INTERNET: Twitter Eyes China Ads, Weibo Eyes Car Services

Bottom line: Twitter’s growing pursuit of business from Chinese advertisers shows it is watching the market for a potential future entry, while a new equity tie-up could see Didi Kuaidi’s hired car services launch on Weibo later this year.

Twitter chases China advertisers

Social networking (SNS) pioneer Twitter (NYSE: TWTR) and its Chinese clone Weibo Corp (Nasdaq: WB) are both in the China headlines today, each taking gambles on different parts of the market. After previously saying that China isn’t a market where it can do business, the original Twitter has quietly begun to court local advertisers, even as its actual service remains blocked in the country. Meantime, Weibo, which rose to prominence after Twitter was first blocked in China in 2009, has announced a relatively large new investment in local hired car services leader Didi Kuaidi. Continue reading

FUND RAISING: BYD Raises Cash, Warburg Cashes Out Of Car Inc

Bottom line: BYD’s latest fund raising will test investor patience as its EV business struggles, while Warburg Pincus will continue to cash out of Car Inc to take advantage of its soaring stock.

Warburg sells down Car Inc stake

A couple of cash-raising stores are in the headlines for 2 car-related companies, led by the news that Warren Buffett-backed new energy car maker BYD (HKEx: 1211; Shenzhen: 002594) is planning a new share sale as it gets weighed down by a big debt and slow sales for its electric vehicles (EVs). Meantime, Warburg Pincus is selling down its stake in car rental specialist Car Inc (HKEx: 0699), following the end of a lock-up period after its IPO last year.

The BYD saga is easily the more interesting of the 2 stories, showing the company’s dreams for making big profits from the emerging market for EVs are moving ahead far more slowly than it had originally hoped. That reality has forced BYD to look to various measures to raise billions of dollars in cash over the last year to keep its operations going. In the process, Warren Buffett’s stake has slowly crept down from an original 10 percent to a current 9 percent. Everyone is watching closely to see if the billionaire investor may ultimately dump his stake completely. Continue reading

IPOs: Didi Kuaidi Steers Towards IPO, But Where?

Bottom line: Didi Kuaidi’s IPO could come as early as the fourth quarter, with Hong Kong, China and New York standing equal chances of winning what could be the year’s biggest China Internet listing, worth up to $2 billion.

Didi Kuaidi to list in Q4

Just days after launching a massive promotion to attract new customers to its private hired car services, Didi Kuaidi is reportedly starting the process that could end with a major IPO for China’s largest taxi app operator by year end. Such a development wouldn’t come as a huge surprise, following the company’s formation earlier this year through the merger of 2 bitter rivals to create a Chinese market leader reportedly valued at up to $9 billion.

But equally interesting will be where this fast-driving company chooses to list. Just a year ago the answer would have almost certainly been New York, which is where most of China’s top Internet companies are traded. But a recent boom in China’s own stock markets and a new program that allows mainland investors to buy Hong Kong stocks have made Chinese Internet companies start to seriously consider both of these markets for IPOs as well. Continue reading

News Digest: May 28, 2015

The following press releases and media reports about Chinese companies were carried on May 28. To view a full article or story, click on the link next to the headline.
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  • Buffett-Backed Automaker BYD (HKEx: 1211) Plans Up To $1.9 Bln Placement (English article)
  • Blocked in China, Twitter (NYSE: TWTR) Still Courts Chinese Firms For Ads (English article)
  • Sina Weibo (Nasdaq: WB) to Invest $142 Mln in Taxi App Didi Kuaidi (English article)
  • Gucci China Discounts Prompt Lines as Bagmaker Clears Stock (English article)
  • Chinese Airline Juneyao IPO Surges by Limit 44 Pct on Shanghai Debut (English article)

CELLPHONES: Huawei’s Big Order, Coolpad’s Continuing Struggle

Bottom line: Huawei’s big deal with JD.com reflects growing momentum that will see it overtake Xiaomi in China’s smartphone market by year end, while Qihoo’s boosting of its stake in its Coolpad joint venture could be a prelude to an eventual buyout.

Huawei’s Honor scores big smartphone win

Two big smartphone stories are in the headlines today, led by a massive new order for Huawei that could help it move up the charts to unseat the stumbling Xiaomi as China’s second largest manufacturer. Another struggling player is in the second headline, with software security specialist Qihoo (NYSE: QIHU) announcing it will boost its stake in its joint venture with Coolpad (HKEx: 2369), another former superstar that is fast fading out of the China smartphone race.

After a period of brief quiet at the start of this year, these latest developments reflect some major shuffling happening in China’s smartphone market, which is at once the world’s largest but also extremely competitive. The latest trends show that global giant Apple (Nasdaq: AAPL) has begun to resurge in the market, and that the stodgier Huawei is also rapidly moving up the food chain. Meantime, former high-flyers like Xiaomi and Coolpad seem to be moving in the other direction. Continue reading

MEDIA: LeTV Overvalued With CEO Sale, Cheap Share Placement

Bottom line: LeTV’s plans to raise new funds at a big discount and for its CEO to sell a big block of his shares reflect their belief that the company’s stock has become overvalued and could be due for a correction.

LeTV plans private placement

Online video superstar LeTV (Shenzhen: 300104) is in a couple of headlines that reflect the recent meteoric rise of its stock, with word that it’s planning a major new share placement as its CEO gets set to sell a big chunk of his shares in the company. Both news bits come amid a rally that has seen LeTV shares soar 5-fold since the start of this year, amid a broader huge rally for China’s stock markets. They also come as LeTV embarks on a major expansion that will take it beyond its core video products into a range of new areas including smartphones and smart cars. Continue reading

RETAIL: Shanghai Wins Big With Wanda Group Relocation

Wanda to relocate HQ to Shanghai

Shanghai may be famous for its entrepreneurial spirit, but its track record isn’t quite so stellar when it comes to nurturing top entrepreneurs. That could be starting to change, however, with word that Dalian Wanda Group, one of China’s most dynamic companies, plans to move its headquarters to Shanghai from its current location in Beijing.

As a longtime foreigner living in Shanghai, I’ve always been surprised by the relatively small number of major private companies for a city of our size. We should certainly be proud of some of our city’s most outstanding entrepreneurs, with names like Guo Guangchang of Fosun Group and Spring Airlines (Shenzhen: 601021) Chairman Wang Zhenghua as 2 outstanding examples. Continue reading

News Digest: May 27, 2015

The following press releases and media reports about Chinese companies were carried on May 27. To view a full article or story, click on the link next to the headline.
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  • LeTV (Shenzhen: 300104) to Raise 7.5 Bln Yuan Through Private Placement (English article)
  • JD.com (Nasdaq: JD) Inks 10 Bln Yuan Deal With Huawei Honor Smartphones (Chinese article)
  • Ctrip (Nasdaq: CTRP) Announces Additional $250 Mln Investment by Priceline (PRNewswire)
  • Amazon (Nasdaq: AMZN) Enters Online Grocery Business With 5 Chinese Partners (Chinese article)
  • Qihoo 360 (NYSE: QIHU) To Increase Stake In Coolpad (HKEx: 2369) JV (PRNewswire)

SMARTPHONES: Xiaomi Overheats In India, Eyes Brazil

Bottom line: Xiaomi’s latest headaches in India due to a technical glitch are just one of many growing pains it will experience more frequently due to its rapid expansion, as it targets developing markets under its push to become a global brand.

Xiaomi prepares to launch in Brazil

Xiaomi is fast becoming the unofficial smartphone of the BRICS, with word that it’s getting ready to start producing its signature phones in India as it also gets set to launch in Brazil next month. The company is also likely to enter Russia later this year, leaving South Africa as the only BRICS country missing from its global footprint by the end of 2015.

At the same time, Xiaomi’s ride into India has been quick but also bumpy, starting with a patent dispute last year and now including a problem that has seen its latest model in the market, the Mi 4i, experience overheating problems. Those kinds of problems will only be magnified in more developed western markets, which is why Xiaomi says it won’t be selling its smartphones in North America or Europe anytime soon. Continue reading

MEDIA: CCTV Takes Aim At LeTV, JD.com

Bottom line: CCTV’s new attacks on LeTV and JD.com reflect its growing assertiveness to counter the rise of new media, and could become more frequent in the months and years ahead.

CCTV takes aim at LeTV, JD.com

The rapid rise of new media is posing a serious challenge to China’s traditional media, which is perhaps partly behind a couple of headlines that have state-run broadcasting giant CCTV leveling separate attacks against online video high-flyer LeTV and e-commerce giant JD.com (Nasdaq: JD). The first case has seen CCTV sue LeTV for copyright infringement related to its popular Lunar New Year’s eve TV program. The second has CCTV airing an investigative report accusing JD.com of offering refurbished iPhones over its site that used unauthorized components, causing some to break down. Continue reading

INTERNET: LeTV Answers Lenovo, Didi Challenges Uber

Bottom line: Beijing should step in to mitigate the latest cutthroat competition in the smartphone and hired car services spaces, or risk seeing meltdowns that lead to chaos and job losses.

Lenovo, LeTV CEOs in war of words

New battles broke out in 2 of China’s most hotly contested high-tech sectors last week, casting a spotlight on the aggressive and even potentially illegal tactics that Chinese companies sometimes use in their fierce rivalries and quest for market share.

One of those saw taxi app operator Didi Kuadi announce a major promotion offering aggressive subsidies for its hired car services. The other saw video high-flyer LeTV (Shenzhen: 300104) use equally aggressive tactics to launch its new line of smartphones, igniting a war of words after another prominent rival criticized its actions as “irrational”. Continue reading