Is China exporting a dotcom bubble? (Reuters)

22 April 2011 0 h 10 min 1 comment

“Will you marry me, Nasdaq?” that may be the message Jiayuan.com is keen to send to the Nasdaq and potential investors. Jiayuan.com, an online dating service founded by a student of the Journalism School of Fudan University in 2003 and whose name means “a good destiny of love” in Chinese, today applied for an initial public offering in the United States. It’s the latest in a series of Chinese Internet technology and social networking companies to apply for a U.S. listing in recent months.

By George Chen, Reuters, 21 April 2011

Now, I’m not a chartered financial analyst or Internet industry expert, so I just want to look at this wave of IPOs from a more personal perspective. First of all, I do believe there’s a reason behind the current rush of listing applications; it’s not mere coincidence!

The financial crisis changed the global landscape for many sectors, not only the financial industry but also many consumer-driven services. Wall Street investors have long been worried about the performance of traditional media companies such as the New York Times Co, while Google and Apple are already too expensive for some.

Youku.com and Renren.com, clones of YouTube and Facebook in China, naturally sound like a more comfortable investment solution to many Western investors who may have missed the previous gold rush for Google and Apple and are looking for something similar with a cheaper price tag.
Thanks to public relations agencies and global media outlets, once you give Renren.com a nickname like “the Facebook of China”, investors have a tendency to be wowed no matter how much they know of the differences in business models between Renren.com and Facebook, or about the way Renren.com really works and its impact on Chinese users.
Let me suggest, dear investor, that before you subscribe to the Renren.com IPO, you register an account and post a message – by the way, be careful you don’t  post anything politically sensitive or your post will likely disappear rather quickly  – or set up an event and upload some photos to share. User experience is important before deciding to pour big money into the “Facebook of China”.
If you don’t speak or write Chinese, such a test could be challenging. How about asking a friend in China how they feel about Renren.com. Don’t just ask the banker or asset manager trying to sell you the IPO, you need your friend’s personal feedback. In my not so financially professional view, that could be more important than reading through hundreds of pages of IPO prospectus.

Of course, I’m not just picking on Renren.com. You should do the same for any of the upcoming China IPOs , including Jiayuan.com. There are many stories of successful love and marriage on Jiayuan.com, however, none of them involved anyone I know of. Jiayuan.com says it operates the largest online dating platform in China and had more than 40 million registered users at the end of March. However, only 4.74 million of those user accounts were active, on average, during the first quarter of 2011 and less than 1 million of them were paying accounts. This dating site is seeking up to $100 million from a Nasdaq IPO.
“Don’t be fooled by the apparent prosperity of the industry. What is important is how much you can achieve … and whether your products are attractive. So don’t be dazzled by sudden changes in the market, which is on fire,” said Robin Li, founder and head of China’s largest search engine Baidu, which has a much bigger market share than Google in the world’s No.2 economy.

When Renren.com announced its IPO plans, Chinese media were overjoyed. Numerous newspapers carried similar headlines proclaiming that Renren.com, from China, would become the world’s first big social network IPO. It does make me feel that Renren.com is now more powerful than Facebook, at least for Chinese media.

As my editors often warn me when I report breaking news, “First be right, and then be first.” The same should also apply to the likes of Renren.com.

George Chen is a Reuters editor and columnist based in Hong Kong.

Full article on blog.reuters, Reuters, 21/04/2011

Related posts:

Leave a Reply

You must be logged in to post a comment.

Other News

  • China (mainland) film Brilliant future expected for Chinese cinema: interview

    Brilliant future expected for Chinese cinema: interview

    Jiang Wen (R), a well-known Chinese director, walks down the red carpet with his wife Zhou Yun at the opening ceremony of the 70th Venice Film Festival in Venice, Italy, Aug 29, 2013. [Photo / Xinhua] (Xinhua, 04 Sep, 2013)Chinese films have achieved over the past few years very positive results in terms of both quantity and quality, and will drive their technology-led development, 70th Venice Film Festival president Alberto Barbera told Xinhua in a recent exclusive interview. This venerable [...]

    Read more →
  • Breaking news China (mainland) film Cloudary extends script to movie industry

    Cloudary extends script to movie industry

    (chinadaily.com.cn, 26 Aug, 2013) Cloudary Corp – an online literature platform owned by interactive media giant Shanda Group – said on Friday that it reached a film script agreement with the Chinese movie firm Seven Stars Films. Seven Stars Films, a movie production and investment firm owned by Chinese media entrepreneu r Bruno Wu, will link Cloudary’s literature with the world’s movie industry. Wu, who is married to popular TV host Yang Lan, founded Seven Star Films in 2012. The [...]

    Read more →
  • Breaking news China (mainland) film China’s movie market booms with local content

    China’s movie market booms with local content

    ( Agencies, 23 Aug, 2013) In “American Dreams in China”, Cheng Dongqing is giving a lecture in an abandoned factory in Beijing . Snow falls through the damaged roof and a power cut sends students reaching for their flashlights. The movie , about how young Chinese in the 1990s tried every means to learn English so they could study overseas, is part of a boom in domestic productions that is outpacing foreign film s at the box office in China. [...]

    Read more →
  • Breaking news China (mainland) film Fast forward with film

    Fast forward with film

    (China Daily, 23 Aug, 2013) In the past year, Chinese films have galloped ahead like a dark horse, beating Hollywood imports. It is hardly surprising that most of these domestic hits are comedies. Comedy is mostly local. When Hollywood sent scouts to recover the secret formula, many of them reported that these Chinese movies were not particularly funny. Of course not. When you translate every line into English, you have lost much of the fun, leaving only a few sight [...]

    Read more →
  • Breaking news China (mainland) Digital Mobile game firms looking abroad

    Mobile game firms looking abroad

    (China Daily, 21 Aug, 2013) Intensifying domestic competition is driving Chinese mobile game developers into overseas markets, said Google Inc, owner of the world’s most used smartphone operating system. Japan and South Korea may become “sizeable” money-spinners for developers in China in the coming years, it added. “Tapping into South Korea and Japan makes sense for Chinese developers, because both countries have a large smartphone user base and high sales volume in the mobile gaming sector,” said Ben Zhang, China [...]

    Read more →
  • Breaking news China (mainland) tv PPTV denies buyout rumors

    PPTV denies buyout rumors

    (chinadaily.com.cn, 14 Aug, 2013) Online video provider PPTV has denied rumors it will be jointly acquired by e-commerce giant Alibaba Group Holding Ltd and Hunan Satellite TV. “We have noticed related media reports. PPTV is operating independently, well, and we have nothing to announce at present,” PPTV told China Daily on Wednesday. A report from IT industry portal 36kr.com said on Wednesday that the prospective deal is almost closed, with the transaction reaching $400 million. It cited venture capital sources [...]

    Read more →
  • Breaking news China (mainland) film Film industry needs long tail to grow

    Film industry needs long tail to grow

    (China Daily, 15 Aug, 2013) The domestic film market registered record half-yearly box office returns of 10.9 billion yuan ($1.77 billion) in the first six months of this year, up 35 percent year-on-year, and there have been excited voices saying that the Chinese film industry is about to boom in the international market. However, box office success is just part of the industry’s chain, and without the further development of licensed movie merchandising, the Chinese film industry is still in [...]

    Read more →
  • Breaking news China (mainland) Digital New WeChat game becoming painfully popular

    New WeChat game becoming painfully popular

    (chinadaily.com.cn, 15 Aug, 2013) A new mobile phone game on WeChat, a social network app in China, is proving so popular that it’s causing hand injuries for many Chinese users. The game, which was recently introduced to WeChat’s 400 million subscribers, allows users to compete online with their friends in aircraft battles. Within two hours after the release of the game on Aug 5, there were more than 180 million downloads. But Zou Cheng, an orthopedic doctor at Hangzhou First [...]

    Read more →