D-Link has established a very strong foothold in China. As the fastest growing market, China's network equipment business grew from US$278 million in 1998 to US$374 million in 1999. In just the first half of 2000, business exploded to exceed US$507 million. D-Link product shipments in China increased 39% last year.

In 2000, D-Link entered into a joint venture with Legend Holding and became the largest networking company in China. The jointly owned company was named Legend Networks Limited, with D-Link holding 43% of the capital, and Legend Holding owning 57%.

It was a marriage of strengths, with D-Link providing network expertise and products readily from its R&D facilities and manufacturing plant in China, and Legend providing its extensive domestic distribution and customer service.

Prior to the joint venture, Legend had been D-Link's largest distributor in China for many years. It is China's largest manufacturer and distributor of PCs, producing its own-brand PCs in China and providing system integration.

Legend also distributes foreign-brand PCs and related products. In 2001 we began our foray into retail marketing in China, using Legend's extensive retail channels.

With a start-up capital of US$10 million, this joint venture is targeted as an IPO, which will be listed in the Hong Kong Stock Exchange. Sales revenue in China was about US$60 million in 2000, and is projected to grow to US$250 million in 2003.