New signals coming from Beijing indicate the mobile Internet could be the first area of China’s telecoms sector to open to foreign investment, following years of an informal ban on outside investment in the sensitive space. The new signs, coming from the telecoms regulator, would be consistent with recent moves over the past year that have seen Beijing officially approve new China-based cloud computing ventures backed by US technology giants IBM (NYSE: IBM) and Microsoft (NYSE: MSFT), both of which have an Internet focus.
Journalist China
Bank of China Results: Crisis Averted? 中国银行业绩：危机得以避免？
Investors have been anxiously watching for signs of a looming bad-loan crisis for China’s top banks, but the latest results from Bank of China (HKEx: 3988; Shanghai: 601398) indicate that Beijing may be looking to substitute slowing growth for a full-blow crisis. This kind of “compromise” could only happen in China, since Beijing’s position as both regulator and majority stakeholder of the major banks means it has the power to decide just how badly those lenders will suffer following a government-ordered lending binge in 2009 and 2010 that left most major players with billions of dollars in questionable loans.
Qihoo Takes on Baidu in Search 奇虎360搜索低调上线 或挑战百度龙头地位
I’ve been watching with interest these last couple of weeks as Internet software security specialist Qihoo 360 (NYSE: QIHU) takes an uncharacteristically low-profile approach to its new online search service, in a clear and interesting challenge to industry titan Baidu (Nasdaq: BIDU). Qihoo’s controversial founder Zhou Hongwei has been mostly quiet since the service’s recent debut, even as media reported the company quietly severed its long-standing relationship with Google (Nasdaq: GOOG) in launching its own technology. Now it seems that Zhou, who seems to thrive on controversy, is challenging Baidu itself, though not in the way that most people might think.
Beyondsoft in New Outsourcing M&A 博彦科技加入IT外包并购行列
Less than 2 weeks after HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT) announced their landmark merger agreement, we’re getting word of another significant acquisition in the IT outsourcing space with a new purchase plan by China-listed Beyondsoft (Shenzhen: 002649). The rapid announcement of 2 such major deals could indicate that much-needed consolidation is finally coming to this lucrative but highly fragmented industry, which holds the potential to produce major companies that could someday rival big Indian outsourcing firms like Infosys (Mumbai: INFY).
Youku, Tudou: No Honeymoon Ahead 优酷与土豆“婚”後将无蜜月可度
The proposed marriage between Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO) looks like a done deal, with shareholders of both companies approving the union at separate meetings on the same day. (Youku announcement; Tudou announcement) So now the question becomes: what does the union mean for the longer term development of the new company, Youku Tudou, and also what does the formation of this new industry leader mean for other major players? In a nutshell, I honestly don’t think the future looks very bright for anyone, due to both individual company issues and broader industry issues as well.
Google’s Latest China Headache: Motorola 谷歌在华又遇头疼问题：摩托罗拉
The colorful love-hate relationship between Beijing and Google (Nasdaq: GOOG) never seems to stop evolving, flaring up this time with extensive coverage in state-run media over big China layoffs at Google’s recently acquired Motorola cellphone unit. In all fairness, Motorola’s decision to lay off 1,400 China employees is certainly big news by itself, with the China reductions accounting for more than a third of a recently announced round of 4,000 global job cuts by Motorola. But that said, I have little doubt that domestic media are being quietly encouraged to report extensively on the cuts by Beijing leaders who still feel stung by Google’s 2010 high-profile decision to withdraw from the China online search market.
Suggestion to Beijing: Let Suntech Fail 建议中国政府：让尚德倒闭
The past 2 weeks have seen solar energy pioneer Suntech (NYSE: STP) plunge into a downward spiral after revelations of questionable accounting, leaving the firm on the edge of financial collapse and its fate largely in the hands of Beijing. But rather than come to Suntech’s rescue, Beijing should let the company collapse to send a high-profile message that it won’t support companies that engage in such financial shenanigans.
Chery, Great Wall Hit Export Speed Bump 奇瑞和长城汽车遭遇出口障碍
Domestic car makers Chery and Great Wall Motor (HKEx: 2333) have hit a first major speed bump in their recent export drive, spotlighting the uphill road China’s big domestic brands will face as they look overseas to offset sputtering sales at home. Media are reporting that both companies have launched recalls for most of their cars sold in Australia after asbestos, a well-known carcinogen, was found in the engines and exhaust systems of some vehicles. (English article)
China Mobile: Set for 3G Blitz? 中国移动将发起3G攻势？
I’ll end out this peak week of second-quarter earnings season with a couple of telecoms items, starting with comments from dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL) that indicate it may finally be preparing for a much-needed offensive to breathe new life into its flagging 3G network. While China Mobile struggles under its own massive weight, separate news bites indicate the up-and-coming Xioami, a maker of low-cost, high performance smartphones, may be running into its first troubles after a strong debut for its first product last summer.
Dangdang Defiant as Losses Balloon 当当网亏损扩大 但拒不认输
It’s only appropriate that I end this week with one more story on the bloody price wars in China’s e-commerce space that have dominated headlines these past few days, this time taking a look at the just-released quarterly results of Dangdang (NYSE: DANG), the only major publicly traded online merchant. Dangdang saw its loss more than quadruple in the quarter, as its marketing costs soared and margins crumbled due to all the price wars. (results announcement) But in an ominous sign that the company is prepared for a long battle, it also trumpeted the fact that it has big cash reserves that should enable it to weather the price wars for many quarters to come. Meantime, local media are also reporting that Jingdong Mall, one of Dangdang’s biggest and most outspoken rivals, is taking longer to pay its suppliers, in what could be the latest sign of distress among e-commerce companies. (English article)
Toys R Us: New China Toy Story? 玩具反斗城：新的中国玩具总动员？
It’s Friday and almost the weekend, so I thought I’d take a break from all the e-commerce price wars and woes at solar panel maker Suntech (NYSE: STP) that have dominated headlines this week to take a look at something a little more fun, namely toys. Specifically, leading US toy store operator Toys R Us has announced its first big China expansion since buying out a majority stake from the partner in its Asia operations about a year ago. (company announcement) While I have fond memories of this retailer, I’m predicting this new push will ultimately fail due to a poor game plan and lack of brand recognition.
