Corporate ChinaWeibo: Vancl's new clothes, Dianping's new partner

Talk involving major new investments in online clothier Vancl and restaurant ratings site Dianping was buzzing through the blogosphere this past week, reflecting the new partnerships that are quickly forming amid intense competition plaguing the overheated Internet space.

Vancl has been racing to find profits before it runs out of cash, and recently received a lifeline in the form of $100 million (HK$775 million) in new funding from a group led by Lei Jun, the marketing-savvy co-founder of trendy smartphone maker Xiaomi. Lei Jun and Vancl CEO Chen Nian engaged in a round of online banter this week on their microblogs that could hint at some of the new directions and tactics that Vancl will take as it searches for the elusive business model that can move it into the black.

The last two years have been tough for many of China’s younger Internet firms, as they struggled with stiff competition and were abandoned by investors who funded operations during their start-up phase. As a result, many firms have faced a cash crunch, forcing some to sell themselves to bigger rivals and others to close up shop.

Vancl was once an venture capital darling, positioning itself as one of China’s leading online clothing sellers and planning a New York IPO as recently as two years ago. But lack of investor interest led it to scrap the offering, and its situation was becoming critical when Lei Jun stepped in earlier this month to provide the $100 million in new funding.

This week in the blogosphere, Lei Jun and Vancl’s Chen Nian held a brief online dialogue on high-end clothing, in an exchange reminiscent of Lei’s own posts that often seem highly scripted and designed to create buzz. The subject of the banter was relatively mundane, centred on Lei Jun’s preference for high-quality shirts with a count of at least 300 threads per inch.