Here's the LA Business Journal article:
INTERNET--Net Company Poised to Leap Into Big Pool
Issue Date: 6/5/00
Pundits insist that any ramping-up of opportunities in
China remains years away, despite that country’s pending
admission to the World Trade Organization. But officials at the Hartcourt Cos. beg to differ. The Los Angeles-based company – formerly a manufacturer of pens, writing tools
and environmental engineering equipment – decided to change
course a few months back. They would instead concentrate on
three things: China, telecommunications and the Internet.
“The new economy is where we want to be and China is where
we want to be,” said Alan Phan, Harcourt’s president and
chief executive, who founded the company in 1990.
Already, the company is setting up joint ventures with
Chinese companies to capitalize on China’s untapped demand
for financial-oriented Web sites and cable TV programs
aimed at helping aggressive Chinese investors decide what decisions to make.
In March, Hartcourt launched a new holding company and
financial Web site in China called Sinobull.com, in which
it has a 48 percent controlling interest. The site,
operated out of four offices in China by the holding
company, offers financial news stories related to China
and the broader overseas market, real-time quotes from the
Taiwanese and Hong Kong stock markets, quotes from
the Shenzen and Shanghai stock markets, and financial chat
In addition, customers can sign up to do online e-trading
with 10 of the 15 largest securities companies in China,
said Mike Bianco, president and chief executive of
“It is the only nationwide online financial services Web
site in China,” Bianco said, adding that the site averages
1.8 million page views a day.
Of course, there are a few glitches to be worked out. “The
technology needs to be further developed on the
infrastructure, and security issues need to be looked at
closely. And you have a real challenge in finding people
who are IT (information technology) qualified,” Bianco
said. “Other than that, it’s easy.”
While Hartcourt may control one of the first financial Web
sites in China, it is not the only one.
Others include HomeWay.com, StockStar.com, China.com and
Sina.com, providing mostly financial news and content.
Hartcourt also wants to become the next CNBC of China. And
that may happen very soon. One of Hartcourt’s subsidiaries,
Shanghai Guo Mao Financial Corp., has teamed up with China
Cable Networks to provide financial news to the 80 million
cable TV viewers in China. Hartcourt’s subsidiary will
develop TV content, including real-time market data and
Phan said his company is looking for anchors right now and
preparing to broadcast from 9 a.m. to 10 a.m., Mondays
through Fridays, beginning Aug. 1.
China, with 1.3 billion people, is one of the biggest
untapped computer markets in the world. And it is a nation
of astute business people hungry for financial information.
Goldman Sachs Investment Research shows that in 1998 there
were 2.4 million Internet users in China and 700,000 in
Hong Kong. Within the next three years, that is expected
to explode to 80.5 million Internet users in China and
3 million in Hong Kong.
“China currently has a fairly low rate of Internet hosting
and PC penetration,” noted Matt Sanders, an analyst with
Forrester Research, an Internet analysis firm in
Massachusetts. “But China has the second largest number of
cell phone subscribers, second only to Japan.”
Industry analysts are expecting Chinese consumers to use
those wireless phones to access the Internet for e-trading,
e-commerce and eventually e-banking.
And Sinobull.com, the holding company formed to operate
the Web site with five Chinese companies, hopes to
capitalize on that market. It is planning to offer a host
of financial services that are not currently available in
China, but may be one day if the Chinese government lifts
regulatory controls on the financial industry.
Hartcourt has always had dealings in China. So when its
stock price dipped to around 30 cents a share in fall 1998,
from a one-time high of $7.50, the board of directors made
a decision. “We were doing $24 million to $25 million in
sales from manufacturing, and we were slightly profitable,
but our stock price was low,” explained Phan. “No investors
were interested in manufacturing, even though we were
slightly successful. So we decided to participate in the
New Economy. We were the early players and we wanted to
capitalize on our years in China.”
It sold off its pen factory in China and transferred all of its environmental products manufacturing operations to a
spinoff called Enova.
Next, Hartcourt entered into joint ventures with five
Chinese companies that give the Los Angeles firm access to
the Chinese Internet and telecommunications industries.
Those include Hong Kong-based Streaming Asia Ltd., a
provider of streaming video and audio content; UAC Stock
Exchange Online; Financial Telecom, a distributor of
financial information via wireless apparatus; Shangdi
Network, a multimedia distribution network for financial
information; and Shanghai Guo Mao, which provides financial
products and information.
The new strategy’s effectiveness in boosting Harcourt into
the black remains to be seen.
After suffering a net loss of $21.3 million ($1.18 per
share) for the year ended Dec. 31, 1998, Harcourt improved
to a net loss of $7.9 million (40 cents a share) last