Why Online Dating Is Becoming BIG, BIG Business in China!

Wow, the column I wrote about Facebook on May 1 generated a lot of passionate response. I guess that is to be expected when you criticize a company with 900 million customers!

However, it looks like others — including Facebook’s top executives and its IPO investment-bank underwriters — somewhat share my skepticism. The company announced it will price its IPO somewhere in the $28 to $35 range, which is well-below the widely rumored/expected $40 a share.

Plus, that is well below the $44 a share Facebook traded at earlier this year on private-company stock exchanges, like SharesPost.

In addition, shares of online-game producer Zynga (ZNGA) got clobbered for a 10% loss after it disappointed Wall Street by reporting lower revenues per gaming customer.

What does Zynga have to do with Facebook?

Almost all of Zynga’s revenues come from Facebook, and it’s a significant revenue source for the social-media site as well — more than 11% of Facebook’s revenues come from Zynga — so any slowdown at Zynga is a major negative for Facebook.

The stars may not be aligning for Facebook right now, but that doesn’t mean ALL Internet-based social media stocks are bad. And the Facebook IPO has opened up the gargantuan profit potential of helping people connect with friends, family and loved ones from around the globe and from all walks of life.

I had mentioned Renren (RENN) in that May 1 column, but there is another company with an even-more-attractive business model than the “Facebook of China.” The company I’m talking about has figured out ...

How to Make a Fortune Helping Young
Chinese Men Meet Young Chinese Women

Each year, millions of Chinese are moving from the lesser developed, poorer, rural interior to the large, eastern cities in China in search of jobs, opportunity and dreams. It is estimated that 200 million Chinese have left their rural homes in search of high-paying urban jobs.

One of the social consequences of that massive migration, however, is that cities like Beijing and Shanghai are filled with people who have moved away from their families and friends. These big-city newcomers don’t have a local social network, and like anybody else, want to find new friends ... and, perhaps, new love.

That is why millions of Chinese are turning to online dating as a solution to relationship woes in a society where the social pressure to find a partner can be oppressive. Chinese parents commonly expect their sons or daughters to be married by the time they reach 30.

There is even a word for those who are unmarried in their 30s: Shengnan and shengnu, literally a “left-over man” or “left-over woman.” The problem is especially acute for Chinese men.

These older men without a wife and without children are called “bare branches” and the social stigma against these unmarried men is strong. Therefore, helping them meet their match is BIG, BIG business in China.

The Large Gender Imbalance

Back in 1980, the Chinese government launched its one-child policy with the aim to keep the population below 1.2 billion. According to the Chinese government’s claims, this policy has prevented 400 million births, but it has also created a large gender imbalance.

Chinese men are under pressure to marry before age 30.

There are 122 baby boys born each year in China for every 100 girls, and millions of Chinese men are finding it difficult to find a wife.

It is going to get worse.

According to the Chinese Academy of Sciences, by 2020 there will be 24 million more men of marrying age than women.

The centuries-old preference for boys, coupled with the millions of aborted female fetuses, puts China at the top of countries where boys outnumber girls. By the way, the ratio of boys to girls in the U.S. is 1.05-to-1.

The odds get dramatically worse, the older a man gets. For Chinese in their 30s, the number of single men to single women is estimated to be nearly 10-to-1. Approximately 5% of Chinese men in their late 30s have never married. That number could hit 15% by 2020, and 25% by 2040.

According to research by the National Women’s Union, China currently has 180 million bachelors, and up to half of them are estimated to be looking for love online. Those numbers mean big business, and that is why Chinese online dating sites attracted three million paying customers last year who collectively spent $150 million.

The online dating market in China is projected by iResearch to grow from US$75 million to US$292 million by 2015. That is a 31% compound annual growth rate, and could grow to three to four times its current size in the next four to five years.

To put that in perspective, that dwarfs the 3.4% growth rate for the online dating market in the United States.

There is one publicly traded Chinese dating service that happens to own the largest market share of that booming industry. According to iResearch, this company has captured 43% of all the money spent on the online dating market in China last year.

It is also number one in (a) number of unique visitors, (b) average time spent per user, and (c) average page views per user among all online dating websites in China.

Bottom line: The business dynamics of the dating industry in China isn’t going to rise or fall with the Chinese economy, so this company has years, if not decades, of great growth ahead of it.

Facebook ... schmacebook. Check out Renren and its successful Chinese social-media cousins to potentially make some really big money.

Until next time,

Tony Sagami


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Posted 05-18-2012 1:10 PM by Tony Sagami