Bottom line: Alibaba’s combining of its mapping and web browser units under a single leader marks the start of a necessary rationalization of its many acquisitions over the last 2 years, which could produce some odd pairings.
Alibaba combines UCWeb, AutoNavi units
After nearly 2 years of making billions of dollars in strategic acquisitions, we’re finally seeing an attempt by e-commerce giant Alibaba (NYSE: BABA) to integrate and rationalize some of those purchases through new tie-ups and other pooling of assets. In this case the integration is coming in an executive move, which is seeing the founder of its AutoNavi online mapping division leave the company. His former position will be taken over by the founder and head of Alibaba’s UCWeb browser division, combining the 2 units under the leadership of a well-respected tech leader named Yu Yongfu. Read Full Post…
Bottom line: Orient Securities IPO should price and debut strongly on strong sentiment towards brokerages, which should perform well over the short- to medium-term if China’s broader economy continues to slow.
Orient Securities IPO draws strong interest
Despite new uncertainties about their future, Chinese brokerages continue to remain a hot ticket as investors bet they’ll benefit from a booming domestic stock market and new business from a pilot program allowing more foreigners to buy Chinese stocks. That’s my assessment following word that the biggest domestic IPO since 2011, from Orient Securities, has been massively oversubscribed by a factor of more than 90. Put another way, some $150 billion worth of investor money is chasing the $1.6 billion offering, meaning barely 1 in 10 investors will be able to get any shares. Read Full Post…
Bottom line: Huawei’s and ZTE’s attempts to cultivate alternative brands with Honor and Nubia could both stand a relatively strong chance of success, though ZTE’s slower, more focused approach looks a bit more prudent.
Huawei holds Honor gala
Chinese smartphone makers Huawei and ZTE (HKEx: 763; Shenzhen; 000063) are trying to shed their stodgy images with newer brands targeting the kind of young trendsetters that have propelled start-up sensation Xiaomi onto the global stage. I got a chance to check out Huawei’s Honor brand phones and ZTE’s Nubia models last week at a major trade show in Spain, where both were trying to show that they can be just as hip and edgy as Xiaomi and Apple (Nasdaq: AAPL), the global leader in trendy, cutting edge smartphones. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 14-16. To view a full article or story, click on the link next to the headline.
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Citi-Linked China Broker’s IPO 90 Times Oversubscribed In $150 Bln Investor Rush (English article)
Alibaba (NYSE: BABA) Says UCWeb Chief Yu Yongfu To Head AutoNavi Unit (Chinese article)
Solar Panel Makers Setting Up Offshore Plants To Avoid US Anti-Dumping Tariffs (Chinese article)
Home Decoration Site To8to Completes $200 Mln Series C Funding (English article)
Bottom line: A widening investigation into violations of an anti-dumping solar panel settlement between China and the EU is likely to result in punitive sanctions, dealing a blow to the Chinese panel makers.
Solar settlement unravels
What started as some quiet rumblings earlier this week is quickly brewing into a major storm, with word that a landmark settlement between the EU and China a year ago to resolve an anti-dumping dispute over solar panels is quickly unraveling. In this case it’s probably more accurate to say the settlement was between the EU and actual Chinese solar panel makers, rather than an agreement between governments. That’s an important distinction, since Chinese companies are often far more likely to try to undermine such agreements by exploiting loopholes, unlike central governments that are usually a bit more trustworthy. Read Full Post…
Bottom line: Dianping’s bigger-than-expected fund-raising underscores its popularity among investors, and could pressure it to make an IPO worth $1 billion or more this year to capitalize on positive market sentiment.
Dianping closes $850 mln funding
China’s online group buying space could be closer to getting its first IPO, with word that Dianping, one of the industry’s 2 leaders, has just raised a whopping $850 million in its fifth funding round. The massive funding has actually been in the works since late last year, but kept growing as more investors clamored for a piece of this hot company. The move sends the latest signal that Dianping may be eying an IPO later this year that could raise up to $1 billion or more.
Word of the funding comes as a more advanced IPO plan has gone missing from smaller rival 55Tuan, which was hoping to become China’s first publicly listed group buying site. 55Tuan made a public filing for a New York IPO back in January, and a later filing indicated it planned to sell its shares and begin trading on February 25. But that date has come and gone with no listing, and there’s still no word on the reason for the delays more than 2 weeks later. Read Full Post…
Bottom line: Amazon’s opening of a shop on Alibaba’s popular Tmall looks like a shrewd move to boost its struggling China business, but is unlikely to raise its market share significantly.
Amazon opening store on Alibaba’s Tmall
Word that Amazon (Nasdaq: AMZN) will open a China store on Alibaba’s (NYSE BABA) popular Tmall marketplace has the online world buzzing that the US e-commerce giant is admitting defeat and failure of its China strategy. Some are even saying the move could mark an eventual closure of Amazon’s own China site, which has failed to attract a major audience despite huge investments by the company. But anyone reaching those conclusion should think again, as this particular move looks quite shrewd and could actually help Amazon to boost its struggling China business. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 13. To view a full article or story, click on the link next to the headline.
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Online Ratings and Group Buy Site Dianping Wins $850 Mln Series E – Sources (English article)
Tencent (HKEx: 700) Opens TMall Digital Store, Still Inaccessible On WeChat (Chinese article)
ReneSola (NYSE: SOL) Looks To Exit EU Solar Settlement Agreement (Chinese article)
Smartisan Enters Low-End Smartphones With 1,000 Yuan Model – Source (Chinese article)
Homeinns (Nasdaq: HMIN) Reports Q4 And Full Year 2014 Financial Results (PRNewswire)
Bottom line: Alibaba’s 2 latest big investments in Snapchat and Snapdeal look like good bets for strong financial returns, but are unlikely to produce any major strategic benefit.
Alibaba in talks for Snapdeal stake
I was a bit confused on my first reading of the headlines today, after seeing articles saying e-commerce leader Alibaba (NYSE: BABA) was in talks to invest in 2 companies whose “snappy” names sounded quite similar. But a closer reading made it clear that these were 2 very different deals, one involving the popular US social networking service (SNS) Snapchat, and the other involving a popular Indian e-commerce site called Snapdeal.
Despite their big geographic and product differences, these 2 deals seem to represent a growing trend for Alibaba, which is no longer acquiring companies but instead only buying small strategic stakes. The strategy looks mostly advantageous to the investment targets. That’s because it’s helping to push up the valuations of names like Snapchat and Snapdeal to frothy levels, much the way Alibaba used similar investments to pump up its own valuation in the run-up to its IPO last year. Read Full Post…
Bottom line: Baidu’s temporary halting of updates for its mobile operating system is likely to become permanent, and looks like a smart move as it focuses on more efficient ways to boost its mobile market share.
Baidu stops supporting Yun OS
In a move that seemed inevitable, Internet search leader Baidu (Nasdaq: BIDU) has put the brakes on its 3-year-old mobile operating system (OS) that was sapping big resources with little or no chance for long-term success. The move comes just a month after Baidu trumpeted the growing contribution of mobile revenue to its overall business, surpassing traditional desktop PC search revenue for the first time in December. There’s no mention in Baidu’s latest quarterly report of how much of its mobile search revenue came from smartphones equipped with its self-developed mobile operating system, Yun OS, but I suspect the answer was “very little”. Read Full Post…
Bottom line: China job cuts at GSK and Tesla reflect broader adjustments that major multinationals are making as Beijing cleans up its business climate and fails to meet many of its aggressive targets for new sectors.
GSK, Tesla take tough medicine with job cuts
Two high-profile multinationals are slimming down in China, with word that British drug giant GlaxoSmithKline (London: GSK) and US electric car superstar Tesla (Nasdaq: TSLA) have both made major job cuts to their local operations. Both cases acknowledge the difficulties of navigating the tricky China market, which superficially looks quite large and full of potential but in reality is quite fraught with obstacles.
Despite their differences, these 2 cases actually share some fundamental similarities based on unrealistic expectations many foreign firms have when they come to China. GSK’s woes stem from a bribery scandal that dates back almost 2 years, in which Beijing exposed and later punished the company for systematically bribing doctors and other medical professionals to purchase its drugs. Such practice is common in China, but Beijing is trying to clean up the business landscape. Read Full Post…
