Splashing out Rmb600 million ($86 million) on new players this year, Chinese Super League football club China Fortune Land was the biggest spender in the winter transfer window (which closed last month).
The club’s owner, a Hebei-based property developer of the same name, seems set for another spending spree following talks to invest in property projects across Southeast Asia. Further afield, it is reportedly one of the investors in the consortium behind the buyout bid for storied Italian football club AC Milan. However, none of the above has generated as much attention on social media as China Fortune’s investment in Tianya, an internet discussion platform.
The deal was relatively small: according to an announcement published on the New Third Board – the over-the-counter bourse on which Tianya is listed – China Fortune spent about Rmb22 million in February for a 1% stake in the internet firm, valuing Tianya at Rmb2.2 billion.
The disclosure got the attention of an older generation of internet users. Tianya was founded in 1999, providing blogs, classifieds, photo hosting, news and sports updates. But it was best known as the most popular online forum in China. Over the years its message boards have produced a number of internet celebrities and it served as an ideal platform for whistleblowers (see WiC105). Many “super IPs” (money-spinning trademark rights that can be cross-sold as novels and movies, see WiC327) also trace their origins to Tianya. “Tianya is home to the collective memory of China’s oldest netizens,” was one tribute a veteran blogger paid on the portal Guandian.
But many of the internet firms that started out at the same time as Tianya have grown into much larger internet giants. Tianya seems to have missed a number of opportunities to monetise its early lead. In 2007 it sold a 6.67% stake to Google but the investment proved a hindrance when the Californian firm largely disappeared from the Chinese market in 2010. Tianya tried to buyback Google’s stake and mount an IPO, but the process proved drawn out. Around the same time competitors like Sina Weibo, Baidu’s Tieba and other microblog sites were increasing their market share, and diverting content writers and viewers from Tianya’s once thriving platform.
The company was also slow to respond to changes in consumer behaviour – its longer articles and layouts weren’t ideal for content consumption on mobile phones, for instance. According to ThePaper.cn, it has reported losses for the last three years, bleeding Rmb117 million between 2013 and the end of the first half of 2016.
In 2015 Tianya quietly joined the New Third Board and began looking for new investors. Diehard fans – who revere the site as a haven of free expression – say they are concerned about China Fortune’s stake, citing its ties with a number of local governments. But why is China Fortune interested in investing? ThePaper.cn reports that Tianya will be trying to develop a “pan-cultural entertainment platform, focusing on finding original content and operating an IP copyright business”. Certainly, content costs are rising in China as platform owners pay more for material that keeps customers interested. More users are prepared to pay for content themselves too. But Tianya’s refocusing of the business might be too late in the day, with much larger, deep-pocketed rivals like Tencent already making major moves into content ownership and distribution (see WiC357).
Tianya can still make an impact, mind you as a posting this month made plain. A whistleblower revealed on the site that the subway in Xi’an had been constructed with poor quality electrical wires, compromising safety. The scandal – which media then reported widely on this week – has seen the cable supplier make a televised apology and has led to eight company officials getting taken into custody.
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