News Digest: May 26-28, 2012 报摘： 2012年5月26-28日

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The following press releases and media reports about Chinese companies were carried on May 26-28. To view a full article or story, click on the link next to the headline.

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◙ Chinese WTO Suit Strikes Back at US Duties (English article)

◙ Alibaba.com (HKEx: 1688) Shareholders Approve Privatization Proposal (Businesswire)

◙ Nokia Siemens Accuses Huawei of Plagiarism in Promotional Materials (Chinese article)

◙ Microsoft (Nasdaq: MSFT) to Build Cloud Data Centers in China (English article)

◙ Ming Yang Wind Power (NYSE: MY) Announces Preliminary Results for Q1 (PRNewswire)

Solar Storm Heats Up in US, China 中美太阳能产品征税之争升温

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The war of words is heating up in the ongoing US-China trade war over unfair subsidy allegations against Chinese solar panel makers, with unusually tough new sounds coming from both sides of the Pacific that indicate the protectionists may be losing some momentum. I’ll admit I was surprised by both of the latest developments, the first of which saw the Chinese solar panel makers finally come together to hold an unusual press conference in Shanghai denouncing planned punitive tariffs announced by the US last week ranging from 30 percent to 250 percent. (English article; previous post) The second development saw the trade group representing US panel makers issue its own statement that indicates another major US trade group representing the broader solar power sector may also be preparing to oppose the latest proposed punitive tariffs, which are set to take effect in October. Let’s take a look at the Shanghai press conference first, where the CEO of industry leader Suntech (NYSE: STP), after remaining low-key and relatively cautious throughout the dispute that began nearly a year ago, spoke out loudly against the proposed new tariffs, calling the unfair allegations untrue. A spokesman for the industry organization that organized the event further warned that China’s solar panel makers reserved the right to urge Beijing to take retaliatory action if the US actually does implement the new tariffs. Beijing has issued a steady stream of angry denunciations of previous US moves in this case, including one after last week’s decision; but industry executives themselves have tried to maintain a more positive stance by pointing out they are strong contributors to the US economy by providing jobs to upstream industries and also helping to promote the US solar power sector. This change of tactics by the Chinese panel makers is probably the result of their realization that their softer, more persuasive approach clearly didn’t work. Adding to the pressure against the US decision are the latest signs that a major US trade group, the Solar Energy Industries Association, may be preparing to enter the war on the side of the Chinese. That’s my interpretation based on a press release from another industry group, the Coalition for American Solar Manufacturing (CASM), which represents US solar cell producers who filed the original complaint against the Chinese companies. In the press release, CASM warns the Solar Energy Industries Association to respect a previous pledge to remain neutral in the dispute, and condemns the SEIA’s calls for a “premature settlement” of the matter. (CASM announcement) Clearly the bigger solar power association is listening to its power-producing members, who will suffer the most if they suddenly have to pay 30-250 percent more for their Chinese solar panels. Both of these developments show that the US solar panel makers are losing some of their advantage in this dispute, and pressure is mounting from both inside and outside the US for a settlement to avert a trade war. Now that people finally realize how high the stakes are, I would look for serious talks to begin soon that should offer a better than 50 percent chance of a settlement before October.

Bottom line: Growing pressure by forces opposed to punitive US tariffs against Chinese solar panel makers mean the chances of a settlement in the dispute are greater than 50 percent.

Related postings 相关文章:

◙ Passive Beijing Blasts New US Solar Tariffs 中国炮轰美高关税不实用 解决太阳能产品纷争需更主动

◙ Solar War Reignites With Big US Tariffs 美国拟对中国太阳能电池高征税

◙ Suntech, Canadian Solar in Latest PR Moves 尚德电力和Canadian Solar就西方倾销顾虑作出回应

 

China Auto IPO Crashes 神州租车的IPO之梦告吹

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The winter for China IPOs in New York has officially moved into deep freeze with the official announcement that car rental specialist China Auto, the first Chinese company to file for a US listing back in January, has formally scrapped the offering. (Chinese article) The official withdrawal, made in a filing to the US securities regulator, marks the end of a choppy story that saw the money-losing China Auto filled with optimism when it initially filed for a Nasdaq IPO to raise up to $300 million in January, hoping that US investor skepticism towards Chinese companies had eased following a confidence crisis the previous year due to a series of accounting scandals. The first signs that perhaps the climate hadn’t improved too much came in the next couple of months, when China Auto’s IPO failed to make much progress, presumably due to lack of investor interest. The situation got worse still when online discount retailer Vipshop (NYSE: VIPS) did finally become the first Chinese company to list in the US in March, but only after it had to drastically scale back the offering due to anemic demand. (previous post) And even then, its shares priced below their original range and dropped sharply in their first few trading days. Despite that dismal performance, China Auto moved ahead with its own offering, which also met with anemic demand that forced it to halve the size of its original capital raising plan. But even that reduced plan soon looked ambitious, and it ended up suspending the offering just hours before it was set to price in late April. (previous post) The aborted offering means we could soon go an entire year with just one new listing for a Chinese company in the US. The last major listing before the current freeze came back in August last year, when online video company Tudou (Nasdaq: TUDO) forged ahead with its IPO despite a weak market, with the result that the stock dropped sharply on its trading debut. (previous post) The CEO of the New York Stock Exchange’s operator said in an interview earlier this week that only 7 Chinese companies went public on NYSE Euronext stock exchanges last year, a third of the 22 companies that made IPOs on its exchanges in 2010 when Chinese companies — especially in the Internet sector — were investor darlings. (English article) If current trends continue, we could see just 1 company list on the NYSE for all of 2012, which undoubtedly would be a low not seen for many years. There’s still a possibility we could see 1 or 2 other offerings proceed, especially one for Shanda’s online literature unit, Cloudary, which appears to be moving forward after the company reported a surprising profit in its latest quarter. (previous post) But if that IPO also fizzles, which is a strong possibility, look for the winter for Chinese IPOs in New York to easily continue until this fall, and quite possibly through the end of the year.

Bottom line: China Auto’s official withdrawal of its New York IPO shows the current winter for US-listed Chinese offerings continues, and could easily last through the end of the year.

Related postings 相关文章:

◙ Shanda Cloudary Wows Investors With Profit 盛大文学利润令投资者惊叹

◙ IPOs: China Auto Slashes, People’s Daily Marches Ahead IPOs:神州组车减，人民网启动

◙ China IPO Winter Goes On as Vipshop Flops 唯品会大跌，中国IPO冬季持续

Huawei Goes on the Offensive 华为发起攻势

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Maybe I’ve become a bit jaded after writing about Chinese companies for so long, but I’ll openly admit that I was quite encouraged by the latest reports that telecoms equipment giant Huawei has lodged a complaint in Europe accusing a company of monopolistic practices. The reason for my excitement is that after years of watching Chinese companies constantly assume a defensive posture on the global stage, it’s refreshing to finally see one go on the offensive to fight what it believes is unfair treatment. Whenever Chinese companies appear in the headlines due to conflicts overseas, the chances are nearly 100 percent that those companies are coming under attack by local interests, sometimes over allegations of unfair subsidies, and other times due to nationalistic concerns. In nearly every case, the accused Chinese company is likely to quickly assume a defensive posture, complaining that it’s being treated unfairly and arguing why the allegations are untrue. So it’s nice for once to finally see a Chinese company take the offensive and fight for its right when it believes it is receiving unfair treatment in the market. In this case Huawei lodging its anti-monopoly complaint after failing to license key 3G technology patents from a company called InterDigital (Nasdaq: IDCC). (English article) Huawei is  accusing InterDigital of extortion, saying the company made “unreasonable and discriminatory demands” for rights to the patents for its 3G wireless technology. Huawei filed its complaint after it was sued in the US last year for patent infringement by InterDigital, which also sued Nokia (Helsinki: NOK1V) and LG Electronics (Seoul: 066570). So from that perspective, Huawei’s latest action is a bit reactionary to InterDigital’s lawsuit, and in fact this kind of suit and countersuit has unfortunately become quite common in the technology industry. But from my perspective, this kind of action by Huawei at least shows it finally realizes the global market is a tough and competitive place, and the only way it will be able to survive and succeed there is to play by the same rules as other major global companies. That means that it, as well as other Chinese companies, will need to use more aggressive tactics, not only when they come under direct attack but also when they are entering markets where local interests might want to use excuses like national security, unfair subsidies and broader xenophobic fears to keep them out of the market. Huawei tried out its legal attack skills at home last year, when it sued crosstown rival ZTE (HKEx: 763; Shenzhen: 000063) for patent infringement. (previous post) Now it appears to be taking its more aggressive strategy to the global stage, which, combined with a well-funded public relations campaign, could finally help it win better access to Western markets in the next couple of years.

Bottom line: Huawei’s new anti-monopoly complaint in Europe reflects a new more offensive posture that more Chinese companies need to take to succeed on the world stage.

Related postings 相关文章:

◙ Huawei Follows ZTE to Lower Profits 继中兴之后华为利润也降低

◙ Beijing Help Undermines Huawei Image Drive 中国商务部替华为出面或适得其反

◙ ICBC, Huawei: It’s Cold Out There 工商银行、华为：国外市场冷清

News Digest: May 25, 2012 报摘： 2012年5月25日

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The following press releases and media reports about Chinese companies were carried on May 25. To view a full article or story, click on the link next to the headline.

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◙ China Banks May Miss Loan Target for 2012, Officials Say (English article)

◙ China’s CIC eyes Up to $2 Billion Stake in Alibaba Group: Sources (English article)

◙ E-House (NYSE: EJ) Reports Q1 Results (PRNewswire)

◙ Tencent (HKEx: 700) to Invest $1 Bln in E-Commerce Subsidiary (English article)

◙ China Auto Withdraws Nasdaq Listing Application (Chinese article)

China Telecom Opens Door for Foreign Telcos 中国电信在英国推出MVNO业务 或为外国电信企业进入中国铺路

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The headlines are buzzing today with new of the formal launch of the first virtual mobile network by a Chinese telco outside China, with China Telecom (HKEx: 728; NYSE: CHA) partnering with European mobile carrier Everything Everywhere to offer service in the United Kingdom. (English article; Chinese article) But from my perspective, the much more interesting proposition could be that this move might finally mean that Chinese telcos themselves are open to this kind of deal, potentially paving the way for one of the big foreign telcos to finally enter China as a mobile virtual network operator (MVNO). Such MVNOs let companies quickly enter foreign markets by offering service under their own brand over an existing carrier’s network. Let’s look at the latest news first, which saw the official launch this week of China Telecom’s new service, called CTExcelbiz, following an initial announcement of its plan to become an MVNO in Britain back in January. (previous post) Under that previously announced plan, China Telecom said it would launch service in Britain first, targeting the growing number of Chinese living and traveling to Europe, and then potentially draw on Everything Everywhere’s ties to France and Germany to expand to those markets. From the China perspective, this move by China Telecom, the smallest of China’s 3 mobile carriers, seems to indicate that the company itself might be open to partnering with a foreign telco in its home China market for a similar MVNO. Such a partnership would quickly give China Telecom a potentially big new revenue source from its foreign partner, and would allow it to make better use of its relatively underutilized state-of-the-art 3G network. The Chinese telecoms regulator also said earlier this year it wants to open the market more to infrastructure investment by foreign companies (previous post), so allowing foreign MVNOs into the market would help to meet that aim, and also give China’s telcos access to foreign technology and services that can take advantage of their 3G networks. Britain’s Virigin Mobile (London: 1044Q), one of the world’s most successful MVNO operators, was reportedly in talks to form an MVNO in China in the mid-2000s, but no deal was ever announced. Much has changed since then, most notably a reorganization of China’s mobile sector, the launch of 3G networks, and an increasing openness by Beijing to let foreign investment into the sensitive telecoms infrastructure space. If China Telecom’s move signals an opening of the market to foreign MVNOs, there are certainly a number of operators that would be interested. One of Everything Everywhere’s major stakeholders, France Telecom (Paris: FTE), has shown previous interest in China, as has European giant Vodafone (London: VOD), South Korea’s SK Telecom (Seoul: 017670) and Spain’s Telefonica (Spain: TEF). With all those carriers interested in China and China’s own increasing openness, I wouldn’t be surprised to see an announcement of the first MVNO in China by a foreign telco in the next 18 months, most likely with China Telecom as a launch partner.

Bottom line: China Telecom’s move into Britain means Beijing may soon let foreign telcos enter China as mobile virtual network operators, with a first deal possible in the next 18 months.

Related postings 相关文章:

◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力

◙ Telecoms Infrastructure Prepares to Open 中国电信基建市场或更开放

◙ China 3G: Entering Slow-Growth Phase? 中国3G：进入缓慢增长阶段？

 

Lenovo Results: Second Time the Charm? 联想在日德的收购会重蹈覆辙？

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Top Chinese PC maker Lenovo (HKEx: 992) has just announced some impressive results, saying recent acquisitions in Germany and Japan helped to lift its profit 60 percent in its latest fiscal quarter, as revenue rose an equally strong 54 percent. (Earnings announcement) But as a long-time China watcher, my first reaction is: I’ve seen this before, as the company’s results also got a quick boost back in 2006 after its ground-breaking purchase of IBM’s (NYSE: IBM) PC assets, which instantly gave its revenue a major boost with a large new global presence. But history watchers will also remember that honeymoon period was relatively short lived, and Lenovo later suffered big losses and launched a major reorganization after many of IBM’s former clients defected and it couldn’t efficiently run IBM’s overseas operations. So the question now becomes, are we going to see an encore performance of the IBM deal, which would see Lenovo’s fortunes rapidly fall and end with another reorganization; or will it learn from its previous IBM experience and this time do better, perhaps even achieving its goal of overtaking Hewlett-Packard (NYSE: HPQ) to become the world’s largest PC company? Before I gave my answer, let’s take a quick look at the big picture, starting with the latest acquisitions that saw Lenovo purchase German PC maker Medion and take over the PC operations of Japan’s NEC (Tokyo: 6701) last year. The US may have been a difficult labor market for Lenovo, but the challenges there will seem small compared to what it will face in Japan and Germany, the former due to its tradition of companies providing lifetime employment to workers and the latter due to its strong labor unions. Those kinds of labor issues were largely behind the failure of TCL’s (HKEx: 1070) purchase of a French TV maker and the purchase of Siemens’ (Frankfurt; SIEGn) cellphone assets by Taiwan’s BenQ nearly a decade ago. Lenovo was a little smarter this time in Japan, taking over NEC’s PC operations through a joint venture rather than an outright purchase, meaning NEC will remain as a partner to help to run the operation. But TCL also tried the joint venture approach with France’s Thomson, and clearly that didn’t work. In terms of customer defections, I would also expect those to start happening soon. In this case, the defections could be even worse, since Japanese and German consumers and businesses are especially quality conscious, and are unlikely to like the idea that they are buying computers from a Chinese company instead of a German or Japanese one. All that said, look for both of these acquisitions to run into problems, with labor issues likely to flare up in the next year and customer defections to accelerate as corporate purchasing contracts expire. The situation could become worse as many of Lenovo’s recent forays into new product areas are also likely to run into trouble, meaning the company could quickly see its new zooming top and bottom lines start to stumble, setting the stage for yet another reorganization in the next 2-3 years.

Bottom line: Lenovo could soon see history repeat, with strong results after 2 recent acquisitions setting the stage for integration difficulties and an eventual reorganization.

Related postings 相关文章:

◙ Lenovo’s TV Gamble: Failure Ahead? 联想电视赌注：未来会失败吗？

◙ TCL Cellphones: History Repeats Itself TCL手机业务历史重演

◙ Lenovo Completes Leadership Change, Yang Uninspired 联想完成高层调整，杨元庆难鼓舞人心

Solar Comments: Consolidation Chinese Style? 太阳能行业：中国式整合

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When someone says an industry is in need of consolidation, the assumption is usually that mergers and bankruptcies will reduce overheated competition and excess capacity to create a more efficient and profitable sector. But the concept seems to have a completely different meaning in China, where 2 of the nation’s top solar panel makers discussed the consolidation concept in their latest earnings reports even though we’ve yet to see any major companies close or merge among a money-losing group that now produces more than half the world’s solar cells. In announcing fresh major new losses for their latest reporting quarters, Suntech (NYSE: STP) and Trina Solar (NYSE: TSL) both used the “c” word, with the latter saying specifically it sees further signs of industry consolidation happening. (Suntech earnings; Trina earnings) Suntech was less direct, saying simply it was consolidating its own operations to close down some of its less efficient facilities. Obviously there could be M&A deals now being negotiated that are still secret, but to the best of my knowledge there has been little or no consolidation happening in this sector that has been suffering from overcapacity for a year now. Several US companies had to close last year, but they were mostly smaller players and those bankruptcies happened almost a year ago. Other than that, the only deal I’ve seen so far this year was a small acquisition in January of a small German manufacturer by LDK Solar (NYSE: LDK). (previous post) China watchers will know that consolidation of any industry in China — especially a strategic one like solar that Beijing wants very much to develop — is extremely difficult due to the government’s willingness to support money-losing companies indefinitely with loans from state-owned banks and other public funding sources. That means even the most money-losing companies may never close if the government doesn’t want them to. What’s more, mergers are also extremely difficult, as most big manufacturers get strong support from local governments that worry that any such mergers might result in the closure of manufacturing facilities that contribute to their local economies. So what consolidation does Trina see exactly? Perhaps the answer lies in Suntech’s comments. Rather than consolidation through combinations and closures, the industry may have to follow Suntech’s example and see individual manufacturers close down their less efficient facilities. That approach could work for relatively well for more efficient companies like Suntech, though a less efficient player like LDK — which already announced massive layoffs earlier this year (previous post) — might have to shutter the  majority of its operations to return to profitability. This kind of consolidation could be the most likely and practical, but will also mean we could expect to see some significant drops in capacity at Chinese solar companies as they self-consolidate on their march back to profitability.

Bottom line: Chinese solar cell makers, unable to consolidate through mergers and closures, are starting to close less efficient factories to reduce overcapacity and return the sector to health.

Related postings 相关文章:

◙ Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心

◙ Passive Beijing Blasts New US Solar Tariffs 中国炮轰美高关税不实用 解决太阳能产品纷争需更主动

◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待

News Digest: May 24, 2012 报摘： 2012年5月24日

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The following press releases and media reports about Chinese companies were carried on May 24. To view a full article or story, click on the link next to the headline.

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◙ Lenovo (HKEx: 992) Reports Fiscal Q4 and Full Year Results (Businesswire)

◙ China Mobile (HKEx: 941) to Spend 20 Bln Yuan on Handset Subsidies This Year – CEO (Chinese article)

◙ Suntech (NYSE: STP) Reports Q1 Financial Results (PRNewswire)

◙ Sina’s (Nasdaq: SINA) Weibo Microblog Incorporates Web Search (English article)

◙ TCL (HKEx: 1070) Showcases Its LED SMART Television in “Marvel’s The Avengers” (Busineswire)

奇虎360财务疑云未散

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奇虎360<QIHU.N>曾被指责虚报用户数据，该公司刚刚公布的数据显示，其第一季度营收大幅上升，但预计本季度增幅将放缓。财报中引起我注意的是该公司任命了新的联席首席财务官，这个头衔我从未听过，此举比较异常，至少让我更加怀疑财务虚报可能存在部分真实性。奇虎360的财报显示，第一季营收为6,930万美元，为上年同期的三倍。该公司实现获利，而上年同期为净亏损。但该公司预计营收增速料大幅放缓至100%，尽管表面看来仍很不错，但增速只为刚刚报告的数据的一半。投资者看起来关注奇虎360营收的大幅上升以及重新实现获利，报告公布前，该公司股价周二盘中上升近5%。财报发布後，在随後的盘後交易中股价再度上涨4.5%。奇虎360在财报末尾宣布，任命姚珏与现任首席财务官徐祚立共同担任公司的联席首席财务官。姚珏此前担任公司的财务副总裁。我至少要称赞该公司此举的相对透明，因为我注意到该任命的唯一原因是该公司在财报标题中提到此事。不过公司高层财务官的变动往往是警戒信号，可能意味着公司不希望投资者知道幕後正在发生的一些事情。过去半年，奇虎360已经遭遇困境，因空头Citron去年秋天发布报告，质疑奇虎360的很多数据都严重虚报。奇虎360的股价基本未受到Citron报告的太大冲击，尽管Citron此後又发布了一份报告重申其主张。上个月初，《福布斯》杂志发表文章，同样质疑奇虎360的一些数据，再次强烈暗示该公司的财务数据可能虚报，而其审计公司德勤可能在未来对其财务数据更加仔细审查。与Citron的报告不同，《福布斯》的文章看起来更加有说服力，因为该杂志并没有交易奇虎360的股票。不过奇虎360强烈否认有任何过失，目前该公司的股价与Citron首次发布报告时差不多。该公司任命联席首席财务官让我觉得幕後肯定有事情在发生，尽管我不愿妄加猜测。但我相当有把握地认为，奇虎360的财务问题不会这麽快就结束，未来三四个月估计会出一两件大事。

一句话：奇虎360公布的业绩抢眼，但任命联席首席财务官可能意味着质疑该公司虚报财务数据的事情还没有结束。

相关文章:

◙ 奇虎360：下一个会计丑闻受害者？

◙ 奇虎360陷入新的丑闻

◙ 我觉得“德勤与美国证券交易委员会在中国公司问题上的冲突

Microsoft E-Commerce: Late to the Game Again 微软进军中国电商市场最终或以失败收场

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I suppose I should congratulate Microsoft (Nasdaq: MSFT) for finally realizing the huge potential of e-commerce in China, even though it’s quite late coming to this incredibly competitive space. Then again, no one will ever accuse Microsoft of being a leader in anything these days, as this company is clearly a follower that takes advantage of its dominant PC presence with Windows to force its way into other product and service areas developed by nimbler, more innovative companies. Chinese media are reporting that Microsoft, through its MSN platform, is planning to enter the crowded e-commerce space in China following the recent end of beta testing for its Chinese-language Bing search engine. (English article) The company didn’t provide any details, but it sounds like the new e-commerce platform will be somehow integrated with Bing, as well as Microsoft’s Windows platform that is also the dominant PC operating system in China, similar to the rest of the world. First off, I have to say that I’m amazed that Bing in China is just finishing up its beta testing, as Microsoft launched the site 3 years ago. Clearly it wasn’t fast-tracking Bing in China, which is obvious from the fact that the search engine is still a non-player in the market, similar to its status in the rest of the world despite Microsoft’s putting large resources into this key Internet area dominated by Google (Nasdaq: GOOG) globally and local search leader Baidu (Nasdaq: BIDU) in China. But let’s take a rest from my sarcasm about Bing, and turn my attention instead to this ludicrous new e-commerce initiative. I use the word “ludicrous” not because e-commerce isn’t an area filled with huge potential, but rather because Microsoft will stand little or no chance of success because the space is already so crowded with other much bigger names with far longer histories in the area. In terms of actual numbers, China’s e-commerce market was worth 500 billion yuan in sales in 2010, or nearly $100 billion, and is likely to hit the 1 trillion yuan mark by 2015 if current growth trends continue. But much of that growth has been fueled by a crowded field of both home-grown and international players who will be formidable rivals even for Microsoft. Just to name a few, the former category includes industry leader Alibaba, along with challengers Jingdong Mall, Suning and Dangdang (NYSE: DANG). In the latter category, retail giants Amazon (Nasdaq: AMZN) and Wal-Mart (NYSE: WMT) are both making aggressive pushes in the space, the former with a major expansion of its China website and the latter through its investment in another domestic player called Yihaodian. I’m not saying that entry at this late stage is impossible, as Microsoft does have some advantages that its rivals don’t have. But the lateness of this arrival, combined with the presence of so many well-funded, highly experienced rivals, make me fairly confident in saying that this new e-commerce initiative will ultimately end up a failure.

Bottom line: Microsoft’s new China e-commerce initiative is likely to fail due to its late arrival to the sector where it will face stiff competition from well-funded domestic and international rivals.

Related postings 相关文章:

◙ E-Commerce: Dangdang CFO Goes, Suning’s New Trip 当当网首席财务官请辞 苏宁进军在线旅游业

◙ China: Room for How Many Amazons? 中国电商市场到底有多大？

◙ Dangdang Loss Balloons In E-Commerce Wars 当当网在电子商务大战中亏损严重