Bottom line: Alibaba’s stock is likely to come under continued pressure over the next 6 months, as it grapples with overvaluation, piracy issues and a large volume of shares coming back into the market from Yahoo.
Yahoo to spin off Alibaba stake
E-commerce giant Alibaba (NYSE: BABA) is in a couple of major headlines today, raising questions about its future ownership and also its open platform business model. On the ownership side, US Internet giant Yahoo (Nasdaq: YHOO) has announced it will spin off its large stake in Alibaba into a separate company, and then distribute shares in that new firm to existing Yahoo shareholders. On the business model side, Alibaba has enlisted one of the thousands of merchants on its popular Taobao C2C marketplace to respond to a government audit that found nearly two-thirds of goods sold on Taobao were fakes. Read Full Post…
Two of China’s most successful tech companies, Xiaomi and Huawei, took center stage in the microblogging realm over the past week, engaging in a rare direct war of words over their competing products in the nation’s overheated smartphone market. Their online sparring aside, the pair of tech stars also engaged in their own separate globally-focused activities that emphasized attempts by each to become the nation’s first truly international smartphone brand.
Huawei’s media-shy founder Ren Zhengfei traveled to the World Economic Forum in Davos, Switzerland, where he gave a rare public speech in which he appealed to the US to accept his company’s products, in remarks chronicled by some of his top deputies on their microblogs. Meantime, several recently recruited member of Xiaomi’s high-profile international team met at the company’s headquarters in Beijing, where they were talking strategy as the company continues its global expansion. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 28. To view a full article or story, click on the link next to the headline.
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Yahoo to Spin Off Alibaba (NYSE: BABA) Stake Tax-Free As Public Company (English article)
Taobao Publishes Merchant Letter Questioning Accuracy Of Govt Piracy Audit (Chinese article)
JD.com (Nasdaq: JD) Launches Major Imported Foods Initiative (GlobeNewswire)
Apple (Nasdaq: AAPL) Ranked As Top China Smartphone Seller In Q4 – Report (Chinese article)
Huawei Eyes $16 Bln In 2015 Smartphone Sales With High-End, Export Push (Chinese article)
Bottom line: Motorola’s China homecoming looks well-designed conceptually, but will have trouble due to stiff competition and is unlikely to become a major player in the next 2-3 years.
Moto returns to China
I’ve written quite a bit already about Lenovo’s (HKEx: 992) big plans for its recently acquired Motorola brand, which has just made its formal return to China with the local launch of the Moto X smartphone. But what’s surprised me a bit is the magnitude of the campaign that Lenovo has given to this homecoming, which hints at the big hopes it has for the brand whose name whose cutting-edge phones were once the ultimate in “cool” and “trendy”.
It’s been a number of years now since that image was relevant, and many younger Chinese might not even remember the Motorola name at all. But Lenovo is clearly hoping that this homecoming and all the accompanying fanfare will reawaken some of those former impressions among China’s older consumers, in a certain form of “retro-cool” to counter the more recent rise of names like Xiaomi and Coolpad (HKEx: 2369). Read Full Post…
Bottom line: A new audit reveals how widespread counterfeit goods are on Chinese e-commerce sites, which will remain a major risk for site operators and their shareholders.
Taobao slammed in piracy audit
A new audit from State Administration For Industry and Commerce (SAIC) is showing just how pervasive fake goods are on the Chinese Internet, underscoring the huge risk that consumers face when purchasing online. The results underscore the huge risk to e-commerce firms as well, since many of China’s top names including Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD) operate so-called “open platforms” that are simply online marketplaces where third-party merchants can sell their goods. Such merchants are notoriously hard to police, and these latest results show that they frequently offer fake and substandard products to buyers. Read Full Post…
Bottom line: China needs to accelerate the opening of its banking sector to foreign participation, or risk losing overseas expertise and investment dollars that could revitalize the sector.
BBVA sells down Citic Bank stake
Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) became the latest major foreign bank to check out of China last week, when it sold off half of its stake in Citic Bank, a unit of one of the nation’s leading financial services groups. The move follows a similar series of sales by other major foreign financial firms over the last 5 years, depriving China’s state-run banks of valuable expertise they could have used as they make the transition from their past as policy lenders to more commercially-oriented institutions. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 27. To view a full article or story, click on the link next to the headline.
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Just 58.7 Pct Of Products Genuine In Random Government E-commerce Audit (Chinese article)
WeChat Unveils First Big Advertisers For Moments Function, Includes BMW, Vivo (Chinese article)
Actress Zhao Wei Invests HK$5.1 Bln In Alibaba (NYSE: BABA) Film Unit (Chinese article)
Wanda Invests $1 Bln In Sydney Land Development Project (Chinese article)
Lenovo (HKEx: 992) Brings Motorola Back to China as Moto X Phone Released (English article)
Bottom line: Apple’s allowance of audits of its products by Chinese inspectors marks its latest compromise to address China’s national security concerns, and could mark the start of a more transparent approach on the issue by Beijing.
Apple allows product audits by Beijing
Global gadget leader Apple (Nasdaq: AAPL) is deepening its uneasy embrace with Beijing security officials, with word that it has agreed to allow security audits for products that it sells in China. This latest development comes less than a year after Apple took the unusual step of moving some of the user information it collects to China-based servers, which was also aimed at placating security-conscious regulators in Beijing.
Apple’s increasingly close cooperation with Beijing contrasts sharply with Google (Nasdaq: GOOG), whose popular Internet products and services are increasingly being locked out of China as it refuses to play by Beijing’s rules. Other global tech giants are also having to deal with the delicate situation, each taking a slightly different approach to try to protect user privacy while complying with Beijing’s insistence that they make their information available to security-conscious government regulators. Read Full Post…
Bottom line: A current round of big fund raising for Chinese tech firms will continue through the first half of the year but then start to fade, leading to a steady drop in valuations for such companies.
51Auto raises $30 mln in new funds
The fund-raising frenzy for Chinese tech companies continues as we head into the end of January, with word of another mega funding worth $100 million for childcare website Beibei.com. At the same time, a used car specialist called 51Auto has landed a nifty $30 million in its own new funding round. But my favorite story from the fund-raising realm comes from a company that has created a PC for dogs, and has found a backer to give it 5 million yuan ($800,000) for the endeavor. Read Full Post…
Bottom line: Alibaba could make a bid to buy Yahoo as part of a broader overhaul of the relationship between these 2 Internet companies, but personal and other issues could ultimately hamper such a deal.
Yahoo to sell remaining Alibaba stake?
Media have been focused these last 2 days on reports of a new mega purchase by Alibaba (NYSE: BABA) in the insurance space, but another report centers on a far more intriguing possible deal involving the e-commerce giant’s long relationship with faded US search giant Yahoo (Nasdaq: YHOO). That particular relationship has undergone huge changes since the pair first formed their partnership a decade ago, and could easily be the subject of a book. In the latest chapter to that story, a new report is speculating that Alibaba could make a bid for Yahoo in the next year as it seeks to go global following its blockbuster IPO in 2014. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 24-26. To view a full article or story, click on the link next to the headline.
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Apple (Nasdaq: AAPL) Agrees To Chinese Security Audits Of Its Products – Report (English article)
Infant Care Website Bebei.com Raises $100 Mln In New Funding (Chinese article)
Spain’s BBVA To Sell Citic Bank Stake To Chinese Real Estate Firm (English article)
ZTE In Wireless EV Charging Venture With National Grid Operator (Chinese article)
Hisense Sees TV Valued Added Services Market At 29 Bln Yuan In 3 Years (Chinese article)
