Youku, China’s largest online video company, has raised $203 million in its initial public offering and saw its shares surge more than 100 per cent in New York trading.

Tudou, Youku’s largest rival, has also filed for a US IPO, but there is no date for the offering yet. But Gong Yu, chief executive of Qiyi.com, the online video site set up by Baidu, China’s leading online search engine, referred to an “unhealthy industry”.

“Due to the overall positive outlook for the online video business there is an IPO wave right now, but the huge operating costs still raise doubts over the video sites’ monetisation model,” said an EnfoCapital, research note.

“In the short term, advertising will continue to account for more than 90 per cent of [Chinese] online video companies’ revenues.”

Industry executives estimate that online video sites attract less than 5 per cent of China’s online ad spending.

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