The article cites several reasons for the decline in venture investment in the Chinese Internet sector include a general pull-back from an overheated sector, recent accounting scandals involving Chinese firms listed on US stock exchanges, tougher US listing requirements for Chinese firms, poor market performance of recent listings, and a shifting towards newer sectors.
I was recently in China meeting with venture capital firms, and the sense that I had was that there was a general cooling attitude towards venture capital investing in Chinese tech companies. In addition to the factors cited above, a common reason that I heard was that liquidity in general (IPOs and M&A) was proving more difficult and taking longer than expected.
It's a good article and worth a read. Here's the link: