Wu Bo sits at his desk worth less than 500 yuan (US$60) in an eight-square-metre room in Beijing's Financial Street. He stares into the most expensive piece of office equipment he has, a Dell laptop. He cannot even make a direct long-distance call.
His office could easily be mistaken as a shabby sales office like in many crowded computer marketplaces in China, but Wu's company - China Finance Online Co Ltd (JRJ) - has just raised US$60 million in net proceeds from an initial public offering (IPO) bought three months ago on the high-tech laden NASDAQ stock market in the United States.
JRJ is fast becoming known as being the most profitable financial information provider in the world's most populous country.
What is more, the ambition of the chief operating officer of JRJ and his team is to become the "Bloomberg of China."
While Wu, JRJ chief operating officer (COO), and his colleagues are "extremely cost-conscious," the main task for the Beijing-based company next year is to spend money.
"We are the most qualified and have the most resources, so we want to consolidate our position as the leader in this industry," said Wu, a biochemist by training.
"The consolidation in the financial information sector will be completed soon," he added.
By the end of September, China Finance Online had US$70 million worth of liquidity, including US$60 million in net proceeds from the IPO in October.
JRJ said in its prospectus that it planned to use half of the money on mergers and acquisitions.
Michael Yin, a Shanghai-based Internet industry analyst, said the IPO will be very helpful for those first movers in the stock market to stand out.
Besides the capital raised from the IPO, JRJ is also one of the most profitable financial service providers in China, since it broke even in 2002.
The company's revenues in the last quarter totalled US$1.67 million, with profits reaching US$1.3 million.
At the same time, many peers in the market are still in the red, which puts JRJ in an easy position for buying out competitors.
According to the China Network Information Centre (CNNIC), there were over 7,200 commercial websites providing financial information in February.
However, the overwhelming majority of them were affiliated under securities houses, newspapers or other financial institutions.
JRJ, Beijing-based Homeway and Shanghai-headquartered Stockstar are believed to be among the top independent online financial information providers. Many of the smaller firms are still fighting to break even.
Wu said JRJ will target counterparts which can bring either industrial resources or customers to his company.
JRJ's business is mainly focused on individual customers. It added 4,069 new customers and had 2,372 repeat subscribers in the third quarter.
How to enter the institutional market has become a challenge for the five-year-old business.
JRJ, which almost went bankrupt in 2000 during the bursting of the Internet bubble, will also seek new ways to achieve organic growth, besides acquisitions.
For individual customers, JRJ will launch more new products to increase the number of customers and their subscription fees. Wu said his company will release a new series of products in January.
In October, JRJ launched its Stock-Market-Sidekick X subscription service, which includes comprehensive financial information and news services, JRJ's flagship product in 2005.
The starting price of the product is 560 yuan (US$67.63) per year.
Wu declined to say how many customers subscribed to the service, but said that the software was downloaded over 100,000 times during the free trial.
Institutional subscriptions are a new but very profitable area that JRJ aims to penetrate in 2005.
The JRJ COO said his company is still thinking about whether to enter the arena unassisted or through acquisitions, but one thing for sure is that it will spend a lot of resources on the business.
JRJ is also seeking to co-operate with international financial information providers.
While Reuters and Bloomberg aim to develop local customers and inform them of developments in global financial markets, JRJ aims to serve both domestic and foreign companies about the trials and tribulations of Chinese financial markets, so that JRJ and its international counterparts will compliment each other.
However, the company will still remain cost-effective in the operations, and expansion should not lead to a drastic increase in costs, Wu said.
JRJ had only employed 40 people at the beginning of this year, quickly expanding to 70 after the IPO. Now it supports 90 personnel.
Wu believes there will be over 100 employees next year for the company alone. If acquisitions become the route of choice, an increase to 300 - 500 staff is expected.
(Business Weekly 12/28/2004 page15)
