Internet

Latest Financial Trends & News for Internet in China

TELECOMS: Giddy Unicom Picks 14 Mixed-Ownership Partners

Bottom line: Unicom’s choice of 14 partners for a mixed-ownership reform plan involving its Shanghai-listed unit is far too many, and is ultimately likely to fail when those partners become frustrated and sell their shares.

Unicom puts 14 new partners into its mix

What I feared might happen has come to pass in a mixed-ownership reform plan being crafted by China Unicom (HKEx: 762; NYSE: CHU), one of the nation’s three telcos that is experimenting with selling some of itself to private investors. That’s a reference to reports in early August that the company might be planning to take on as many as 20 partners in the plan to sell a significant stake in its Shanghai-listed unit, China United Network Communications (Shanghai: 600050), to strategic private investors.

My worry was that taking on so many partners would effectively dilute the plan, since none of the partners would receive a very big stake and Unicom’s attention would be too fragmented. As it turns out, the number 20 was a bit too high, but not far off the mark. That’s the latest word, as Unicom has finally announced its mixed-ownership reform plan that will see it partner with 14 private companies in a bid to become more dynamic. Read Full Post…

RETAIL: Alibaba, Tencent Take Wars to Convenience Stores

Bottom line: Alibaba’s move into unmanned coffee shops could stand a strong chance of success due to its relative simplicity, while WeChat’s move into Hong Kong convenience stores should also be relatively well received.

Alibaba samples coffee shops

Convenience stores are shaping up as the next battlefield in the wars for supremacy between Internet titans Alibaba (NYSE: BABA) and Tencent (HKEx: 700), at least based on the latest headlines. One of those has Alibaba preparing to roll out an unmanned coffee store concept in its hometown of Hangzhou, while the other has Tencent’s WeChat rolling into Hong Kong in a big way in a new tie-up with 7-Eleven convenience stores.

Starbucks (Nasdaq: SBUX) probably doesn’t need to be too worried just yet about the new threat from Alibaba in coffee shops, though many of the dozens of smaller coffee chains that have set up shop in China these last few years might take note. Likewise, Hong Kong’s incumbent electronic payments service, Octopus, probably doesn’t need to worry just yet either. Read Full Post…

FINANCE: Jack Ma’s Yu’ebao Fund Gets Too Fat

Bottom line: Yu’ebao’s further lowering of investment limits shows the Ant Financial-owned fund is growing too unwieldy, and the company would be better advised to diversify its wealth management product portfolio.

Yu’ebao gets too fat on cash

Alibaba (NYSE: BABA) founder Jack Ma is quickly discovering that his super-aggressive promotional ways can sometimes yield too much success. That’s my quick assessment of the bottom line from reports that Yu’ebao, the phenomenally successful fund launched by Alibaba’s former financial unit Ant Financial, is further capping the size of individual investments it will take.

The new cap is being set at a relatively low 100,000 yuan ($15,000), and comes just three months after Ant set an initial upper limit of 250,000 yuan per individual Yu’ebao account. The limits are clearly being put in place to avoid Yu’ebao spiraling out of control, as the fund has already become the world’s largest just four years after its launch. Read Full Post…

INTERNET: Mobike Outage Leaves Commuters Sweaty, Late for Work

Bottom line: A peak-time outage for Mobike highlights how popular the shared bike service has become in a very short time and its vulnerability to hiccups, even though bigger issues are more likely to threaten its longer-term survival.

Mobike sees mass outage
Mobike sees mass outage

We’ll end the work week with a story about work itself that shows just how pervasive shared bike services have become in China’s major cities in just a year’s time. The story, involving a mass outage for leading operator Mobike, illustrates how such new technologies are prone to hiccups, and also how quickly they catch on in a place like China.

The question with all of these new technologies, especially a recent flurry related to the concept of a shared economy, is whether any will have legs and stand the test of time. The answer will probably be “yes” for a select few, such as the wave of cashlessness now taking over China that has even an old timer like me rarely spending cash for anything anymore and instead paying with my smartphone. But I suspect the vast majority of these new concepts, including shared bikes, will ultimately end up on the scrap heap of good ideas that didn’t quite work out. Read Full Post…

INTERNET: Tencent – China’s New Opiate of the Masses?

Bottom line: Tencent could be forced to take more measures to control addictive play of its popular “Honour of Kings” game, which could take a short-term toll on its gaming business.

Military critical of Tencent hit game

Internet juggernaut Tencent (HKEx: 700) has been in nonstop headlines lately for its smash hit game called “Honour of Kings”, along with its stock price that keeps reaching new highs. The company must certainly be feeling a bit uneasy from all the publicity, especially since Tencent tends to be quite low-key in line with the style of founder Pony Ma. But equally worrisome is the negative publicity “Honour of Kings” has been getting due to its addictive nature.

There’s a reason that Tencent and some of its major peers can continue to post strong double-digit growth despite their huge size. In Tencent’s case the reason lies at least partly with its phenomenal success as a game developer and operator, and also its related ability to create strong online communities from such gamers.  Read Full Post…

TRAVEL: Ctrip Goes Offline, Tongcheng Finds Profits

Bottom line: Ctrip’s offline travel alliance campaign looks like a shrewd move with good chances of success, while Tongcheng’s move back into profits shows the sector is heading into a new stable period.

Tongcheng travels back to profits

A couple of travel-related stories are in the headlines today, led by a blitz into the offline realm by leading online agent Ctrip (Nasdaq: CTRP). The other item has smaller rival Tongcheng reporting its first profit in four years, as it becomes the latest to emerge from a prolonged price war that bloodied the entire industry and sent most companies into the loss column.

Neither of these stories is huge, which partly reflects the fact that this industry is finally emerging from a brutal period to a new one of relative calm. But Ctrip is clearly looking for its next battle front, after consolidating its position by taking over most of its major rivals, including Qunar and eLong, to end the price wars. Read Full Post…

IPOs: Sohu to List Sogou, AirMedia Lowers Buyout Offer

Bottom line: Sohu’s plan to list its Sogou search unit has a 50-50 chance of happening this year, while AirMedia’s 2-year-old privatization plan is likely to close within that period.

Sohu talks IPO for Sogou — again

A couple of IPOs are in the headlines as we head into the new week, led by an often-discussed offering by perennial third-place search engine Sogou, which is co-owned by Internet titan Tencent (HKEx: 700) and second-rate portal Sohu (Nasdaq: SOHU). At the same time, another second-rate company, AirMedia (Nasdaq: AMCN), has slashed the proposed buyout price for its attempt to go private, reflecting the company’s own troubles.

Both of these stories have a bit of the “who cares?” element for long-term investors, since neither company is one that has particularly strong long-term prospects. But they do both reflect the larger realm of smaller Chinese Internet and media companies that are struggling for attention, as investors get mesmerized by giants like Tencent, Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD). Read Full Post…

INTERNET: Whatsapp Goes Spotty in China, Headed for Shutout?

Bottom line: China’s apparent partial blockage of some Whatsapp functions for brief periods is unlikely to end with a total blockage, mostly because the service is used almost exclusively by foreigners.

Whatsapp temporarily blocked in China

Foreign media are buzzing about what appears to be the blockage of some functions on Whatsapp, with the obvious implication that a full blockage of the the popular instant messaging app could be next. This particular story has a few interesting angles, led by the fact that Whatsapp isn’t used by very many Chinese and also that it’s owned by social networking giant Facebook (Nasdaq: FB).

There are a also a number of precedents to go by, none of which looks too positive for the future of Whatsapp. Just about every other major global social networking app has been blocked in China by now, including Facebook itself, as well as Twitter (NYSE: TWTR) and Japan-listed Line (Tokyo: 3938). But there are a few notable exceptions that have been allowed to keep operating in China, one of which is Whatsapp and two others being the Microsoft (Nasdaq: MSFT) owned Skype and LinkedInRead Full Post…

INTERNET: Baidu Back Under Microscope Over Search Suspicions

Bottom line: A new scandal involving results that favor a major advertiser on Baidu’s mapping service could have a minor impact on the company’s stock during the next week, but is mostly an embarrassment.

Doctors criticize Baidu maps

A year after taking a beating over questions about the reliability of its search results, stumbling Internet titan Baidu (Nasdaq: BIDU) is back in the headlines over similar queries about results given by its popular mapping service. This time Baidu has quickly responded to the criticism from a group of doctors who are questioning the prominence of a powerful hospital group in search results on the mapping service, blaming the issue on a glitch and saying it is moving to correct the problem.

That’s far different from the last crisis, arguably the biggest in Baidu’s history, which began last spring when the story of a duped cancer patient made the rounds like wildfire on China’s Internet. In that instance, Baidu was slow to respond to the claims from a patient, who had already died at the time, that he was fooled by a cancer hospital whose name looked like a genuine search result but was really just an advertisement. Read Full Post…

VIDEO: LeEco Moves on With Founder Jia’s Resignation

Bottom line: LeEco is likely to spin off its new energy car unit by the end of the year following the departure of founder Jia Yueting from the listed company, while it could also close its smartphone division.

LeEco set to spin off car unit?

In what looks like a major turning point for the foundering LeEco (Shenzhen: 300104), the company’s charismatic but embattled founder has relinquished his role as chairman at the publicly listed firm. This particular news came out just as people were leaving home for work last night, so it’s still not completely clear on what exactly has happened.

But it appears that one of the companies that had agreed to provide a major cash infusion, a real estate developer named Sunac (HKEx: 1918) was refusing to hand over the funds because it said certain unspecified conditions weren’t met from its agreement. Thus it appears that Jia’s departure from the listed company, and probably most of LeEco in general, was probably the big sticking point. Read Full Post…

INTERNET: Tencent Limits Gamers, Joins with TCL

Bottom line: Tencent’s roll-out of time playing limits for teenager gamers for a popular new title looks aimed at preventing a regulatory intervention, while its new TCL tie-up could presage a spin-off of its video business.

Tencent limits teenage gamers

Internet titan Tencent (HKEx: 700) is in a couple of headlines as the US observes its Independence Day holiday, starting with word that it’s limiting teenagers from playing too much of a very popular new title. The other headline has the company teaming up with TV stalwart TCL (HKEx: 1070; Shenzhen: 000100) in a new smart TV tie-up.

The only real common thread to these headlines is that they both involve Tencent, though each does spotlight a certain pattern that’s quite typical for China’s most successful Internet company. In the first case, the game story spotlights Tencent’s strong record at developing and operating games, which are its largest source of revenue. The TCL story highlights Tencent’s fondness for making strategic minority investments, often with mixed results. Read Full Post…