Bottom line: New signals indicate Beijing plans to move aggressively to prevent solar panel makers from adding unneeded new capacity to help their local governments meet economic growth targets.
A new low-key announcement from Beijing is hinting at a quiet struggle taking place behind the scenes in China’s promising but embattled solar panel sector, with the regulator saying it will stop the building of most new manufacturing capacity. On one side of this struggle are local government officials, who may be encouraging solar panel makers in their areas to add capacity that will benefit their local economy but is the last thing the industry needs. On the other side of the battle is Beijing, which is trying to show the world it doesn’t unfairly subsidize its solar panel sector as it also tries to rationalize a bloated domestic industry that is stifling global development. Continue reading →
Bottom line: 55Tuan’s IPO plan has a less than 50 percent chance of succeeding as a deadline looms, while Jiayuan.com is likely to de-list later this year after its investors accept a so-so buyout offer.
Time is quickly running out for a planned IPO by group buying site 55Tuan, as a deadline approaches that will nullify the company’s application earlier this year for a New York listing. Meantime, time is also running out for another Chinese Internet company, Jiayuan.com (Nasdaq: DATE), as a private equity firm launches a bid to privatize the neglected online dating site.
Both 55Tuan and Jiayuan represent a group of decidedly second-tier Chinese Internet companies that probably would have been acquired long ago in a more mature western market. But in the less developed Chinese market, the pair have managed to stay independent. The second-tier status of such firms often leads investors to question their longer term viability, dampening enthusiasm for their stocks when they list overseas. Continue reading →
Bottom line: China’s regulators should work closely with innovators like Alibaba and SMG to minimize the risk from their new financial products that bring small lenders and borrowers together.
E-commerce giant Alibaba (NYSE: BABA) made its latest advance in the financial realm last week, announcing a major tie-up with Shanghai’s leading broadcaster to promote film finance over its online platform based on the crowd-funding concept. The move extends Alibaba’s recent forays into both entertainment and finance, and could provide a major boost for smaller Chinese movie makers who often lack access to project funding.
But the reality is that movie making is a highly risky business for even the most experienced companies, and smaller productions are famous for losing money. That means many of the projects that get financed through the new Alibaba tie-up with Shanghai Media Group (SMG) may ultimately see investors lose some or all their money if and when poorly conceived projects fail to find an audience. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 31. To view a full article or story, click on the link next to the headline.
Tencent (HKEx: 700) Dismisses New WeChat Membership System As Rumors (Chinese article)
Xinhua, AP presidents Discuss Cooperation In New Media Era (English article)
Jiayuan.com (Nasdaq: DATE) Engages Financial Adviser For Privatization Bid (PRNewswire)
Alibaba (NYSE: BABA) In Digital Distribution Deal With Music Rights Group BMG (English article)
Bottom line: Tsinghua Unigroup’s pending purchase of a controlling stake in H3C could mark the start of a new partnership with HP in routers, but is unlikely to affect its older partnership with Intel in the telecoms chips.
Semiconductor company Tsinghua Unigroup was already a name to watch after a string of major deals last year including a tie-up with Intel (Nasdaq: INTC), and now it’s adding to its allure with word of a major new alliance with Hewlett-Packard (NYSE: HPQ). This latest deal would trump the earlier one from Intel in size, and would see Unigroup buy a controlling 51 percent stake of HP’s China-based H3C unit, which makes routers and switches that compete with US giant Cisco (Nasdaq: CSCO).
It’s not completely clear how much Unigroup would pay for the stake, though the amount would almost certainly be more than the $1.5 billion that Intel paid last year for 20 percent of a new company that Unigroup created through its merger of 2 of China’s leading telecoms chip designers. I’m no telecoms expert, but I’ll admit this latest deal is leaving me just a bit puzzled due to the very different natures of the businesses of H3C and the earlier tie-up involving Intel, which revolved around telecoms microchips. Continue reading →
Bottom line: ChemChina might be advised to maintain Pirelli as an independent unit and limit the size of an IPO if succeeds in buying the Italian tire maker and decides to re-list the business.
The headlines are buzzing today with word that state-run behemoth ChemChina may try to re-list Pirelli (Milan: PC) after it purchases the Italian tire maker, which got me to thinking about how the China factor might affect such an IPO. In theory at least, investors might get quite excited about a company they once disdained after its purchase by a Chinese buyer, due to hopes for lower costs and greater profits. But a look at 2 recent cases of major US firms that were acquired by Chinese buyers, then re-listed, shows the reality can vary widely and that a Chinese owner isn’t necessarily a panacea for an ailing overseas company. Continue reading →
I’ve always thought Shanghai was quite a colorful place, and now it seems our city is determined to drive home that point with yet another color schemes in a growing series designed to keep us informed on everything from the quality of the air we breathe to the storms that keep our waterways full. This latest scheme will apply to traffic conditions on our congested roads, allowing us to quickly tell when to expect long delays and consider possible alternate routes.
This kind of color coding certainly isn’t unique to Shanghai, as other countries and cities around the world have similar ways for keeping ordinary citizens informed using symbols that are quick and easy to understand. But that said, our city seems to be embarking on a particularly aggressive color feast that could ultimately end up creating more confusion than clarity as everyone tries to figure out if the latest red alert applies to weather, air quality, traffic or perhaps something else. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 28-30. To view a full article or story, click on the link next to the headline.
HP (NYSE: HPQ) To Sell 51 Pct Of H3C Unit To Tsinghua Unigroup, Seeks $5 Bln (Chinese article)
Geely (HKEx: 175) Invests 250 Mln Pounds On British New Energy Taxi Plant (Chinese article)
Bottom line: Washington’s raising of Beijing’s foreign technology restrictions to the WTO and London’s acceptance of Huawei equipment could add to pressure on all parties to soften their restrictive actions over use of foreign technology.
A pair of stories in the headlines today show a growing divergence in how China’s major trading partners are treating their cyber security clashes with Beijing. The larger of the 2 stories has Washington formally posing questions at the WTO over Beijing’s recent restrictions that limit the sale of foreign technology to Chinese banks. The other has seen Britian issue a report saying products from leading Chinese telecoms equipment maker Huawei pose no threat to the nation’s security, or at least that the threat is controllable. Continue reading →
Bottom line: A rebellion by a major hospital group against Baidu could reflect growing discontent towards the search engine among Chinese advertisers, which could force it to lower prices and make its business practices more transparent.
Local media are swarming to a story that has seen a major hospital association advise its members to yank their advertisements from Baidu (Nasdaq: BIDU), cutting off a top cash cow for China’s leading search engine. The Putian Healthcare Industry Chamber of Commerce is saying the grievances that led to its action are related to the high prices that Baidu charges for its services. But Baidu has weighed in with its own view, calling the move retaliatory for its own refusal to accept ads containing false and exaggerated claims from many Putian members. Continue reading →
Bottom line: The latest blockage of Reuters sites in China is probably temporary and related to coverage during the recent National People’s Congress, but still reflects the very real risk of doing business in the tightly controlled media market.
China’s latest crackdown on foreign media has just netted global news giant Reuters (Toronto: RTR), in a potentially worrisome trend that has seen Chinese censors block a growing number of websites operated by big multinationals. Despite longer-term crackdowns on big names like Bloomberg and the New York Times, Reuters had managed to largely steer clear of China’s censors and its websites have remained largely accessible in China for most of the last 2 years.
But I couldn’t access any of Reuters sites in Shanghai starting last Thursday, and later reports confirmed the company’s Chinese- and English-language websites have been blocked throughout the country since then. (English article) Before I go any further, I should disclose that I previously worked at Reuters for a decade, and maintain contact with many of my former colleagues 4 years after leaving the company. Reuters Chinese site also is a regular user of my work, though apparently none of that has been viewable in China for the last few days. Continue reading →