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: Apple’s retention of China’s smartphone crown for a second consecutive quarter is partly due to timing, but also owes to CEO Tim Cook’s new PR campaign that will help to win favor from Beijing and the broader Chinese public.
Apple’s Cook opens Weibo account
Media are fixated today on a new report showing China’s smartphone sales fell for the first time in this year’s first quarter, in a development that shouldn’t surprise anyone due to the market’s supersaturation. But equally impressive in the report is the ongoing surge of Apple (Nasdaq: AAPL), which managed to hold onto its title as the nation’s leading smartphone brand for a second quarter after stealing the crown from the high-flying Xiaomi.
Some may say Apple’s surge is due to timing, since it released its latest iPhones in October, fueling a fourth-quarter sales boom that lingered into the first quarter. That may be partly true, though I personally have to applaud CEO Tim Cook for mounting a very focused campaign to woo both Beijing and average Chinese consumers. In the latest move of that campaign, Cook has just opened his official account on Sina Weibo (Nasdaq: WB), China’s equivalent of Twitter (NYSE: TWTR), as he moves to communicate more directly with customers in one of his most important markets. Read Full Post…
Bottom line: A new anti-bribery probe against the medical device divisions at Siemens, GE and Philips will end with a quiet settlement, as China scales back a wave of probes that have raised complaints about discrimination against multinationals.
Foreign medical device makers fall under China microscope
Summer time is fast approaching, which means it’s time for China’s latest crackdown on foreign firms to start heating up. Such crackdowns are becoming an annual tradition, and have even developed a certain cyclicity that sees them begin in late spring, then reach a fever pitch in summer before fading in the fall. This year could continue that pattern, following reports that the medical device units of global conglomerates Siemens (Frankfurt: SEIGn), General Electric (NYSE: GE) and Philips (Amsterdam: PHG) are all being probed over whether they bribed hospitals and other medical professionals to achieve their current market dominance. Read Full Post…
Bottom line: A potential future spin-off of Yum’s China operations looks like a good move that would give the new company more focus, while McDonald’s China franchising drive also looks good if it can find the right partners.
Investors eye spin-off for Yum’s China unit
China was once the hot story for fast food companies like KFC and McDonald’s (NYSE: MCD), as Chinese consumers flocked to the concept of reasonably priced food that was served quickly in attractive restaurants with friendly workers. But that story has become quite stale in recent years, leading this pair of global heavyweights to look for new China stories to pump up their local business and excite investors.
KFC has been trying to achieve that goal through a major overhaul of its China restaurants over the past year, and now is back in the headlines as some investors call for its parent, Yum Brands (NYSE: YUM), to split off its China operations into a separate company. Meantime, McDonald’s is trying to bring some excitement back to its China story by rapidly accelerating the expansion of its traditional franchised store model in the market. Read Full Post…
Bottom line: Lenovo has done remarkably well since defying skeptics with its landmark IBM PC buy a decade ago, and could stand a 50-50 chance of remaining relevant a decade from now in the fast-changing world of high-tech gadgets.
Lenovo celebrates a decade since landmark IBM buy
Global PC leader Lenovo (HKEx: 992) is commending itself on how far it has come since its landmark purchase of IBM’s (NYSE: IBM) PC business 10 years ago, setting it on a path that has made it the world’s top computer seller. (company announcement) I’ll admit I was a skeptic at the time of the IBM deal in 2005, and have become much more bullish on Lenovo since then. Still, the company hasn’t completely convinced me that it has the necessary skill and vision to move past its global PC crown, which is fast becoming yesterday’s news as traditional computers rapidly lose ground to newer devices like smartphones and tablets.
Before I look at the challenges that Lenovo is facing, I want to start by personally congratulating the company on its huge accomplishments over the last decade since it announced it would purchase IBM’s storied PC business for $1.25 billion. I and many others predicted at the time that Lenovo could stumble badly with the move, since it had no experience at running such a major foreign business that was clearly in decline and need of restructuring. Read Full Post…
Bottom line: A new e-commerce joint venture by Japan’s Itochu and Thailand’s CP Group marks the latest major advance for China’s fledgling free trade zone program, whose policies should eventually expanded to the entire country.
Itochu forms new venture in Shanghai FTZ
China’s fledgling Free Trade Zone (FTZ) program got a new boost last week when a group of corporate giants from Japan, Thailand and China announced a major new retailing joint venture in the original zone in Shanghai. That news came just a week after a major expansion of the Shanghai zone, and the announcement of a plan for 3 additional FTZs in other parts of China.
This sudden expansion of the FTZ program is a welcome development for the many private companies whose growth plans have been stymied for years by China’s huge bureaucracy. That group includes not only big multinationals like Amazon (Nasdaq: AMZN) and HSBC (HKEx: 5; London: HSBA), but also a growing number of homegrown private giants like JD.com (Nasdaq: JD) and Alibaba (NYSE: BABA), which also harbor global aspirations. Read Full Post…
Bottom line: Tsinghua Unigroup is likely to win the bidding for a controlling stake in HP’s China-based networking equipment unit, and could help HP consolidate its place as one of China’s leading IT service providers.
Bidding war breaks out for HP asset sale
Hewlett-Packard (NYSE: HPQ) is finding itself in a rare position of power in China, with word that an unusual bidding war has broken out as it looks for a partner to buy a controlling stake in its locally-based networking equipment unit. The development could bring not only a windfall in terms of money HP will get for its H3C Technologies unit, but will also allow it to choose between 2 potent partners to help consolidate its place as one of China’s leading IT services providers.
HP is in the process of splitting itself into 2 as part of a broader restructuring announced last fall. In this case the China-based H3C networking equipment venture would almost certainly go into its new HP Enterprise unit, focused on products and services for corporate customers. The other main unit under the break-up will include HP’s older PC and printer businesses, which will go by the name HP Inc. Read Full Post…
Bottom line: A negative tale from Chongqing spotlights the challenges Tesla faces in China due to lack of infrastructure, while a big taxi fleet order in Wuhan offers a possible new route for the company to jump-start its Chinese sales.
Tesla taxis hit road in Wuhan
Sputtering new energy car maker Tesla (Nasdaq: TSLA) is in a couple of new China headlines, scoring a big order in the central city of Wuhan and an embarrassing bit of negative publicity in the southwest city of Chongqing. Watchers of the company and its difficult road into China might recall it was exactly a year ago that Tesla’s charismatic founder Elon Musk made a high profile visit to the country to hand over the keys for its first official sale to a local customer.
That event happened on the sidelines of China’s largest annual auto show, which rotates between Beijing and Shanghai and has become a major global event due to the country’s status as the world’s largest auto market. But in a testimony to the challenges Tesla has faced since that hype-filled day, Musk failed to appear at any public events during this year’s show that has been happening all week in Shanghai. Read Full Post…
Bottom line: The new Nokia-Alcatel merger, combined with a continued low-key lobbying campaign by Huawei could ultimately convince Washington to ease its ban on Chinese telecoms equipment within the next year.
US to rethink Huawei ban?
A couple of new reports are casting a spotlight on the troubled relationship between Washington and leading Chinese telecoms equipment maker Huawei, and raising the intriguing potential for a much-needed compromise that might end the impasse between the pair. The impasse is really quite one-sided, with Washington banning the sale of all Chinese telecoms equipment in the US due to concerns about the potential for spying. But this kind of policy seems a bit broad, especially amid an accelerating sector consolidation that is leaving wireless carriers with fewer and fewer networking equipment suppliers to choose from. Read Full Post…
Bottom line: Apple’s new court victory in a China patent dispute shows its relations with Beijing are improving, positioning it well for growth in a country that is likely to pass the US as its largest global market in the next 1-2 years.
Apple wins China victory in patent dispute
A couple of new reports are showing that global gadget giant Apple (Nasdaq: AAPL) may have finally reversed its slumping fortunes in China, led by word that China probably overtook the US to become the world’s largest market for its iPhones in the first quarter of this year. The other report has Apple winning an important court victory against a Chinese company that accused it of illegally using its voice recognition technology.
This pair of upbeat stories come just a week after Apple scored another positive round of publicity in China, announcing it would make a relatively modest investment in 2 solar farms in southwest Sichuan province. (previous post) This sudden flurry of positive stories, and the fact that they’re being widely covered by China’s state-controlled media, shows Apple could finally be turning a corner in the country after a stormy relationship with Beijing over the last 2 years. Read Full Post…
Bottom line: China is likely to become Apple’s largest smartphone market by next year, while Huawei’s smartphones could make significant gains in the next 2 years en route to becoming one of the world’s top 2 brands.
iPhone posts China milestone
Three of the world’s top cellphone makers are in China-related headlines today, led by word that Chinese iPhone sales officially passed the US for the first time in Apple’s (Nasdaq: AAPL) latest reporting quarter. At the same time, 2 of China’s own homegrown cellphone makers with big aspirations are also in the headlines, with both Huawei and Lenovo (HKEx: 992) discussing their goals for the next few years.
One of those has Huawei’s smartphone chief saying he’s aiming to become the world’s largest brand within the next 3-5 years. The other has Lenovo’s chief executive saying he’s aiming to sell 100 million cellphones in the company’s latest fiscal year, as it consolidates its position after a period of rapid expansion. Read Full Post…
