Landover firm dreams of high-tech wealth in China

November 11, 1994|By Ian Johnson | Ian Johnson,Beijing Bureau of The Sun

HEFEI, China -- Moments after the 20-piece marching band finished a quick version of "Jingle Bells," a red ribbon was cut by local dignitaries and Winston Chan's dream of opening a joint venture in China was finally realized.

It hadn't been easy for Mr. Chan, whose Landover-based Multimax Inc. formally linked up with Anhui Chang Hong Corp. yesterday to found a joint venture called Hefei Computer Dynamics Technology Co. Ltd., a manufacturer and servicer of personal computers in China.

The 38-year-old had been trying to start a computer company in China for several years, but was delayed by red tape, uncertainty over which local partner to choose and the time-consuming necessity of building personal relationships.

Two years ago, however, he hired David Wang, a native of China's relatively poor Anhui Province. Mr. Wang looked into Beijing, Shanghai and special economic zones on the coast, but eventually found a deal in his home province in central China.

"Anhui is not so well developed, so its labor force is cheaper, but the workers' quality is still high and the transportation convenient," Mr. Wang said. "So it seemed like a good place to invest."

Even though Anhui is Maryland's sister province in China, it is not very well known to the state's business community. Multimax, in fact, is the first Maryland company to invest there. That was why the state's Department of Economic and Employment Development organized a three-day tour of the province this week that included a stop yesterday at Multimax's ribbon-cutting ceremony.

The Marylanders' tour was designed to put small- and medium-sized businesses in touch with an appropriate investment partner.

Multimax worked without the state's help, and its experience shows how important those partners are -- not to mention a guide like Mr. Wang, who knows the reputation of potential partners.

"You have to find the right broker. Once we settled on Chang Hong as our partner, things went smoothly. I came in June, and we signed a contract in July," Mr. Chan said.

In choosing Chang Hong, Mr. Chan went for a big, well-connected -- and profitable -- state-owned conglomerate, although one without any experience manufacturing computers. That may sound like a mismatch, but Chang Hong Chairman Zhang Changbin pointed out that his company, which is involved in real estate, medical equipment and two other joint ventures with Hong Kong companies, has the experience in Anhui to get Mr. Chan's computers built, distributed and sold.

"We wanted to get into the high-technology field. We're government-owned and the government has encouraged us to do more joint ventures," Mr. Zhang said.

Mr. Chan found Mr. Zhang thanks to Mr. Wang, who knew of Chang Hong's clout through old friends in Anhui.

The joint venture calls for Multimax to invest $1 million, which gives it a 57 percent stake and controlling interest in Hefei Computer Dynamics. Mr. Chan has put Mr. Wang in charge of the joint venture's daily operations. Eddie Lau, a trusted friend from Hong Kong, where Mr. Chan was born before he moved to the United States 20 years ago, will be vice director of the joint venture and fly up from Hong Kong periodically to check on the new company's progress.

Although Mr. Chan and Mr. Wang hope to introduce American-style management techniques to the joint venture, they say they will have to go slow. "We don't want to step on anyone's toes," Mr. Wang said.

The goal is to sell computers to Chinese government organizations, such as the post office, local businesses and the small but growing number of individuals wealthy enough to afford a personal computer. The CDT computer, as it will be known, will sell for $1,100 to $1,200 and be built primarily of parts imported from the United States, such as Intel chips. Multimax will provide Chinese-language software and expertise in helping Chinese organizations use personal computers to set up larger networks.

"Many computers in China just sit on desks unused because the Chinese language software is so bad. We're going to be the only company in China that can sell imported, top-quality technology customized for the China market," Mr. Chan said.

Anhui officials hope that the factors that brought Multimax to their province will interest other Maryland investors. Although the inland province with 59 million residents is not as well known as the booming coastal regions, ships can still reach it by the Yangtze River and a new high way links the capital, Hefei, and its 1 million residents with Nanjing. Shanghai is a 30-minute flight.

About 300 U.S. companies have invested $180 million in Anhui, said Wu Yijing, a senior economist at Anhui's Foreign Economic Relations and Trade Commission. That made the United States the third-largest foreign investor, behind Hong Kong and Taiwan, but ahead of Japan.

"We're glad Americans are here," Mr. Wu said. "We just want more people from Maryland to invest."

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