I want to take a look today at Gree (Shenzhen: 000651), a major home appliance maker that is casting an interesting spotlight on a new kind of risk faced by major state-owned firms due to a central government campaigns against excessive spending and corruption. Gree usually makes headlines because of its prominent President Dong Mingzhu, who was named last year by Forbes magazine as one of Asia’s 50 most powerful women. But this time it has been in the news for far less glamorous reasons, as its internal party secretary Zhou Shaoqiang has been stripped of his posts for his lavish spending at a recent banquet.
Journalist China
Vancl Dresses in Black For IPO Ball 凡客诚品扭亏为盈 或重启IPO计划
After a long period of silence, online clothing specialist Vancl has stitched its way back into the headlines following a major internal meeting where the company disclosed it finally turned profitable in last year’s fourth quarter. The reports don’t specify if the profit was on a net or operating basis; but profits of any kind for younger Internet firms like Vancl will undoubtedly be welcome by investors, who have been avoiding loss-making firms like e-commerce firm Dangdang (NYSE: DANG) and video sharing specialist Youku Tudou (NYSE: YOKU). All that said, this big meeting and news of its first-ever profit seem to indicate the company has probably restarted the process for its long-delayed New York IPO, and I wouldn’t be surprised to see Vancl make its first public filing in the next 2 months.
Beijing Steps Into Big 4 Accounting 中国政府介入四大会计师事务所
Beijing has launched a new drive to unionize workers at service-sector multinationals, starting with the “Big Four” accounting firms as it seeks to exert more control over these major foreign employers. The move would follow the similar unionization of workers at most foreign-owned manufacturers over the last decade, presumably to better protect the rights of Chinese workers. If providing such protection is really the objective, then this kind of unionization drive looks like a positive development. But the move also looks suspiciously like an attempt to re-create a structure commonly seen at State-run enterprises (SOEs), where an internal Communist Party secretary is usually one of the chief decision makers and politics is often a key element in many major decisions. The insertion of this kind of government influence into major foreign service-sector companies could create serious disruptions at many of these firms, forcing them to make politically motivated decisions that don’t necessarily make good business sense.
News Digest: March 2-4 报摘：2013年3月2-4日
The following press releases and media reports about Chinese companies were carried on March 2-4. To view a full article or story, click on the link next to the headline.
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- China Plans Unionization Push Into Big Four Accounting Firms (English article)
- EMC Corp (NYSE: EMC) Releases China 5-Year Plan (English article)
- Yahoo (Nasdaq: YHOO) Discloses Alibaba Financials In US Stock Filing (Chinese article)
- Vancl’s Profit Imperative: CEO Further Empowers Managers (Chinese article)
- Xiaomi’s Lei Jun To Attend NPC, Propose Corporate Law Changes (Chinese article)
- Latest calendar for Q4 earnings reports (Earnings calendar)
7 Days Privatization Goes Ahead, Focus Sputters 7天私有化继续，分众传媒遇挫
Two major privatization plans of US-listed Chinese companies appear to be moving in different directions, with hotel operator 7 Days (NYSE: SVN) moving closer to its plan to de-list even as outdoor advertising specialist Focus Media’s (Nasdaq: FMCN) plan appears to be derailing. Both companies launched their plans last year at the height of a confidence crisis for US-listed China stocks that saw many companies’ shares fall sharply.
Qihoo Under Fire From News Report 奇虎遭媒体报道攻击
Security software specialist Qihoo 360 (NYSE: QIHU), known for its frequent attacks against its adversaries, is coming under fire itself in the last couple of days from a news report questioning its integrity. One of China’s top business newspapers, the National Business Daily, has issued the in-depth report detailing some of Qihoo’s allegedly dubious business practices, prompting Qihoo to sue in response. (newspaper report)
Earnings Look Up For Jiayuan, AutoNavi 世纪佳缘和华谊兄弟为当前财报季带来些许亮光
I’ve spent most of the current earnings season writing about the bleak picture for many companies, which have seen their profits drop as the country’s economy slows. So I thought it would be nice to take a break from the downbeat news and look at a few smaller companies that have just issued more upbeat reports, including online dating site Jiayuan.com International (Nasdaq: DATE), navigation software specialist AutoNavi (Nasdaq: AMAP) and movie producer Huayi Brothers (Shenzhen: 300027). All 3 of these firms have just posted fourth-quarter results that show improving top and bottom lines, underscoring that there are still some bright spots for investors in China’s difficult economic climate.
No Buzz For Suning, Germany’s Metro 苏宁业绩悲观 万得城退出中国
Anyone thinking of getting into China’s consumer electronics retailing market might want to think again, following the latest downbeat news from homegrown giant Suning (Shenzhen: 002024) and a joint venture involving Germany’s Metro Group (Frankfurt: MEO). In the former case, Suning has just reported 2012 results that will hardly encourage investors, including an accelerating decline in profits. In the latter, Metro has formally announced it will shutter its Media Markt stores, confirming buzz that has surrounded the troubled chain that was launched with fanfare 2 years ago.
BYD Operations Sputter Into the Red 比亚迪业绩陷入亏损
The number 94 seems to have special meaning for BYD (HKEx: 1211; 002594), the struggling car maker backed by billionaire investor Warren Buffett, which has just reported some preliminary data that show its profit last year fell 94 percent as it failed reverse its sharp decline of the last 2 years. But perhaps more alarming, this new data show the company’s operations fell into the loss column in the last 3 months of 2012, even though it technically remained profitable overall due to strong government support. That means that 2013 could continue to be a difficult year for the company, which could start reporting some net losses as it struggles to regain its footing in China’s competitive car market.
Spreadtrum’s Bad 3G Bet Hits Profits 展讯通信押注3G失利拖累业绩
Former high-flying cellphone chip maker Spreadtrum (Nasdaq: SPRD) survived a high-profile short-seller attack last year, but it’s having a much harder time fighting weakening investor sentiment as its big bet on a homegrown Chinese technology looks increasingly like a dud. The bottom line in this saga is reflected in Spreadtrum’s stock, which fell 3.7 percent after it announced its latest quarterly results on Tuesday in New York. The drop continued a downward trend that has seen Spreadtrum’s shares lose about 30 percent of their value since last November when it began to grow apparent that its gamble on a Chinese technology called TD-SCDMA wasn’t developing as well as many had hoped.
China Mobile Expands Commercial 4G 中国移动增加4G试商用城市
Dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL) is turning up its campaign to pressure the telecoms regulator to issue 4G licenses soon, this time through aggressive comments from its chairman at the world’s biggest industry event taking place this week in Spain. Among all the latest talk, the item that most caught my attention was the disclosure that China Mobile is preparing to launch a “trial commercial” service this week in the major southern cities of Guangzhou and Shenzhen, expanding a program it began last month. (English article)
