l******n
发帖数: 507 | 1 Buyer beware
First, if you buy shares of the Cayman Islands-based holding company,
you don't actually own the operating company in China. That company,
Beijing Qianxiang Tiancheng Technology Development, will remain 99%
owned by Renren CEO Joe Chen's wife, Jing Yang (a Chinese citizen).
There will be a contract in place that entitles you, a foreign
shareholder, to the economic benefits of the company. That may sound
like a neat way to circumvent Chinese restrictions on foreign ownership
of telecommunication assets, but good luck getting that contract
enforced in Chinese court should Ms. Yang choose not to honor it.
Further, a dual-class share structure that limits the influence of
outside shareholders means that Joe Chen and his wife hold all of the
cards here.
Second, unlike Facebook here in the U.S., Renren is not the clear leader
in the social networking space in China. There are a number of
competitors, including two backed by cash-rich Chinese Internet giant
Tencent.
Third, while Joe Chen is often called the "founder" of Renren, he's not
actually the heart and soul of the technology like Bill Gates was at
Microsoft or Mark Zuckerberg at Facebook. These zealots spearheaded
years of innovation at their respective companies and earned early
investors incredible returns in the process. Rather, Chen acquired the
platform from some Chinese college students in 2006. As Kai Lukoff
reported at Mashable, it's actually competitor kaixin101.com that has
the innovative founder.
Finally, know that the reason Facebook isn't the Facebook of China is
because the site is blocked there by Chinese government censors.
Recently, however, it's been rumored that Facebook is looking to team up
with Chinese search giant Baidu (Nasdaq: BIDU ) to launch a new social
networking service in China. Having such an influential local partner
might help Facebook make inroads in China and would undoubtedly be a
massive threat to Renren's long-term position.
The global view
The bottom line is that if you're going to pay up for Renren, you need
to believe in at least three realities. First, that Renren will be the
dominant social networking site in China in 10 to 20 years. Second, that
Renren will have figured out more and better ways to monetize its
traffic. Third, that foreign shareholders of Renren will end up
benefiting from its success.
While all three of those are open questions in my mind, the most
challenging for me is believing Renren will end up king of China's
social networking hill. It's not there now, it's not run by the most
innovative team, and more and more competition is coming. That's why
investors should pass on this IPO. |
|
