Page 94 - How China Is Winning the Tech Race

a weekly roundtable program called 5G. He added WoWar.com, an online
community for players of the World of Warcraft game, to the lineup too. He
also inked a joint venture with an unnamed personal investor in Kuho.com
(“Kool Monkey”), an online entertainment site for downloading music and
videos. His one disappointment was being outbid in a deal to buy
Douban.com, a site for exchanging book reviews, films, and plays.
The year 2006 saw no letup. Oak Pacific picked up $48 million in venture
capital in a deal that Chen thought would never close. Funds were so tight
that Liu and he bunked together in a no-frills Silicon Valley hotel that Chen
found on Priceline.com. But the wait proved worth it. Suddenly Oak Pacific
had a huge sum of money and stellar investors: UUMe’s prior backers DCM
and Accel, plus lead investor General Atlantic, a global private equity player
based in Greenwich, Connecticut. It also had two new seasoned board
members: DCM’s David Chao and GA’s Hong Kong-based managing director,
Vince Feng.
Loaded with cash, Chen went on an acquisition and development binge.
He started RenRen (“PeoplePeople” in English), an online classified listings
site similar to Craigslist. He launched a social networking site for college
students called 5q.com, (“me cute” in English). In the fall, he acquired its
competitor, Xiaonei.com, a leading college social network Web site whose
name means “on campus.” Chen merged the two sites for 5 million registered
users and says it’s one of the firm’s “best-performing sites so far.”
If that isn’t enough, Chen tested his first English-language site, Hi There,
where online shoppers can design personalized logos in English for T-shirts, hats,
ceramics, and other merchandise and then have the goods shipped to the United
States from China. It’s been made over as an online gaming site after being hit
with unexpected import tariffs. To top off the year, Chen bought a 40 percent
investment stake in a Chinese search engine geared for business users called
Hylanda. He also expanded his firm’s reach into online gaming, adding two
sites—zgmop.com and ssmop.com—to its already popular pet.mop.com.
“We buy stuff, and then we integrate it and inject more resources after
the acquisition,” says Chen. “The acquisition is not just for revenues; it is for
revenue potential.” He adds that most of the firm’s growth has come from
innovative features the team has added to the sites it acquires.
Chen has made sure to surround himself with managerial talent in China,
where a shortage of qualified candidates is a major issue. UUMe founder Liu,

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