Bottom line: China Mobile’s new unnamed social networking platform based on RCS technology has a 50-50 chance of posing a serious challenge to WeChat due to the many advantages it will enjoy from its China Mobile connections.
After 2 years of standing on the sidelines as Tencent’s (HKEx: 700) WeChat rapidly stole its text messaging business, leading telco China Mobile (HKEx: 941; NYSE: CHL) is finally preparing to fight back with its own competing product offering, according to ZTE (HKEx: 763; NYSE: CHL), which is supplying networking equipment for the product. ZTE’s cloud computing chief Zhu Jinyun told me the new product will be an entire platform for social networking and other services based on rich communications suite (RCS), a technology developed by a global telecoms association.
I’m admittedly not too familiar with RCS, though some web searches showed it’s a platform that allows for a wide range of functions, from one-on-one instant messaging to group chats, file transfers, IP voice calls and location-based services (LBS). Anyone looking at that list will instantly recognize that many of those features are already present on WeChat, whose popularity has rapidly siphoned texting business from China Mobile and the nation’s other telcos. Continue reading →
Bottom line: LeTV could be a company to watch as it embarks on a global expansion, drawing on a savvy business model that sells smart TVs and smartphones at low prices in exchange for video subscription contracts.
A major telecoms show happening this week in Spain was filled with small bits of news, but one of the biggest surprises came when I stumbled on an area decked out with signage for the racy online video firm LeTV (Shenzhen: 300104). So far as I could tell, none of the company’s many rivals like Youku Tudou (NYSE: YOKU) and iQiyi were at the show, and even global leader YouTube was absent. That’s not hard to understand, since the Mobile World Congress taking place in Barcelona is a telecoms show whose main attendees are telecoms equipment and smartphone makers. Continue reading →
Bottom line: Lenovo could make significant inroads into western smartphone markets with its newly acquired Motorola if it lets the brand remain independent and maintain its own product development and sales resources.
A tour of the Lenovo (HKEx: 9992) booth at a major trade show happening this week in Spain made me realize just how much the company is betting on its recently purchased Motorola brand to boost it into the smartphone big leagues. Motorola’s continuing attraction as a powerful brand was on full display at the Lenovo booth, with large crowds clamoring for a look at what seemed like quite a ho-hum new low-end model being rolled out at the show.
By comparison, a glitzy new Lenovo-brand model from its higher-end VIBE line was drawing far less attention, even as a Brit on the stage sang on with nonstop praises for the unique features of the new model that has many attributes of a high-end camera. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 4. To view a full article or story, click on the link next to the headline.
Obama Sharply Criticizes China’s Plans For New Technology Rules (English article)
ZTE (HKEx: 763) Doubled 4G Shipments, Global Share Exceeded 25 Pct In 2014 (Businesswire)
JD.com (Nasdaq: JD) Announces Q4 And Full Year 2014 Results (Globe Newswire)
Bottom line: 58.com’s purchase of a secondary real estate trading site at a big discount looks like a shrewd move for the longer term, but could cause a short-term drag on profits due to weakness in China’s property market.
Local media are buzzing about a relatively large Internet deal that will see leading online classified advertising site 58.com (NYSE: WUBA) buy Anjuke, one of China’s largest online platforms for services involving secondary real estate. But the source of the buzz isn’t the deal itself, but rather the huge bargain that 58.com is getting compared to what Anjuke said it was worth just a year ago. That massive discount reflects the broader gloom surrounding China’s real estate market as it teeters on the edge of a major correction, and certainly doesn’t bode well for listed peers like E-House (NYSE: EJ) and SouFun (Nasdaq: SFUN). Continue reading →
Bottom line: Meizu’s rapid India expansion could provide it with some relief from the overheated China market over the short-term, but will result in new price wars over the next 2-3 years as its domestic rivals make similar moves.
Freshly infused with nearly $600 million in new capital after a major investment from e-commerce giant Alibaba (NYSE: BABA), smartphone maker Meizu is getting set to take on higher profile rival Xiaomi outside China with a major new campaign in India. In many ways, this particular move looks like China’s way of exporting the rampant price wars that have plagued its smartphone market to other countries with similar demographics. In this case, Meizu is not only eying a country that has suddenly become Xiaomi’s second largest market, but is also planning to follow its rival into Southeast Asia. Continue reading →
Bottom line: Beijing needs to roll out new rules allowing limited foreign investment in sensitive areas or risk seeing private companies like Ant Financial suffer from slower growth and artificially low valuations.
Alibaba-affiliated (NYSE: BABA) Ant Financial has been on a financial roller coaster ride over the past month, as it tries to raise billions of dollar to fund its growth en route to an IPO that will offer Chinese investors one of their first plays into the private banking sector. Some reports have said the new funding could value Ant, whose largest asset is the Alipay electronic payments service, at up to $50 billion. But others have put the figure as low as $30 billion, reflecting the intense negotiations taking place. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 3. To view a full article or story, click on the link next to the headline.
58.com (NYSE: WUBA) Buys Real Estate Sales Site Anjuke For $267 Mln (Chinese article)
Britain’s Marks & Spencer (London: MKS) To Close 5 Shanghai Stores (English article)
Home Furnishings and Decoration E-tailer Jia.com Wins $160 Mln Series D Funding (English article)
New China Life Ends Plan For Strategic Stake Sale To Alibaba (NYSE: BABA) (Chinese article)
38 Online Lottery Ticket Sellers Suspend Sales, No Word On Resumption (Chinese article)
Bottom line: Ant Financial is likely to get a low valuation from its new private placement due to the exclusion of foreign investors, but could see the figure reach up to $70 billion by the time of its 2017 IPO if it can rapidly build up its new services.
Yet another report has come out about an ongoing private placement by Ant Financial, saying the financial services affiliate of e-commerce giant Alibaba (NYSE: BABA) is now planning a domestic IPO in 2017. That’s a little later than was indicated in previous reports, which were probably a little too optimistic about a company whose various businesses are mostly less than 2 years old.
But the more interesting element in this recent flurry of reports has been what valuation the new private placement will bring for Ant, which is financially separate from the New York-listed Alibaba. Some of the earlier reports indicated Ant could be valued at up to $50 billion, which admittedly looks quite optimistic for a firm at its stage of development. But now the latest reports are bringing the number down sharply, saying the new funding will value Ant at between $35 billion and $40 billion. Continue reading →
Bottom line: The absence of Xiaomi and other newer Chinese smartphone makers from the world’s leading telecoms show reflects their focus on emerging markets and limited promotional budgets due to stiff competition at home.
I’m in Barcelona this week for what has become the world’s biggest annual telecoms show, and thought I’d kick off my coverage with a look at who is attending from China this year. The list contains most of the big names you’d expect, including Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992), though Lenovo has decided to keep its name off the “made in China” list and is opting to call itself a US company.
But equally noteworthy is who isn’t on the list, at least not as an exhibitor. That list of absentees includes all of China’s newer smartphone makers, led by the fast-rising Xiaomi that has come from nowhere over the last 3 years to become the world’s third biggest brand. Others that aren’t on the list include locally well-known Chinese names Coolpad (HKEx: 2369) and Meizu, which have recently formed tie-ups with major Internet companies Qihoo 360 (NYSE: QIHU) and Alibaba (NYSE: BABA, respectively. Continue reading →
The following press releases and media reports about Chinese companies were carried on February 28-March 2. To view a full article or story, click on the link next to the headline.
China issues 4G FDD Licences To China Telecom (HKEx: 728), Unicom (HKEx: 762) (English article)
China draft Counterterror Law Strikes Fear In Foreign Tech Firms (English article)