The question whether there is a bubble in the China internet sector comes up frequently in conversations.  In my views, definitely, yes.  There is a bubble in the sector.  And during the recent market correction, some of the most over-priced saw their share price plunged a lot. But my guess is: it is not over yet, the bubble will swell again, once the market recover from recent Greek debt crisis.

Five or six years ago when I just started following the sector, the Chinese internet companies had to be making profit before they got listed.  Actually, all of them, Baidu, Tencent, Netease, Shanda and so on, made healthy profit and had fast growth.   And that was what supporting their share price.

Today, that is still true for some of them, such as Baidu and Tencent.  But not so much for the others, especially, some of the recently listed.  Last October, ChinaCache, which provides Internet content and application delivery services to businesses and government agencies in China got listed when it was still in red.   Its share went up 95%  on the first day of trading.  Then came Youku.  It too was making a loss when it got listed last December.  Its share went up over 150% on its first day.  Recently, it made another public offer, selling its share at US$48.18, or 3.76 times of its IPO price.  Still, the company is making a loss and will be doing so in the next couple years.

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Sherman So

Author of Red Wired: China's Internet Revolution, the first book to completely survey the nature of China's internet. (http://redwiredrevolution.com/) She previously was the lead China technology reporter...