China’s battered solar sector is finally getting a rare piece of good news from next door, with word that new incentives from Japan could provide a much-needed boost for this field of money-losing companies. (English article) The news that Japan will provide some of the strongest incentives to date for makers of solar cells is having a decidedly mixed effect on solar shares, with only Suntech (NYSE: STP) receiving a big boost in Monday trade, perhaps indicating that the biggest names are most likely to benefit from this new development.
Journalist China
AsiaInfo Gets More Private Equity Interest 多家私募基金有意收购亚信联创
After several months with no news following an unsolicited buyout offer for AsiaInfo-Linkage (Nasdaq: ASIA), the telecoms software maker has burst back into the headlines with reports that it has attracted several more new potential buyers as it seeks to pump up its valuation amid a broader weak market for US-listed China stocks. This new signs of interest, which includes some major global private equity firms, could be a good sign for the broader sector of battered New York-traded Chinese stocks, as it means there is clearly some strong institutional investor interest in better-run companies despite weak broader market sentiment, which means we could see some other interesting buy-out offers in the months ahead.
Burger King Build-Up: Strange Partner Choice 汉堡王在华组建合资公司：奇怪的合作方
China’s lucrative but increasingly crowded fast food market is about to heat up a notch, following a new announcement by Burger King that it will significantly ramp up its China business under a new joint venture. (company announcement) The size and rapidity of this build-up certainly caught my attention at first; but a closer look at the announcement reveals a strange choice of partners for this new initiative that raises doubts for me about whether this venture will really succeed, especially with the fierce competition in the market from much better run operations by sector leaders KFC (NYSE: YUM), McDonalds (NYSE: MCD) and a growing number of mid-tier players. (previous post)
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More Turmoil at Tencent Soso 腾讯搜搜内部更加混乱
A major restructuring at Tencent (HKEx: 700) is moving forward with the latest rumors that the top executive at the Internet giant’s Soso search business has left, in what looks like the latest sign of turmoil at this particular unit. Tencent has previously declined to comment on reports that anything is amiss at its search business, following reports last month that it had considered closing the unit but later decided simply to reduce Soso’s workforce by about half. (previous post)
China’s TravelSky Joins Global Travel 信天游与美国同业Sabre结盟Rush
I don’t usually like to commend myself, but I have to say that it appears I was correct with my recent prediction that something was happening in the normally low-profile travel sector, as we’ve seen a nonstop stream of new initiatives from the sector since then, nearly all involving new international tie-ups. (previous post) Barely a day seems to go by now without the announcement of a new tie-up between a Chinese company with a foreign counterpart in the travel space, including the latest announcement from US air and hotel ticketing giant Sabre Holdings that it is forming a new alliance with China’s TravelSky. (company announcement) The tie-up looks quite interesting, as it will instantly make the 30,000 Chinese hotels on TravelSky’s network available for booking by users of Sabre’s system, while making Sabre’s 100,000 properties available to TravelSky users. This kind of a tie-up is clearly designed to cater to both the growing number of Chinese traveling to the West, as well as the big numbers of western tourists who travel to China. The alliance also appears more aimed at bookings made by travel agencies, rather than do-it-yourself travel booking sites that cater mostly to individual consumers. As such, it won’t compete very directly with more consumer-oriented online travel booking sites like Ctrip (Nasdaq: CTRP), eLong (Nasdaq: LONG) and Qunar, which tend to focus on individual travelers in the domestic market. But if TravelSky does eventually get into the consumer market, it could instantly have a very attractive product with this new Sabre tie-up, allowing it to quickly gain share on Ctrip and the other major domestic players. The move also seems to be part of a broader one that has Chinese airlines and hotel booking firms trying to become more international. I previously wrote that this new globalization drive, which seems to have gained recent momentum, is probably being driven by Beijing, which wants all of its sectors to become more globally competitive rather than simply relying on their protected home market. Regardless of the reason for this sudden surge in global tie-ups, the recent momentum means we will probably see many more similar announcements in the months ahead, shaking up the relatively small, protected field of players, most of whom have largely relied up to now on their home China market. The looming shake-up and industry shift was apparent in another form overnight on Wall Street, where Ctrip itself announced a $300 million share repurchase program to bolster its sagging stock. (company announcement) Ctrip shares rallied about 4 percent after the announcement, but they are still at just about a third of their levels from just a year ago, amid a broader depressed market for US-listed Chinese shares following a series of accounting scandals last year. I’ve always been quite positive on Ctrip due to its industry-leading position and strong ability to focus on its core travel services business. But the company may need to follow the recent trend and look for more expansion opportunities outside China — including possible tie-ups with foreign partners — or risk losing both share and relevance to more aggressive rivals.
Bottom line: A new tie-up between a top China hotel booking service and a US counterpart is part of a growing globalization trend for Chinese providers of travel services.
Related postings 相关文章:
◙ Airlines on Global Flight, New Tie-Ups Ahead? 航空公司环球飞行，未来有新合作？
◙ China Eastern’s Budget Play: Turbulence Ahead 东方航空成立廉价航空公司：将面临动荡
Cars: Nissan Drives, Saab Gets Reprieve 汽车：尼桑设新厂，萨博暂时获救
I’ll wrap up this week with a couple of items from the car world, one of which has Japan’s Nissan (Tokyo: 7201) adding fuel to China’s looming auto glut while the other has yet another Chinese buyer helping forestall the long and tortured death of Sweden’s bankrupt Saab. My personal favorite among these 2 stories is Saab, as it’s quite a colorful saga; but Nissan is clearly the bigger of the items, so I’ll start with a look at the news that the Japanese automaker is planning to build a $785 million new plant in the northeastern port city of Dalian. (English article) The new plant is part of a broader plan to invest 30 billion yuan in China by 2015 previously announced by Nissan, China’s second biggest car brand and the most aggressive of Japan’s 3 major automakers in China. The new plant, being built together with Nissan’s China partner Dongfeng Motor (HKEx: 489), will initially have capacity to build 25,000 cars per year when it opens in 2015, but will expand rapidly to a a hefty 240,000 vehicles by 2017, according to a foreign media report, citing an unnamed source. This kind of rapid expansion, despite a recent cool-down in China’s auto market, is being seen throughout China’s auto industry, with most of the big foreign automakers including Ford (NYSE: F), BMW (Frankfurt: BMWG) and General Motors (NYSE: GM), all announcing major new initiatives over the last couple of years. I have no doubt that market growth will eventually accelerate again, and recent signs from Beijing indicate that could happen soon as it considers new incentives to boost sales. But the addition of new capacity for another 1 million or more vehicles looks a bit big to me for a market unlikely to sell more than 10 million vehicles this year; that means we could see lots of idle capacity in the next few years, forcing some weaker players, especially the domestic brands, to leave the market. Meantime, Saab, which is now in bankruptcy and hasn’t produced any cars since last year, is being sold to a Sino-Japanese partnership that plans to turn the brand into an electric car specialist. (English article) I’ve never heard of either the Chinese company, a Hong Kong-based firm called National Modern Energy Holdings, or the Japanese partner, Sun Investment. But I expect this pair are looking to buy the Saab name and perhaps some of its technology if the deal actually gets completed, and then they would probably shut down Saab’s money-losing Swedish operations completely. A more likely scenario would see this latest agreement collapse, just like an earlier rescue package that saw 2 other Chinese firms try and fail to buy the company. (previous post) Regardless of the final outcome, it does seem like the Saab brand may be destined to live on in China — an ironic development since the name is virtually unknown in the market.
Bottom line: Nissan’s latest plan for a massive new plant in northeast China marks the latest sign of a supply glut building for China’s auto sector.
Related postings 相关文章:
◙ Dwindling Demand Fuels Car Inventory Build-Up 中国汽车库存增加或引发价格战
Silcon Valley Bank Forges Into China 美国矽谷银行与浦发成立合资银行
I’ve previously written about a low-key second wave of financial service companies quietly coming into China after a pull-back of earlier arriving big names like Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C), with US tech-focused lender Silicon Valley Bank the latest name to join this trend. What’s equally interesting in this latest news is the rapid speed with which the government has approved the joint venture between Silicon Valley Bank and Shanghai-based Pudong Development Bank (Shanghai: 600000), indicating Beijing may be keen to bring in more foreign expertise from these smaller names as it looks to build up a viable private sector banking industry that operates outside the traditional realm of big state-owned lenders. Let’s look at the latest reports, which have an executive from California-based Silicon Valley Bank saying he was surprised at the rapid speed with which his bank’s joint venture was approved following its announcement last October, and that new joint venture bank will aims to open by September. (English article) Silicon Valley Bank’s pairing comes just months after Citibank sold a 3 percent stake it had held in Pudong Development Bank for several years, mirroring a recent trend that has seen many major western banks sell off investments they made nearly a decade ago in Chinese lenders. (previous post) While the western lenders made many of those sales to raise cash to bolster their shaky balance sheets, observers also noted that many were disappointed that their investments never led to strategic partnerships to help them tap the fast-growing China market for financial services. This new tie-up between Silicon Valley Bank and Pudong Development Bank looks like a clearly focused initiative to help service the growing semiconductor chip sector, anchored by leading chip maker SMIC (HKEx: 981; NYSE: SMI), and a growing field of LCD and LED makers emerging in the Yangtze River delta area. Whereas many of the earlier tie-ups between the big western banks and their Chinese counterparts contained lofty dreams that were never really realized, this more recent round of new initiatives by smaller players looks much more targeted and modest in its ambitions, seeing foreign companies pair with smaller local players in highly-focused moves with specific aims. As such, I would give them a much better chance for success than the previous tie-ups. Other recent lower-profile tie-ups in the financial services sector have included moves by money transferring specialist MoneyGram (NYSE: MGI), which recently expanded its tie-up with Bank of China (HKEx: 3988; Shanghai: 601988); and American Express, which has invested in an electronic payments firm called Lianlain. (previous post) Beijing is probably quietly encouraging these kinds of tie-ups to more rapidly propel its financial services sector to world-class status, especially as it faces its own internal banking crisis that is largely the result of older practices still seen at many banks that behave more like policy-based institutions than true market-oriented lenders. Accordingly, look for a growing number of these kinds of new tie-ups involving mid-tier western players in the months ahead.
Bottom line: The rapid approval of Silicon Valley’s new joint venture bank indicates Beijing wants to bring in more niche-oriented foreign firms to bolster its financial services sector.
Related postings 相关文章:
◙ AmEx Chases E-Payments With Lianlian Link 美国运通联手中国连连集团
◙ MoneyGram In Latest Financial Services Move 速汇金携手中行 提供汇款服务
◙ Goldman Flees ICBC as Bank Crisis Looms 中国银行业危机隐现 高盛迅速转让工行股票
Telecoms: More of the Same for Huawei, ZTE 美国对华为和中兴展开新的调查
There are a few interesting telecoms tidbits out today, led by what seems to be an increasingly redundant refrain of the latest woes being faced by quickly fading telecoms equipment superstars Huawei and ZTE (HKEx: 763; Shenzhen: 000063), who are now the subject of a new security probe by US politicians. ZTE is also in the headlines for its own announcement of an interesting new tie-up in the teleconferencing space, which is part of its ongoing drive to diversify into less controversial products beyond its core networking equipment business. And last but not least, Apple (Nasdaq: AAPL) is flexing its muscles in China by getting local Internet search leader Baidu (Nasdaq: BIDU) to agree to an unusual revenue-sharing agreement in exchange for inclusion of Baidu’s search engine in a new China-friendly iPhone. Let’s start with the Huawei and ZTE news, which has the US House of Representatives questioning the pair about how they do business in a bid to determine what, if any, security risk their network equipment might pose to unsuspecting buyers. (English article) I almost didn’t even notice this report as it looks so similar to a steady stream of similar ones that have come out in recent weeks, all about Western governments probing Huawei and ZTE for not only for security risks, but also for unfair subsidies from Beijing. Adding to the woes, a couple of employees from both companies were found guilty earlier this week of bribery in an Algerian court, casting further doubt on their business practices. (previous post) In response to all the scrutiny, both companies have been trying to diversify from their traditional networking equipment into smartphones and other less controversial products, which leads to my second news bit, which has ZTE pairing with US company Vidtel to offer videoconferencing services in North America. (company announcement) The tie-up will pair equipment from ZTE with services offered by Vidtel, in what looks like an interesting effort to provide a lower-cost alternative to products and services now offered by companies like networking equipment giant Cisco (Nasdaq: CSCO) and videoconferencing equipment makers Tandberg and Polycom (Nasdaq: PLCM). This move looks smart for ZTE, which has been particularly aggressive in developing its smartphone business in the last 2 years, though at a big cost to its profit margins. If this new tie-up can provide a reliable product, then this tie-up could provide some serious competition for existing players not only in North America, but perhaps in other western markets as well. Lastly there’s Apple, whose tie-up with Baidu was initially reported last week and is part of a broader drive that will see the US tech giant load more China-friendly features into a new iPhone for the China market. (previous post) What’s new in this latest news bit is the revenue sharing agreement. Hardware makers rarely have the clout to demand such agreements with service providers, but Apple’s iPhones are so popular that it can often demand such concessions in exchange for giving access to its phones. Look for more such revenue sharing agreements by Chinese firms looking for space on the new China-friendly iPhone, helping Apple but making such tie-ups less profitable for its China service partners.
Bottom line: A new US security probe against Huawei and ZTE shows the pair’s telecoms equipment may never gain broad acceptance in the west, and they should focus on other products instead.
Related postings 相关文章:
◙ Huawei, ZTE Suffer New Image Setback 华为和中兴改善形象的努力受挫
Alibaba Feels the E-Commerce Pinch 阿里巴巴感受电子商务竞争
Alibaba appears to be feeling the pinch that has hit most of its major rivals over the last year as they engage in a nonstop game of cutthroat competition, with news that China’s e-commerce leader is doing the once unthinkable: offering discounts. At the same time, media are reporting the company has also become the latest entrant to the online book-selling business, again reflecting the overheated competition that has gripped the market as everyone battles with everyone else in just about every major product category. To understand the significance of this latest news, we need to look first at Alibaba’s e-commerce model, which is quite different from that of its major rivals like Jingdong Mall, which also goes by the name of 360Buy, and Dangdang (NYSE: DANG). Whereas nearly all of its major rivals directly sell their merchandise to consumers, Alibaba uses a model that see it acting as middleman for other online retailers by letting them set up shops on its online TMall platform, formerly known as Taobao Mall. That means that Alibaba, as a middleman platform operator, has largely avoided the recent price wars infecting most of its rivals, whose margins have plummeted as they offered steep discounts to maintain their market position. Now it appears that Alibaba is also feeling some of this price-war pain, as the company reportedly prepares to help the merchants on its TMall platform by providing $47 million in rebates for sales of their various electronics, from cellphones to televisions and air conditioners. (English article) That figure doesn’t look all that big for a company of Alibaba’s size, but it probably reflects the fact that many of the merchants who sell things on TMall are feeling the effects of the price wars that have driven nearly all major e-commerce companies deeply into the loss column, including Dangdang, the only publicly traded company in the space. (previous post) Alibaba likes to boast that it is one of the few e-commerce companies that has remained profitable throughout the price wars, but clearly it’s starting to feel some pressure as many of the merchants who sell items on TMall are being forced to do so at a loss and perhaps even closing up shop. I wouldn’t expect TMall to start losing money anytime soon, though it will clearly feel more pain as the overheated e-commerce sector undergoes a much-needed consolidation that could result in the closure or merger of one or more major players. (previous post) Meantime, Alibaba is copying a tendency by most of its rivals to encroach on each others’ product areas with the latest news that it is boosting its online book-selling business, according to media reports. (English article) That move would following another high-profile entry into the online book business by Jingdong Mall, which made headlines earlier this year when it entered a business dominated by Dangdang and Amazon’s (Nasdaq: AMZN) China site. Despite its late entry to the space, Alibaba will probably gain at least some market share in online books simply because of its size. But from a broader perspective, this move just underscores that the rampant competition in China’s e-commerce space is continuing, with consolidation sorely needed to set the sector on a more solid footing for long-term profitability.
Bottom line: Alibaba’s offer of financial support to its online merchants is the latest sign of rampant competition that has pushed most Chinese e-commerce companies into the red.
Related postings 相关文章:
◙ Alibaba: Let’s Get the Roadshow Rolling 阿里巴巴：我们开始路演吧
Shanda Cloudary IPO Glides Ahead 盛大文学推进IPO计划
The literature unit of online game giant Shanda Interactive seems determined to move forward with its plan for a New York IPO despite a weak investor climate, landing $15 million in new funds from venture investor Orbis as it forges ahead. This kind of late-stage investment is clearly designed to generate some buzz for an offering that looks slightly interesting to me, but may still have limited appeal for the average Wall Street investor worried about recent volatility in US-listed China stocks after a series of accounting scandals last year. This latest investment also seems aimed at setting a valuation for the unit, Shanda Cloudary, again as Shanda Interactive looks to raise as much cash as possible to help pay down its big debt from its own recent privatization. (previous post) Let’s have a look at the actual news, which has Orbis taking a 1.875 percent stake in Cloudary for its $15 million investment, valuing the company at a relatively modest $800 million. (Chinese article) That’s far less than Shanda Interactive was worth when it delisted earlier this year. It’s also about two-thirds of the value of Shanda’s only other listed unit, Shanda Games (Nasdaq: GAME), reflecting the fact that this literature unit may have big potential as a supplier of online literature even though it generates significantly less revenue than Shanda’s core online gaming business. Shanda filed to list Cloudary last year but had to withdraw the plan when market sentiment plummeted. It refiled the plan earlier this year (previous post), reflecting its urgent need for new cash even as broader market sentiment remained weak. The only major Chinese company to make a New York listing so far this year, discount online retailer Vipshop (NYSE: VIPS), was a major failure, and lingering negative sentiment forced one of the year’s only other China IPO candidates, auto rental firm China Auto, to withdraw its offering just before the final pricing last month. (previous post) From my perspective, I’ve always thought the Cloudary IPO looked like an interesting proposition, as online literature is clearly a big growth market as rapidly growing numbers of Chinese mobile Internet users look for interesting things to read on their tablet PCs and smartphones. As an early entrant to this market, Cloudary looked well positioned to become a major player in the space. What’s more, the company surprised the market last month when it announced its first-ever modest profit of about 3 million yuan for the first quarter of this year. Profitability has been rare among the stream of Chinese Internet companies to make IPOs over the last 2 years, so that fact could help ease investor concerns, even though Cloudary’s sudden move into the profit column, while not surprising based on recent trends, also may have been assisted by some accounting maneuvers. Regardless of that, I still do think the company’s potential, its relatively strong income statement and relatively modest valuation could mean it may actually succeed in becoming only the second Chinese Internet company this year to make a New York IPO, providing an interesting investment opportunity for anyone who likes this emerging growth area.
Bottom line: A new round of fund-raising indicates Shanda is moving ahead with the IPO for its Cloudary online literature unit, which could receive moderate investor interest.
Related postings 相关文章:
◙ Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹
China iPhones: Apple Ties Up With Youku 中国型iPhone：苹果与优酷合作
Smartphone powerhouse Apple (Nasdaq: AAPL) is finally waking up to the importance of the China market, forging a new tie-up with leading online video site Youku (NYSE: YOUK) in bid to incorporate more China-friendly features into its wildly popular iPhones. This latest deal follows the even bigger unconfirmed news last week that Apple was in talks to integrate software from leading Chinese search engine Baidu (Nasdaq: BIDU) into its next generation iPhone, in another major nod to the importance of a market that now accounts for a fifth of Apple’s global sales, second behind only the US. (previous post) What we see here is a growing trend for Apple to integrate leading Chinese Internet software into its next-generation iPhones, which should result in some smart new models when Apple rolls out its latest smartphone later this year. Executives speaking at a developer conference in the US have already touted the fact that the next generation iPhone will have better Chinese input and Mandarin voice recognition capabilities, and I wouldn’t be surprised if we see some more news leaks and announcements in the days ahead for tie-ups with other Chinese Internet leaders like e-commerce giants Alibaba or Jingdong Mall, and microblogging sensation Sina (Nasdaq: SINA) Weibo. Let’s look at this latest announcement, which has Youku saying its video site software will be integrated into the newest versions of Apple’s desktop and mobile operating systems, set for release later this year. (company announcement) The integration should provide a nice boost for Youku, which will solidify its place as the country’s leading online video site with its pending merger with the second largest player, Tudou (Nasdaq: TUDO). Youku-Tudou will control a combined 40 percent of China’s online video market, and the addition of their platforms on the next-generation iPhones and Apple notebook computers could help them to further consolidate their dominance and perhaps even push them to their elusive goal of sustained profitability by year end. iPhones have become a must-have product for gadget lovers in big Chinese cities, with the smartphones now offered in plans by 2 of China’s top telcos, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU). This new drive to create a China-friendly iPhone also hints that Apple could be near one of its biggest objectives for the market, namely the signing of an iPhone deal with China Mobile (HKEx: 941; NYSE: CHL), China’s biggest wireless carrier with two-thirds of the market. Such a deal has been repeatedly delayed due to technological reasons, but this rapid and sudden push to develop a China-friendly iPhone leads me to believe we could also see a China Mobile iPhone deal by the time the newest China iPhone comes out later this year.
Bottom line: Apple’s new tie-up with top online video site Youku is the latest step in its plans to make a China friendly iPhone, which could soon also include a long-awaited deal with China Mobile.
Related postings 相关文章:
◙ Baidu, Sina in Smart Cellphone Tie-Ups 百度、新浪在智能手机领域的合作
◙ China Telecom iPhone Debut Looks Strong 中国电信iPhone初次发售，势头强劲
◙ Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？
