George Chen

By George Chen
The opinions expressed are the author’s own.

Two Chinese dotcom companies have apparently become the latest victims of the growing market concern about China “concept” stocks in the wake a series of accounting scandals.

Online video firm Xunlei Ltd and Chinese e-book firm Cloudary Corp have postponed their U.S. fundraising plans. They both blamed volatile global markets. Volatile markets? Really? Aren’t the markets always volatile?

More or less, to some extent. We still see other companies lining up to list in the U.S. although the near-term outlook for China IPOs to land in the U.S. market doesn’t look too bright. In return, such concerns — warranted or not — are growing about Chinese companies listing in Hong Kong and Singapore.

There were some early signs about Xunlei’s difficulties to go public. It failed to win direct investment from News Corp. And some analysts say Xunlei could face challenges from some Hollywood movie makers over copyright issues.

For Cloudary, it’s a different story. The company changed its name from Shanda Literature before the IPO plan, as the firm seeks to brand itself as an e-book maker and seller — trying to convince U.S. investors it could become “China’s Kindle maker”. In the end, the rebranding campaign didn’t make headway.

Maybe what the two companies should really blame is not the volatile market but the investment bankers they hired who should have gotten them to list faster and earlier. Remember the match-making site called Jiayuan.com? It may be a good idea to revisit my previous column “Is China exporting a dotcom bubble?“.

The reason I mention in particular the two Chinese dotcom companies today is to reflect the growing difficulties of selling so-called China concept stocks. China is not just a concept any more. Investors are getting more cautious and are asking more questions.

That should send a message to other Chinese companies considering public listings. For investors in Hong Kong, isn’t it time to review the China concept and related stocks that you hold in hand?

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

By George Chen
The opinions expressed are the author’s own.

“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.

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.

Photo: An employee is seen through a glass wall as she walks past the logo of Youku.com above the reception desk at the company’s headquarters in Beijing, December 9, 2010 REUTERS/Soo Hoo Zheyang

By George Chen
The opinions expressed are the author’s own.

As the world’s No.1 daily deals website Groupon.com, which Google once tried to acquire for $6 billion, prepares for the launch of its China portal, it has apparently run into trouble finding the right URL to bring its service to the hundreds of millions of potential Chinese online consumers.

Chicago-based Groupon.com has opened a China representative office and hired a team to help it launch its China portal as soon as possible, according to people involved in the plan. However, even before getting the wheels properly in motion, it has encountered in an unexpected and uncomfortable hurdle — both Groupon.cn and Groupon.com.cn, its first and most obvious choices for a local web address, have already been snapped up by a Groupon.com copycat.

According to China’s internet watchdog and web domain regulator, cnnic.net.cn, both addresses are owned by Chinese national Ren Chunlei. Local media described Ren as the CEO of Groupon.cn, which claims to be China’s No.1 group purchase site.

A quick visit to Groupon.cn shows that it looks very similar in layout to the front page of Groupon.com, although the two sites have no official connection. They are two independent companies — one a U.S. company headquartered in Chicago, the other a Chinese company based in Beijing. The domain Groupon.com.cn takes you to the same Groupon.cn site.

In the “About Us” section, the Chinese copycat apparently makes no effort to hide the fact that it started its online daily group purchase business in China using exactly the same business model as Groupon.com. “On Feb. 18, 2010, taking Groupon.com as a reference and combined with our own experience, we decided to launch the group purchase project,” the company says.

In December, Groupon.com acquired three deal websites in Asia — Hong Kong-based uBuyiBuy, Singapore’s Beeconomic and Taiwan’s Atlaspost — expanding its reach across East and Southeast Asia. Now you can access the three local sites, already part of Groupon.com’s global online shopping network via the three local domains: Groupon.hk, Groupon.sg and Groupon.com.tw.

One natural scenario could be that Groupon.com acquires the Chinese imitator and obtains ownership of the two Chinese domains, but people familiar with the situation said this was unlikely given the potential valuation of such a deal. On the other hand, Groupon.com has a China partner — Tencent, which runs China’s most popular instant messaging provider QQ, so it doesn’t make much sense for it to acquire or tie-up with another Chinese company.

Protection of intellectual property rights (IPR) has grown to become a core issue in U.S.-China economic relations, and Chinese President Hu Jintao vowed to make more progress in the field during his recent state visit to the United States.

Groupon.com is not alone. In the wake of the rapidly growing popularity of the world’s No.1 social networking site Facebook.com, more than a dozen copycats emerged in China, including renren.com, now the No.1 social networking site in a country where access to Facebook is blocked by the government.

Fortunately, Facebook successfully registered the Facebook.cn domain as early as in 2007, showing that the U.S. internet giant certainly remains interested in the Chinese market.

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

Photo: Screenshots of the two websites, Chicago-based Groupon.com (left), and Beijing-based Groupon.cn, as seen on Feb. 7, 2011