Renren, the biggest social networking website in China, raised US$743.4 million in its initial public offering with shares on the New York Stock Exchange increasing 29 percent on the first day of trading. However, many think Renren is a risky bet because it must walk a fine and shifting line in order to keep the government’s ever watchful censors happy.
Renren, which offers social networking, online commerce, and gaming, must run their operation while remaining in compliance with government rules regarding freedom of information. Dixon Doll explained that any company that embarks on a social networking venture in China does so with the knowledge that they must always abide by the rules. Doll, a co-founder and general partner of venture capital firm DCM, said “you’re going to have to pay attention to the will of the Chinese government because they’re going to keep a very close look at the kind of activities that are going on.”
DCM, an investor of Renren, calls itself a “Venture Capital firm that partners with exceptional entrepreneurs to bring disruptive products and services to global markets.”
China’s rules about sharing information on the internet have become stricter in the wake of turbulence in the Middle East and North Africa which saw leaders pushed from power or threatened by protestors emboldened by the ease of connecting and organizing on line via Facebook and other social media.
Donald Straszheim warns that while the Chinese government seems to regard Renren favorably now, they would probably cut the cord if the operation becomes unfriendly. Straszheim is a senior managing director of China Research for the International Strategy and Investment Group, a full service brokerage firm established in 1991 that provides research, trading and sales.
The Chinese government often blocks content or shuts down websites it believes present security risks and President Hu Jintao is now calling for the government to find even more ways to manage public opinion online. Google Inc. shut its website down in mainland China and Facebook, Twitter, YouTube, and Flickr have previously been blocked.