Chen Yizhou, chief executive officer of Renren, says the company is planning to sell some non-core businesses to improve their profitability and they are also considering investment and expansion opportunities in America and Hong Kong.
Chen revealed during an interview with local Chinese media that under the current model it is hard for the company to make any profit. They will therefore implement a complete transformation and change their business model.
Renren was once known as the Facebook of China. Founded in 2005 in its present incarnation, the Chinese company has already been listed on the New York Stock Exchange. The company took a typical Chinese Internet company path of developing diversified operations, covering online games, online video, e-commerce, group buying, and social networking.
Though the company claims to have 214 million monthly active users by June 30, 2014, they never achieved stable profit. In the second quarter of 2014, Renren realized net profit of USD31.3 million. However, its operating revenue was only USD25 million and its earnings of USD86 million were from short-term investments. The company suffered operating losses of USD30.4 million during the reporting period.
The third quarter is even worse. Renren predicted that its operating revenue will decrease to between USD19 million and USD21 million. Chen attributed the situation to the severe competition from Tencent and other Chinese Internet companies.
Chen refused to disclose which business the company plans to dump. Prior to this, Renren sold its e-commerce business to Baidu in August 2013. With exception of its social networking core business, Renren holds an open attitude towards cooperation with large technology companies.