November 6, 2007 -- On October 26, 2007, Shanda Interactive Entertainment Ltd. announced that it plans to acquire Onwind Digital Co. Ltd., a Xiamen-based game art design studio. The investment was announced at the Fifth China International Internet Expo, and includes the development of outsourcing manufacturing.

"Shanda is a Shanghai-based online game operator, and it will more familiar with the gaming market," Chen, an Onwind spokeman who did not want to give his full name, told Emerging China. "Onwind is a game art design studio, we have our experienced research and development team, but we are not professionals in gaming marketing. The cooperation of these two online game giants will increase the possibility of success in [the] Xiamen gaming market in a short time. Shanda is a listed and reputable firm with enough marketing channels and resources in China, including a Chinese language website, capital and a network of branches."

According to Chen, this strategic investment is mutually beneficial and will widen the expansion scope of Onwind.

"It appeals to the ‘Fengyun Plan' of Shanda," Zhuge Hui, a Shanda spokesman, told Emerging China. "The ‘Fengyun Plan' lays emphases on internet game firms with mature systems. For Onwind, we focus on its outstanding talents and mature products. Shanda has its own research and development base as well, and would help Onwind to improve its technology and research and development team. Besides that, Shanda has a huge game operation platform. If Onwind's experienced research and development team can be injected with capital and supports from Shanda, that would be a model of win-win cooperation."

"Assessing the potential adverse effects is important," Yan Yang, GM Assistant of Manpower Inc. told Emerging China. "Shanda's new investment should take account the risk factor involved. These two firms own their unique culture or leadership styles respectively; we cannot ignore the possibility of resistance from either firm. For instance, Shanda as an older and bigger firm would have more overseas shareholders values, and its management style would be more western."

However, according to Zhuge, ‘Fengyun Plan' is not a risk investment, because the company plans to give Onwind enough "free space" to develop. Strategic investment is a necessary step for the survival of online gaming firms in the Xiamen market, and the development of internet gaming firms is relatively slow. As such it would be impossible to grow rapidly without strategic investments.

"We will spend [between] 10 million and 100 million yuan ($US1.3 million to US$13 million) for each project included in the ‘Fungyun Plan' investment, " Zhuge, told Emerging China. Many Onwind products like the game 'Sushan' have huge marketing potential, he says, and Shanda can help Onwind explore new markets and develop game software.