SHANGHAI, April 12 (Reuters) - The head of China’s largest search engine Baidu Inc cautioned Chinese Internet companies on Tuesday against listing overseas in haste, describing the market as “hot”.
In a speech at the company’s Baidu Union Summit, Robin Li, the charismatic founder of Baidu, warned Chinese entrepreneurs not to be taken in by the interest in China’s Internet market and to instead focus on developing good products.
"I believe there will be a listing frenzy this year; a frenzy of Chinese Internet companies wanting to list overseas," Li said. (here)
“You must remember that listing is not a means to an end, it is only a means of business development,” Li said to an audience comprised of Baidu affiliates, partners and entrepreneurs.
Chinese Internet stocks have become darlings of Wall Street, with online video company Youku.com Inc , e-commerce website operator E Commerce China Dangdang Inc and online security firm Qihoo 360 Technology Co Ltd posting huge first-day IPO gains.
Li, whose company posted a first-day jump of more than 300 percent in 2005, said Chinese Internet companies looking to list must focus on building up their products and their operations.
“Don’t be fooled by the apparent prosperity of the industry. What is important is how much you can achieve ... and whether your products are attractive. So don’t be dazzled by sudden changes in the market, which is on fire” Li said, adding that history had shown that many predictions on hot Internet sectors in the United States and China had turned out to be duds.
However, Li advised companies close to listing overseas to do so soon to benefit from prevailing positive sentiment for Chinese Internet companies.
China, the world’s largest Internet market by users, is home to about a dozen dynamic, large but unlisted entities such as Alibaba Group’s Taobao and 360buy.com.
One of China’s larger social-networking-sites, Renren, also has plans to list this year. Yet, analysts have said sky-high valuations and unsteady business models could lead to a Chinese Internet bubble.
“In light of what will be a very hot market this year, my advice is to be still in the midst of the noise,” Li said. (Reporting by Melanie Lee; Editing by Chris Lewis)