Ready to log in to China.(Reprint)

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Investors hungry for a slice of 'China's facebook' can scarcely wait for Tuesday, when shares in the firm will go on sale. When Chinese social networking site Renren goes public, many will likely ignore big risks the company faces, and be lured instead by a combination of the words "China" and "social networking."

Hot Chinese tech companies like Internet search engine Baidu Inc and online video site Youku.com have risen triple-digit percentages since their own initial public offerings (IPOs), whetting investors' appetites for such share sales. And this is in a sector that is hot in the US too - facebook, the biggest social network company in the world, has an estimated market value of somewhere around $70 billion, making it worth more than companies such as aviation giant Boeing.

The demand for Renren shares was clear on Friday when the company raised the expected price range of its IPO by 30 per cent to $12 to $14 per share.

"Appetite to invest in China right now is so strong that some investors are willing to ignore factors that they wouldn't in other markets," said Mark Natkin, managing director of Marbridge Consulting, a Beijing-based company that advises investors on China's internet and telecommunications sectors.

Renren's IPO filings do raise a handful of very serious questions.

For one thing, Renren doesn't really seem sure how many users it has. According to its April 27 revised IPO filing, the Chinese facebook clone's monthly unique log-in user base grew by only five million, or 19 per cent, in the first quarter of 2011 - not the seven million, or 29 per cent, it reported in its first filing only 12 days earlier.

Some investors and analysts brush off such red flags - after all China is the biggest Internet market in the world and it is growing rapidly. Others say the opaque information is a big problem.

"If you can't validate the numbers or the company proves it doesn't have a good handle on the numbers, then you've got to be concerned," said Gary Rieschel, founder of Qiming Venture Partners.

Another possible risk for investors is the broad government oversight that Renren, and other companies operating in China, face. Chinese authorities keep extremely close tabs on internet firms.

Renren says in the risk factors section of its IPO prospectus that this means a prohibition against posting content that, among other things, "impairs the national dignity of China" or is "superstitious".

If Renren fails to comply, the company says that its websites could be shut down. Clearly that could put it out of business. Whether a social network page posting is objectionable is determined by the Chinese authorities. Renren must even guard against providing services that may lead to its users finding themselves in "emotionally charged situations."

Add in the fact that filings showed 87 per cent of Renren's leased floor area did not have the proper title documents, and it all paints a picture of a company that is far from risk free.

Still, it isn't difficult to find people who will give it the benefit of the doubt.

While Renren has posted losses the past two years, it could still be a dream growth stock. Its net revenue grew more than fivefold to $76.54 million in 2010 from $13.78 million in 2008.

But there will be some who, after reading the prospectus, may wonder whether these risks actually outweigh the rewards.

This article was originally published by www.7days.ae.

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