Technology giant Apple (Nasdaq: AAPL) is reportedly planning to buy a Chinese online game developer, Handseeing Information Technology, a move that could help it gain a foothold in the world's biggest Internet market.

A top executive at Handseeing said, Friday, that Apple has been in negotiations with the Chinese firm for "a certain period of time" and the public could expect some sort of "incremental" announcement in September.

Though the executive refused to say how much Apple is willing to pay for Handseeing, he said the firm is expected to fetch a price upwards of $150 million.

The mainland's state-run news agency Xinhua has confirmed the news, quoting Tian Bo, Handseeing's deputy general manager.

Xinhua reported Tian as saying that if the deal is successful, it would be Apple's first acquisition in China. However, other foreign firms are also interested in Handseeing, and Apple could see stiff competition, Tian was cited as saying.

Handseeing, founded in 2005, develops Java-based online games, in partnership with Sun Microsystems, for Tianya Online, China's largest social networking forum.

The growing popularity of Handseeing made Shenzhen-based Green Pine Capital Partners Co. pick up 35 percent stake in the privately-held firm in 2009 for about $7.4 million.

Market analysts said they were not surprised by the news as Apple has been eyeing expansion in the Chinese market for a long time. The Cupertino, California-based company sells its popular iPhone through China's No.2 mobile operator Unicom and last month opened a sprawling flagship store in Shanghai.

However, to date, the iPhone has struggled against smartphones made by rivals such as Nokia as the device comes with the Wi-Fi function disabled. But iPhone sales are expected to surge after Unicom announced that it will begin selling Wi-Fi-enabled iPhones in the coming week.

Apple's popular tablet computer, the iPad, is not available in China, but it could soon find its way into the market with China's No.2 mobile operator, China Mobile, expressing interest in the device last May.

The popularity of the iPhone and the iPad is largely on the back of Apple's legendary App Store, where over 100,000 applications ranging from games to business tools are available for download. Apple has billed its Game Center technology, part of the iOS 4 operating system, as a "new social gaming network" and with Handseeing specializing in online gaming applications, the firm will nicely fit into Apple's business model, analysts said.

According to the analysts, another reason Apple could be eyeing Handseeing is because it will help it get a foothold on China's growing online gaming market. In 2009, the total number of online gamers in China was between 60-70 million or about a fifth of the country's total internet community, according to iResearch.

China boasts of the world's largest online population -- 350 million -- or more than the total population in the U.S. According to New York-based EMarketer Inc., the number may grow to 840 million by 2013.

The acquisition is also unlikely to dent Apple's balance sheet as the company has nearly $46 billion in cash reserves, analysts said. Last month, Apple said that its Q3 net profit jumped 77.5 percent to $3.25 billion while revenue in the quarter surged 61 percent to $15.7 billion, its highest ever.

However, some analysts wondered why Apple was interested in Handseeing as the latter develops Java-based online games and Apple products currently don't support Java.

Apple has refused to comment on the matter. Its shares closed down 0.62 percent at $260.08 on Friday.

International Business Times, The Global Business News Leader

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