Bottom line: Netflix may be in talks to enter China through a joint venture, but is unlikely to reach a deal for at least the next 1-2 years due to regulatory turbulence and tough restrictions in the rapidly changing market.
Netflix eyes China
Investors are getting excited about reports that leading US video streaming site Netflix (Nasdaq: NFLX) is in talks to come to China, in what would be the first such move by a major foreign video operator. The prospect of such a move would indeed be exciting, especially since it could come in partnership with a company closely tied to Chinese e-commerce leader Alibaba (NYSE: BABA). But I would caution that this particular market is a very tricky one due to China’s strict censorship policies, and also recent resistance to private companies from traditional state-owned TV stations. Read Full Post…
Bottom line: A merger between Youku Tudou and iQiyi looks like a strong possibility because it would greatly benefit both companies, creating a clear market leader to rival LeTV and traditional broadcasters.
Youku Tudou in merger talks with iQiyi?
Rumors that former online video leader Youku Tudou (NYSE: YOKU) is in talks to merge with rival iQiyi have reignited interest in the former’s beleaguered stock, as investors get excited about another landmark deal in the space. Youku Tudou’s shares soared 17 percent in the latest trading session, and have now nearly doubled since the beginning of April.
The sourcing is quite vague on the reported talks for a merger with iQiyi, which is owned by online search leader Baidu (Nasdaq: BIDU). But I would give the reports a strong chance of being true, as this kind of a move seems consistent with past behavior of Youku Tudou’s CEO Victor Koo, who is highly practical and thus would seriously consider selling his company if such a move made financial sense. Read Full Post…
Bottom line: The latest sporting deals by LeTV, Wanda and Alibaba reflect a growing scramble to secure broadcast rights and develop sports channels in China, with more such deals likely in the year ahead.
Alibaba wins NCAA rights for China
A nascent but growing move by China’s top private companies into global sports is in 2 separate headlines, with word of significant new deals involving e-commerce giant Alibaba (NYSE: BABA) and video superstar LeTV (Shenzhen: 300104). The stories also involve the entertainment ambitions of real estate magnate Wang Jianlin, one of China’s richest men, whose Wanda Group has been at the center of 2 major global sports deals over the past year.
The first of the newest deals will see Alibaba bring US college basketball to China through a deal with the National Collegiate Athletic Association (NCAA), the main governing body for US college sports. The other deal has seen LeTV, China’s most valuable provider of Internet video services, raise 800 million yuan ($130 million) for its young sports division. One of the main backers in that new funding round was Wang Jianlin’s son, Wang Shicong. Read Full Post…
Bottom line: A new wave of traditional Chinese firms are taking new high-tech names to fool local investors who often buy stocks with little or no knowledge of the companies, and should serve as a warning to foreigners interested in Chinese shares.
Real estate firm renames itself as Pi Tu Pi
An entertaining local media report is poking fun at the latest trend among Chinese companies, which is seeing many adopt high-tech sounding names in a bid to convince unsavvy investors that they are engaged in high-growth industries. But all joking aside, the report also casts a very real spotlight on the dangers of buying Chinese stocks for average international investors, who have been ramping up their purchasing via Hong Kong following the launch last year of the landmark Hong Kong-Shanghai connect program. Read Full Post…
Bottom line: Apple is likely to reach a deal to bring Apple Pay to China in the next 12 months, while Xiaomi’s addition of traditional offline sales channels acknowledges it needs to diversify its approach to maintain its breakneck growth.
Cook eyes Apple Pay for China
The old saying “An apple a day” seems to be appropriate this week in China, where Apple’s (Nasdaq: AAPL) CEO Tim Cook is being quite talkative on his latest China trip with a steady stream of small but noteworthy news. He began the week by announcing a new environmental China initiative for Apple, then followed by launching his own microblog on the locally popular Sina Weibo (Nasdaq: WB), often called the Twitter of China. (previous post)
Now he’s candidly talking about hopes for bringing his company’s Apple Pay electronic payments service to China, perhaps through tie-ups with local e-commerce giant Alibaba (NYSE: BABA) or UnionPay, China’s largest electronic transactions network operator. Read Full Post…
Bottom line: A worker rebellion over layoffs at an online recruitment site being bought by 58.com underscores the company’s inexperience at M&A, even though the purchase itself looks like a good move.
Workers rebel over layoffs at ChinaHR
Chinese media are flocking to news that leading online classified ad site 58.com (NYSE: WUBA) has begun slashing jobs at its newly acquired ChinaHR, just days after it announced it would purchase the struggling online recruitment site. The move looks a bit hasty and perhaps extreme, and also comes across as just slightly ironic since many people now losing their jobs may soon have to use rival services to find new work.
But irony aside, this particular story looks quite similar to something that happened just 2 years ago at the very same ChinaHR. In that case workers mutinied and even briefly held an executive hostage after its then-owner, US online recruitment giant Monster Worldwide (Nasdaq: MWW), also tried to lay off employees as part of its own plans to sell the company. If history repeats itself, which is showing early signs of happening, 58.com could be looking at some turbulent times ahead over the next week or two. Read Full Post…
Bottom line: Recent raids on Uber’s offices in 2 major Chinese cities reflect resistance it is meeting from traditional taxi operators, which could significantly limit its growth potential in the politically sensitive market.
Uber’s offices raided in Chengdu, Guangzhou
The turmoil in China’s overheated market for paid car services has cruised into the offices of global fast-riser Uber, which has been raided twice in the last 2 weeks over its aggressive move into the market. The first raid came last week, when local officials visited the company’s offices in the southern metropolis of Guangzhou, sometimes also called Canton. (Chinese article) Now the raids have extended to the interior city of Chengdu, where Uber’s offices have again been visited by local officials conducting an unspecified investigation. (English article) Read Full Post…
Bottom line: Baidu’s crackdown on internal corruption and big jump in a ranking of global media firms are both good publicity, but won’t change the fact that it’s facing sharply slowing growth over the next year.
Baidu probes 3 directors for corruption
Following a bruising battle with some of its leading advertisers in March, leading search engine Baidu (Nasdaq: BIDU) is in the headlines this week on a more positive note with a report it is cracking down on internal corruption. At the same time Baidu is in a separate similarly positive headline that shows it is quickly climbing the ladder on a list of global media companies, surpassing much older rivals like Yahoo (Nasdaq: YHOO) and Microsoft (Nasdaq: MSFT).
The first of these headlines casts a spotlight on the many corrupt practices that frequently occur in China’s young business culture, such as preferential treatment for customers who pay “special” fees and bribe individual employees. Such practices were almost certainly a factor behind the high-profile spat that saw one of China’s largest associations of hospital owners boycott Baidu’s advertising services in March, dealing a significant blow to Baidu. (previous post) Read Full Post…
Bottom line: JD.com’s latest results show it could reach profitability on an operating basis later this year, while its new tie-up with Tuniu looks like a well-conceived plan that reflects a growing wave of equity tie-ups among Chinese Internet firms.
JD’s loss narrows, ties with Tuniu
China’s second largest e-commerce firm JD.com (Nasdaq: JD) has been busy wowing investors these last few days, starting with its latest quarterly ressults that shows it is making strong progress in moving towards sustainable profits. Meantime, the company has also become the largest individual stakeholder in online travel site Tuniu (Nasdaq: TOUR) through its participation in a deal that saw Tuniu raise $500 million by selling shares to a larger group of investors.
Wall Street greeted the pair of news stories with mildly positive reaction, bidding up JD.com shares by 2 percent after the reports came out. The stock has rallied nearly 50 percent this year and is 77 percent above its IPO price from a year ago, as investors grow more bullish on this company that is China’s biggest challenger to the much larger Alibaba (NYSE: BABA). Tuniu shares also got a nice lift from the news, rising 4.5 percent. Read Full Post…
Bottom line: Baozun’s IPO is likely to price in the middle of its range and debut flat despite its strong credentials, as waning sentiment towards Chinese Internet companies may prompt other recently listed names like Jumei to launch privatization bids.
Baozun IPO gets lukewarm response
Sentiment towards China-listed US firms continues to show signs of weakening, with word that e-commerce website designer Baozun has had to scale back its IPO in New York as its shares move closer to their trading debut. Meantime, shares have jumped over the last week for e-commerce firm Jumei International (NYSE: JMEI), amid talk that it may be considering a privatization bid to re-list back back in China.
Both stories reflect a recent trend that has seen a growing number of second-tier Chinese Internet companies abandon New York listings due to lack of investor interest. Many are believed to be eying re-listings in China, where their names are better known and companies of all types have achieved lofty valuations these days during a stock market surge that has seen shares double since a rally dating back to last summer. Read Full Post…
Bottom line: Alibaba’s change of CEO shows that founder Jack Ma is still calling the shots at the company, and a rally for its shares will be short-lived before they continue a gradual downward movement back toward their IPO level.
Alibaba shifts course with new CEO
Investors nervously awaiting the release of e-commerce giant Alibaba’s (NYSE: BABA) latest quarterly results were instead greeted with the surprising news that the company has just named its third CEO in 2 years. Alibaba founder Jack Ma is spinning the story as part of a plan to hand over the running of his company to a generation of Internet-savvy youngsters born after 1970. That may be true, though I do find it somewhat ironic that the replacement of former CEO Jonathan Lu with the younger Daniel Zhang shows quite clearly who is still firmly in control at Alibaba, namely Ma himself, who is hardly a post-1970s youngster. Read Full Post…
