How Big Will Alibaba Group Become?

Meet Alibaba Group.  It's soon to become bigger than either Tencent or Baidu.  The biggest Chinese Internet company in the world.

Read the full post in Forbes

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New Rumor: Facebook Seeking Local Partner To Enter Mainland China

Mainland China is usually never short on rumors in tech.  However, Marbridge Daily is usually very reliable.  It reported that Bank of America (BAC) would be unloading its stake in CCB several months before it happened last year.

Now, this morning, it’s reporting (via DoNews) that Facebook is preparing to enter the Mainland Chinese market through a joint venture with a local partner.

Read the full post in Forbes

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Google Still Does $640 Million In Annual Revenue In China

Google left China 18 months ago.  It's still the country's 3rd biggest ad revenue generator.

Read full post at Forbes

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Caught in the Chinese Web

By Eric Jackson10/04/11 - 07:45 AM EDT
NEW YORK (TheStreet) -- A few months ago Facebook was rumored to be close to a deal with Baidu (BIDU_) about setting up a joint venture.

At the time, I said I thought that it was a smart move on the part of Facebook (although the rumors of the day then said it was something that Mark Zuckerberg was insisting on over objections by Sheryl Sandberg). I remember a friend of mine, Bill Bishop, an American venture investor based in Beijing, was very skeptical at the time of such a deal working out. Bill pointed out then on his blog how many American Internet JVs had driven on the rocks of China over the last 5 years.

I was reminded of Bill's thoughts last week when I watched an interview of Qunar co-founder, Fritz Demopoulos, who recently sold his Chinese travel business to Baidu.

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Fritz is a German, who got his MBA in the U.S., and then promptly went to China. He started two companies over there in the last 10 years. He has a uniqueperspective on the country and what it takes to succeed there.

Fritz says flat out in the interview that he doesn't think that any U.S. internet company will ever be successful in China through a JV.

His reasoning was pretty simple. Even six years ago, China's infrastructure was pretty immature vs. the U.S. Remember that was the time when Jack Ma sold 40% of his company for $1 billion to Yahoo! (YHOO_). Baidu and Tencent were early days. Sina (SINA_) was a boring AOL(AOL_)-type company.

When big U.S. brands came to China -- whether MySpace or Google (GOOG_) -- they brought capital, know-how and coolness.

That Was Then

Today, things are much different in China. The market is flooded with capital. Any private company with a decent business plan can come up with some money.

There is tremendous technical talent available and it is much cheaper than in the U.S. It is getting a little competitive for the best talent in Beijing, Shanghai and Shenzhen but the costs are still far lower than the U.S. and the supply is very high.

Read the full post on TheStreet.com here

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Alibaba Group will IPO as a Whole - Not as Parts

When it IPOs, expect one Alibaba Group IPO - not several parts IPOs.

Read the full Forbes post

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Mecox Lane Is A Bargain Here

My investment thesis for why I like Mecox Lane at these current prices before next Tuesday's earnings.

Read the full post on Forbes.

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Rumor: Baidu Might Acquire IPO Cursed Online Video Site Tudou

Baidu may put Tudou out of its IPO misery, by acquiring the firm and rolling it into its Qiyi service.

Read the full Forbes post.

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Time for Yahoo!’s Board to Play Offense: Sell 10% of Its Alibaba Stake Now

There is too much misinformation and conservatism circulating about the value of Yahoo!'s stake in Alibaba Group. It's time for Yahoo!'s board to set the record straight by selling a 10% piece of its stake.

Read the full piece on Forbes.

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Baidu Ends Piracy Dispute

NEW YORK (TheStreet) -- Contributor Eric Jackson details how Baidu's recent agreement to pay record companies for music in China stands to affect China's music piracy rate and the company.

Fri 07/29/11 05:15 AM EST -- Brittany Umar & Eric Jackson

Stocks in this video: YHOO | SINA | BIDU | SOHU | GOOG

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Things Never End Well, Otherwise They Would Never End

Why bubbles will continue to happen. And why the tech bubble in the US and China are destined to end badly.

Read the full post at Forbes here.

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Don't Bail on China Tech Stocks

By Eric Jackson
RealMoney Contributor
6/28/2011 1:30 PM EDT
Click here for more stories by Eric Jackson

The second quarter has not been kind to Chinese tech stocks. After flying high from January to April, big China techs such as Sina (SINA - commentary - Trade Now), Sohu (SOHU - commentary - Trade Now) andBaidu (BIDU - commentary - Trade Now) got walloped. Newbie China tech IPOs such as Youku (YOKU -commentary - Trade Now), Dangdang (DANG - commentary - Trade Now), and Qihoo 360 (QIHU -commentary - Trade Now) got hurt even more.

There were many reasons for the sharp pullback in these China tech stocks, some of which are listed below:

• the general market pullback meant that these high-beta names pulled back even more;
• more evidence of fraud in China stocks spreading from smaller reverse takeover companies to larger companies such asSino-Forest and Longtop Financial (LFT- commentary - Trade Now);
• continued worries about a China Internet bubble and concerns that this was the beginning of the end; and
• Jack Ma transferred out Alipay from Alibaba, sending Yahoo!'s (YHOO - commentary - Trade Now) shares down and worrying Americans that there is no rule of law in China.

In the midst of this wave of bad news and worry, I happened to be traveling through China, meeting with several tech companies. I was asked about if we were in a bubble more than anything else while I was there.

What I said then and what I still believe now is that this is not the beginning of the end but the end of the beginning. The Chinese Internet bubble is not bursting now, and I don't believe it will burst this year. I still think we have six to 36 months of good times ahead of us. It's hard to know more precisely than that when the party will end -- at least at this point.

Translated for investors, that means you shouldn't miss out on a second-half bounce-back for these stocks.

There is a range of quality out there, however, so you need to do a lot of research and due diligence before jumping in.

I recommend you stick with two of the biggest quality names: Baidu and Sina. They are solid companies with great management teams that will continue to be in-demand sites for a long time. Everywhere I went in China, I would hear people updating their Sina Weibo status on their iPhones. That is a growing monster service, right there.

Similar to Baidu and Sina, Hong Kong-listed Tencent should also do well in the second half of the year.

...

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In New Crop of Chinese IPOs, There’s Not Another Baidu

Don't expect to find the next Baidu in the upcoming crop of Chinese IPOs. However, there are many niche players that will still be very profitable and successful.

Read the full post here at Forbes

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In Chinese E-commerce, Logistics Is Key

By Eric Jackson06/15/11 - 07:00 AM EDT

BEIJING (TheStreet) -- I've spent the last two weeks in China. Most of the time has been devoted to going around and talking to e-commerce and other Internet companies. The sector is hot despite the pullback in stocks in recent weeks. The mood is very positive about the growth ahead.

Most CEOs and CFOs I spoke to in the sector believe the macro growth fundamentals point to very strong growth for them in the coming quarters. You start to hear the same points repeated: only 30% of Chinese are connected to the Internet, people's incomes are moving up slightly, and people are becoming more and more interested in doing business over the Web.

In virtually every major city right now, you are bombarded with outdoor advertising for major public and private e-commerce companies including Tmall (which is part of Alibaba Group, partly owned byYahoo!(YHOO_)), Groupon competitors, 360Buyand Vancl. The latter two both plan IPOs at the end of this year.

CFOs also discuss how Web companies likeBaidu(BIDU_) and the major portals likeSina(SINA_) and Sohu(SOHU_) keep being able to raise their advertising rates because so many e-commerce Web sites are clamoring to get their ads on the front page.

But what most in the States fail to understand is how challenging logistics is in China. We take it for granted back home how easy it is to get Fedex(FDX_) orUPS(UPS_) to fulfill an e-commerce order.

Back in the early days of the Web 10 years ago, companies like Amazon(AMZN_) had to spend a lot of time getting people over the hump of trying to make an online purchase. They then had to spend some time thinking through building up their logistics infrastructure to support their growth. To Amazon's credit, they've done a fantastic job at the latter with world-class distribution centers and fulfillment process.

In China at the moment, it's really the Wild West for most e-commerce when it comes to fulfilling orders. They are still at the stage where they need to get Chinese consumers to buy. Most Chinese think of Taobao when they think of e-commerce. They know they can usually get something online from there if they want to and they've had a good experience. (It was estimated that last year within China, 50% of deliveries made were for Taobao purchases.) However, they know far less about other vertical e-commerce plays.

......

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Q&A on Doing Business in China

By Eric Jackson, Senior Contributor06/08/11 - 06:00 AM EDT

NEW YORK (TheStreet) -- I have been on a two-week trip to China since last weekend. Before I left, I asked several American colleagues if they had any questions they'd like me to ask the "real" Chinese about their perceptions of both China and the U.S.

On Monday, I met with a group of my followers on the Twitter-like SINA(SINA_) Weibo service. The event was informal and meant simply to be an exchange of ideas. There were representatives from tech firms, resource companies, and Chinese Internet firms.

Here is a summary of their comments to several of my questions:

Q: Do you worry about a U.S. default weighing on China or China's investment in U.S. Treasuries?

A: No. In general, they thought that the U.S. would be forced to take action in order to protect its own self-interests and those of U.S. Treasury holders. They also thought most average Chinese made no link between the U.S. debt and their own economic interests.

Q: Do you worry that there will be an economic crash in China caused by itself?

A: No. Americans don't understand that the Chinese take a long view to their investments. If their stocks were to drop suddenly, the Chinese would likely stick it out with the stock as opposed to Americans who would immediately sell it.

Q: Do you think the next Chinese president and premier will be more conservative or more permissive?

A: More conservative.

Q: What do you think of the way Jack Ma of Alibaba handled the transition of Alipay, negatively impacting Yahoo!(YHOO_) and Softbank?

A: Most educated people think that Jack Ma didn't do the right thing in the transfer. They can't understand why he would do such a thing. This has seemed very suspicious from the start.

Q: Why do you think so many American companies fail when they come to China?

A: The most important point is that the U.S. company imposes a top-down management structure that is too rigid for the local management team. The companies which win are generally the ones who have given their team total autonomy to run their businesses the way they see fit for the local market. When the Americans put what they know has worked in the U.S., they tend to force local Chinese to follow orders, which isolates them.

.......

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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China Embraces Its Inner Tech Bubble

There will be a time when the China tech bubble pops - and it will be a severe reckoning - but that day is still likely at least two years away.

Read the full post here at Forbes.

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Putting Taobao’s Size and Growth in Perspective

When you compare the size and growth of Taobao today, relative to Tencent and Baidu, the implied valuation of the private company (and Yahoo!) is staggering.

Read my full post on Forbes here.

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Most Competitive Spaces in Chinese Internet

By Eric Jackson05/04/11 - 07:00 AM EDT

NEW YORK (TheStreet) -- China is a hot investment theme -- and, more specifically, China Internet. Stocks like Sina(SINA_), Baidu(BIDU_), Sohu(SOHU_) and Youku(YOKU_)have had great runs this year.

I often see investors talking about relative valuation of Chinese Internet stocks on Twitter: "I think Dangdang(DANG_) is poised to pop here to close the gap with Youku."

However, not all Chinese Internet stocks are created equal. Two sectors within the Chinese Internet space are particularly competitive: group buying and online video. I'm bearish on both sectors for the next year.

What's not to like?

The group buying space in China has existed for years.Groupon is certainly in the space. It recently bought a Chinese company called Groupon.cn that set up shop the moment it became clear that Groupon in Chicago was on to something. More interestingly, Groupon.cn was much more popular in China than Groupon had been.

It looks like Groupon made the acquisition to strengthen its position in China and look more put together for its likely end of year Nasdaq IPO. Groupon might end up being successful in China, with a lot of help from its partner there, Tencent. However, I wouldn't bet on it.

There are literally dozens of group-buying clones in China. Some more popular than Groupon, some less. The big daddy of them all is Taobao (ju.taobao.com) with more than 75 million unique visitors in January. Taobao is the mega-ecommerce site owned by Alibaba Groupprivately (which is 40% owned in turn by Yahoo! (YHOO_)). Taobao has never been shy to compete on price. Ask eBay(EBAY_) about their experience competing against Taobao -- they were driven out of the market.

Lashou.com is the next most popular company with 45 million unique visitors in January. Groupon.cn had 19 million visitors (which presumably Groupon Chicago will take over). Groupon itself (with its Gaopeng.com site which it had been using in China) didn't make the top 10 list of group buying sites in January in China.

There is money pouring into the sector. Lashou just received a Series C round of $110 million. This brings its total capital raised to date to $166 million.

.......

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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The RenRen Question

By Eric Jackson
RealMoney Contributor
5/2/2011 1:00 PM EDT
Click here for more stories by Eric Jackson

"Do You Like RenRen?"

I was asked that question more times last week than any other. It's actually surprising to me how many casual China investors are curious about this initial public offering, which is set to debut on U.S. exchanges Wednesday under the ticker "RENN."

The short answer is I don't really like the company, viewed by many as the "Facebook of China." But investors would be wise to get their hands on as many shares at the offer price as possible, because the stock will be hot out of the gate.

A couple of weeks ago, I gave my summary of the company's F-1 filing with the Securities and Exchange Commission. I said that the number of active users seemed to be far lower than what the company had suggested when it was still private and didn't have to worry about running afoul of pesky securities laws.

At the end of 2010, the company had only 24 million unique log-ons for the month of December, almost flat compared with December 2009. Revenues in the last three quarters have also been flat: $20 million, $22 million and $21 million, respectively. That's not a hockey stick.

I continue to hold rival Sina (SINA - commentary - Trade Now) long because I believe the growth of itsWeibo microblogging service continues at a pace we don't yet fully appreciate. Various reports I have heard from China suggest that many young users are dropping RenRen in favor of Weibo.

That said, the IPO process for RenRen has gone very well. Even before RenRen's U.S. road show, Asian demand had caused the IPO's bankers to raise the target offer price by $3 to a range of $12 to $14 per share. The company is now seeking to raise $743 million from the offering instead of about $500 million.

Maybe it's a Facebook thing. That company appears to be on track to do $2 billion in revenues this year and $4 billion next year. Facebook just released a report indicating their growth is faster than previously expected and on track for a successful IPO later this year. Of course, Facebook recently indicated that it is looking at entering the Chinese market through a joint venture with Chinese Internet search giant Baidu(BIDU - commentary - Trade Now).

Or maybe it's a China Internet thing. Youku (YOKU - commentary - Trade Now) is an online video site that did $58 million for the full-year of 2010, with a net loss of $31 million. Yet, the company has a $6.2 billion market capitalization.

...

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