MeetChina.com, an operator of internet trade portals in Asia, has announced plans to form a joint venture (JV) with Thailand.com, a website for information and services on Thailand and Southeast Asia. The portal will open cross border trade with some 20,000 active export companies in Thailand, and expand Thailand.com from a content channel to a business to business (B2B) trading site.
This JV is one of several MeetChina.com has made in the past year. JVs are the primary form of expansion for the company. "Unlike Ariba and Commerce One, we don't license our technology, instead, we take a minority stake in a local company," says MeetChina CEO Len Cordiner.
In India, MeetChina.com has signed a memorandum of understanding with Satyam Infoway, an internet service provider (ISP); and in Vietnam, with International Finance Corporation, part of the World Bank Group, and FPT, a Vietnamese ISP.
In return, local companies such as Thailand.com benefit from trade portal technology, access to over MeetChina.com's 20,000 registered buyers and a trade community that includes logistics, trade finance and insurance players.
MeetChina.com and its JV partners gain revenue stream from supplier membership, advertising, and transactions.
MeetChina.com's fulfillment platform is due for launch in the first quarter of next year. When completed the platform should allow logistics companies, insurance companies, inspection agencies and participating banks to bring the entire transaction online. But Cordiner admits that the process of getting all the payers together and ensuring a compatible platform has been a slow and mammoth task.
"To be frank, you see a lot of claims that transactions have taken place end to end online," he says. "But today, end to end is still an academic exercise until you can get banks and logistics companies into the system." MeetChina.com has signed on SGS for quality inspection, and AIG for marine insurance.
The platform is linked to First Union for trade finance processing. The purchasing order is created on the site and pushed to First Union in XML (extended mark-up language) form. This is then mapped into a draft SWIFT letter of credit and sent to the issuing bank to check the instructions and confirm the credit line and ability to pay. Upon confirmation, an image file of the letter of credit is sent to MeetChina.com which then hosts it on a secure site for exporter and importer to view. Amendments and discrepancies can immediately be picked up and negotiated. Cordiner estimates an exporter can have notice of the importer's letter of credit within two to three days, instead of two to three weeks.
Just how much can merchants expect to save via this platform? Cordiner estimates that a typical cross border transaction of $100,000 from China to North America could cost merchants between $10,000 and $12,000 in shipping costs, insurance and processing a letter of credit. Using the platform, Cordiner says merchants can expect a 30% to 40% reduction in those costs, and are looking at around $6,000 to $8,000 for the same transaction.
MeetChina will announce another JV with an Indonesian listed company later this week and another with a Korean company early next month.