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Copyright violator Xunlei going public in U.S.

Women use their laptop computers at a wireless cafe in Beijing on July 3, 2009.

STEVE CHIOTAKIS: Several Chinese companies are planning to go public in the U.S. this week. Among them is Xunlei, China's third largest video streaming site. Now that site uses what's known as peer-to-peer technology to share music, movies, software and the like. Some call it China's Napster. But like Napster, there's a problem.

In Shanghai, here's Marketplace's Rob Schmitz.


ROB SCHMITZ: Lawyer Jack Chen logs into Xunlei and begins to download a movie. Ten seconds later the movie begins. Xunlei gives 300 million people access to billions of songs, movies and TV shows. Much of it, like this version of "Avatar," is stolen.

Greg Pilarowski heads Pilar Legal in Shanghai. He says Xunlei blatantly violates U.S. law. Yet its name will soon appear on NASDAQ.

GREG PILAROWSKI: And that means that it's the U.S. capital markets that are actually going to fund the expansion of this company. And I think that that is of important interest to America. Should we open up our capital markets to companies whose business models, would in the United States, be illegal?

It's a question many lawyers are asking -- Xunlei's been sued nearly 250 times in the past three years for copyright infringement. But history shows investors are more forgiving. Last year another Chinese site carrying pirated movies went public in the U.S. It had the biggest one-day gain for a new IPO in five years.

In Shanghai, I'm Rob Schmitz, for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.
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Besides the hundreds of IPRs and copyright lawsuits against XNET, its CFO is now involved in sex scandal with a company secretary. He was beaten by the secretary's husband and jailed by the police. The video was broadcast by Shenzhen local TV station in early June. The Chinese police is in. That could be a big risk for the company. If you type in "Xunlei CFO" via google, you would find hundreds of weblinks to the video. http://www.google.com.hk/search?hl=zh-CN&source=hp&q=xunlei+CFO&meta=&rl...

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