According to LinkedIn Corp (NYSE:LNKD), the largest US-based internet company active in China, the country needs to open its doors for overseas internet companies and develop a more tolerant regulatory environment, if it has to develop its internet industry. In spite of creating a no-entry zone for most of the US-based internet companies by citing regulatory concerns, the Chinese government allowed LinkedIn Corp (NYSE:LNKD) to start a Chinese-language professional networking site in February this year. The statement regarding China opening its doors for overseas internet companies was made by LinkedIn Corp (NYSE:LNKD)’s China President, Derek Shen. Bloomberg’s Leslie Picker and Hans Humes from Greylock Capital recently discussed about the advice that LinkedIn gave to China and the difficulties in doing business in the nation.
“So, now this is the thing with China. As I study Alibaba for the last six months, one thing you learn is they have this preferential treatment from the Chinese government. This is the hallmark for Chinese government to put on a pedestal and say look what we can achieve, look what the beacon of entrepreneurialism China can achieve here and that is Alibaba. Now, Linkedin, as we all know, is a part of the US. So, it won’t get those favorable regulatory treatments as an Alibaba […],” Picker said.
Picker believes that giving equal opportunities to overseas companies is “not a Chinese way of life” and as a testament to that she cites numerous US-based companies that have been banned from operating in China.
Humes urged people to look at this LinkedIn Corp (NYSE:LNKD) story in context of the Alibaba Group. According to him, if this is the way businesses are run in China then investors must be skeptical of investing in companies that do business there as the Chinese government can change regulations on a whim.
As of June 30, 2014, Kerr Neilson‘s Platinum Asset Management owns over 800,000 shares of LinkedIn Corp (NYSE:LNKD).