According to reports in local media, the Chinese Internet portal NetEase.com is in contact with MSN China and intends to take a 50% stake in MSN China from Shanghai Alliance Investment.

Shanghai Alliance Investment is the shareholder of Shanghai MSN Network Communications Technology, which is responsible for the operation of MSN China. On the completion of the transaction, NetEase.com will reportedly become Microsoft’s new partner for the operation of MSN China to challenge Tencent’s leadership in the Chinese instant messaging and wireless services sector.

An industry insider revealed that the negotiation between the two parties is currently drawing to a close. However, NetEase.com’s public relations department said they had no comment on this issue.

MSN fully entered the Chinese market in 2005. As a result of the consideration of the Chinese policy, Microsoft decided to set up a joint venture with Shanghai Alliance Investment, with each party holding a 50% stake. After that, MSN developed several services in China, including portals, instant messaging, wireless value-added services, and email box service. But MSN China’s performance did not meet the expectation and the company has not find a clear profit point.