CONSUMER: Coke Tries China M&A Again With Protein Drink Maker

Bottom line: Coke’s proposed $400 million purchase of a Chinese protein drinks maker is likely to get quick regulatory approval, and could make significant contributions to its China operations within the next 2 years.

Coke makes new China M&A bid

Six years after a high-profile failure for a major China acquisition, global beverage giant Coca Cola (NYSE: KO) is trying once again with a smaller plan to buy a Chinese maker of protein drinks. This latest play for the maker of China Green-brand drinks looks like a smarter move by Coke, since the deal is valued at a relatively modest $400 million. By comparison, Coke’s failed attempt to buy leading Chinese juice maker Huiyuan (HKEx: 1886) was valued at $2.3 billion, which drew strong scrutiny from China’s anti-monopoly regulator that ultimately vetoed the deal in 2009. Continue reading

CELLPHONES: Xioami Boosts India Ties With Launch, Investment

Bottom line: Xiaomi’s release of a new model and addition of a high-profile investor in India reflect the market’s key role in its global expansion this year, with a likely target of 4 million or more unit sales.

Xiaomi in new India launch

Smartphone sensation Xiaomi is working hard to repair its position in India, following a setback late last year that saw some of its higher end products locked out of the market over a patent dispute. Now the company is making a big new push at the lower end of the market, choosing India for its first product launch outside of China. At the same time, the company announced it has sold a stake in itself to one of India’s best known tech tycoons, a patriarch at the renowned Tata Group conglomerate.

Both of these news bits come from an event late last week in India, and underscore the growing importance that Xiaomi is placing on the market this year to keep its meteoric growth alive. Xiaomi is banking heavily on global markets to fuel its growth story, now that it is already king of the smartphone hill in its home China market. Continue reading

Shanghai Street View: Modernizing Museums and Retiring Restaurants

Big crowds at new Natural History Museum

This week’s Street View takes us to historic Jing’an District, where a pair of headlines are spotlighting the closing of a storied expat landmark and the opening of a new museum that’s likely to become one of our city’s top future attractions.

News junkies will recognize the second item as the newly opened, state-of-the-art Shanghai Natural History Museum, which was flooded with visitors in its first days of operation. Far fewer people will know that the once ground-breaking but now faded expat hangout Malone’s is preparing to close its doors, after losing its relevance among much of the city’s foreign community. Continue reading

News Digest: April 25-27, 2015

The following press releases and media reports about Chinese companies were carried on April 25-27. To view a full article or story, click on the link next to the headline.
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  • Apple (Nasdaq: AAPL) Wins Siri Software Patent Appeal In China (English article)
  • Tencent (HKEx: 700) Doubles Medium-Term Note Program To $10 Bln (HKEx announcement)
  • Coca-Cola (NYSE: KO) To Acquire Chinese Protein-Drink Line For $400 Mln (English article)
  • Xiaomi Announces New 4i Model For India, Not Available In China (Chinese article)
  • Baidu (Nasdaq: BIDU) Sues Sogou for Hijacking Traffic Via IME (English article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

INTERNET: Tuniu In Turmoil, Rukuten Buys Into Fanli

Bottom line: Tuniu is likely to quickly resolve a revolt by some of its third-party travel agents, and a sell-off of its shares looks overdone, while Rakuten’s third foray into China could finally succeed thanks to its choice of a more suitable partner.

Rakuten invests in Fanli

We’ll close out this week with a couple of stories buzzing through the Internet realm, led by a travel agent rebellion against online travel site Tuniu (Nasdaq: TOUR). Meantime, Japanese e-commerce giant Rakuten (Tokyo: 4755) is taking its third try at the China market through a new investment in an e-commerce company called Fanli.com, following failed previous forays with leading online travel agent Ctrip (Nasdaq: CTRP) and online search leader Baidu (Nasdaq: BIDU).

These 2 stories are mostly linked by the fact that both involve Internet companies. But in a twist that looks purely coincidental, Rakuten was also one of the earlier investors in Tuniu before the latter made its New York IPO early last year. It’s not clear if Rakuten still holds that stake in Tuniu, but if it does its shares just lost nearly 5 percent after a Thursday sell-off on reports of the merchant revolt. But Tuniu’s shares are about 75 percent above their IPO price, meaning its early investors are still doing quite well. Continue reading

INTERNET: Baidu Ends Search For Japan, Hangs Out Egyptian Shingle

Bottom line: Baidu’s new go-slow global expansion strategy focused on emerging markets like Brazil and Egypt looks smart, but will provide limited contributions due to the small size of those markets.

Baidu tests out Egypt

Chinese online search leader Baidu (Nasdaq: BIDU) is making some major strategic adjustments in its global expansion, turning to developing markets and away from more lucrative but also extremely competitive western ones. That’s my main conclusion, following reports that Baidu has finally pulled the plug on its struggling Japan search service 8 years after choosing the market for its first foray abroad. At the same time, the company is making initial moves into Egypt with its first Arabic-language website, following earlier moves into Brazil and more recently into Thailand. Continue reading

News Digest: April 24, 2015

The following press releases and media reports about Chinese companies were carried on April 24. To view a full article or story, click on the link next to the headline.
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  • 17 Major Travel Agencies Unit To Oppose Tuniu (Nasdaq: TOUR)  (Chinese article)
  • Hong Kong’s TVB (HKEx: 511) Sells Stake To China Media Capital-Backed Fund (Chinese article)
  • ZTE (HKEx: 763) Announces Q1 Results (HKEx announcement)
  • Yingli Green Energy (NYSE: YGE) Announces Agreement To Sell Its Idle Land (PRNewswire)
  • China’s Internet Watchdog Closes 35 Illegal Dating Sites (English article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

CELLPHONES: ZTE Pounces On Huawei With Patent Allegations

Bottom line: ZTE’s patent infringement allegations against Huawei are mostly noise that won’t result in any major legal action, and instead reflect the stiff competition that is plaguing China overheated smartphone market.

ZTE accuses Huawei of IP theft

After several months without any major developments, China’s overheated smartphone market is showing new signs of stress with word that domestic heavyweight ZTE (HKEx: 763; Shenzhen: 000063) is accusing its larger rival Huawei of intellectual property theft. The complaint reflects the intense competition that has plagued China’s smartphone market for the last 2 years, and is likely to claim its first victim or two within the next 12 months.

This particular action also shows that Huawei and ZTE are becoming quite adept at playing the western game of filing lawsuits to protect their intellectual property and attack rivals. Both companies have been sued by their western peers in the past, and their domestic rival Xiaomi suffered a setback last year when it had to stop selling some of its models in India after Ericsson (Stockholm: ERICb) filed a patent complaint. Continue reading

INTERNET: China Internet Tycoons Creep Up On Li Ka-shing

Bottom line: China’s “Big 3″ Internet tycoons are likely to see their fortunes continue to grow at rates far faster than the broader economy over the next year, and they could even overtake some wealthier real estate magnates.

Jack Ma named China’s richest Internet tycoon

Hong Kong’s Li Ka-shing may still lead the list of wealthiest men in China and Hong Kong, but his traditional formula for success is rapidly losing ground to China’s fast-rising Internet magnates. The heads of China’s “Big 3″ Internet firms were all among the top 10 people on this year’s just-published Forbes list of the wealthiest men in China and Hong Kong, spotlighting the huge role that the Internet is playing in China’s economy. Whereas Li’s fortune took decades to build, the founders of Alibaba (NYSE: BABA), Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU) made their fortunes much more quickly, mostly over the last decade. Continue reading

BANKING: Banks Finally Stand Up To Beijing

Bottom line: The refusal of many banks to follow a Beijing directive to support the sagging property market looks encouraging, and could show these state-run lenders are finally beginning to behave more commercially.

Banks break with policy-lending past

It appears I owe an apology to big Chinese state-run banks, after years of calling them policy lackeys of Beijing with very little commercial instinct. Just a day after criticizing top lender ICBC (HKEx: 1398; Shanghai: 601398) for making a blatantly political $4.3 billion infrastructure loan to Pakistan (previous post), a new report is saying a growing number of banks are defying a recent Beijing order to boost their mortgage lending to support the sagging domestic real estate market.

This kind of action certainly won’t please economic planners in Beijing, but it marks a huge step forward for the banks in their drive to become more commercial and earn some real respect from investors. Continue reading

News Digest: April 23, 2015

The following press releases and media reports about Chinese companies were carried on April 23. To view a full article or story, click on the link next to the headline.
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  • Visa (NYSE: V), MasterCard (NYSE: MA) Surge On China Move To End Card Monopoly (English article)
  • Chinese Banks Disobey Order To Support Housing Market (English article)
  • ZTE (HKEx: 763) Accuses Huawei Smartphones Of Intellectual Property Theft (Chinese article)
  • Lenovo (HKEx: 992) Recalls Nearly 90,000 ThinkPad Computers In China (Chinese article)
  • P2P Lending Site Jimu Box Raises $84 Mln in Third Fund-Raising Round (Chinese article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)