Compaq, CMGI Team Up In Chinese Venture

Compaq Computer Corp. (NYSE: CPQ) and Internet network CMGI (Nasdaq: CMGI) announced today that they are joining up with the management arm of the Shanghai, China government in a joint venture aimed at developing the fledgling Chinese Internet industry.

The two companies — partners in portal Alta Vista and a number of other Internet ventures — said they have initiated a strategic alliance with Shanghai Information Investment Inc. (SII), a major player in the growing Information Technology and Internet industries in China.

SII has interests in the Shanghai region’s ATM backbone, a broadband network, a credit information service provider, an e-commerce center and a number of other Internet infrastructure projects.

The company’s investors come from a broad range of Shanghai media, including the Shanghai Post & Telecom, the region’s broadcast, film, radio and TV bureau, and one of the largest ISPs in China.

“We’re extremely pleased that SII, a pioneer in the Chinese Internet marketplace, has selected CMGI as its strategic partner,” said CMGI CEO David Wetherell.

“The expansion of CMGI and its operating companies into new international markets will be a recurring theme for the coming year. Our relationship with SII extends the CMGI network with a powerful base of Asian partners, and the unique opportunity to be a leading enabler of the country’s acceleration to the Internet.”

In short, CMGI believes that it has found an inroad to the Chinese market, a company that can break down the barriers between the business practices of East and West.

Waiting for WTO Go

Compaq and CMGI were surely sitting on their hands until the recent round of WTO talks between China and the United States concluded. Now, with China all but given the green light to join the organization and apparently eager to do so, foreign investors like CMGI, AOL and Yahoo! have far more leeway in helping to shape the industry in China.

CMGI has approximately 50 companies in its Internet network, making it one of the most influential Internet companies. It is the majority owner of Alta Vista, NaviNet, Adsmart, iCast and others, and its @Ventures affiliate has ownership stakes in Lycos, eCircles, PlanetOutdoors, Raging Bull and many others.

Compaq is a minority owner of CMGI, as is Intel, Microsoft and Sumitomo.

Compaq brings its considerable resources to the mix as well. The company recently opened a multi-million dollar (US$) e-commerce competency center and large-scale call center to serve multi-nationals in Shanghai.

Compaq says it is focusing on offering Internet expertise for the government and the finance and telecom industries and will rely on its Asian-based resources to broaden its involvement in China.