Internet service provider America Online will enter the mainland's vast computer and Internet market with a planned US$200 million joint venture with China's largest computer-maker, Legend Holdings.
The move is a sign of foreign companies' growing interests in the sector's huge potential.
China is already the fastest-growing PC market in Asia Pacific and demand for PCs and interactive services is expected to accelerate with the country's entry to the World Trade Organisation, expected late this year or early next.
Sources said America Online was attracted to Legend's sound fundamentals.
Further details would be announced next week, the sources said.
Red-chip Legend is the mainland's dominant PC manufacturer, with sales of 610,000 in the first quarter.
That was an increase of 45 per cent year on year.
