Journalist China

Business news from China By Doug Young.
Doug Young, journalist, has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies.

He is based in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.
He contributes regularly to a wide range of publications in both China and the west, including Forbes, CNN, Seeking Alpha and Reuters, as well as Asia-based publications including the South China Morning Post, Global Times, Shanghai Daily and Shanghai Observer

TD-LTE Hits First Delay, More to Come? TD-LTE技术首次延期 未来还会更多？

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After reporting just yesterday that first-phase trials had wrapped up in 6 cities for TD-LTE, the 4G technology being developed by China Mobile (HKEx: 941; NYSE: CHL) (Chinese article), domestic media are reporting today that those same trials weren’t quite as clean as the first reports indicated, spotlighting the inevitable delays this technology will face in getting to market. China Mobile has been trialing TD-LTE on an expanded basis in 6 major cities since this spring, with domestic firms Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Datang, and global players Ericsson (Stockholm: ERICb), Nokia Siemens and Alcatel Lucent (Paris: ALU), all seeking to showcase their technology in hopes of winning big future contracts when a national commercial network is built. Now it seems that two of the smaller players in the trials, Samsung (Seoul: 005930) and a company I’ve never heard of called New Postcom, have fallen behind in the trials by failing to complete their work for technical reasons. (English article; Chinese article) Frankly speaking, this particular delay looks rather small and insignificant, as neither Samsung nor New Postcom are major players in this area and their failure to deliver technology on time would probably have minimal impact on the building of new networks. But what these delays do highlight is the fact that TD-LTE is a completely new technology, and it’s probably only a matter of time before we see more significant big problems coming from the likes of Huawei and Ericsson as their trials become more advanced. People who follow the industry will recall that TD-LTE’s 3G predecessor, TD-SCDMA, was looking fine in its early trial stages until numerous issues started emerging later on, including all kinds of technological problems that continue to haunt China Mobile’s commercial 3G network to this day. TD-LTE could see less problems, since it’s a follow-on to TD-SCDMA, which was completely new, and it’s also closer technologically to other more globally accepted 4G standards. Still, such technological glitches are almost inevitable, and this first round of problems, while they appear small, are a reminder that more significant problems are almost guaranteed to appear as the trials become more advanced. Such problems will almost inevitably push back the timeline for a commercial rollout TD-LTE, making a service launch unlikely before before 2013, and perhaps more likely in 2014.

Bottom line: Newly disclosed delays in China Mobile’s 4G trials are a sign of things to come, with more significant problems almost guaranteed to push any commercial launch to 2013 at earliest.

Related postings 相关文章:

◙ China Mobile Nears iPhone Deal, Continues 4G Press 中移动iPhone协议近尾声 加紧4G攻势

◙ China Mobile: Where’s the 3G iPhone? 中移动4G网络稳步推进 3G版iPhone或遇阻

◙ Telecoms Regulator Shifts Tone on 4G 电信监管者就4G牌照发放转变口风

Alibaba Sharpens Focus in Yahoo Buy-Out, Taobao Mall 阿里巴巴回购雅虎所持股权有望

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It wouldn’t be a proper week if I didn’t write at least one commentary about Alibaba Group, which has been in the headlines nearly non-stop following the firing of Carol Bartz as the controversial CEO of Yahoo (Nasdaq: YHOO), which owns 40 percent of Alibaba. After initial reports said Alibaba founder Jack Ma was interested in both buying and running all of Yahoo (previous post), the latest reports indicate Ma may have found little interest from investors in that plan and instead is narrowing his focus to simply buying back the 40 percent stake in his company owned by Yahoo. (English article; Chinese article) According to the reports, Ma is talking to Singapore sovereign wealth fund Temasek about funding a buy-out of the 40 percent stake, in a move which looks much betterthan Ma’s previous hopes of taking over and running Yahoo, which would have stood a big chance of failure.  Bringing in Temasek as its controlling stakeholder makes lots of sense, as this kind of investor is purely interested in earning money rather than a strategic pair-up, which is far more suited to Ma’s style as an extremely self-confident business owner who likes to call all the shots and doesn’t like to listen to others. Combined with separate media reports that say Yahoo co-founder Jerry Yang is trying to engineer a privatization of his company, I could easily see Yahoo first being taken private, and then Ma’s Temasek-backed group buying back the 40 percent Alibaba stake from that newly privatized company. Separately, domestic and foreign media are reporting that Alibaba’s main B2C platform, Taobao Mall, is making a broad set of new moves to prepare itself for an IPO, possibly as soon as next year. (English article; Chinese article) The moves are too detailed to describe fully here, but the bottom line seems to be that merchants that sell on Taobao will see their fees rise dramatically, while Taobao is also taking strong early steps to prevent the kind of fraud on its site that undermined its sister company, B2B marketplace operator Alibaba.com (HKEx: 1688), earlier this year. Both moves look smart in my view, as the higher fees will weed out many of the smaller sellers that were the most likely to engage in fraud while significantly boosting revenue from the biggest merchants, while the anti-fraud measures will avoid future controversy like the one dogging Alibaba.com.

Bottom line: Alibaba Group is finally regaining some much needed focus by targeting a buyback of the 40 percent of the company owned by Yahoo, and by sharpening operations at its Taobao Mall.

Related postings 相关文章:

◙ Alibaba: The Little Genie That Roared?

◙ Alibaba.com Blows Smoke With HiChina Spin-Off Plan 阿里巴巴网络分拆万网放烟幕弹

◙ Taobao Mall Drums Up Hype in IPO Run-Up 淘宝商城开放或为IPO造势

Message to Beijing: Privatize the Big 4 Banks 对中国政府说：将四大银行退市吧

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I’m going to be a bit controversial today and make a bold suggestion that may seem obvious to some, namely that China should privatize its big 4 banks and let them resume their role as the state-owned policy lenders that they were for their first 50 years. The idea may sound extreme, but it’s exactly the approach that Beijing seems to be taking first by forcing its banks to issue billions of dollars worth of new shares to shore up their balance sheets last year, and now by announcing it will buy up even more of their stock to support their sagging shares. The banks’ majority shareholder, the central government-controlled Central Huijin, provided few specifics other than to say it has started buying up shares in the top 4 lenders, ICBC (HKEx: 1398; Shanghai: 601398), China Construction Bank (HKEx: 939; Shanghai: 6019399), Bank of China (HKEx: 1398; Shanghai: 601398) and Agricultural Bank of China (HKEx: 1288; Shanghai: 601288). (English article) Let’s review the facts: Huijin, which controls a third or more of each of those banks, already boosted its holdings in the 3 of the 4 last year when each made a multibillion-dollar share rights offering to strengthen their balance sheets after a year-long lending binge ordered by Beijing to prop up the economy at the height of the global financial crisis in 2009. This new buy-back will put even more of the banks’ shares into Huijin’s hands, boosting the central government’s ownership even further. Shares of all 4 banks jumped in late Monday trading in Hong Kong on the news, and we could well see those gains extended on Tuesday. But the banks’ shares are still down sharply over the last year, falling 40-50 percent from their 52-week highs. The main reason for their poor performance is that investors realize that despite their publicly listed status, all 4 banks still take their orders from Beijing and show no signs of changing those habits, making them less attractive as growth companies. That said, it would make more sense for Beijing to just end the charade and take all 4 of the banks private again so they can continue in their role as policy tools of the central government.

Bottom line: Beijing’s latest move to buy back sagging shares in the country’s top 4  lenders further underscores their function as policy lenders that should be privatized.

Related postings 相关文章:

◙ Record Profits Bolster Banks as Storm Looms 创纪录利润有助银行抵御楼市低迷隐忧

◙ ICBC Discovers China’s Latest Low-Cost Export: Currency 工行将从非洲人民币结算业务中获益

◙ China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

Sina’s Weibo: Growth Engine or Growing Burden? 新浪微博：动力or负担？

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After months of seeing its shares and prospects soar on non-stop hype about its phenomenally successful Weibo microblogging service, Sina (Nasdaq: SINA) is quickly learning that what goes up often comes down, and that great chances for growth also carry equally great risk. In a rare setback for Weibo, which boasts 200 million users, Hong Kong media reported over the weekend that China is considering new regulations for the unruly microblogging sector, which has become an increasingly fertile ground for fanning public discontent and spreading rumors by people often using fictitious names. (English article) According to the report, the biggest change being considered would require all microbloggers to register accounts using their real names — a development that would instantly probably wipe out about 90 percent of the accounts now in use. Such a move is certainly consistent with previous measures taken by Beijing, which is trying to limit things like rumor mongering and spam, even as some criticize such moves as also limiting free speech. Even if less drastic measures are ultimately taken, the increased regulation doesn’t look good for Weibo and microblogging in general. Investors, recognizing that fact, have been dumping Sina shares en masse, sending the stock down by a third in the last 3 weeks. Making the situation worse, in my opinion, is the steady stream of reports about new social networking services (SNS) that Sina is now rolling out to try and leverage Weibo’s popularity. In the latest of those, local media are reporting that Sina is launching a new SNS product called Kandian (English article), after launching another related product called Qing back in July. (previous post) I understand that Sina is looking for ways to turn Weibo into a profit center, but this pattern of launching so many new businesses in such a short time looks very rushed and lacking in long-term vision, and could very well backfire by leaving Sina and Weibo with a new group of lackluster performers rather than the next new Internet sensation.

Bottom line: Looming new government regulations and an increasingly chaotic growth strategy both look like bad developments for Sina’s popular Weibo microblogging site.

Related postings 相关文章:

◙ Sina, Tencent Pose Threat in SNS, E-Commerce 新浪腾讯攻城掠地

◙ Sina Gets Serious on SNS With New “Blogging Light” 新浪推出轻博客 大力进军社交网络业务

◙ Sina’s Weibo Steps Outside China 新浪微博进军日本市场

Chery, Luxury Cars Hit New Speed Bumps

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The rapid slowdown in China’s auto sales has spread to the higher-end of the market, boding poorly for foreign names like Volkswagen’s (Frankfurt: VOWG) Audi brand and BMW (Frankfurt: BMW), which have invested heavily in the market on a bet that pricier cars were less vulnerable to industry downturns than more mainstream models. After two turbo-charged years of growth that saw Chinese car sales jump on strong buying incentives from Beijing, growth in the market has suddenly disappeared as incentives ended and the central government takes other tightening steps to cool the overheated economy. Makers of high-end products, such as luxury bags, homes and cars, love to say how their products are more immune to economic downturns than mainstream goods, even though the reality is that the suffering is usually just slightly delayed for these higher-end products. But even luxury cars appear to already be suffering in the current car slowdown, with foreign media reporting that sellers of premium brands are now offering discounts of 16-20 percent to maintain sales. Those discounts look similar to ones being offered by more mainstream brands such as VW and SAIC (Shanghai: 600104), as companies lower prices to try and offset cooling demand. I previously said that Chinese car makers with major foreign partners are best positioned to survive the current downturn, which is bad news for names like Chery and BYD (HKEx: 1211; Shenzhen: 002594), which lack such partners that have the resources to weather such slowdowns. Chery has received a setback on that front, with Japanese media reporting the company’s plan to produce Subaru-branded vehicles in a new joint venture with Fuji Heavy Industries (Tokyo: 7270) has been rejected by China’s state planner because the company’s major shareholder, Toyota (Tokyo: 7203), already has 2 joint ventures in China, the maximum allowed under Chinese law. (English article) Chery says it will go ahead with the plan to make Subaru cars despite the rejection, but the development looks like a big setback as the industry gears up for some painful restructuring under a slowdown that will last a year or more.

Bottom line: Luxury brands will face a 1-2 year slowdown in China’s auto market similar to that seen by mainstream automakers as China takes steps to cool the market.

Related postings 相关文章:

◙ Nissan Jumps on China Expansion Bandwagon, Overcapacity Ahead 日产加入中国市场扩张潮 未来料产能过剩

◙ China Carmakers Lose a BRIC in Export Drive 中国汽车厂商的出口机会将逐步缩窄

◙ China Car Brands Look Like One-Hit Wonders

Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空

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Sinopec (HKEx: 386; NYSE: SNP), one of China’s top 3 oil companies, is taking a double hit as China gets back to work this week, due to factors both within and beyond its control. First let’s look at the factor that’s well within its control, namely the announcement by Canada’s Daylight Energy (Toronto: DAY) that it will be acquired by a Sinopec unit for a tidy $2.1 billlion, or about double its market value. (English article) Obviously Sinopec sees something more in Daylight than most other investors do, but on a broader basis this kind of overpayment looks all too typical of China’s resources firms that look determined to acquire global assets at any cost under Beijing’s broader plan to make China more energy self-sufficient. The plan could ultimately work if energy prices remain high. But I suspect the bigger trend for the next 3-4 years will see stable and possibly even falling global prices as the world’s economy remains weak and alternate energy sources gain efficiency, meaning Sinopec is probably paying far too much for this company. On the more immediate front, Sinopec and fellow oil majors PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR) and CNOOC (HKEx: 883; NYSE: CEO) are taking a hit from a 3-4 percent downward adjustment in gas prices announced by the state planner over the weekend. (English article) This will be the first downward adjustment this year, though it is far less than the 20 percent increase in domestic fuel prices the state planner has allowed since June 2010, the last time fuel prices were lowered. The irony is that even with this reduction China’s fuel prices are still generally higher than those in the US, and yet even at those levels the Chinese companies are all losing money on their refining operations. None of this looks good for Sinopec, which is the most dependent of the 3 big oil companies on refined product sales for its business. That fact, combined with the obvious overpayment for Daylight, are likely to weigh on both Sinopec’s business and its shares in the months ahead.

Bottom line: Sinopec’s overpayment for a major Canadian asset and China’s new lowered gas prices will weigh on the company’s business and stock for the next 6 months.

Related postings 相关文章:

◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦

◙ CNOOC Woes Spotlight Environmental Perils

◙ China Makes Up Its Mind: Penalty Reform 中国终于下决心:改革惩罚制度

HK Woes Point to Shanghai Sell-Off Next Week 港股跌宕起伏沪深後市堪忧

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China’s struggling stock markets are taking a much-needed weeklong break for the National Day holiday, but weak sentiment has continued unabated in Hong Kong, where the stock market tanked earlier in the week and shares of premier brokerage Citic Securities (HKEx: 6030) stumbled badly in their first trading debut outside China. The Hong Kong board started off the week in free-fall, shedding 7.6 percent on Monday and Tuesday before staging a rally on Thursday. But it was still down 2.4 percent at the start of the Friday trading day, and the volatility clearly reflects investor angst over what will happen when trading resumes in Shanghai and Shenzhen next Monday, with more sell-offs likely. In the midst of the chaos, shares of Citic Securities (Shanghai: 600030), the first in a string of high-profile listings of major state-connected firms aimed at propping up the markets, stumbled out of the gate, losing as much as 10.5 percent from their IPO price on their first trading day before finishing the day unchanged, even as the broader market rallied 5.7 percent. (English article) The weak debut, which came after Citic Securities already scaled back the offering and priced its shares at the low end of their range, bodes poorly for a number of other major state-run firms lining up to go public, including Sany Heavy Industries (Shanghai: 600031), which is also planning a listing in Hong Kong, and China Communications Construction, which is planning a Shanghai listing. (previous post). Meantime, the weakness has led two premier Hong Kong-listed China Internet names, Tencent (HKEx: 700) and Alibaba.com (HKEx: 1668), to do the once unthinkable and actually buy back their shares (Tencent article; Alibaba article). They join a list of peers that has so far included many mid-sized US-listed China tech firms like Ctrip (Nasdaq: CTRP) and Renren (NYSE: RENN) but has yet to see the likes of top names like Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) resort to such buy-backs. But if the current sell-off continues, we might even see these big names join the buy-back frenzy, showing just how low sentiment has sunk towards China plays, especially Internet stocks.

Bottom line: China’s stock markets will fall when trading resumes next week, extending sell-offs in Hong Kong and New York while Chinese markets were closed for the October 1 holiday.

Related postings 相关文章:

◙ Beijing IPO Campaign to Boost Markets Falls Flat 大宗IPO提振中国股市或成泡影

◙ China Offers Up Premier IPOs to Revive Markets 大企业沪港上市 政府借机重燃沪港生机

◙ CITIC Securities $2 Bln IPO Looks Good, With Potential to Jumpstart HK 中信证券香港IPO值得期待

CDC Kicks Off China Bankruptcy Parade 中华网打开赴美上市公司破产魔盒

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The confidence crisis in US-listed China stocks has claimed its latest victim in CDC Corp (Nasdaq: CHINA), the former high-flying software maker which filed for bankruptcy in the US on Wednesday as it struggled under the weight of a costly lawsuit. (Chinese article) Old-timers will recall that this company, formerly known as Chinadotcom, was one of China’s first US-listed web firms to go public more than a decade ago. That makes its current demise somewhat significant, though the company had faded from prominence for quite a while before this latest development. In an ironic twist, CDC’s ticker symbol is CHINA, symbolizing the broader downfall of many US-listed China stocks in recent months amid a crisis of confidence about their accounting. In CDC’s case, the crippling blow was a recent $65 million judgment against it resulting from a 2009 lawsuit from another company called Evolution CDC. (English article) There are no other details about the lawsuit, but based on the plaintiff’s name and fact that it was filed 2 years ago, this looks more like a disagreement between CDC and one of its vendors than a shareholder lawsuit like many of the ones we have seen in recent weeks against Chinese firms whose share prices have plunged on a steady stream of news about financial irregularities. CDC could nowl see similar shareholder suits coming its way, as its shares plunged more than 50 percent after it announced the bankruptcy filing. I checked the details on CDC’s major shareholders and was surprised to find such big names as CalPERS, the massive California pension fund, and Morgan Stanley (NYSE: MS) among them as of June, underscoring just how popular these companies had become among investors before their recent demise. I’m sure we’ll see more similar bankruptcy filings in the next year or two, as the steady stream of shareholder lawsuits now being lodged get resolved in the courts, many in shareholders’ favor. In the latest of those, a company named SinoTech Energy (Nasdaq: CTE) is facing a new class action lawsuit for allegedly including misleading information in its registration statement. (lawsuit announcement) Stay tuned for more such lawsuits, and subsequent bankruptcy filings, as the ongoing confidence crisis plays out over the next 2 years.

Bottom line: CDC Corp’s bankruptcy is the first but almost certainly not the last for US-listed Chinese firms, which are defending themselves against a raft of shareholder lawsuits.

Related postings 相关文章:

◙ US China Stocks: Bloodbath Becomes Correction 在美上市中资股遭抛售 迈入股价修正新阶段

◙ US-Listed China Firms Fight Back — Finally 中国赴美上市公司最终还击

◙ Securities Regulator Seizes on US Confidence Crisis 中国证监会或介入企业海外上市

Yum China: Little Sheep Getting Tangled in Trade Friction? 百盛收购小肥羊案卷入中美贸易摩擦？

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The latest quarterly results from Yum Brands (NYSE: YUM) are once again all about China, with strong performance from that market salvaging an otherwise dismal period for the operator of the KFC and Pizza Hut chains. But for followers of this company, what’s equally interesting in Yum’s quarterly results announcement is what’s NOT included, namely any mention of its pending purchase of leading Chinese hot pot chain Little Sheep (HKEx: 968), which is still awaiting regulatory approval nearly 6 months after the deal was first announced. First a look at the third quarter numbers, which showed that Yum’s China business boomed in just about every way, even as operating profit in its home US market slipped 16 percent. (company announcement) Yum’s China revenue leaped 35 percent, while its China same-store sales and operating profit rose 19 percent and 7 percent, respectively. The only negative China figure in the results was store margins, which slipped to 21.3  percent this year from 25.2 percent in 2010 as inflation in China took a toll. But amid all those rosy figures, there was no mention at all of Yum’s pending $500 million acquisition of Little Sheep, a relatively straightforward deal which the company first announced in April but still hasn’t received regulatory approval. (previous post) Yum provided a brief update of sorts on the deal in its last quarterly results by mentioning it had set aside funds for the purchase, seeming to indicate it still believed the deal would get regulatory approval. (previous post) It’s hard to read too much into the failure to mention the deal in its latest results announcement, as perhaps there’s just nothing new to add. The most recent US-China trade frictions that have seen the US Senate approve a bill to punish China for currency manipulation could add an interesting twist to this deal. Beijing’s approval of the Little Sheep deal now would send a strong message that it’s committed to fair trade, and could help dispel some of the anti-China rhetoric on Capitol Hill. Still, one never knows with China, and the regulator could also choose to veto the deal in an angry response to the US Senate’s move, which would only heighten tensions. I honestly think the latter is less likely to happen as China has traditionally tried to defuse this kind of friction. Accordingly, I wouldn’t be surprised to see the Little Sheep deal finally approved in the next month as a goodwill gesture aimed at mollifying tensions.

Bottom line: China is likely to finally approve Yum Brands’ pending purchase of the Little Sheep hot pot chain in the next month to try to diffuse trade tensions with the US.

Related postings 相关文章:

◙ Yum Feasts on China, Still Eying Little Sheep 百胜依然觊觎小肥羊

◙ China’s Heavy Hand Leaves Investors Wary on YUM’s Little Sheep Buy 百胜难吞小肥羊

◙  YUM and Little Sheep – A Sweet Match If China Approves 美国百胜购小肥羊：甜蜜姻缘还靠中国政府成全

Lashou Ropes in Small Potatoes For US IPO 拉手网聘二流承销商赴美上市

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Turmoil and discord continue to plague the online group buying space, with industry leader Lashou taking a dubious step in its struggle to make an IPO before the market collapses by hiring a couple of second-tier investment banks to underwrite the offering. Reuters is reporting the company has hired leading Chinese investment bank CICC and top Japanese investment bank Nomura to lead the New York offering to raise $100-$200 million (Chinese article). The hire  comes after Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) abruptly resigned from the case last month due to concerns over accounting records at some of Lashou’s recent acquisitions, and after another leading group buying site, 55tuan, reportedly failed to find an underwriter for its planned IPO for similar reasons. (previous post) I applaud Lashou for its tenacity in making an IPO; but it’s also painfully apparent the company had to resort to CICC and Nomura after the first-tier US and European investment banks all shunned the deal. Neither CICC  nor Nomura has particularly strong ties to US investors, which means that Lashou’s IPO, if it really goes ahead, will face an uphill battle attracting investors to this offer from a sector in crisis. The turmoil first surfaced earlier this year when Gaopeng, the group buying joint venture between US group buying pioneer Groupon and Tencent (HKEx: 700) launched mass layoffs. Groupon.cn, a China competitor unrelated to US-based Groupon, has also reportedly laid off many employees (Chinese article); and 55tuan itself has also started some layoffs, though the company has denied gossipy reports that it was laying off up to 70 percent of its staff. (English article) A sector in so much turmoil will hardly be attractive to US investors, who are already wary of Chinese companies due to several recent high-profile accounting scandals. That said, and considering the weakness of Nomura and CICC in this space, I would look for Lashou’s IPO to price at the low end of its range and ultimately raise less than the minimum $100 million it is targeting, as investors avoid this highly problematic offering — if it even makes it to market at all.

Bottom line: Lashou’s upcoming New York IPO is likely to attract little or no investor demand due to weak underwriters and turmoil in China’s ultra-competition group buying space.

Related postings 相关文章:

◙ Lashou Begs for an IPO Banking Partner 拉手网拼命寻找上市承销商

◙ 55tuan Layoff Rumors Mark Latest Group Buying Distress Call 传窝窝团大裁员 团购业前景黯淡

◙ Group Buying Sites: The First to Fall? 团购网或将在互联网泡沫破灭时应声而倒？

Alibaba: The Little Genie That Roared?

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This week will see a limited offering of commentaries during China’s National Day holiday, starting with the latest provocative words on and about Alibaba Group, including Jack Ma’s latest interest in global expansion and critical words about the controversial Alibaba chairman from another major web executive. Jack Ma mildly surprised the world over the weekend when he declared that his company is “very interested” in Yahoo (Nasdaq: YHOO), the struggling global search player which also happens to own 40 percent of Alibaba. (English article) The context of his remarks strongly implied that Ma was interested not only in buying back Yahoo’s 40 percent Alibaba stake, but also in potentially buying Yahoo itself. If such an outcome came to pass, it would certainly look like a “Mouse that Roared” scenario, a reference to the 1959 movie that sees a tiny European nation declare war on the US, and then go on to win. In this case, I could easily see Ma joining a group of private equity or other investors that eventually goes on to buy out Yahoo, and then Ma being named as Yahoo’s new CEO. Whether this is a good idea is a different matter. Ma has little or no experience running a major global company like Yahoo, and his time might be better spent staying at home to tend to his only listed company, China’s biggest B2B marketplace Alibaba.com (HKEx: 1688), which is also struggling. There’s also no reason to believe that Ma can succeed where a group of seasoned big-name Western executives before him have failed in the campaign to revive Yahoo. But that said, perhaps Ma’s outside perspective could be just the medicine to turn Yahoo around. If he ends up taking over, I would still peg his chances of success at just 20 percent, but not rule out success completely. In the second development, Joe Chen, CEO of Renren (NYSE: RENN), often called the Facebook of China, has lashed out at Ma and Alibaba for greatly contributing to the current confidence crisis in US-listed China stocks through his controversial spin-off of Alibaba’s e-payments unit, Alipay, earlier this year. (English article) I won’t go into all the background here (previous post), but Chen may have a point to some extent, as the high-profile misstep captured global headlines for several months and spotlighted the questionable business tactics used by many Chinese firms. Still, it might be a slight exaggeration to blame Ma for such a systemic problem, and as I said last week, the sell-off that has seen many US-listed China companies share prices tank in the last few months now looks more like a long-overdue correction in their overinflated share prices. (previous post)

Bottom line: A successful bid by Alibaba’s Jack Ma to take over and run Yahoo would likely end in failure, with only a 20 percent chance of success.

Related postings 相关文章:

◙ Yahoo: A Good Time to Break From Alibaba? 雅虎与阿里巴巴分手时机还不成熟

◙ Alibaba.com Blows Smoke With HiChina Spin-Off Plan 阿里巴巴网络分拆万网放烟幕弹

◙ More Internet Froth in Alibaba Valuation, Dangdang Price War 阿里巴巴估值奇高凸显网络泡沫