Alibaba Makes Peace With Banks In Lending Tie-Up

Alibaba in new alliance with banks

A year after it shook up China’s stodgy banking sector with the launch of its Yu’ebao savings product, e-commerce leader Alibaba looks set to give the market another shot of needed innovation in a new tie-up with 7 major banks. This time the aim is to promote lending to small and medium-sized enterprises (SMEs), with a focus on manufacturers and especially exporters. Such companies often have difficulty getting loans from traditional banks for reasons I’ll explain shortly. Thus this new partnership aims to use Alibaba’s mountains of financial data on these smaller companies to help the banks better understand underserved SMEs that are a critical player in China’s economy. Continue reading

Tencent In Rare SNS Pullback On Microblogs

Tencent pulls plug on microblog service

Update: Since originally writing this post, Tencent has issued a statement in response to the original Chinese media reports saying it has no plans to close its microblogging service. It adds the service will be combined with its news service, as part of a broader restructuring of its online media group.

New reports are saying that leading Internet firm Tencent (HKEx: 700) is quietly halting development for its largely ignored microblogging service, in what would amount to a rare admission of defeat in its core social networking services (SNS) business. The move would be long overdue, as Tencent’s microblogging service, a variant of US leader Twitter’s (NYSE: TWTR) service, was never really a major player in China. So in that sense I have to at least congratulate Tencent for finally conceding defeat in the space to Weibo (Nasdaq: WB), the Twitter imitator founded by leading web portal Sina (Nasdaq: SINA). Continue reading

Shanghai Street View: Making Markets

Night market opens at Jinjiang Amusement Park

Shanghai and most major Chinese cities lack organized outdoor food centers and night markets, which are a colorful and popular part of daily life in places like Taiwan, Hong Kong and Singapore. But now that’s changing here in Shanghai, which is rolling out ambitious plans for a series of such centers modeled on the famous Shihlin night market in Taipei.

This kind of move seems long overdue, and could kill many birds with a single stone. Most importantly it would help to rid the streets of annoying hawkers, and it would also remove a source of noise and congestion that is irritating for nearby residents. It would also tackle the problem of food safety, since concentrating such hawkers in supervised centers would make it easier to monitor their quality. Continue reading

News Digest: July 23, 2014

The following press releases and media reports about Chinese companies were carried on July 23. To view a full article or story, click on the link next to the headline.
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  • Tencent (HKEx: 700) Halts New Development For Microblog Service (Chinese article)
  • Alibaba Joins With Banks In Online Lending Initiative (Chinese article)
  • New Oriental (NYSE: EDU) Announces Q4 Results, $120 Mln Share Repurchase (PRNewswire)
  • Xiaomi Unveils New Flagship Smartphone, The Mi 4, With A Metal Frame (English article)
  • Apple (Nasdaq: AAPL) Revenue Lags Street’s View Despite Strong China Growth (English article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

Giant, RDA De-List As Deal-Making Slows

RDK closes privatization

Two more US-traded Chinese firms are on the cusp of de-listing, with online game operator Giant Interactive (NYSE: GA) and chipmaker RDA Microelectronics (NYSE: RDA) just announcing they have wrapped up buy-out deals that will pave the way for their imminent privatization. These 2 de-listing stories were announced months ago and are completely expected. But the bigger underlying story is the lack of major new privatization announcements in the last half year. In a similar development, major new IPOs by Chinese firms in New York have slowed considerably since a boom of offerings in April and May, indicating the broader deal-making market may be entering a new, more stable phase. Continue reading

KFC, McDonald’s Consumed By New Safety Scandal

McDonald’s supplier at center of new scandal

It’s been more than a year since a major food safety scare hit western fast-food operators in China, so we were probably overdue for the latest scandal that is now consuming leading chains KFC (NYSE: YUM) and McDonald’s (NYSE: MCD). Frankly speaking, Chinese consumers are probably so jaded about food safety scandals by now that I don’t know if these latest 2 will really have much long-term impact on either company.

The most disgraceful element this time is the fact that the supplier at the heart of the latest scandal is a foreign-owned firm. Up until now, most of the suppliers who provided tainted food to big foreign supermarkets and restaurant chains were domestic Chinese firms, which usually have lower quality control standards. Thus this latest scandal could really do some damage to the broader image of foreign-owned companies, which are generally seen as more trustworthy than their Chinese peers. Continue reading

Regulators Become Mediators As Internet Firms Encroach

Regulators in new role as judges for industry clashes

China’s regulators have become involved in mediating a growing number of business disputes, reflecting the recent rise of a new generation of multibillion-dollar private sector companies that are rapidly growing beyond their traditional roots. In most cases, companies that began as Internet firms and high-tech manufacturers have encroached into a wide range of new areas like banking, TV and telecoms services, raising the hackles of big state-owned firms that previously dominated those sectors. Continue reading

News Digest: July 22, 2014

The following press releases and media reports about Chinese companies were carried on July 22. To view a full article or story, click on the link next to the headline.
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  • Yum (NYSE: YUM), McDonald’s Apologize As New China Food Scandal Hits (English article)
  • Mobile Internet Users Pass Desktop Users For First Time – CNNIC (Chinese article)
  • Huawei’s H1 revenue Up 19 Percent Year-On-Year At $22 Bln (English article)
  • Citic Securities (HKEx: 6030) Announces Preliminary H1 Results (HKEx announcement)
  • China Telecom (HKEx: 728) Starts Selling 4G Phones, Service In 16 Cities (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

Forbes Embraces, Keeps Distance From China With Sale

Fosun fails in bid for Forbes

More than half a year after putting itself up for sale, US publishing giant Forbes Media has found a suitor in a group with strong China ties even though none of its members are actually Chinese. The announcement comes as a slight surprise because Fosun International (HKEx: 656), one of China’s biggest private equity firms, had been rumored as a frontrunner in the bidding for the US publishing giant. Some media are saying that price was the determining factor in the end, as Fosun may have been unwilling to pay the high premium that Forbes wanted. But the stigma of potential ownership by a Chinese company may have also influenced the final decision by Forbes, which wants to maintain its independent image while also staying active in the China market. Continue reading

JD Relaunches Paipai, Eyes Taobao

Paipai relaunches with eye on Taobao

Nearly 2 months after its listing in New York, e-commerce giant JD.com (Nasdaq: JD) is trying to keep up its positive momentum with announcement of a relaunch for Paipai.com, the C2C service it acquired as part of its Tencent (HKEx: 700) tie-up earlier this year. While the announcement contains a bit of detail about JD’s plans, it makes no mention of the main target of this new campaign, which is Alibaba’s industry-dominating Taobao service. That said, I’m hopeful we could see Paiapi shake up the stagnant C2C space, much the way that Alibaba did nearly a decade ago when Taobao challenged and eventually defeated then-leader eBay (Nasdaq: EBAY). Continue reading

Coke’s Smoggy Battle, KFC’s ‘Dead Chicken Bounce’

Coke gets headache from Beijing smog

The latest news is decidedly cloudy from 2 of the world’s biggest food and beverage operators in China, with beverage leader Coca Cola (NYSE: KO) and fast-food giant Yum Brands (NYSE: YUM) fighting battles on different fronts. Yum has just reported financial results that show a nice jump in same-store sales for its flagship KFC restaurants during the second quarter. But the year-ago figures were extremely depressed due to several one-time factors, meaning current same-store sales are probably still below levels from 2 years ago. Meantime, media reports say Coke is offering generous incentives to attract foreigners to work in Beijing due to the city’s heavy air pollution, reflecting a recent broader problem faced by many multinationals. Continue reading