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AOL in talks to re-enter China

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CIOL Bureau
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Doug Young

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NEW YORK: Just months after pulling out of its high-profile

$200 million joint venture in China, Time Warner Inc.'s America Online

unit said that it is in talks to re-enter the world's most populous

market.

"It's a different business

model.". "We're in some talks for something in China," said

Jonathan Miller, CEO, AOL. 

However, he was not more specific about the nature of the new model

except to say that AOL would invest far less than it did in its previous China

joint venture with the nation's No. 1 PC maker Legend Group Ltd.

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"We're not going to take major financial risks in Asia right

now," he said. "We need low risk ways to operate so we can see

how the market develops," he added. Miller hoped to fix the deal within a

year, but didn't specify on the nature of his firm's potential partner.

Likely candidates could include China's mobile phone duopoly of China

Mobile (Hong Kong) Ltd and China Unicom Ltd; and its top two fixed line

carriers, China Telecom and China Netcom, which have both spent millions

of dollars over the last two years to build out their high-speed Internet

networks.

Other partners could include China-based online media firms like

Sina.com, Sohu.com and NetEase.com which have all become profitable in the

last two years and were some of the best performers on the Nasdaq in 2003.

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All have relied on a combination of paid services, most notably

short-text messaging to mobile phones and online games, to boost their

non-advertising businesses that now account for more than half of total

revenue.

America Online's return to China would come as a quick about-face for

the firm, following Legend's disclosure last month that it bought out

AOL's stake in the stalled project. The pair formed the venture with much fanfare nearly three years ago,

but it never began commercial operations due to what Legend said were

rapid changes in China's Internet market.

Last month, Legend also unveiled a partnership with China Telecom to

promote broadband Internet access on the mainland, a market that analysts

say enjoyed triple-digit growth in 2003.

© Reuters

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