KongZhou has become the latest victim of China's clampdown on
miss-selling of wireless value-added services (WVAS). Total revenues
for its third quarter were $25m, 17% lower than in the immediately
preceding quarter, although up 24% year-on-year. The rest of the
results here.

Yunfan Zhou, Chairman and CEO, said he still anticipates
“challenges” to the WVAS business during the rest of 2006. Perhaps
sensing that this market is not the pot of gold it once seemed,
KongZhou is trying to develop a new business, that of wireless internet
portal, although this is still in the “early development stage”.

The portal, with the wonderful name of sold just $59,000 of
advertising revenue in Q3, so I don't think Google or Baidu are too
worried yet.

There are around half a dozen small China-based WVAS providers
listed in the UK and US and all have come a cropper on the tighter
rules recently introduced by China Mobile, China's largest operator —
see this post for example.

Even if the market returns to its former growth, its a tough
business in which size matters and the mobile operators will always
have the upper hand. There is always a chance that some of these small
fry will get snapped up by China's big Nasdaq-listed portals, but
otherwise there is little to interest western investors.

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