Chinese Internet giant Sohu.com Inc plans to overtake its arch-rival Sina Corp in online advertising, while building up its presence in online games and paid search services, according to Friday's China Daily.

Charles Zhang, the NASDAQ-listed firm's chairman and chief executive officer said: "Compared with wireless value-added services, online advertising has a higher entry barrier and it also has long-term growth prospects."

Zhang set the ambitious goal of earning the "the biggest branding advertising revenue in 2005."

Only rival firm Sina Corp is ahead of Sohu in terms of online advertising firm in China. Its advertising revenues in the past year were US$29.5 million, compared with Sina's US$41.2 million.

Zhang said Sohu will reach that target, following its acquisition last year of gaming website 17173.com and real estate website Focus.cn.

Sohu notched up a US$11 million advertising revenue in the first quarter of this year, a quarter-on-quarter growth of 15 per cent, while Sina's only grew by 1.4 per cent to US$13.1 million.

Sina spokeswoman Betty Jia declined to comment on Sohu's goal, but seemed confident that many companies would stick with Sina as she asserted that advertising clients tend to establish stable relations with influential advertising firms and will not easily transfer to other platforms.

She said Sina had sold almost all of the advertising places on its websites for the first half of the year, by the start of 2004, claiming that the company actually has too many potential advertisers.

She added her company would focus on developing more advertising formats and customers.

Sohu said it would launch a new online game, Blade Online, which it has developed with domestic firm Pixel Game, in July.

It has already been running its first online game, Knight Online, which it imported from South Korea, for almost two years, but it has been operating on a small scale.

He Jinmei, vice-president of Sohu in charge of online games, said that the multiplayer online role-playing game will make its commercial debut in either September or October.

Zhang said he did not expect the game to make much contribution to Sohu's company's business results this year, but predicts it will play a significant role next year.

"Online games will become the fourth pillar of our business after online advertising, wireless value-added services and paid searches," said Zhang.

Paid searches will become the most significant difference between Sohu and its major competitors Sina Corp and Netease.com Inc, also listed on the NASDAQ in New York.

He estimated his company has as many as customers or even more than fellow Chinese search engine service provider Baidu.com, which claims to be the biggest in the business and was tipped to make an initial public offering on the NASDAQ in the third quarter of this year.

Announcing its first quarter financial results in April, Sohu said that it had about 64,000 paid search customers during that period.

Sohu suffered a decline in revenue from US$14.2 million in the fourth quarter to US$13.4 million in its wireless value-added services, but this will remain to be a key business for the company.

"Our focus will be on the multimedia messaging service and WAP (wireless application protocol) services," said Zhang.

Sohu said on Tuesday it had completed the acquisition of Beijing G Feel Technology Co Ltd, a major WAP or wireless Internet surfing service provider in China, for US$18 million.

(China Daily)