China’s Facebook Sold for $20 Million

Renren.com, a Chinese equivalent of Facebook that fell out of fashion a few years ago, has been sold for $20 million, another milestone in the downfall of a once-popular social networking site that has now given way to more-innovative competitors.

Renren Inc. announced on Wednesday that it’s selling all assets relevant to its social networking business to Beijing Infinities Interactive Media Co. Ltd. In return, the buyer’s parent, Infinities Technology (Cayman) Holding Ltd., will issue $40 million worth of shares to Renren, which is valued at $700 million, according to a company statement.

Renren said the sale will help it focus on two other businesses: its used cars unit in China, and mobile app operations in the U.S. It’s confident that the sale “is the most viable” way for it to dispose of its social networking business and move “Renren onto its next phase of growth.”

Renren intends to remain listed on the New York Stock Exchange, the statement said.

The predecessor of Renren was Xiaonei.com, which was launched in 2005 by serial entrepreneur Wang Xing. He currently helms China’s largest on-demand services platform Meituan Dianping.

The Friendster-like Xiaonei, or “within the campus” in Chinese, took off rapidly and was a hit among college students. But a cash crunch later prompted Wang to sell the business to Oak Pacific Interactive in 2006.

Oak Pacific rebranded the site as Renren.com in 2009, which would go on to raise hopes it could be akin to China’s Facebook before its own New York initial public offering in 2011. At its height in 2012, the platform claimed 56 million monthly unique logins and 178 million accounts. China had 573 million internet users that year.

Oak Pacific itself was renamed Renren Inc. in 2010.

However, Renren in recent years has fallen into obscurity, overtaken by more popular services like the Twitter-like Weibo and Tencent’s WeChat instant messaging service.

Launched in 2011, WeChat offered something Renren was lacking: privacy. WeChat allows users to set their posts to private, and only the person who posted the update themselves can see all the comments and likes. Sina Weibo, which debuted in 2009, had more marketing savvy: it invited many celebrities to open their accounts, helping everyday users interact with their idols.

Contact reporter Tang Ziyi (ziyitang@caixin.com)