With an estimated 100 million Internet users in the country and a roughly 12
percent penetration in online shopping compared with nearly 1 out of three
Americans shopping in the U.S., it's a largely untapped market.
In Friday trading, that optimism about the opportunities in China helped to
bring back buyers into the sector.
After a week of declines, Chinese Net stocks recaptured some losses.
Sina rose nearly 2 percent to $31.50. The stock traded at $34 at the start of
this week. Shanda Interactive, which purchased a 19.5 percent stake in Sina in
mid-February, saw shares rise 1 percent to $31.30. Shares started the week above
$35. NetEase added more than a percent to $45.74, about where the stock started
Tomo Online added half a percent to $12.35; Ctrip, which started the week at
the sub-$40 range, added half a percent to $41.21 in Friday trading. But 51jobs
fell 1 percent to below $20.
It is estimated that consumer online auction gross merchandise value in 2004
was $400 million to $450 million, out of a total gross domestic product of $1.5
trillion, according to Seraphin Capital, an investment bank in Hong Kong. The
three companies pursuing this opportunity are eBay's Eachnet, a wholly owned
subsidiary of eBay and Taobao, a joint venture between Alibaba and Softbank and
1pai, a joint venture between Yahoo and Sina.
The interest from U.S. Internet companies to tap the Chinese market is one
reason many of the Chinese Net stocks look attractive.
There has been rampant speculation that Yahoo is interested in buying Sina,
according to observers. But with Shanda owning nearly 20 percent, it is clear
that Yahoo would also have to work with Shanda to complete such a deal. Yahoo
would not comment on its China or online gaming initiatives.
EBay is also very interested in China. The company said earlier this year
that it would dedicate $100 million to invest in China this year.
Meanwhile, Google is one of the top two search engines in China. The other is