Bottom line: Baidu’s spending blitz at Nuomi looks like a good but expensive strategy to help the company quickly pick up market share in the group buying space, and could pose a serious challenge to industry leaders Dianping and Meituan.
About Internet Giant Baidu
Baidu revs up spending at Nuomi
Internet giant Baidu(Nasdaq: BIDU) is making a major push into the group buying space, announcing a bold campaign that includes 20 billion yuan ($3.2 billion) in new spending as it aims to replicate its earliest success in online search. This particular campaign is focused on Baidu’s Nuomi group buying site that it purchased a year and a half ago, and has the site’s chief saying he aims to overtake industry leaders Dianping and Meituan in the next 1 year and 3 years, respectively.
This particular campaign surprised me a bit, as Baidu hasn’t really announced any major plans for Nuomi since buying the company from struggling social networking site Renren (NYSE: RENN) for more than $200 million. But this kind of move would be similar to what Baidu did with online travel site Qunar (Nasdaq: QUNR), which was already growing quickly when Baidu purchased a controlling stake in 2011. Since then, Qunar has made an IPO and Baidu has poured big money into the company, which is now posing a serious challenge to longtime industry leader Ctrip. (Nasdaq: CTRP) Read Full Post…
Bottom line: Shanghai will bid aggressively for Chinese tech firms to list on a new Nasdaq-style board planned for the city, while shares of companies privatizing from New York will continue to sag in sync with China’s stock market sell-off.
Soccer club eyes IPO on new Shanghai board
A new Shanghai-based Chinese board that aims to compete with Wall Street for new high-tech listings is moving closer to reality, with reports that Baidu’s (Nasdaq: BIDU) iQiyi online video service and Alibaba’s (NYSE: BABA) affiliated Ant Financial unit will be among the exchange’s inaugural listing candidates. A separate report also says that another Alibaba-affiliated company, soccer team Evergrande Taobao, will also list on the board, which is being referred to right now as the new strategic industries board.
Meantime in New York, the current week looks set to end with just a single privatization announcement for a US-listed Chinese firm, a sharp slowdown from the 20 earlier offers in the month of June. In this case the abrupt slowdown is at least partly due to the plunge in China’s stock markets this week, and we’re unlikely to see any more offers until the situation stabilizes. Read Full Post…
Bottom line: Xunlei’s growing ties with Xiaomi could presage a buyout bid for the former by the latter, as Xiaomi seeks partners and acquisitions to help it realize its goal of building an ecosystem of Internet services and related devices.
Xiaomi, Xunlei launch Xingyu
A year-old alliance between smartphone sensation Xiaomi and online video operator Xunlei (Nasdaq: XNET) has entered a new phase, with news that the pair have formed a content distribution service. That plan, which will see the pair launch a new brand called Xingyu, is part of Xiaomi’s efforts to create an ecosystem of Internet-based services like online video for its smartphones and other devices like smart TVs and set-top boxes.
This latest move isn’t a big surprise, and comes after Xiaomi purchased 30 percent of Xunlei almost exactly a year ago at the time of Xunlei’s New York IPO that met with a cool reception. Xunlei’s shares have been quite volatile since then, losing almost half their value before rebounding over the last few months to return to their IPO level. But a recent wave of buy-out offers for many US-listed Chinese companies, combined with this growing alliance, is raising the interesting possibility that Xiaomi might soon lead a bid to privatize Xunlei or perhaps buy the company outright. Read Full Post…
Bottom line: Didi Kuaidi is likely to launch service in the US next year, while Uber’s decision to spin off its China operations shows its commitment to the market, as the rivalry between the pair intensifies.
Didi Kuaidi eyes US
A major global rivalry is shaping up between US hired car services pioneer Uber and its Chinese alter ego Didi Kuaidi, which both have extremely strong backing and are attracting billions of dollars in new funding. Just days after Didi Kuaidi was reportedly on the cusp of raising up to $2 billion in new money, media are now reporting the Chinese company has quietly begun hiring in the US for a move onto Uber’s home turf.
At the same time, Uber’s aggressive CEO Travis Kalanick has been quoted saying he’s planning to spin off his China business into a separate company. That move would be unique for Uber in its global strategy so far, and is aimed at better challenging Didi Kuaidi on its home turf. Uber also hopes the plan will allow it to respond more rapidly in a market that’s both extremely lucrative but also quite unique and challenging. Read Full Post…
Bottom line: Resolution of Baidu‘s dispute with a one of its top clients, combined with declining profits, reflects a new reality that is seeing its pricing power erode as it faces growing competition from both search and non-search service providers.
Exec confirms Baidu settles Putian dispute
A new report is confirming that leading search engineBaidu (Nasdaq: BIDU) has quietly settled a dispute with one of its major advertisers, which shaved nearly 15 percent off the company’s stock at the time. But the dispute is clearly have some lasting damage on Baidu’s share price, reflecting the reality that new challenges from rival search engines and also from non-search services like Tencent’s (HKEx: 700) WeChat may be undercutting Baidu’s ability to command huge premiums for its advertising services.
Baidu’s misery in China’s stock Markets
Adding to Baidu’s misery is the recent plummet in China’s stock markets, which has fueled a concurrent drop in overseas-listed Chinese tech stocks like Baidu. That sell-off saw Baidu’s shares dip more than 5 percent in the last 3 trading days of last week. That fall shaved off nearly $4 billion from its market value, as its shares reapproached levels last seen during the stand-off with the Putian Healthcare Industry Chamber of Commerce that broke out in late March. Read Full Post…
Bottom line: Alibaba’s boosting of its stake in a leading Indian e-payments firm is part of a broader strategy that aims to replicate its China success in India through a series of acquisitions, and looks relatively well conceived.
Alibaba eyes new India investment
Just a week after abruptly pulling out of a major US investment, e-commerce giant Alibaba (NYSE: BABA) is increasingly focusing on India as the first major stop on its global expansion, with word that it’s in talks for a major new investment in a local e-payments firm. The new investment in Paytm, which would be worth about $600 million, is just the latest in a growing string of similar Indian acquisitions for Alibaba as it tries to replicate its success in China in overseas markets.
From a strategic perspective, India looks like a smart bet for Alibaba. The Indian market shares many characteristics with China, including the lack of a mature western-style retail industry from the pre-Internet era. As a result, a far bigger percentage of people in these markets are more likely to shop online. What’s more, the Indian retail market is relatively less competitive than western markets, and is experiencing rapid growth. Read Full Post…
Bottom line: China needs to let traditional banks behave more independently and encourage them to take risks, or risk seeing them overtaken by private, entrepreneurial financial companies.
Alibaba bank goes online
China’s 2 leading e-commerce companies were in the headlines last week with major new moves in the financial services sector, continuing a trend that has seen private firms pose the first serious challenge in decades to China’s banking establishment. One move saw Alibaba (NYSE: BABA) launch its online bank, MYbank, as part of a Beijing pilot program to allow private companies into the sector. The other saw JD.com (Nasdaq: JD) form a credit scoring joint venture, aiming to tap its huge volumes of transaction data to help rate the creditworthiness of individuals. Read Full Post…
Bottom line: Didi Kuaidi could rise over the next 1-2 years to challenge Uber, as it embarks on a global expansion starting in Southeast Asia, fueled by billions of dollars in new investment.
Didi Kuaidi, Uber race for new funds
China’s homegrown version of global hired car services giant Uber continues to race ahead, with word that Didi Kuaidi is on the cusp of a new fund-raising that’s similar in size to the many recent amounts raised by its larger US cousin. At the same time, we’re seeing the earliest signals that Didi Kuaidi may be getting read to challenge Uber outside of China, with separate reports saying the former is in talks for a major investment in a major Southeast Asian taxi app operator.
The market for hired car service apps seems to change almost daily, with hardly a week passing without the announcement of a major new milestone or conflict between these aggressive companies and traditional taxi drivers. Uber is a good example, hitting speed bumps with government raids of 2 of its Chinese offices earlier this year, only to disclose it had no intention of leaving the market and was preparing to invest $1 billion in China this year alone. (previous post) Read Full Post…
Bottom line: LeTV’s purchase of a major stake in Coolpad is likely to upset Coolpad’s existing alliance with Qihoo, and could lead to a turbulent period that could ultimately see one of the alliances terminated.
LeTV buys into Coolpad
The battle for supremacy in China’s crowded smartphone space has just taken a strange twist, with word that online video superstar LeTV (Shenzhen: 300104) has purchased a major stake in domestic manufacturer Coolpad (HKEx: 2369). This particular move was quite unexpected, as I had written just last week that software security specialist Qihoo 360 (NYSE: QIHU) was the most likely candidate to purchase a stake in Coolpad being sold by the company’s largest shareholder, Data Dreamland.
Coolpad was once one of China’s hottest homegrown smartphone makers, but intense competition drove it to form a joint venture late last year with Qihoo, which contributed $420 million in much-needed cash for its stake in the venture. That led me to believe that Qihoo could make a bid to invest directly in Coolpad and perhaps eventually buy the company outright after Data Dreamland last week announced its intent to sell some or all of its 38.3 percent stake in Coolpad. (previous post) Read Full Post…
Bottom line: A probable correction in China’s stock markets could cause Tongcheng to abandon its decision to list at home, and lead to a weak debut for Legend Holdings’ Hong Kong IPO.
Toncheng eyes China IPO
When the history books are written, the latest batch of IPO news could well mark the end of a brief but unusually buoyant period that has seen many Chinese companies eschew overseas stock markets for listings at home. Leading off the news was a sizzling performance by securities brokerage Guotai Junan (Shanghai: 601211) on its trading debut in Shanghai, as it become China’s biggest domestic IPO since 2010.
Another piece of IPO news also cast a spotlight on the hot Chinese stock markets, as online travel site Tongcheng said it was eying a listing at home in the next year, in a snub to New York where most of its peers are traded. Last but not least, the lukewarm reception for Chinese listings abroad was reinforced by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which failed to attract any major international investors as it priced its Hong Kong IPO. Read Full Post…
Bottom line: Alibaba will mount an intense campaign in Washington over the next 6 months in a bid to avoid major embarrassment if its name appears on a widely watched list of global Internet companies that don’t do enough to fight piracy.
Volume grows in Alibaba anti-piracy drive
Just weeks after hiring a major lobbyist to convince Washington it’s serious about fighting piracy, e-commerce leader Alibaba (NYSE: BABA) is turning up the volume in its campaign with a couple of new announcements about its commitment to combating the problem. The latest of those has seen Alibaba jointly issue an announcement with the Washington-based International AntiCounterfeiting Coalition, reaffirming an earlier tie-up aimed at stamping out the selling of fake products in Alibaba’s popular e-commerce marketplaces.
The other announcement came earlier in the week, and saw Alibaba announce it was strengthening its cooperation with a Chinese organization that fights online copyright infringement. Unfortunately for Alibaba, no one paid too much attention to these 2 announcements, with the result that its renewed anti-piracy blitz wasn’t publicized too much in mainstream media. Read Full Post…
