TRAVEL: HNA Lodges in Brussels, Jin Jiang in Vienna

Bottom line: Major new hotel acquisitions by HNA Group and Jin Jiang reflect a recent wave of domestic consolidation and global hotel buying by Chinese companies, and could culminate with a Jin Jiang bid for France’s Accor.

Jin Jiang buys Vienna Hotels

Two of China’s biggest acquirers from the travel sector are in the headlines today, both with very European-sounding investments. The larger of those will see HNA Group, parent of Hainan Airlines (Shanghai: 600221), purchase the Belgium-based owner of the Radisson hotel brand. The other will see Shanghai-based hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600754) buy 80 percent of Vienna Hotels Group, a European-sounding name that is actually just a Chinese operator based in the southern boomtown of Shenzhen.

Both deals reflect a recent Chinese appetite for global hotel companies, including property owners and management firms. That appetite was on prominent display last month, when insurance company Anbang got in a heated bidding war for US-based Starwood (NYSE: HOT), owner of the Sheraton and Westin brands. Anbang bid aggressively against US operator Marriott (NYSE: MAR) in that battle, but ultimately bowed out under pressure from China’s insurance regulator. (previous post) Read Full Post…

BANKING: UnionPay Takes on Visa, MasterCard in US

Bottom line: UnionPay’s move into the dollar-denominated US credit card market looks smart strategically, but is likely to fail due to clumsy execution and fierce competition from Visa and MasterCard. 

UnionPay issues first US credit cards

Watch out, Visa (NYSE: V) and MasterCard (NYSE: MA). China’s UnionPay is taking on this global pair of credit card giants on their home turf, with word that the Chinese company will launch its first US-based card in partnership with ICBC (NYSE: 1398; Shanghai: 601398), China’s biggest bank.

Of course I’m being just a bit facetious here, since UnionPay’s first-ever US credit card will have to overcome huge obstacles to ever become a serious rival to local cards from Visa, MasterCard or American Express (NYSE: AXP). But I have to at least commend UnionPay for taking the offensive, since it’s likely to face a major assault on its own home turf later this year when Beijing finally opens the Chinese credit card market to foreigners. Read Full Post…

E-COMMERCE: Amazon Courts China’s Gome, Investment Coming?

Bottom line: A new strategic partnership between Amazon and Chinese retailer Gome could expand later this year into an equity alliance that would see the former buy about a fifth of the latter for around $500 million.

Gome ties with Amazon

A year after getting dumped by private equity giant Bain, fading electronics retailer Gome (HKEx: 493) is being courted by yet another big western name, with word of a new major tie-up with global e-commerce leader Amazon (Nasdaq: AMZN). This particular tie-up is most intriguing due to the timing, which comes after reports emerged last year saying Gome’s controversial founder Huang Guangyu might soon be freed from prison after serving about half of a 14-year sentence for bribery and insider trading.

Reports of the early release, combined with a buyout of Bain’s 5 percent stake last year, hint that Huang may be making new plans for Gome if and when he emerges from prison soon. This new tie-up with Amazon suggests that a major investment from the US e-commerce giant could be in the offing, which could be part of Huang’s plan to breathe new life into his faded retailing empire. Read Full Post…

China News Digest: April 29, 2016

The following press releases and news reports about China companies were carried on April 29. To view a full article or story, click on the link next to the headline.
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  • Carl Icahn Says Sold Entire Apple (Nasdaq: AAPL) Stake on China Woes: CNBC (English article)
  • Baidu (Nasdaq: BIDU) Announces Q1 Results (PRNewswire)
  • China’s Largest Budget Carrier Spring Air (Shanghai: 601021) Posts 44 Pct Profit Gain (English article)
  • Jin Jiang (HKEx: 2006) Acquires 80 Pct of Vienna Hotels for 1.7 Bln Yuan (Chinese article)
  • Fitbit (NYSE: FIT) to Expand Reach in China Through MOU with Alibaba’s Tmall (Businesswire)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

FUND RAISING: Investors Give Cold Shoulder to JD, Yintech

Bottom line: A sell-off of JD.com shares after announcement of a big bond issue and a lukewarm debut for Yintech’s New York IPO reflect growing investor skepticism towards US-traded Chinese stocks due to the nation’s economic slowdown.

JD shares tank on mega bond sale

China startups may be all the rage among private equity investors in Asia, but they’re quickly losing their luster for smaller US-based investors. That seems to be the bottom line, following a lukewarm reception for the new IPO by a metals trading platform operator called Yintech (Nasdaq: YIN), and a plunge in shares of e-commerce giant JD.com (Nasdaq: JD) after it announced a major new fund-raising plan.

Neither of these stories surprises me too much, since China’s economy is standing on the cusp of a major slowdown that is likely to severely crimp all companies’ growth. But that said, it’s also noteworthy that private equity investors are still pumping billions of dollars into companies like Ant Financial and Didi Kuaidi even as sentiment cools on Wall Street. Read Full Post…

MEDIA: China Trips up Disney, Paramount; Draws Comcast to DreamWorks

Bottom line: New China setbacks for Disney and Paramount look relatively minor, and reflect their growing involvement in a market whose fast growth is also driving Comcast’s pursuit of DreamWorks Animation.

DreamWorks’ China exposure draws Comcast

In a very rare occurrence, 3 top Hollywood studios are all in the China headlines today, reflecting the growing links between these media titans and a country that could become the world’s largest entertainment market in the next decade. Leading the headlines are relatively minor China setbacks for Disney (NYSE: DIS) and Paramount Pictures, which are facing new battles with Beijing censors and unhappy local clients, respectively.

Meantime, DreamWorks Animation (NYSE: DWA) is reportedly in talks to be bought by US cable TV giant Comcast (Nasdaq: CMCSA), and some are pointing out that a major driver behind the deal may be DreamWorks’ strong China exposure. That’s because DreamWorks Animation has bet big on the market, with a major joint venture in Shanghai that produced the latest installment in its Kung Fu Panda series. Read Full Post…

STOCKS: Citic Offers Rare Excitement Among Big SOEs

Entrepreneurial spirit thrives at Citic

Anyone who has followed this series on my favorite Chinese stocks knows that all of my picks so far have come from the private sector, and that I’m generally not a fan of big state-owned enterprises (SOEs). But given the huge weight that SOEs carry in China’s economy and their preferential status in many key sectors, I feel obliged to recommend at least one such company in this series.

With that background in mind, my top pick among this group is the Hong Kong-listed Citic Ltd (HKEx: 267), one of China’s oldest conglomerates and a company often considered one of the nation’s most entrepreneurial SOEs. I particularly like Citic for its financial services focus, which includes its private equity arm, a bank and China’s leading brokerage, all of which are more commercially driven than many of China’s other big financial companies. Read Full Post…

China News Digest: April 28, 2016

The following press releases and news reports about China companies were carried on April 28. To view a full article or story, click on the link next to the headline.
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    • Apple (Nasdaq: AAPL) Stumbles in China as Local Phone Makers Head Up-Market (English article)
    • ICBC (HKEx: 1398) Launches First Chinese Credit Cards in US with UnionPay (English article)
    • Alibaba-Disney (NYSE: DIS) Partnership Is Frozen in China After Just 5 Months (English article)
    • Movie Ticket Booking Platform Weiying Shidai Wins 3 Bln Yuan Series C+ Funding (English article)
    • Yintech (Nasdaq: YIN) Falls Flat in US Debut as Chinese Peers Seek De-listing (English article)
    • Latest calendar for Q1 earnings reports (Earnings calendar)

 

E-COMMERCE: Alibaba in Korean Cloud, Ant Flooded in Funds

Bottom line: Alibaba’s new cloud tie-up shows that Korea is a primary market for its global expansion, while the new $4.5 billion funding for its Ant Financial affiliate could be followed by an IPO within the next 12 months.

Alibaba in Korea cloud initiative
Alibaba in Korea cloud initiative

E-commerce giant Alibaba (NYSE: BABA) is in a couple of major headlines today, led by word that its Ant Financial affiliate has just raised a whopping $4.5 billion in only its second-ever funding round. That particular story has been rippling through the headlines for a few weeks now, and is most notable because the deal is finally done and is triple the company’s original fund-raising target.

The other headline has Alibaba itself in a new deal to launch cloud computing services in South Korea, working in a partnership with a unit of local telecoms giant SK Telecom (Seoul: 017670). This particular deal is interesting because it represents Alibaba’s recent search for global growth stories, in a bid to satisfy investors worried about a slowdown in its home China market. Read Full Post…

INTERNET: LinkedIn Networks in China with Low-Key Approach

Bottom line: LinkedIn’s rapid growth in China has been aided by its low-key approach to the sensitive market, and a high degree of autonomy for its local unit from its distant US-based parent.

LinkedIn reaches 20 mln China users

US business networking giant LinkedIn (NYSE: LNKD) is quietly emerging as one of the few foreign success stories in China’s social networking (SNS) landscape, using a low-key approach that has helped it steer clear of controversy. I haven’t written much about the company since its slightly controversial entry to China 2 years ago, when it issued a statement acknowledging it would be subject to the country’s strict self-censorship rules.

LinkedIn’s ability to avoid controversy is probably due in large part to its low-key approach, and its choice of an industry veteran with experience in both the US and China to head its local operations. True to his low-key style, company chief Derek Shen is making some minor headlines today with comments at a Shanghai event, including his disclosure that LinkedIn has signed up more than 20 million local users during its first 2 years in China. Read Full Post…

POLICY: Huawei, Weibo, NBA Chase Business Cheats in Court

Bottom line: New court actions by Huawei, Weibo and NBA star Michael Jordan reflect China’s efforts to crack down on white collar crimes that are common but threaten to hamper the country’s economic development.

Huawei tussles with corporate thief
Huawei tussles with corporate thief

The headlines are bubbling today with a few notable stories from the courtroom, which spotlight the slow but steady progress China is making against corporate cheats who undermine the nation’s business climate. Leading the news is telecoms giant Huawei, which is chasing a rogue former executive who was already jailed once for stealing company property and tried to continue his illegal ways after being released from prison.

Another headline has a judge ruling in favor of the Twitter-like Weibo (Nasdaq: WB), which accused a software maker of illegally stealing data from its service. Last but not least there’s the NBA, whose legendary Michael Jordan is closing in on a high-court decision that could finally force a rogue sporting goods maker to stop illegally using his trademark. Read Full Post…