A new race looks to be shaping up to be first to market in China’s wildly hot group buying space. First I wrote last month about a company named Dianping that was moving toward what looks like an IPO in the latter half of this year, (previous post). Now we’re hearing about another company called Lashou making similar moves (English article; Chinese article). According to one report, Lashou is getting a major round of 
late stage venture money around mid year, which looks suspiciously like pre-IPO funding. This looks a lot like the race that developed late last year between video sharing sites Youku (NYSE: YOKU) and Tudou, which was ultimately won by Youku. It’s probably too early to say who’s ahead this time, though Dianping may have an early lead due to the more advanced stage of its venture funding. Look for some nice returns to whoever makes it first.
VERDICT: Look for a race between Dianping and Lashou to be China’s first group buying site to make an overseas IPO this year, with Dianping having a slight early lead.
It’s a relatively slow news day, so I thought I’d start off with another “seeing is believing” story, this one on Sina’s (Nasdaq: SINA) wildly popular microblogging Weibo service. Sure, we’ve all heard about how Weibo is becoming the Twitter of China, but yesterday I got to see the real thing in action and it was quite impressive. Within literally 2 or 3 minutes of an acquaintance posting an item on his Weibo site about my blog, the “news” had been rebroadcast by at least 3 or 4 of his followers, and a woman sitting behind us in the coffee shop where we talking, whom neither of us knew, came over and said hello. Granted, none of this resulted in a significant increase in traffic to my blog, but that’s really beside the point. Clearly lots of people with not enough to do are spending time on this thing, which a savvy Sina should easily be able to monetize and use to generate handsome revenues and profits. The way this thing is growing, with a current user base of over 100 million, I see spin-off and IPO not far down the line, and another feather in Sina’s cap as it tries to become a diversified Web company.
regulator issuing 4G licenses anytime soon, perhaps late 2012 at the very earliest. China Mobile’s earnest pressing ahead with 4G trials, at least in my mind, is probably more wishful thinking, as the company loses some of its colossal market share in the 3G space to smaller rivals China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 762; NYSE: CHT).
Chinese regulators’ ill feelings towards the NSN-Motorola deal, and an ongoing Huawei lawsuit against Motorola likely isn’t helping the matter. Of course, all of this is politics and has little or nothing to do with the anti-trust functions the regulator is supposed to fulfill. If this is a sign of things to come, China is sure to come under fire for its growing willingness to block global m&a under a process that is completely opaque and smacks of politics.
After numerous false starts in its journey to market, e-commerce site Dangdang (NYSE: DANG) finally seems to have hit its stride and is showing no signs of fading, at least not based on its latest results and guidance for the first quarter. (
So, now we hear that Sogou, Sohu’s (Nasdaq: SOHU) search engine wannabe, is losing money hand over fist, while Shanda Interactive (Nasdaq: SNDA), which can’t decide exactly what it wants to be, may be mulling a foray into online group buying similar to U.S. phenomenon Groupon. First Sogou, whose Chinese name, which translates to “search dog”, may be closer to the truth than it realizes. Sohu has been trumpeting this venture for five years now, and yet after all that time it has yet to take a significant bite out of the search market, still dominated by Baidu (Nasdaq: BIDU) and lost $27 million last year, even more than its $20 million loss the year before (
comany may be preparing to enter this business. (
this year, 7 Days is seeing growth more in the 30-plus percentage range. Part of the difference certainly comes from size, as 7 Days is coming off a smaller base. Home Inns also tends to be more conservative, though that can’t explain the difference in historical numbers from 2010. I’ve previously disclosed that I own some shares in Home Inns, as they’re the sector leader and I do like this sector. But perhaps the more up-and-coming 7 Days, which plans to open 290 hotels this year,versus the 270 new hotels planned in 2011 for Home Inns, might make the former a better bet for growth-minded investors. Then again, many a company has stumbled on overly aggressive expansion.
Since I’m writing this from a Starbucks (Nasdaq: SBUX) in Shanghai, I figured I’d start the day with a posting on the ubiquitous coffee chain’s plans for a major expansion in China — and its chances for success. The China Daily reports that Starbucks, following in the footsteps of other big global names like Nokia (Helsinki: NOK1V) and Dell (Nasdaq: DELL), is preparing to blaze a trail into China’s 2nd and 3rd tier cities, with plans to open 1,500 new stores by 2015. This kind of hyper expansion sounds very typically Starbucks, and its success or failure will depend highly on getting the recipe right for cities that are far more cost sensitive than Beijing or Shanghai. The report says Starbucks will develop more cakes and tea drinks as part of the drive, presumably to better suit smaller town tastes and wallets. Let’s face it: people go to these stores as much as a social thing as they do for the food, so there’s no reason people in smaller towns won’t want to socialize. The main issue will be getting the price right, as no one in these towns will want to spend a third of their monthly paycheck simply for the right to socialize.
Shanghai, leaving its leading doll as the latest casualty in the China retail market. (
showing it is hardly an innovator worthy of its position as the world’s fourth biggest PC seller. In the latest case of its follower approach, the company announced its going to launch the LePad 2, an updated version of its tablet PC. Uh, does this sound just a tiny bit familiar to anyone? If they’re going to so blatantly follow tablet PC leader Apple (Nasdaq: AAPL), at least they could wait more than a week after Apple’s big iPad 2 announcement to announce their own latest me-too product. I do like the fact that Lenovo is trying to develop its own “Le” line of products, including LePads and LePhones, to become more diversified in keeping with the times. But again, just take out the “Le” and substitute an “i” and … you get the picture. What’s more, the Apple products have a huge following in China, where Lenovo derives half of its revenue, while the Le monniker leaves most people scratching their heads. If Lenovo really wants to have a serious future in the global computing business, it’s going to have to step up its game a notch.
