Facebook's planned initial public offering (IPO) is likely to give impetus to China'ssocial networking service (SNS) and boost its development, industry insiders say.
Facebook filed with the US Securities and Exchange Commission on Wednesday to raise $5billion in a preliminary IPO, one of the largest technology offering so far.
"Facebook's IPO is a milestone event in the global Internet arena," said Cheng Binghao, chiefexecutive officer of China's top SNS site Kaixin.
"In the next few years, SNS sites will become the mainstream of the Internet, and the IPO ofFacebook will make more people realize the change," Cheng told reporters in an interview.
Fang Xingdong, founder of blogchina.com and web research consultancy chinalabs.com, saidmany venture capitalists would benefit enormously from the IPO.
"The move will also fortify market confidence over investment in the Internet," Fang said.
Thanks to the news of Facebook's IPO, China's SNS sites have witnessed a dramatic rise instock market. Shares of New York-listed Chinese social networking company Renren Inc., whichis dubbed China's "Facebook," rose 33 percent from last Thursday to Tuesday this week, whileshares of NASDAQ-listed Sina Corp., owner of China's popular Twitter-like Sina Weibomicroblog service, rose 18.8 percent over the same period.
SNS sites have mushroomed in China in recent years and some of them have successfullylisted on overseas stock markets.
It is estimated that 269 million Internet users in China were registered at SNS sites by the endof 2011, which had a market value of about 2.1 billion yuan ($328 million), according to China'smarket research firm Analysys International.
However, China's SNS sites still face numerous problems that will impede its furtherdevelopment, industry watchers say.
Compared with Facebook, China's major SNS sites like Kaixin and Renren are still small-scalein user numbers and lack growth momentum, experts say.
Kaixin CEO Cheng said Facebook's going public will in the short term have a great impact onthe performance of China's SNS.
"However, the long-term influence is limited due to the difference between Facebook andChina's SNS sites in income structure, business model and positioning," Cheng said.
Huang Meng, an analyst with Analysys International, also pointed out that the status quo ofChinese concept stocks in the US stock market being undervalued won't change in the longrun.
Huang said China's Internet companies usually lack a solid profit pattern and they are tooeager to expand their business scope.
"By doing so, they have lost their core competitiveness in comparison with their foreign peers,"Huang said.
However, Cheng is still optimistic about China's SNS sites in regard to their developmentpotentials to replace traditional communication, media and business platforms in the next fiveyears.
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