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Ben Kwok

Hutchison Whampoa has concluded the latest in a string of information-technology investments by forming an alliance with US-based on-line shopping firm Priceline.com.

 The two companies said yesterday they would establish a joint venture to introduce Priceline.com's 'name-your-own-price' concept to Asia.

 The venture will have an initial investment of US$20 million.

 Neither would say how this would be shared.

 The deal marks a further acceleration in Hutchison's drive to embrace the Internet, coming only three days after it formed a HK$3 billion e-commerce joint venture with parent Cheung Kong (Holdings) and banking giants HSBC and Hang Seng Bank.

 Hutchison has forged a series of technology-related deals in recent months, including setting up Tom.com, an infotainment portal venture with Cheung Kong, and tie-ups with Japan's NTT and Global Crossing of the United States.

 Hutchison managing director Canning Fok Kin-ning, who announced the Priceline.com venture, left no doubt that IT was now a key group strategy.

 'Technology will be our new focus as it is just an extension of building up our business,' Mr Fok said.

 'We are the most active company in Hong Kong when it comes to developing e-commerce. That pretty much tells how important is e-commerce to the group.'  The new alliance, along with other mature Internet or technology-related subsidiaries, would seek separate listings on the Hong Kong or Nasdaq markets, Mr Fok said.

 Priceline.com would licence its business model to the new company and contribute its expertise in technology, marketing and operations. It will receive a licensing fee based on a percentage of sales.

 The US company will not take equity in the venture initially but will buy a convertible note allowing it to take up to a 50 per cent stake within five years.

 Hutchison would bring to the venture its brand, customer base, retail network in Asia, management expertise and rapidly developing Internet platform.

 Priceline.com has a patented Internet pricing system that allows customers to name their own price for products such as airline tickets, hotel reservations, cars and home loans.

 Launched 20 months ago, it already has four million customers in the US and is expected to report revenues for last year of almost US$500 million.

 The joint venture, which is Priceline.com's first international foray, will launch in the third quarter, selling initially air tickets and hotel reservations.

 Additional services for credit cards and long-distance phone cards will be added later.

 'We are confident this model will be one of the main trends of retailing in Asia,' Mr Fok said.

 He said Hutchison, which runs the highest number of drug stores in Asia and the largest supermarket in Hong Kong, would launch the service in Hong Kong first.

 Ian Wade, managing director of AS Watson, would head the new Asian operation.

 Mr Fok said Hutchison was likely to pursue other Internet-related projects if opportunities arose.

 He said Tom.com would be the group's first Internet project to be listed this year, possibly in the first half.

 Hutchison-Global Crossing, which has won the Government's electronic service delivery contract, and the group's Internet service provider Hutchcity, were also listing candidates.

 Analysts applauded the new joint venture.

 'It is an interesting business concept,' one regional brokerage analyst said.

 'We will expect at least 15 similar deals for the group this year for Internet business,' another analyst said.



Hutchison in US$20m on-line retailing deal