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

1. A Business Initiative for Launching An Education Portal in China Presented by Aplus Business Consulting Ltd. Newton Press Ltd. Zenocom Ltd. July 15, 2000 A Business Initiative: Education Portal in China

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

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

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

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 today. A Business Initiative: Education Portal in China

6. Chinese Economic Indicators • Source: IMF A Business Initiative: Education Portal in China

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

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

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

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

11. Forecast Internet: The Emerging New Media • In the past years, number of Internet users has been doubled every half year Number of Internet users in China Millions 50 45.0 40 30 20.0 20 13.0 8.9 10 4.6 2.0 0.9 0.5 0.2 0.1 0 Dec '96 Jun '97 Dec '97 Jun '98 Dec '98 Jun '99 Dec '99 Jun '00 Dec '00 Dec '02 • Source: CnNIC, IDC A Business Initiative: Education Portal in China

12. Internet: The Emerging New Media • Main 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

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

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

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

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

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

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 • 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

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

20. On-line education Offerings I. Vast education- and knowledge-related contents: • Daily campus news of both domestic and international universities • 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 • Free educational contents A Business Initiative: Education Portal in China

21. On-line education Offerings II. Paid educational contents • Business management courses for Chinese students • Corporate training programs • Introduction of Chinese business to European businessmen III. Derived E-Commerce Activities A Business Initiative: Education Portal in China

22. 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 • Vendor Selected: Those who have significant resources in business 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 • Other: Earnest & Young and Aplus Business Consulting Ltd. for corporate training A Business Initiative: Education Portal in China

23. 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

24. 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 20,000 contents pages • Key government relations A Business Initiative: Education Portal in China

25. 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

26. 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

27. Cost & revenue constituents • Revenues • Membership fee • Tuition fee: Regular students • Tuition fee: Corporate clients • Advertising • E-commerce • Costs • Variable cost • Research, public relation & promotion • Overheads A Business Initiative: Education Portal in China

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

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

30. Participants in China • Leading entities • Aplus Business Consulting Ltd.: A leading 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 magazine publishing business and consulting for international publishing companies. • 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. • 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. A Business Initiative: Education Portal in China

31. 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 & other universities.: Major leading universities in China • China National Library.: The largest library in Asia. A Business Initiative: Education Portal in China

32. 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