TELECOMS: Unicom, China Telecom Study 4G Network Sharing

Bottom line: A plan to pool 4G network resources between Unicom and China Telecom could be a cost saving move, but could also be the latest signal that the regulator may ultimately merge the pair.

New signs of Unicom, China Telecom merger

China’s 2 smaller telcos are reportedly studying a plan to pool their 4G networks, in the latest sign that a major industry overhaul could be coming that would see the merger of Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 762; NYSE: 728). It’s hard to say what’s happening behind the scenes in China’s opaque telecoms sector, since any plans for such a merger are probably only known to regulators at the secretive Ministry of Industry and Information Technology (MIIT).

A high-ranking MIIT official said recently that he was unaware of plans for such a merger, indicating that nothing was imminent. But a growing number of signs are pointing to such a plan, though the cautious MIIT appears to be taking a very slow approach whose end goal wouldn’t necessarily be an outright merger but could instead also include a complex network-sharing arrangement. Read Full Post…

SMARTPHONES: Xiaomi, LeTV Stars Fade Further

Bottom line: Xiaomi’s newest product launch focused on cheap smartphones and LeTV’s scrapping of an IPO for its film-making unit reflect fading prospects for these former superstars due to stiff competition.

Xiaomi rolls out more bargain phones

Former Chinese superstars Xiaomi and LeTV (Shenzhen: 300104) are in the headlines with new setbacks, reflecting the meteoric rises and equally fast falls that China is producing in its own version of the dot-com bubble. But this bubble has distinctly Chinese characteristics, and is coming in a more mature Internet where rampant competition and copycatting make it very difficult to make profits.

The first headline has Xiaomi rolling out 3 of its newest smartphones that are decidedly low-end, representing a big setback for the company’s drive to produce higher-end models that have fatter profit margins. The second headline has LeTV scrapping a plan to make a separate listing for its filmed entertainment unit, a year after hyping a new IPO that it hoped could mimic the meteoric rise in its own stock earlier this year. Read Full Post…

Shanghai Street View: Offline Enforcement

Fenxian school bans smartphones in class

I often use this space to spotlight news where Shanghai looks like a trendsetter, and that certainly looks like the case with a small but hopefully significant item involving the smartphones that have become an indispensable fixture of everyday life for many, myself included. This particular news has seen an entire department at a local university take the bold step of banning students from bringing their smartphones into class.

As a university teacher, I have to enthusiastically applaud the move by the School of Art, Design and Media at East China University of Science and Technology in Fengxian District. I also hope that many departments and perhaps entire universities will follow suit, and that the move could spark a broader debate about when, where and how it’s appropriate to use smartphones in a big city like Shanghai. Read Full Post…

News Digest: November 25, 2015

The following press releases and media reports about Chinese companies were carried on November 25. To view a full article or story, click on the link next to the headline.

  • Apple (Nasdaq: AAPL) Seeks to Launch Apple Pay in China by February – Sources (English article)
  • Unicom (HKEx: 763) Drafts Proposal to Share 4G Network with China Telecom – Reports (English article)
  • China’s HNA Agrees to Buy 24 Pct of Brazilian Airline Azul (English article)
  • LeTV (Shenzhen: 300104) Drops Listing Plan for Filmed Entertainment Unit (Chinese article)
  • Dangdang (NYSE: DANG) Announces Unaudited Q3 Results (PRNewswire)

MEDIA: Alibaba’s Ma Eyes Stake in Iconic HK Newspaper SCMP

Bottom line: Jack Ma is unlikely to tamper with content at the South China Morning Post if he buys a stake in the iconic Hong Kong newspaper, but instead will look for ways to leverage its content using more dynamic new media platforms.

Jack Ma eyes HK newspaper stake

A sketchily-sourced report from 2 weeks ago is suddenly getting major new credibility, with word that Alibaba (NYSE: BABA) founder Jack Ma is near a deal to take a major stake in Hong Kong’s SCMP Group (HKEx: 583), publisher of one of Asia’s oldest and most profitable English language newspapers. The biggest twist in the latest reports is that Ma himself and not Alibaba would invest in SCMP, owner of the South China Morning Post newspaper.

The earlier reports were based on a story citing vague rumors that Ma was in talks with the SCMP, leading me to say that such a move looked logical even if sourcing in the reports was quite shaky. (previous post) The newest report has far more solid sourcing and comes from the reputable Bloomberg, meaning the chances are high that a deal is really happening. Read Full Post…

TRAVEL: Tuniu Hitches With HNA, Spurns Ctrip

Bottom line: Tuniu’s new tie-up with HNA looks like a smart move that could position it as a leading provider of resort vacation packages, and could also signal the rise of a meaningful rival to industry leader Ctrip.

Tuniu travels to Hainan with HNA

Leading online travel site Ctrip (Nasdaq: CTRP) has emerged as the loser in a recent bidding war for a stake in smaller rival Tuniu (Nasdaq: TOUR), which has just announced a new alliance that will see it receive a $500 million investment from one of China’s top traditional travel companies. This latest in a recent flurry of deals from the travel space will see HNA Tourism get about a quarter of Tuniu’s shares for its investment, making it Tuniu’s largest shareholder.

HNA Tourism is a unit of HNA Group, one of China’s more dynamic state-run investors that is also parent of Hainan Airlines (Shanghai: 600221), one of the country’s best-run airlines. Based in the tourism-friendly island of Hainan, HNA certainly looks like a logical and well-connected partner for Tuniu, even though media were reporting last week that the more entrepreneurial Ctrip was in talks for a similar deal. (previous post) Read Full Post…

INTERNET: Google Tries Transparency on Road Back to China

Bottom line: Google should follow the example set by LinkedIn and Apple and be more transparent when it returns to China, and should work with Beijing to forge a more constructive relationship.

Google eyes China return in 2016

One of the strongest signals yet that Google (Nasdaq: GOOG) could soon return to China came late last week, when media reported the company was aiming to open a Chinese version of its Google Play app store next year in accordance with relevant Chinese laws. Such a move would represent an important improvement in the company’s relationship with Beijing, coming 6 years after Google shuttered its China-based search service due to a disagreement on self-policing policies that apply to all sites in China.

The shift is being driven by both sides, amid a realization that they can work together constructively to each other’s benefit. Google’s realizes that China is a market it can’t afford to ignore, with the world’s largest base of 600 million Internet users and 1.3 billion mobile subscribers. Beijing also realizes that a high-tech giant like Google can bring important technology and know-how to the country, whose large stable of smartphone makers already rely heavily on Google’s free Android operating system (OS). Read Full Post…

News Digest: November 24, 2015

The following press releases and media reports about Chinese companies were carried on November 24. To view a full article or story, click on the link next to the headline.

  • Tuniu (Nasdaq: TOUR) Announces $500 Mln Investment from HNA Tourism (GlobeNewswire)
  • Alibaba (NYSE: BABA) to Invest $1.5 Bln in Takeout Delivery Platform (English article)
  • Alibaba’s Jack Ma Said to Be in Discussions to Buy SCMP (HKEx: 583) Stake (English article)
  • Trina Solar (NYSE: TSL) Announces Q3 Results (PRNewswire)
  • Bank of Jinzhou Starts $943 Mln Hong Kong Initial Offering (English article)

INTERNET: Alibaba-Meituan Discord — Split Ahead?

Bottom line: Reports of a recent spat between Meituan and Alibaba are probably exaggerated, but do point to growing tensions that could ultimately prompt Alibaba to sell its small stake in Meituan.

Alibaba, Meituan clash in takeout dining

Everyone is trying to interpret whether a split is imminent between e-commerce leader Alibaba (NYSE: BABA) and leading group buying site Meituan, following a flurry of reports about a spat between the pair over the past few days. The situation is casting a spotlight on the massive web of cross-ownership relationships between many of China’s Internet companies, which is creating odd bedfellows and other conflicts as a wave of mega mergers has swept China’s Internet over the last 2 years.

In this case the conflicts are coming on 2 fronts. The larger of those is related to Meituan’s pending mega merger with archrival Dianping, in a deal announced last month. That union also brought together China’s 2 largest Internet companies in another odd partnership, since Meituan is partly owned by Alibaba and Dianping counts Tencent (HKEx: 700) as one of its largest investors. Read Full Post…

TRAVEL: Hotel Owners Unite to Counter Ctrip, Qunar

Bottom line: A new alliance between some of China’s largest hotel operators is the latest reaction to Ctrip’s growing clout in the travel services sector, and could lead the anti-trust regulator to take remedial action next year.

Hotel operators band together against Ctrip

An increasingly powerful Ctrip (Nasdaq: CTRP) is in the headlines as the new week begins, with word that some of China’s top hotel operators are banding together to protest what they see as unreasonable demands by the online travel services giant. News of this action is once again spotlighting Ctrip’s recent purchase of big stakes in nearly all of its major rivals, in a bid to reduce the rampant competition that has plagued the industry over the last 2 years.

I wrote about this issue just last week, when media reported that Ctrip was in talks to take a stake in travel package site operator Tuniu (Nasdaq: TOUR), one of the few major players that doesn’t have an equity alliance with Ctrip. (previous post) I observed that such a tie-up would help Ctrip by neutering one of its last major domestic rivals. That could ultimately draw the attention of China’s anti-trust regulator, which until now hasn’t taken any action to break-up near monopolies in many  of the country’s Internet spaces. Read Full Post…

MEDIA: China Entertainment Draws Billions From Fox, Others

Bottom line: Chinese video- and entertainment-related companies will continue to attract big investments and valuations over the next year due to their strong growth potential, even as sentiment cools towards other new media companies.

Mango TV eyes major new funding

Investor sentiment may be rapidly cooling towards many Internet areas in China, but entertainment is one that still remains quite popular. That’s my latest read on the markets, following news of major new financing for 2 companies and a new Sino-foreign co-production deal in the hot video and movie-making sectors.

Up-and-coming online video operator Mango TV is at the center of the biggest news in terms of value, with media reporting it’s aiming to raise a hefty 20 billion yuan ($3.2 billion) in just its second funding round. Movie ticket booking app Weiying Shidai is in a smaller but still sizable fund-raising headline, with reports that it has just raised 1.5 billion yuan in its third funding round. Last but not least is word of a film co-production deal between local studio Huace (Shenzhen: 300133) and global giant Twenty-First Century Fox (Nasdaq: FOX). Read Full Post…