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