The following press releases and media reports about Chinese companies were carried on October 17-19. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Offers $4.6 Bln for Rest of Youku (NYSE: YOKU) Video Site (English article)
Rare Store Sales Data Highlights Wal-Mart’s (NYSE: WMT) China Challenge (English article)
BrightFood to Buy 50 Pct of New Zealand Meat Processor for $200 Mln (English article)
Marvell (Nasdaq: MRVL) Cuts 800 Jobs in China, Workers Stage Protest (Chinese article)
IBM (NYSE: IBM) Gives Beijing Access to Software Code (English article)
Bottom line: AMD’s sell-down of its China assets, and a record fine against Qualcomm earlier this year reflect China’s fading attraction for global chip makers due to technical and bureaucratic obstacles.
AMD sells down China operations
A trio of headlines from the chip-making sector is showing just how much China has lost its luster for big multinationals, as logistical and technological issues dog this once-promising industry. Leading the headlines is word that struggling US chip maker AMD (NYSE: AMD) is selling most of its Asia-based foundry business, including sizable China operations, to a Chinese partner.
That was followed by announcement of a new very domestic chip-making joint venture anchored by SMIC (HKEx: 981), China’s largest contract foundry that at one time had hopes of becoming a global giant. Last but not least is a headline showing that US giant Qualcomm (Nasdaq: QCOM) was the main recipient of China’s recent anti-monopoly fervor, paying 90 percent of the penalties meted out by one of the nation’s main anti-trust regulators in 10 cases so far this year. Read Full Post…
Bottom line: LeTV’s fledgling e-commerce business could rise quickly but may also experience growing pains that bring negative publicity, as media start to tire of the company’s constant hype and its fortunes start to stagnate.
LeTV jumps into e-commerce
Online video sensation LeTV(Shenzhen: 300104) has never been one to do anything quietly, and that’s true once more with its sudden jump into the hotly contested e-commerce space. In its usual high-profile fashion, LeTV has sent out emails to reporters detailing its huge success with a recent e-commerce promotion, and also its launch of a US e-commerce site.
But the media weren’t giving to much ink to LeTV’s hype, and instead focused on negative reports of logistical problems connected to its recent promotion on September 19. Such problems don’t come as a huge surprise for an e-commerce newcomer like LeTV, which is far better known for its online video service than Inernet shopping. Read Full Post…
Bottom line: Jiuxian’s decision to list in China and Dangdang’s continued effort to de-list from New York show that low-quality Chinese firms will have difficulty getting attention from US investors and are probably better listing in their home market.
Jiuxian wine cellar to list on China’s OTC
Two news items continue to show a growing distaste for New York by Chinese web firms, led by word that veteran online wine seller Jiuxian has just received approval for an IPO on China’s over-the-counter (OTC) board. The second items comes from veteran e-commerce site Dangdang (NYSE: DANG), whose outspoken CEO is quoted complaining about his company’s low valuation and saying his plans are moving forward to de-list from New York and re-list in China.
The most commonly heard theme to these stories is that Chinese firms can get better valuations in their home market than New York, because their names are more recognized in China. But another theme that gets far less attention is that many of these complaining companies are simply low-quality products whose only real attraction is their “made in China” label. Read Full Post…
The following press releases and media reports about Chinese companies were carried on October 16. To view a full article or story, click on the link next to the headline.
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AMD (NYSE: AMD) Brings in Much-Needed Cash Through Asset Sale to China (English article)
Online Wine Seller Jiuxian Approved to List on China’s OTC Board (Chinese article)
CCB (HKEx: 939) in Talks to Buy LME Broker Metdist – Sources (English article)
Bottom line: Wal-Mart’s loss of China Resources as one of its major Chinese partners reflects rapid changes in the traditional retailing market, and could prompt Wal-Mart to accelerate an overhaul of its broader China strategy to focus more on e-commerce.
China Resources dumps Wal-Mart JV stake
Just 3 months after sacking the founders of its China e-commerce site, US retailing giant Wal-Mart (NYSE: WMT) has suffered yet another blow in the huge but difficult market with the loss of a major local partner for its traditional brick-and-mortar stores. That move is seeing China Resources, one of the country’s biggest and oldest consumer names, dump shares worth $515 million in a number of Wal-Mart stores that it jointly owns with the US retailing giant.
The move isn’t all that surprising for a number of reasons, but still doesn’t look too good for Wal-Mart in the fast-changing Chinese retailing market. For starters, China Resources is already a major owner of smaller supermarket chain called Vanguard. It also moved into the hypermarket business 2 years ago when it effectively took over the China-based operations of British giant Tesco (London: TSCO) through a joint venture. (previous post) Read Full Post…
Bottom line: Huawei’s ongoing surge should help to consolidate its position as China’s leading domestic smartphone brand, while a newly formed cell tower operator will relieve China’s 3 telcos of the burden of owning and operating such assets.
New cell tower operator takes shape
The telecoms space is buzzing on both the operator and consumer products sides, with surging smartphone maker Huawei and a new cell tower operator called China Tower both rising in the latest headlines. The higher profile of these 2 telecoms headlines has Huawei continuing its rise to become the world’s third largest smartphone brand, stealing the title from the fading Xiaomi. Meantime, all 3 of China’s big state-run telcos have come out with one of their simultaneous announcements saying they have formally transferred their cell tower assets to China Tower.
This pair of stories is quite different, but the bigger picture is one of trying to improve by becoming more efficient and diverse. In the case of Huawei the company is trying to leverage its long experience in making telecoms equipment to diversify into the consumer-oriented smartphone space. In the second case, China’s telecoms regulator is trying to improve efficiency among the nation’s 3 stodgy telcos by doing something that carriers in the west did on their own long ago. Read Full Post…
Bottom line: Lenovo and Tsinghua Unigroup may be considering rival bids for EMC following a $67 billion offer from Dell, but will ultimately abandon any such plans due to high price and political sensitivities.
Unigroup, Lenovo eying rival bids for EMC?
As the blockbuster deal that would see faded PC giant Dell buy leading memory products maker EMC (NYSE: EMC) for $67 billion buzzes through the high-tech headlines, I thought I would look at 2 leading Chinese candidates whose names were noticeably absent on the list of companies that might make rival bids for EMC. China tech watchers will know I’m referring to local PC giant Lenovo (HKEx: 992), which has never seen an acquisition opportunity it didn’t like, and the more recently acquisitive Tsinghua Unigroup.
Both of these names could be interested in EMC for similar reasons, and each could theoretically make rival bid for the US company. Dell’s newly announced purchase of EMC would be one of the biggest-ever sales in the high-tech world, but also includes a 60 day period where others could make counter offers. Other names mentioned that could make such bids include the likes of IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Hewlett-Packard (NYSE: HPQ), though sources say the chances of such a bid are slim. Read Full Post…
The following press releases and media reports about Chinese companies were carried on October 15. To view a full article or story, click on the link next to the headline.
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Huawei Biggest China Smartphone Brand in Q3, Xiaomi Finishes Second (Chinese article)
3 China Telcos Complete Sale of Towers to China Tower (HKEx announcement)
Online Loan Search Platform Rong360 Lands 1 Bln Yuan Series D Funding (English article)
LeTV (Shenzhen: 300104) in Product Delivery Scandal After Sept 19 Promotion (Chinese article)
Geely (HKEx: 175) Said to Plan Research Center for London Black Cabs in UK (English article)
Bottom line: New global initiatives by Alibaba and JD.com are largely cosmetic and could bring some short-term support to their stocks, but both will need to show results to satisfy investors over the longer term.
Alibaba, JD in outbound migration
China’s 2 leading e-commerce firms are in a sudden migratory mood, with Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) both announcing the opening of new offices in the US and Europe. At the same time, Alibaba has also declared that the headquarters for its annual November 11 Singles’ Day shopping extravaganza will migrate, leaving its original location in the company’s hometown of Hangzhou to set up a new shop in Beijing.
The sudden migratory story looks squarely aimed at investors, who want to see these domestic e-commerce giants laying the groundwork for future growth beyond their home China market. But while opening new offices may look nice on the surface, the US and European markets that both companies are targeting will be extremely tough due to competition from entrenched local players and global giant Amazon (Nasdaq: AMZN). Read Full Post…
Bottom line: YIngli’s sudden repayment of 70 percent of a maturing bond shows the government may provide partial assistance for struggling solar panel makers, in an effort to engineer an orderly shut-down of these weaker companies.
Yingli makes surprise debt repayment
The story of China’s troubled solar panel sector has taken an unexpected twist, with word of a last-minute partial reprieve for Yingli (NYSE: YGE), one of the weakest major players that looked set to default on a large debt payment. The development came quite quickly and had a few unusual elements that hint strongly at government intervention.
Yingli’s case is important because it will show to what extent Beijing and local governments may come to the rescue of ailing companies from the solar panel sector. Earlier signals had indicated Beijing was prepared to let weaker companies fail or get acquired, providing a second round of much-needed consolidation for a sector plagued by overcapacity. But this latest sign shows Beijing and especially local governments may be losing some of that resolve as China’s economy slows. Read Full Post…
