China Mobile Set For Painful Year In 2014

China Mobile reports ugly Q1

Leading wireless telco China Mobile (HKEx: 941; NYSE: CHL) has kicked off the first-quarter earnings season with some numbers that look quite scary, reflecting a sharp slowdown as its home market shows growing signs of saturation. Adding to the problem is the rapid growth of “over the top” (OTT) apps like Tencent’s (HKEx: 700) popular WeChat, which are stealing business from China Mobile’s traditional text messaging service. I commented last month that a recent sell-off in China Mobile shares could represent a good buying opportunity, but clearly these latest results show the company is going through a period of painful readjustment that is likely to last for the rest of this year. Continue reading

Tesla CEO Makes Smooth Drive Into China

Tesla drives into China

I have to give my congratulations to new energy car maker Tesla (Nasdaq: TSLA) for creating the kind of buzz and excitement this week that only names like Apple (Nasdaq: AAPL) and smartphone sensation Xiaomi have typically been able to muster. In the last 2 days, the company and its charismatic founder Elon Musk were all over the Chinese headlines as Tesla delivered its first electric vehicles (EVs) in China on the sidelines of the nation’s biggest annual auto show happening this week in Beijing. Musk seems to have done interviews with nearly all of the major publications I regularly read, leading me to wonder if the man ever sleeps. Continue reading

McDonalds Quickens Franchising Drive

McDonalds steps up franchising drive

Fast food leaders McDonalds (NYSE: MCD) and KFC (NYSE: YUM) have unveiled major China overhauls in the last few weeks, as each tries to reignite stalling growth in one of their biggest and most profitable markets. Such retrenchments are long overdue, more than 2 decades after each company first came to China and  achieved huge success by opening stores that offered not only good food at affordable prices but also friendly service and a comfortable eating environment. Continue reading

Shanghai Street View: Misguided Measurement

Shanghai improves air quality reporting

Shanghai environmental officials have been busy this past week boasting of the latest improvements to their system for informing the public about the city’s most up-to-date air quality. In the latest advance to the ever-improving system, people can now get real-time updates online and over their mobile phones to find out just how good or bad Shanghai’s air is.

Perhaps I’m being a bit cynical, but I’m starting to get just a tad tired of this constant stream of improvements to the city’s air quality reporting system, each of which gets huge coverage in the local media. Obviously it’s good to know just how polluted our air is, and more information will allow ordinary people to make better choices about how they structure their daily activities. Continue reading

News Digest: April 23, 2014

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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Perfect World’s Shanda Buy: Consolidation Coming?

Perfect World buys into Shanda Games

The online game industry has just gotten a small hint of potential consolidation, with word that mid-sized player Perfect World (Nasdaq: PWRD) is buying a stake of rival Shanda Games (Nasdaq: GAME), which is in the process of privatizing. The tie-up that will see Perfect World buy about 6 percent of Shanda Games’ shares comes as both companies confront sagging profits, and could kick off a period of consolidation for the highly fragmented industry. I’ve incorrectly predicted such consolidation before, but a recent wave of M&A in China’s Internet and other recent trends could mean that such an overhaul could finally be coming to online games. Continue reading

New York IPO Scorecard: Still Some Life

Still some steam in IPO market

Two weeks after this year’s first Chinese IPO in New York, there’s still a bit of life left in the market despite recent signs of slowing momentum. That’s my quick assessment after looking at the performance of the 4 companies to list so far this year, starting with education services firm Tarena (Nasdaq: TEDU), followed by clinic operator iKang (Nasdaq: KANG) and finally online real estate services firm Leju (NYSE: LEJU) and microblogging giant Weibo (Nasdaq: WB). Meantime, media are reporting that this year’s most highly anticipated IPO from Alibaba is getting delayed, after reports emerged last week that the e-commerce giant could make its first regulatory filing for a New York offering this week. Continue reading

News Digest: April 22, 2014

The following press releases and media reports about Chinese companies were carried on April 22. To view a full article or story, click on the link next to the headline.
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  • Alibaba Delays Initial F-1 IPO Filing – Source (Chinese article)
  • Perfect World (Nasdaq: PWRD) To Buy Shanda Games (Nasdaq: GAME) Stake (PRNewswire)
  • China Shoe Strike Spreads, Enters Second Week (English article)
  • Tesla (Nasdaq: TSLA), JA Solar (Nasdaq: JASO) To Build Charging Stations In Pudong (Chinese article)
  • Fosun Pharma Boosts Offer for Chindex (Nasdaq: CHDX) After Rival Bid (English article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

Chunkong Set For Tepid IPO, 58.com Eyes M&A

58.com eyes online job sites

Mobile game operator Chukong is back in the headlines with its latest filing for a New York IPO, while recently listed 58.com (NYSE: WUBA) is also making news with word that it’s eying strategic acquisitions to complement its popular online classified advertising site. Chukong’s newly released financials reveal that it’s growing at lighting speed in the attractive mobile games space, even as its losses also mount. Meantime, 58.com’s M&A plan looks quite attractive to me, as it attempts to build a diversified classified advertising site that we haven’t seen emerge in China so far. Continue reading

JD.com Adds WeChat To Arsenal In Alibaba Assault

JD finds new weapon in WeChat

Alibaba founder Jack Ma’s worries about the rapid rise of mobile instant messaging service WeChat appear to be well founded, with word that Tencent’s (HKEx: 700) wildly popular platform will create an exclusive shopping channel for Alibaba’s chief rival JD.com. This kind of deal must certainly be Ma’s biggest nightmare, as it will instantly link JD, China’s second largest e-commerce company, with the hundreds of millions of young Chinese who regularly use WeChat to communicate. What’s more, WeChat has shown itself quite capable of converting its users into shoppers who could easily become JD customers. Continue reading

China Smartphones Stall, As ZTE Launches Star 1

China smartphone sales sag in Q1

I’ve been predicting for a while now that China’s booming smartphone sector was set for a rapid slowdown due to a rapid build-up last year, and now the latest sales data is showing that such a downturn may have begun in this year’s first quarter. Of course one quarter of data is hardly enough to declare the death of last year’s smartphone explosion, and we’ll have to see if the coming months continue a downtrend that saw China’s cellphone sales tumble 27 percent in the first 3 months of the year. Meantime, one of the industry’s top players ZTE (HKEx: 763; Shenzhen: 000063) has just launched yet another new sub-brand aimed at online buyers, reflecting the hyperactive state of competition and intense pricing pressure in the market. Continue reading