Channel Agents Ally to Form a New Enterprise
September 25, 2006
Channel Agents Ally to Form a New Enterprise. Check it out:(SinoCast China IT Week Via Thomson Dialog NewsEdge) BEIJING, September 26, SinoCast -- Thirteen channel agents of the original 3721 will form an "enterprise flagship" and debut a new search engine product "ad-union" through the introduction of venture capital, according to sources.
At present, the agents are in talks with venture capitalist Softbank and will finalize the cooperative plan by the end of this month possibly, disclosed the sources.
Softbank will make investments of USD 5 million in the first stage and USD 10 million in the second stage, totaling USD 15 million, and the thirteen channels will integrate into an enterprise to offer shares 18 months later, according to the preliminary plan.
However, the heads of some agents of 3721 refused to disclose details concerning the contact with Softbank and make comment on the news, such as Xu Changzhi, general manager of Qingdao Leixun, Mo Guangshun, general manager of Beijing Insintek, and Shui Peijun, general manager of Guangzhou Yuansheng.
Jack Ma, president of Alibaba.com, recently acknowledged in the public that he would give up 3721 Internet keyword business, which was a big blow to the channel agents of 3721. The agents have nothing to do but find a new way out, namely the debut of their own product.
It is obvious that the strength of a single channel agent is not enough, and it is likely to be affected by any move of manufacturers. But the situation will be completely different if channel agents can join hands with each other. In this way they may have the strength and capital to negotiate with manufacturers.
Under the lead of Zhao Xu, chairman of Century-time, 5 channel agents struck a common agreement immediately. In the process of contacting with venture capitalists, however, the agents began to realize that they were short of core competitiveness if just advocating a "channel consortium." Therefore, their primary task was to develop their core product.
On August 1, the agents eventually launched their new product, namely ad-union, which integrated the advertisement platforms of NetEase, China.com, Tom, and 21cn. As long as users purchase the keyword of ad-union, their advertisements can be displayed on the four platforms. Furthermore, the price for purchasing the keyword is even lower than that of releasing advertisements on a single platform.
Meanwhile, the number of channel agents involved in the plan increased from the original 5 to 13, which were Century- time, Ningbo Chuangya, Guangzhou Yuansheng, Beijing Insintek, Qingdao Leixun, Dalian Globalmart, Fuzhou Chenglixin, Hefei Chenguang, Shenzhen Yingte, Changzhou Yitong, Tianjin Cuijie, Jinan Chengxin, and Wenzhou Zhongwang. Nearly all of them are 3721's local registered centers.
The move of the 13 channel agents drew a hefty response in the industry. Leading search engines such as Google, Baidu.com, and Yahoo! paid close attention to the event.
A search engine in Jinan said that channel agents now heavily rely on manufacturers, which can control their profit rate, and even their life. Once manufacturers adopt the direct- selling strategy, agents will go bankrupt for sure.
The consortium can not only enhance channel agents' capacity of negotiating with upstream manufacturers, but also phase out relatively smaller agents in the industry, thus reshuffling the channel market.
As a matter of fact, it is not the first time that channel agents team up with each other. In April this year, BookSir, along with around 600 medium-sized and small agents, went against search giants such as Google and Baidu.com, only in a different way.
Copyright 2006 Sinocast
Related Tags: channel agents, general manager, agents, channel, manufacturers, enterprise
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