MEDIA: Beijing’s Cable TV Consolidation Stalls, Companies Take Charge

Bottom line:  The formation of a joint venture between six leading cable operators looks designed to jump start Beijing’s stalled attempt to create a national player that can compete with the big telcos.

Five regions in cable TV joint venture

After years of snail’s-pace progress at consolidating the nation’s fragmented cable TV operators, a group of leading players is finally taking matters into their own hands with announcement of what could be a breakthrough joint venture. I’ve followed this story for a while now, and, along with everyone else, have been impatiently waiting for a state-supported national cable operator, called China Broadcasting Network Co., to take shape and provide a strong interesting alternative to the nation’s three big telcos for network-based services.

But such a development has moved forward at a pace even slower than molasses, mostly due to the huge bureaucracy involved. That mostly involves the interference of local interests, which are loathe to give up control over municipal and provincial cable TV networks, which they run as personal regional propaganda machines. As a result, all of the nation’s cable TV networks are dying a slow but certain death, as they get overtaken not only by the telcos but also by a rising generation of private sector Internet TV services like Youku and iQiyi. Read Full Post…

INTERNET: Whatsapp Goes Spotty in China, Headed for Shutout?

Bottom line: China’s apparent partial blockage of some Whatsapp functions for brief periods is unlikely to end with a total blockage, mostly because the service is used almost exclusively by foreigners.

Whatsapp temporarily blocked in China

Foreign media are buzzing about what appears to be the blockage of some functions on Whatsapp, with the obvious implication that a full blockage of the the popular instant messaging app could be next. This particular story has a few interesting angles, led by the fact that Whatsapp isn’t used by very many Chinese and also that it’s owned by social networking giant Facebook (Nasdaq: FB).

There are a also a number of precedents to go by, none of which looks too positive for the future of Whatsapp. Just about every other major global social networking app has been blocked in China by now, including Facebook itself, as well as Twitter (NYSE: TWTR) and Japan-listed Line (Tokyo: 3938). But there are a few notable exceptions that have been allowed to keep operating in China, one of which is Whatsapp and two others being the Microsoft (Nasdaq: MSFT) owned Skype and LinkedInRead Full Post…

INTERNET: Baidu Back Under Microscope Over Search Suspicions

Bottom line: A new scandal involving results that favor a major advertiser on Baidu’s mapping service could have a minor impact on the company’s stock during the next week, but is mostly an embarrassment.

Doctors criticize Baidu maps

A year after taking a beating over questions about the reliability of its search results, stumbling Internet titan Baidu (Nasdaq: BIDU) is back in the headlines over similar queries about results given by its popular mapping service. This time Baidu has quickly responded to the criticism from a group of doctors who are questioning the prominence of a powerful hospital group in search results on the mapping service, blaming the issue on a glitch and saying it is moving to correct the problem.

That’s far different from the last crisis, arguably the biggest in Baidu’s history, which began last spring when the story of a duped cancer patient made the rounds like wildfire on China’s Internet. In that instance, Baidu was slow to respond to the claims from a patient, who had already died at the time, that he was fooled by a cancer hospital whose name looked like a genuine search result but was really just an advertisement. Read Full Post…

VIDEO: LeEco Moves on With Founder Jia’s Resignation

Bottom line: LeEco is likely to spin off its new energy car unit by the end of the year following the departure of founder Jia Yueting from the listed company, while it could also close its smartphone division.

LeEco set to spin off car unit?

In what looks like a major turning point for the foundering LeEco (Shenzhen: 300104), the company’s charismatic but embattled founder has relinquished his role as chairman at the publicly listed firm. This particular news came out just as people were leaving home for work last night, so it’s still not completely clear on what exactly has happened.

But it appears that one of the companies that had agreed to provide a major cash infusion, a real estate developer named Sunac (HKEx: 1918) was refusing to hand over the funds because it said certain unspecified conditions weren’t met from its agreement. Thus it appears that Jia’s departure from the listed company, and probably most of LeEco in general, was probably the big sticking point. Read Full Post…

INTERNET: Tencent Limits Gamers, Joins with TCL

Bottom line: Tencent’s roll-out of time playing limits for teenager gamers for a popular new title looks aimed at preventing a regulatory intervention, while its new TCL tie-up could presage a spin-off of its video business.

Tencent limits teenage gamers

Internet titan Tencent (HKEx: 700) is in a couple of headlines as the US observes its Independence Day holiday, starting with word that it’s limiting teenagers from playing too much of a very popular new title. The other headline has the company teaming up with TV stalwart TCL (HKEx: 1070; Shenzhen: 000100) in a new smart TV tie-up.

The only real common thread to these headlines is that they both involve Tencent, though each does spotlight a certain pattern that’s quite typical for China’s most successful Internet company. In the first case, the game story spotlights Tencent’s strong record at developing and operating games, which are its largest source of revenue. The TCL story highlights Tencent’s fondness for making strategic minority investments, often with mixed results. Read Full Post…

VIDEO: Xunlei Founder Resigns as CEO, Sale Coming?

Bottom line: The resignation of Xunlei’s founder as CEO, even as he retains his chairman’s title, could indicate a sale is coming soon, with the most likely buyer as Xiaomi.

Big shifts happening in Xunlei boardroom

The incredible shriveling online video company Xunlei (Nasdaq: XNET) is making a tiny splash in the headlines as we head toward the weekend, with word that its founder is relinquishing his position as CEO. The move seems potentially significant, since one of the main obstacles that keeps more companies from being acquired in China is resistance by their founders to relinquish their “empires” to someone else.

In this case, Xunlei’s empire is rapidly vanishing, as it gets overtaken by larger rivals like Baidu’s (Nasdaq: BIDU) iQiyi and video services operated by Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU). That may mean that no one really wants Xunlei anymore, including ordinary stock investors. The company’s shares have been on a downward trajectory since its Nasdaq IPO three years ago, and now trade at $3.24 apiece, about a quarter of their IPO price of $12. Read Full Post…

E-COMMERCE: Beating Highlights Brutal Competition for Couriers

Bottom line: A major altercation between a customer and deliveryman from STO Express underscores the intense competition in the sector, which puts huge pressure on couriers and companies in general.

STO delivers controversy

An incident making the rounds in Chinese media is highlighting just how brutally competitive the parcel delivery business has become — literally. The incident is quite appalling but not really too surprising, with reports that courier STO Express  (Shenzhen: 002468) has fired a deliveryman who seriously beat a customer who filed a complaint about him.

This particular incident comes just a day after I wrote about the latest IPO by a parcel delivery firm, Best Inc, which is hoping to raise up to $750 million in New York. (previous post) That IPO is noteworthy because Best is still losing massive money, unlike most of the other courier companies that have made listings, even though the industry’s brutal competition makes it hard for me to believe the others are as profitable as they say. Read Full Post…

IPOs: Logistics Provider Beats Fintechs to NY IPO Gate

Bottom line: Best Inc.’s IPO is likely to price and debut weakly due to its loss-making status and concerns about China’s economy, which could also weigh on an upcoming flurry of fintech offerings in Hong Kong and New York.

Best Inc loads up logistics IPO

After waiting months for this year’s first major New York IPO by a Chinese company, I was surprised to read the distinction looks set to go to a logistics firm backed by e-commerce giant Alibaba (NYSE: BABA). In this case the winner in this race to the IPO gate appears to be a company called Best Inc, with plans to raise a relatively sizable $750 million.

I say I’m surprised because all this time I’ve been waiting for one of a number of financial technology companies, often called fintech, to finally break through the IPO gate with the year’s first big offering. Peer-to-peer (P2P) lender China Rapid Finance (NYSE: XRF) actually took the distinction for first notable IPO of the year with its May listing on the New York Stock Exchange. But that offering was quite small at just $60 million. What’s more, the stock hasn’t exactly been a huge performer since then, and is now trading just slightly above its IPO price. Read Full Post…

INTERNET: JD on the Rise, as Baidu and Weibo Stumble

Bottom line: JD.com is likely to pass Baidu this week and become China’s third most valuable internet company, while Weibo’s stock is likely to enter a period of correction while it awaits an official live broadcasting license.

JD on cusp of overtaking Baidu

The era of the Internet triumvirate of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700), often called the BAT, is on the cusp of ending, as up-and-comer JD.com (Nasdaq: JD) looks set to pass Baidu in terms of market value. Meantime, I suspect the end of another era is coming for the soaring Weibo (Nasdaq: WB), which had some of the wind knocked out of its sails following some strict words from China’s heavy-handed regulator.

We’ll focus mostly on the Baidu/JD transition here, as that really does seem to mark a changing of the guard in China’s dynamic Internet sector. That move has seen Baidu experience a longer-term stagnation, as its core search business comes under assault from a few other newer players and it fails to find new revenue sources to offset the loss. On the other hand, JD.com seems unable to do any wrong these days, and is starting to resemble US titan Amazon (Nasdaq: AMZN) in the sense that people don’t really care whether it makes money. Read Full Post…

NEW ENERGY: Tesla EV Plan Lands in Shanghai — Again

Bottom line: Tesla is likely to announce a new $9 billion electric car joint venture in Shanghai within the next two months, which could begin production as the industry starts to gain traction in the next 1-2 years.

Tesla on cusp of electric car JV

Almost a year to the day after media reported an imminent deal that would see electric car maker Tesla (Nasdaq: TSLA) set up a plant in Shanghai, new reports are emerging saying the long delayed deal will finally be announced. Anyone sensing a bit of “boy who cried wolf” with the latest reports is probably justified in feeling slightly skeptical. But I would quickly add this time perhaps we could finally see an announcement. It may not be as imminent as the reports are indicating, but perhaps within the next month or two.

Anyhow who feels compelled can go back and look at the reports a year ago, at which time I also predicted an announcement could be coming in the next month or two. (previous post) I tend to probably believe such reports a bit too much, mostly because China is a famously leaky place for such news. But that leakiness means that talks for deals often get out when they’re still in the relatively early stages, whereas in the west most such leaks don’t occur until the deal is nearly done. Read Full Post…

CONSUMER: Hon Hai, Hisense in Battle for Sharp Brand

Bottom line: A spat between Hisense and Sharp over the former’s use of the latter’s brand name spotlights the dangers of relying on such licensing agreements for Chinese companies going abroad.

Sharp sues Hisense over brand agreement

An entertaining battle is rippling through the headlines as we head into mid-week, pitting Taiwanese contract manufacturing titan Hon Hai (Taipei: 2317) against Chinese TV maker Hisense (Shanghai: 600060) in a battle for the Sharp (Tokyo: 6753) brand name. This is essentially the story of two giants with very little name recognition battling for a brand that, somewhat ironically, fell onto hard times as a company but still retains a relatively strong reputation.

Hon Hai is virtually unknown outside of industry circles, but is one of the world’s leading contract manufacturers that is most often cited as producer of iPhones for Apple (Nasdaq: AAPL). Likewise, Hisense is a relatively well-known TV maker in China, but is virtually unknown outside the country, creating obstacles for its global aspirations. Then there’s Sharp, the former Japanese electronics superstar that fell onto hard times was was taken over by Hon Hai last year. Read Full Post…