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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Thanks For Reading in October

I started writing in TheStreet on finance and technology back in 2008.  It's fun and helps me formulate my thinking on different topics.

In October, I had my biggest month yet in terms of readers of my Forbes posts since I started contributing there in March:

- 383k unique visitors
- 725k page views

Thanks for reading.

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Potential $1 Billion Ponzi Scam Exposed in China

The story of the brazen loanshark in Inner Mongolia who fleeced up to $1 billion from 5 local Chinese banks.

Read the full post on Forbes

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How to Invest in China

From last week's RealMoney....

Stock quotes in this article: 

BIDU

, 

GS

, 

GS

, 

YHOO

, 

SINA

, 

YOKU

, 

PWRD

With CEO Allen Chan's departure from Sino-Forest earlier this week and the halt in trading of its stock, many investors are scratching their heads and wondering how or if they should invest in China.

I've even heard some commentators on TV say that since the Shanghai index has been flat or down in the last few years, this is proof that China is not a great place to invest. Yes, but most people invest in particular stocks. For example, i\If you bought into Baidu(BIDU) at its March 2009 levels and held on to it until today, you would be up 845%. That's not bad.

Of course, if you've invested in Sino-Forest or some of the other Chinese frauds, you have taken massive hits.

So how should you proceed? Here's my advice.

1. Don't ever put your money in a Chinese Reverse-Takeover (RTO) again. There might be some good ones out there, but I can't name any. It's not worth it. There is way too much risk for the potential return.
2. Don't think a Big Four auditor is a guarantee that everything at a Chinese company is kosher. Longtop Financial had one. So did China Agritech. Both are now trading on the pink sheets.
3. Don't think a big name investment bank is a guarantee that a company is legit.Goldman Sachs (GS) took Longtop public a couple of years ago.
4. All things being equal, it's safer to invest in the bigger-cap Internet companies in China -- and they are less likely to manipulate numbers compared to a manufacturing companies over there. The big dogs of the Chinese Internet are Tencent, Baidu, andAlibaba Group. Alibaba is still private but Yahoo! (YHOO) owns 40% of it, which is why I love Yahoo! Sina (SINA) is trying to break into this small group of big dogs and probably will in the next couple of years as its Weibo users grow.
5. Beneath the "big dogs," there is much more risk, so pick category winners. Sina is the category winner in Weibo (Twitter). Youku (YOKU) is the category winner in online video. Taobao (part of Alibaba Group) is the category winner in e-commerce.
6. Look for value plays. Online gaming in China is severely undervalued at the moment -- especially compared to the expected valuation that Zynga is going to get when it launches its IPO. My two favorites in that space are Perfect World (PWRD) and Giant Interactive (GA). I also think Mecox Lane (MCOX) is massively undervalued compared to Dangdang (DANG).
7. There are no guarantees in China. The Chinese government could rewrite the rule book tomorrow. The whole Alipay incident with Yahoo! shows the risks of Chinese investing. Just as it's possible in the U.S., There could be a big accounting restatement in any of the "big dogs" at any time. However, I think there is still another 18-36 months of growth ahead for China before a major correction, so opportunity does beckon for the right companies.

At the time of publication, Jackson was long YHOO, SINA, PWRD, YOKU and MCOX, although positions can change at any time.

TAGS: 

CHINA

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RISK

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INTERNET

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Groupon’s Foray Into China Sounds Like a Disaster

Things reportedly aren't going well for Groupon in China.

Read the full post on Forbes.

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China's Train Crash in a Coal Mine

By Eric Jackson08/03/11 - 08:51 AM EDT

NEW YORK (TheStreet) -- With all the noise surrounding the debt-ceiling debate over the last few weeks, you might not have heard about a terrible train crash in Wenzhou, China that took place nearly two weeks ago.

The collision of two high-speed trains killed at least 40 people and injured almost 200. Authorities said a lightning strike knocked out power to one train, causing it to stall, and that a monitoring device then failed to alert the second train.

From a raw numbers perspective, the Wenzhou accident isn't so different from the August 2007 collapse of a bridge in Minneapolis that caused 100 cars to plunge into the Mississippi River. Thirteen people died, and more than 100 were injured.

Firefighters and civilians search for passengers from the wreckage of the Wenzhou train crash on Saturday, July 23.

We don't talk much about that crash today. There was an 18-month investigation by the National Transportation Safety Board. The board's conclusions were that over time the bridge started carrying a higher load-bearing weight than it was designed for.

Unfortunately, we haven't heard whether other bridges built decades ago are also at risk because their current loads are exceeding their designed capacity.

There was a lot of media coverage of the Minneapolis disaster, but I can't recall much public outrage. Eventually, Anderson Cooper packed up and went home and the NFL season started.

Yet, in China, the story -- and the public anger over it -- seems to grow by the day.

I first heard about the crash via a friend on Twitter, who was monitoring updates on Sina's(SINA) Weibo service (China's equivalent of Twitter).

Although Weibo has hundreds of censors on staff, the service saw an outpouring of emotions and information about the crash, which I believe is the first major Chinese tragedy since Weibo became used on a widespread basis.

I wonder whether people used the service as a release valve -- one that had never been available to them before.

[Read the full post in TheStreet.com here]

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Mecox Lane and E-Commerce in China

E-Commerce in China is moving at a breakneck pace. I discussed the landscape with Mecox Lane (MCOX) CFO Paul Zhang recently.

Read the full Forbes post here.

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Future of Chinese E-Commerce

By Eric Jackson 07/20/11 - 06:00 AM EDT

NEW YORK (TheStreet) -- Last month, I met about a dozen Chinese tech companies to get a better sense of the businesses and industry trends in China that affect e-commerce companies.

All but one of the companies I met with are public. The only private company was called Letao, and it sells shoes in China. Because of that, it's often called by Americans "the Zappos of China." However, there are important differences.

Letao does all its sales entirely on consignment. Also, because it makes more money on private label sales than reselling premium brands, Letao has been putting a big emphasis on its own white label shoes recently. It started as an ecommerce toy company but switched to shoes last year when it believed the market opportunity there was bigger.

Letao also has some big American backers behind it, including Tiger Global. Although there are no plans for an immediate IPO, that is certainly in the cards for Letao at some point.

Here's an edited version of my conversation with Eric Chai, the assistant to the CEO at Letao.

Eric: Tell us about your CEO.

Chai: Letao's CEO, Mr. Bi, used to be the assistant to Robin Li in Baidu(BIDU_).

Eric: And how many employees do you have?

Chai: We had 100 last year, but this year we have 500. The growth occurred after we made the transition from selling toys to shoes.

Eric: What do you think about all the group buying sites that are prevalent in China today?

Chai: I believe only two or three group buying sites can survive; we only collaborate with them so we can reach more people. Since the third quarter of 2009, we started cooperation with Groupon, Lashou and Nuomi. But since we have the customers now, we don't need to spend as much money to use those group buying sites anymore.

Eric: So how do you market yourself?

Chai: We have a very unique business model. We have some private brand names such as Angry Birds from Rovio, and these cheap products can attract many customers. We collaborated with Focus Media(FMCN_) before, but the commercial fees are high, so this is one of the reasons why we created the coupon strategy.

[Read the full post here at TheStreet.com]

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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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A Q&A with 51Jobs

By Eric Jackson
RealMoney Contributor
7/7/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

51job (JOBS - commentary - Trade Now) is often referred to in the U.S. as the "Monster Worldwide(MWW - commentary - Trade Now) of China."

Since the financial crisis of 2008, 51Job's U.S.-listed shares have been on a tear, tripling in the last two years alone. This is due in part to the continued growth of the Chinese economy and the great need to fill white collar jobs there. During a pullback in the U.S. markets in May and June, the stock fell to $45 from $63, but it has bounced back sharply in the last couple of weeks and is now trading around $60 a share.

I recently met with Linda Chien, the director of investor relations, in 51job's Shanghai office and I asked her about the staffing company's business, competition, customers and future, among other things.

JACKSON: Can you give an overview of 51job and what's been happening with the stock of late?

Chien: The volatility has been huge. I don't think the movement is anything related to the fundamentals. We have been listed since 2004, so we have seen ups and downs and so we are not over-worried about daily movements. For our business, we focus on providing job search for companies, but we are trying to diversify into H.R. training. Businesses need to think about retaining human assets, and so we will diversify into that business.

In the U.S., we are being compared to Monster all the time, but only part of our businesses is like that. Our target group is on the professionals rather than workers or laborers. Currently, 50% of our business comes from online, 25% is from print, and 25% is from training/campus recruitment/others. The online business overtook print business since the middle of 2009, and it will continue to grow, whereas print will go down.

How did you start and how do you compare yourself with your competitors?

We use an integrated approach. Our business started with print at first. After we had the lead, it is easier for us to attract more customers. Most of our competitors are playing catch-up with us and we have more diversified businesses.

...

[*** 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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Why Corporate Governance is So Important to China

Crises tend to come from places where we are not looking. Corporate governance in China is a new area where the government needs to focus more attention.

Read the full post here in Forbes.

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How to Ensure Strong Boards and Proper Accounting Standards in China

Corporate governance and a lack of confidence in companies' financial statements threatens China's future growth. Their government must move quickly to clean things up.

Read the full post here at Forbes.

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What the US Might Do About China’s “Go Slow” Approach to Revaluing the Renminbi

China would rather go slow on the yuan revaluation. The US seems to think it has no power to say otherwise on the matter.

Read the full post on Forbes.

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What Does It Mean That Apple Had Its Worst First Half Since 2008?

Apple's stock price has treaded water compared to the market in the last 6 months. History says that is a sign you should buy the stock.

Read my full post here at Forbes.

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What Are The 7 Biggest Risks Facing China?

I'm not so worried about the Chinese property market or "ghost towns." Here are the 7 biggest risks that worry me about China.

Read the full post in 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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A Chinese Revolt on a Plane

There are definitely cultural differences between Americans and Chinese. Here's a personal story to illustrate how different they are -- and why it shows how the government needs to tend to the people's needs.

Read the full post on Forbes.

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5 Observations About China

By Eric Jackson
RealMoney Contributor
6/13/2011 10:45 AM EDT
Click here for more stories by Eric Jackson

It's been 10 days since I left for China, and since I've been over here, Chinese tech stocks have taken a nasty fall.

Several folks from back in the U.S. who have been following my trip updates on Twitter have asked me what differences I have noticed since my last trip to China in November 2010 and whether China's growth story is still intact.

Here are five things I've noticed about China right now.

1. China's growth story is still going strong, but it's definitely slowed a little.

I got a lot of questions on this, since back in the States, we hear the news headlines about PMI and GDP growth in China cooling things down. People want to know if this is accurate or not. I went around to all the big cities on this trip (Beijing, Shanghai, Hangzhou, Guangzhou and Shenzhen). I met with about a dozen companies. I can only give my anecdotal impressions, but I would say that growth is still phenomenal relative to the U.S.

The number of cranes erecting buildings everywhere is still hard to fathom. How quickly new buildings have gone up since my last trip is also amazing to see.

That said, though, relative to six months ago, the pace of growth seems to have slowed a touch. So, the actions that the government has taken have definitely had an effect.

2. Chinese property developers have been pinched by the government's tightening measures and prices are flat, so the actions are working.

People always want to know about whether there's a housing bubble in China and if it's about to burst. I don't think that's going to happen in the near term. The steps that the government took to cool down the property market have worked. You hear of some property developers now being caught in a situation where they got themselves involved in quite a number of large projects and now these measures are pinching them. Prices are stable at the moment in many cities -- not down but not up.

...

[*** 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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Wall Street Journal China Opinion: 如何才能让投资者相信中国公司

Why bad corporate governance and poor financial standards are causing increasing corruption in China.

Read the full post in WSJ China here.

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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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