Multinationals

MEDIA: Tencent, Alibaba in Music Swap as Regulator Gets Involved

Bottom line: A new music re-licensing deal between Alibaba and Tencent, combined with a meeting between the copyright regulator and major online music sellers, hint at attempts to create a more level playing field in the space.

Alibaba, Tencent in music cross-licensing deal

A couple of items from the music sector are in the headlines today, showing how tricky the situation is becoming with copyrights and online licensing in China. One of those has two major players, the music services of Internet giants Alibaba (NYSE: BABA) and Tencent (HKEx: 700), signing an agreement to cross-license music to each other when one of them owns the rights to such music. The other has China’s copyright office actually calling a meeting between those two companies and two other major players, NetEase (Nasdaq: NTES) and Baidu (Nasdaq: BIDU), to discuss issues confronting the industry.

Two issues appear to be driving these two deals that appear to be related. One is concerns from the music industry that rights to their songs will become fragmented and confined to single platforms under the current licensing system, limiting consumer choice. Similar concerns might also be what’s driving the regulator to get involved as well. An interesting footnote to this might be whether the same thing could soon happen in the video licensing arena, which shares similar issues. Read Full Post…

INTERNET: Google Steps Up Beijing Dance With AI Drive

Bottom line: Google’s campaign to build a China-based artificial intelligence team is at least partly designed to woo Beijing, as part of its broader effort to get permission to open a China-based Google Play app store.

Google Play edging towards China?

In the latest signal of its move back to China, Internet titan Google (Nasdaq: GOOG) is apparently on a hiring spree in Beijing that looks aimed at building up an artificial intelligence (AI) team in the world’s largest online market. This particular move doesn’t come as a huge surprise, and seems to be part of Google’s recent obsession with the world’s biggest Internet market.

The backstory is that Google quit China seven years ago, at least for its core search business that is the backbone of its operations in other markets, due to a dispute over Beijing’s tough policies requiring all sites to self-police themselves for sensitive content. But over the last two or three years Google has had a change of heart, realizing it really can’t afford to ignore an Internet market that has 750 million users. Read Full Post…

CONSUMER: Hon Hai, Hisense in Battle for Sharp Brand

Bottom line: A spat between Hisense and Sharp over the former’s use of the latter’s brand name spotlights the dangers of relying on such licensing agreements for Chinese companies going abroad.

Sharp sues Hisense over brand agreement

An entertaining battle is rippling through the headlines as we head into mid-week, pitting Taiwanese contract manufacturing titan Hon Hai (Taipei: 2317) against Chinese TV maker Hisense (Shanghai: 600060) in a battle for the Sharp (Tokyo: 6753) brand name. This is essentially the story of two giants with very little name recognition battling for a brand that, somewhat ironically, fell onto hard times as a company but still retains a relatively strong reputation.

Hon Hai is virtually unknown outside of industry circles, but is one of the world’s leading contract manufacturers that is most often cited as producer of iPhones for Apple (Nasdaq: AAPL). Likewise, Hisense is a relatively well-known TV maker in China, but is virtually unknown outside the country, creating obstacles for its global aspirations. Then there’s Sharp, the former Japanese electronics superstar that fell onto hard times was was taken over by Hon Hai last year. Read Full Post…

FINANCE: Ant Makes Case, No New Offer, for MoneyGram Buy

Bottom line: Ant Financial’s open letter to MoneyGram could hint at a new raised offer coming soon for the company, though rival suitor Euronet is likely to bid equally aggressively and has a slightly better chance of winning the contest.

Ant makes case to MoneyGram workers, US politicians

Three weeks after being surprised by an unsolicited counterbid for US money transferring specialist MoneyGram, China’s Ant Financial is finally speaking out on the matter beyond its initial reaction to the rival bid. The former financial unit of e-commerce giant Alibaba (NYSE: BABA) frankly isn’t saying much about future plans in its open letter to the MoneyGram community, and there’s no hint on whether it will raise its offer for the US company.

Instead, the letter seems aimed at reassuring MoneyGram employees that their jobs will be safe, and on reassuring wary government officials that information on MoneyGram users won’t be recklessly used. Those messages look squarely aimed at quelling the very real possibility that such a deal could get vetoed by Washington on national security grounds, even though the jobs issue doesn’t really fall into that category. Read Full Post…

ENTERTAINMENT: DreamWorks, Paramount China Tie-Ups Unraveling

Bottom line: Foundering prospects of cross-border tie-ups involving DreamWorks and Paramount shows the love affair between Hollywood and China may be entering a new phase of lowered, more realistic expectations.

DreamWorks Animation eyes sale of China JV stake

The old saying says that what goes up must come down, and that certainly appears to be the case with new reports of the unraveling of two more China-Hollywood tie-ups. The latest reports say that US giant DreamWorks Animation is looking to sell out its stake in Oriental DreamWorks, its landmark China animation joint venture that was launched with fanfare 5 years ago. At the same time, another report is saying a $1 billion film production tie-up between two Chinese partners and Paramount is reportedly running into trouble due to turmoil at the Hollywood studio.

The unraveling of these two major deals comes just weeks after another deal involving Wanda Group’s planned purchase of Dick Clark Productions also appears to be coming unglued. In that case the culprit is China’s recent currency controls, which were preventing Wanda from getting the necessary funds outside the country to complete the $1 billion purchase. But Wanda was apparently also worried it was overpaying for the asset. Read Full Post…

INTERNET: Google Seeks Partner for China Return

Bottom line: Google will get permission from Beijing to open a Chinese version of its app Play Store later this year, most likely through a joint venture with NetEase or Tencent.

Google, NetEase talk China Play Store JV

The glacial return to China for Internet titan Google (Nasdaq: GOOG) is making its debut in the 2017 headlines, with word that the company is in talks to open a Chinese version of its app store with online game giant NetEase (Nasdaq: NTES). That tidbit nicely sets the stage for what’s likely to be a banner year for Google and possibly US Internet rival Facebook (Nasdaq: FB) in their race to see who can be first to plant a tent pole in China. Read Full Post…

RETAIL: Yum China Looks Flat in Maiden Report

Bottom line: Yum China’s maiden quarterly report and $300 million share buyback program highlight a company that needs to move more aggressively and take more risks to regain its footing after being spun off from its US parent.

Yum China posts unimpressive maiden quarterly report
Yum China posts unimpressive maiden quarterly report

Fast food operator Yum China (NYSE: YUM) has just put out its maiden quarterly earnings report that looks decidedly ho-hum, including a somewhat surprising announcement of a $300 million share repurchase program. The operator of KFC and Pizza Hut stores in China was formally split off from its parent, Yum Brands (NYSE: YUM), late last year, following shareholder pressure to let the unit operate more independently in the somewhat unique and fast-changing Chinese market. Read Full Post…

E-COMMERCE: Alibaba Gets Alter Ego with Yahoo-Turned-Altaba

Bottom line: Alibaba will closely watch the performance of the newly minted Altaba over the next 1-2 years, and could make a privatization bid with Softbank if it feels the company is undermining its own stock.

Yahoo to morph into Altaba

Yahoo (Nasdaq: YHOO) co-founder Jerry Yang never would have dreamed a decade ago that the ground-breaking search engine he co-founded might someday morph into a Chinese e-commerce company called Alibaba (NYSE: BABA). But that’s pretty much what has just happened, with official word from Yang’s former baby that it will change its name to Altaba following the pending sale of its core Internet business. Read Full Post…

INTERNET: Tencent in High-Powered Mapping Investment with Europe’s Here

Bottom line: Tencent’s new investment in Nokia’s former mapping unit Here reflects the Chinese herd mentality to pile into new technologies, but also looks like a relatively savvy way to enter the space by pairing with experienced partners.

Tencent ties with mapping giant Here

Internet giant Tencent (HKEx: 700) doesn’t want to be left behind in the race with rivals Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) into self-driving new energy cars that may someday dominate the streets of both China and the world. That appears to be the message from the latest headlines, which have Tencent involved in a somewhat complicated deal that will give it a small stake in a high-powered mapping company that counts car giants BMW, Daimler and Audi as its main investors. Read Full Post…

CONSUMER: Bright Food Gets Indigestion from Weetabix

Bottom line: Bright’s plan to sell Weetabix 4 years after the purchase is mostly due to declining performance at the British cereal maker, with similar sales likely to follow for other poorly planned food purchases by Chinese buyers.

Bright loses appetite for Weetabix

After splashing into the global M&A headlines 4 years ago with its purchase of a well-known British breakfast cereal maker, Shanghai’s Bright Food has decided that Weetabix apparently isn’t its cup of tea. That seems to be the message in the latest headlines, which say that Bright is looking to sell the British company for quite a discount to the price it paid at the time of the ground-breaking deal in 2012.

Of course much has happened since Bright, known in Shanghai for its biscuits and dairy products, first announced the deal. Bright brought Weetabix’s core breakfast cereal products to China not long after the deal was closed, and even talked about making a separate listing for the British company. Read Full Post…

SMARTPHONES: Two Losers Unite in BlackBerry, TCL Alliance

Bottom line: TCL’s new licensing deal with BlackBerry will end up as a quiet failure due to TCL’s weak R&D skills and lack of consumer appeal to the BlackBerry name.  

TCL, BlackBerry in licensing tie-up

When does adding two negatives yield a positive? The answer is “never”, but dying smartphone makers BlackBerry (Toronto: BB) and TCL (Shenzhen: 000100) are hoping that maybe this time will be different. Of course, it’s easy for me to predict disaster for this particular new alliance, and I’d be much bolder if I said this partnership might revive the two dying companies. But the truth is that neither BlackBerry’s nor TCL’s smartphone business have much going for them these days. Read Full Post…