Will the real China play, please step forward? Founders of Sina.com are close friends of Mr. Goldfinger. Guess what they have to say about ZSUNE? Nothing, they've never heard of it! "China Portal Sina.com Strains Toward U.S. Nasdaq Listing
By LESLIE CHANG
Staff Reporter of THE WALL STREET JOURNAL
SHANGHAI, China -- China's most popular Internet portal is headed for
a U.S. Nasdaq Stock Market listing, but official intrusion at every step of
that process highlights the continuing difficulties facing the industry.
Sina.com, which claims 16 million daily page views, said it has filed to list
four million shares on the Nasdaq, beating domestic rivals to go public.
The road show for investors begins Thursday, sources familiar with the
offering said, with the as much as $82 million raised to be used for working
capital and general corporate purposes.
Behind that simple announcement lie months of
negotiations with Chinese authorities and
multiple compromises. Sina has given ground
to officialdom on almost every front to secure
Beijing's approval for the listing, from toning
down news reports on its site to a
restructuring designed to keep key businesses out of the foreign public's
hands and even to taking down a satellite dish used to receive foreign
television broadcasts. Company executives declined to comment, citing the
quiet period ahead of the offering.
Unfiltered News Source
Sina's roots lie in the very thing that most irritates Beijing: free unfiltered
news of the world. The company was born from a merger in 1998
between Stone Rich Sight Information Technology Co., a Beijing software
company, and Sinanet.com, a U.S.-based company that ran Internet sites
targeting overseas Chinese. Sina burst onto China's Internet scene two
years ago with up-to-the-minute online coverage of the World Cup soccer
championships in France. The company built a wide network of freelance
contributors and signed deals with a host of Chinese publications to supply
content, mindful that strong news coverage has huge appeal in a country
where the state runs all traditional media outlets.
"People started to realize that you could get your news here first. It was a
tremendous breakthrough," says Bo Feng, a Shanghai venture capitalist
who helped line up early financing for Stone Rich Sight.
Last year, Sina cemented its popularity with aggressive reporting and lively
chat-room talk after the North Atlantic Treaty Organization's bombing of
China's Yugoslav embassy, which U.S. officials said was accidental. The
site reported the incident before the state media did, helping to propel it
ahead of more established players to the top of Web site popularity
surveys. "At the time of the bombing, there was no consideration of what
officials were thinking," says a former Sina employee of the decision to
report the bombing first.
Change in Reporting
But Sina's very success put the company in the sights of the authorities. As
executives began pushing for an initial public offering last year, Sina's news
offerings changed dramatically. Gone are the once-freewheeling reports on
Taiwan, many from overseas Chinese publications; Sina's mainland site
was conspicuously silent on the island's presidential elections earlier this
month other than running state media reports. Meanwhile, visitors to its
U.S. site, which is inaccessible from China, can vote on who should be
Taiwan's new premier, or the leader of the cabinet. But the mainland site
advertises job openings for "content supervisors" with "familiarity with
traditional media operating methods."
Behind the scenes, the company also has worked overtime to placate
authorities, with top executives attending weekly meetings with officials
since late last year to discuss the planned share offering, says a person
close to the company. According to Chinese regulations, any company
with Chinese assets or the bulk of its operations in China must gain
approval from as many as three government agencies before such a listing.
Sina's intensive focus on news compounds official reluctance to sign off on
the issue, people in the industry say.
Officials "don't want foreigners to own Internet content providers, because
eventually you could have a hostile takeover," leaving control of the
company in unfriendly hands, says Duncan Clark, a partner at industry
consultancy BDA (China) Ltd.
The compromise reached is a bizarre restructuring that hives off the firm's
China portal, widely regarded as its most attractive asset. Instead, the
listed vehicle will comprise portals aimed at overseas Chinese communities
in Taiwan, Hong Kong and North America. The Chinese site has been
spun off to a domestic company owned by Sina executives that has
revenue-sharing and other contractual arrangements with the
soon-to-be-listed vehicle, people familiar with the arrangements say.
While the practice of shearing off a company's most promising business
prior to listing might give investors pause, it's likely to become
commonplace for Chinese Internet companies, with Sina once again
leading the way for the industry. "If this is what it takes to get approval,
companies will do it," says a person familiar with the Sina offering.
"Investors will understand that this is the way things get done in China." |
