The Rise And Fall Of Chinese Facebook Clone Kaixin001 (UPDATED)

• Posted by bbishop
• on November 27th, 2011

An ad agency recently sent out a note showing the dramatic rise and then crash of Kaixin001 (开心网), once one of China’s leading social networking sites. Sina Weibo and Tencent Weibo are primarily responsible for Kaixin001′s fall.

Kaixin001, which failed in its attempts to IPO in the US, recently raised money from Tencent, probably saving the company from going the way of Myspace. According to various reports Tencent invested less than $50m for about a third of the company. Sina ($SINA) owned around 20% of the firm before the Tencent round. I guess Sina management was either not interested in putting more money into Kaixin or lacked the ability to block Tencent from effectively turning Kaixin001 into a Tencent affiliate.

Perhaps Tencent took the Kaixin001 stake primarily to use it as another distribution channel for its games, or as a way to infuriate Sina and/or to keep the company away from a competitor like Baidu ($BIDU), which lacks a credible social play.

UDPATE: This post originally had the slides I was requested to take them down. Thanks to GroupM China for pointing out the iResearch data.

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