Bottom line: Coke’s proposed $400 million purchase of a Chinese protein drinks maker is likely to get quick regulatory approval, and could make significant contributions to its China operations within the next 2 years.
Coke makes new China M&A bid
Six years after a high-profile failure for a major China acquisition, global beverage giant Coca Cola (NYSE: KO) is trying once again with a smaller plan to buy a Chinese maker of protein drinks. This latest play for the maker of China Green-brand drinks looks like a smarter move by Coke, since the deal is valued at a relatively modest $400 million. By comparison, Coke’s failed attempt to buy leading Chinese juice maker Huiyuan (HKEx: 1886) was valued at $2.3 billion, which drew strong scrutiny from China’s anti-monopoly regulator that ultimately vetoed the deal in 2009. Read Full Post…
Bottom line: Beijing should offer more incentives to local governments to tackle piracy at its roots, or risk seeing homegrown high-flyers like Xiaomi get undermined by fakes.
Xiaomi knock-offs wash up in Germany
China’s fast-rising high-tech sector passed a dubious milestone last week, when media reported that fake copies of smartphones made by local superstar Xiaomi have begun appearing in Germany, marking one of the first such cases for a Chinese brand. Xiaomi wasn’t the only company in the headlines for piracy, as other media reported that fake copies of the new Apple Watch (Nasdaq: AAPL) were already widely available in China, as the US tech giant began taking orders for its latest gadget. Read Full Post…
Bottom line: The move by Yahoo’s former China R&D chief to a major local Internet firm reflects growing work opportunities at Chinese companies, and waning attraction of China as an R&D center for big multinationals.
Former Yahoo R&D exec joins JD.com
A new move by a leading R&D executive is spotlighting a pair of major trends in China’s high-tech space, led by rapidly falling expectations for the market by big multinationals. The actual move has seen the former head of Yahoo’s (Nasdaq: YHOO) China R&D center take a new job at JD.com (Nasdaq: JD), China’s second largest e-commerce company, just weeks after Yahoo closed one of its last remaining Chinese operations. That move also highlights the growing attractiveness of big domestic companies for top R&D executives, who used to eschew such homegrown firms. Read Full Post…
Bottom line: The failure of 3 major tech leaders to discuss issues confronting their companies at a major forum in China reflect a Chinese preference to avoid thorny issues in public and instead focus on more trivial matters.
Bill Gates, Elon Musk avoid tricky issues at China forum
It’s not often that 2 of the hottest US tech personalities can share the stage with one of China’s biggest Internet names and fail to say anything newsworthy. But that’s exactly what has happened in the southern Chinese city of Bo’ao, where Microsoft (Nasdaq; MSFT) founder Bill Gates and Elon Musk, CEO of electric car sensation Tesla (Nasdaq: TSLA), failed to say much of interest as they shared the stage in a dialogue hosted by Robin Li, founder of leading Chinese search engine Baidu (Nasdaq: BIDU).
The lack of insight is even more notable because both Microsoft and Tesla have faced big challenges in China lately, as the former comes under scrutiny for tax evasion and monopolistic practices, and the latter has fallen far short of its ambitious sales targets. But then again, Robin Li isn’t a reporter, and embarrassing his 2 high-profile guests about their recent woes probably wasn’t one of his big priorities as the at 3 men met at the annual Bo’ao Forum in southern Hainan province. Read Full Post…
Bottom line: AP’s willingness to consider new tie-ups with Xinhua is the result of economic pressures being felt by western media, but is unlikely to produce any major alliances due to the potential for negative publicity.
AP open to deeper partnership with Xinhua
Rapid changes in the traditional media realm are creating some strange bedfellows, and the situation looks even stranger in China due to the strong elements of censorship and state control. That odd combination of circumstances is creating a perfect storm that has led some western media companies to do the previously unthinkable and consider partnerships with some of China’s most centrally controlled media. Recent rumors have said that global financial news leader Bloomberg may be considering such a tie-up, and now the latest reports are saying US media giant Associated Press (AP) is also open to such partnerships. Read Full Post…
Bottom line: Beijing’s delay of new rules for foreign tech firms selling to Chinese banks could mark a turning point in a looming trade war centered on cybersecurity, and Washington should move to take reciprocal action.
Beijing slows down on new cybersecurity rules
After months of heating tensions, we’re seeing a sudden pause in the growing friction between China and the west that looked set to erupt into a new trade war centered on the sensitive issue of cybersecurity. That’s my assessment on reading that China is delaying implementation of draconian new requirements that would have forced all foreign tech firms to hand over sensitive and highly confidential product information when selling to Chinese banks.
I’m certainly not being naive in believing that China’s delay in this instance is the result of its realization that there’s no security risk posed by products supplied by foreign tech giants like IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Oracle (Nasdaq: ORCL). Instead, this delay is almost certainly the result of repeated protests from the companies themselves and also from Washington and Europe, which all argue the new requirements are overly and unnecessarily intrusive. Read Full Post…
Bottom line: Tesla’s China reboot appears to be complete, paving the way for it to gain some traction in the market by year end if it can effectively target the nation’s wealthy, image-conscious trend setters.
Tesla finishes China reboot
Nearly a year after driving into China on a wave of fanfare and big hopes, electric vehicle (EV) superstar Tesla (Nasdaq: TSLA) is pressing the reset button on a market that has huge potential but also some major obstacles. This particular reset has been in the works for the last few months, but appears to be near completion with indications that the company has discarded its previous short-term aggressive sales targets for the market.
The reboot to Tesla’s China business is discussed in a series of interviews by Zhao Kuiming, its head of China sales, who was on a PR offensive following the recent overhaul. (Chinese article) It’s unclear from the reports if Zhao is new to Tesla, but he appears to be the company’s new public face after previous China President Veronica Wu resigned in December after just 9 months on the job. (previous post) Read Full Post…
Bottom line: Tsinghua Unigroup’s pending purchase of a controlling stake in H3C could mark the start of a new partnership with HP in routers, but is unlikely to affect its older partnership with Intel in the telecoms chips.
HP eyes router stake sale to Unigroup
Semiconductor company Tsinghua Unigroup was already a name to watch after a string of major deals last year including a tie-up with Intel (Nasdaq: INTC), and now it’s adding to its allure with word of a major new alliance with Hewlett-Packard (NYSE: HPQ). This latest deal would trump the earlier one from Intel in size, and would see Unigroup buy a controlling 51 percent stake of HP’s China-based H3C unit, which makes routers and switches that compete with US giant Cisco (Nasdaq: CSCO).
It’s not completely clear how much Unigroup would pay for the stake, though the amount would almost certainly be more than the $1.5 billion that Intel paid last year for 20 percent of a new company that Unigroup created through its merger of 2 of China’s leading telecoms chip designers. I’m no telecoms expert, but I’ll admit this latest deal is leaving me just a bit puzzled due to the very different natures of the businesses of H3C and the earlier tie-up involving Intel, which revolved around telecoms microchips. Read Full Post…
Bottom line: ChemChina might be advised to maintain Pirelli as an independent unit and limit the size of an IPO if succeeds in buying the Italian tire maker and decides to re-list the business.
WH Group, AMC IPOs offer lessons for ChemChina
The headlines are buzzing today with word that state-run behemoth ChemChina may try to re-list Pirelli (Milan: PC) after it purchases the Italian tire maker, which got me to thinking about how the China factor might affect such an IPO. In theory at least, investors might get quite excited about a company they once disdained after its purchase by a Chinese buyer, due to hopes for lower costs and greater profits. But a look at 2 recent cases of major US firms that were acquired by Chinese buyers, then re-listed, shows the reality can vary widely and that a Chinese owner isn’t necessarily a panacea for an ailing overseas company. Read Full Post…
Bottom line: Washington’s raising of Beijing’s foreign technology restrictions to the WTO and London’s acceptance of Huawei equipment could add to pressure on all parties to soften their restrictive actions over use of foreign technology.
US takes nat’l security dispute to WTO
A pair of stories in the headlines today show a growing divergence in how China’s major trading partners are treating their cyber security clashes with Beijing. The larger of the 2 stories has Washington formally posing questions at the WTO over Beijing’s recent restrictions that limit the sale of foreign technology to Chinese banks. The other has seen Britian issue a report saying products from leading Chinese telecoms equipment maker Huawei pose no threat to the nation’s security, or at least that the threat is controllable. Read Full Post…
Bottom line: The latest blockage of Reuters sites in China is probably temporary and related to coverage during the recent National People’s Congress, but still reflects the very real risk of doing business in the tightly controlled media market.
Reuters websites blocked in China
China’s latest crackdown on foreign media has just netted global news giant Reuters (Toronto: RTR), in a potentially worrisome trend that has seen Chinese censors block a growing number of websites operated by big multinationals. Despite longer-term crackdowns on big names like Bloomberg and the New York Times, Reuters had managed to largely steer clear of China’s censors and its websites have remained largely accessible in China for most of the last 2 years.
But I couldn’t access any of Reuters sites in Shanghai starting last Thursday, and later reports confirmed the company’s Chinese- and English-language websites have been blocked throughout the country since then. (English article) Before I go any further, I should disclose that I previously worked at Reuters for a decade, and maintain contact with many of my former colleagues 4 years after leaving the company. Reuters Chinese site also is a regular user of my work, though apparently none of that has been viewable in China for the last few days. Read Full Post…
