The Internet world is buzzing today with word that Alibaba and Tencent (HKEx: 700), China’s 2 dominant Internet firms, are among the first group of 10 companies to receive banking licenses as Beijing opens the sector to private competition. From a macro-economic perspective, the move is certainly a welcome one for China and should provide some much-needed competition for the nation’s stodgy state-run lenders that now control the sector.
But from an individual company perspective, I really can’t see how traditional banking fits into either Tencent’s or Alibaba’s core Internet business, and worry a bit that this new initiative could ultimately distract these companies from their main focuses. I do expect that Tencent may ultimately follow its recent strategy of spinning off businesses and move its bank into a separate company, which looks like the right move. Alibaba would be well advised to do the same, though founder Jack Ma has shown a tendency for wanting to keep all his companies under one roof. Continue reading →
Chinese investors marked an important milestone last week when they rejected a bond offer by Jin Jiang (HKEx: 2006; Shanghai: 600754), one of the nation’s leading hotel operators, reflecting their growing understanding of risk in China’s young financial markets. Chinese investors too often blindly pile into nearly any product offered by the latest hot company, bank, fund manager or even Internet firm, falsely believing they are guaranteed big returns on their money. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 12. To view a full article or story, click on the link next to the headline.
Alibaba To Acquire ChinaVision Media (HKEx: 1060) For HK$6.24 Bln (Chinese article)
Hershey’s (NYSE: HSY) Kisses Brand Hits $100 Mln In China (Businesswire)
I don’t usually like to toot my own horn, but my prediction last month that we could soon see a major fund-raising exercise by high-flying e-commerce firm Vipshop (NYSE: VIPS) has come to pass, with word that the firm is preparing to sell stock and bonds worth more than $600 million. Investors weren’t extremely excited about the plan, with Vipshares falling slightly after the announcement came out. But considering that the company’s shares have risen about 8-fold over the last year alone, the reception wasn’t all that bad either. From the strategic perspective, this new massive fund raising hints that Vipshop wants to take advantage of the recent wave of M&A sweeping China’s e-commerce space, and I expect we could see some big deal announcements later this year. Continue reading →
After an unsuccessful earlier listing for one of its units, online real estate giant E-House (NYSE: EJ) is preparing to try again with plans for a New York IPO for its Leju division. The company has been quite cagey in this latest listing plan, giving little details about Leju’s background and why the unit deserves its own separate listing. Perhaps that’s because a little checking reveals that this “new” offering is really just a recycled listing for a previous company jointly-owned by E-House and leading web portal Sina (Nasdaq: SINA). Continue reading →
A new survey on marriage patterns in Shanghai is casting an interesting spotlight on what it means to be an outsider in one of China’s most international cities, whose high-profile embrace of foreigners and foreign things often overshadows a much bigger influx of domestic immigrants. The survey also draws attention to the bigger Chinese fondness for characterizing everything as either “insider” or “outsider”, a centuries-old tradition that Shanghai could and should take the lead in discarding.
The “insider” and “outsider” mentality goes way back in Chinese history, and is physically present across the Chinese landscape and deeply embedded in the language. Its most potent physical symbol is the storied Great Wall, which drew a clear line between the inside, or civilized China to the south, and the outside, populated by barbarian tribes to the north. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 11. To view a full article or story, click on the link next to the headline.
JD.com Rolls Out Financial Product Similar To Yu’ebao To Boost IPO (Chinese article)
E-House (NYSE: EJ) Announces Leju’s Plan For Proposed IPO (PRNewswire)
Home Inns (Nasdaq: HMIN) to Acquire Yunshang Siji Hotel Management Co (PRNewswire)
ZTE (HKEx: 763), The9 (Nasdaq: NCTY) to Release Game Console – Source (English article)
Ackman To Renew Attack On Herbalife (NYSE: HLF) With Aim On China Business (English article)
The new week is just beginning, but it could well go down as a pivotal moment in Chinese Internet history with Tencent’s (HKEx: 700) new announcement of an e-commerce alliance with JD.com that could threaten the dominance of sector leader Alibaba. The tie-up, which was first rumored last month, will see Tencent pay $215 million for 15 percent of JD.com, which will also receive some of Tencent’s e-commerce assets including a minority stake of its flagship Yixun.com B2C service. (company announcement) The companies will merge their e-commerce businesses, creating a new player with nearly a quarter of China’s B2C e-commerce market. Continue reading →
As I longtime China resident, one of the most fascinating things for me to watch over the last 2 decades has been the rapid rise of the country’s private sector, which has spawned such big names as real estate giant Wanda Group and Internet leader Tencent. But a big majority of China’s economy still comes from the state-run sector, where many of the largest companies like Sinopec and China Mobile have also thrived on a combination of innovation and also strong protection from Beijing.
While these government-owned giants have thrived, the nation’s thousands of smaller state-run firms have faced a more uncertain fate. Many of these suffered from poor management, and quietly closed over the years as they failed to compete with better-run private sector players. Continue reading →
After a massive rally over the last year, shares of solar panel makers could be set for a few months of winter following a disappointing earnings announcement from superstar Canadian Solar (Nasdaq: CSIQ) and a debt default from second-tier player Chaori Solar (Shenzhen: 002506). Such a correction was almost inevitable after last year’s huge rally and shouldn’t be cause for concern among long-term buyers of shares in top players like Canadian Solar. But shareholders of second-tier firms like Chaori might think strongly about selling their stock, as these smaller companies could easily end up getting wiped out or sold for bargain prices in the sector’s ongoing consolidation as it emerges from a 2-year downturn.
The following press releases and media reports about Chinese companies were carried on March 8-10. To view a full article or story, click on the link next to the headline.