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

VanceInfo Finds China Partner in Oracle 文思得遇贵人甲骨文

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There’s an interesting (and probably largely overlooked) press release out there saying that IT services provider VanceInfo (NYSE: VIT) has acquired Oracle’s (Nasdaq: ORCL) IT China consulting arm, a company called Bright Consulting, for a modest $700,000. Sure, that figure isn’t going to raise any eyebrows and Bright Consulting itself generated an equally modest $1.5 million in revenue last year, according to the press release. So why am I writing about this deal? For this reason: As the world’s largest maker of business software, Oracle has enormous resources that it can provide to little VanceInfo to help this Chinese firm boost Oracle’s presence in China. Clearly Oracle wasn’t gaining much traction in the consulting arena on its own, hence its wise decision to let a homegrown Chinese firm take over that part of the business. If this relationship works out, the future could indeed be bright for VanceInfo.

Bottom line: VanceInfo will reap handsome rewards from its new relationship with Oracle.

最近有这麽一则有意思的公司新闻发布，可能许多人都忽略了：中国IT服务公司文思(VanceInfo)<VIT.N>收购了甲骨文公司<ORCL.O>旗下公司Bright Consulting。这是一家设在北京的信息技术服务公司，收购金额只有区区70万美元（一些中国媒体曾将之误报为700万美元）。 当然，这个数字实在难以引人注目，而Bright去年的收入也只有150万美元. 那我为什麽对这笔交易感兴趣呢？作为全球最大的商务软件公司，甲骨文能够向文思提供庞大的资源支持，令其更好地为自己的中国业务服务；显然甲骨文自己在中国的信息技术咨询领域并无建树，因此决定让本土公司文思接手。如果两者之间的合作关系运作顺利，文思的前途不可限量。

一句话：文思与甲骨文之间的合作将令前者获益匪浅。

Gmail, Netqin Spar with Chinese Censors Gmail,网秦

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It seems the Chinese censors have been working overtime, with security software provider Netqin and Internet giant Google (Nasdaq: GOOG) both feeling the wrath of Chinese bureaucrats. First Netqin. I don’t know much about this company other than it’s an IPO candidate, which I reported last week. But if the media reports are right, it looks like Netqin, which specializes in mobile software, is suddenly being disabled by all three of China’s major telcos. (English article) No reason was given, but knowing how shifty some of these companies can be, I wouldn’t be surprised if they were engaging in questionable business practices. Regardless, this kind of development certainly can’t be good for an IPO. On to Google, which has accused China of slowing or blocking access to its Gmail service, after numerous users reported problems in recent weeks. (English article) This one looks like part of Google’s ongoing testy relations with Beijing, and I have no doubt the “crisis” will pass with time, especially now that the National People’s Congress is over.

Bottom Line: Netqin’s overseas IPO may have suffered a death blow at the hands of China censors, while Google’s latest tussle with Beijing will pass soon with no major consequences.

最近Gmail和网秦遭遇麻烦，显示中国网络监管部门似乎又在加班加点。据中国媒体报导，有意海外上市的手机软件公司网乎被中国三大电信运营商集体屏蔽。无论原因如何，这对网秦的IPO计划都是重大打击。最近几周，Gmail在中国的服务屡出问题，似乎是Google与中国政府磕磕碰碰的关系中出现的新插曲。但随着两会闭幕，我相信这些”问题”将逐步自行解决。

一句话：中国网监部门几乎对网秦的上市计划判了死刑。而Google在中国遇到的新问题应可小事化无。

2011: Year of the Unicom 2011：联通的好运年

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If 2010 was the year of China Telecom (HKEx: 728; NYSE: CHT) and every year before that belonged to China Mobile (HKEx: 941; NYSE: CHL), then 2011 could finally be shaping up as the year of China Unicom (HKEx: 762; NYSE: CHU), the perennial underperformer of China’s telecoms world. The latest monthly 3G data is out and continues to show Unicom winning steady share from China Mobile in the 3G space. (English article). Interestingly, Unicom added nearly twice as many 3G users in February as new users for its older 2G GSM service, showing this company clearly knows where its future lies and is playing to its strength in the form of its superior 3G technology. At the same time, there’s an interesting report coming out of the Chinese media saying Unicom has finished a major management overhaul, ending two years of painful restructuring after its merger with the former China Netcom, leaving it with a younger, more vibrant management team. (Chinese article). With all these things going in its favor, Unicom is looking increasingly like a leader in 2011.

Bottom line: Unicom is making all the right moves, positioning itself to become China’s best performing telco in 2011

如果说2010年是中国电信<0728.HK><CHT.N>的好运年，那麽在2011年，风水似乎终於转向了中国电信市场的2011千年老二:联通<0762.HK><CHU.N>。最近的月度3G数据出炉，显示联通继续稳步夺取中国移动在3G市场的份额。有意思的是，联通在2月份新增3G用户数量几乎是其新增2G用户数的两倍，这说明联通深谙电信业的未来走向，并且通过3G技术扩大自己的优势。与此同时，中国媒体报导联通完成了一次重大内部管理架构改革，新的管理团队更加年轻，更有活力。考虑上述因素，联通看似将成为2011年的赢家。

一句话：联通屡出妙棋，有望在2011年成为中国表现最佳的电信公司。

China TV Makers Lack Right Stuff to Profit fom Sony Woes 索尼遭殃谁受益？

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Time for one of YCBB’s periodic quick but hopefully insightful looks at a major event and its impact on China companies, in this case its TV makers following Sony’s (Tokyo: 6758) setback from Japan’s massive earthquake. Unfortunately for China company watchers, the picture isn’t very exciting for Chinese firms, which tend to cluster at the low end of the market versus the more premium end occupied by Sony. The biggest short-term beneficiaries will most likely be other Japanese names like Sharp (Tokyo: 6753) and Panasonic, and Korea’s Samsung (Seoul: 005930) and LG (Seoul: 066570) could also gain some share. Within Greater China realm, two companies that could make some small inroads are TCL (HKEx 1070; Shenzhen: 000100) and TPV (HKEx: 903), which have strong relationships with Thomson Electronics and Philips Electronics (Amsterdam: PHG), respectively. One other interesting company to watch could be Taiwan’s Amtran (Taipei: 2489), which has actually done a good job of penetrating the US with its tie-up supplying TVs to Vizio. Of course, all these Chinese guys are low-end players, but they’ll have to start moving up the food chain at some point or risk getting overtaken by other up-and-comers.

Bottom line: TCL and TPV, with their western ties, are best positioned to benefit from Sony’s earthquake woes, but don’t look for any major breakthroughs.

日本大地震对索尼<6758.T>造成重创，但中国电视厂商若想乘机抢占其市场份额，恐怕自身修行还欠些火候。因为中国电视机制造商倾向於在低端市场拼抢，而索尼传统上占据高端市场。短 期内最大的赢家可能是其他大牌日本电子厂商，例如夏普<6753.T>和松下，而韩国的三星<005930.KS>和 LG<066570.KS>也可能分得一杯羹。在大中华区内，有两家公司可能略有斩 获：TCL<1070.HK><000100.SZ>和香港冠捷科技<0903.HK>，两者分别与汤姆逊电子和飞 利浦电子<PHG.AS>有密切合作关系。另外一家值得关注的是台湾的瑞轩科技<2489.TW>。当然，上述大中华区厂商仍在低端徘徊，但早晚有一天，面临新生力量的竞争，他们会要向食物链上端发展。

一句话：大中华区可能从索尼震灾中获益的电视生产商不过TCL和香港冠捷，但别指望什麽重大突破。

PetroChina Gets in Bed wtih Saudis to Secure Oil Supplies 中石油的沙特“情缘”

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Saudi Arabia has seen the future, and the world’s biggest oil exporter sees it in a place called China: a realization that will play to Beijing’s advantage. Saudi Aramco, the nation’s oil producing arm, has announced it’s pairing up with top Chinese oil producer PetroChina (NYSE: PTR; HKEx: 857; Shanghai: 601857) to build a large new refinery in south China’s Yunnan province, a move that plays nicely to the Chinese producer as it looks to secure its supplies in these volatile times for oil prices. (English article). This move is especially interesting  coming even as Beijing pumps billions into developing its new energy industries to reduce its reliance on oil. But let’s face it: the new energy aspirations are still at least 5 or 6 years from producing any meaningful results, and so China is going to need plenty of oil to keep its economy humming during that period. And as far as PetroChina is concerned, this tie-up could help to shield it from some of the wild swings the oil market has seen lately, which could only benefit its bottom line.

Bottom line: PetroChina’s new refinery with Saudi Aramco will provide a welcome new lifeline to the Chinese firm in helping to buffer it from wild price swings on the global oil market.

世界产油大国沙特阿拉伯预见到了未来，而这个未来就在中国。国有的沙特阿美石油公司宣布，将与中国石油巨头中石油<PTR.N><0857.HK><601857.SH>联手在中国云南省建设一个巨大的炼油厂。

这一举动对中石油意义非凡，尤其是在当前的动荡时期，有利於中石油获得稳定的石油供给。尽管中国正在投入巨资建设新能源产业，降低对石油的依赖，但实话实说，开发新能源至少在五六年内还不可能产生任何有意义的成果，中国经济对石油的依赖短期内也就无法降低。

一句话：中石油与沙特阿美的合资炼油厂对前者来说是大好消息，有助於其抵御国际市场油价动荡的冲击。

Autos: a Desperate Capital Grab for Jianghuai, and Dongfeng’s Silly South Africa Plans 汽车业：江淮增发东风出口

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It seems Chinese automakers know a major slowdown is in the air at home, and are revving up for it by doing just about anything to buffer their cash reserves. In one piece of news, we learn that Jianghuai Auto (Shanghai: 600418) is looking to raise a hefty $426 million by offering new shares, saying it needs the money for expansion (English article; Chinese article). In the second piece of news, we hear Dongfeng Motor （HKEx: 489), Honda’s manufacturing partner in China, is revving up for a major export drive to South Africa, where it is setting up its first overseas sales company. First Jianghuai, also known as JAC: this company is NOT a top name in China autos, and any savvy investor would stop to think why a second-tier player might be looking for so much cash. As to Dongfeng, having a big name like Honda behind it certainly won’t hurt in its export drive, and South Africa could be just the kind of sort-of developed market that could be fertile ground for its exports. Still, this move also smells a bit of desperation, as China’s domestic car market shows fresh signs of slowing.

Bottom line: Jianghuai’s massive capital raising won’t attract much interest from savvy investors, while Dongfeng’s drive into South Africa will provide minimal returns in the near-term.

山雨欲来风满楼。为应对即将到来的行业减速，中国汽车企业纷纷充实自己的现金储备，无所不用其极。

例如，江淮汽车<600418.SH>计划通过增发股票筹集高达4.26亿美元的资金，称将用其扩张产能。另外，东风汽车<0489.HK>称计划向南非大量出口汽车，并将在那里建立自己的第一个海外销售公司。

关於江淮，精明的投资者会发问：为什麽一家中国二线汽车企业需要如此之多的现金？ 至于东风，作为本田的中国合作夥伴，在扩大海外销售方面或可获得本田一臂之力，而南非可能也正是适合东风产品出口的半发达市场。随着中国国内汽车市场显露出新的颓势，出口南非恐怕也是不得已之举。

一句话：江淮的大笔融资，对精明的投资者来说恐怕没什麽吸引力。东风向南非出口在短期也不会获得多少回报。

Snaptu: Facebook’s China Back Door? Facebook在中国走“後门”？

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Now that the salt shortage in Shanghai seems to be easing as people realize it isn’t practical to ingest 10 kg of salt per day to protect themselves from  Japanese radiation, it’s time to move on to some real news. One interesting report today is coming from the US, where China lockout victim Facebook seems to be sniffing for a backdoor into the country. The world’s most popular social networking site, available nearly everywhere except for China, said over the weekend it will buy mobile apps developer Snaptu for around $70 million (English article; Chinese article). As chance would have it, a friend was telling me a few nights ago how Snaptu offers mobile phone users a backdoor into Facebook in China, though I haven’t verified this personally. It’s an interesting concept, and I’ve no doubt this may be part of Facebook’s consideration in buying Snaptu. But let’s face it, Facebook: China doesn’t want you, and I’d say it’s just a matter of weeks, months or even days now before Snaptu users find their service suddenly blocked. So other popular sites like Kaixinwang and Renren, both candidates for overseas IPOs in the not-too-distant future, need not worry — the censors in Beijing will protect you from the evil Facebook.

Bottom line: Facebook’s Snaptu buy could provide a backdoor into China, but it’s just a matter of time  (probably very short) before Snaptu also falls victim to Chinese censors.

美国传来消息，在中国被封的社交网站巨头Facebook似乎正寻求曲线进入中国市场。

这 家（在除了中国以外的）全球最火的社交网站周末称，将以7,000万美元价格购买移动应用程序开发商Snaptu。凑巧，最近有朋友告诉我 说，Snaptu程序让手机用户能在中国访问Facebook。尽管我还没能亲自验证这种说法，这的确是个有趣的情况，恐怕也是Facebook购买 Snaptu的动机之一。但容我向Facebook说句大实话：中国就是不想让你进来。如果真想通过Snaptu走後门，这後门被堵死也是早晚的事。所 以，最近有意在海外IPO的中国社交网站开心网和人人都不必惊慌：北京有贵人相助尔等，把那些邪恶的Facebook拒之城下。

一句话：後门不可靠。（完）

ZTE: Ready for a Breather 中兴通讯：遇到了减速带

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A slowdown at telecoms superstar ZTE (HKEx: 763; Shenzhen: 000063) was bound to happen sooner or later, but the one we’ve seen in the company’s just-published fourth quarter results has come a bit sooner than even I expected. Despite the huge spend on 3G telecoms in China and India last year, ZTE saw its 2010 revenue rise by just 21 percent, including an anemic 27 percent outside China. Sure, most Western companies would probably kill for that kind of growth, but it looks like a sharp slowdown for a company that was seeing its international revenue double every year for a while there. Lingering problems in India mean that growth from that market may not come back right away, and a hoped-for opening of the US market may be at least a year off. That said, look for even more sluggish results from China’s former high-flyer, and also for its cross-town rival Huawei, in 2011.

Bottom line: ZTE’s high-flying days have hit a major speed bump, with an even sharper slowdown likely in 2011.

国际电信业超级巨星中兴通讯<0763.HK><000063.SZ>，其势头减弱本来是早晚的事。但是其刚刚发布的第四季度财报还是让人失望。

尽管中印两国在过去一年不惜巨资投入3G建设，中兴通讯2010年的营收只上升区区21%，在中国以外市场的增长只有27%。当然，多数西方公司对这种增速已是垂涎三尺，但对於这家在若干年来几乎年年实现国际业务翻番的公司来说，这可是严重倒退。

在印度市场存而未决的问题，意味着中兴在那里的增长速度一时难以恢复；想打开美国市场大门，至少是一年以後的事。这样一来，中国一度的“电信明星”——中兴和华为在2011年的增速恐怕仍将萎靡。

一句话：中兴的高歌猛进时代暂告一段落，2011年增速放缓势在难免。

Tencent Takes on Video Sharing in New Alliance 腾讯觊觎视频霸主地位

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There’s a new video sharing alliance that smells suspiciously of Tencent (HKEx: 700) trying to throw its weight around in this new Web space it has yet to dominate. Chinese media are reporting that a so-called “group” of operators of video-sharing sites, including Tencent, Xunlei, PPLive, Baofeng and Joy.cn, have formed an alliance to share rights to TV or movie content obtained by any single alliance member. (English article) Given Tencent’s own fledgling video-sharing ambitions and its direct investment in Xunlei, this one looks to me like an initiative by China’s biggest Web firm as it tries to muscle in on and eventually dominate the space, which has yet to produce a clear leader, the same way it did in the online gaming space. Given Tencent’s success in its past endeavors, I’d say this one could also stand a good chance of success, to the detriment of other pioneers like Youku (Nasdaq: YOKU), Tudou, and even search leader Baidu (Nasdaq: BIDU).

Bottom line: Tencent is once again using its weight and connections to try and dominate video-sharing, an Internet space with no clear leader, and stands a good chance of success.

中国媒体报导，门户巨头腾讯<0700.HK>与视频网站迅雷、PPLive，暴风影音和激动网结成了一个新的视频版权联盟，任何一家成员拥有版权的电视电影内容都可互相分享。在我看来，这就是腾讯向自己尚未独霸的一个领域伸出了手。

腾讯在视频分享方面的野心尽人皆知，再加上它已经直接投资迅雷，联盟之举不过就是它建立自己在这个领域霸主地位的第一步。毕竟，视频分享尚未出现明显的行业老大。

考虑腾讯过往的战绩，我觉得这次它成功的机会也很大。面临挑战的就是优酷、土豆、甚至包括百度。

一句话：庞然大物腾讯向视频霸主地位进军了，大家好自为之吧。

Alibaba Challnges Investors to Read Between the Lines As Big Slowdown Looms 阿里巴巴：财报说了些什麽？

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Alibaba.com (HKEx: 1688) has just published its fourth-quarter and 2010 results, and this is a read-betwee-the-lnes announcement if ever there was one. (English article; Chinese article) The company, still reeling from a scandal that forced out its CEO and COO late last year, saw fourth-quarter revenue growth that slowed to 37 percent from 43 percent for the whole year, and I’m willing to bet that number will show an even sharper slowdown in this year’s first quarter when business from more than a thousand fraudulent suppliers is cut out. The flagship of Jack Ma’s Alibaba Group has tried to ease investor concerns by saying its revenues are getting more diversified. But if I were a shareholder in this company (which I’m not), I’d brace myself for more turbulent times ahead, especially when the company reports its first-quarter results in April or May.

Bottom line: Alibaba’s growth was already slowing even before its year-end scandal, and we can expect an even more dramatic slowdown when it posts Q1 results

阿里巴巴<1688.HK>也发布了第四季度财报和2010年年报。这些报告有必要仔细咂摸。

阿里巴巴仍在疲於应付导致CEO和COO下台的欺诈丑闻。2010年全年营收增速是43%，第四季度增速则降至37%，我敢打赌，今年第一季度的增速肯定进一步下降。马云试图安抚投资者情绪，表示阿里巴巴的盈利来源正在多元化，但假如我是这家公司的股东（实际上我不是），我会对四五月间公布的第一季度财报做好心理准备。

一句话：在丑闻爆发之前，阿里巴巴的增速就已经放缓了。2011第一季度增速继续明显下降，没什麽悬念。（完）

China Mobile Looks for Help in Handsets

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China Mobile (NYSE: CHL; HKEx: 941), the world’s biggest mobile carrier and increasingly one of the world’s most boring companies, is trying to bring some zip back to its bottom line by selling phones. The company has just reported another quarter of snooze-worthy numbers that saw its profit rise a scant 3.7 percent — repeating a refrain from the last two to three years. (English article) The company, which has been loathe to promote its second-rate 3G service, keeps trying to wow the market with talk of 4G and how everything will get better then. But since that’s so far off — at least 3 years by most estimates — now it’s turning to cell phones as well to try and jazz up its bottom line, with its buy out of Topssion, a customerizer and distributor of handsets, from its former partners that included ZTE (HKEx: 763; Shenzhen: 000063) and Huawei. (English article) Topssion isn’t a company I’ve ever heard of, so don’t look for any results too quickly. But if China Mobile really puts its mind to this, especially given its huge clout in the handset market, this buy could still end up being a lucrative and much needed source of new income to boost its anemic bottom line.

Bottom line: China Mobile is in desperate need of more lucrative businesses to jump start its profit growth, and its purchase of a China-based handset company should help in that direction.