Bottom line: Gubuli’s foray into the coffee business is doomed to failure, while Carrefour is likely to sell part of its China business to a local partner later this year.
Gobuli tries coffee with Gloria Jean’s
You know the China coffee market is overheated when one of the nation’s most famous names in a traditional food like steamed buns enters the market. That’s what’s happening now, with word that Gobuli Group, a restaurant chain whose name is synonymous with a popular kind of meat-filled steamed buns, is launching a coffee chain joint venture in partnership with Australia’s Retail Food Group.
While the coffee business is quickly overheating, the opposite is true for the traditional supermarket business, which has seen several major western retailers leave the market or scale back operations as they face a growing challenge from e-commerce. Now it looks like French giant Carrefour (Paris: CA) could become the next in that trend, with word that it might consider selling some or all of its China business to a local partner. Read Full Post…
Bottom line: New mega fund-raising by Citic and Galaxy Securities could presage a flurry of global buying in the year ahead as non-banking financial firms look to expand abroad.
Citic raises $10 billion
Massive new fund raising by 2 major Chinese financial firms is showing that these companies remain an attractive option for international investors, even as traditional banks have become a pariah due to their huge volumes of bad debt. The deals by financial conglomerate Citic Ltd (HKEx: 267) and Galaxy Securities (HKEx: 6881) will raise a collective $12.3 billion, and could also presage a new wave of global buying by fast-growing Chinese financial firms outside the nation’s traditional banks. Read Full Post…
Bottom line: China and the west should sign an agreement for telecoms networking equipment trade that creates a transparent and fair playing field for fair trade while protecting national security.
Transparency needed in global telecoms trade
A simmering national security standoff between China and the west involving telecoms networks could soon heat up again, with word that China Telecom, the smallest of China’s 3 state-run carriers, is preparing a bid to build a new wireless network in Mexico. Analysts say the US might object to such a Chinese-run network so close to its borders, fearing it could contain backdoors and other hidden features that might accommodate spying by Beijing.
Similar previous concerns have locked Chinese telecoms equipment makers out of the lucrative US market, and cost leading manufacturer Huawei a chance to help build a cutting-edge broadband network in Australia. Read Full Post…
Bottom line: UCWeb’s new India tie-up with Facebook looks like a good step that will help its global expansion, while Qihoo’s new Microsoft alliance looks mostly like inconsequential hype.
UCWeb ties with Facebook in India
A couple of new corporate tie-ups are in the headlines today, led by word of a potentially major new alliance between Alibaba-owned (NYSE: BABA) web browser UCWeb and global social networking giant Facebook (Nasdaq: FB). The other tie-up, which looks far less interesting but still potentially significant, and will see security software specialist Qihoo 360 (NYSE: QIHU) work with Microsoft (Nasdaq: MSFT) in advertising services. This second alliance is just the latest in a long recent string for Qihoo, and seems aimed at breathing life into its struggling stock that is being rapidly abandoned by impatient and disappointed investors. Read Full Post…
Bottom line: Xiaomi’s new more upscale Mi Note phablet should get a strong reception and sell well, drawing on the company’s trendy name and growing base of loyal buyers.
Xiaomi goes upscale with new Mi Note
Smartphone sensation Xiaomi doesn’t seem content to only follow its role model Apple (Nasdaq: AAPL) anymore, and is also taking a page from stumbling sector leader Samsung (Seoul: 005930) with its latest model as it seeks a long-term direction for its products. Of course I’m being just a little facetious with my comparison to Apple, since the only thing Xiaomi shares with the US company is a cool and trendy image. Apple is firmly placed at the top end of the smartphone market, whereas Xiaomi began its life in the mid-range and has steadily moved downmarket since then. Read Full Post…
Bottom line: The US, EU and other major countries are likely to block the merger of China’s 2 largest rolling stock producers on anti-competitive grounds, forcing Beijing to abandon the deal.
CNR-CSR merger to face western scrutiny
Beijing has become increasingly active in reviewing big global M&A for deals that affect China, but an interesting reversal is set to occur when western countries review a pending mega-merger between the nation’s 2 largest makers of railroad rolling stock. That review could put the west and China on a collision course, as the US and especially the European Union could both have strong cases for blocking the merger of CSR Corp and CNR Corp, which are already 2 of the world’s largest companies that manufacture high speed railroads and related equipment. Read Full Post…
Bottom line: Dunkin’ Donuts’ second attempt to enter China stands a better chance of success due to a better choice of partners, and also will benefit if it tries to give its brand a more upscale image.
Dunkin’ finds new China partner
The small club of foreign fast food chains with more than 1,000 stores in China could soon gain a new member, with word that donut giant Dunkin’ Brands (Nasdaq: DNKN) is gearing up for a second try at the market. Before I go any further, I should disclose that I’m a big donut fan and was quite disappointed when Dunkin’ ended its first China foray more than a year ago. But that said, I’m a bit more optimistic that it will succeed this second time around for several reasons, including valuable lessons that it learned from the failure during its first time in the market. Read Full Post…
Bottom line: Ctrip’s latest M&A reflects the growing scarcity of good acquisition targets for cash-rich Chinese Internet firms, which could pressure them to issue dividends or launch share buy-backs.
Ctrip makes UK acquisition
A new overseas purchase by leading online travel agent Ctrip (Nasdaq: CTRP) is drawing yawns from investors, reflecting the very real fact that Chinese Internet firms have far too much cash in their coffers and no place to spend it. This particular dilemma is one that most western companies would love to have, since excess cash can be used for not only M&A and organic expansion, but also to pay dividends or buy back shares. But in the case of Chinese companies, a big chunk of the cash has been raised in a series of massive bond and share offerings over the last 2 years, meaning it would be strange to turn around and return the money to investors through a dividend or share repurchase. Read Full Post…
Bottom line: Traditional car makers will suffer from weak sales growth and plunging margins in China in 2015 and into 2016, while EV makers will start the new year slow but could see improvement by the end of 2015.
Toyota to miss 2014 target
A flurry of headlines this week are sending ominous signals for the car industry in the year ahead, with both traditional and new energy vehicle makers likely to face an uphill road as China’s economy slows. The problem could be compounded as big new capacity comes online from many major automakers that have invested billions of dollars on expansion over the last 3 years. Other headwinds could come as major cities take steps to ease traffic congestion, with the southern boomtown of Shenzhen becoming the latest to implement a new program to control the number of cars on the road. Read Full Post…
Bottom line: Alibaba’s new online credit product and global shopping mall look like smart new initiatives that could help maintain its strong growth to justify its high valuation.
Alibaba financial unit trials credit product
It’s been quite a while since I’ve written about the actual business of e-commerce giant Alibaba (NYSE: BABA), which has captured global headlines for much of the last 4 months for mostly financial reasons after its record-breaking IPO in September. So on that note, I was quite happy to finally read new headlines on some smart-looking moves the company is making to justify its sky-high valuation, which is built on expectation for continuing super-charged growth.
One of those initiatives has Alibaba’s finance unit rolling out a product that looks like a variation of traditional cards, and is aimed at getting shoppers to spend even more on its popular e-commerce platforms. The other is an update on its new global e-commerce initiative that looks like it’s gaining some strong early momentum, at least according to the company’s own telling of the story. Read Full Post…
Bottom line: The NDRC should force Qualcomm to change some of its licensing practices but not force it to lower prices in its upcoming antitrust settlement against the company.
Qualcomm judgment coming soon
All eyes will be on China’s anti-monopoly regulator in the days ahead, when it’s expected to rule in a case involving the pricing and licensing policies of global smartphone chip leader Qualcomm (Nasdaq: QCOM). The case is the latest in a string of recent similar antitrust probes by Beijing against major companies. But it’s also quite different because it involves licensing practices for proprietary technology, which aren’t typically included in the conventional definition of monopolies. Read Full Post…
