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Posted on Wednesday, Dec 21st 2011

Last year, 22 Chinese players listed in the U.S., raising more than $2.8 billion from the market. The current year was comparatively slower with seven Chinese IPOs listing on the New York Stock Exchange and raising a total of $1.5 billion. The weak global economy is causing some Chinese companies to stay away from listing despite having filed their S-1s. The Chinese equivalent of Craigslist,, is one such player.’s Financials was founded in 2005 by Chinese entrepreneur Yao Jinbo. Similar to Craigslist, is a listing site for classified ads spanning more than 375 cities in China, and the site plans to extend to another 20 domestic cities in the near future. Besides expanding market reach, is also aggressive in establishing its sales office footprint. The company has offices and subsidiaries in more than 20 cities.

Although most of the service is an ad-free offering, earns revenues by charging advertisers for premium placement of their ads. As of March 2010, was the second-biggest online classifieds publisher in the country with 272 million page views, marginally short of the market leader Ganji’s 285 million page views.

As of May 2011, claimed to have 40 million registered users accessing 100 million posts. The site’s user base continues to grow with more than 100,000 new users added per day. Yet has been rather quiet about their financial performance. In November 2010, they claimed to have earned revenues of RMB 100 million (~$15.65 million ) for the year. To date, has received $85 million in funding as investments from Softbank Asia Infrastructure Fund (SAIF) Partners and DCM. Additionally, U.S.-based Warburg Pincus increased their stake to 30% of’s shares by being a lead investor in the most recent round of funding of $60 million in December 2010. is said to have filed their S-1 for listing on the Nasdaq as they were originally planning to list by the second half of this year. However, it seems that the market conditions have delayed the offering, which is now expected to be out by 2012.’s Expanding Offerings faces stiff competition from another Chinese player, Between them, the two command nearly 70% of the local classifieds market in the country. Both and Ganji focus on the relatively lower income and younger age group demographics. To compete with Ganji, also launched their own group buying site. Within nine months of its launch, the service had generated “millions of renminbi” in revenue and reported gross margins of 10% as it processed “thousands” of deals daily.

Like its peers, needs funding to expand operations within China. Mobile platforms are another important area as they have realized that while the Chinese may always not have access to computers, they do have access to mobile phones. In addition, is looking to capture China’s high-growth Internet buyers, the number of which is projected to grown from 80 million in 2010 to 183 million by 2015, reflecting a penetration rate of 34% in 2015 compared with 19% in 2010. But, as I said about Lashou last week, I would stay away from this stock until they make more of their financials and corporate information available to the public. Also, the performance of Angie’s List in the public market leaves a lot to be desired in the category, and needs to learn from that.

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