The venture, Shanghai MSN Network Communications Technology Company Ltd, has received approval from the Chinese government to deliver products and services of MSN, Microsoft's online services division, throughout China, a joint statement said on Wednesday.

"The rapid growth in Internet adoption and mobile device usage in China, along with the exceptional energy and talent of its people, make this one of the most important new markets for MSN," said David Cole, MSN's senior vice president.

Microsoft also unveiled plans to acquire certain assets of TSSX, a prominent Chinese mobile software and services company, and enter into exclusive arrangements with the company to deliver MSN mobile products and services globally.

It marks the first Microsoft venture with a Chinese company in mobile Internet services.

MSN Messenger instant messaging service and the MSN Hotmail e-mail service in Chinese is popular in China.

The launch of the MSN China online portal is expected to integrate communications, information and content services, and create opportunities for advertisers to reach the one of the world's largest Internet markets, the statement said.

Some 94 million Chinese were online in 2004, an eight percent increase over the previous year, according to China Internet Network Information Center (CNNIC).

As part of the agreement, Microsoft plans to form a China Mobile Development Center based in Shenzhen that will include TSSX employees and integrate the Chinese firm's technology and service offerings with those of MSN Mobile, the statement said.

This could enable MSN China to quickly provide mobile information, communication and multimedia services to Chinese consumers, it added.

China has an estimated 340 million mobile phone users, the world's biggest telecom market.

"Creating a joint venture for MSN China and SAIL and our transaction with TSSX signifies the importance Microsoft attaches to the Chinese market," said Tim Chen, the chief executive officer of Microsoft Greater China.

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