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The Rise of Chinese IPOs

2011-01-18 thebluntblogger

Chinese Internet companies are building up in the stock exchange and looking forward to their IPOs.  One of the more promising internet companies includes E-Commerce China DangDang, considered to be the Amazon of China.  It was originally an online bookstore but it turned into a general merchandise retailer online.

The internet company DangDang was founded five years after Amazon and grew more slowly due to the Chinese cultural value of saving money and also to the local internet situation.  The founders, Peggy Yu Yu and Victor Koo, expanded the company by offering discounts and low costs, but they also built an online bookstore which is said to be the biggest Chinese bookseller now.

DangDang had around six million active customers in 2009 and in 2010 has already averaged at 1.2 million unique visitors every day.  It has 590,000 book titles and is continually expanding with more product categories.  The company was expected to price its offering to a maximum of $15 per share but was able to price at $16 and opened at $24.50.

A competitor of DangDang, Joyo, was acquired by Amazon and might find competition growing as well.  But Yu considers it more of an opportunity to learn from the competitors’ mistakes and cites instead more opportunities of growing in the industry when the electronic book business hits China.

Another internet IPO in China is Youku.com.  It is considered the YouTube of China, and it has recently found a rise in price of 234 percent early in December 2010.  However, it is considered less of a “sensible investment” compared to DangDang because it has yet to earn in profit.

Other IPOs from China include Mecox Lane, SemiLeds, and China Cache, but they show less promise compared to Youku.com and DangDang.

An Evalueserve survey last August 2010 of 150 Chinese companies shows insights into the IPO Market of China.  The results show that out of 50 private companies, 50 percent plan to launch an IPO within the next five years, 32 percent do not plan to launch in the same span of time, while only 18 percent are not sure if they will launch an IPO.