MEDIA: Mobile Data, Box Office Boom In Lunar New Year

Bottom line: Mobile data usage will grow by triple-digit amounts this year as telcos boost 4G promotions, while box office growth will start to slow and the ongoing decline in traditional SMS text messaging will accelerate.

Hongbao chatter fuels mobile data surge

The usual rush of Lunar New Year-related data is coming in, painting a mixed picture for traditional and new media. The clear winner in the mix is new media, whose surging popularity helped to fuel a 70 percent jump in mobile data traffic over the holiday period. Traditional movies also performed well, with China’s box office rising 36 percent during the period. It will also come as no surprise that the big loser over the holiday was traditional SMS text messages, whose volume plunged by 25 percent. Continue reading

IPOs: Postal Bank Eyes Mega-Listing, 55Tuan Delays

Bottom line: A mega IPO by Postal Savings Bank next year is likely to attract little or no interest from private investors, while an upcoming IPO by 55Tuan could do slightly better but will still get only a lukewarm reception.

55Tun misses pricing target date

A couple of unattractive IPOs are in the headlines as China gets back to work after the Lunar New Year holiday, led by a massive plan by China’s Postal Savings Bank to raise up to $25 billion as soon as next year. While that plan may be a year or more away, a more advanced listing by group-buying site 55Tuan has failed to price its shares by a previously announced target date, leading some to speculate that the deal is running into trouble. Neither of these deals looks very exciting to me, and I suspect they won’t attract much interest from private investors either. Continue reading

News Digest: February 26, 2015

The following press releases and media reports about Chinese companies were carried on February 26. To view a full article or story, click on the link next to the headline.
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  • Lunar New Year Eve SMS Volume Down 25 Pct, Data Traffic Up 70 Pct – MIIT (Chinese article)
  • BYD Reports Preliminary Annual Results For 2014 (HKEx announcement)
  • 500.com (NYSE: WBAI) Announces $30 Mln Share Repurchase Program (PRNewswire)
  • Lunar New Year Box Office Passes 1.7 Bln Yuan, Growth Slows Sharply From Last Year (Chinese article)
  • Kuaidi, Didi Taxi App Mega Merger Won’t Be Subject To Antitrust Review – Exec (Chinese article)
  • Latest calendar for Q4 earnings reports (Earnings calendar)

INTERNET: WeChat Rattles Alibaba In Hongbao Wars

Bottom line: The huge success of Tencent’s hongbao promotions over the Lunar New Year reflects the growing dominance of WeChat, which could marginalize other mobile services unless regulators step in to create a more level playing field.

WeChat clobbers Alibaba in red envelope promotions

I remember a time not long ago when we China tech reporters used to write annual stories about the number of people who sent billions of simple Lunar New Year text greetings over their mobile phones. Those days now seem like a distant memory, and new data from Tencent’s (HKEx: 700) WeChat and Alibaba’s (NYSE: BABA) Alipay are showing just how small those earlier figures were, even though they seemed impressive at the time.

But the real story in this new tide of “red envelope grabbing wars”, known as qiang hongbao in Chinese, is the huge victory for Tencent over Alibaba, which I’ll describe shortly. That victory owes directly to the huge popularity of WeChat, which saw many of its hundreds of millions of users glued to their smartphones for much of the Lunar New Year while they ignored everything else. Instead of the usual New Year activities, they spent much of the holiday trying to “grab” millions of yuan in gift money being doled out over WeChat by their friends, bosses and also by Tencent and Alibaba themselves. Continue reading

INTERNET: NetEase Joins Rush To US, Zynga Crashes Out of China

Bottom line: NetEase’s new California R&D center could become an important hub for its future global growth, while Zynga’s China pull-out reflects the extreme difficulties foreign firms face in the local gaming market.

NetEase opens US R&D center

Just a day after I wrote that online gaming giant Tencent (HKEx: 700) may be planning a major new drive into the US, we’re hearing that its top rival NetEase (Nasdaq: NTES) is also moving into the neighborhood with plans for a new California R&D center. NetEase’s move comes after search leader Baidu (Nasdaq: BIDU) and Tencent both set up US offices last year, though only Baidu actually announced a major new product development center. (previous post) All of these moves represent the Chinese companies’ efforts to tap into the Silicon Valley ethos, which has far more of the skills they will need in their quest to enter global markets outside of China. Continue reading

News Digest: February 26, 2015

The following press releases and media reports about Chinese companies were carried on February 26. To view a full article or story, click on the link next to the headline.
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  • China’s Postal Savings Bank Plans $25 Bln IPO: China Daily (English article)
  • NetEase (Nasdaq: NTES) Expands Global Presence With First HQ In The West (Businesswire)
  • WeChat Speeds Holiday Cash Gifts With Shakes, Red Envelopes (English article)
  • China Drops Leading Technology Brands For State Purchases (English article)
  • SMIC (HKEx: 981) In Talks To Acquire South Korea’s Dongbu HiTek – Sources (Chinese article)
  • Latest calendar for Q4 earnings reports (Earnings calendar)

CELLPHONES: Xiaomi’s China Crown, Huawei Charges Honor

Bottom line: Xiaomi’s sales growth will slow this year as it faces stronger competition outside China, while recent momentum by Huawei could position it as the country’s solid number-two manufacturer.

Huawei shakes up Honor brand

I previously gave Xiaomi my award for China’s top tech company of 2014, and now the smartphone superstar has cemented that title by formally unseating global giant Samsung (Seoul: 005930) as last year’s leading Chinese brand. In a separate smartphone news bit, the stodgier and older Huawei has changed the chief for its Honor brand, in one of a series of recent developments that could position the company to become China’s second best-selling manufacturer this year.

As a regular writer about the China smartphone market, I’ve watched the many twists and turns in the rapid development of both Xioami and Huawei, which have emerged as my 2 major players to watch this year. Rivals Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) are also names to keep an eye on; but if I had to bet money, I would say Xiaomi and Huawei are likely to end 2015 as China’s 2 largest smartphone makers by a comfortable margin. Continue reading

CONSUMER: Chocolate Aims To Track China’s Coffee Boom

Bottom line: China’s chocolate market could follow the recent boom for coffee as a lifestyle product, benefiting foreign names like Nestle, Hershey and Dove that can tap the preference for premium brands.

Nestle, Hershey seek success in upscale chocolate

A couple of chocolate stories were in the headlines over the Lunar New Year holiday, spotlighting the big potential for the foreign treat to boom in a similar way that coffee has over the last few years. One story had Swiss giant Nestle (Zurich: NESN) saying it will look to chocolate and premium coffee to boost its stagnating China sales. The other had US chocolate giant Hershey (NYSE: HSY) also predicting strong growth for the China market, following its own recent local acquisition. Continue reading

INTERNET: Baidu Eyes Middle East, WeChat Flops In US

Bottom line: Baidu’s approach of targeting developing markets like Brazil and now the Middle East looks smart due to similarities with China and fewer rivals, while Tencent’s focus on the US looks dubious due to stiff competition.

Internet names in different global approaches

Having become some of  the world’s most valuable online companies over the last few years, China’s big Internet names are now looking globally to maintain the kind of growth they’ll need to justify their sky-high valuations. All are trying a number of strategies, but 2 broadly defined camps are emerging: one targeting developing markets like the BRICS, which are less lucrative and more fragmented, but also less competitive; and the other targeting developed markets like the US and Japan that can be very rewarding but are also extremely competitive.

Search leader Baidu (Nasdaq: BIDU) is squarely in the developing market camp, with search operations in Brazil and Thailand, and now new signs it is targeting the Middle East for its next overseas expansion. Tencent (HKEx: 700) appears to be the latter camp, following a high profile entry for its WeChat service into the US last year that now appears to have ended as a very expensive flop. Alibaba (NYSE: BABA) appears to be trying both options, though we have yet to hear of any major spending on any campaigns besides a few small overseas acquisitions. Continue reading

News Digest: February 23-25

The following press releases and media reports about Chinese companies were carried on February 23-24. To view a full article or story, click on the link next to the headline.
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  • Xiaomi Smartphone Sales Surge To Top Samsung (Seoul: 005930) As China’s No. 1 (English article)
  • LeTV (Shenzhen: 300104) Market Value Tops China’s Enterprise Board (Chinese article)
  • Nestle (Zurich: NESN) Adds High-End Snacks As Chinese Consumers Opt For Premium (English article)
  • Rainbow Medical Raises $25 Mln From China, Sets Up China Collaboration Office (Businesswire)
  • Huawei Changes Head Of Honor Brand Smartphone Division (Chinese article)
  • Latest calendar for Q4 earnings reports (Earnings calendar)

YCBB On Holiday

We will be on holiday on the first 3 days of the Lunar New Year, and won’t be publishing any articles on February 19-21. Limited publishing will resume next week, with a return to normal schedule on 25. Happy Year of the Sheep!