ENTERTAINMENT: Disney Pirates Fined as Shanghai Park Nears

Bottom line: Shanghai’s clampdown on piracy of the Disney brand reflects the city’s desire to protect its huge investment in the soon-to-open Shanghai Disneyland, and also Disney’s growing clout in China.

Shanghai protects Disneyland investment

Disney (NYSE: DIS) pirates, beware. As the grand opening of mainland China’s first Disneyland draws near, the park’s home city of Shanghai is stepping up efforts to protect is multibillion-dollar investment by clamping down on piracy of the Disney brand. That crackdown is certainly long overdue, and has just netted 5 hotels that were illegally using the Disney name to dupe visitors into thinking they were affiliated with the US entertainment giant.

In an interesting aside to this clampdown story, the 5 properties busted in the new clampdown were owned by Shenzhen-based Vienna Hotels Group. That’s significant because in August Vienna was reportedly in talks to be acquired by Shanghai’s leading hotel group Jin Jiang (HKEx: 2006; Shanghai: 600754). (previous post) Thus this latest crackdown could signal the Jin Jiang-Vienna talks ultimately collapsed, since it’s unlikely Vienna would have been targeted in such a high-profile way if it was part of the locally well-connected Jin Jiang. Read Full Post…

FUND RAISING: Weibo Backs Video, 58.com Unleashes Guazi

Bottom line: Weibo’s investment in mobile video app Miaopai looks like a smart move to build on its recent momentum, while 58.com’s spin-off of its Guazi used car service is mostly a management restructuring.

58.com spins off Guazi used car site

A couple of web-related fund-raising stories are in the headlines today, though their relatively small size reflects investor sentiment that is rapidly fading towards these money-losing Internet companies. The bigger of the 2 deals has short video app Miaopai raising $200 million, in a funding round led by China’s Twitter-like Weibo (Nasdaq: WB). The second has leading online classifieds site 58.com (NYSE: WUBA) spinning off its Guazi used car businesses, in a move aimed at giving the company more flexibility to raise money for its future growth.

The $200 million figure is one of the largest we’ve seen in recent months, but is well below mega-fundings in the first half of this year when China’s stock markets were rallying and fundings of $1 billion or more were almost ordinary. But the flow of money has slowed sharply in recent months as investors get impatient for profits, forcing a number of former rivals into mergers to accelerate their drive to profitability. Read Full Post…

RETAIL: Alibaba Gets Appetite for Ele.me, Indigestion from Meituan

Bottom line: A new landscape in China’s O2O restaurant services market is taking shape around the “big 3″ firms of Alibaba, Baidu and Tencent, with a Tencent-backed Meituan-Dianping the most likely to succeed.

Alibaba eyes Ele.me investment
Alibaba eyes Ele.me stake

We’re seeing more signs of a major shuffle in the China market for online-to-offline (O2O) dining services, with e-commerce leader Alibaba (NYSE: BABA) at the center of 2 major new developments in the space. One would see Alibaba invest $1.5 billion for about a third of Ele.me, the leader in O2O takeout dining services. The other has media reporting that Alibaba is looking to sell its 7 percent stake in Meituan-Dianping, China’s recently formed leading group buying site that operates a rival takeout dining service.

The big driver behind both of these stories is a major consolidation taking place in the O2O marketplace, where money-losing companies are suddenly scrambling to find wealthy backers after being cut off by their more traditional funding sources. Many of those companies have found a receptive audience from China’s cash-rich “big 3″ Internet titans of Alibaba, Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU). Read Full Post…

News Digest: November 26, 2015

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

  • Ganji Founder to Yang Haoyong Leaves as 58.com (NYSE: WUBA) Co-CEO, Joins Guazi.com  (PRNewswire)
  • Sina (Nasdaq: SINA) Leads $200 Mln Investment in Mobile Short Video App ‘Miaopai‘ (English article)
  • UnionPay, Apple (Nasdaq: AAPL) Said to Reach Apple Pay Agreement for China (English article)
  • Qunar (Nasdaq: QUNR) Reports Q3 Financial Results (GlobeNewswire)
  • Xiaomi’s $45 Bln Valuation Seen `Unfeasible’ as Growth Cools (English article)

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…