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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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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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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No Panic Here in China

By Eric Jackson
RealMoney Contributor
6/9/2011 10:00 AM EDT
Click here for more stories by Eric Jackson

I have been in China for the past week, and have had a chance to visit a number of Chinese Internet firms -- including Tencent, Perfect World(PWRD - commentary - Trade Now), NetQin (NQ- commentary - Trade Now), NetEase (NTES -commentary - Trade Now), Baidu (BIDU -commentary - Trade Now) and AirMedia (AMCN -commentary - Trade Now).

It's been a down market for the last six trading days, and Chinese stocks have been hit hard, including the former leaders such as Sina (SINA -commentary - Trade Now), Sohu (SOHU -commentary - Trade Now) and Youku (YOKU -commentary - Trade Now).

The mood amongst most of these companies, however, remains upbeat. Most now point to the recent worries about Chinese frauds as the reason for the bigger pullback in the entire sector. Most say they have received no uptick in questions from their own investors about their auditors or their own corporate governance.

One thing I couldn't help but notice, as I drove around Beijing, was the large number of advertisements being bought in the offline world (as in buses, billboards or kiosks) for new private consumer-oriented e-commerce sites such asLashou.com (the No. 1 group-buying site in China), VANCL (a clothing retailer) and Tmall.com, which is part of Taobao (of whichYahoo! (YHOO - commentary - Trade Now) is a 40% owner).

Most of these companies expect to hold initial public offerings in the next six to 18 months. They have obviously been trying to drive traffic to their sites in the last few months in order to dress themselves up for investors -- and they don't mind spending money to do it.

Earlier this week I met with a company called Letao.com, which is also private but experiencing extraordinary growth selling shoes online. Some refer to it as the Zappos of China even though there are subtle differences that, in some ways, make the company a more attractive business. Letao is probably further away from an IPO than some of those other companies I've mentioned. Even though they have money to spend on advertising, it is trying to do this wisely, through search marketing and group buying primarily. Nevertheless, Letao is aware of the feeding frenzy for buying ads of all kinds in China now, and it sees how this is leading to higher ad prices each time they renew.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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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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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.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Baidu Keeps Rolling

By Eric Jackson
RealMoney Contributor
4/28/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

Last night's report from Baidu (BIDU - commentary - Trade Now) didn't disappoint the bulls. The company beat earnings expectations by $0.03 a share and beat top-line revenue estimates.

More important, Baidu raised its guidance for the second quarter above $500 million, on the high end of the range. This was beyond any prior high-end estimates for the second quarter. Quite simply, Baidu is continuing to perform with continued staggering growth.

The company's trailing 12 months of revenue prior to last night was $1 billion. Last night's quarter annualized is up to over $1.3 billion in revenue. Next quarter's guidance puts it up to $2 billion annualized. Its last quarter-on-quarter earnings growth compared with the prior year is 171%. That compares to the "mature" growth of Apple (AAPL - commentary - Trade Now) at 95% and Google (GOOG - commentary -Trade Now) of 20%.

But Baidu is still relatively small compared with Google. We're talking $1 billion or so in revenue a year vs. $30 billion. Can Baidu continue to justify a high multiple in the coming years? It now has almost one-third the market capitalization of Google.

To hear Robin Li, the founder and CEO of Baidu, talking about it on last night's call, Baidu still has a lot of growth areas ahead of it, including:

• Further penetration within China, where only 30% of its population is connected to the Internet today.
• Further increase in wealth and ad rates within China as the standard of living increases.
• Growth in mobile use. Last night, Baidu management confirmed that 80% of the Android handsets shipping in China have Baidu as the default search engine. Ironically, Google's open platform has allowed handset manufacturers to insist that Baidu be the default search engine, as it is preferred in China.
• Social. Robin Li made the point last night that Baidu has been competing against social platforms in China for many years, via Tencent's QQ service. Therefore, it has responded by trying to integrate social search into its search for a while. No one confuses Baidu with a social platform yet, although it has had its own version of Yahoo! (YHOO - commentary - Trade Now) Answers for years, and it has become very popular. Baidu can do a lot more to monetize search. And although the company didn't mention it all last night, there is the possibility of partnering with Facebook to bring the universal social service to China in the future.
• Local. Today, this remains very under-monetized, according to Li's comments last night. In an increasingly mobile connected world, this search ability will become more important. A couple of days ago, the CEO of Sina (SINA - commentary - Trade Now), Charles Chao, said that over half of the users of his popular Weibo service connect via a mobile device.
• Video. Baidu has 150 users for its Qiyi video service in less than a year. Youku (YOKU) has 230 million users. Baidu is rumored to be looking to spin-off Qiyi in 2012.
  
• Robin Li discussed last night how apps are becoming more popular. Today, there are tens of thousands of apps, and the Chinese are showing a lot of interest in downloading them and experimenting with them. In a few years, however, he said, there will be hundreds of thousands and then millions of apps. At some point, users get overwhelmed with the choices. When that happens, they need to fall back to their familiar choices. Search, and Baidu, will be a key necessity for them. (Other big Chinese Internet companies such as Tencent, Taobao and Sina should also benefit from this trend.)

This morning, there are some increased price targets out from analysts. The stock is up.

Baidu is a solid Chinese company. It might not grow 143% in the next 12 months as it has in the last 12 months, but it will do very well.

At the time of publication, Jackson had long positions in BIDU, SINA, YHOO and AAPL.and short YOKU

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Wall Street Journal China Opinion:中国科技股正面临泡沫危机吗？

My latest opinion piece from the WSJ China on why Chinese Internet stocks are still not in a bubble.

Read the whole post here.

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If China Stocks Are Being Revalued, Why Not Yahoo!?

By Eric Jackson04/20/11 - 08:00 AM EDT

NEW YORK (TheStreet) -- China Internet stocks are on fire. The unstoppable SINA(SINA_) is now up 106% year-to-date. SOHU(SOHU_) is up 56%. Baidu(BIDU_) is up 53%. Even new IPO Youku (YOKU_) is up 94% year-to-date.

We are now starting to see new Chinese companies rushing to list their stocks on the U.S. exchanges.Dangdang(DANG_) has managed to hold a price at a big premium to its December IPO. Qihoo 360(QIHU_) is another high-flying IPO from last month. RenRen(RENN), the "Facebook of China," is planning to list next month.

The more these relatively smaller stocks go up, the more it seems that the bigger Chinese portal names keep going up. Look at Sina's performance in the last two weeks alone for evidence of that.

China observer and investor Bill Bishop said on Tuesday that he thinks there is a revaluation going on in the Chinese Internet sector:

Most U.S.-Listed Chinese Internet stocks are soaring, with some up 10%+ Monday, and some up 30% or more in a matter of weeks. Many of these firms, like Baidu and Sina, have great businesses and massive growth prospects, but the surge seems to be about more than just fundamentals.

Are investors in relative valuation mode, believing that because immature firms like Youku (6.7B market cap), Qihoo (3.7B) and RenRen (planned IPO valuation is $4B+) are so richly valued, then Sina, Baidu, Sohu, Shanda et al are dramatically undervalued on a relative basis?

There is logic to that argument, and it can sustain high valuations for a while, especially given the great wall of money that is both being reallocated to China by Western funds and is sitting in Chinese hands looking for speculative opportunities.

I agree with his logic. I think this revaluation is going on.

And I agree with him that this is not a bubble. It could grow into one -- but we have a long way to go. In "dot com" era terms, I would characterize the current Chinese tech sector as being in the equivalent of the fall of 1995. Netscape went public that year in August. As its price held up for the first few weeks after, it made people reconceptualize the value of tech.Yahoo!(YHOO_) went public in April 1996. And, after that, the race was on for tech billions.

But it would not be for another 3.5 years after Yahoo!'s IPO that the "dot com" bubble burst.

I think we still have another four years of growth ahead of us in the Chinese tech world. Buckle up: it's going to be a fun ride.

But, here's a question for you: If there is a revaluation going on in the Chinese Internet world, it has so far eluded the biggest Chinese Web company in the world (at least, as I see the Chinese Web world playing out over the next five years).

Tencent and Baidu may be the big dogs today with $50 billion market capitalization each. And they will likely triple in size over the next five years, as the wealth of Chinese people increases and Internet penetration doubles or triples from its current levels.

.......

[** 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 Next Great Chinese Stock - And it's Not an IPO

Chinese gaming company Perfect World has had a disappointing last 12 months, but some new games are about to change its luck. Expect a $47 stock by the end of the year.

Read the whole post over at Forbes.

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Video: Facebook's New Chapter: China Watch

NEW YORK (TheStreet) -- Contributor Eric Jackson details Facebook's new deal with Baidu to create a social network in China, challenges that may lie ahead and how this affects his outlook on playing Baidu.

Fri 04/15/11 06:00 AM EST -- Eric Jackson & Brittany Umar

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

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