I don’t like to write too much about the same topics in a single week, but I can’t really ignore separate breaking developments at solar cell pioneer Suntech (NYSE: STP) and in the e-commerce space that could be critical for the future of each. In the former case, Suntech has just announced the resignation as CEO of Shi Zhengrong, the company’s founder who was once lauded as a visionary when Suntech became China’s first publicly listed solar panel maker in 2005. (company announcement) In the latter case, leading Chinese home appliance maker Haier has announced it is severing its relationship with Jingdong Mall, also known as 360Buy, as the temperature continues to rise in a rapidly escalating price war that has broken out this week with rivals Suning (Shenzhen:002024), Gome (HKEx: 493) and others. (English article)
Journalist China
NetEase at a Crossroads 网易走到十字路口
After piling through the mountain of corporate earnings that have just come out in the last 24 hours, I’ve decided to focus on online game veteran NetEase (Nasdaq: NTES), which appears to be at a critical juncture that could simply mark a pause in its recent rise or be the beginning of a longer-term decline. NetEase has been one of the most resilient companies throughout the current confidence crisis for US-listed China stocks, perhaps due to its status as one of China’s oldest publicly listed Internet firms and also due to solid performance from its core online game business.
War of Words, Wal-Mart Heat Up E-Commerce 中国电子商务价格战愈演愈烈
I wrote yesterday that China’s big e-commerce names are showing no signs of easing up their fierce battle for market share (previous post), and today we’re getting news bites from industry giant Jingdong Mall and global retail titan Wal-Mart (NYSE: WMT) that indicate the situation could get considerably worse before it starts to improve. Leading the news today are the latest comments from Jingdong Mall’s talkative CEO Liu Qiangdong, who has suddenly decided that profits aren’t important for his recently established electronics business, at least not for the next 3 years. (English article; Chinese article) Meantime, in separate news Wal-Mart has won approval from China’s regulator for its previously announced plan to boost its minority share in e-commerce firm Yihaodian to a majority stake, meaning we could soon see a major new offensive from Yihaodian in this already crowded and massively money-losing market. (Chinese article)
Resource Buying Binge Hits Speed Bump 中国海外资源收购面临减速
A plan by aluminum giant Chalco (HKEx: 2600; Shanghai: 601600) to buy a Mongolian-focused mining company is reportedly on the verge of collapse due to politics, a development that could have big implications for China’s recent buying spree for global resource assets. For anyone who hasn’t been paying close attention, Chinese energy and resource firms, from oil and coal giants to gold and iron ore miners, have embarked on a multibillion-dollar spending spree over the last few years to feed the country’s growing economy. The buying binge has gained momentum in the last year, as cash-rich Chinese companies, with strong support from Beijing, have purchased assets from cash-challenged international owners still struggling as a result of the global economic downturn. Now, at least one country that has become a favorite destination for Chinese buying, Mongolia, appears to finally be saying “no”.
Sinking Suntech Wins Symbolic Victory 沉沦中的尚德赢得象征性胜利
Troubled solar panel maker Suntech (NYSE: STP) is trying to calm worried investors with news of a victory in a fraud case that could leave it liable for more than $600 million. The only problem is, the company itself may not survive long enough to enjoy the victory, which has come in the courtroom in this fast-evolving case. Suntech shareholders, who bid down the company’s stock to all-time lows after word of the fraud first came out, were largely indifferent to news of the courtroom victory, bidding the stock up a tiny 2 percent to remain near its all-time low.
Focus Media Privatizes, Sale in Sight? 分众私有化，出售在即？
The headlines have been buzzing this week with news of a management-led privatization offer for leading outdoor advertising firm Focus Media (Nasdaq: FMCN), marking the latest in a recent string of developments that I suspect will end with a sale of this colorful but faded company. The buyout is the latest in a series of similar plans by US-listed Chinese firms in recent months, following a series of accounting scandals that have caused shares of the entire sector to tumble.
Beijing Funds Solar Consolidation 中国政府或继续向光伏行业提供资金支持
A new announcement from solar panel maker Canadian Solar (Nasdaq: CSIQ) indicates that Beijing may be preparing to help fund a much-needed consolidation in the oversupplied sector. The news should be welcome by money-losing Chinese solar companies in general, as it indicates that Beijing will continue to provide them with funds to continue their operations as private sector options evaporate. But the move will inevitably raise new complaints from foreign rivals, who will say this funding is exactly the kind of unfair state support that has led to dumping investigations in both the US and European Union.
E-Commerce: Big Spenders Keep Spending 大型电子商务企业继续挥金如土
News from e-commerce giant Suning (Shenzhen: 002024) and web portal Phoenix New Media (NYSE: FENG) indicate a long-awaited consolidation in e-commerce has begun at the bottom of the Internet food chain, where many smaller players are quietly closing up shop as big names continue their aggressive fight for market share.
Dianping’s New Funding: M&A in Sight? 大众点评融资意在收购
It’s Monday morning and the news flow from the weekend is rather slow due to the summer holidays, so I’m going to be a bit whimsical and comment on the potential for new M&A following a new $60 million funding round for Dianping, an interesting and profitable company which started as a restaurant ratings company but which has also expanded into the problem-plagued group buying space. I’ll start by saying I have absolutely no reason to think Dianping has plans for any major M&A, but then will quickly add that its recent receipt of the $60 million in new venture funding looks suspiciously like it might be intended for such a purchase.
US Partners Flee Troubled ZTE 中兴遇美国顾问卸任
A key US consultant has severed his ties with troubled telecoms equipment and cellphone maker ZTE (HKEx: 763; Shenzhen: 000063), in a worrisome development that could presage more similar defections as people seek to distance themselves from the controversial company. ZTE and crosstown rival Huawei were already facing a difficult time in the US and Europe for several trade- and security-related reasons, but ZTE’s outlook grew dimmer still last month when word got out that the company was being investigated for allegedly selling banned US computer equipment to Iran to help that country set up a sophisticated telecoms surveillance system.
VanceInfo, HiSoft Set Stage for M&A Wave 文思信息和海辉软件奠定并购潮基础
A new mega-merger between China’s two largest software outsourcing firms could lay the foundation for a new global powerhouse in the lucrative IT services sector, marking the second major corporate marriage in China this year between two industry leaders. More of these kinds of marriages are sorely needed to clean up fragmented high-tech sectors marred by rampant competition, but to make that happen many of China’s most vibrant entrepreneurial companies need to lose their mom-and-pop shop mentality and learn to act more like the major corporations they aspire to become.
