The following press releases and media reports about Chinese companies were carried on October 6-8. To view a full article or story, click on the link next to the headline.
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- China’s Huawei Considers an IPO (English article)
- HiSoft (Nasdaq: HSFT), VanceInfo (NYSE: VIT) Set Shareholder Votes on Merger (PRNewswire)
- Qunar Marketing VP Resigns (English article)
- Toyota (Tokyo: 7203) China Sales Tumble As Islands Row Hits Japan Inc (English article)
- Foxconn (HKEx: 2038) Denies China iPhone Plant Hit By Strike (English article)
In what looks suspiciously like a game of “good cop, bad cop”, independent directors of New Zealand home appliance maker Fisher & Paykel (NZ: FPA) have just recommended that the company’s shareholders reject a takeover offer from Chinese home appliance giant Haier (HKEx: 1169) because it is too low. I use the expression “good cop, bad cop” here to refer to a tactic often used by salesmen working in pairs when trying to confuse a buyer into paying a higher price for something. One salesman typically plays the role of “good cop”, acting like he’s the buyer’s friend and trying to get him the best deal, while the other plays the role of “bad cop”, demanding a higher price. In reality, both salesmen have the same goal in mind, namely getting the buyer to pay a higher price.
New reports of a government-sponsored rescue package being assembled for for fast-sinking Suntech (NYSE: STP) and other major solar firms highlight everything that’s wrong with China’s struggling solar sector, most notably exposing the ridiculous levels of state report it receives. At this point the Chinese seem to no longer care about denying the allegations of unfair government support made by their western peers, and instead are focused on simple survival as the industry remains caught in its worst ever downturn created by a massive supply glut. The western allegations have only made the situation worse for the Chinese, as both the US and the European Union have launched probes that are likely to result in punitive tariffs for Chinese-made solar cells imported into those markets.
I’ve written lots about the huge potential that China offers for drug makers as Beijing rolls out a multibillion-dollar reform of the country’s medical system. But there’s also huge potential for medical equipment makers, whose devices will fill the thousands of smaller local clinics being set up as part of a massive national plan to provide basic medical coverage to hundreds of millions of Chinese who lack access to such services. That potential was on display with the announcement by US-based Medtronic (NYSE: MDT), one of the world’s top medical equipment suppliers, that it would buy New York-listed Chinese peer Kanghui Holdings (NYSE: KH) for a nifty $816 million, in what looks like the biggest acquisition of a Chinese medical device firm by a western company.
A flurry of new signals from the public and private sectors are all indicating that TD, a home-grown Chinese technology for third- and fourth-generation wireless mobile services, may finally be gaining momentum after several years of languishing, providing a welcome boost for China Mobile (HKEx: 941; NYSE: CHL), the technology’s main proponent. The latest news bits include word that China Mobile itself is preparing to purchase large volumes of handsets that can operate on the 4G standard known as TD-LTE, and that global smartphone chip leader Qualcomm (Nasdaq: QCOM) will roll out a highly anticipated TD chip by the end of the year. From the regulatory end, the Ministry of Industry and Information Technology (MIIT), which oversees the telecoms sector, is also reportedly preparing to finalize its spectrum plans for TD-LTE and 4G in general within the next month.
Despite China’s best efforts to avoid it, a much needed day of reckoning seems to be drawing nearer for the bloated global solar panel industry, which should include a major shake-up for Chinese firms that supply over half the world’s output. The latest signs of a looming judgment day are coming in news that US firm MiaSole has just agreed to be purchased by a Chinese buyer, and from Chinese giant LDK Solar (NYSE: LDK), which disclosed it has received a brief reprieve from its lenders for repayment of its rapidly souring debt.
After talking for much of the past year about plans to develop its solar power industry, Beijing may finally be starting to transform its words into action based on the latest signals coming from mid-sized panel maker JA Solar (Nasdaq: JASO) and an unusual move by leading US manufacturer First Solar (Nasdaq: FSLR). These 2 developments are interesting from a number of angles, as they could provide a welcome lifeline to the struggling global solar panel sector and also help to diffuse trade tensions with the west, which accuses China of unfairly subsidizing its industry. But before those tensions can really ease, Beijing will have to show it won’t favor its own solar panel makers in bidding for new China-based projects at the expense of western rivals. It will also have to take more concrete steps to wean its sector from the kinds of unfair subsidies behind the western complaints, including policies like low interest loans and export rebates.
Billionaire investor Warren Buffett must certainly be wondering about his 2008 decision to buy 10 percent of sputtering car maker BYD (HKEx: 1211; Shenzhen: 002594), which is starting to look like the proverbial sinking ship after the recent defection of 2 key top executives. After seeing his $232 million investment soar by many multiples in the 2 years after he bought it, Buffet has seen his BYD shares have come crashing back to earth in the last 2 years after the company’s core car making business stumbled badly. Meantime, BYD founder and visionary Wang Chuanfu continued to try to sell investors on a longer term vision of building his company into an electric vehicle powerhouse of the future, even as BYD has had to implement massive layoffs and its profits have fallen to nearly zero.
In a theme that is rapidly gaining momentum, yet another US-listed Chinese firm has announced a new privatization bid to capitalize on valuations that have been pushed to rock-bottom levels amid a broader investor confidence crisis. The newest management-led buyout offer from 7 Days Group (NYSE: SVN), the smallest of China’s 3 publicly listed budget hotel operators, follows a string of similar moves that have seen other US-listed Chinese companies, including Shanda Interactive and Focus Media (Nasdaq: FMCN), make similar moves. So perhaps the more interesting question is: who are the most likely companies to launch similar privatization bids, as investors can clearly make some quick money if they can answer this question correctly.
