In writing this blog, I generally try to keep my own views muted and focus instead on the latest news and what it means for the companies involved. But I’m making one of my occasional exceptions to that rule today to say that the US really should go ahead and approve the sale of bankrupt battery maker A123 Systems to a Chinese company, since this deal seems to have few if any national security implications and blocking it would send a bad signal about Washington’s commitment to fair trade.
Journalist China
Solar Rallies on New Beijing Subsidies 中国政府新补贴使太阳能股反弹
China’s solar panel industry is starting to look more and more like a beggar kneeling on the doorstep of Beijing, with the latest word that the central government is preparing to hand out an additional $1.1 billion in subsidies to the struggling sector. That news comes just after a government official was quoted saying Beijing is considering a plan to double its already ambitious target for a massive building spree of new solar electricity plants, again in a bid to support the struggling sector.
ZTE, Huawei Scale Back Invesments 中兴、华为收缩战线
A couple of months after suffering a major setback in the US, hobbled telecoms equipment giants Huawei and ZTE (HKEx: 763; Shenzhen: 000063) are trying hard to convince the world that they are still committed to expansion in the west with 2 new investment announcements. But neither announcement looks very exciting in terms of size, and both look like feeble efforts to try to prove that neither company is ready to admit a slowdown in its global expansion. Both cases involve investment in new product development, with ZTE announcing a plan to invest in the US and Huawei focusing on Europe.
Lenovo and Microsoft: A New Love Affair? 微软可能结盟联想？
Just a day after I ridiculed a new mobile phone alliance between Microsoft (Nasdaq: MSFT) and China Unicom (HKEx: 762) (previous post), we’re seeing signs of another new China tie-up between the world’s largest software maker and PC giant Lenovo (HKEx: 992) that looks much more intriguing. Whereas the Unicom alliance looked set to fail for a number of reasons, this new potential love affair between Microsoft and Lenovo could stand a better chance of success because it contains strong incentives for both sides. What’s more, each company is the global leader in its main product area, but both are still minor players in the mobile computing category that is likely to become the wave of the future for computer makers.
China Mobile on Services Steroids 中国移动重拳出击
After praising China Mobile (HKEx: 941; NYSE: CHL) just last week for finally returning its focus to the present under a new top management team installed earlier this year, I feel compelled to update my previous view by expressing a slight concern at a sudden flurry of new initiatives from the company. In the last 24 hours alone, I’ve read reports of at least 3 new moves by China’s largest mobile carrier all aimed at tapping the growing market for high-speed telecoms services.
Microsoft, Unicom Alliance Set For Failure 微软、中国联通成立产业联盟注定失败
Microsoft (Nasdaq: MSFT) continued its long-standing China strategy of launching poorly conceived campaigns last week with its announcement of a new tie-up with carrier China Unicom (HKEx: 762; NYSE: CHU) to promote its struggling Windows mobile operating system (OS) in the world’s largest mobile market. While the software giant clearly needs to take aggressive steps to challenge Apple and Google in this critical market, this kind of new tie-up looks doomed to failure due to its poor choice of partners and lack of exclusivity.
Focus Media’s Privatization Hits Hiccup 分众传媒私有化遇阻
China’s rapidly weakening advertising market may be undermining Focus Media’s (Nasdaq: FMCN) ongoing privatization bid, with word that one of the companies underwriting the buyout may have backed out of the deal. The news, if true, underscores the fact that this kind of privatization is never easy, and that China’s wobbly economy may make future similar buyouts even more difficult. But at the end of the day, I do suspect this privatization bid will probably succeed since many offshore investors are still quite bullish on China. What’s more, Focus Media, despite a recent restructuring, is in the enviable position of being one of China’s leading outdoor advertising services firms.
Canada OKs CNOOC Buy, AIG Tests US 中海油竞购尼克森获批
Fresh on the heels of a victory in its bid to buy Canadian energy exploration firm Nexen (Toronto: NXY), China is preparing to test its luck once again with another sensitive attempt to buy one of the largest US aircraft leasing companies from insurance giant AIG (NYSE: AIG). I previously predicted the Canadian government would ultimately approve the purchase of Nexen from state-run Chinese oil major CNOOC (HKEx: 883; NYSE: CEO), which the government of Prime Minister Stephen Harper finally did just before the weekend after months of foot dragging. But a separate group of state-backed buyers that includes China’s biggest bank ICBC (HKEx: 1398; Shanghai: 601398) should look closely at the fine print in final Nexen verdict, which could presage a bumpy flight path ahead in their surprise $5.5 billion bid for ILFC, the aircraft leasing arm of AIG.
Suntech Woes Drag On 尚德困境持续
The woes at fast-fading former solar superstar Suntech (NYSE: STP) keep on coming, with the company releasing its latest earnings report that shows its woes are likely to continue until its increasingly inevitable takeover by the state. That takeover, if and when it comes, is likely to be as filled with fireworks as Suntech’s actual decline, with all signs indicating that founder Shi Zhengrong won’t easily yield control of his company to the government-backed funding sources he needs to provide it with desperately needed new capital.
China Wine Plays: Oversaturation? 中国红酒电商：“跟风潮”来袭？
Two news bits from the wine sector are making headlines, shining a spotlight on this hot industry whose fast growth is being fueled by millions of new middle class Chinese who are willing to pay big money for premium products like wine and coffee. But these latest 2 deals also reflect intensifying competition in a sector that could easily become the next bloody battlefield for over-eager Chinese start-ups, resulting in big losses and ultimately an ugly consolidation.
PICC IPO, Ping An Sale Bolster Insurance 中国人保、平安售股提振保险业
If I were a short-term investor, I would say that now looks like a good time to buy Chinese insurance shares following positive developments from newly listed PICC Group (HKEx: 2328) and Ping An (HKEx: 2318; Shanghai: 601318), 2 of China’s leading players. But from a longer-term perspective, this brief and relatively rare uptick is likely to be short-lived for an industry that faces a number of major problems despite the strong growth potential of China’s insurance market.
