments will have a 23 per cent stake in Digital China Information Technology, which will be valued at 2.15 billion yuan and targets an initial public offering before June 2012,” said Wycee Liu Yuqing, the general manager of the corporate communications and planning division.

Ms Liu said the firm would add resources to its IT services business and target large local customers such as banks, telecommunications operators and government departments.

The Infinity Fund is an Israeli private equity fund. They, along with the big Israeli holding company IDB, set up the I-China fund in 2004. They summarize their activities:

Based on the success of the 2004 Infinity-CSVC fund, Infinity has expanded and focused fund efforts on its Israel-China strategy. Infinity’s investing activities today are centered around value created when capitalizing on synergies between Israeli technology businesses and Chinese manufacturing/service companies.

They have a stable of Israeli high tech companies that are either looking to China as a market or as a manufacturing platform. The SCMP article notes that Digital China hopes to provide integration services for Infinity-invested Mate’s “intelligent video” surveillance solution in China. Digital China identified finance, telecom, and government as the three sectors unaffected by a tightening credit market in China. No bonuses for guessing which one will soon be receiving brochures in the mailbox.

The article also mentioned the simmering Microsoft anti-monopoly lawsuit rumor:

The company, which generated 3 per cent of revenue from selling Microsoft products, is not worried about a possible mainland investigation of the US software giant for alleged anti-competitive practices.

“A lawsuit that may be filed by [Beijing] against Microsoft will not be resolved in one or two years,” Ms Liu said. “Even though Microsoft may be fined or restricted from doing business on the mainland, Digital China will not be affected as we have many other suppliers.”

One or two years? Does Digital China’s Ms. Liu know something about how all this will play out?

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