Bottom line: Apple’s new solar power initiative in China is a highly symbolic move to curry favor with local officials, and should win the company positive public relations points at very little cost.
Apple announces China solar farms
I have to commend Apple (Nasdaq: AAPL) for finally realizing it needs to improve its image in China, with word that the global tech giant is investing in 2 new solar farms to be built in interior Sichuan province. The move is actually quite masterful, as Apple is at once killing many birds with a single stone as it works to curry favor with Beijing.
The 2 new projects will contribute to China’s recent drive to produce more clean, renewable energy, which has been one of Beijing’s top priorities these last couple of years. The new farms are also being built in China’s interior, which has been a priority area for investment by Beijing leaders eager to reduce the wealth gap between interior regions and wealthier coastal areas. Last but not least, these new investments should be quite inexpensive for a company like Apple, and carry relatively small risks. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 22. To view a full article or story, click on the link next to the headline.
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Yum (NYSE: YUM) CEO Says China Business Mending, Sees Strong Year-End (English article)
ICBC (HKEx: 1398) To Provide $4.3 Bln In Financing For Pakistan Power Projects (English article)
Forbes Releases Wealthiest Chinese List, Internet “Big 3” BAT Chiefs In Top 10 (Chinese article)
Bottom line: A recent stabilization of China Mobile’s profits and revenue per user could be short-lived, and declines could resume and accelerate later this year as its rivals ramp up their 4G promotions.
China Mobile earnings report excites investors
Telecoms juggernaut China Mobile (HKEx: 941; NYSE: CHL) passed an important milestone in its latest quarterly results, posting its first increase in years for average subscriber revenue on strong gains for its new 4G service. But that milestone was partly offset by weakness in data services, its biggest future growth engine, hinting that the turning point for average revenue per user (ARPU) may be short-lived.
Of course we’ll have to wait for later quarterly results to see if China Mobile can continue to improve its revenue per subscriber, which will be critical to the company’s future as the Chinese mobile market rapidly approaches saturation. I wouldn’t be surprised if the figure start to erode again by the end of the year, due to stiff competition from rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU), which are just starting to aggressively promote their own new 4G services. Read Full Post…
Bottom line: Government officials are being forced to deal carefully with newly minted Internet giants like Alibaba, which sometimes commit transgressions due to their youth but also provide huge contributions to China’s economy.
Alibaba a double-edge sword for govt
A trio of stories about Alibaba (NYSE: BABA) nicely summarize both the risks and benefits that China’s Internet juggernauts present for the government, which must walk a fine line between taming these newly minted giants while being careful not to kill such economic powerhouses. In just the space of a decade, Alibaba, alongside Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU), have grown rapidly from venture-funded start-ups to become some of the world’s most valuable companies.
That growth and status has brought not only big prestige to China, but also valuable tax dollars to local governments and high-tech jobs that Beijing wants to replace lower-tech manufacturing labor. But at the same time, such young companies are particularly vulnerable to missteps, which can create chaos in the marketplace and Beijing needs to be careful to control. Read Full Post…
Bottom line: Solar products maker Tianwei is likely to get a government bailout before it defaults on an upcoming bond payment, while a massive 2 GW solar farm being built by a new private equity fund is likely to get completed.
Tianwei struggles under huge debt
Two solar news items are drawing attention to both the opportunities and challenges facing this increasingly schizophrenic sector in China. A new mega-project is spotlighting the huge opportunities for new construction in the space, with word that a recently launched private equity fund plans to build a massive solar farm with a whopping 2 gigawatts of capacity. But big challenges are also apparent in another story, which says mid-sized player Baoding Tianwei is on the cusp of defaulting on a bond interest payment as it faces a cash crunch due to falling prices. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 21. To view a full article or story, click on the link next to the headline.
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Bottom line: Baozun’s IPO should achieve its $200 million fund-raising target and the stock could perform relatively well for the rest of the year if it can show that it will become profitable for all 2015.
Baozun files for $200 mln IPO
The first serious Internet IPO of the year could finally be in the pipeline, with word that e-commerce services provider Baozun has filed for a New York listing that would be a first-of-its-kind for this type of company. Media are calling Baozun an e-commerce firm, but the reality is that the company helps others design and operate e-commerce sites, meaning it doesn’t have to compete itself in the fiercely competitive space.
The company’s largest shareholder is actually e-commerce leader Alibaba (NYSE: BABA), which holds 23 percent of Baozun. That relationship underscores Baozun’s unique market position as a service provider rather than actual website operator, and the company cited third-party data saying it currently controls about 20 percent of its market. The Alibaba relationship also provides important ties with many major retailers that already do business on Alibaba’s hugely popular Tmall. Read Full Post…
Bottom line: 58.com’s new Ganji tie-up looks like a smart partnership that should create a clear industry leader with a strong strategic partner in Tencent, though the stock could be set for a short-term correction due to overvaulation.
58.com buys 42 pct of Ganji
China’s Internet has just gained a major new player through the combination of online classified sites 58.com (NYSE: WUBA) and Ganji, which together will have a market value approaching the $10 billion level. Few companies outside the “Big 3” of Baidu (Nasdaq: BIDU), Tencent (HKEx: 700) and Alibaba (NYSE: BABA) can boast such valuations, and this particular deal seems to mark the emergence of a new sector leader that could even become an acquirer on the global stage.
Of course it’s easy to talk about going global, but actually doing that has been far more problematic for China’s booming field of Internet players. Still, this latest deal appears to show that 58.com may have the savvy that some of its larger rivals lack to make the global push, perhaps using this Gangji deal as a template for more strategic acquisitions in developing markets similar to China. Read Full Post…
Shanghai Auto Show says goodbye to sexy car models
Many car fans in Shanghai may be bracing for a shock next week, as the biannual Shanghai International Automobile Industry Exhibition gets set to hold its first-ever edition without skimpily-clad models draping themselves over cars and prancing around the stages. Of course I’m being just slightly sarcastic in saying car buffs may be disappointed, since most of these people probably go to the show to see the automobiles and other latest accessories and gadgets on display.
Instead, the highly-discussed decision to ban the usual sexy models from this year’s Auto Show could disappoint some of the many mainstream consumers who might secretly come more to watch people than actual cars. Some might argue the decision seems overbearing and a bit of a killjoy. But the reality is it should bring a much-needed degree of respect to Chinese trade shows that are sometimes ridiculed by foreigners for their circus-like atmosphere. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 18-20. To view a full article or story, click on the link next to the headline.
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58.com (NYSE: WUBA) Acquires Strategic Stake In Ganji, Investment by Tencent (PRNewswire)
E-Commerce Trust Services Firm Baozun Files For $200 Mln US IPO (Chinese article)
Bond Interest Default Looms For Solar Products Maker Baoding Tianwei (Chinese article)
After 8 Years Of Failing, Baidu (Nasdaq: BIDU) Shuts Japan Search Engine (English article)
China Minsheng Investment Corp To Invest 15 Bln Yuan In 2 GW Solar Farm (Chinese article)
Bottom line: P2P lenders like Lufax and Jimu Box have become the latest hot ticket for Chinese Internet investors, and one or more could make an IPO later this year to seize on the positive sentiment.
Lufax raises $500 mln
I remember a time not long ago when China tech deals worth just $10-$20 million were considered big and worthy of news, as such sums looked big when the sector was just starting to develop. Nowadays the threshold has risen sharply as both domestic and international investors flood into the space. That’s definitely the case with the latest mega-deal, which has seen peer-to-peer (P2P) lending platform operator Lufax raise a cool $485 million in new funding round, a record for the fast-emerging space.
