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China – DJI to bring online booking system to sports

By - 17 September 2015

DJI Holdings, a licensed promoter and distributor of Chinese sports and welfare lottery products to third party retailers and direct to consumers, is partnering with Heilongjiang Sports Bureau to establish a joint venture.

This will include, for the first time in a Chinese province, a Business-to-Business (B2B) online booking system for sports. Based on DJI’s technology, the system is expected to generate significant incremental revenue. Terms have been agreed with three of China’s largest online portals to sell and promote its B2B system from November 2015, giving it direct access to their significant customer bases. A full e-commerce platform for the HSB is expected to follow in 2016.

Beyond the online booking system, it is expected that the HSB Joint Venture will have exclusive lottery contracts with HSB for its lottery distribution channels including its official web site (B2C), mobile platform (B2B), lottery stores (offline-to-online) and digital and physical scratch cards, and will be responsible for the introduction of new games.

The development and support of the soccer industry in Heilongjiang, in parallel with China’s wider ambitions for its involvement in the sport, is a key aim of the HSB. HSB and the company have agreed in principle that up to 20 per cent of post tax earnings from the HSB Joint Venture will be retained and invested in the development and promotion of football in the province, including football academies, new facilities and coaching.

Guo Mingyu, Director of Heilongjiang Sports Bureau, said: “We are delighted to be partnering with DJI at the forefront of China’s new generation of internet development. Together we will develop deeper cooperation in the sports industry and create new business and service models. In line with the national Internet + strategy, we will be able to accelerate B2B, Offline-to-Online and e-commerce platform building to support public sports services. We will build our joint venture into a flagship brand of Heilongjiang province, operating beyond online booking and ticketing, into big data, sports consulting, new sports lottery game development and grass-roots football training.”

The plan is to float on the New York stock exchange in the foreseeable future.

Darren Mercer, Chief Executive Officer of DJI Holdings, said: “This exciting and important joint venture is further evidence of DJI executing the strategy outlined at the time of our IPO. We are partnering with key provinces in China, increasing our channels to market and developing complementary revenue streams beyond lottery sales. Our deal with Heilongjiang Sports Bureau is testament to the strength of our relationships in China, the scale, robustness and versatility of our technology platform and our ability and commitment to introduce innovative lottery games and sports related content and services. These are key components of our strategy to further increase DJI’s competitive advantage in the marketplace.

“The March 2015 temporary suspension of online sales continues pending regulatory changes. During this time DJI is repositioning itself in readiness for the significant revenue opportunities that a better regulated Chinese lottery sector will bring next year for high quality operators,” he added. “In the meantime, we expect the new HSB joint venture to contribute significantly to revenues before the end of 2015. The expected continued online market penetration, followed by the roll out of the e-commerce platform, again supported by our agreements with major online portals, provides a sound basis for considerable revenue enhancement in 2016.”

Heilongjiang, located in the north east of China, is the country’s sixth largest province by area with a population of approximately 40 million.

HSB operates or is responsible for all sports lottery activities in the province: in 2014 sales were RMB 7.03bn, an increase of more than 60 per cent per on 2013. HSB also owns and/or operates an extensive portfolio of sporting venues and facilities across the province, including Yabuli, China’s largest ski resort.

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