GUEST POST: Cross-Border E-commerce: New Regulation, New Opportunities?

By Federico Sferrazza

China moves to regulate cross-border e-commerce

Accused of poor regulation and unfair competition by traditional import-export traders, cross-border e-commerce in China has been subject to new regulations since the beginning of April. Over the long term, the new regulation is expected to improve the shopping experience by focusing on the quality of goods.

With over 5,000 cross-border online trading platforms and more than 200,000 enterprises involved, e-commerce has become a major force for foreign trade into and out of China. In 2015, cross-border consumer deals settled online reached $ 40 billion, up 50 percent, representing over 6 percent of the total consumer e-commerce sector. China’s Commerce Ministry estimates the broader cross-border e-commerce market is much larger, growing at an average rate of 30 percent to reach up to $1 trillion by 2018. (analysis report) Read Full Post…

China News Digest: May 26, 2016

The following press releases and news reports about China companies were carried on May 26. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) Undergoing SEC Investigation Over Accounting Practices (English article)
  • Tencent’s (HKEx: 700) Ma Says Daily Mobile Payment Transaction Volume Over 500 Mln (Chinese article)
  • BOE (Shenzhen: 000725) Debuts Flexible LED Display at US Trade Show (Chinese article)
  • Baidu (Nasdaq: BIDU) Limits Number of Search Ads Per Page to 4 (English article)
  • Lenovo (HKEx: 992) Analysts Slash Outlook on Company’s ‘Mobile Crisis’ (English article)

MULTINATIONALS: Shanda, Tencent in Global P2P, Gaming Buys

Bottom line: Shanda’s purchase of 12 percent of LendingClub reflects its new investment focus on global financial services, while Tencent’s pursuit of a major Finnish game maker is consistent with its previous M&A strategy.

Tencent eyes Finland’s Supercell

Major outbound M&A deals involving 2 of China’s largest private firms are in the headlines today, with new moves by private equity investor Shanda and Internet giant Tencent (HKEx: 700) reflecting their latest buying priorities. The first deal has Shanda buying a large stake in LendingClub (NYSE: LC), the peer-to-peer (P2P) US lending pioneer whose shares have tumbled recently due to a scandal involving some of its loans. The other headline has Tencent looking to take control of Finnish game maker Supercell, in a deal that would be its biggest acquisition of all time valued at several billion dollars. Read Full Post…

SMARTPHONES: Xiaomi Shrivels in China, Huawei Gets Assertive

Bottom line: Xiaomi’s rapid slide in China is unlikely to ease soon and it’s likely to fall out of the top 5 brands before year end, while Huawei’s lawsuit against Samsung reflects a new confidence with its recent rapid rise.

Xiaomi rapidly losing steam in China

New headlines are shining a spotlight on 2 of China’s best-known domestic smartphone brands, even though the fast-rising Huawei and rapidly sinking Xiaomi are moving in opposite directions. New data shows just how badly Xiaomi has slipped over the last year at home, where the former market leader is now in danger of dropping out of the top 5 following a huge decline in first quarter sales. Meantime, the same data show a continued surge for Huawei, which is showing its growing confidence by a filing a new patent lawsuit against global smartphone leader Samsung (Seoul: 005930). Read Full Post…

ENTERTAINMENT: Alibaba Kicks Up China Soccer Spree, NBA Club in Sight?

Bottom line: A recent spree of European soccer purchases by Chinese buyers could auger a similar bid for an NBA team in the next 1-3 years, with Alibaba and Wanda as 2 of the most likely buyers.

Alibaba in talks for FIFA sponsorship

A recent stream of global sports investments from China has bounced back into the headlines, with word that e-commerce juggernaut Alibaba (NYSE: BABA) is near a major sponsorship deal with soccer giant FIFA, even as a Chinese businessman has just signed a separate deal to buy British club Aston Villa. The 2 latest deals spotlight China’s sudden fascination with global sports, as millions of Chinese embrace these globally famous names over local leagues that are far less professional and tainted by corruption scandals.

Nearly all of the deals to date have been focused in Europe and on soccer, which is hugely popular in China. But basketball is equally popular in the world’s most populous country, which raises the intriguing question of when we might see a Chinese buyer bid for an NBA team, in what would be a first-of-its kind deal sure to make global headlines. Read Full Post…

China News Digest: May 25, 2016

The following press releases and news reports about China companies were carried on May 25. To view a full article or story, click on the link next to the headline.
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  • Tencent (HKEx: 700) in Talks to Buy Supercell Stake From SoftBank, WSJ Says (English article)
  • Huawei Sues Samsung (Seoul: 005930), Demands Royalties on Phone and Tablet Tech (English article)
  • Chinese Billionaire Chen’s Shanda Buys 11.7 Pct of LendingClub (NYSE: LC) (English article)
  • Tesla (Nasdaq: TSLA) May Push Back Plan for China Manufacturing (Chinese article)
  • Baidu-Affiliated (Nasdaq: BIDU) iQiyi Plans Backdoor A-Share Listing Next Year (Chinese article)

SMARTPHONES: Coolpad in Denial on LeEco Takeover Talk

Bottom line: Rumors that LeEco is in talks to take over Coolpad are probably true, with a deal likely in the next few months that would see the former buy a controlling stake or even purchase the latter outright.

Coolpad to be acquired by LeEco?

I don’t usually write about rumors, but I just couldn’t resist opining on new market talk saying that struggling smartphone maker Coolpad (HKEx: 2369) may become the first major player to get swallowed up in a looming industry shakeup. In this case Coolpad is denying the rumors, which say it will be acquired by online video superstar LeEco (Shenzhen: 300104), which is already a major stakeholder and now pays Coolpad to manufacture its recently launched line of smartphones. Read Full Post…

IPOs: SF Express Eyes Back Door; China Music in NY; ZTE Thinks Small

Bottom line: A backdoor listing plan by SF Express in Shenzhen, a New York IPO plan by China Music Corp and 3 new China OTC listings by ZTE units reflect creative approaches to new listings by Chinese firms due to bottlenecks for traditional IPOs.

SF Express eyes backdoor listing

A trio of IPO stories in the headlines are quite revealing, as none are happening through traditional channels on China’s 3 main stock exchanges in Shanghai and Shenzhen. Instead, the largest of the 3 plans has parcel delivery giant SF Express eyeing a backdoor listing using a shell company from the minerals business. Meantime, music streaming company China Music Corp has popped up across the Pacific in New York, where it is reportedly planning an IPO that could be the largest of its kind this year. Read Full Post…

TRAVEL: Anbang Plays Hide-and-Seek with Beijing in Canadian Hotel Bid

Bottom line: Beijing regulators should take a more hands-off approach to outbound M&A by major institutional buyers like Anbang, and let them take more direct responsibility for their investment decisions.

Anbang targeting InnVest?

A new showdown could be brewing between Beijing and China’s newly minted field of outbound investors, as reports emerged last week that insurer Anbang was planning a major new Canadian acquisition less than 2 months after China’s insurance regulator reportedly vetoed a previous similar plan. The latest deal would see Anbang buy InnVest Real Estate Investment Trust (Toronto: INN-UN), one of Canada’s largest hotel owners, following its failed bid in March to buy US hotel giant Starwood (NYSE: HOT), operator of the Westin and Sheraton brands. Read Full Post…

China News Digest: May 24, 2016

The following press releases and news reports about China companies were carried on May 24. To view a full article or story, click on the link next to the headline.
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  • SF Express Eyes Backdoor Listing Using Dingtai Rare Earth (Shenzhen: 002352) (Chinese article)
  • Tencent-Backed China Music Corp Launches Process for NY IPO (Chinese article)
  • Coolpad (HKEx: 2369) Denies Report of Plan to be Acquired by LeEco (Shenzhen: 300104) (Chinese article)
  • Wal-Mart (NYSE: WMT) China Sales Rise 5.1 Pct Y/Y in Q1 (English article)
  • ReneSola (NYSE: SOL) Announces Q1 Results (PRNewswire)

IPOs: Yum Orphaned in China as CIC Abandons Stake Bid

Bottom line: CIC’s withdrawal from the bidding for a stake in Yum’s China unit represents a minor setback, but Yum’s long history in the market makes finding major local investor less important.

CIC drops out of bidding for Yum China stake
CIC ends bid for Yum China stake

KFC parent Yum Brands (NYSE: YUM) has lost a major potential ally as it prepares to spin off its China business, with word that China’s sovereign wealth fund has dropped out of the bidding for 20 percent of the unit. Reuters is reporting that China Investment Corp (CIC) abandoned its bid for a number of reasons, including Yum’s refusal to sell a controlling stake to the new investor group. Yum has previously said it wants to sell just 20 percent of the China unit, which includes 7,200 stores. It also plans to sell more of the unit’s shares through an IPO later this year in Hong Kong or New York. Read Full Post…