MULTINATIONALS: China Patriots Back at Work in Apple, KFC Protests

Bottom line: Recent calls for boycotts of KFC, iPhones and McDonald’s by Chinese patriots are unlikely to result in long-term damage for any of the companies, but could become a problem if any of China’s ongoing territorial disputes escalate.

Chinese patriots call for KFC boycott
Chinese patriots call for KFC boycott

It seems China’s restless patriots are back at work following a 4 year break, venting their latest anger at the US by smashing Apple (Nasdaq: AAPL) iPhones and calling for boycotts of KFC. This particular bout of Chinese patriotism follows a ruling 2 weeks ago by an international court that found in favor of the Philippines in a territorial dispute with China. The last major bout of similar patriotism came back in 2012, and involved another territorial dispute between China and Japan. But in that instance, Beijing gave much freer rein to many of the patriots, which resulted in long-term Chinese sales declines for the big Japanese automakers. Read Full Post…

China News Digest: July 29, 2016

The following press releases and news reports about China companies were carried on July 29. To view a full article or story, click on the link next to the headline.
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  • Baidu (Nasdaq: BIDU) Announces Q2 2016 Results (PRNewswire)
  • China Formally Legalizes Online Car Booking Services (English article)
  • Fosun (HKEx: 656) Pays $1.26 Bln for 86 Pct of India’s Gland Pharma (Chinese article)
  • New Oriental Announces Xun Cheng’s Listing Application for China’s NEEQ (PRNewswire)
  • Baozun (Nasdaq: BZUN) to Establish E-Commerce JV with Korea’s CJ O Shopping (GlobeNewswire)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

PCs: Xiaomi Aims Low with Notebook PC Entry

Bottom line: Xiaomi’s new move into notebook PCs looks like a necessary step toward its goal of creating an ecosystem of entertainment products and services, but is likely to suffer from weak reviews and stiff competition from established brands.

Xiaomi rolls out notebook PCs

I really want to write something positive about fading smartphone maker Xiaomi these days, but the company really isn’t giving us much suitable material with its steady string of new but uninspired products. The latest of those is a couple of new notebook PC models, marking its move into a crowded area where it will face stiff competition from established players like Apple (Nasdaq: AAPL) and Lenovo (HKEx: 992), as well as new entrant Huawei.

One could argue that while Xiaomi is coming late to the notebook PC game, such a move is still necessary since such computers will be a critical component to the company’s dream of building an ecosystem of products and services around a range of interfaces like PCs, smartphones and TVs. And Xiaomi is still ahead of the more upward trending LeEco (Shenzhen: 300104), which likes the ecosystem idea so much that it actually changed its former name from LeTV to include this recent industry buzzword. Read Full Post…

INTERNET: Alibaba Eyes Polish C2C, Ant Chases Taiwan Insurance

Bottom line: Alibaba’s bid for Polish C2C site Allegro looks like a smart move into a related developing market, but could be thwarted by rival Tencent, while affiliate Ant Financial’s new Taiwan insurance tie-up also looks smart though relatively small.

Alibaba bids for Poland’s Allegro

E-commerce giant Alibaba (NYSE: BABA) and its Ant Financial affiliate are in a couple of major headlines as the weekend approaches, each focusing on a strategic growth area. In the first case, Alibaba has entered the bidding for a leading Eastern Europe online auctions site, competing with global rival eBay (Nasdaq: EBAY) for Poland’s Allegro. The second deal has Ant, owner of leading electronic payments service Alipay, expanding its financial services holdings with the purchase of a majority stake in the insurance unit of Taiwan’s Cathay Financial (Taipei: 2882). Read Full Post…

NEW ENERGY: Geely Dumps EVs, BYD Wins Back Shenzhen

Bottom line: Geely’s sale of its EV joint venture stakes to its parent company, and BYD’s reinstatement of a major electric bus order from its hometown government, underscore how reliant the industry is on government support for its survival.

Shenzhen reinstates big electric bus order for BYD

A couple of electric vehicle (EV) stories are in the headlines, spotlighting just how dependent the sector is on government subsidies for its survival in China. I’ve written about this over-reliance on state-support frequently, including just last week when a government report said the sector had become bloated with mediocre players without any chance for commercial success. (previous post) Both of the latest headlines reinforce that theme, including one from smaller player Geely (HKEx: 175) and the other from stalwart BYD (HKEx: 1211; Shenzhen: 002594). Read Full Post…

China News Digest: July 28, 2016

The following press releases and news reports about China companies were carried on July 28. To view a full article or story, click on the link next to the headline.
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  • Greater China Loses Status as Apple’s (Nasdaq: AAPL) Second Largest Region (Chinese article)
  • Wanda Buys Movie Portal Mtime for $280 Mln (Chinese article)
  • Sale of Yum Brands (NYSE: YUM) China Franchise at a Standstill (English article)
  • Alibaba (NYSE: BABA) Bids for East Europe’s Top Online Auction Site Allegro (Chinese article)
  • Xiaomi Launches Notebook Computer With Starting Price of 3499 Yuan (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

ENTERTAINMENT: LeEco Buys US TV Brand, Raises More Cash

Bottom line: LeEco’s latest mega purchase will throw a lifeline to the struggling Vizio TV brand, as its latest issue of new shares at a big discount reflects growing investor fatigue and skepticism with the company.

LeEco throws lifeline to Vizio

Acquisitive online video superstar LeEco (Shenzhen: 300104) is back in the headlines for its latest mega-purchase, signing a deal to buy Vizio, a US-based TV brand that is at once one of the nation’s largest and also most obscure. At the same time, LeEco, formerly known as LeTV, is in separate but somewhat related headlines in a big cash-raising exercise through a new share issue. The company has become quite adept at such cash raising these days, often using its overvalued stock to bring in new money. Read Full Post…

SMARTPHONES: Huawei Margins, Sales Show Smartphone Stress

Bottom line: Huawei’s eroding profit margins and slowing smartphone sales growth reflect stresses being felt both at home and abroad in an overheated industry showing rapid signs of global saturation.

Huawei announces H1 results

The latest financial results from Huawei are showing how smartphones are at once becoming a growth engine but also a drag on the telecoms giant. The company’s fast-growing smartphone business was one of the main engines behind a 40 percent surge in sales during the first half of this year, as Huawei consolidated its position as the world’s third largest brand behind only Samsung (Seoul: 005930) and Apple (Nasdaq: AAPL). But at the same time, fierce competition in the sector also sharply eroded Huawei’s profit margins. Read Full Post…

INTERNET: Fortune 500 Misses China Web Giants, Captures JD Minnow

Bottom line: The appearance of JD.com as China’s first Internet company in the Fortune 500 and exclusion of the nation’s 3 biggest players underscores major shortcomings of the list due to its reliance on revenue as the basis for its rankings.

JD.com lands in Fortune 500

Everyone is buzzing these last few days about the latest edition of the Fortune 500, including the rising presence of China on the list of the world’s largest companies by revenue. But as a China tech watcher, the fact that most caught my attention was the absence of China’s top 3 Internet companies from the list, namely Tencent (HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). Adding to the puzzle was the appearance of Alibaba’s much smaller e-commerce rival JD.com (Nasdaq: JD), which became the first Chinese Internet company to make the Fortune 500 list. Read Full Post…

China News Digest: July 27, 2016

The following press releases and news reports about China companies were carried on July 27. To view a full article or story, click on the link next to the headline.
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  • LeEco (Shenzhen: 300104) to Buy US TV Maker Vizio for $2 Bln (English article)
  • South China Morning Post CEO Resigns, Takes Position at Temasek (Chinese article)
  • Huawei Says Sold 60.56 Mln Smartphones in H1, Consolidates World No. 3 Position (Chinese article)
  • Gome (HKEx: 493) in Online Alliance with China Resources’ Feiniu.com (Chinese article)
  • China’s 4G Subscriber Base Surpasses 600 Mln in June – MIIT (English article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

LEISURE: Wanda Ups Carmike Bid, Gets Boost from China Life

Bottom line: Wanda may need to raise its offer price again to buy Carmike, while a plan to privatize its property unit stands a good chance of winning shareholder approval.

Wanda ups Carmike bid

Conglomerate Wanda Group is in a couple of a major headlines, one involving its traditional real estate business and the other for the newer entertainment unit it’s building up as part of a diversification drive. The real estate headline centers on Hong Kong-listed property developer Dalian Wanda (HKEx: 3699), which has just received an endorsement from a major shareholder in its bid to go private. The second item centers on Wanda’s fast-growing cinema business, and has the company boosting its offer for US theater operator Carmike (Nasdaq: CKEC) after minority stakeholders complained a previous bid was too low. Read Full Post…