Bottom line: Huawei’s low-cost Honor brand is likely to gain global market share in 2015 at the expense of multinationals like Samsung, which is likely to lose its spot as China’s top smartphone seller in the new year.
Sales soar at Huawei’s Honor brand
Two of China’s leading smartphone sellers are in the headlines today moving in opposite directions, reflecting turbulent conditions in the world’s largest but also most competitive market. On the upside, media are reporting that sales are booming for domestic giant Huawei’s low-end Honor brand, as the company borrows a low-cost marketing strategy from domestic rival Xiaomi. Meantime, other reports say market leader and Korean giant Samsung (Seoul: 005930) is sending an emergency team of rescuers to China in a bid to reverse the company’s sudden slide in the market. Read Full Post…
Bottom line: Kingfisher’s sale of control of its China home improvement chain to a local partner will produce an uneasy alliance that will ultimately see the UK retailer withdraw its B&Q name from the market.
Kingfisher hands over B&Q China to Wumart
Just weeks after US electronics retailing giant Best Buy (NYSE: BBY) made a final retreat from China, British rival Kingfisher (London: KGF) is making a similar move with word that it’s selling control of its China B&Q store operations to a local buyer. These 2 deals mark an interesting twist on a trend that has seen other global retailers like Home Depot (NYSE: HD) and Germany’s Metro (Frankfurt: MEO) also abandon the tough China market. Whereas the earlier cases saw companies simply close down their China operations and leave, this new wave of deals has firms selling their operations to eager Chinese buyers. Read Full Post…
Bottom line: BBVA’s cut-back in its alliance with Citic represents the latest divorce between western banks and Chinese partners, with little new foreign investment likely in the sector for the next 2-3 years.
BBVA sells stake in Citic unit
A trend that’s been quiet for more than a year has popped back into the headlines, with word that Spain’s second largest bank has dumped its stake in a holding company tied to Chinese financial services conglomerate Citic Group. This particular deal is being driven by a number of factors, including a need for cash by Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA). But the bottom line is that BBVA and other major foreign banks have ended most of their similar alliances with Chinese partners over the last 3 years after such tie-ups failed to produce any strategic benefits. Read Full Post…
Bottom line: The snowballing of a recent series of mudslinging remarks by major companies underscores the rampant lack of business ethics in China, and could prompt some much-needed public debate on the topic.
China business ethics in need of fixing
What started as a couple of stories highlighting the shady business practices that are all too common in China is starting to snowball, with home appliance giant Gree (Shenzhen: 000651) and a local start-up air purifier maker adding their voices to this entertaining year-end war of words. At the heart of this verbal mudslinging is a toxic Chinese business culture where practices like illegal copycatting, corporate espionage and violation of business contracts are quite common and even accepted to a certain degree. Read Full Post…
Bottom line: China and the west will continue to find common interests in fighting corruption, while Beijing’s state support for certain industries will remain an area of contention for the foreseeable future.
Obama press Xi on Qualcomm case
Sino-US business ties are on display in 3 separate headlines today, reflecting the increasingly complex relationship between these 2 economic superpowers that sometimes agree but often clash on different issues. One of the few things they agree on is the need to fight corruption, which is the theme in one headline that has the US fining health care products maker Avon (NYSE: AVP) for bribery at its China operation.
But the areas of disagreement are a bit more numerous, including US disapproval of Beijing’s strong state support for industries it wants to develop. That disagreement was at the center of another headline that saw the US finalize anti-dumping tariffs against Chinese solar panels, capping a 3-year-old clash on the issue. Heavy western ownership of globally used technologies is another sore spot, which was in the headlines as the US pressured China on a probe it is conducting into the licensing practices of mobile technology giant Qualcomm (Nasdaq: QCOM). Read Full Post…
Bottom line: Lenovo and TCL Communications’ profits are likely to take a hit in the current quarter and into early 2015 due to currency loses related to economic turmoil in Russia.
Geely profits slip on Russia crisis
The economic crisis in Russia is capturing headlines around the world, but far less attention is going to non-Russian companies that are likely to take a hit as a direct result of the turmoil. Automaker Geely (HKEx: 175) has become one of the first to reveal the damage that some companies may face, citing the slide in the Russian ruble as one of the biggest causes for a halving of its profits for 2014. Read Full Post…
Bottom line: Wuliangye’s new tie-up with Brown-Forman continues its drive to diversify and create new products for younger consumers, which could help it emerge as a leader when liquor makers emerge from their current downturn.
Brown-Forman links with Wuliangye
It’s not often that I get to write about foreign company involvement in China’s traditional liquor industry, which is largely closed to overseas investment and is also quite fragmented and filled with pitfalls due to dominance by local interests. So I was quite excited to read a new report saying Brown-Forman (NYSE: BF-B), a major US liquor maker whose brands include Jack Daniels whiskey, has teamed up with leading Chinese spirits maker Wuliangye (Shenzhen: 000858) to develop new products for emerging markets. Read Full Post…
Bottom line: The resignation of Tesla’s China president hints the company is getting off to a slow China start, while BAIC’s Hong Kong IPO will get a lukewarm reception and trade flat to down over the next year.
Tesla China head resigns after 9 months
Mixed signals are coming from China’s car sector, with state-run automaker BAIC getting a so-so reception for its upcoming IPO as US new energy superstar Tesla (Nasdaq: TSLA) suffers a setback with the departure of its China president. Among these 2 news bits, the one involving BAIC doesn’t come as a huge surprise, since I wasn’t expecting much from the IPO for this stodgy state-run firm. The Tesla news will disappoint the company’s overseas boosters and electric vehicle (EV) fans in general, and hints that this new energy superstar’s drive into China isn’t going as smoothly as hoped.
Let’s begin with the Tesla news, as that’s the sexier of these 2 stories due to the company’s extremely high hopes for China created by its charismatic chief Elon Musk. The latest headlines say Tesla’s China President Veronica Wu, or Wu Bixuan, has resigned after just 9 months on the job. (English article; Chinese article) Tesla declined to comment further on Wu’s departure, but one analyst said the move may reflect slower than expected progress in developing the China market. Read Full Post…
Bottom line: Accor’s new tie-up with China Lodging looks like a smart deal that will bring together complementary partners, and is likely to spark a new round of similar cross-border partnerships in the year ahead.
China Lodging moves in with Accor
A development I’ve been predicting for quite a while has finally happened in China’s lucrative but crowded hotel space, with news of a major new tie-up between global giant Accor (Paris: AC) and domestic budget operator China Lodging Group (Nasdaq: HTHT), which also calls itself Huazhu. The tie-up will essentially see China Lodging take over operation of much of Accor’s China portfolio, and could ultimately see Accor purchase the Chinese company outright. The move could also spark a round of similar tie-ups that sees other major foreign operators pair up with Chinese partners like Home Inns (Nasdaq: HMIN). Read Full Post…
Bottom line: The visit by a top Chinese Internet official to Facebook’s US campus shows Mark Zuckerberg’s charm offensive toward China is producing results, which could see his company finally get permission to enter the market next year.
China Internet official Lu visits Facebook campus
I have to commend Mark Zuckerberg for his tenacity, after the Facebook (Nasdaq: FB) founder once again made headlines for receiving a visit from a top Chinese Internet official visiting the US. There are several interesting things about this latest development involving Zuckerberg’s endless quest to bring Facebook to China, beginning with the source of this latest news.
It turns out the news didn’t come from Facebook or even ordinary people who caught a glimpse of the meeting, but rather it came from the web page China.com.cn, an official government site under the State Council. (Chinese article) What’s more, the account was rather detailed and upbeat, and featured several photos of Zuckerberg chatting happily on the Facebook campus with Lu Wei, minister of the Cyberspace Administration of China. Read Full Post…
Bottom line: Fosun should drop out of the bidding war for Club Med to avoid overpaying for the resort operator, despite big potential from a possible Asia expansion.
Fosun in bidding war for Club Med
Chinese investors aren’t the only companies with big money to spend on global M&A for undervalued western assets. That’s the lesson that high-flying private equity firm Fosun International (HKEx: 656) is quickly learning, as it gets sucked into a bidding war for French holiday resort operator Club Med (Paris: CU). This particular bidding war is one of the first I’ve seen for a major western asset involving Chinese bidders, and could presage more competition from local western investors who want to take advantage of the many assets now now being sold at bargain prices. Read Full Post…
