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 →
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 →
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.
The list of major Chinese entertainment firms jumping on the Hollywood bandwagon has just gained an important new member with word that Huayi Bros (Shenzhen: 300027) is on the cusp of investing in a major new production house. I’ve been following the China media scene for more than a decade now, and can say that Huayi was one of the nation’s earliest major players to emerge in a space that was extremely difficult for years due to tough restrictions and extreme fragmentation. But Huayi has shown not only an ability to survive, but also to thrive in a market where the movie theater business is suddenly booming and online video has quickly become an important new revenue source. Continue reading →
I had a sense of deja vu on reading reports that a group of workers at an IBM (NYSE: IBM) plant in south China had gone on strike, unhappy about the terms of their transfer to domestic PC giant Lenovo (HKEx: 992) under a recent M&A deal. It seems the workers in the city of Shenzhen were offered similar pay and other terms under the transfer, which came as the result of Lenovo’s pending purchase of IBM’s low-end server business announced in January. But the workers were still unsatisfied, feeling they should get higher pay for agreeing to work at a domestic company rather than the more prestigious IBM. Continue reading →
The 4G strategies of China’s 2 smaller telcos are starting to emerge under an unusual hybrid scheme being rolled out by the nation’s telecoms regulator, and the path being pursued by China Unicom (HKEx: 762; NYSE: CHU) certainly doesn’t look encouraging. Both Unicom and China Telecom (HKEx: 728; NYSE: CHA) have been given the nod to launch commercial 4G service using a homegrown standard known as TD-LTE, even though both plan to build their main networks using a more globally tested technology technology called FDD-LTE. But whereas China Telecom is making minimal investment in TD-LTE, Unicom seems intent on wasting billions of dollars, with word that it has awarded contracts to 8 companies to start construction of a network based on the technology. (Chinese article) Continue reading →
The following press releases and media reports about Chinese companies were carried on March 7. To view a full article or story, click on the link next to the headline.
8 Companies Win Awards In First Round Of Unicom (HKEx: 762) 4G Tenders (Chinese article)
IBM China Workers Strike Over Terms In $2.3 Bln Lenovo (HKEx: 992) Deal (English article)
L’Oreal 2013 China Sales At $13.3 Bln, 13th Year Of Double-Digit Growth (Chinese article)
Dangdang (NYSE: DANG) Announces Resignation Of CFO (PRNewswire)
Huayi Bros (Shenzhen: 300027) Prepares To Go To Hollywood, Shares Halted (Chinese article)
If I was a shareholder in e-commerce firm Dangdang (NYSE: DANG), I would definitely sell my stock after hearing about the company’s latest announcement of a tie-up with Walmart-backed (NYSE: WMT) Yhd.com. I personally wasn’t surprised by the nature of the tie-up, which will see the pair cross-promote each others’ services, even though I was a bit disappointed that there was no equity exchange. Dangdang had previously confirmed it would announce a tie-up after rumors of an alliance first appeared a few weeks ago. This kind of hype followed by disappointment is quite typical of Dangdang’s co-founder and CEO Li Guoqing, whose fierce independence could ultimately lead to the marginalization or even death of his company. Continue reading →
Everyone is getting quite excited these last 2 days about word that Beijing will soon launch a major new sell-down of its stake in many of China’s largest state-owned enterprises (SOEs), in a bid to breath new life into these bureaucratic behemoths. The news certainly looks like a positive sign all around, providing an exciting new opportunity for investors who would prefer to own major companies that behave more commercially rather than the current group that take their orders from Beijing.
Equally important, the shift could help many of these state-run giants to shed their “SOE stigma”, which often carries connotations of state-control, bureaucracy and political agendas. Such a shift could fuel a new wave of outbound M&A by some of these giants, whose major global purchases often raise suspicions among host governments who currently view such SOEs as tools used by Beijing to execute its political goals. Continue reading →
Much of the China tech world was focused last week on the world’s largest telecoms trade show taking place in Barcelona, but one company that was noticeably absent from the Mobile World Congress was fast-rising smartphone maker Xiaomi. That absence was all the more noticeably because Xiaomi has made no secret of its plans for a global expansion this year as part of a strategy to maintain its explosive growth in the 4 years since its founding. Xiaomi seems to have skipped the big show this year, and instead focused its energies on its own internal suppliers meeting, as reflected by a flurry of microblog posts from that event. Continue reading →