SMARTPHONES: Smartisan Value Dives, LeEco Sales Sputter

Bottom line: Smartisan’s plummeting value and big losses point to a possible sale or closure of the company by year-end, while LeEco’s weak smartphone sales reflect the market’s overheated condition.

Smartisan value gets hammered

Separate stories from 2 of China’s decidedly second-tier smartphone brands highlight ongoing stress in the overheated sector, even though a major casualty has yet to emerge. But that could change soon, with word that the asset value of high-brow brand Smartisan has plummeted over the last year, as disclosed in a new filing by one of its investors. Meantime, online video superstar LeEco (Shenzhen: 300104) has disclosed sales figures that look quite weak for its own smartphone business, which it launched more than a year ago with big hopes.

I’ve previously predicted we would see one or two major casualties from China’s crowded smartphone sector this year, though we have yet to see any big names close or get purchased. But there are still 3 months left in 2016, so perhaps we’ll see one or two mid-tier players finally decide to call it quits. Read Full Post…

NEW ENERGY: Tesla Takes New China Hit with Driver Death Lawsuit

Bottom line: A Beijing lawsuit against Tesla over an accident that killed the driver of one of its cars is quite possibly baseless, but will add to a recent string of negative publicity for the company and China’s problem-plagued new energy vehicle sector.

Tesla sued over driver death in China

Electric car maker Tesla (Nasdaq: TLSA) is in the negative headlines in China driving into the new week, following reports of a Beijing lawsuit against the company over the death of a driver of one of its cars. I’ll be quite direct and say that the lawsuit looks a bit dubious and perhaps unrelated to Tesla’s technology, though it’s also possible that Tesla’s carefully worded statement is designed to give that impression. But even if the lawsuit is baseless, this kind of negative headline is the last thing that Tesla needs in a problem-plagued market that it once hoped would fuel its difficult drive into profitability. Read Full Post…

China News Digest: September 23, 2016

The following press releases and news reports about China companies were carried on September 23. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • US Bank Regulators Join Investigation Into JPMorgan’s (NYSE: JPM) China Hiring (English article)
  • UCar Launches Consumer Private Car Services Platform, Challenges Didi-Uber (Chinese article)
  • Carlyle Sues China ATM Firm Seeking $369 Mln Over Missed IPO (English article)
  • Smart Robot Developer Rooboo Secures $100 Mln Series A Funding (English article)
  • New Management Shakeup at Autohome (NYSE: ATHM) With Exit of Co-Founder, VP (Chinese article)

INTERNET: Tencent, Alibaba Take Bite Out of Scandal-Hit Baidu

Bottom line: Alibaba is the biggest beneficiary of business lost by Baidu after a scandal earlier this year, with search rivals Qihoo and Sogou also likely to pick up new business.

Baidu loses digital ad crown to Alibaba
Baidu loses digital ad crown to Alibaba

A couple of news items are showing how Baidu’s (Nasdaq: BIDU) core search business is coming under assault from several directions, in an ominous sign for the company’s main revenue source. The first item shows that Baidu has officially lost its crown as China’s top digital adverting platform to e-commerce titan Alibaba (NYSE: BABA), following a scandal earlier this year that wiped out up to a fifth of its revenue. In the other item, reports are saying that China’s other Internet titan Tencent (HKEx: 700) has boosted its stake in Sogou, one of Baidu’s main search rivals, to 45 percent. Read Full Post…

INTERNET: Adjusting NetEase Eyes Cloud, Has BAT Potential

Bottom line: NetEase’s move into cloud computing and closure of its forum service are part of an overhaul positioning it for future growth, and could propel it into China’s top 3 Internet companies in the next 5 years.

NetEase launches cloud service

China’s lowest-key Internet giant NetEase is making some more new adjustments, extending reports last week that it was planning to spin off or sell its old but stagnating web portal business. One of the new moves includes word that the company has shuttered its equally slow-growth web forum business. The other has the company launching a new cloud service, with plans to pump hundreds of millions of dollars into the business over the next few years. Read Full Post…

China News Digest: September 22, 2016

The following press releases and news reports about China companies were carried on September 22. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • Alibaba Takes Lead in China Digital Ad Market, Baidu Drops to Second (press release)
  • Postal Savings Bank of China IPO Raises $7.4 Bln After Pricing at Low End (English article)
  • China Telecom (HKEx: 728) to Close Accounts Without Real Name Registration (Chinese article)
  • Sony (Tokyo: 6758) Close to Motion Picture Alliance With China’s Wanda (English article)
  • Filing Shows Smartisan Value Drops By 500 Mln Yuan in Half Year (Chinese article)

IPOs: Postal Bank Offering Fizzles, Anbang Eyes HK

Bottom line: Postal Savings Bank’s IPO is likely to price weakly and make a flat trading debut due to waning enthusiasm, while Anbang could make a similarly large IPO next year that will get an equally tepid reception.

Anbang eyes HK IPO

The world’s biggest IPO in 2 years is quickly running out of steam, with word that a Hong Kong listing by Postal Savings Bank of China, the nation’s last national bank to list, is set to price near the bottom of its range. Meantime, what could easily become one of next year’s biggest offering has just popped into the headlines, as insurance giant Anbang is saying in one of its first-ever foreign media interviews that it wants to make its own listing, also in Hong Kong. Read Full Post…

ENTERTAINMENT: Pokemon Go Coming to China, Set for Flop?

Bottom line: Pokemon Go could launch in China as soon as the end of this year, but is likely to get a tepid reception due to its late arrival and fading buzz in other countries.

After months of silence in the world’s largest mobile market, Pokemon Go, the wildly popular mobile game that debuted this summer in most of the world, may be finally coming to China soon. That’s the word coming from new media reports, which are citing the CEO of Niantic, the San Francisco-based developer of the popular title that takes mobile gaming to a new level by adding global positioning (GPS) technology. But the bigger question is whether Pokemon Go will get much attention from Chinese gamers, since it seems to be well past its prime after making global headlines over the summer. Read Full Post…

China News Digest: September 21, 2016

The following press releases and news reports about China companies were carried on September 21. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • Postal Savings Bank of China Set to Price Hong Kong IPO Near Low End (English article)
  • New Disclosure Shows Tencent (HKEx: 700) Owns 45 Pct of Search Engine Sogou (Chinese article)
  • NetEase (Nasdaq: NTES) Launches Cloud Service, to Invest ‘Several Billion Yuan’ (Chinese article)
  • Dangdang (NYSE: DANG) Announces Completion of Merger (PRNewswire)
  • Bright Food Approved to Buy Stake in New Zealand’s Largest Meat Processor (English article)

MEDIA: Wanda, Baidu Spurned by Film Partners

Bottom line: Wanda will look for new Hollywood assets after being rejected in the bidding for a stake of Paramount, while the departure of a member of the group buying Baidu Video is a minor setback and a new investor will be easily found.

Paramount abandons stake sale plan

A couple of headlines are showing that China’s love affair with the film and video industries isn’t always so smooth, with the collapse of 2 major deals involving cinema giant Wanda and online search leader Baidu (Nasdaq: BIDU). The far larger of the 2 developments has seen leading Hollywood studio Paramount scrap plans to sell a strategic stake in itself, ending a deal that reportedly had seen Wanda emerge as one of the most likely buyers. The Baidu deal is quite a bit smaller, and has seen one of the buyout partners withdraw in a plan to spin off its relatively minor Baidu Video business. Read Full Post…

RETAIL: Yum, McDonald China Spin-Offs Advance, Offer New Template

Bottom line: Yum and McDonald’s are likely to complete spin-offs of their China units by year end, offering a new business template for multinationals that should be encouraged with incentives from Beijing.

Yum names board for China unit

Separate plans by fast food giants KFC and McDonald’s (NYSE: MCD) to spin off their China businesses into separate companies were in the headlines last week, in a new trend that could see other big multinationals take similar steps to address the market’s huge size and unique qualities. Each company is using a slightly different strategy, with KFC parent Yum Brands (NYSE: YUM) choosing a key strategic partner and separate listing for its China unit. By comparison, McDonald’s is simply selling its China stores to a strategic partner in a franchise-style arrangement, while maintaining control of its bigger China operations. Read Full Post…