INTERNET: Tencent, Alibaba Spin Dizzying Hongbao Numbers

Bottom line: Results from Chinese New Year promotions show that WeChat will continue to dominate over Alipay in gift-giving and other friend-to-friend transactions over the mobile Internet due to its original design as a SNS service.

WeChat trounces Alipay in online hongbao promotions

Most of China has been on holiday these last few days, but leading Internet companies Tencent (HKEx: 700) and Alibaba (NYSE: BABA) have been working overtime trying to put the best possible face on dizzying numbers from their red envelope gift-giving promotions over the holiday.

Tencent is focusing on the headline figure of 8 billion money-filled virtual red envelopes, known in Chinese as hongbao, that changed hands on its wildly popular WeChat messaging service through the second day of the Lunar New Year. Alibaba, meanwhile, is focusing on its own headline figure that shows its Alipay electronic payments service received a whopping 21 billion hits per minute at the height of a New Year’s promotion it held with leading TV broadcaster CCTV. Read Full Post…

Shanghai Street View: Housing History

Old jockey club to house city history museum
Old jockey club to house city history museum

Shanghai will have yet another major attraction to look forward to in the Year of the Monkey, with word that the museum that tells the story of our city’s history will soon take up a new permanent residence at the former Art Museum on the edge of People’s Square. As a fan of history museums in general, I was quite excited about the development, and have to commend the city on its choice of locations.

More broadly speaking, the new museum will become yet another feather in Shanghai’s cap as it builds up a stable of world-class attractions for both local residents and domestic and international travelers. Read Full Post…

RETAIL: Macy’s, Suning Salivate at Overseas Chinese Shoppers

Bottom line: A growing strategy by retailers like Macy’s and Suning to target Chinese tourists traveling abroad looks smart, drawing on Chinese consumers’ growing taste for imported goods and distrust of domestically made products.

Macy’s targets Chinese shoppers in US

Traditional retailing giant Macy’s (NYSE: M) is rapidly discovering a new fondness for China, with its announcement of a series of special promotions at its main US department stores targeting Chinese traveling abroad for the Lunar New Year. Macy’s new move comes just a half year after the company announced a major new China joint venture aimed at tapping the nation’s booming markets for traditional retailing and e-commerce.

At the same time, domestic Chinese retailing powerhouse Suning (Shenzhen: 002024) is targeting similar consumers traveling over the holiday to Japan, offering its own promotions using a local Japanese electronics chain it purchased last year. Read Full Post…

YCBB on Holiday

YCBB will be on holiday through February 9 for the Lunar New Year. We will resume limited publishing for the remainder of the week, and return to our normal schedule on February 15. Happy Year of the Monkey!

ENTERTAINMENT: Shanghai Disneyland Prices Tickets, Battles Scalpers

Bottom line: Shanghai Disneyland’s ticket pricing and proactive efforts to stop scalpers are being well received by media and local Chinese, boding well for a broadly positive launch when the park opens in June.

Shanghai Disneyland prices tickets

It’s still 4 months until Shanghai Disneyland (NYSE: DIS) formally opens its doors to the public, but already the park operator is fixating on its entrance tickets that are almost certain to become a hot commodity when they start hitting the market next month. The announcement of pricing for Shanghai Disneyland tickets, which was quickly followed by measures the company is taking to avoid scalpers, are part of a barrage of hype that will only accelerate as the park charges towards its opening date in mid June.

I’m usually a bit cynical about this kind of thing, since companies like Disney are masters at creating news just to keep their names in the headlines ahead of a big event, even if there’s no real news to report. But in this case the opening of the Shanghai Disneyland really does seem worthy of the buzz, since the new park marks a major milestone for both China and Disney itself.  Read Full Post…

BUYOUTS: eLong, Ming Yang Near NY Exit Door

Bottom line: eLong and Ming Yang will complete their privatizations and de-list by the middle of the year, but more than half of the buyout offers for Chinese companies still waiting to exit New York will ultimately collapse.

eLong signs final buyout offer

Two longtime New York-listed Chinese companies are charging for the exit door on this last trading day in the Year of the Ram, with online travel site eLong (Nasdaq: LONG) and wind power equipment maker Ming Yang (NYSE: MY) both saying they’ve just signed final buyout agreements that will result in their privatization. Neither of these deals was ever in much doubt, since eLong’s was backed by Internet titan Tencent (HKEx: 700) and Ming Yang’s was relatively small, valued at less than $400 million, and was crafted by the company’s chief and dominant shareholder.

This pair are likely to ultimately complete their privatizations over the next 2-3 months and de-list by mid-year, following previous successful de-listings of names like online game operators Perfect World and China Mobile Games. But the big majority of previously announced buyout plans by around 40 US-listed Chinese companies are still pending, and I still believe that half or more of those could ultimately collapse due to failure to secure necessary funding. Read Full Post…

SMARTPHONES: China’s Meizu, Xiaomi Eyeing US Market?

Bottom line: Xiaomi and Meizu are trying to expand their exports by working through third-party distributors, and could make a formal entry into the US later this year after studying the market for patent-related liability.

Meizu eyeing US?

After dancing around the edges of the lucrative but extremely competitive US market for much of the last 2 years, fast-fading Chinese superstar Xiaomi and up-and-coming local rival Meizu may finally be preparing to enter the market through tie-ups with local carriers. A flurry of new media reports say the pair of Chinese brands are already making the move via a tie-up that will see their smartphones offered by US Mobile, a virtual network operator (VNO) that uses T-Mobile’s (Nasdaq: TMUS) network.

But no sooner did the reports emerge that Xiaomi issued its own statement saying it had no plans to sell its phones in the US, and that US Mobile was not one of its authorized distributors. Meizu also said it has no announced plans to enter the US. What seems clear from all this is that both companies are probably talking with one or more distributors about selling their smartphones in the US and possibly other western markets, even though neither is quite ready to make a formal announcement. Read Full Post…

News Digest: February 5, 2016

The following press releases and media reports about Chinese companies were carried on February 5. To view a full article or story, click on the link next to the headline.
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  • Shanghai Disneyland (NYSE: DIS) Announces 30 Travel Partners, Heads Off Scalpers (Chinese article)
  • Merchants Bank (HKEx: 3968) Terminates Payment Support for P2P Lending Sites (English article)
  • Evergrande Taobao Soccer Club Fined 1 Mln Yuan, Sues League (Chinese article)
  • ChemChina, Syngenta (Zurich: SYNN) to Move Quickly on US National Security Review (English article)
  • eLong (Nasdaq: LONG) Enters into Definitive Merger Agreement for Going Private  (PRNewswire)

PCs: All Signals Point Down for Wearying Lenovo

Bottom line: Lenovo chief Yang Yuanqing is likely to resign or get replaced as company head by the end of this year as sales continue to stumble, possibly by recently named President Gianfranco Lanci from its European operations.

Lenovo looks at tough year ahead

If there’s a single word to summarize the latest quarterly results from struggling PC giant Lenovo (HKEx: 992), it’s “down”. Just about every major metric in its just-released results was down, though the company did manage to boost its net profit for the quarter thanks to recent aggressive cost cutting. But lowering costs isn’t a long-term formula for success, and investors are clearly worried about the prospects for Lenovo’s shriveling core PC business and a sputtering mobile device unit that is supposed to be its new growth driver.

Investors were clearly most spooked by Lenovo’s top line revenue, which shrank 8 percent to $12.9 billion in its latest quarter. That was the first time Lenovo has posted such a revenue decline in more than 6 years, and nicely summarizes the company’s struggles in just about all of its major product areas. Lenovo did achieve one notable milestone as its mobile device unit finally climbed from the loss column to break even. But even that is hardly an accomplishment since cost cutting was most likely the main driver behind that movement.  Read Full Post…

GUEST POST: ‘Voice of China’ Copyright Dispute Buzzes State-Run TV

By Lin Nanwei

“Voice of China” caught in copyright feud

The wildly popular “Voice of China” variety show has landed at the center of a major copyright dispute in China, attracting big audiences in its own right. How the conflict gets resolved will pose a major test for China’s young and fiercely competitive industry that makes programs for TV and other video channels.

The conflict’s origins lie in “Voice of China’s” copyright owner, the Dutch company Talpa, and Vico Systems, which has been producing the program for the last 4 seasons. After failing to come to financial terms for a fifth season of the show, Talpa found a new production partner, Talent TV and Film (Shenzhen: 300426). (Chinese article) Read Full Post…

INTERNET: Alibaba Finds New Can of Worms at Youku

Bottom line: An internal review that netted a Youku Tudou executive for suspected abuse of position was likely linked to the company’s pending purchase by Alibaba, and could be followed by more similar internal actions by China’s big tech companies this year.

Internal probe nets Youku VP

E-commerce leader Alibaba (NYSE: BABA) is quickly learning that major M&A can be a tricky business, as 2 of its largest purchases deliver headaches with the exposure of problems at acquired companies. First there were a series of accounting irregularities and a criminal investigation against an official at its Alibaba Pictures (HKEx: 1060) unit purchased in 2014, and now newly acquired online video unit Youku Tudou (NYSE: YOKU) is providing yet more headaches.

The latest problems are related to a single executive, with reports that a company vice president named Lu Fanxi has been taken away for questioning by police on suspicion of using his position for personal gain. This kind of activity is quite common in smaller Chinese companies, and Alibaba itself uncovered similarly inappropriate behavior by salespeople and fraudulent merchants at its B2B marketplace unit in 2011. Read Full Post…