Why Chinese Social Networks IPO In The US?

Massive markets like China see their social networks grow with the speed of light. So are we surprised to see that China’s largest social network Renren filed for an initial public offering with US regulators to raise up to $573,1 million?

We might understand Renren’s hurry and timings. Might not be a coincidence, since Facebook CEO Mark Zuckerberg recently teamed-up with some of China’s major internet entrepreneurs?

Renren intends to list on the New York Stock Exchange under the symbol “RENN”. Renren had about 172 million registered users as of March 31, 2011.

Renren was founded in 2005 by three Chinese graduates of the University of Delaware under the name of Xiaonei, or “inside school”, and is now the most popular social network among Chinese students. Renren is owned by Oak Pacific Interactive.

In 2010, Renren had revenue of about $76.5 million and a net loss from continuing operations of $61.2 million including some charges.

Renren’s IPO would follow successful recent debuts by other Chinese tech stars. The online TV company Youku.com listed on the New York Stock Exchange in December. Its shares closed up 161% on the first day of trading and have performed well since.

Shares in the e-commerce site Dangdang jumped 87% on the first day and have continued to increase in value. Baidu, China’s answer to Google, has been listed on the NYSE since 2005 and its shares have risen 4,660% to date.

Oak Pacific Interactive, is an affiliate of China InterActive Corp, one of the country’s largest Internet companies, which also owns Nuomi, a website featuring daily deals similar to the popular US website Groupon, and Mop, an online community in China.

Nuomi.com, one of China’s best-known group buying websites, announced Friday it will spend 200 million Yuan ($30.42 million) on advertising to promote its brand, a move one industry watcher said it had been forced into in order to secure its leading spot in the market.

The website will first place advertisements on China Central Television, while other possible choices include subway advertising and advertisements inside public buildings, the company told the Global Times Friday.

The number of internet users in China hit 420 million in June 2010, more than any other nation, according to the state-run China Internet Network Information Centre.

Here’s an overview of some other Chinese market leading portals and platforms.

Social Networks:
Kaixin001.com – founded in 2008; 102 million registered users; reported rmb 300millions revenue in 2010; WSJ recently reported its IPO plan.

Taomee.com – a social network for kids; 180 million registered users and 30-50 millions active users; the company is reported profitable in January 2011.

Jiayuan.com – the leading online dating site; 30 million registered users.

Online video sites:
Tudou.com – founded at April 15th, 2005, the first video sharing site in China.

PPLive.com – the most popular P2P video streaming software worldwide; raised $250millions fund from Softbank in Feb 2011.

E-Commerce:
Qunar.com – the leading online Travel service provider. Flight ticket price comparison is its core service;

RedBaby.com.cn – the No.1 e-commerce site for mum & kids; reported rmb 2 billions revenue in 2010.

Facebook, the biggest social network of all, may go public in 2012 and now has an estimated value of $60bn. Along with other western social media sites, including Twitter and YouTube, it is blocked by censors in China, and while its users have found ways around the ban, their numbers are small.

So is it safe to assume that Facebook’s efforts to conquer China will push more Chinese social networks to IPO in the USA? I think it is…

Source: Reuters and Guardian.