Jiumei, Dianping Eye Investors, Mobile 酒美网和大众点评网为上市蓄势
On this day before Christmas, I’ll take a look at 2 of China’s more interesting privately held Internet plays, online wine seller Jiumei and restaurant ratings site Dianping, which are making innovative new moves that could make them attractive investments when they make eventual public offerings. In Jiumei’s case, the company is forming an interesting tie-up with European banking giant Rothschild to create a product for Chinese who want to invest in wine. Meantime at Dianping, founder and CEO Zhang Tao has given a rare interview in which he reveals his company is making big investments in the mobile Internet in a bid to translate its current desktop PC dominance to the fast-growing mobile space.
Let’s start off with Jiumei, which also goes by the name of WineNice and made recent headlines when it received a new round of venture funding worth about $16 million. (previous post) The company is one of a growing number of firms entering the space for European-style wines in China, tapping demand from a fast expanding middle class looking for something with a loftier image than traditional liquors like baijiu. The sudden rush into the business led me to previously comment that the industry could soon become oversaturated, leading to a typical boom-bust cycle often seen in China for hot new industries. (previous post)
But that said, Jiumei looks like a potentially good company to watch, as it’s one of the industry’s older players and now is making an interesting move to differentiate itself from rivals through this new tie-up with Rothschild. (Chinese article) There’s not much detail about the actual tie-up in a report in the Chinese media, but presumably Rothschild would help Jiumei assemble investment funds, which would then go and buy red and white wines with potential to increase in value.
We’ve seen similar types of funds for other product areas like paintings and other fine art, and this kind of investment product does seem like one that could find an audience among Chinese buyers. In the report Jiumei’s CEO Lu Yide said his company is on track to post 300 million yuan in revenue this year, or nearly $50 million, and that it recently became profitable. But any westerners hoping to buy into the company may be disappointed to learn that Jiumei is eying a listing on China’s Nasdaq-style ChiNext board in 2014.
From Jiumei, let’s move on to Dianping, which has just celebrated its 10th anniversary and whose CEO Zhang Tao granted a rare interview on the sidelines of an award ceremony in Beijing where he was named one of the year’s leading entrepreneurs. (Chinese article) In the interview Zhang repeatedly avoids the question of a potential IPO for his company, which has been likened to the Chinese equivalent of US restaurant ratings site Yelp.
But he does disclose that Dianping is making big investments in the mobile Internet and is working hard to make its group buying business profitable, as it encounters stiff competition that has seen many rivals either close or lay off employees over the last year. Zhang also gives a few pieces of data, including that Dianping now has more than 5.4 million active users writing an average of 2.2 million restaurant reviews each month. It also has 1.8 million commercial clients, mostly restaurants, and covers more than 2,300 Chinese cities.
Based on Zhang’s remarks, it looks like Dianping may be profitable overall right now, but is probably more focused on building its business than boosting its bottom line. He doesn’t give any real indication of when an IPO might occur; but if the market improves next year, which seems to be happening, I could see the company make an offering in the next 12 months, capitalizing on its market-leading position to gain some needed cash for its ongoing expansion.
Bottom line: Jiumei’s new tie-up with Rotschild and Dianping’s focus on the mobile Internet look like smart strategic moves in the run-up to possible IPOs by both companies in the next 1-2 years.
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