Dutch Bank Takes Stake In Asian B2B E-Commerce

ABN Amro, the Netherlands' largest bank, announced today that it has moved into the China and Hong Kong markets by taking a 40 percent equity stake in the B2B e-commerce unit of General Electric.

In its first pure e-commerce venture in Asia, ABN Amro's Asian investment unit took a position in GE EXCpress (HK) Ltd., which was established with a Taiwanese partner 18 months ago to market B2B e-commerce services.

General Electric Information Services has reportedly invested some $30 million (US$) in Asian e-commerce partnerships in the last two years. The company operates 14 centers in China to support its e-commerce business.

ABN Amro -- which has a presence in 76 countries around the world and booked first half revenues of over $7 billion -- has investments in a dozen Asian IT ventures, but this is the first in an e-commerce venture in the region.

The bank is a dominant force in its home market and has been aggressively pursuing international expansion throughout much of the decade.

Post WTO Climate

The investment comes two days after the U.S. agreed to allow China to join the World Trade Organization (WTO). Among other things, the deal between the two countries allows foreign investors to own as much as 49 percent of a China-based telecom provider.

The agreement is rather vague in terms of how content providers will be affected, but it does pave the way for more Internet-related deals in China and eases concerns about the Chinese government's recent posturing on banning foreign investment in the country's nascent Internet industry.

Observers say that the deal will propel the growth of the Internet industry in China. Foreign telecom companies are striking deals to improve the country's telecommunications infrastructure, which is an obvious need for the industry.

Large Players Waited Patiently

Most of the Internet's largest players have secured alliances in China and Hong Kong, with AOL, Yahoo!, Lycos and Microsoft (Nasdaq: MSFT) among them. They, like others involved in China, could only bide their time and lay low until the WTO deal was signed.

Despite the deal, hurdles remain. China is a vast country with a population of 1.3 billion. That fact makes it attractive in terms of its untapped potential, but a large percentage of the country has no access to a computer and no chance of getting one cheaply.

The B2B market, for instance, is one in name only. ABN Amro's investment now is long-term in nature and is seen by many as a gamble that might pay off down the road.