LinkedIn (NYSE: LNKD) may have lost China.
The company has been a gem in a year of busted tech IPOs; its stock is up 45% this year. However, one place the company is not hot is China. In a country with 100 million professionals, LinkedIn has fallen behind domestic competitors. If LinkedIn doesn't act fast, SINA (NASDAQ: SINA ) may block the professional network out for good.
SINA's LinkedIn-like features
Diversifying from its Twitter-like Weibo platform, SINA launched its professional networking product on Nov. 27 to test further monetization strategies. Currently in invite-only mode, Wei Renmai, translated as "Weibo Connections," includes features that mirror LinkedIn.
Source: Tech2IPO via Tech in Asia
Within the search function, users can look for "people," "companies," or "opportunities." There's also a side map that highlights which business contacts you and your friends share.
Because Renmai is actually a part of Weibo (you can access the website at renmai.weibo.com), SINA has included many of Weibo's traditional functions, like following, commenting, "retweeting," and placing people in circles. Though this may seem to dilute the professional nature of a business network, remember that LinkedIn recently introduced these Twitter-like functions to its own platform. So far, LinkedIn's revamp has helped it attract and retain users.
What SINA Renmai means for LinkedIn
While these features may not look like much of a threat, don't forget that SINA has more than 400 million users on Weibo. If the company can convert all of them onto Renmai, SINA can then entice more partnerships with recruiting departments, just as LinkedIn has done.
Another boon for SINA is that the company is Chinese. We've heard how the Chinese government has limited Google's (NASDAQ: GOOG ) operations; Google's search market share got crushed to 5%, while Baidu (NASDAQ: BIDU ) holds 73% of the search market. Similarly, because Facebook (NASDAQ: FB ) is blocked in China, it has only bout 600,000 users there, while Renren (NYSE: RENN ) has close to 100 million users.
The Chinese government has blocked LinkedIn in the past. And going forward, the company stated that it can't guarantee that its features or whole website won't be blocked temporarily or permanently. LinkedIn shouldn't be surprised if it does get censored by the government, and if SINA pulls way ahead in professional networking.
Not all is lost for LinkedIn
To be fair, LinkedIn hasn't launched a full-on Chinese version of its site for the growing country. The company has publicly stated that it is thinking through its decision, and that LinkedIn "will not jump in and provide something that won't be successful."
For investors, LinkedIn's strategy may be a good one for now. The company's stock is still seeing huge gains internationally in the Americas, Europe, and other parts of Asia. In the past quarter, LinkedIn's revenue increased 81% over the past quarter, while SINA's increased only 17%.
Also, LinkedIn still has a window of opportunity. SINA still has to combat Tencent, which just saw its WeChat product surpass 200 million users, and Sohu (NASDAQ: SOHU ) , as it continues to make its way into China's social media realm.
So who is the "LinkedIn" in China?
LinkedIn may still be able to find a way into China. SINA is struggling to make money as it deals with competitor, mobile, and macro concerns. But at the same time, SINA's 400 million user base and home-court advantage may grow stronger.
For now, I suggest you keep an eye on SINA's user growth and the percentage of returning visitors -- both on its Weibo and Ren Wenmai platform. If SINA can capture the majority of Chinese professionals, LinkedIn may not have the chance to worry about Chinese censorship.
As LinkedIn contemplates its move in China, investors may be better served observing how other U.S. companies have fared. One company gaining traction is Facebook. After the world's most-hyped IPO turned out to be a dud, most investors probably don't even want to think about shares of Facebook. But don't forget Facebook's China opportunity. We've outlined it here in our newest premium research report. To access it, just click here.