INTERNET: Baidu’s AI Obsession Spawns New Silicon Valley Center

Bottom line: Baidu’s opening of a new artificial intelligence lab in Silicon Valley is the latest move in its AI obsession, which is likely to end in failure and a quiet pullback in around two years due to mediocre execution.

Baidu in new Silicon Valley R&D lab

I’m officially dubbing Baidu (Nasdaq: BIDU) chief executive Robin Li the “two-year attention span man”, with word that the company is setting up a new Silicon Valley office in the rush to build up its artificial intelligence (AI) capabilities. If any one of China’s “big three” Internet chiefs deserves the title of “short attention span” man, it’s most definitely Robin Li. As far as I can remember, Li has been a “flavor of the moment” guy who fixates on the latest daily hot trend, most often to jettison the idea around 2 years later when it falls out of fashion. Read Full Post…

IPOs: Literature Firm Makes New Listing Attempt with Shanda, Tencent Backing

Bottom line: Tencent’s online literature unit is likely to make a Hong Kong IPO later this year, and should get a relatively strong reception due to strong backing and its market leading position for a product with stable long-term demand.

Tencent literature unit eyes HK IPO

If you don’t succeed the first, second and third times, then try again. That could well be the mantra for the digital literature unit of former online entertainment giant Shanda, which has gone through quite a few attempts at an IPO, only to stumble each time. This particular story has quite a few twists, which I’ll review shortly. But the end result appears to be that the unit, previously called Cloudary, may finally succeed in its latest attempt to go to market, this time under its current parentage as the online literature unit of Internet giant Tencent (HKEx: 700). Read Full Post…

TELCOMS: China Telecom Eyes 5G Network Sharing

Bottom line: China Telecom, Unicom and China Broadcasting Network could share the costs of a 5G network to lower costs, while China Mobile is likely to construct a network on its own.

China telcos consider 5G network sharing

As earnings season reaches a crescendo, wireless carrier China Telecom (HKEx: 728; NYSE: CHA) is raising an old theme by saying it might consider sharing resources with someone else in building a next-generation 5G network. This particular topic first surfaced more than a year ago when China Telecom and rival Unicom (HKEx: 763; NYSE: CHU) studied the possibility of sharing 4G resources, even though they ultimately each built their own networks. (previous post)

The interesting twist this time is that Beijing is rolling out a program to inject private capital into the telecoms sector, meaning perhaps China Telecom and the other telcos could be allowed to pick private-sector partners for their 5G networks. Another interesting wrinkle comes in the form of a fourth state-run telco that was assembled from the nation’s many cable TV companies last year and would probably like to have its own telecoms network. Read Full Post…

IPOs: Qudian Moves Toward Blockbuster NY Listing

Bottom line: Qudian’s IPO will get a moderately warm reception in New York, drawing interest due to its status as a major private fintech firm but also wariness owing to many uncertainties in the young sector.

Qudian moves closer to IPO

Anything involving movement of money has always been slightly problematic in China. Be it paying for things online, paying to play computer games, or even borrowing small sums to buy something like a smartphone, nothing has ever been easy for Chinese consumers. That’s mostly due to the creaky financial system they inherited when the country began its march into the modern era starting in the 1980s and ’90s.

That lack of services has been a godsend for a new generation of companies that are now making their way to market by supplying some of the many basic financial services that consumers crave. An IPO by one of the largest of those looks set to happen in the next 3 months, with word that microlender Qudian has made its first private filings for a New York listing to raise up to $1 billion. Read Full Post…

ENTERTAINMENT: DreamWorks, Paramount China Tie-Ups Unraveling

Bottom line: Foundering prospects of cross-border tie-ups involving DreamWorks and Paramount shows the love affair between Hollywood and China may be entering a new phase of lowered, more realistic expectations.

DreamWorks Animation eyes sale of China JV stake

The old saying says that what goes up must come down, and that certainly appears to be the case with new reports of the unraveling of two more China-Hollywood tie-ups. The latest reports say that US giant DreamWorks Animation is looking to sell out its stake in Oriental DreamWorks, its landmark China animation joint venture that was launched with fanfare 5 years ago. At the same time, another report is saying a $1 billion film production tie-up between two Chinese partners and Paramount is reportedly running into trouble due to turmoil at the Hollywood studio.

The unraveling of these two major deals comes just weeks after another deal involving Wanda Group’s planned purchase of Dick Clark Productions also appears to be coming unglued. In that case the culprit is China’s recent currency controls, which were preventing Wanda from getting the necessary funds outside the country to complete the $1 billion purchase. But Wanda was apparently also worried it was overpaying for the asset. Read Full Post…

E-COMMERCE: Ant Trumped in US, Alibaba Reorganizes Video

Bottom line: Ant Financial will counter bid for MoneyGram, following a surprise rival bid for the company, while Alibaba Pictures’ absorption of the former Youku Tudou looks like a logical consolidation of Alibaba’s filmed entertainment assets.

Ant’s MoneyGram offer attracts rival bidder

Two of Alibaba (NYSE: BABA) founder Jack Ma’s biggest endeavors outside his core e-commerce business are in the headlines, led by a counter bid for a US financial services company his Ant Financial is trying to acquire. That particular deal has a US company called Euronet Worldwide announcing a bid for MoneyGram that’s 15 percent higher than Ant’s own $880 million bid made back in January. The other news is slightly more mundane but still significant, and has Ma’s Alibaba moving its Youku Tudou online video service into its separately listed Alibaba Pictures (HKEx: 1060) filmed entertainment unit. Read Full Post…

INTERNET: Yidao Talks IPO, in Break with LeEco

Bottom line: Yidao’s announcement of plans for an IPO hint at a looming sale of the company by controlling stakeholder LeEco, which could be mulling sales of other recently purchased assets in a bid to ease its cash-crunch.

Yidao prepares for IPO

What do you do when you’re running low on cash? The answer is obvious for private car services firm Yidao: make an IPO. That would normally seem like a relatively smart and logical choice for most up-and-coming companies, but Yidao isn’t quite one of those. For starters, the company operates in an extremely competitive space now dominated by the likes of Didi Chuxing, UCar and Shouqi, just to name a few.

The other big factor weighing on the company is its majority ownership by cash-challenged online video company LeEco (Shenzhen: 300104). To be precise, LeEco paid $700 million for 70 percent of Yidao in 2015, back when both companies were far healthier than they are today. Thus this latest pronouncement that Yidao is even considering an IPO seems to hint that LeEco may be considering a sale of some of the many assets it acquired during a breakneck expansion that got it into its current mess. Read Full Post…

SMARTPHONES: Oppo Shows India Resolve with Cricket Deal

Bottom line: Oppo’s major new cricket sponsorship deal shows its commitment to India, but may have to be renegotiated if and when the company’s fortunes decline in the next 1-2 years following its meteoric rise.

Oppo in India cricket deal

Smartphone high-flyer Oppo is trying to show the world it’s serious about India, with word it will pay 1.1 billion yuan ($160 million) for rights to sponsor the nation’s national cricket team. News of the deal comes just three months after China’s top smartphone brand announced plans to build a production facility in the hotly contested India market, which has become a magnet for Chinese brands over the last year.

All that raises the question of whether Oppo is for real, or just another passing fad in China’s constantly changing smartphone landscape. That landscape has seen players like Lenovo (HKEx: 992), Xiaomi and Huawei become dominant players in the world’s largest smartphone market one day, only to rapidly fade the next. It’s obviously still too early to say if Oppo will follow in that trajectory, though my educated guess would be the answer to that question is quite possibly “yes”. Read Full Post…

LEISURE: Legoland Builds in Shanghai, Royal Caribbean Steers Clear of Korea

Bottom line: Legoland’s new Shanghai theme park spotlights the growing lure of China’s leisure travel market, while Royal Caribbean’s removal of South Korean ports from its China-based trips spotlights how political tensions can affect tourism-reliant businesses.

Legoland coming to China

A couple of Shanghai-based leisure stories are spotlighting two very different trends in China’s leisure travel sector, where a burgeoning middle-class is seeking new and interesting vacation ideas. On the more upbeat side, one of Europe’s top theme park developers is expressing a major vote of confidence in the market, with word that the developer of Legoland theme parks will open one of its mega-resorts in Shanghai. But on the downside, the country’s largest cruise operator, Royal Caribbean (NYSE: RCL), has removed South Korean ports from its China-based trips amid growing frictions between Beijing and Seoul over a controversial missile defense system. Read Full Post…

E-COMMERCE: Alibaba Cranks Up the Anti-Piracy Pitch at NPC

Bottom line: Alibaba’s anti-piracy PR blitz during the National People’s Congress is aimed at getting attention during the high-profile event, but it will need to keep up its efforts to convince the public and officials its effort is sincere.

Alibaba calls for tougher anti-piracy laws

As the National People’s Congress (NPC) kicks into high gear in Beijing, e-commerce leader Alibaba (NYSE: BABA) is using the annual session of China’s legislature as a soapbox to make its case that it’s being tough in the battle against piracy. In the last 2 weeks alone, founder Jack Ma has made two high-profile declarations on the subject, one equating the problem to the drunk driving menace and the other calling for his country to create tougher laws to fight the problem. Lest anyone think Alibaba is trying to pass the buck, the company has also announced it has filed a lawsuit against a maker of counterfeit pet food. Read Full Post…

TELECOMS: ZTE Settles with US, Looks Forward

Bottom line: ZTE’s settlement with the US over illegal sales to Iran will help the company focus on the future, as it advances with plans to move away from low-margin businesses and find more promising new growth areas.

ZTE settles US accusations of illegal sales to Iran

After a year of living in a state akin to suspended animation amid a US probe against it for illegal sales to Iran, telecoms giant ZTE (HKEx: 763; Shenzhen: 000063) is finally seeing some light at the end of the tunnel, with word that it has finally reached a settlement in the matter. The company previously indicated the settlement would be no small deal, and the nearly $900 million fine it will have to pay proves that’s certainly the case.

But more important is the fact that ZTE has finally settled the case, meaning it can now get on with business without this major distraction hanging over its head. Before the settlement, ZTE had faced the possibility that it might get cut off from its key US suppliers as punishment for illegally selling US-made equipment to Iran in violation of earlier US sanctions against the country related to its nuclear program. Read Full Post…