B2C sector leads way in Internet investments

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E-commerce replaced online games as the most popular branch for investments in the Chinese Internet market last year, thanks to the booming business to consumer sector, a Beijing-based research firm said Monday.

E-commerce accounted for 46 percent of 137 Internet related investment deals last year, compared with 18 percent for the gaming sector, Zero2IPO Research Center said.

"Investment in online games increased last year, but it was not as strong as 2008," said Zhang Yanan, Zero2IPO's analyst.

E-commerce, online games, social networking, and Internet promotion services were the hottest sectors for investors in 2010, according to Zero2IPO.

Online retailers such as Alibaba.com, Dangdang.com, Amazon China and 360buy.com expanded in logistics and distribution or penetrated into new categories, all requiring large investments. Meanwhile, smaller firms opened online stores selling luxury products to meet surging demand for watches and handbags in China.

For example, Nasdaq-listed Dangdang.com expanded into consumer electronics after first specializing in books.

In 2010, B2C investment increased US$714 million, compared to US$137 million for online games, according to Zero2IPO.

Investment in online games reached US$189 million in 2008, the sector's peak period.

"There was a lack of blockbuster titles last year and competition is tough," said Zhang, who expects the sector to rebound sharply this year.

Media firm Huayi Brothers Media Corp is expected to enter the gaming sector, industry insiders said.

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