This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

China's Tech Giants Quietly Grow off Beijing's Internet Controls

Sina, which came out 10 years ago as one of China's top Internet content providers, has seen its Nasdaq share price rise 23% over the past five years. Tencent has seen share prices go up an unfettered 87% since 2007. American Depositary Receipts of Renren, however, have sunk 77% over about the last year.

"Whether such Chinese services are making money is another story, but wherever they are in their development, it's safe to say that they have done much better or gotten much further than they might had they had to face not just local, but global competition," says Mark Natkin, managing director with the Beijing-based market research firm Marbridge Consulting.

China's bans on Dropbox and Google Drive have given growth space to the local Alibaba AliCloud service, for example. Its parent company, Alibaba Group, is expected to do an initial public offering this year after buying a share of a major rival, giant Silicon Valley giant search engine and Internet service provider Yahoo! (YHOO).

With Google searches running slow and the company inert toward China after pulling plugs there in 2010 over censorship and hacking worries, Chinese-owned Baidu (BIDU) and local peer Sogou have found plenty of users looking up information online. Baidu share prices are up 86% since 2007.

China's government also didn't build by itself the network that allows its cops to monitor who's surfing what, closing down proxies within days of their debuts and sending out self-explanatory page-cannot-be-displayed messages to users who land on banned sites. Any foreign company that helps China block and filter content would have a fat customer to depend on, but local rivals have caught up.

Hard to say where the foreign aid comes from. Cisco Systems (CSCO) was sued in The United States last year over allegations of designing a firewall to monitor the Internet, but the Silicon Valley networking hardware maker has said it does not customize products to censor or repress people. China-based Huawei Technology makes the same kind of equipment anyhow.

Says Jeremy Goldkorn, founder of Beijing-based Internet research firm (and popular blog) danwei.com: "It's unlikely any American company has made any money since the early days of the Chinese Internet, in the 1990s, before Chinese companies like Huawei had the capacity to make routers and other networking equipment."

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,248.59 +91.74 0.53%
S&P 500 2,009.15 +7.58 0.38%
NASDAQ 4,586.3740 +24.1850 0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs