Amazon.com (Nasdaq:AMZN) has become the latest public Internet company to enter China’s market, with its $75 million dollar acquisition of VC-backed Joyo.com Ltd., which makes its headquarters in the British Virgin Islands.
Amazon follows Yahoo Inc. (Nasdaq: YHOO), which invested in China’s 3721.com; EBay (Nasdaq: EBAY), which acquired EachNet; and Google (Nasdaq: GOOG), which took part in the funding of Chinese search engine leader Baidu.com.
Amazon says its acquisition expands its access to more than 80 million consumers already online in China. Joyo, which was founded in 2000, claims to be the largest online retailer of books, music and videos in China. Joyo (pronounced like joe-who) was founded by Lei Jun, who is also the president of Kingsoft Holdings, the largest shareholder of the company. Kingsoft is one of China’s oldest and largest software applications developers, founded in 1988 and best known for the anti-virus products it makes for China.
The Amazon deal, which consists of $72 million in cash and the assumption of employee stock options worth an additional $3 million, is one of the most successful exits to date for an indigenous Chinese Internet company. It also provides a windfall return on investment to Kingsoft and another of Joyo’s large investors, Legend Capital, the venture capital arm of Legend Holdings. Legend also owns LeNovo Group, the largest domestic manufacturer of personal computers in China.
Legend Capital is one of China’s largest venture capital firms, having raised two funds to date. LC Fund I, a fund of $35 million, is fully invested, and the firm is currently investing from LC Fund II, a $100 million fund.