Their relatively low costs and access to the fast-growing China market often make major Chinese tech firms look like attractive business partners to their foreign peers. But big hopes for new partnerships often end in disappointment, resulting in the kinds of divorce we are now witnessing in the new slow-motion break-ups between PC giant Lenovo (HKEx: 992) and Japan’s NEC (Tokyo: 6701); and between global contract chip-making leader TSMC (Taipei: 2330; NYSE: TSM) and Chinese counterpart SMIC (HKEx: 981; NYSE: SMI). In both cases, the foreign companies have just started selling down previous strategic stakes in their Chinese partners, in what’s likely to end in an outright divorce for each pairing.
Journalist China
China Start-Up Patron Attacks Short Sellers 李开复炮轰做空机构Citron
An entertaining war of words has broken out this week between one of the most outspoken short sellers of US-listed Chinese stocks over the last year and an China-based Internet veteran whose company is helping to fund many similar companies to the ones under attack. Followers of China’s Internet will know that the short seller I’m referring to is a California-based company called Citron, whose most recent attacks have targeted Internet security software maker Qihoo 360 (NYSE: QIHU) by questioning the company’s user data. The Internet veteran, meantime, is Lee Kai-Fu, a former top executive at Microsoft (Nasdaq: MSFT) and Google (Nasdaq: GOOG) who left Google in 2009 to start his own company called Innovation Works to fund Chinese high-tech start-ups. (English article; Chinese article)
Suning: China’s New Walmart? 苏宁：中国的下一个沃尔玛？
Chinese media are buzzing this morning with reports that retailing giant Suning (Shenzhen: 002024), a name synonymous with electronics, is preparing a major push into general merchandising, laying the groundwork to create a retailing giant that could someday challenge the likes of Walmart (NYSE: WMT) and Carrefour (Paris: CARR). According to the reports, Suning will start its newest retail drive by converting four flagship stores in Beijing, Shanghai, Guangzhou and Nanjing into the new general merchandising format, which will be rebranded as Suning Expo. (English article; Chinese article)
Chery, Jaguar in PR Push for JV Approval 奇瑞、捷豹开展公关，争取合资企业获批
Six months after announcing their plans for a joint venture, fast-fading domestic car maker Chery and its luxury partner Jaguar Land Rover are playing a PR game as they try to get regulators to approve their tie-up. Both companies desperately want to see this venture move forward for their own reasons. Chery needs the venture to breathe new life into its business as it faces a growing number of setbacks both at home and abroad. Jaguar also desperately wants to boost its presence in the world’s fastest growing luxury car market, where the big German names are already well established and US giants Ford (NYSE: F) and GM (NYSE: GM) are also planning new initiatives.
China Mobile Seeks Partner in TD Misery 中国移动谋求让电信或联通分担TD之痛
More than 3 years after receiving the booby prize when China awarded its 3G mobile licenses, China Mobile (HKEx: 941; NYSE: CHL) is still sulking about being forced to build a network based on a problem-plagued homegrown Chinese technology and now wants one of its rivals to share the misery. That’s my broader interpretation of the latest reports that say China’s dominant mobile carrier is lobbying hard for the industry regulator to force one of its 2 rivals to build a future 4G network based on the problematic technology, known as TD. (English article; Chinese article)
Vancl Slashes Delivery Arm 凡客诚品削减物流业务
The latest sign of distress in the battered e-commerce sector is coming from online clothing retailer Vancl, with media reporting the company has slashed operations at its package delivery arm in what looks like a desperate cost-saving move. Frankly speaking, I wholeheartedly support this kind of move, if it’s really true, as I personally believe that e-commerce companies shouldn’t be delivering parcels to begin with, and instead should leave that part of the business to professional specialists like UPS (NYSE: UPS) and China’s own China Postal Express, which itself is preparing for a domestic IPO to help fund its ongoing expansion. (previous post)
New Oriental: Investors Get Short Seller Fatigue 新东方股价回升 投资者对卖空机构失去耐心
The accounting scandal surrounding education services firm New Oriental (NYSE: EDU) continues, with a US law firm announcing a class action lawsuit against the company after its shares plummeted when it disclosed it was being investigated by the US securities regulator. (lawsuit announcement) But in what may be a positive development, it appears that investors have largely ignored many of the claims made by an opportunistic short seller immediately after New Oriental’s original disclosure. That means that after more than a year of watching a non-stop stream of short seller attacks that have hammered overseas-listed Chinese stocks, investors may finally be growing skeptical of such attacks and their accusations of accounting misdeeds.
China Ends UnionPay Monopoly 中国结束银联垄断
Beijing made the right decision last week in deciding not to oppose a World Trade Organization ruling that it unfairly supported its domestic UnionPay financial transactions network at the expense of foreign rivals like MasterCard (NYSE: MA) and Visa (NYSE: V). Now it needs to show it is prepared to wean its other big industries from unfair state support, starting with the unrelated solar energy sector that has recently become a major source of friction between China and its major trading partners.
Baidu Takes Qihoo Battle to Customers 百度要求代理商切断与奇虎360关系
The blossoming war between Internet search leader Baidu (Nasdaq: BIDU) and challenger Qihoo 360 (NYSE: QIHU) is becoming more colorful each day, with Baidu resorting to some interesting new tactics to defend its market dominance. In the latest wrinkle of this fast-developing story, Baidu appears to be asking many of its corporate clients to cut their ties to Qihoo, in what is looking like an increasingly dirty war where either side will do anything to attack the other.
Smartphones Surge As Apple Support Fades 中国国产智能手机崛起 运营商或减少iPhone补贴
There are a couple of interesting reports out today from the smartphone space, highlighting the rapid rise of these feature-packed phones with the growing availability of affordable, high-quality models supplied by newcomers like ZTE (HKEx: 763; Shenzhen: 000063), Huawei and Xiaomi. Those increasingly popular models, many selling for 2,000 yuan or less, could quickly pose a major challenge to high-end specialists like Samsung (Seoul: 005930) and Apple (Nasdaq: AAPL), amid early signs that Chinese mobile carriers are looking to cut back their generous subsidies for these more expensive models.
Citic Securities Results: Set for Rebound? 中信证券业绩：预计反弹？
Securities brokers certainly aren’t having much fun these days, watching their profits shrivel as China’s stock markets hover at 3-year lows. But the latest results from leading brokerage CITIC Securities (HKEx: 6030; Shanghai: 600030) hint that a rebound could be coming towards the end of the year, as bargain hunters — led by a growing number of foreign investors — start to pour into the market. It’s obviously too early to say whether this potential rally will be sustainable since it hasn’t even begun yet. But the chances of a rally lasting at least a half year or longer seem realistic as China opens its doors wider to foreign investment in its stock markets and domestic firms make an effort to become more transparent and clean up some of their questionable accounting practices.
