Hanwang Technology, a Chinese maker of e-readers and portable devices with handwriting recognition, hopes to raise 249 million yuan through an initial public offering to fund technology upgrades and product research.

Hanwang said in a statement on Tuesday that it would float 27 million shares on the Shenzhen Stock Exchange's small- and medium-sized enterprise board. The funds raised will be allocated across five projects including improvements in handwriting-recognition technology and e-reader manufacturing.

Hanwang Chairman Liu Yingjian previously hoped to list on the Shenzhen Stock Exchange in 2008 but later postponed the plan due to the economic downturn.

The company's statement came after it confirmed plans with Sina.com last month to unveil its first tablet computer, the TouchPad this March.

Industry watchers say the tablet plan may help Hanwang maintain growth.

"The e-reader market will likely undergo a price war this year due to fierce competition, so by entering the tablet-computer market, Hanwang may to some degree offset stiff competition in that product sector," said Zhang Ya'nan, an analyst with domestic IT research firm Analysys International.

In addition to making its own products, Hanwang has also granted access to its handwriting recognition algorithms to hi-tech companies at home and abroad, including Microsoft, Nokia and NEC.

Hanwang's handwriting recognition algorithms are core technologies in both its e-readers and tablet computers, but this alone cannot assure its market share.

"Terminals are only the carrier of content, which is the key to winning users, but Hanwang is more of a technology innovator than a content provider," said Zhang, adding that Hanwang's sales may be impacted if Apple Inc's iPad enters the domestic market too early.

Hanwang reported a net profit of 30.1 million yuan in 2008 and 85.3 million yuan in 2009. E-reader sales have been responsible for the company's rapid growth since its first e-reader debuted in September 2008.

Liu said last month that he expected shipments of its e-readers to increase 400 percent this year. The company hopes to sell 2 million e-readers this year as compared with 500,000 in 2009, he added.

The company said it controls a 95 percent share of China's e-book market, with overseas business accounting for less than one-third of total sales.

According to IT research firm DisplaySearch, China's e-reader sales will soar from 800,000 units in 2009 to 3 million units this year, accounting for 20 percent of global e-reader sales.