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

Motorola Comes Xooming Into China 摩托罗拉平板电脑偏重中国市场

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It looks like tarnished mobile products maker Motorola (NYSE: MOT) has more confidence in China than superstar rival Apple (Nasdaq: AAPL), at least when it comes to tablet PCs. Motorola chose the somewhat strange location of Hainan Island to announce the upcoming launch of its new Xoom tablet PC before the end of June, not long after its global launch earlier this year. (Chinese report) That contrasts sharply with Apple, which left China off the international launch list it published earlier this month for its iPad 2. (previous post) This looks like a smart move by Motorola, though the company will have to work hard to overcome the market dominance of Apple’s original iPad, as well as competition from other products including Lenovo’s (HKEx: 992) new LePad (previous post) But considering the decent reviews this product is getting, combined with Motorola’s strong previous experience in China, Xoom may actually stand a chance of getting some decent sales in a market that is the company’s second largest behind only the US.

Bottom line: Motorola should gain significant share in China’s tablet PC market with the upcoming release of its state-of-the-art Xoom

摩托罗拉移动<MMI.N>似乎比苹果<AAPL.O>对中国市场更具信心，至少在平板电脑领域是如此。摩托罗拉别出心裁地选在中国海南，发布6月底前将推出的Xoom平板电脑。这与苹果的作法截然不同，苹果不久前在二十多个海外市场推出新版iPad，其中并不包括中国。摩托罗拉这种作法是明智的，但要撼动苹果iPad在中国市场的地位，并应对包括联想等其他同类产品的竞争，绝非易事。不过各方对Xoom评价正面，且摩托罗拉以往在中国市场创过佳绩，因此Xoom在中国市场应有不俗表现。对摩托罗拉来说，中国是仅次于美国的第二大市场。

一句话：摩托罗拉新早期在中国上市的Xoom平板电脑应该帮助他得到不少市场额

Acer Takes a Hit With Lanci Leaving 宏基痛失兰奇

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I was quite surprised to read reports today that Acer (Taipei: 2353) CEO Gianfranco Lanci has resigned over differences with the company about strategic direction. (English report; Chinese report). His departure comes amid a recent downturn for Acer, which shot to stardom under the leadership of Lanci and Taiwanese Chairman J.T. Wang, who made a potent pair by focusing on mid to lower end, consumer PCs with a special attention to notebooks that now dominate the market. While Wang came from an engineering background, Lanci brought much of the marketing savvy that helped the company become Europe’s notebook leader 3 or 4 years ago, and i suspect he was also a key player in the company’s successful acquisition strategy. My big concern is that with Lanci gone, Acer will go back to being a very Taiwanese company focused on gaining market share at any costs, very likely to the company’s detriment.

Bottom line: Gianfranco Lanci’s sudden resignation as Acer CEO marks the beginning of a downward spiral for the company, similar to the downturn that almost killed it a decade ago.

宏基<2353.TW>执行长兰奇(Gianfranco Lanci)离职，令我意外的是，今日读到报导说兰奇辞职是由於在公司战略方向上的分歧。宏基以往在兰奇和董事长王振堂的带领下，专注于中低端个人电脑，尤其侧重於笔记本电脑。王振堂有工程专业背景，而兰奇则颇具营销智慧，带领宏基成为欧洲笔记本电脑市场领先者。我猜兰奇也为宏基成功的收购战略作出了重大贡献。而随着兰奇的离开，或许宏基会重新还原成一家典型的台湾公司，不计代价争夺市场份额，这不利於宏基发展。

一句话：兰奇的突然离职等于宏基新衰退时期的开头，类似于十年前的衰退时期。

Netqin IPO Tangled in Top Line Tussle CCTV再度揭露网秦

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It seems the detectives at CCTV  have been working hard these days. After uncovering illegal gambling at online game firm Shanda (Nasdaq: SNDA)(see previous post), CCTV is now reporting a huge discrepancy in what IPO candidate Netqin previously reported for its 2008 sales and what it told US regulators in its IPO prospectus (Chinese article). And this is really a huge discrepancy, with CCTV saying the company, a mobile software maker, previously reported sales that year of 3.76 million yuan, while its prospectus says the annual figure was 26 million yuan. I’m sure they’ll find an explanation for all this, and Netqin’s underwriter will probably convince stock exchange officials that the current prospectus is correct. But this, combined with the fact that the company seems to be locked in a fight with China’s 3 major telcos (see previous posting) certainly can’t bode well for Netqin. Btw, before I sign off with my usual bottom line, I’d like to thank one of my students, Lina Guo (郭文鹃), for bringing it to my attention.

Bottom line: Netqin has too many issues to clarify before I would consider it a good IPO investment.

中国的媒体警察CCTV再度出击。在揭露盛大<SNDA.O>子公司涉嫌网络赌博後，央视又报 道了手机软件公司网秦此前披露的2008年销售业绩与其向美国监管机构提交的招股说明书数据不符，并且两者间差距巨大：网秦天下的工商年检资料显示其2008年的销售收入仅为376万元人民币，而向美方提交的招股书中声称有400万美元。也许网秦的IPO承销商能够说服美国监管机构，其招股说明书中的数字是真实的，但此次负面报导，加上中国三大电信公司对网秦的杯葛，网秦的日子肯定愈加难过。（感谢我的学生郭文娟提醒我关注相关报 道。）

一句话：网秦的包袱太重，我现在还看不出它的IPO有什麽投资价值。

Google Bracing for Another Clash with Beijing 谷歌：英雄气短

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There’s an ominous article in today’s China Daily basically accusing Google (Nasdaq: GOOG) of failing to get the proper license to operate its popular mapping service in China. According to the report, any Internet company providing China-based mapping services had to register with the government earlier this week or risk breaking the law after July 1. There’s a lot more in the article for those who want to look, but to me this looks like China pushing Google one step closer to the exit door by putting up rules the US search giant doesn’t want to follow. None of this would probably even matter if it weren’t for the huge popularity of Google’s Android operating system for cellphones in China, which appeals to local consumers because it’s free and thus drives down the cost of handsets. If this mapping issue blows up into another major clash, which it might, then Android could easily be the next to get kicked out of China, dealing a huge blow to the OS and thus to Google.

Bottom line: Google’s days in China may be numbered, dealing a major blow to its Android OS.

今天的《中国日报》有一篇文章，指责谷歌在中国的地图服务并未获得有关部门批准。这篇报 道称，任何提供中国地图服务的互联网公司必须在本周四以前向中国政府注册，否则在7月1日以後就将属於非法经营。在我看来，这是中国政府通过设立谷歌不可能接受的监管条款，又把谷歌向大门外推了一步。其实，谷歌与中国政府交恶至此，本来也没有太多可在乎的了，唯独谷歌 的安卓(Android)移动操作系统在中国大受欢迎，令谷歌尚有些投鼠忌器。如果地图问题再度成为谷歌与中国政府一大冲突点，也会危及安卓在中国的市场 地位。

一句话：谷歌在中国日益难以立足，其安卓操作系统也将遭受打击。

Qihoo: A Strange Tiger, Indeed 奇虎：真的是头怪虎！

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It seems like after all my warnings to avoid Qihoo’s (NYSE: QIHU) IPO, plenty of greedy investors just couldn’t stay away from this company, whose name means “strange tiger” in Chinese. The company raised less than initially reported in its new IPO, but more than made up for that as its share price more than double on its NYSE trading debut, bringing lots of quick bucks for anyone who got shares at the IPO price. (English article; Chinese article) To those hedge fund managers who followed by advice, my apologies and I owe you a drink. But for longer term investors, for whom my advice was really intended, my advice remains the same: This company is a lightning rod for lawsuits and negative publicity, and much of that is due to questionable business practices that will ultimately drag down the company and possibly put it out of business. (previous blog post) Once again I say: let the buyer beware.

Bottom line: Qihoo is not for longer term investors, but may become a hedge fund darling because of its frequent controversies

尽管我对奇虎<QIHU.N>的IPO冷语不断，但是看来仍旧有无数贪婪的投资人难以抵御这头”奇怪的老虎”的诱惑。奇虎终於如愿在纽交所上市，尽管筹资额小於最初预期，但上市当天股价几乎翻番，令首批投资者大赚一笔。那些当初听了我的话的对冲基金经理们，我对不住你们， 回头请你们喝酒。但是，对於长期投资者来说,其实，我的忠告本来也是说给你们的–我还是那句话：这个公司就是块招惹法律纠纷和负面新闻的磁铁，而且它 的多数争议也不都是空穴来风。最终，奇虎的出格商业行为必然毁了自己。买家们，还是要当心！

一句话：奇虎是长线投资的毒药，但也许它的重重争议对对冲基金来说反而是良药。

E-House: Don’t Sell the House Just Yet 易居：不要马上卖掉这栋楼

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A prolonged sell-off seems to be driving the latest move by real estate services provider E-House (NYSE: EH), which has just announced a $50 million share repurchase program in a bid to bolster its sagging shares. (news release) Now I’ll be the first to admit I’m quite bearish on the China real estate market, with a correction of 20-30 percent likely in the next 12 months as Beijing tries to cool the overheated market. But I also think the correction will be relatively brief as Beijing will quickly lower interest rates if things cool down too quickly. And regardless of a slowdown, real estate services firms like E-House will be less exposed to such a downturn since they derive most of their income from fees and not actual sales. All that said, E-House shares still trade at a relatively rich premium despite losing 50 percent of their value since October. Some of the high valuation is undoubtedly due to bearish analyst profit forecasts. Still, this company looks a bit oversold and could be a nice long-term play for those seeking exposure to Chinese real estate.

Bottom line: E-House should be able to weather a short real estate downturn with minimal pain, making it attractive for those who like China real estate.

在美国纽交所上市的房地产服务网站易居中国<EH.N>近来遭持续抛售，股价一路走低。易居中国刚刚宣布了5,000万美元的股票回购计划，意在提振股价。我必须承认，我对中国房地产短期前景持悲观态度，我认为在未来一年内，随着政府试图为房地产市场降温，房价可能出现20%-30%的向下修正。但我也相信，这种修正将是相对短暂的。一旦降温过快，北京将迅速降低利率。无 论市场放缓与否，像易居这样的服务商风险都较小，因为他们的收入大多来自於服务费用，而非买卖交易。尽管目前易居股价已经比去年10月的高点下跌了 50%，我认为其溢价仍较高。而高估值的原因之一当然是分析师对其获利预期乐观。所以，我认为，目前易居股票多少有些超卖，对於那些欲试水中国地产业的投 资者来说，不失为一个长期投资的良好选择。

一句话：易居中国应该能够相对安然地度过短期的房地产市场调整，其股票对於投资者来说还是有吸引力的。

Sina Searches for Roots in Google Break 新浪与古歌断交，搜索自己的根

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There’s plenty of chatter out there on the news that leading Web portal Sina (Nasdaq: SINA) is cutting ties with Google (Nasdaq: GOOG) by no longer using Google’s search technology. (English article; Chinese article) On the surface, this move is really just the latest example of a Chinese company cutting such ties after Google’s own high-profile exit from China last year. But this also represents a golden opportunity for Sina to get back into search, which was one of its original businesses when it launched as one of China’s first Web portals more than a decade ago. Sina has shown a recent knack for successfully getting into new areas such as real estate and blogging, and as China’s leading portal its also one of the most visited Web sites, guaranteeing it plenty of traffic. Given its strong record lately, I would bet on them to make an acquisition in the search space in the near future and pose the first serious challenge in years to industry heavyweight Baidu (Nasdaq: BIDU).

Bottom line: Sina’s break with Google represents a golden opportunity for it to return to the search business and challenge Baidu.

近期有关新浪<SINA.O>与谷歌<GOOG.O>交恶的传言不断，称新浪将不再使用後者的搜索技术。表 面上看，这不过是又一家中国公司在谷歌与中国政府高调冲突後断绝与谷歌的关系。但这对新浪来说，则是它重归搜索领域的绝好机会。毕竟，搜索是新浪在中国的 开山法宝之一。而且新浪近年来在拓展包括地产服务和微博等新业务方面显示了过人的能力。所以，我猜新浪将在不久的将来通过收购重新进军搜索领域，向行业老 大百度提出挑战。

一句话：新浪与谷歌停止合作，反而说明新浪有意重归搜索，挑战百度。

BYD: Jump-Starting Stalled Sales With Auto Finance 比亚迪：试水汽车金融

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There’s an interesting bit of news coming from Warren Buffett-backed BYD (HKEx: 1211). It seems the Chinese carmaker, once a superstar but now struggling with stalling sales, has linked up with a US company that specializes in vehicle finance systems in an apparent move to jumpstart its growth by selling cars on credit to Chinese consumers. (English press release). This kind of move is clearly a gamble for BYD, which has plenty of experience making cars but little or none in vehicle finance, in a country where some 90 percent of people still pay for their cars with cash. But given Buffett’s strong background in finance, together with the facts that many analysts see strong growth ahead for vehicle financing in China and sharply slowing growth of the broader auto market, this one looks like a very worthwhile gamble for BYD and one that could help to put it back on the road to strong profit growth.

Bottom line: BYD’s move into vehicle finance looks like a smart one with good chances of success to jump-start its stalled growth.

一度举世瞩目的明星、近来却焦头烂额的比亚迪<1211.HK>，传出了新消息：它与一家专门开发汽车金融系统的美国公司合作，似乎有意通过向中国消费者提供信贷而刺激自己的汽车销量。这对比亚迪来说是一场豪赌：它造车经验丰富，搞汽车金融可丝毫不在行。在中国，九成的消费者还是现金全款购车。但比亚迪的”美国伯乐”巴菲特则是金融大师， 而且很多分析师对中国汽车金融业前景看好。在整体汽车市场大幅降温的情况下，比亚迪这一赌还是值得的，有希望让比亚迪重归高速增长的轨道。

一句话：比亚迪赌注汽车金融是聪明之举，有望重振增速。

Baidu: Tidbits But Still No Search Alternatives 百度：干扰不断

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There are a few tidbits coming from Baidu’s (Nasdaq: BIDU) Robin Li, who is down in Shenzhen attending an Internet conference along with the likes of Tencent’s (HKEx: 700) Pony Ma. Chinese media have been rattling nearly non-stop about Baidu’s ongoing dispute with Chinese authors, who are suing the company for copyright infringement (if this sounds familiar, it may be because Google is in the middle of a similar lawsuit). Now Li has told the Shenzhen conference that Baidu could get out of the book business altogether (Chinese article), in what would be a welcome move for something that’s become a major distraction without providing any major new revenue. In one other mini-development, local media are reporting that Baidu is considering buying a small English language search engine to improve its English search functions (English article). This seems like yet another distraction that Baidu doesn’t need, but I suppose it’s necessary to satisfy news-hungry investors who want some justification for the sky-high prices they’re paying for Baidu stock.

Bottom line: Baidu should get out of all business lines that put it at risk for copyright infringement lawsuits.

对於百度文库与多位中国作家的版权纠纷，李彦宏终於表态道歉，并且表示如果无法妥善解决，就考虑关掉百度文库。其实，百度文库非但没能带来真正的收入，反而已经成为一大干扰因素，关掉它倒是让各方皆大欢喜。另外，中国媒体报 道百度正考虑收购一家小型英文搜索引擎，以改善其英文搜索功能。这看起来又是一个没什麽实际效果的干扰因素，但百度为了向投资者证明自己奇高的股价，也许总要做些什麽吧。

一句话：百度应该迅速行动，砍掉一切可能产生版权纠纷风险的业务。

China Makes Up Its Mind: Cable Consolidation 中国终於下决心：有线电视行业整合

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This posting marks the official launch of “China Makes Up Its Mind,” an occasional mini-column where I look at one of Beijing’s latest macro industrial policies, its chances for success and the potential impact on industry players. This first post takes a look at Beijing’s latest push to consolidate its vast and highly fragmented cable TV industry. Noises coming from the regulator show it is making a renewed push in this direction, which is smart as it’s only through economies of scale that China can develop the kinds of high speed networks and good programming to compete with the West. The problem is, the regulator tried a similar a campaign around 5 years ago and failed miserably due to interference from local interests. There are some interesting reports coming out saying Shanxi province has already begun consolidating its networks, showing that maybe consolidation is possible, after all. (English article) Perhaps a province-by-province consolidation, followed by a national one, is  the right way to go this time. If it succeeded, such consolidation would benefit the likes of set-top box makers like ZTE (HKEx: 763; Shenzhen: 000063), while providing competition to companies like China Telecom (NYSE: CHT; HKEx: 728), which is trying to develop its own national digital TV network. Still, I’d give this latest effort just a 30-40 percent chance of success, again due to resistance from all the local interests.

Bottom line: China’s latest effort to consolidate its fragmented cable TV sector is likely to fail, benefiting competitors like China Telecom.

从今天起，我将推出一系列以”中国终於下定决心”为主体的迷你专栏，分析中国最新的宏观产业政策调整及其对业界公司的影响。今天先说有线电视这个大而不统的市场的整合。监管层传出的信号表明，北京有意推进有线电视业的整合。这是明智之举，因为只有充分发挥规模效益，中国才能建设高速、高质量的有线电视网络，与西方公司竞 争。但问题是，政府曾在5年前发起一场类似的运动，但由於地方保护势力的干扰，以惨败告终。近期有报导说，山西省已经开始整合其有线电视行业，看来整合并 非无望。也许逐省整合後再全国整合，才是成功之道。如果整合成功，对中兴通讯<0763.HK><000063.SZ>等机顶盒生产企业将有助益。但对中国电 信<CHT.N><0728.HK>来说则意味着增加了竞争对手，因为中国电信正在自行建设全国性的数字电视网络。我认为，这场整合运动成功的可能性只有30%-40%毕竟，地方保护主义势力还是不可小觑。

一句话：中国政府主导的又一次有线电视业整合运动成功可能性不大，对中国电信来说倒是好事。

 

Lenovo’s LePad: Finally a Game Plan That Could Work 联想乐Pad：终於拿出了像样的东西

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After several months of hype, Lenovo (HKEx: 992) is finally sharing with the world a few clues about how exactly it’s going to succeed with its new tablet PCs, which are already well behind most of the competition. After finally launching its first LePad this week, priced at an unimpressive 3,499 yuan, Lenovo tells the China Daily it will launch 2-3 more tablets this year, including a LePad 2 in the fourth quarter and one model aimed at enterprise customers. Lenovo seems to think that segmenting PCs is the way to go, unlike Apple’s (Nasdaq: AAPL) one-size-fits-all approach. I personally think the Apple approach is more cost effective and thus a bit better, but I’m still giving Lenovo a good chance of success. The reason has nothing to do with technology and everything to do with sales channels. Apple and other tablet  makers like Samsung (Seoul: 005930) may have superior products, but they just don’t have the reach in China of a company like Lenovo, whose sales channels extend all the way down to the smallest cities.

Bottom line: Lenovo’s upcoming crop of LePads will succeed in China, but don’t look for the tablet PCs to win big market share anywhere else.

经过几个月的大张旗鼓造势後，联想终於向世界展示了自己的平板电脑利器”乐Pad”。但它的时机已经远远落後于多数竞争对手。乐Pad定价3,499元，没能给消费者带来惊喜。联想对《中国日报》表示，今年还将推出2-3款平板电脑，包括在第四季度推出的乐Pad2，以及面向企业用户的一款平板电脑。联想似乎采取了细分市场的战术，而非苹果<AAPL.O>的”一款产品打天下”。我个人认为苹果的办法成本效益比更高，但对联想仍旧看好。其实这跟产品的技术高低毫无关系，真正起决定性作用的是销售渠道。苹果和三星<005930.KS>也许产品过人，但在中国市场，他们的销售渠道和渗透程度远逊於联想。

一句话：联想姗姗来迟的乐Pad系列产品将在中国获得成功，但在中国市场以外没戏。