Bottom line: WH Group’s decision to sell its stake in Spain’s Campofrio just a year after the purchase reflects its need for cash to pay down a big debt load, and also overly optimistic expectations at the time of the acquisition.
WH Group sells Campofrio stake
Just a year after making its second major global acquisition, Chinese meat processing giant WH Group (HKEx: 288) is having second thoughts about Spain’s Campofrio and is selling its stake in the company. WH Group gave a brief statement on the move, which appears to show it needed the cash and that Campofio was dragging on its financial performance. If that’s the case, this unusually quick flip-flop reflects one of the biggest risks that Chinese companies will face as they shop in an unfamiliar global marketplace that is quite different from their own home market. 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: 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: Twitter’s growing pursuit of business from Chinese advertisers shows it is watching the market for a potential future entry, while a new equity tie-up could see Didi Kuaidi’s hired car services launch on Weibo later this year.
Twitter chases China advertisers
Social networking (SNS) pioneer Twitter (NYSE: TWTR) and its Chinese clone WeiboCorp (Nasdaq: WB) are both in the China headlines today, each taking gambles on different parts of the market. After previously saying that China isn’t a market where it can do business, the original Twitter has quietly begun to court local advertisers, even as its actual service remains blocked in the country. Meantime, Weibo, which rose to prominence after Twitter was first blocked in China in 2009, has announced a relatively large new investment in local hired car services leader Didi Kuaidi. Read Full Post…
Bottom line: Rupert Murdoch’s shift in China strategy towards less controversial retail and entertainment projects looks smart, but is likely to meet with lukewarm success due to lack of awareness of 20th Century Fox among Chinese consumers.
Rupert Murdoch eyes China theme park
Rupert Murdoch just can’t seem to ignore the China story for too long, with new reports saying his Twenty-First Century Fox (Nasdaq: FOX) is finalizing plans for a theme park in a country that has been quite elusive for the aging media mogul. The theme park approach certainly looks safer than Murdoch’s previous attempts to enter China with more traditional media like TV and movies, and mirrors what some of the world’s other top media companies have done. Of course that means Murdoch and Fox are coming a bit late to this particular show, and the fact that 20th Century Fox theme parks aren’t exactly a well-known brand means his media empire could face a steep uphill ride finding a Chinese audience. Read Full Post…
Bottom line: HP’s choice of a Beijing-based group with strong ties to a top science university as its China IT services partner looks like a smart move, which will help ease potential for conflict over national security concerns by Beijing.
HP choses Unigroup as China IT partner
Hewlett-Packard (NYSE: HPQ) has chosen a relatively dynamic, Beijing-based tech company as its future China partner over a stodgier state-run firm in Shanghai, as the US computer giant prepares to split itself into 2. The development is seeing HP get a bit less money than it had hoped for the 51 percent stake of its China-based H3C unit, which makes equipment for use in small telecoms networks. But the choice of Tsinghua Unigroup as the buyer looks quite prudent, and will bring in a new politically connected partner for HP as it prepares to split off its core PC unit from its more dynamic business that sells computing and networking services to enterprises. Read Full Post…
Bottom line: China’s largest corporations need to face stiffer regulatory penalties to ensure their compliance with Beijing rules, as part of a campaign to clean up the country’s business climate.
More strictness needed in Alibaba, telco cases
Some of China’s leading high-tech firms were in the headlines last week for foot-dragging in response to government calls to change their business practices, in separate cases that show why Beijing needs to get more aggressive about enforcing its rules among big domestic corporations.
The first case saw e-commerce giant Alibaba (NYSE: BABA) sued by one of the world’s top makers of luxury goods for allegedly refusing to clean up its popular sites of trafficking in pirated goods. The second saw critics accuse China’s 3 major mobile carriers of taking largely empty steps to improve their mobile data pricing and speeds, after Beijing called on them to take such action. Read Full Post…
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: Apple’s latest environmental initiative in China looks like a savvy and inexpensive way to raise local awareness of environmental protection, in a move that will please Beijing and help it improve its government relations.
Apple tries forest management
Just 3 weeks after capturing local headlines with its plans to invest in solar farms in China, global gadget leader Apple (Nasdaq: AAPL) is rolling out more environmentally friendly initiatives in an attempt to woo both consumers and government officials in one of its most important markets. This latest initiative probably won’t get much attention in western media, as it looks mostly like a publicity ploy even though it does lay out big goals. But foreigners were never Apple’s real target with this announcement, which instead is part of its recent campaign to win over Beijing as well as a broader base of Chinese consumers. Read Full Post…
Bottom line: Apple CEO Tim Cook’s latest meetings in Beijing are important steps in his bid to cultivate better government relations, but he may need to make more substantive moves to earn serious goodwill.
Apple’s Cook meets with Chinese vice premier
We’ll continue this week’s tradition of closely following Apple (Nasdaq: AAPL) CEO Tim Cook on his latest trip to China, with word that he’s met with one of the nation’s vice premiers and also with officials from China Telecom (HKEx: 728; NYSE: CHA), one of its 3 big state-run telcos. I’ll begin with just a slight note of cynicism by saying that both of these meetings seem just slightly second-tier, for reasons I’ll explain shortly, and therefore one could argue that Cook has yet to make it into the “big leagues” of Chinese politics.
But that said, these and other visits on this trip still mark a huge step forward for both Cook and Apple, which just 2 years ago were criticized by the powerful People’s Daily, the official newspaper of the Communist Party, for its unparalleled arrogance. Cook has been working hard to change that image, and this particular weeklong trip seems to be almost as much about public relations as it is about doing business. 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…
