Record investment in Chinese mobile Internet

Investment in China's mobile-Internet industry reached a record $378 million in the first six months of the year, a year-on-year increase of 18 percent, according to a leading consultancy in the venture capital and private equity industry.

There were 30 investments in the first half of this year, compared with 33 registered in the same period last year, the Beijing-based Zero2IPO Group said in a report on Tuesday at the China Mobile-Internet Industry Investment Forum 2012, being held in the Chinese capital.

“Although the total investment volume of VC and PE in the first half of the year has declined about 60 percent year-on-year, yet the investment in the mobile- Internet industry has risen and the momentum is expected to continue,” said Gavin Ni, founder and chief executive officer of Zero2IPO Group.

There will be at least five companies in mobile-Internet industry to be listed in the next three to five years in China, he added, and the market revenue of mobile Internet will rise to about 130 billion yuan ($20.5 billion) from last year's 102 billion yuan.

According to the report, the major incentive for the increased investment was the fast development of the mobile-Internet market.

There has been an increasing number of mobile-Internet users in recent years, and it is expected that by the end of this year the figure will rise to 520 million from last year's 429 million. By 2013, the number of mobile-Internet users will outweigh that of Internet, the report said.

Joe Chen, chief executive officer of Chinese social networking company Renren Inc, said the shift to mobility is the major trend in the domestic technology industry.

“The mobile-Internet market has great potential, representing the biggest trend in the information technology industry in the next 10 years,” Chen said.

Mobile e-commerce, wireless value-added services and mobile gaming services have attracted the most investment this year.

Mobile e-commerce will become one of the major investment areas in the industry, said the report. VC and PE companies made five investments in mobile e-commerce industry in the first half of this year.

The investment in mobile Internet was $665 million in 2011, and market revenue was 102 billion yuan, a year-on-year increase of 36.84 percent, the report said.

Zhou Kui, partner of Sequoia Capital China, said despite global economic uncertainty, he is optimistic about investment in the mobile-Internet industry.

“We attach great importance to the development of the mobile- Internet industry, since it is of great potential,” Zhou said.

Xu Shengyuan, managing director of Intel Capital China, the investment arm of US-based chip giant Intel Corp, said every sector related to mobile Internet could attract Intel Capital's attention.

“The mobile-Internet industry provides much convenience to consumers and constitutes a huge vertical market,” Xu said. “There will definitely be some new large-scale companies coming out of this industry.”

However, despite the confidence, investors are still wary. It is not clear what the profit modes of most mobile-Internet products are, and “there should be more caution in making investment decisions”, Ni said.

There are also credit concerns about Chinese companies listed in the United States. Since the second half of 2011, valuations of new Internet companies have decreased and some investors have been reluctant to make new investments, Ni said.

And because of concerns over the global economy, fewer companies have filed offerings recently. “Investors should be patient and wait for the returns, since the mobile-Internet business is full of potential in China,” Ni said.

huhaiyan@chinadaily.com.cn