E-World Technology surprised the electronics industry by selling an almost 70 percent stake to a UK counterpart despite its Enhanced Versatile Disk (EVD) struggling to become accepted as an international standard for high definition video disk technology, China Daily reported today.
The London-based investor, New Media Enterprise, said it had reached an agreement with E-World to buy a 69.09 percent stake in it for US$8.5 million and 40 percent of its shares.
E-World and its President Hao Jie were not immediately available for comment on the deal but Zhang Baoquan, a Beijing real estate tycoon currently building EVD cinemas and disk shops, said the deal had taken place and expressed his surprise at it.
China's DVD player industry faces fierce competition and has to pay high patent fees. EVD was officially named the new national standard by the Ministry of Information Industries in February.
E-World has since been granted 9 patents for its system technology and received a grant of US$1.235 million for scientific research from the State Economic and Trade Commission.
It is competing with two international disk storage standard candidates: Blue Ray and High density DVD.
New Media Enterprise, a listed company on NASDAQ's Over the Counter Bulletin Board, said it planned to return to NASDAQ's national market early next year.
China Daily speculated that E-World's deal with the British company might have been a move the government did not expect when previously giving its support to the company.
However, Eagle Zhang, president of research firm Analysys International, said opinions on the deal should not be formed from a nationalistic point of view.
"What we lack most is international cooperation and that's why many of our standardization proposals like EVD, AVS (Audio Video Standard) and wireless security standard WAPI cannot really become accepted as international standards," he said.
But he did express concern that working with a small company with limited capital resources and industrial influence may not be a good choice for cooperation.
New Media Enterprise said in its annual report for the period ending June 30 that it had less than US$200,000 cash capital.
(China Daily December 1, 2005)