Bottom line: Google could open a Chinese version of its app store by the end of this year and spend aggressively to quickly gain market share, but would face negative backlash from western critics for its U-turn back into the sensitive market.
Google lobbies China smartphone makers to include Play Store
Global Internet giant Google (Nasdaq: GOOG) is reportedly eying a return to China, with plans to launch a Chinese version of its flagship Google Play app store. The move, if true, would mark a major flip-flop for Google, which withdrew its core search engine from China in 2010 after a high-profile spat over Beijing’s strict censorship policies. But as many similarly principled companies quickly discover, China is a market that is simply too big to ignore.
That quandary led top business networking site LinkedIn (NYSE: LNKD) to enter China last year, despite expressing its own reservations about censorship, and top social networking (SNS) site Facebook (Nasdaq: FB) is also lobbying strongly for such a move. Google’s latest campaign comes in a the slightly less sensitive area of app store operation, though even that business would involve some self-censorship to eliminate apps that Beijing might consider sensitive for political or other reasons. Read Full Post…
Bottom line: Wowo’s merger with a major food service B2B platform looks broadly positive, giving it a new business with better growth potential than its core group buying service.
Wowo in food transformation
Just 2 months after its delayed and underwhelming New York IPO, group buying site Wowo (Nasdaq: WOWO) is undergoing a radical transformation by merging with a B2B site used by the food service industry. Wowo, which until recently was known as 55Tuan, is billing this particular merger as a purchase of Join Me Group, or JMU, in a deal that it says will create China’s largest food service Internet company. But the reality is that Wowo appears to be the one getting swallowed up by the larger JMU in this deal, which would end its very brief life as China’s first publicly listed group buying site.
Investors who bought into Wowo’s April IPO thinking they were getting a group buying site similar to US leader Groupon (Nasdaq: GRPN) weren’t impressed by this sudden transformation, bidding Wowo shares down by 8.3 percent and another 4.5 percent in regular and after hours trade after the deal was announced. Still, it’s noteworthy that after the sell-off the shares were still at $10.50, or just a tad above their IPO price of $10. Before rumors of this deal first appeared, the shares had been trading well below the IPO price. Read Full Post…
Bottom line: The sale of new shares at a discount by Alibaba Pictures and Kingsoft reflects growing competition for funds in Hong Kong, while Mindray is likely to seek a China re-listing following its privatization from New York.
Kingsoft in fund-raising plan
A flurry of fund-raising activity on China’s periphery is in the headlines as we end the week, led by 2 separate plans by Alibaba’s (NYSE: BABA) film unit and software maker Kingsoft (HKEx: 3888) to raise a combined $2 billion. At the same time, medical device maker Mindray (NYSE: MR) has become the latest in a recent string of companies to receive buy-out offers, following years of lackluster performance for its New York-listed shares.
The underlying theme to these 3 stories is a huge stock market rally in China itself, which has seen the benchmark Shanghai index more than double over the last year. That rally is making companies like Mindray envious, prompting many to de-list from New York and target re-listings at home. At the same time, the China effect is also spilling over into adjacent Hong Kong, making it much easier for Chinese companies listed there to also raise new cash. Read Full Post…
Bottom line: Alibaba’s potential new venture to bring Japanese imports to China looks like a smart move that plays to Beijing’s desire to boost consumer spending, and could serve as a template for similar import-related tie-ups.
Alibaba talks tie-up with Yahoo Japan
A potential major new tie-up between Alibaba (NYSE: BABA) and Yahoo Japan (Tokyo: 4689) aimed at bringing more Japanese imports to China looks full of promise, providing a possible major new growth source for the Chinese e-commerce giant. Such a tie-up would be especially exciting because it would bring together 2 of the largest e-commerce companies from the world’s second and third largest economies. It would also receive strong support from Beijing, which is rapidly dismantling many import barriers as it tries to boost consumer spending to prop up a slowing Chinese economy. Read Full Post…
Bottom line: Alibaba’s new tie-up with SMG could produce a homegrown financial news and information giant drawing on both companies’ strengths, but could also face obstacles due to the 2 partners’ differing backgrounds and styles.
Alibaba buys into SMG financial newspaper
E-commerce titan Alibaba (NYSE: BABA) is taking an interesting new step into the news media realm, with word that it’s investing 1.2 billion yuan ($200 million) in one of China’s leading financial newspapers that is owned by Shanghai Media Group (SMG), the country’s second largest state-owned media company. I’ve watched for the last couple of years as traditional newspapers like SMG’s China Business News, or CBN, have struggled to chart a new path in the digital media age.
For many of these traditional media, that movement has meant putting their content online, and launching a mobile app, but not much more. As a result, many are seeing their revenue shrink as advertisers flock to more dynamic new media, mirroring a trend in the west. In that light, this new Alibaba tie-up could breathe some new life into CBN’s new media push, providing new ideas and other expertise to reverse the newspaper’s decline.
Bottom line: Uber should consider forming closer alliances with local city governments to boost its chances of survival in China.
By Jeffrey Towson
Uber struggles in China
Hired car services giant Uber is now in the situation you never want to be in in China: a foreign company on the wrong side of both the government and powerful local competitors. Ask Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) how that worked out. However, Uber can still win in China. They have one last move that could reverse the situation. They can do what homegrown rivals Kuaidi and Didi won’t. They can ignore the advice of Alibaba (NYSE: BABA) Chairman Jack Ma and marry the government.
Ma has famously said “Never, ever do business with government. Love them. Don’t marry them. So, we never do projects for government.” Compare this to statements by Kuaidi’s CEO Joe Lee, who said “One thing we learned is if we want to grow fast, we need to make sure the government supports us. Because in China, they can stop you in one day — they shut down your server and you’re out.” Read Full Post…
Bottom line: A major new investment in Sina by CEO Charles Chao indicates he wants to take one last try at revitalizing the company’s core portal business, and might consider a sale if a good offer emerges.
Sina CEO Chao buys big stake in company
The China Internet world has been buzzing this week with speculation over what is driving a massive new personal investment of nearly $500 million in leading web portal Sina (Nasdaq: SINA) by its longtime CEO Charles Chao. I have quite a bit of respect for Chao, who is more of a western-style, bottom line-focused CEO than many of his Chinese Internet peers who run their companies like personal fiefdoms.
But that said, I’ve also previously said that Chao lacks the kind of bigger vision that many of his peers have, and that he should consider stepping aside to make way for some new leadership. Accordingly, perhaps this latest move by Chao augers a return to his company’s core portal business, following his focus over the last few years on building up its recently-listed Twitter-like Weibo (Nasdaq: WB) unit. That could be followed by his exit in a year or two, and even a possible sale of some or all of its remaining core assets. Read Full Post…
Bottom line: Legend Holdings is likely to get a tepid reception for its new shares that could start trading by month’s end, while Focus Media is also likely to complete its backdoor listing in Shenzhen in that time frame.
Focus Media comes home to list
A new IPO, a backdoor listing and a buyout offer are all in the news today in Hong Kong, China and New York, spotlighting an emerging dynamic that is seeing Chinese companies abandon US listings for offerings closer to home. The choice of Hong Kong instead of China for the upcoming IPO by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), also reflects the difficulties that private Chinese companies continue to face when trying to list at home in Shanghai or Shenzhen.
China’s 2 main domestic stock markets have traditionally favored big state-owned companies, a big factor that prompted Legend to look to Hong Kong where it will meet with local stock exchange officials this week in the run-up to its looming IPO. At the same time, outdoor advertising specialist and formerly New York-listed Focus Media has just taken a major step towards a re-listing in China by injecting itself into a Shenzhen-listed firm. Last on our list is children’s website Taomee (NYSE: TAOM), which has just become the latest New York-listed Chinese firm to receive a privatization offer due to undervaluation. Read Full Post…
Bottom line: Effects of the short-seller attack on Vipshop are likely to die down soon and the stock should stabilize, while Jiayuan is likely to get bought out for a figure close to its latest stock price following receipt of a new bid.
VIP short seller attack continues
New developments are occurring in 2 stories involving less-followed Chinese Internet companies, led by a fresh assault in an ongoing short-seller attack that is eroding shares of discount e-commerce site Vipshop(NYSE: VIPS). Meantime, shares of online matchmaking site Jiayuan (Nasdaq: DATE) have soared, after it announced it has received new buy-out bids for the company. That development would come nearly 2 months after Jiayuan received an initial buy-out offer that some complained vastly undervalued the company. Read Full Post…
Bottom line: Priceline’s new China foray with Ctrip will get off to a positive start, but will run into problems and ultimately collapse due both sides’ inability to gain much from the partnership.
Ctrip boosts Priceline alliance
Just days after global online travel giant Expedia (Nasdaq: EXPE) announced its withdrawal from China, rival Priceline (Nasdaq: PCLN) is moving in the other direction with a significant boost to its partnership with local sector leader Ctrip (Nasdaq: CTRP). I’ve previously been quite skeptical of this particular partnership, after previous similar tie-ups failed due to the fiercely independent nature of Ctrip’s top management. I’m still quite skeptical, though a string of other major tie-ups by Ctrip recently seem to show it’s realizing it needs to be more flexible to fend off the growing threat from fast-rising local rival Qunar (Nasdaq: QUNR). Read Full Post…
Bottom line: Thursday’s hacking attack on Ctrip brings a sour end to its week of major new tie-ups, but isn’t too unexpected for a company of its size and should have a relatively limited impact on its operations and reputation.
Ctrip shut down by hackers
I’ve been writing a lot about leading online travel agent Ctrip (Nasdaq: CTRP) these last few days after it signed a couple of major deals, so it seems fitting that we end the week with news of a major hacking attack that took the company offline for most of Thursday. I’m a longtime user of Ctrip and am generally a big fan of the company, whose good management and focus on its core travel business have allowed it to maintain its market-leading position for a decade despite numerous challenges.
Against that backdrop, this hacker attack seems like a relatively minor issue, though one that could be potentially worrisome as it exposes one of Ctrip’s biggest vulnerabilities. Then again, Ctrip is certainly not the only company to come under such attacks, and many much larger and more experienced western giants like US retailer Target (NYSE: TGT) and Hollywood studio Sony Pictures (Tokyo: 6753) came under much higher-profile and more damaging outside assaults last year. Read Full Post…