CELLPHONES: Meizu, Qihoo Join Smartphone March to India

Bottom line: Qihoo and Meizu are likely to struggle with their new smartphone campaigns in India, where intensifying competition will also undermine domestic rivals like Xiaomi and Huawei that have recently entered the market.

Qihoo unveils new Qiku smartphones

Qihoo (NYSE: QIHU) and Meizu have announced they are taking their smartphones to India, becoming the latest Chinese brands to export to the fast-growing but increasingly competitive market. India is actually the second stop on Qihoo’s smartphone roadmap, which will begin in its home China market with the launch of the first 2 models of its new Qiku smartphone brand. Meizu has become a major second-tier player in its home China market over the last few years, and formally announced its own move into India this week as it looks to move overseas.

The pair will join several of China’s top smartphone makers in the increasingly crowded India market, which shares many qualities with China. Xiaomi launched in India last year and the market quickly became its second largest globally, while Huawei’s Honor brand has also scored rapid progress in the market. But Qihoo’s biggest competitor in India could be Coolpad (HKEx: 2369), which is already a big player in the market but will also produce Qihoo’s new smartphones through a joint venture formed by the pair last year. Read Full Post…

CELLPHONES: Huawei’s Honor Smartphones Zoom in India, Eye US

Bottom line: Strong sales growth for Huawei’s Honor brand in the first half of the year reflects the company’s broader accelerating momentum, and could pose a growing challenge for domestic rival Xiaomi.

Huawei’s Honor brand grows in India, eyes US

More new data is showing the growing momentum for smartphone aspirant Huawei, with word that the company’s Honor brand surpassed its sales target in the first half of the year as it prepares to enter the US. The latest numbers continue to portray a surging Huawei, and show how the company is using its traditional strengths in product development and a newer expertise in consumer marketing to overtake big domestic rivals like Xiaomi and Lenovo (HKEx: 992) and also a host of smaller ones like Meizu and Coolpad (HKEx: 2369).

These latest numbers don’t look extremely impressive at first glance, as they show that Honor just slightly surpassed its sales target for the first half of the year. But in the current climate where many companies are missing their targets due to intense competition in China, the ability to not only meet but even slightly exceed a sales target does seem like a noteworthy accomplishment. Read Full Post…

News Digest: August 28, 2015

The following press releases and media reports about Chinese companies were carried on August 28. To view a full article or story, click on the link next to the headline.

  • Chinese Banking Giants: Zero Profit Growth as Bad Loans Pile Up (English article)
  • Motorola to Lead Lenovo (HKEx: 992) Mobile Unit in New Overhaul (Chinese article)
  • Cinda (HKEx: 1359) Only Bidder for BOC (HKEx: 3988) Bank Unit with $8.8 Bln Price (English article)
  • Dalian Wanda Buys Ironman Triathlon Owner for $650 Mln (English article)
  • Uber China Unit Wins $1 Bln in New Funding – Source (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

CONSUMER: Boeing, Smithfield Defy Economic Downturn, See Strong China Demand

Bottom line: Upbeat reports from leading pork producer Smithfield and aircraft giant Boeing show that consumer-focused companies should continue to thrive despite China’s slowing economy, while policy-driven state-run firms could suffer more.

Boeing ups China aircraft outlook

A couple of upbeat new reports from aircraft giant Boeing (NYSE: BA) and leading global pork producer Smithfield are providing an interesting contrast to broader forecasts of gloom and doom for China’s slowing economy. In the first instance, Boeing has upgraded its 20 year forecast for aircraft demand in China, while the second has Smithfield has saying its exports to China rose 45 percent in the first half of this year.

Each of these stories is slightly different, but both point to a growing divide in the Chinese economy that has big implications for the nation’s major industries. On one side of the aisle are companies like Boeing and Smithfield, which make products and services directly tied to consumer demand. Such products and services are part of the so-called “real economy” and are things that the market really wants. These should be able to continue thriving even if China’s economy slows. Read Full Post…

CELLPHONES: Apple Strong in China, Xiaomi Looks to Africa

Bottom line: Apple will continue to post strong iPhone growth in China but could lose some momentum if the stock market sell-off continues, while Xiaomi’s new push into Africa won’t offset its own rapidly slowing momentum.

iPhone China sales continue strong

Apple (Nasdaq: AAPL) and Chinese imitator Xiaomi are both in the headlines, as the former continues to consolidate its China position at the expense of the fading latter. In this case, Apple’s continuing China surge is reflected in new remarks from CEO Tim Cook, who says his company’s business has remained strong in China during the summer months despite concerns of a slowdown linked to the nation’s tanking stock markets.

While Apple has been feasting on China, Xiaomi is feeling growing pressure at home and is looking to other global markets for growth as it struggles to meet the lofty expectations it set for itself. According to the latest headlines, the latest stop on Xiaomi’s global roadmap is Africa, where the company is eyeing another BRICS country in South Africa. Such a move would put Xiaomi in 4 of the 5 BRICS, following its earlier moves into India and Brazil. Read Full Post…

News Digest: August 27, 2015

The following press releases and media reports about Chinese companies were carried on August 27. To view a full article or story, click on the link next to the headline.

  • Global PC Shipments to Fall 8.7 Pct This Year – IDC (Chinese article)
  • ZTE (HKEx: 763) Announces H1 Results (HKEx announcement)
  • Toyota (Tokyo: 7203) Poised to Restart Production at China Plant Shut in Blast (English article)
  • Qihoo’s (NYSE: QIHU) Qiku JV Releses New Smartphones (PRNewswire)
  • Meizu Announces Entry to India Smartphone Market (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

INTERNET: China Internet Sell-Off in US Fueled by Panic, New Realism

Bottom line: The recent sell-off for US-listed Chinese Internet stocks represents some panic selling but also a more realistic view of these companies by western investors, and could presage a modest rebound for their shares.

New investor realism towards China Internet stocks

After all the turmoil on China’s stock markets over the last 2 weeks, I thought it was finally time to take a closer look at what’s happened to shares of US-listed Chinese Internet companies and give my view on what’s happened and what might happen next. I was quite surprised when the selling frenzy in China over the last 2 weeks spread to US-listed Chinese shares, since names like Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) seemed like they were being punished even though they never benefited from the massive price gains seen by many of their Chinese peers over the last year.

But after moving in tandem with China’s stocks over the last 2 weeks, US-listed Chinese shares finally broke the cycle and posted strong gains on Tuesday, even as the main Shanghai index slid another 7.6 percent. Some will say that US investors were acting in response to a surprise interest rate cut by China’s central bank after Chinese markets closed on Tuesday, and that may be partly true. But I also believe that their selling over the last 2 weeks reflects a new realism by US investors about China’s growth prospects, and that investors have also woken up to the biggest truth that governs China’s stock markets. Read Full Post…

Shanghai Street View: Wartime Fudan

Senior Fudan student recalls war era
Senior Fudan student recalls war era

With the 70th anniversary of the end of World War 2 in Asia fast approaching, I’ve been looking for interesting but overlooked war stories involving my adopted home of Shanghai, which was one of China’s first cities to get dragged into the conflict. Most such stories involve a mix of perseverance, resilience and defiance, as both Chinese and foreigners in Shanghai tried to maintain their daily routines as much as possible, while also resisting the enemy and awaiting the return of peace.

That’s when I realized that one of the most fascinating stories, which includes a healthy dose of all these elements, was right under my nose at Fudan University where I’ve been teaching in the Journalism School for the last 4 years. I’d heard in the past that Fudan fled Shanghai during the war and set up temporary shop in Jiangxi province or the interior city of Chongqing, but never pursued the real story to find out what actually happened and why. Read Full Post…

News Digest: August 26, 2015

The following press releases and media reports about Chinese companies were carried on August 26. To view a full article or story, click on the link next to the headline.

  • IDC Forecasts China Smartphone Market to Grow 1.2 Pct This Year (Chinese article)
  • Asia’s Richest Man Wang Jianlin Heads List of Big Losers in China Crash (English article)
  • Boeing (NYSE: BA) Raises China 20-Year Aircraft Demand, Says Outlook Rosy (English article)
  • E-House (NYSE: EJ) Reports Second Quarter 2015 Results (PRNewswire)
  • Smithfield CFO Says China Pork Exports Rise 45 Pct in First Half (English article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

FUND RAISING: Citic Funds Uber, Lufax Eyes IPO

Bottom line: New fund-raising signals indicate car services giant Uber could spin off its China unit within a year, and that Ping An-backed P2P lending platform Lufax could make a major IPO in the same time frame.

Uber, Lufax send new fund-raising signals

Two big new fund-raising stories are in the headlines, led by a modest new funding commitment that hints at a spin-off soon for the China unit of hired car services leader Uber. Meantime, the rush to see which of China’s fast-growing peer-to-peer (P2P) lending sites will be first to market has officially begun, with separate reports saying an IPO is in the planning stages for Lufax, a Shanghai based company that is backed by one of China’s top traditional financial services firms.

Both of these deals are in the mid-range in terms of size, probably worth the $100-$500 million, contrasting with a spate of deals earlier this year that were worth much more when China’s stock market was booming. It’s still possible we could see one or two more mega-fundings worth $1 billion or more by the end of the year, though such large deals could quickly disappear if China’s stock markets and economy remain in the doldrums. Read Full Post…

INTERNET: Despite Sell-Off, NY Offers Best Value for China Internet Listings

Bottom line: Premier Chinese Internet names should eschew China’s stock markets and continue to make IPOs in New York, where they can gain more accurate valuations and greater access to global capital markets.

NY offers best value for China Internet listings

Shares of e-commerce giant Alibaba (NYSE: BABA) achieved a dubious milestone late last week, when they officially closed at their lowest price since the company’s record-breaking IPO nearly a year ago. The big rise and subsequent fall of Alibaba’s stock was part of a broader sell-off of US-listed Chinese shares, sparked by an equally large drop on China’s domestic stock markets.

The US sell-off once again cast a spotlight on the question of whether some of China’s most promising private companies should pursue such offshore listings or make IPOs at home where their names are more familiar. Despite occasional volatility like last week’s sell-off, such offshore listings remain the best choice because they provide companies with relative stability and far more accurate valuations than what their peers are getting in China’s immature markets. Read Full Post…