Bottom line: Washington’s approval of the purchase of the Waldorf Astoria hotel by a Chinese insurer indicates a wave of similar real estate buying by Chinese investors will accelerate, resulting in a bubble likely to burst over the next decade.
Anbang closes Waldorf buy
Washington has just sent an important signal that it won’t seek to halt the growing tide of Chinese investment in US real estate, with word that Anbang Insurance has just closed its purchase of New York’s storied Waldorf Astoria hotel for nearly $2 billion. I was quite surprised at how quickly this deal closed, since the amount of money is huge and the deal itself also sparked some controversy over potential national security issues. More precisely, it took just over 4 months to close the purchase of one of the world’s most famous hotels at a record-setting price. Read Full Post…
Bottom line: Shares of China’s “Big 3” Internet firms of Baidu, Tencent and Alibaba will come under pressure in the next few months as investors tire of their heavy spending on mobile and resulting profit erosion.
Investors tire of Baidu mobile story
Internet search leader Baidu (Nasdaq: BIDU) has just become the second of China’s “Big 3” Internet firms to report its latest quarterly results, and investors were clearly unimpressed with its heavy spending on mobile Internet initiatives. Frankly speaking, I’m also a bit tired of hearing Baidu founder Robin Li talk about the importance of mobile at every opportunity he gets. But that said, the strategy certainly looks like a good investment for the future, even if the message has begun to get a bit redundant and has ceased to generate much excitement. Read Full Post…
Bottom line: New online service platforms from Lenovo and Tencent could both do reasonably well, but will face challenges due to inexperience and product limitations, respectively.
Hisense, Tencent join hands in gaming smart TV
The “platform” concept is becoming a hot area in China’s overcharged Internet world, as companies look for newer and better ways to deliver their products and services over a growing number of devices and online channels. That rush is behind 2 of the latest big moves in the space, one from PC giant Lenovo (HKEx: 992) and the other from Internet titan Tencent (HKEx: 700).
Lenovo’s new foray into online products and services has been in the headlines for the last few months, but I’ve finally received some clarification on what exactly is behind its plans for an online platform with the new name of ShenQi. Meantime, Tencent is aiming to boost its leading position in the online gaming space through a new tie-up with household electronics giant Hisense (Shanghai: 600060). That tie-up looks set to produce a new gaming TV that could compete with more traditional consoles from Microsoft (Nasdaq: MSFT) and Sony (Tokyo: 6753). Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 12. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Announces Q4 And Fiscal Year 2014 Results (PRNewswire)
Ant Financial To Invest In Tebon Fund Management – Source (English article)
China’s Huawei Says Its Ready For Transparency (English article)
500.com Ltd (NYSE: WBAI) Reports Q4and Full Year 2014 Financial Results (English article)
Waldorf Astoria Sale Marks Tip Of Chinese Money Into US Hotels (English article)
Bottom line: Tesla’s weak China performance owes mostly to its lackluster marketing to wealthy, status-conscious Chinese car fanatics, but its situation could quickly improve if it finds a new marketing-savvy country head.
Tesla looks for China jump-start
After roaring into China last year on a wave of hugely positive publicity, electric car superstar Tesla (Nasdaq: TSLA) has rapidly lost momentum and now appears on the cusp of a major overhaul in a bid to jump-start its prospects. This kind of development isn’t hard to understand, as Tesla’s charismatic CEO Elon Musk set the bar incredibly high when he sold his company’s first electric vehicle (EV) in China last April.
One of Musk’s and Tesla’s obstacles has been Chinese consumer reluctance to buy EVs, despite Beijing’s strong desire to promote the clean technology. But Tesla’s target market was never really the mainstream consumer anyhow, and instead Musk was pursuing wealthy, status-conscious people who like to be first adopters of trendy new technologies. In that regard, Tesla’s marketing efforts have also sputtered despite Musk’s strong launch for his brand in China last year. (previous post) Read Full Post…
Bottom line: Wanda is sending a bad signal by emphasizing its government ties in its latest overseas mega-purchase, reflecting the complex relationship between major Chinese firms and Beijing.
Wanda bounces into sports marketing
If big Chinese companies are trying to show their independence from Beijing, then property giant Dalian Wanda isn’t doing a very good job with its just-announced $1.2 billion purchase of a major European sports marketing firm. The mega purchase of Swiss firm Infront Sports & Media is certainly a major feat, but Wanda has made a questionable decision in focusing on the how the deal will help Beijing’s bid to win more major sporting events, including the 2022 Winter Olympics. Of course I’m being just a tad cynical here, but this kind of talk certainly won’t help Wanda and other major private Chinese companies convince western skeptics of their independence from Beijing. Read Full Post…
The Super Bowl may be the most watched TV program in the US, but it’s still relatively unknown in China due to the lack of popularity of American football. But the sport gained at least a few Chinese fans with its latest airing, as top executives from the likes of PC giant Lenovo (HKEx: 992) and online video firm LeTV (Shenzhen: 300104) tuned in to watch this year’s match-up that saw the New England Patriots defeat the Seattle Seahawks.
Meantime, an executive from the struggling Sina Weibo (Nasdaq: WB) was busy criticizing rival Tencent (HKEx: 700) for the latter’s freeze-out of several major Internet firms from its hugely popular WeChat instant messaging platform. Finally, we’ll end this week’s round-up of tech executive chatter with buzz that hints a former online literature pioneer may be preparing to emerge from a forced retirement, as he returns after a tough business battle of the sort that’s quite common in China. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 11. To view a full article or story, click on the link next to the headline.
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Dalian Wanda To Buy Swiss Sports Firm For $1.2 Bln Amid Entertainment Push (English article)
Tesla (Nasdaq: TSLA) CEO Threatens Firings After Dismal China Sales – Sources (English article)
Bottom line: Qualcomm’s settlement of a Chinese antitrust probe shows Beijing will be more open when taking similar actions against foreign firms, though it’s unlikely to take such a conciliatory stance with domestic companies.
Qualcomm settles China antitrust probe
After several months of reading reports that China was on the verge of wrapping up its antitrust probe of US telecoms chip giant Qualcomm (Nasdaq: QCOM), I’m happy to report that a landmark settlement of the deal has finally come. Headline writers will inevitably focus on the eye-catching figure of nearly $1 billion, which is the record amount that Qualcomm has agreed to pay to settle a probe that has lasted more than a year. But I’m most impressed by the unprecedented atmosphere of conciliation that came with this particular negotiation, which marks a huge change for Beijing regulators who are used to making decisions unilaterally with limited or no input from affected companies. Read Full Post…
Bottom line: Alibaba’s Meizu investment is likely to spark a round of similar buying by major Chinese Internet firms, but could jeopardize Meizu’s access to the latest Android technology from Google.
Alibaba invests in Meizu
E-commerce giant Alibaba (NYSE: BABA) is finally making a smart acquisition to revive its flailing smartphone initiative, with word that it’s investing a hefty amount in the well-respected second-tier player Meizu. This particular investment comes just 2 months after another similar deal that saw security software specialist Qihoo 360 (NYSE: QIHU) form another tie-up with smartphone maker Coolpad (HKEx: 2369), and could auger a new wave of similar investments by Baidu (Nasdaq: BIDU), Tencent (HKEx: 700) and perhaps one or two other cash-rich Internet companies.
The news could provide some new breathing room for companies like Meizu and Coolpad, since they and many of their domestic peers are probably losing big money due to intense competition in China’s overcrowded smartphone space. But this new buying spree could also mean that competition is unlikely to abate anytime soon, since wealthy companies like Alibaba and Qihoo are unlikely to give up easily on their new smartphone initiatives. Read Full Post…
Bottom line: China’s Internet companies should create a code of conduct to ensure fair competition, and the regulator should step in when they abuse their market dominance to promote their other products.
WeChat freezes out Alibaba
Internet giant Tencent (HKEx: 700) was in the headlines for much last week, as reports circulated that it had cleansed its popular WeChat mobile messaging platform of several services from rival Alipay, the popular electronic payments unit of rival Alibaba (NYSE: BABA). Tencent certainly isn’t alone in this kind of “freeze out” behavior, which has become a unique characteristic in China’s brutally competitive Internet landscape. Read Full Post…
