Bottom line: Google is likely to soon announce that Huawei will make its next generation of Nexus smartphones, in an alliance that looks savvy for both companies for political and practical reasons.
Google, Huawei preparing Nexus partnership?
Global search giant Google (Nasdaq: GOOG) is continuing its low-key drive back to China, with word the next model from its Nexus line of smartphones will be produced by fast-rising domestic brand Huawei. The move is unconfirmed and sourcing in the reports comes from an unnamed Huawei employee.
But such a move would certainly be consistent with Google’s other recent actions, which have seen it moving quietly behind the scenes for a more active role in China’s smartphone market, the world’s largest. Despite its lack of formal presence, Google already enjoys a huge passive role in the market due to the huge popularity of its Android operating system, which is used by nearly all of China’s homegrown smartphone makers. Read Full Post…
Bottom line: New fund raising by Ctrip and Tujia looks like far more than either company needs, and is part of a broader wave seeing Chinese Internet sites raise big funds to take advantage of strong investor sentiment.
Tujia raises $250 mln
Someone recently asked me why so many companies in China are currently rushing to raise cash, and, after some quick thought, I provided my best answer: Because they can. That seems to be the mentality among Chinese companies these days, including leading online travel agent Ctrip (Nasdaq: CTRP), which has just issued bonds to raise a cool $1.1 billion in new cash that it really doesn’t need. But that statement isn’t completely true, as Ctrip is in another headline that has it joining in a new $250 million funding round for Tujia, China’s equivalent of Airbnb. Read Full Post…
Bottom line: Uber and rival homegrown Chinese hired car services are likely to ultimately get a green light to operate throughout China, providing a much-needed shot of competition to traditional taxi fleets.
Uber plows big bucks into China
Anyone who thought that US hired car services hotshot Uber might be stalling in China might want to reconsider that view, following new reports that say the company has budgeted a cool $1 billion for its China expansion this year. The reports are all citing an internal company email, which strongly suggests that Uber deliberately leaked the message to quash any talk that it might be losing its resolve to push ahead in a China market that is quite difficult but also has huge profit potential.
At the same time, another report is saying that Uber and other providers of similar hired car services could ultimately find their business model outlawed, as a number of cities consider banning or heavily restricting the use of private cars that compete with traditional taxis. I seriously doubt that will happen, however. That’s because Beijing has shown an usual desire to accommodate these newer, high-tech services that have the potential to drive China’s economy in the future as many traditional industries lose momentum. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 19. To view a full article or story, click on the link next to the headline.
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Alibaba’s (NYSE: BABA) Ant Financial Valued at $45 Bln After New Funding: Source (English article)
Huawei to Make Nexus Smartphones for Google (Nasdaq: GOOG) – Employee (Chinese article)
Bottom line: More than $20 billion in new fund-raising deals by China companies outside the country reflects the huge amount of global money now chasing Chinese investments, lured by the nation’s soaring stock markets.
Billions flood into Chinese companies
I was so surprised by the number of major new China-related deals churning through the fund-raising system that I decided to do some math, which showed that 5 deals in the headlines today were worth a staggering total of $21 billion. Those deals involved a wide range of topics, led by a new $9 billion privatization bid for software security specialist Qihoo 360 (NYSE: QIHU), the largest such plan to date among a wave of Chinese firms de-listing from New York.
That deal was followed in size by another similar one from Focus Media, whose $7.4 billion plan to re-list in Shanghai following its own New York privatization has hit an unexpected hurdle with an investigation of the shell company that is hosting the backdoor listing. The there’s a hefty $3.5 billion fund-raising plan by leading brokerage Citic Securities (HKEx: 6030; Shanghai:006030), which has attracted 2 of Singapore’s leading investors as it prepares to issue new shares in Hong Kong. Read Full Post…
Bottom line: HNA’s purchase of a stake in a small US hotel chain could presage a larger buyout bid for the company in partnership with a Chinese operator looking to expand abroad.
HNA checks in to Red Lion
We’ll take a break today from all the recent mega-deals involving Chinese firms, and focus our attention on a much smaller hotel purchase by private equity high flyer HNA Group. Frankly speaking, I find this new investment in US hotelier Red Lion Hotels (NYSE: RLH) a bit puzzling, as the actual size of the deal is very small and hardly worthwhile for a leading Chinese private equity investor like HNA. But that said, global real estate and hotels in particular have emerged as a hot commodity for big Chinese investors over the last year, meaning this particular deal could presage a larger purchase in the sector by HNA as it tests out the market. Read Full Post…
Bottom line: Cisco’s dismissal of several top China executives reflects its struggles in the market, and the situation will only improve if it takes a more conciliatory approach to address Beijing’s national security concerns.
Cisco lays off China execs
Beijing’s ongoing clampdown on foreign tech companies over national security concerns is taking a toll on Cisco (Nasdaq: CSCO), with word that the US networking equipment giant is laying off several of its top local executives due to falling China sales. This particular development doesn’t come as a huge surprise due to Beijing’s recent obsession with national security and suspicion of foreign tech companies. But Cisco’s struggles do contrast sharply with that of Hewlett-Packard (NYSE: HPQ), which appears to be faring better in China due to its more conciliatory approach to address Beijing’s concerns.
The following press releases and media reports about Chinese companies were carried on June 18. To view a full article or story, click on the link next to the headline.
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Citic Securities (HKEx: 6030) Seeks $4.7 Bln in Share Sale; Temasek Among Buyers (English article)
Qihoo 360 (NYSE: QIHU) Announces Receipt of Proposal to Acquire the Company (PRNewswire)
Alibaba (NYSE: BABA), Foxconn in Talks to Invest $500 Mln in India’s Snapdeal (English article)
Trina Solar (NYSE: TSL) Plans $500 Mln India Plant Amid Ban (English article)
Imax (NYSE: IMAX) Sets China Unit IPO Goal at $300 Mln (English article)
Bottom line: A record IPO by Guotai Junan and massive private fund raising by a relatively unknown website reflect the overheated state of China’s capital markets, and could reflect a cresting of the current stock market rallies.
Guotai Junan eyes mega-IPO
With China’s stock market posting 2 consecutive days of large losses, everyone is starting to guess whether the current stock market rally may have finally crested and a period of correction begun. Two of the latest fund-raising headlines show just how frothy and ambitious activity has become, led by a plan for China’s biggest IPO in 5 years from securities brokerage Guotai Junan. The other headline comes in the venture funding space, where Zhubajie, a relatively unknown company in the hot crowdsourcing sector, has just landed an impressive 2.6 billion yuan ($420 million) in new funding. Read Full Post…
Bottom line: A probe against WeChat in Taiwan is likely to see its local offices shut down and Tencent evicted, reflecting the many challenges Chinese tech companies will face as they try to expand abroad.
WeChat faces Taiwan eviction
Taiwan may share many cultural traits with China, but its government certainly doesn’t seem to have much love for Chinese technology. The list of Chinese firms running into trouble on the island has just gained a new member, with word that Tencent’s (HKEx: 700) hugely popular WeChat is facing eviction from Taiwan for possibly violating local investment rules.
This brewing setback is interesting mostly for political reasons, and also because it reflects the troubles that WeChat has faced in its fledgling global expansion. From a practical perspective, Taiwan looks like an easy market for Chinese tech companies due to the shared language and culture. But the fact is that Taiwanese preferences are often quite different from China’s, and in this case the reality is that Japan-leaning Taiwanese far favor rival Japanese product Line to WeChat. Read Full Post…
Bottom line: China’s traditional broadcasters need to move quickly to forge new, meaningful partnerships with private companies outside the media space, or risk being overtaken by new media rivals.
Mango TV ties with China Mobile
Two of China’s leading regional broadcasters have been in the headlines these last 2 weeks, as they scramble to transform themselves to compete with a new generation of web-based private companies that are rapidly stealing their viewers and advertising dollars. Both stories involve new tie-ups with industry outsiders, reflecting the need to bring in new expertise to help these state-run broadcasters leverage digital and web-based technologies that will dominate the media landscape of the future.
The first big story came 2 weeks ago, when Shanghai Media Group (SMG) signed a landmark deal with e-commerce titan Alibaba (NYSE: BABA) to develop a financial news and information service that could someday take on the likes of global giants like Bloomberg and Reuters (NYSE: TRT). The second came last week, when media reported that Hunan Satellite TV had raised 1 billion yuan ($162 million) in the first private funding round for its fledgling paid video service Mango TV. Read Full Post…
