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AOL in New Tie-up with China Firm

(Reuters)
Updated: 2006-04-18 15:34

AOL, the online unit of media giant Time Warner Inc, said on Monday it has formed a tie-up with China's number two media company, one of its first such pairings since it withdrew from the Chinese market in 2003.

Under their new relationship, the broadband content arm of Shanghai Media Group (SMG) will provide material for a Chinese language version of AOL.com aimed at Chinese speakers in the United States.

SMG Broadband will provide the actual material to U.S. firm MediaZone, which is a partner in the AOL Chinese language site.

"This partnership is just a beginning, with the major fruits still to come in the future," said SMG Vice President Zhang Dazhong at a news briefing.

He said the initial focus will be on free products and services, but the companies hope to further cooperate to develop fee-based services in the future.

AOL has had an on-again-off-again relationship with China this decade, mirroring its global fortunes as it boomed during the dot-com bubble of the 1990s only to fade during the crash that followed starting in 2000.

The company charged into China in 2001 amid a broader global expansion, launching a $200 million venture with much fanfare with Lenovo Group Ltd., China's largest PC maker.

But the pair scrapped the venture two years later after it failed to gain steam.

The company told Reuters in 2004 it was back in discussions to re-enter China -- the world's second biggest Internet market with more than 100 million Web surfers -- but no deal was ever announced.

If it returns to China, AOL will find itself in a crowded market where local players like Sina Corp. and Sohu.com Inc. compete alongside global Web giants like Yahoo Inc. and Microsoft's MSN service.