Internet

Latest Financial Trends & News for Internet in China

INTERNET: Google Feels China Backlash From Own Employees

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Bottom line: An internal petition calling on Google to be more transparent about its plans to return to China represents the first major backlash to the move, but is unlikely to dissuade the company from going ahead.

Google employees question China return

When the news first broke a couple of weeks ago that Google (Nasdaq: GOOG) was planning a return to China’s search market, many predicted that western sources would be quick to criticize the plan, even though few voices have actually spoken out so far. Fast forward a couple of weeks, when we are hearing the first sounds of what’s likely to become a sea of protests if and when the company actually makes its China search homecoming.

Perhaps not too surprisingly, the first salvo in the storm of protest that could soon emerge is coming from within Google itself, with word that employees are circulating a petition raising questions about the reported move. (English article) This kind of internal debate could be especially troubling, since the last thing that Google wants is an uprising within its own ranks at such a delicate time. Read Full Post…

INTERNET: Tencent Slumps Under Government Wrist-Slap

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Bottom line: Tencent’s sudden pulling of a popular game just days after its release shows no one is exempt from Beijing’s recent online entertainment clampdown, which could weigh on stocks of related company for the next few months.

Tencent gets wrist slapped by regulator

A new statement from leading online game operator Tencent (HKEx: 700) is dripping with contrition, following the sudden yanking of a new hit game from its platform that apparently didn’t pass muster with the regulator. This latest Tencent news, combined with some downbeat earnings from live broadcasting specialist Huya (Nasdaq: HUYA) and its parent YY (Nasdaq: YY), have cast a chill over Chinese gaming and video stocks, which took a beating in Tuesday trade.

Tencent has been leading the crowd, shedding 3.4 percent on Tuesday and down another 3.2 percent in early trade on Wednesday. Those two declines have collectively wiped out more than $4 billion in market value from one of the world’s most valuable Internet companies. The bloodbath was felt among the broader realm of Chinese companies that provide any form of video content over the Internet, be it games, live broadcasting or even traditional moves and TV shows. Read Full Post…

VIDEO: iQiyi Goes Down LeEco Road With Sports JV

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Bottom line: iQiyi’s establishment of a new sports joint venture and the venture’s subsequent 500 million yuan in funding point to a measured expansion for its premium content business, which will be key to its future success. 

iQiyi in sports joint venture

I’m being just a bit coy with today’s headline by suggesting that a new sports programming joint venture by online video site iQiyi (Nasdaq: IQ) resembles a similar expansion by disgraced former rival LeEco (Shenzhen: 300104). But the fact of the matter is that these two particular moves do look somewhat similar, even though I have far more respect for iQiyi than LeEco, for reasons that I’ll detail shortly.

Let’s begin by jumping right in with the news, which has iQiyi, whose main backer is online search leader Baidu (Nasdaq: BIDU), announcing the formation of a sports programming joint venture called Beijing Xin’ai Sport Media. (company announcement) iQiyi is partnering with Super Sports Media, a sports marketing company set up in 2010. As part of the deal, Super Sports Media will change its name to iQiyi Sports, implying this company is basically throwing its lot in with the larger iQiyi. Read Full Post…

INTERNET: Google Outed on China Search Plan

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Bottom line: A new report on Google’s plan to launch a new China search engine within the next year looks credible, and underscores the company’s decision to put the market’s big potential ahead of the negative backlash such a move will bring.

Google prepares to enter eye of China storm

A story in a publication called the Intercept is making big waves in China, saying search giant Google (Nasdaq: GOOG) is preparing a major about-face on its decision to leave the country’s large but highly controlled search market. (English article) While I’ve never heard of this particular publication, the level of detail it contains appears to show it’s credible, which is probably why most major western media are running reports based on the story.

In short, the story says Google has quietly been developing a China-specific version of its search engine that will adhere to Beijing’s strict rules for self-censorship, and has code-named the project Dragonfly. Google previously operated such a search engine in China, but famously pulled out of the market in 2010 after deciding it didn’t want to adhere to those self-policing policies that require removal of all links to sensitive subjects. Read Full Post…

INTERNET: Facebook, Google in New China Steps

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Bottom line: Facebook and Google’s latest micro-moves into China reflect their longer term efforts to get permission to launch major services in the market, though it’s unclear if they will get such a green-light anytime soon.

Facebook, Google take new baby steps in China

You have to give China-challenged Internet giants Facebook (Nasdaq: FB) and Google (Nasdaq: GOOG) an “e” for effort. Both companies have popped into the China headlines over the last two weeks for micro-moves into the world’s largest Internet market, including the latest news that Facebook plans to set up a company in Hangzhou that will become an “innovation hub”.

The Facebook news comes just about a week after Google confirmed that it has launched a new artificial intelligence (AI) game in China on a platform operated by local Internet giant Tencent (HKEx: 700). Both of these moves are miniscule in the big scheme of things, especially for companies of Google’s and Facebook’s size.  But they do reflect the kind of baby steps, some might also say groveling, that such corporate giants will need to take to get a hold in the world’s largest Internet market where they are now mostly denied permission to operate. Read Full Post…

INTERNET: Baidu Sambas Out of Brazil

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Bottom line: Baidu’s withdrawal from Brazil reflects a broader inability of Chinese companies to succeed overseas due to their different practices and local wariness about their ability to protect user privacy.

Baidu says bye-bye to Brazil

In what is probably coming as a surprise to no one, media reports are saying that search leader Baidu (Nasdaq: BIDU) is pulling out of Brazil. This would represent the company’s latest failure abroad, and is really part of a broader string of failures not only for the company but China’s internet sector in general. This particular group is quite good at milking the China market for all it’s worth, but then being unable to replicate its success in other markets.

There are lots of reasons for the inability of China’s Internet companies to succeed outside their home market. One is simply inexperience. But another is really the direct result of Beijing’s determination to set up what almost amounts to a parallel Internet in China that in some ways is identical to the global Internet but in others is very different. Read Full Post…

GAMES: Tencent Takes Gaming Act Abroad

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Bottom line: Tencent’s WeGame could stand a 50-50 chance of success in moving abroad, since the company already has a proven track record in games and will face relatively low privacy protection concerns due to the less-sensitive nature of gaming.

Tencent takes its gaming global

Despite their huge success at home, none of China’s big Internet companies has ever scored a major victory outside its home market, despite a number of low-profile attempts. Social networking giant Tencent (HKEx: 700) is about to become the latest to take a stab at the market, with word that the company will soon launch an international edition of its gaming platform called WeGame.

There are a number of reasons why Chinese Internet companies have yet to really crack any major foreign markets, underscoring the uphill battle Tencent will face. The largest is probably well-established competition in most places, both from local players as well as global giants like Amazon (Nasdaq: AMZN) and Google (Nasdaq: GOOG). The second biggest element is probably trust, since many foreigners are a bit suspicious of these Chinese companies and their ability to protect customer privacy. Read Full Post…

IPOs: Inke Pops in Trading Debut, Xiaomi Bounces Back

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Bottom line: Live broadcasting specialists Inke and Huya should do well over the next year but could face difficulty after that as popularity of such services fades, while Xiaomi’s stock gains over the last two days look like a dead-cat bounce.

Inke goes live with strong trading debut

Following the unimpressive debut of smartphone maker Xiaomi (HKEx: 1810) earlier this week, live streaming site Inke (HKEx: 3700) is the latest high-tech listing in the headlines with a more impressive debut in Hong Kong. This latest deal follows the US listing for Huya (NYSE: HUYA), China’s first live streaming site to make an IPO, which has tripled since its New York IPO in May.

There are some mixed messages in here, perhaps indicating mixed investor sentiment towards many of these new-economy companies as investors try to separate the wheat from the chaff. If that’s the case, investors certainly seem to think that Huya and perhaps Yinke represent the wheat in the hot online streaming category. Meanwhile, they seem less certain about Xiaomi, which fizzled in its trading debut on Monday but has come bouncing back somewhat since then. Read Full Post…

IPOs: Pinduoduo Provides Fresh Face for E-Commerce

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Bottom line: A new IPO by e-commerce company Pingduoduo could do reasonably well due to its rapid growth and unusual business model, but could suffer from a “flavor of the day” element over the longer term.

Pinduoduo puts new spin on group buying

After years of basically having just two choices to invest in China’s e-commerce market, investors will soon have another new and interesting option with the upcoming listing of a company called Pinduoduo. I’ll admit that I was unfamiliar with Pinduoduo before reading about this upcoming listing. But that said, the numbers do point to a potential high-flyer in the making, including a business model that combines elements of Groupon (Nasdaq: GRPN) and Facebook (Nasdaq: FB) to let people recruit their friends to get good deals on merchandise.

The company is also noteworthy for its ties to social networking giant Tencent (HKEx: 700), whose wildly popular WeChat platform is apparently the main venue where friends can get together to get their deals. This particular deal comes as China’s own homegrown Groupon, Meituan-Dianping, prepares for its own Hong Kong listing in a deal expected to raise up to $6 billion, amid a broader bumper IPO season for China new economy offerings. Read Full Post…

IPOs: Uxin Files in NY, Battery Maker in China, Mindray on ChiNext

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Bottom line: New listing plans by used car platform operator Uxin, EV battery maker Amperex and medical device maker Mindray should all do well, driven by strong growth potential and their leading positions in China.

Bumper crop of new China IPOs headed to market

The latest IPO season for Chinese firms is kicking into high gear on both sides of the Pacific, with announcement of several hot new offerings that each has a slightly different story to tell. At the head of the class is a new listing for used car platform operator Uxin, which is aiming to raise up to $500 million in New York.

That’s followed by a listing plan for electric vehicle battery maker Amperex, which is having to settle for a sharply-lower valuation than it had been originally seeking with a listing in China. Last but not least there’s medical device maker Mindray, which de-listed from New York and has just submitted a plan to list on China’s enterprise-style ChiNext board, after its initial plan to re-list on one of China’s larger main boards was rejected. Read Full Post…

TELECOMS: China Mobile 4G Users Decline for First-Time

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Bottom line: China Mobile’s first-ever drop in 4G subscribers in April owes to the company’s early arrival to the space, and reflects the broader market’s maturation that is also adding similar pressures to Unicom and China Telecom.

China Mobile 4G users takes first-ever dip

Much ado is being made about new data from the three big telcos that includes a first-ever drop in 4G subscribers for industry heavyweight China Mobile (HKEx: 941; NYSE: CHL). This particular first seems to have been a long time coming, and really shouldn’t surprise anyone too much. The fact of the matter is that China’s mobile market has been nearing saturation for a while, and the nation’s big 3 telcos have been increasingly stealing customers from each other for the last two or three years as the number of unserved users dwindles.

The bigger question raised by this data is what the slowdown could mean over the longer term, when China Mobile and smaller peers Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) might see slow or negative growth in subscriber terms. The answer to that question is that this trio will be able to feast on their protected home market for many years to come, though they may be forced to innovate a bit more in order to get a tapped-out audience to keep paying more for services. Read Full Post…