GAMES: NetEase Keeps Warcraft, New Giant Buys Playtika

Bottom line: Giant Interactive is banking on Playtika to jump-start its stalled growth, while NetEase’s extension of a major licensing deal will further consolidate its position as China’s second largest online game firm.

NetEase extends Blizzard agreement

A couple of gaming stories are making headlines as we head towards the long Chinese national day holiday, with NetEase (Nasdaq: NTES) and Giant Interactive both inking major deals that should help cement their place as 2 of China’s top players. The first deal has NetEase extending its long-running licensing deal with top global game designer Blizzard Entertainment (Nasdaq: ATVI) for some of its most popular titles, including the World of Warcraft series. The second has Giant buying Israeli social game maker Playtika, in a deal that was previously reported to be worth around $4.4 billion. Read Full Post…

CHIPS: China Tries New US Chip Buy with Analogix

Bottom line: A Chinese buyer’s plan to purchase US chip maker Analogix for more than $500 million is unlikely to meet with political resistance, and could mark a new template for similar cross-border chip M&A by China.

Chinese group bids for US-based Analogix

After failing at several high-profile attempts to buy US microchip technology, China is trying once again with a newly announced plan to acquire venture-backed chipmaker Analogix Semiconductor for more than $500 million. Unlike previous failed efforts that targeted more mature companies, the acquisition target in this case is much younger, since Analogix was only founded in 2002.

This new deal looks strikingly similar to another one earlier this year that saw the Shanghai-based National Silicon Industry Group purchase a similarly young Finnish chipmaker called Okmetic in a deal that valued the company at nearly $200 million. (previous post) That deal and this latest one don’t appear to be related, though one can never be completely sure due to the vague descriptions of the buyers in both cases. Read Full Post…

China News Digest: September 30, 2016

The following press releases and news reports about China companies were carried on September 30. To view a full article or story, click on the link next to the headline.
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  • Starbucks (Nasdaq: SBUX) to Try Take-Out Dining, Partner May be Baidu (Nasdaq: BIDU) (Chinese article)
  • MSCI Still Monitoring China A Shares After ‘Positive’ Signs (English article)
  • China Sees Commercial 5G Telecoms Rollout in 2020, Speeds up to 20 GB/Second (Chinese article)
  • Baic Motor VP Joins Baidu’s (Nasdaq: BIDU) Driverless Car Division (English article)
  • Former Qualcomm Exec Joins LeEco (Shenzhen: 300104) to Develop US Market (Chinese article)

INTERNET: Online Grocer Shuts Down, Q&A Site Pares Back

Bottom line: The closure of online grocer Tablelife and a major overhaul at paid advice service Fenda show investors are growing more impatient with Chinese Internet companies without clear road maps to profitability.

Online grocer Tablelife shuts down

Two news items on downsizing websites reflect not only intense competition on China’s Internet, but also a growing impatience among financial backers for money-losing sites without a clear road map to profitability. It wasn’t long ago that anyone with a dot-com name could easily find hundreds of thousands or even millions of dollars in funding, as both domestic and foreign investors threw money at anything with even the slightest hint of growth potential.

Fast forward to the present, when investors are becoming far more selective and avoiding companies that can’t show a clear paths to profits due to stiff competition and notoriously stingy Chinese web surfers. That reality has apparently spelled the end of the line for online gourmet grocer Tablelife, and a major scale-back for paid advice service Fenda following a 47-day disappearance from the Internet.  Read Full Post…

MEDIA: Wanda in Hollywood Overdrive with Dick Clark Talks

Bottom line: Wanda is likely to succeed in its purchase of Dick Clark Productions, but could pay a rich premium for the awards show producer as part of an effort to develop similar programs in China.

Wanda in talks to buy Dick Clark Productions

Just a week after making headlines through a strategic tie-up with Sony Pictures, China’s star-struck Wanda Group is in talks for yet another blockbuster deal to buy Dick Clark Productions, known for producing a number of popular award shows. My first reaction to the headline was a big “So what?” since the production company’s namesake, who died in 2012, is best known to me as the maker of the aging annual program celebrating New Year’s Eve in Times Square, New York. Read Full Post…

China News Digest: September 29, 2016

The following press releases and news reports about China companies were carried on September 29. To view a full article or story, click on the link next to the headline.
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  • China Postal Savings Bank (HKEx: 1658) Fails to Make Waves in $7.4 Bln HK Debut (English article)
  • New Century Cruise (Shenzhen: 002558) to Buy Mobile Games Business Playtika (English article)
  • Fosun (HKEx: 656) Joins First Public-Private Funded High-Speed Rail Line Group (Chinese article)
  • Apple (Nasdaq: AAPL) Picks Beijing for First China R&D Center, to Invest 300 Mln Yuan (Chinese article)
  • Baidu (Nasdaq: BIDU) Self-Driving Car to Debut in 2018, Cost More Than 1 Mln Yuan (Chinese article)

ENTERTAINMENT: Spurned by Paramount, Wanda Settles for Sony

Bottom line: Wanda’s new production tie-up with Sony Pictures will provide movies for its cinema chains in  China and globally, but could become a drag on its theater operations if the films are poorly received.

Wanda opens new resort in Hefei

Just days after receiving a major setback to its plans to invest in Paramount Pictures, Chinese Hollywood wannabe Wanda Group has just announced a film production tie-up with Sony Pictures. This particular deal looks decidedly like a consolation prize for Wanda, which is trying to build up a diversified entertainment empire similar to Disney (NYSE: DIS).

The company was bidding for a stake in Paramount, one of the top 6 Hollywood studios, after the studio said earlier this year it wanted to sell a strategic stake in itself. But Paramount ultimately reversed that decision following an internal battle for control of the company’s parent Viacom, leaving Wanda out in the cold. (previous post) This new Sony tie-up doesn’t involve any equity swap, and instead looks mostly like a relatively routine co-production deal that is becoming quite common between Hollywood and Chinese partners. Read Full Post…

SMARTPHONES: Lenovo Slashes Moto, Xiaomi Goes Further Offline

Bottom line: Lenovo’s big job cuts at Motorola could auger a write-off of the brand in the next half year, while Xiaomi’s huge offline expansion looks necessary but will further undermine its trendy high-tech image.

Lenovo slashes jobs at Moto

Two former smartphone high-flyers are in the headlines today, with PC giant Lenovo (HKEx: 992) and Xiaomi both taking steps to try and regain their former glory. Lenovo’s move looks like a major retreat for its struggling Motorola brand, which has just slashed more than half of its staff. Meantime, Xiaomi has just rolled out two higher-end models in a bid to go upscale. But what caught my attention were details of the company’s plans to sharply boost its offline presence in the latest reports.

Both stories reflect companies in transition, after each tumbled from the ranks of China’s top smartphone brands due to failure to build a loyal customer base. Lenovo bought Motorola for $2.9 billion 2 years ago and was hoping to position the faded brand as its premium product line. Meantime, Xiaomi skyrocketed to fame 3 years ago partly on an online-only sales model that helped it control costs and position itself as a trendy, cutting-edge brand. Read Full Post…

China News Digest: September 28, 2016

The following press releases and news reports about China companies were carried on September 28. To view a full article or story, click on the link next to the headline.
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  • Lenovo (HKEx: 992) Cuts 1,000, Including More than Half of Motorola Staff (Chinese article)
  • Blizzard, NetEase (Nasdaq: NTES) Renew Operation Agreement in China (PRNewswire)
  • Paid Q&A Service Fenda Reappears After 47 Day Pause, Only Offers Medical Advice (Chinese article)
  • Starbucks (Nasdaq: SBUX), Master Kong in Tie-Up for Drinks from 10 Yuan (Chinese article)
  • Xiaomi Guns for Apple (Nasdaq: AAPL) With Latest Premium Smartphone (English article)

IPOs: Yum China Nears NY Debut, Merchants Securities Lists in HK

Bottom line: Yum China’s new stock will post moderate gains of 3-6 percent when trading begins on November 1, while Merchants Securities’ IPO shares will price in the middle of their range and debut flat to up slightly.

Merchants Securities makes HK listing

IPOs are heating up as we head into the fourth quarter of 2016 and companies race to complete offerings before the traditionally slow period between Christmas and Chinese New Year. The last week alone has seen progress on what could be the world’s 2 biggest offerings this year, being made by Postal Savings Bank of China and P2P lender Lufax. (previous post) Now 2 more mega listings are in the headlines, as brokerage Merchants Securities prepares for an IPO in Hong Kong and KFC parent Yum (NYSE: YUM) gets set to spin off and separately list its China unit in New York. Read Full Post…

TELECOMS: More Proactive Stance Needed in Telco Fraud Fight

Bottom line: Chinese companies need to become more proactive in ending practices that harm consumers, or risk facing pressure from regulators and hurting their prospects for expansion abroad.

Telcos get tough with real name registration

A campaign requiring all mobile phone users to register with their real names was in the headlines for much of last week, in the latest step to curtail rampant phone fraud in China that has grabbed recent attention due to several high-profile cases. Notably, the real-name registration drive was led by 6 government ministries, rather than the nation’s 3 major wireless carriers whose networks are the primary platform for committing most of the fraud.

Both the government and carriers have known about this kind of fraud for years, but did little to aggressively tackle the problem until the recent wave of negative publicity. Read Full Post…