YCBB on Holiday

We will be on holiday October 1 and 2 for the Chinese National Day holiday. We will resume some limited publishing on Oct 5, and will return to a normal publishing schedule on October 8.

INTERNET: Microsoft Cozies with Baidu, Bing Set for China Exit?

Bottom line: Microsoft’s new tie-up with Baidu could presage a major scale-back for its China-based Bing search engine, paving the way for Baidu technology to power the struggling service.

Microsoft, Baidu in new China search tie-up

An interesting new dance is taking shape between global software titan Microsoft (Nasdaq: MSFT) and leading Chinese search engine Baidu (Nasdaq: BIDU), paving the way for a potential exit of Microsoft’s Bing search engine from China after years of disappointing results. After announcing a new tie-up that will see Baidu promote Microsoft’s upcoming Windows 10 operating system in China, the pair are saying said that Baidu will now become the default search engine on the web browser associated with the newest Windows.

Microsoft will clearly benefit from the first move, which should help it to sell more legal copies of its core Windows OS in China. Baidu is the clear beneficiary from the second move, making this look somewhat like an even trade-off. But while the first move is relatively neutral to Baidu, the second will see Microsoft effectively sacrifice Bing in China. That’s because very few people use the search engine, and now that number will drop even more if Bing loses its default status on the new Windows browser. Read Full Post…

TELECOMS: Laggard China Telcos Forced to Lower Data Costs

Bottom line: A new plan allowing customers of China’s 3 telcos to roll over unused data is being forced upon them by Beijing, and once again underscores the regulators’ frustration at their inability to innovate.

Telcos launch data roll-over policy

In the latest signal of just how uncreative China’s big 3 telcos are, the trio have all just simultaneously announced a major new move to boost data usage on their networks by lowering costs for consumers. It will come as no surprise that none of the 3 carriers are taking this step voluntarily, and instead are being forced into the move by the telecoms regulator. But that’s quite common for the uninspired trio of China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).

Instead, it’s more interesting to note that this new move may represent the latest signal of Beijing’s growing frustration with a trio of companies that have become global laggards despite having a state-granted monopoly over the world’s largest telecoms market. That frustration could see Beijing soon decide to end the state-run monopoly, in an overhaul that would allow privately funded players into the market and perhaps even see a merger for 2 of the current big 3 telcos. Read Full Post…

TELECOMS: Cisco Courts Beijing with Inspur Tie-Up

Bottom line: Cisco’s new joint venture will mostly resell its networking equipment into China, and is unlikely to ease Beijing’s worries that its products could be used by Washington for cyber spying.

Cisco calls on China with new JV

Networking equipment giant Cisco (NYSE: CSCO) has become the latest global tech firm to capitulate to China’s national security paranoia, announcing the formation of a new joint venture with a local partner. The tie-up with Inspur Group is just the latest in a recent string of new China-based partnerships involving big western tech firms. Those companies, whose ranks also include IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ), fear that without such well-connected local partners, they could get locked out of the lucrative IT services market under tough restrictions imposed by a new Chinese national security law.

Announcement of the new joint venture with Inspur marks a major shift for Cisco, which up until now has preferred to do its business in China by itself rather than with a local partner. Cisco’s earlier go-it-alone posture has already come with a high cost it in a country where Beijing prefers to see big foreign tech names transfer technology to local partners. Thus this latest partnership should perhaps help to ease some of that pressure, even though it could ultimately put some of Cisco’s intellectual property at risk. Read Full Post…

News Digest: September 30, 2015

The following press releases and media reports about Chinese companies were carried on September 30. To view a full article or story, click on the link next to the headline.

  • Facebook’s (Nasdaq: FB) Sandberg: China Business ‘Thriving’ Amid Ban (English article)
  • Shoemaker Skechers (NYSE: SKX) Plans 4,000 China Stores in Next 3 Years (Chinese article)
  • Microsoft To Replace Bing With Baidu (Nasdaq: BIDU) on Windows 10 in China (English article)
  • 3 Telcos to Launch New Policy Allowing Data Carry-Over on Oct 1 (Chinese article)
  • Google (Nasdaq: GOOG) Unveils Nexus Phones by Huawei, LG to Battle IPhone (English article)

INTERNET: Alibaba’s Govt Relations Campaign in Overdrive

Bottom line: Alibaba needs to take a more low-key approach to improving its government relations, rather than making a big spectacle of cultivating better ties with Beijing.

Alibaba govt relations campaign in overdrive

Alibaba (NYSE: BABA) founder and chief cheerleader Jack Ma has never really understood the meaning of the word “moderation”, which is all too clear with his sudden interest in cultivating better relations with Beijing. Ma has been pulling all the stops in a bid to be closely associated with this week’s US trip by Chinese President Xi Jinping, appearing at related events and announcing a new donation that synchronized nicely with a concurrent speech by Xi.

All that schmoozing certainly looks understandable, and Ma was actually just one of many US and Chinese tech leaders trying to share the stage with China’s president on his first state trip to the US. But Alibaba’s public relations machine was taking things just a bit too far when it joined the Beijing love affair and began promoting stories related to US-Chinese themes from the official Xinhua news agency, often considered the mouthpiece of the Chinese government. Read Full Post…

SMARTPHONES: Huawei Calls on US, Google on China with Nexus Tie-Up

Bottom line: Huawei’s new Nexus tie-up with Google could help Huawei make significant inroads to the US, and could see Google enter the crowded Chinese smartphone market by year-end.

Huawei, Google link up through Nexus

Just days after the launch of the newest iPhone, fast-rising Chinese smartphone maker Huawei will make its own renewed push into Apple’s (Nasdaq: AAPL) home turf through a highly-anticipated tie-up with Internet titan Google (Nasdaq: GOOG). This particular tie-up will see Huawei make one of the newest phones in Google’s Nexus line, in a tie-up that has been written about quite a bit already but is set for a formal announcement later on Tuesday.

That announcement would come just days after the launch of the newest iPhone 6s models, which broke records by selling 13 million units over their first weekend. Apple was able to break that record in no small part due to contributions from China, the world’s biggest smartphone market, which was absent in the last iPhone global launch due to delays for technical reasons. Read Full Post…

BANKING: Wobbly Banks Seek Public, Private Funds

Bottom line: Beijing should wean big state-run banks off government hand-outs to force them to lend more responsibly, and should even consider allowing one or two failures to make its point.

3 banks seek public, private money

Three mid-sized Chinese banks were in the fund-raising headlines last week, reflecting the difficult times many now face as they struggle with growing volumes of bad debt due to China’s slowing economy. The trio, Postal Savings Bank of China, Everbright Bank (HKEx: 6818) and Huishang Bank, were aiming to raise a massive $10 billion collectively to bolster their balance sheets, each by taking in new investors.

But their target investors were quite different. Postal Savings Bank and Huishang both chose to court the private sector through share offerings to big institutional buyers. By comparison, Everbright chose to seek funds from its state-run parent. Read Full Post…

News Digest: September 29, 2015

The following press releases and media reports about Chinese companies were carried on September 29. To view a full article or story, click on the link next to the headline.

  • Walmart’s (NYSE: WMT) Yihaodian Overhaul Sparks Mass Resignations (Chinese article)
  • Google (Nasdaq: GOOG) Leads Huawei into US Smartphone Market (Chinese article)
  • Didi Kuaidi Invests in Indian Car Hire App Ola (English article)
  • Beijing Commerce Department Opens Inquiry into Xiaomi False Claims (Chinese article)
  • Yahoo (Nasdaq: YHOO) Says on Track to Spin Off Alibaba (NYSE: BABA) Stake This Year (English article)

FUND RAISING: Doctor App Raises Big Bucks, Hertz Cashes Out of CAR

Bottom line: Guahao’s new mega-funding spotlights big growth possibilities for private medical service providers, while Hertz could continue to sell down its stake in Car Inc as China’s auto market slows.

Guahao finds riches in medical booking app

IPOs may have ground to a halt due to China’s recent market volatility, but that hasn’t stopped a steady flow of buying and selling into high-growth companies by big investors looking for the next hot trend. One such operator of a medical services app looks like the latest flavor of the day, with reports that a company called Guahao has just landed nearly $400 million in new funding. Meantime, leading rental car operator Car Inc (HKEx: 699) moved in the opposite direction, losing some momentum after early strategic investor Hertz (NYSE: HTZ) sold down more of its stake in the company.

Both of these deals are part of the natural ebb and flow of funds into and out of Chinese companies, and are often a good pointer of where the next trends might emerge. App developers have become a hot investment area, and private medical service providers are also gaining momentum under China’s overhaul of its healthcare system. Meantime, the car market is moving in the other direction due to China’s slowing economy, which is probably making big global names like Hertz less bullish on the market. Read Full Post…

SMARTPHONES: Promotions, No Crowds for iPhone 6s in China

Bottom line: iPhone 6 sales are likely to start slow in China, but could pick up momentum as the nation’s 3 wireless carriers launch aggressive promotions to attract users for their new 4G services.

iPhone 6s in subdued China launch

As everyone awaits the first sales figures for the iPhone 6 after its launch last Friday, it’s becoming apparent that Apple’s (Nasdaq: AAPL) newest smartphone isn’t drawing quite as much buzz as earlier models in China. But that said, strong promotions from some of China’s leading e-commerce sites, a price that’s relatively unchanged from previous ones and the Chinese obsession with owning the newest of everything could work to the new iPhone’s advantage in the world’s largest smartphone market.

In case anyone out there can’t tell, most of us really have no idea how the new iPhone is selling in China for this latest launch, thanks to the huge number of sales channels Apple now has in the country. In addition to official Apple stores and the nation’s 3 wireless carriers, consumers can buy their new iPhones through thousands of unauthorized Apple shops, as well as through top e-commerce sites like the ones operated by Suning (Shenzhen: 002024) and JD.com (Nasdaq: JD). Read Full Post…