News Digest: July 22, 2014

The following press releases and media reports about Chinese companies were carried on July 22. To view a full article or story, click on the link next to the headline.
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  • Yum (NYSE: YUM), McDonald’s Apologize As New China Food Scandal Hits (English article)
  • Mobile Internet Users Pass Desktop Users For First Time – CNNIC (Chinese article)
  • Huawei’s H1 revenue Up 19 Percent Year-On-Year At $22 Bln (English article)
  • Citic Securities (HKEx: 6030) Announces Preliminary H1 Results (HKEx announcement)
  • China Telecom (HKEx: 728) Starts Selling 4G Phones, Service In 16 Cities (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

Giant, RDA De-List As Deal-Making Slows

RDK closes privatization

Two more US-traded Chinese firms are on the cusp of de-listing, with online game operator Giant Interactive (NYSE: GA) and chipmaker RDA Microelectronics (NYSE: RDA) just announcing they have wrapped up buy-out deals that will pave the way for their imminent privatization. These 2 de-listing stories were announced months ago and are completely expected. But the bigger underlying story is the lack of major new privatization announcements in the last half year. In a similar development, major new IPOs by Chinese firms in New York have slowed considerably since a boom of offerings in April and May, indicating the broader deal-making market may be entering a new, more stable phase. Continue reading

KFC, McDonald’s Consumed By New Safety Scandal

McDonald’s supplier at center of new scandal

It’s been more than a year since a major food safety scare hit western fast-food operators in China, so we were probably overdue for the latest scandal that is now consuming leading chains KFC (NYSE: YUM) and McDonald’s (NYSE: MCD). Frankly speaking, Chinese consumers are probably so jaded about food safety scandals by now that I don’t know if these latest 2 will really have much long-term impact on either company.

The most disgraceful element this time is the fact that the supplier at the heart of the latest scandal is a foreign-owned firm. Up until now, most of the suppliers who provided tainted food to big foreign supermarkets and restaurant chains were domestic Chinese firms, which usually have lower quality control standards. Thus this latest scandal could really do some damage to the broader image of foreign-owned companies, which are generally seen as more trustworthy than their Chinese peers. Continue reading

Regulators Become Mediators As Internet Firms Encroach

Regulators in new role as judges for industry clashes

China’s regulators have become involved in mediating a growing number of business disputes, reflecting the recent rise of a new generation of multibillion-dollar private sector companies that are rapidly growing beyond their traditional roots. In most cases, companies that began as Internet firms and high-tech manufacturers have encroached into a wide range of new areas like banking, TV and telecoms services, raising the hackles of big state-owned firms that previously dominated those sectors. Continue reading

Forbes Embraces, Keeps Distance From China With Sale

Fosun fails in bid for Forbes

More than half a year after putting itself up for sale, US publishing giant Forbes Media has found a suitor in a group with strong China ties even though none of its members are actually Chinese. The announcement comes as a slight surprise because Fosun International (HKEx: 656), one of China’s biggest private equity firms, had been rumored as a frontrunner in the bidding for the US publishing giant. Some media are saying that price was the determining factor in the end, as Fosun may have been unwilling to pay the high premium that Forbes wanted. But the stigma of potential ownership by a Chinese company may have also influenced the final decision by Forbes, which wants to maintain its independent image while also staying active in the China market. Continue reading

JD Relaunches Paipai, Eyes Taobao

Paipai relaunches with eye on Taobao

Nearly 2 months after its listing in New York, e-commerce giant JD.com (Nasdaq: JD) is trying to keep up its positive momentum with announcement of a relaunch for Paipai.com, the C2C service it acquired as part of its Tencent (HKEx: 700) tie-up earlier this year. While the announcement contains a bit of detail about JD’s plans, it makes no mention of the main target of this new campaign, which is Alibaba’s industry-dominating Taobao service. That said, I’m hopeful we could see Paiapi shake up the stagnant C2C space, much the way that Alibaba did nearly a decade ago when Taobao challenged and eventually defeated then-leader eBay (Nasdaq: EBAY). Continue reading

Coke’s Smoggy Battle, KFC’s ‘Dead Chicken Bounce’

Coke gets headache from Beijing smog

The latest news is decidedly cloudy from 2 of the world’s biggest food and beverage operators in China, with beverage leader Coca Cola (NYSE: KO) and fast-food giant Yum Brands (NYSE: YUM) fighting battles on different fronts. Yum has just reported financial results that show a nice jump in same-store sales for its flagship KFC restaurants during the second quarter. But the year-ago figures were extremely depressed due to several one-time factors, meaning current same-store sales are probably still below levels from 2 years ago. Meantime, media reports say Coke is offering generous incentives to attract foreigners to work in Beijing due to the city’s heavy air pollution, reflecting a recent broader problem faced by many multinationals. Continue reading

News Digest: July 19-21, 2014

The following press releases and media reports about Chinese companies were carried on July 19-21. To view a full article or story, click on the link next to the headline.
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  • Forbes Media Sells Off Most Of Company To HK Investor Group (Chinese article)
  • Paipai Re-launch to Bring JD.com (Nasdaq: JD) Experience to C2C (PRNewswire)
  • SouFun (NYSE: SFUN) Announces 5-Year Plan with a New Flagship Website Fang.com (PRNewswire)
  • SCA And Vinda To Integrate Hygiene Business In China (Businesswire)
  • Giant Interactive (NYSE: GA) Completes $3 Bln Going Private Transaction (PRNewswire)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

Aug 8 Debut Evades Alibaba IPO, Sept In Sight

Alibaba IPO delayed until September

The date of August 8 is a lucky one for many Chinese, but it’s increasingly looking like it won’t be the day for the highly anticipated IPO of e-commerce leader Alibaba. Previous reports had indicated Alibaba founder Jack Ma wanted to list his company on the eighth day of the eighth month of the western calendar, since 8 is a lucky number that sounds like the Chinese word for wealth and prosperity. What’s more, the Chinese pronunciation for 8-8 is “baba“, which is the same as the last part of Alibaba’s name and also happens to be the BABA ticker symbol the company will use when its shares start trading on the New York Stock Exchange. Continue reading

Crackdown Nets LeTV, Alibaba Set-Top Boxes

LeTV halts sales of set-top box

I wrote earlier this week about a looming crackdown on private Internet-based video providers, and now that campaign appears to be building momentum with word of turbulence in the booming set-top box sector. The latest reports say industry veteran LeTV (Shenzhen: 300104) has withdrawn its set-top box product from the market, while e-commerce giant Alibaba is reportedly delaying the roll-out of its own similar product. The reports certainly don’t bode well for the fledgling sector of set-top boxes, which allow people to watch Internet-based video content on their TVs the same way they watch programs using traditional TV channels. Continue reading

Construction Firm Joins Public Debt Default Queue

Default looms for Huatong bond

Yet another firm is teetering on the brink of default for a relatively large bond, joining a small but growing list of such companies as Chinese investors learn about the risk of buying debt from shaky companies in struggling industries. This time it’s a little-know construction company called Huatong Road & Bridge Group  that’s warning it could soon default on interest and principal payments for 400 million yuan ($65 million) in bonds set to mature later this month. The announcement is the latest of a slow but steady trickle of similar news that hints at distress due to China’s slowing economy. Continue reading