A Business Initiative for Launching An Education Portal in China Presented by Zenocom Ltd.

1. A Business Initiative for Launching An Education Portal in China Presented by Zenocom Ltd. Aplus Business Consulting Ltd. Newton Press Ltd. August 25, 2000 A Business Initiative: Education Portal in China v. 2.0

2. Chinese Cultural Backgrounds • Population: 1.26 billion • Urban: 29% ( = 0.37 billion) • Ethnic groups: Han Chinese, 92% • Education: Compulsory, 7 - 17 • Literacy (1996): 82% • Over 70% of Chinese people are still living in rural areas under poor conditions A Business Initiative: Education Portal in China v. 2.0

3. Chinese Cultural Backgrounds • The Han Chinese culture has been dominated the Chinese history of more than 5,000 years • Though different pronunciations have resulted in hundreds of dialects, the written Chinese language is one and the same • The unified written Chinese language has been the major driving force in shaping the Chinese national identity A Business Initiative: Education Portal in China v. 2.0

4. Chinese Cultural Backgrounds • In China, the ability to read and write is the highly respected prestige for people • Teaching children to recite and learn to appreciate ancient poems and articles constitutes the most important part of pre-school education • Ancient Chinese texts of 2000 years ago are far more closer to modern Chinese people than the ancient Greek texts to modern Western people A Business Initiative: Education Portal in China v. 2.0

5. Chinese Cultural Backgrounds • Based on its unified cultural heritage, today’s China could constitute the largest single media market in the world. The one and the same Chinese language has been the most cherished fortune for Chinese people through the history to date. A Business Initiative: Education Portal in China v. 2.0

6. Chinese Economic Indicators • Even amid the financial crisis sweeping the whole Asia, Chinese economy growth kept very high rates. • Source: IMF A Business Initiative: Education Portal in China v. 2.0

7. Chinese Economic Indicators • To finance education is among the top priority for Chinese people. • Source: Gallup 1999 A Business Initiative: Education Portal in China v. 2.0

8. Chinese Economic Indicators • So, what is next for people to own? • Computer and Internet access! • Source: Gallup 1999 A Business Initiative: Education Portal in China v. 2.0

9. Chinese Media Overview • Like everywhere else in the world, TV is the single most powerful medium in China • At least 55% of the total population is covered by various TV programs, i.e., total TV audience is more than 700 millions. Millions A Business Initiative: Education Portal in China v. 2.0

10. Chinese Media Overview • While TV is the strongest medium, Chinese people keep very strong reading propensity • According to the SRG research, over 80% of residents in the big three cities regularly read at least one newspaper A Business Initiative: Education Portal in China v. 2.0

11. A Bird View on China Media BusinessMedia Penetration: Internet • In the past years, number of Internet users has been doubled every half year Forecast (Millions) • Source: CNNIC, August 2000 A Business Initiative: Education Portal in China v. 2.0

12. Internet: The Emerging New Media • Major Internet players in China: • Sina.com (Nasdaq: SINA) • Sohu.com (Nasdaq: SOHU) • Netease.com (Nasdaq: NTES) • China.com (Nasdaq: CHINA) • 8848.net • Main Investors: • IDG • Intel • Dell • Yahoo! • Sina.com is dominating the Chinese Web-based news service A Business Initiative: Education Portal in China v. 2.0

13. Internet: The Emerging New Media • Internet has brought to Chinese people totally new experience: • A new world of information • A new world of communications • A new world of business • With the advent of Internet, e-Business has become a dominant theme A Business Initiative: Education Portal in China v. 2.0

14. Internet: The Emerging New Media • Internet users tend to be: • Young and energetic • Well educated • Eager to try new things • Source: CNIC, Jan 2000 • 88% of users are aged below 35 • 84% have taken at least 3-year college education A Business Initiative: Education Portal in China v. 2.0

15. Internet: The Emerging New Media • While sina.com is dominating the Internet buzz in China, other e-business-oriented web sites are growing faster than the news-oriented sites. A Business Initiative: Education Portal in China v. 2.0

16. Internet: The Emerging New Media • Problems in e-Business development in China: • Lack of infrastructures: Payment, credit system, bandwidth • Speculation / gamble motives • Lack of clear business model and profit zone • Lack of long-term objectives • Lack of experience • Lack of capital market • All these problems suggest that we need more sophisticated thinking on the e-Business developments A Business Initiative: Education Portal in China v. 2.0

17. Why Education? • The current dominant portals are all news-oriented and difficult to present visible profit zones • The current e-commerce portals are difficult to present their business models because of the yet-to-complete infrastructures • In contrast, the demand for on-line education is outstanding and will constitute a profit generator in the very near future. A Business Initiative: Education Portal in China v. 2.0

18. Why Education? Demand • To whom the education portal we can address? • For getting better career opportunities, large quantity of Chinese business people who are eager to learn business management knowledge and to obtain diplomas from world-known education institutions • Tremendous young people who are thirsty for improving their professional skills: computing / networking, finance / accounting, sales / marketing / communications, Western languages • Corporate clients who want to improve their employees’ business qualifications • Western business people who are eager to learn Chinese business systems and environment. A Business Initiative: Education Portal in China v. 2.0

19. On-line education offerings • To create a web site that is centered with education- and knowledge-related contents and therefore to create a very large web-based community for learning • Provide aggregated entry into online education business, one of the key components of the larger knowledge-related e-commerce in China • Establishing and deepening Chinese educated net citizenship to create new base of customers for cross-selling products and services • Create new, enhanced operating platform for expanding other online knowledge shopping capabilities A Business Initiative: Education Portal in China v. 2.0

20. On-line education Offerings I. Vast education- and knowledge-related contents: • Create a very large data warehouse of various academic resources based on multiple partners • Daily campus news of both domestic and international education institutions • Info of education opportunities within and outside China • On-line editions of both Chinese and European academic journals and other academic resources • Who-is-Who directories of outstanding Chinese and European professors and researchers • On-line directories of library resources • E-zines of various disciplines and interests A Business Initiative: Education Portal in China v. 2.0

21. On-line education Offerings II. Free education programs: • Selected programs in arts and humanities • Fine Arts • Music • Note: Lots of opportunities of sponsorship could be found for funding these non-profit programs A Business Initiative: Education Portal in China v. 2.0

22. On-line education Offerings III. Paid educational contents • Business management courses (MBA) for Chinese students • Advanced bio-science education would be the next big thing on the Net • Other single-course programs for young professionals: computing / networking, finance / accounting, sales / marketing / communications, Western languages, designing • Corp-sponsored certified training programs in computer sciences. (IBM, Oracle, Microsoft, Cisco, Intel …… would be most interested in such on-line programs.) • Corporate training programs provided by state-of-the-art consulting firms • Introduction of Chinese business to European businessmen A Business Initiative: Education Portal in China v. 2.0

23. On-line education Offerings IV. Derived e-Commerce activities • Based on the very large communities generated by the integrated resources and various programs, on-line sales would be a natural result A Business Initiative: Education Portal in China v. 2.0

24. On-line education Offerings: Summary Paid edu programs & Corp training programs Un-paid edu programs AC resources AC-related news General-interest news Biz news E-zines Communities Directories E-commence A Business Initiative: Education Portal in China v. 2.0

25. Business Model: For a Profitable Growth (1) Create enough knowledge- and education-related information resources …… (2) …… so that to create very large communities for on-line learning …… (3) …… so that to offer various paid education and training programs and conduct e-Commerce activities A Business Initiative: Education Portal in China v. 2.0

26. Business Model – Customer Service The education portal will adopt an external vendor strategy for customer service • Considerations: • Rapid time to market • Avoidance of heavy fixed investment • Ability to leverage vendor experience in online services A Business Initiative: Education Portal in China v. 2.0

27. Business Model – Customer Service The education portal will adopt an external vendor strategy for customer service • Vendor Selected: Those who have significant resources in education • Europe: University of Cergy, ESSEC, University Without Walls, Transcultural Network, etc. • China: Chinese Academy of Sciences (CAS), Chinese Academy and Social Sciences and several outstanding universities • International corps like IBM for professional training programs • Other: Earnest & Young and Aplus Business Consulting Ltd. for corporate training programs A Business Initiative: Education Portal in China v. 2.0

28. Business Model – Customer Service Approach: On-line / Off-line Mix • Because of the inadequacy of the bandwidth, we would like to try a mixed approach for the proposed programs • Students / trainees study at home or at work based on the interactive CDRoms and textbooks step-by-step • On-line Q&As and discussions between students / trainees and tutors • Vis-a-vis instructions several times in a year. (In any case, physical contacts are necessary for all education programs.) • [In the places where broadbands are available and affordable, we could try a pure on-line model.] A Business Initiative: Education Portal in China v. 2.0

29. Business Development Strategy • Low risk cost structure • Limited up-front investments • Strong push for variable cost structure • Low break-even point • Aggressive outsourcing • Rapid time to market • Ability to flexibly test and analyze multiple offers • Soft / gradual launch A Business Initiative: Education Portal in China v. 2.0

30. Timing & Schedule • Phase One (Oct 2000 ~ Mar 2001) • Overall designing of the architectures, especially the database structure • Setup of the operation entity and the work team • Integration of major academic resources: at least 200,000 contents pages • Setup of partnerships • Key government relations and approvals A Business Initiative: Education Portal in China v. 2.0

31. Timing & Schedule • Phase Two (Feb ~ Jun 2001) • Definite designing of the paid education contents • Construction of paid contents • Launch of the free contents • Construction of physical education institution • Integration of related parties in Europe and China • Integration of the work flow • Test of the learning programs A Business Initiative: Education Portal in China v. 2.0

32. Timing & Schedule • Phase Three (Jul ~ Sep 2001) • Completion of the paid contents construction and final test of the learning programs • Pre-launch marketing • Launch of the Europe MBA and the corporate training programs • Student enrollment: Europe MBA and corporate training programs A Business Initiative: Education Portal in China v. 2.0

33. Cost & revenue constituents • Revenues • Membership fee • Tuition fee: Regular students • Tuition fee: Corporate clients • Advertising & sponsorships • E-commerce A Business Initiative: Education Portal in China v. 2.0

34. Cost & revenue constituents • Costs • Pre-launch cost: site construction and research • Variable cost: ongoing site expansion and mantainence • Research, public relation & promotion • Overheads A Business Initiative: Education Portal in China v. 2.0

35. Financial forecast:Revenue & cost US$,000) A Business Initiative: Education Portal in China v. 2.0

36. Financial forecast: P&L (US$,000) (US$,000) A Business Initiative: Education Portal in China v. 2.0

37. Participants in China • Leading entities • Aplus Business Consulting Ltd.: The leading Chinese consulting firm specializing in marketing communications and customer publishing for international IT clients. In the past years, IBM, Cisco and Compaq are among its client list. • Newton Press Ltd.: An affiliate to Aplus, specializing in print media business and consulting for international publishing companies. It has formed close partnership with several European publishers. • Zenocom Ltd.: Also an affiliate to Aplus, specializing in development of Web business. In addition to its “Science on Line” (SOL) Web site, it is providing Web content service to IBM, Cisco, Compaq and iTeleWeb Inc. A Business Initiative: Education Portal in China v. 2.0

38. Participants in China • These three entities, all under the leadership of Mr. Lu Xiang, will join hands together to form partnership with European institutions. Their resources relating to Web content creation will be integrated into one force. • Under Zenocom’s name, negotiations for an acquisition of the Information Center of the Chinese Academy of Sciences is ongoing A Business Initiative: Education Portal in China v. 2.0

39. Participants in China • Supporting entities • Chinese Academy of Sciences.: The leading and the largest scientific research organization in China. • Chinese Academy of Social Sciences.: The leading and the largest research organization specializing in humanities and social sciences. • Fudan University, Nanjing University & Zhejiang University: Major leading universities in the most affluent region of China • China National Library.: The largest library in Asia. A Business Initiative: Education Portal in China v. 2.0

40. Contact Mr Lu Xiang 3/F, Building C, A3 Baijiazhuang Road, Beijing 100020 * Tel (86-10)65923373, 65867609 * Fax (86-10)65859114 * Email luxiang@newtonpress.com luxiang@aplus.com.cn A Business Initiative: Education Portal in China v. 2.0