About this Blog

The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Friday, March 15, 2013

Netease being attacked by China State TV station

My last post on NTES can be found here:

I had not finished that series yet. But something else happened.

Within 30 minutes of trading this morning, NTES went down -5% on super heavy volume (300k shares exchanged hand, while the average trading is 800k per day).

The only thing I can find is that China's official TV station, CCTV, had accused NTES of wrong-doings.

NTES has China's number 1 Email service. Most Chinese use NTES Email service. CCTV accused NTES of monitoring its users emails. Thus, NTES is able to obtain users behavior and provide targeted advertising to its users.

See the following link:

In the same episode, CCTV also targeted Apple and Google's Android operating system of similar behavior.

I don't know whether I shall laugh or cry. Considering that current Chinese society is full of conceit and deception, CCTV would attack a common western practice of mining user behavior and to generate targeted advertising.

What is doubly ironic is, on this same day, President of China was "elected" with a vote of 2952 for, 1 against, and 3 abstentions. He was elected by a higher percentage (99.86%) than Bashar Hafez al-Assad of Syria (97.62)!

See the following post:

Talking about deceptions at the highest level!

China may be the number 2 country in economy in the world. Its accomplishment in the area of economy is amazing. But in the area of personal freedom, freedom from mind control, and democracy, it is worse than banana republic (most of the African, South American, and South Asian countries have free elections now).

Anyway, this could be nothing or it could be start of something major negative.

CCTV is China's official news organ. But it is also subject to commercial interest. It does do 60 minutes type of investigative reporting. It may have horrendous standard (when compared to 60 minutes). If this is just a sensational piece to generate eye balls, the effect to NTES will be minimal. NTES got minimal amount of money from its email service. The behavior exposed in the CCTV episode is so mild compared to the common practices in China today.

But if CCTV is carrying Chinese government's position, it will be major negative for NTES. If that is the case, more negative reporting on other areas will come out against NTES shortly. Those will form a pretense for the government to punish NTES.

We will have to wait for a couple of weeks. NTES has strong backing of the southern Guandong province chief. If another branch of government or even central government want to attack NTES, it would generate several negative stories in short duration. It is similar to the "struggling session" that every Chinese had learned during his/her high school and college political classes.

Anyway, we will have to wait for a couple of weeks to see which way this goes. If it is only one episode from CCTV, it means nothing. But if other news stations accuses NTES of other wrong-doings, it could be very negative for NTES.


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