State websites poised for IPOs
A number of state-owned mainland news websites may be preparing to launch initial public offerings on the Shanghai Stock Exchange after getting the green light last week to list.
Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), gave the nod at the end of the five-day annual meeting of the Central Committee of the Communist Party in Beijing.
Measures to rejuvenate the mainland's cultural system were at the top of the meeting's agenda, and the CSRC would support the listing of cultural enterprises, Shang said after the meeting.
Speculation among industry observers quickly turned to the likelihood that the People's Daily, Xinhua news agency, and China Central Television Station could be among the first to go public.
In the past two years, there have been several news reports speculating that Beijing would like to see its official websites listed on the mainland stock markets, following in the footsteps of privately-owned sites - such as Sina, Baidu, and Tencent - that have been listed on the Nasdaq or in Hong Kong in the past decade.
The challenge for the official websites is to convince investors of their stocks' value following a listing.
Xie Wen, former president of Yahoo China, said he failed to see any obvious investment attractions from listing websites such as people.com.cn, other than favourable state policies they might benefit from.
'To be creative and competitive you have to set up the mechanisms of a modern enterprise and operate independently. But the top managers of this website are appointed by the top leaders, as with any state-owned enterprises,' Xie said.
Founded in 1997, people.com.cn is expected to be the first state-owned news website that will be listed. It now offers news in simplified and traditional Chinese characters, as well as 15 languages, including English, Japanese, Russian and Korean.
People's Daily Online Company was set up in June last year to run the paper's website. People's Daily remains the controlling shareholder with an 80 per cent stake.
Global Times, a People's Daily affiliate, holds 15 per cent.
'In the past, they said companies like Sina were doing a better job because they had money,' said Xie. 'Now they are looking for money too, but I don't think they are going to be competitive.'
People's Daily plans to boost its website revenues by providing wireless value-added services and online videos. It launched a news search engine last year, hoping to compete with market giant Baidu.
However, Lu Bowang, president of Hangzhou-based China IntelliConsulting Corporation, said the website would not be sufficiently flexible to compete with Baidu or online video provider Youku, because it would remain in an old, rigid administrative system.
'The only chance for the official websites is the monopolistic advantage Beijing might grant them,' Lu said. The viewing rate of official websites lags behind their private rivals, according to California-based web traffic tracker Alexa.
People.com.cn is No 41 in terms of traffic on the mainland, and xinhuanet.com is No 34, the three-month traffic ranking shows. Commercial news portal ifeng.com is No 12 and Tencent's QQ.com is No 2.
Liu Xingliang, chairman of Hongmai Software, a Beijing-based internet data analysis firm, said the government's control of the websites is a major obstacle to achieving success in the capital markets.