SMARTPHONES: Lenovo Eyes Friendlier China as Foreign Investors Flee

Bottom line: Lenovo’s smartphone business could ultimately get spun off and separately listed in China, as its continued weak performance could force out CEO Yang Yuanqing later this year.

Lenovo posts first annual loss in 6 years

There’s really not much positive to say about the latest earnings report from struggling PC and smartphone maker Lenovo (HKEx: 992), which has just posted its first annual loss in 6 years. Perhaps we could find an upbeat note in word that the company is on track to achieve $1.35 billion in annual cost savings, though even that’s related to widespread layoffs and other cuts related to its faltering businesses. One might also find rays of hope in Lenovo’s admission that its earlier purchase of Motorola has largely failed, or that it might consider a re-listing in China. Read Full Post…

BUYOUTS: Autohome, iKang, Wanda in Twisted Buyout Tales

Bottom line: Privatization plans by Autohome and iKang will face long delays due to shareholder resistance and rival bids, while Wanda Commercial’s similar buyout will proceed soon after some technical issues are resolved.

Autohome, iKang take buyout clashes to court

Three of the larger privatization bids by offshore-listed Chinese firms are running into snags, hinting at a growing wave of resistance to such offers considered by many as too low and opportunistic. Two of the most colorful tales involve online car site Autohome (NYSE: ATHM) and private clinic operator iKang (Nasdaq: KANG), whose management-led buyout deals both hit snags due to unexpected third-party developments. In the latest twist to those stories, Autohome is now taking legal action to prevent a separate share sale that could kill its own management-led buyout bid; while iKang is playing legal games with a rival bidder that trumped an original management-led buyout plan. Read Full Post…

LEISURE: Wanda Challenges Disney with Park-Building Binge

Bottom line: Wanda’s recent theme park building spree looks aimed at challenging Disney, but many of its new resorts are likely to fail due to lack of experience and poor choice of locations.

Wanda breaks ground on new Guilin park

Watch out, Disney (NYSE: DIS). Chinese real estate giant Wanda Group has recently embarked on a global theme park building binge that would put Disney to shame, and certainly outpaces the US entertainment giant in terms of investment dollars. This month alone Wanda is getting set to open a multibillion-dollar park in the interior Chinese city of Jiangxi, and it has also just announced the ground-breaking for another mega-park in the scenic southern tourist city of Guilin. Then there’s its plans for a $3.3 billion park near Paris announced in February, which would be its first major overseas resort. Read Full Post…

China News Digest: May 27, 2016

The following press releases and news reports about China companies were carried on May 27. To view a full article or story, click on the link next to the headline.
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  • Wanda Commercial (HKEx: 3699) buyout offer delayed by regulator’s queries – sources
  • Lenovo (HKEx: 992) Announces Fiscal Q4, Full Fiscal Year Results (HKEx announcement)
  • Huawei Launches MateBook Notebook PC in China, Starting at 4,988 Yuan (Chinese article)
  • Baidu (Nasdaq: BIDU) Ruled Guilty of Unfair Competition, to Pay Dianping 3.23 Mln Yuan (Chinese article)
  • Telstra’s Autohome (NYSE: ATHM) Sale Faces Cayman Islands Court Action (English article)

E-COMMERCE: Alibaba Probed Again by SEC, But Does it Matter?

Bottom line: Alibaba will avoid being penalized in a new SEC probe, but may be forced to modify some of its aggressive accounting practices in a compromise with the US securities regulator.

Alibaba in new SEC probe

I’m beginning to understand why e-commerce giant Alibaba (NYSE: BABA) has been aggressively building a team of Washington lobbyists, following announcement of its latest clash with a US government agency. This time it’s the securities regulator that’s tussling with the aggressive Alibaba, with word that the US Securities and Exchange Commission is investigating the company for potential illegal accounting practices. The SEC is already well acquainted with Alibaba, following another unrelated probe of the company last year related to piracy in its online marketplaces. Read Full Post…

FINANCE: Tencent Payments Take Off, Alipay Steps Up Asia Drive

Bottom line: Tencent’s new disclosure that it processes more than 500 million daily mobile financial transactions highlights its rapid growth in the space, pushing market leader Alipay to accelerate its own expansion into Asia.

WeChat wallet creeps up on Alipay
WeChat wallet creeps up on Alipay

It’s rare to see Internet giant Tencent’s (HKEx: 700) tech-savvy but reclusive chief Pony Ma do interviews or make public appearances, so when he does it’s always reason to take notice. In this case Ma has disclosed new figures that show just how rapidly Tencent is moving into the mobile financial transactions business, rapidly encroaching on an area previously dominated by Alibaba (NYSE: BABA) affiliate Alipay. A separate headline also reflects to some extent the pressure that Alipay is feeling, with reports that its parent Ant Financial is accelerating its recent move into several major Asian markets. Read Full Post…

GUEST POST: Cross-Border E-commerce: New Regulation, New Opportunities?

By Federico Sferrazza

China moves to regulate cross-border e-commerce

Accused of poor regulation and unfair competition by traditional import-export traders, cross-border e-commerce in China has been subject to new regulations since the beginning of April. Over the long term, the new regulation is expected to improve the shopping experience by focusing on the quality of goods.

With over 5,000 cross-border online trading platforms and more than 200,000 enterprises involved, e-commerce has become a major force for foreign trade into and out of China. In 2015, cross-border consumer deals settled online reached $ 40 billion, up 50 percent, representing over 6 percent of the total consumer e-commerce sector. China’s Commerce Ministry estimates the broader cross-border e-commerce market is much larger, growing at an average rate of 30 percent to reach up to $1 trillion by 2018. (analysis report) Read Full Post…

China News Digest: May 26, 2016

The following press releases and news reports about China companies were carried on May 26. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) Undergoing SEC Investigation Over Accounting Practices (English article)
  • Tencent’s (HKEx: 700) Ma Says Daily Mobile Payment Transaction Volume Over 500 Mln (Chinese article)
  • BOE (Shenzhen: 000725) Debuts Flexible LED Display at US Trade Show (Chinese article)
  • Baidu (Nasdaq: BIDU) Limits Number of Search Ads Per Page to 4 (English article)
  • Lenovo (HKEx: 992) Analysts Slash Outlook on Company’s ‘Mobile Crisis’ (English article)

MULTINATIONALS: Shanda, Tencent in Global P2P, Gaming Buys

Bottom line: Shanda’s purchase of 12 percent of LendingClub reflects its new investment focus on global financial services, while Tencent’s pursuit of a major Finnish game maker is consistent with its previous M&A strategy.

Tencent eyes Finland’s Supercell

Major outbound M&A deals involving 2 of China’s largest private firms are in the headlines today, with new moves by private equity investor Shanda and Internet giant Tencent (HKEx: 700) reflecting their latest buying priorities. The first deal has Shanda buying a large stake in LendingClub (NYSE: LC), the peer-to-peer (P2P) US lending pioneer whose shares have tumbled recently due to a scandal involving some of its loans. The other headline has Tencent looking to take control of Finnish game maker Supercell, in a deal that would be its biggest acquisition of all time valued at several billion dollars. Read Full Post…

SMARTPHONES: Xiaomi Shrivels in China, Huawei Gets Assertive

Bottom line: Xiaomi’s rapid slide in China is unlikely to ease soon and it’s likely to fall out of the top 5 brands before year end, while Huawei’s lawsuit against Samsung reflects a new confidence with its recent rapid rise.

Xiaomi rapidly losing steam in China

New headlines are shining a spotlight on 2 of China’s best-known domestic smartphone brands, even though the fast-rising Huawei and rapidly sinking Xiaomi are moving in opposite directions. New data shows just how badly Xiaomi has slipped over the last year at home, where the former market leader is now in danger of dropping out of the top 5 following a huge decline in first quarter sales. Meantime, the same data show a continued surge for Huawei, which is showing its growing confidence by a filing a new patent lawsuit against global smartphone leader Samsung (Seoul: 005930). Read Full Post…

ENTERTAINMENT: Alibaba Kicks Up China Soccer Spree, NBA Club in Sight?

Bottom line: A recent spree of European soccer purchases by Chinese buyers could auger a similar bid for an NBA team in the next 1-3 years, with Alibaba and Wanda as 2 of the most likely buyers.

Alibaba in talks for FIFA sponsorship

A recent stream of global sports investments from China has bounced back into the headlines, with word that e-commerce juggernaut Alibaba (NYSE: BABA) is near a major sponsorship deal with soccer giant FIFA, even as a Chinese businessman has just signed a separate deal to buy British club Aston Villa. The 2 latest deals spotlight China’s sudden fascination with global sports, as millions of Chinese embrace these globally famous names over local leagues that are far less professional and tainted by corruption scandals.

Nearly all of the deals to date have been focused in Europe and on soccer, which is hugely popular in China. But basketball is equally popular in the world’s most populous country, which raises the intriguing question of when we might see a Chinese buyer bid for an NBA team, in what would be a first-of-its kind deal sure to make global headlines. Read Full Post…