Bottom line: 55Tuan’s stock is likely to move steadily downward following its long-delayed IPO, while the booming P2P online lending sector could be due for a bust next year similar to the recent one for group buying sites.
P2P lending site Jimu Box raises big funds
After writing far too much about the repeatedly-delayed IPO for group buying site 55Tuan (Nasdaq: WOWO), I’m happy to report the offering has finally happened and now I can stop following this company. The 2 main reasons for writing about this offering at all were its potential to become China’s first publicly listed group buying site, and also the first Chinese Internet firm to list in New York this year. The actual company and offering were both quite small and the debut went reasonably well, which I’ll detail shortly.
Meantime, another new fund-raising story has me a bit more excited, with peer-to-peer (P2P) lending site Jimu Box on the cusp of a major new funding that will reportedly total about $400 million. It does seem somewhat appropriate to group the 55Tuan and Jimu Box stories together, since P2P companies are now in the midst of a similar boom that group buying sites experienced when they first burst on the scene 5 years ago. Read Full Post…
Bottom line: Xiaomi’s diversified sales strategy in India could help reverse recent setbacks, but could ultimately undermine the carefully cultivated cool and trendy image that has been key to its broader success.
Xiaomi adds traditional retailers in India
Smartphone sensation Xiaomi is making a risky move in India, abandoning its trendy online-only sales model as it faces headwinds in a market that has become its first major stepping stone onto the global stage. Xiaomi is calling the decision to sell its phones through traditional retail stores a tactical move, in a nod to the less advanced state of India’s Internet compared its home China market.
While that may be true, this new move also hints at signs of distress as Xiaomi faces new challenges in India on several fronts. One of those centers on an intellectual property dispute with global telecoms titan Ericsson (Stockholm: ERICb), which forced Xiaomi to stop selling its higher-end phones in India last December. The other big challenge is coming from other Chinese smartphone makers like Meizu, which are attempting to copy Xiaomi’s early success in India. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 9. To view a full article or story, click on the link next to the headline.
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Eying Developers, Intel (Nasdaq: INTC) Launches 120 Mln Yuan China Incubator (Chinese article)
Bottom line: Baidu may never recover the medical advertising business it lost during a recent spat with a major hospital group, putting pressure on its stock as its revenue growth takes a hit over the next few quarters.
Baidu stock takes beating in hospital tiff
A spat between leading search engine Baidu (Nasdaq: BIDU) and one of its largest advertisers is taking a toll on the company’s stock, and also casting an illuminating spotlight on the nature of the advertising market in China. If the latest reports are correct, the boycott by members of the Putian Healthcare Industry Chamber of Commerce could be costing Baidu millions of dollars in lost ad revenue each day, underscoring the importance of such advertisers.
The tussle also reflects the strange nature of China’s advertising market, where ads making inflated claims are quite common. Many outsiders may also find it strange that hospitals are such an important source of advertising revenue in China, since such ads are far less common in more developed markets. The bottom line is that exaggerated ads and strange advertisers are the norm in China, but such revenue sources for companies like Baidu could shrink as the market starts to mature and more closely resemble the west. Read Full Post…
Bottom line: An IPO plan for Jupai could raise up to $100 million and perform relatively well if it can sell itself as an asset manager well positioned to profit from China’s real estate downturn.
E-House grooms Jupai for IPO
The year’s first IPO for a Chinese company in New York could finally be in the pipeline, with word that an asset management firm controlled by real estate services firm E-House (NYSE: EJ) has made its first filing for a listing. The plan comes in a broader announcement by E-House, which has transferred its asset management business to a third company called Jupai, which in turn has submitted a draft registration to the US securities regulator in preparation for a proposed IPO.
If the plan goes forward, it could become the first listing for a Chinese company in New York this year, stealing the distinction from another IPO plan by group buying site 55Tuan. IPO watchers will know that 55Tuan filed its listing plan back in January, but missed several deadlines for unexplained reasons without formally saying it is scrapping the plan. (previous post) Read Full Post…
Bottom line: Products like Qufenqi.com that encourage buying on credit are leading a new wave of online financial products, but could lead to irresponsible borrowing and defaults without proper consumer education.
Qufenqi soars on credit buying
China’s recent financial services boom took a new twist last week, when a start-up e-commerce firm specializing in credit-based purchasing won big new funding and a lofty valuation to support its expansion. Kuaile Shidai’s rapid growth extends a wave of new financial products hitting the market, mostly backed by online companies that can quickly establish a national presence and aren’t subject to the same heavy restrictions as traditional firms.
But while most new firms so far have focused on investment services, Kuaile Shidai is attracting customers by selling goods like smartphones and cameras on credit, and then taking repayment in installments. Such a business model is quite common in the west, and lies at the foundation of the credit card system. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 8. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Retreats on Chinese Private Hospital Advertising Boycott (English article)
Express Mobile Files Patent Infringement Claims Against Alibaba (NYSE: BABA) (PRNewswire)
BYD (HKEx: 1211) Announces Sale of Electronic Component Unit For 2.3 Bln Yuan (HKEx announcement)
Bottom line: Alibaba’s shares will continue to sag through the rest of the year on any news about the company, whether good or bad, as investors exit the stock to lock in big gains.
Alibaba shares continue downward trend
My earlier theory that shares of e-commerce giant Alibaba (NYSE: BABA) will continue to slump on any news, good or bad, is playing out as the shares re-approach a post-IPO low on a mixed series of headlines about the company. At this point the stock is simply on a downward track, as investors of all ilk who made big profits from the company’s meteoric rise sell their shares to lock in some gains. The pressure looks set to continue for the rest of the year, following the end of a post-IPO lock-up period last month that will allow Alibaba’s earliest investors to join the selling frenzy. (previous post) Read Full Post…
Bottom line: Shanda Games is likely to close its privatization by next month, as group founder Chen Tianqiao finishes dismantling his entertainment empire to try a possible new career in private equity.
De-listing looms for Shanda Games
The long and tortured privatization Shanda Games (Nasdaq: GAME) could finally be near, with word that a group bidding for the faded online gaming giant has finalized its funding for a $1.9 billion buyout. If and when this buyout finally closes, it will mark the end of a privatization bid that began more than a year ago. That would easily make it the most drawn out such buyout among about a dozen major Chinese companies that have left New York over the last 2 years due to lack of interest from investors. Read Full Post…
News of the looming closure of one of Shanghai’s oldest wet markets is once again casting a spotlight on the issue of traditions, and their place in our city is it tries to balance its move into the future while also preserving some of its past. At the same time, a separate story about a new helicopter tour of some Shanghai’s famous sights is igniting another controversy over the high prices for a type of attraction that is clearly part of our city’s future.
These 2 stories nicely summarize the many conflicts between old and new that seem to grip our city on a daily basis. One thing I love about my adopted city is the huge contrasts here that often see people living in very basic conditions on the same streets shared by state-of-the-art high-rises. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 4-7. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Unit, Xiaomi Seal Milestone Link (English article)
Shanda Games (Nasdaq: GAME) Enters Definitive Agreement For Going Private (PRNewswire)
Installment Plan E-tailer Qufenqi Wins Series D Funding, $1 Bln Valuation (English article)
TCL (Shenzhen: 000100) Invests 3.3 Bln Yuan In Bank Of Shanghai In Financial Drive (Chinese article)
55Tuan Speaks Up, Says IPO Won’t Come Until After April 7 (Chinese article)
