Understanding that quality content is still king, CDC Corporation (CHINA) has created a US$100 million investment program for its CDC Mobile unit to seek strategic investment opportunities in leading 3G content providers in North Asia and Europe.
"We are very pleased to announce the launch of this US$100 million 3G content partner program to expand on our existing CDC Mobile platform in China with strategic investment partnerships with leading 3G content providers and aggregators from Japan, Korea and Europe," said Peter Yip, Chief Executive Officer of CDC Corporation. "CDC Mobile will build on the success of CDC Software and CDC Games, leveraging the stringent formula of selecting and structuring strategic investments, creating additional value through CDC's proven formula of focus on operational excellence, cross selling and operational leverage with existing infrastructures and synergies with the other CDC companies. Just as we are pursuing now with CDC Software and CDC Games, as the CDC Mobile business unit establishes a successful track record of growth and profit, and prove its potential for accelerating growth, we will then prepare CDC Mobile for its eventual carve out."
CDC Mobile will initially target its investment program to the North Asian countries of China, Japan and Korea which cumulatively have more than 600 million mobile phone subscribers, and where Japan and Korea are already early adaptors of 3G, with more than 60% of Japan subscribers already using 3G handsets. CDC Mobile will seek to invest in and partner with innovative content providers that are leveraging the rollout of 3G infrastructure to develop new content distribution channels, mobile communities, and offer rich content that previously was not possible in a 2G world.
Through convertible bond structures, equity cash investments, lines of credit or a combination of these, CDC Mobile intends to gain first-mover advantage in China by investing up to US$100 million in selected 3G content providers that are dominant in specific content or community niches and have the potential for launching such content in China. CDC Mobile will forge a link between the early success of its content partners in 3G Japan and Korea. CDC Mobile will leverage its current subscriber base, customer support and development infrastructure, deep marketing and sales relationships with all key mobile operators in China, and understanding of the China market to forge ahead with the development of the new 3G China.
The company believes that its strategy of investing into 3G in North Asia now and Europe later will make it both the leading content provider in large early adopting 3G countries as well as give it ample testing grounds and learning grounds for the rollout of 3G in China as it can both learn from the successes in Japan, Korea and Europe and then selectively apply those lessons to the world's largest mobile market. Industry research has estimated that by 2008, 3G users in China could reach 60 million and generate revenues of approximately CNY40 billion.