Two news items from the retail space are showing how China remains a challenging and competitive market despite its huge potential, with KFC operator Yum Brands (NYSE: YUM) and German retailer Metro (Frankfurt: MEO) both suffering setbacks for different reasons. In Yum’s case, the company is quickly discovering the meaning of the word “saturation”, as its rapid expansion in China has forced it to open restaurants in less profitable locations that are ultimately hurting its performance. Adding to its woes, KFC recently found itself at the center of China’s latest food safety scandal, which I’ll discuss shortly. In Metro’s case, the company simply discovered that the Chinese retail market is quite competitive, especially in the electronics space where Metro was trying to find a niche in a partnership with the consumer products unit of Taiwanese manufacturing giant Hon Hai (Taipei: 2317).
Journalist China
Apple’s Cook Meets China Regulators 苹果CEO库克会见中国工信部部长
It may be cold and wintry in Beijing as the Year of the Snake approaches, but that isn’t stopping some of the world’s top high-tech CEOs from passing through the Chinese capital in pursuit of their own varied agendas. First Google (Nasdaq: GOOG) Chairman Eric Schmidt made a high-profile stop in Beijing en route to a visit to North Korea, and now we’re learning that Apple (Nasdaq: AAPL) CEO Tim Cook has also come calling on the nation’s capital this week. But whereas Schmidt’s visit seemed a bit whimsical to me, Cook’s trip looks much more practical, including an all-important stop at the nation’s telecoms regulator, the Ministry of Industry and Information Technology (MIIT). (Chinese article)
Apple’s Cook Meets China Regulators
It may be cold and wintry in Beijing as the Year of the Snake approaches, but that isn’t stopping some of the world’s top high-tech CEOs from passing through the Chinese capital in pursuit of their own varied agendas. First Google (Nasdaq: GOOG) Chairman Eric Schmidt made a high-profile stop in Beijing en route to a visit to North Korea, and now we’re learning that Apple (Nasdaq: AAPL) CEO Tim Cook has also come calling on the nation’s capital this week. But whereas Schmidt’s visit seemed a bit whimsical to me, Cook’s trip looks much more practical, including an all-important stop at the nation’s telecoms regulator, the Ministry of Industry and Information Technology (MIIT). (Chinese article)
Lenovo Thinks High-End, In-House 联想瞄准高端市场 放弃OEM似将惹麻烦
A couple of interesting items on Lenovo (HKEx: 992) are making the headlines these last few days, as the company tries to figure out how to hold onto its crown as the world’s biggest PC maker after taking the top spot from longtime holder Hewlett-Packard (NYSE: HPQ) last year. The first and more intriguing of the moves is seeing Lenovo split its PC products into 2 distinct groups — one a higher-end product centered on its Think brand and the other a more mainstream product based on its older Lenovo brand. The second item has media reporting that Lenovo is moving towards a model that will see it make all of its own computers in-house, in contrast to the current industry model that sees most major PC brands outsource their manufacturing to other original equipment manufacturers (OEMs).
IPOs Revive With Galaxy, Xinhuanet 银河证券、新华网引领IPO强劲复苏
After a 2012 that most investment bankers would probably prefer to forget, the new year is starting off on a more hopeful note for IPOs with news of offerings from brokerage Galaxy Securities and the website of state-owned media giant Xinhua both generating positive buzz. These latest signs of life follow other similar positive signals in the US late last year, after a commercially-focused social media site named YY (Nasdaq: YY) completed only the second major offering for a Chinese firm in New York during the year and saw its shares perform reasonably well. (previous post) All of this points to a potential rebound for Chinese stocks both inside and outside China in the year ahead, which could unleash a flood of new IPOs by companies that had to wait on the sidelines due to the chilly market last year but are keen to tap financial markets for new funds.
China Flexes Regulatory Muscle With Dole, LCDs 罚款与搁置审批 中国监管部门开始发力
Two new cases are showing how Chinese regulators are becoming increasingly assertive in the global marketplace, with Beijing agencies fining the world’s top LCD makers for price fixing in one instance and holding up a major sale by global US fruit giant Dole Food (NYSE: DOLE) in the other. The former case, which involves Korea’s Samsung Electronics (Seoul: 005930) and LG Display (Seoul: 034220) and 4 Taiwanese firms, looks like a very tentative step for China into an arena that is already strictly patrolled by western regulators who combat market manipulation. The latter case is a bit more interesting and potential troublesome, as it has slightly political overtones that could be the result of recent tensions between China and Japan over a territorial dispute.
Qihoo Seeks Potent Partner in Google 奇虎或牵手谷歌 瞄准中国市场
The Year of the Snake could well go down as the time when Baidu (Nasdaq: BIDU) finally lost its dominance over China’s lucrative online search market, following the rapid rise of a new challenger from up-and-comer Qihoo 360 (NYSE: QIHU) that may soon tie-up with global search titan Google (Nasdaq: GOOG). Such an alliance would mark the latest assault in Qihoo’s campaign that has seen its so.com site soar past other more established players to become China’s second largest search engine in just half a year.
China Films Find Success in Comedy 黑马《泰囧》或令喜剧片成国内片商增长点
The headlines this first week of January have been filled with figures on China’s box office for 2012, with many media predictably focusing on the fact that foreign films overtook domestic ones to win the box office crown last year. But from my perspective, more interesting is the fact that a low-budget domestically produced comedy quietly surged at the end of the year to steal the title as the nation’s biggest earning film of the year, taking the crown from the far more expensive and highly hyped 3D makeover of James Cameron’s “Titanic“.
Guangzhou Auto: China’s GM? 广州汽车集团：中国的通用？
Less than 2 months after signing a major R&D tie-up with rival Chery, leading south China automaker Guangzhou Automobile (HKEx: 2238) is back in the headlines with news of a similar tie-up with 2 other smaller rivals. This latest move makes Guangzhou Auto look increasingly like a potential consolidator for the many smaller and mid-sized automakers in nearby provinces, potentially molding the company into a future General Motors (NYSE: GM) of China. Auto historians will note that GM has no formal brands carrying its own name, but rather was formed through the consolidation of many smaller brands during a similar consolidation of the US auto industry many decades ago.
Financial Times Shops For China Buyer 《金融时报》寻求中国买家
Three months after British media company Pearson (London: PSON) reportedly started testing the waters for a possible sale of its flagship newspaper the Financial Times, one of my knowledgeable sources is telling me the company’s advisers have even come to China in their search for potential buyers. My source was quick to add that a Chinese buyer is highly unlikely to make a bid for Pearson for mostly political reasons, which I’ll explain shortly and many of which are detailed in my new book, “The Party Line” about how China’s media work. (book description)
Foreign Banks Cool to Solar, Beijing Steps In 光伏业融资遇冷 中国政府挑担子
A few of the latest headlines reflect a cooling appetite by foreign banks for funding solar energy related projects, creating a worrisome vacuum that Beijing may need to fill as it seeks to stop struggling sector from sinking further still. Two of the latest such headlines look like particular cause for worry, with Canadian Solar (Nasdaq: CSIQ) taking over financial responsibility for a solar power project from one of its construction partners for unspecified reasons that I suspect are related to waning interest by foreign banks in funding such projects. (company announcement) Another similar recent domestic media report says that a Chinese company that insures solar panel sales has just made its biggest-ever payment to JA Solar (Nasdaq: JASO) after the panel maker couldn’t collect payment from one of its overseas customers. (Chinese article)
