China startup dodges IPO ban, floats on shopping website

SHANGHAI Mon Feb 4, 2013 3:27pm IST

Related Topics

SHANGHAI (Reuters) - Chinese entrepreneur Zhu Jiang didn't need a stock market to raise cash for his media startup. Impatient to tap investors even though Beijing has frozen new share sales, Zhu started flogging stock on shopping website Taobao.com.

Before Taobao's owner Alibaba Group ALIAM.UL shut down his virtual store on Monday, saying the platform wasn't allowed to host share offerings, Zhu had pulled in a total of 1.2 million yuan from more than 1,000 online punters.

"For start-ups, time is life," Zhu, founder of Beijing-based video content producer Makev, said on his official microblog on Sunday. "We cannot afford to wait in a long queue for funding approvals, and there's little chance to get bank lending. So this is the practical solution."

In October, China's securities regulator suspended initial public offerings, an effort to help stabilise the country's volatile stock market. The stoppage is likely to last until the end of March.

Thousands of types of consumer goods, cars and real estate are up for sale on Taobao, but it "does not allow the listing of (shares) on the platform and ... has taken immediate action to remove such listings from the website", an Alibaba spokeswoman said in an e-mailed statement.

Lu Fang, a spokeswoman for Makev, said the cash raised from online shoppers has already met the firm's fundraising target. Before it was shut down, Makev's virtual Taobao store was selling vouchers representing 100 Makev shares for 120 yuan.

Taobao is China's largest e-commerce platform with nearly 500 million registered users and more than 800 million product listings at any given time. It is unlisted on any share market.

(Editing by Daniel Magnowski)

FILED UNDER:

Reuters Showcase

Documentary Banned

Documentary Banned

Documentary on 2012 Delhi gang rape banned in India.  Full Article 

RBI Rate Cut

RBI Rate Cut

RBI surprises with post-budget rate cut.  Full Article 

Bollywood Focus

Bollywood Focus

Franchise Man swoops in to save Bollywood.  Full Article 

Snowden seeks Return

Snowden seeks Return

Fugitive ex-NSA contractor Snowden seeks to come home - lawyer.  Full Article 

Carry Your Litter

Carry Your Litter

Nepal tells Mount Everest litterbugs to take out the trash.  Full Article 

Healthcare Mess

Healthcare Mess

Exclusive - Payment delays dent India's flagship health, AIDS programmes  Full Article 

Reuters Interview

Reuters Interview

Budget lacks wow, but good enough: Jim O’Neill.  Full Article 

Defence Budget

Defence Budget

China defence budget rise to defy slowing economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage