Tudou.com, one of China's leading online video Web sites, raised $57 million in fresh funds, suggesting that investors remain keen on the sector despite recently issued rules that have sparked concern about how it will be regulated in the future.
The new fundraising, which closely held Tudou announced Monday, reflects investors' continued strong interest in China amid a global economic slowdown. In the first quarter of the year, 116 Chinese firms received $940.7 million in venture-capit funds, more than double the $419 million that companies in China raised in the same three months of 2007, according to a report last week by Zer02IPO Group, Beijing-based research company.
Overall, foreign direct invesl ment in China in the first quartE surged 61% from a year earlier t $27.41 billion, according to government statistics.
Online video is a growing industry in China, which by some estimates has the world's largest population of Internet users, with more than 220 million. But the technology has also challenged the government's control over distribution of video images.
In December, Chinese regulators suprised industry executives by announcing new rules requiring all viedo-streaming Web sites to be owned or controlled by government entities. The state agencies that issued the rules later clarified that these wouldn't apply to existing, privately owned video sites whose content is in compliance with regulations.
Given uncertainty so far about how the new rules will be applied, it isn't guaranteed that China's three video-sharing leaders - Tudou, Youku.com and 56.com - in the futures can continue to operate as they currently do.
Liu Bin, an analyst for BDA China Ltd., a Beiking-based technology research first, said the new investment in tudou, which proceeded despite that uncertainty, indicated that investors are still eager to bet on the online-video sector.
Tudou, the oldest of China's three major online video companies, received a warning last month from the State Administration of Radio, Film, and Television for carrying content the agency said violated government censorship rules. Neither the state body nor Tudou has disclosed the specific reason for the warning. Pornography, violence and politically sensitive topics are among the content categories that China's government requires Web companies to censor.
Tudou didn't name its investors, but said they include family and venture funds from overseas, including Singapore and the U.S. Including Monday's amount, Tudou has completed four rounds of funding - raising a total of $85 million - since it was founded three years ago.
By: Loretta Chao
Wall Street Journal; April 2008
