If you’re going to seek a New York listing, it seems only appropriate you might want to get your name removed from a major business blacklist before doing so, or at least that’s what e-commerce leader Alibaba seems intent on doing with its latest big-name hire. Foreign media are reporting the company has put up big bucks in the US to hire James Mendenhall, a Washingtonian with strong government ties, with a mandate to improve the company’s image in intellectual property protection. (English article) Of course that looks like a thinly disguised way of saying the company is giving Mendenhall the big paycheck to get Alibaba removed from the annual US list of notorious companies that fail to protect intellectual property by engaging in or facilitating piracy. China’s leading online search site Baidu (Nasdaq: BIDU) trumpeted its removal from the notorious list last year, after being included on it for years, and now uses that removal as a major plank in its public relations campaign to show the world it’s serious about playing in the same leagues as its big western rivals. (previous post) Alibaba’s Taobao sites, which engage in consumer-to-consumer (C2C) e-commerce and business-to-consumer (B2C) until recently, weren’t so lucky, and were once again included on last year’s notorious list. A quick look at Mendenhall’s resume shows he clearly has the connections to help Alibaba tackle the issue. A Harvard law school graduate who now works in a private law firm, Mendenhall has extensive past experience in the US Trade Representative’s Office, and also served as an adviser to the 2008 presidential campaign of Republican John McCain. That will give him good access to many of the key players he will need to convince that Alibaba should be removed from the notorious list, which is compiled by the Trade Representative’s Office. Of course, hiring big name executives doesn’t always work, at least not immediately, as telecoms equipment giant Huawei Technologies has discovered. Despite hiring a string of well-connected political insiders in the US, Britain and Australia over the last 2 years, Huawei has been repeatedly thwarted in all those markets, most recently being denied permission to bid on contracts to build a state-of-the-art new high-speed network in Australia. This latest move by Alibaba is clearly designed to clean up its image in the west, and seems like part of a longer-term plan for an eventual listing of the entire company in New York, which could come in the next few years. In the shorter term, all eyes will be on the next notorious list due to come out at the end of this year, with Mendenhall and his team coming under pressure to show some results for their big paychecks.
Bottom line: Alibaba’s latest hiring of a well-connected Washington insider to lobby for removal from a piracy list is part of its drive to clean up its image in the run-up to an eventual New York IPO.
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◙ 2011: A Breakthrough Year in Copyright Protection 2011年：中国版权保护取得突破的一年
Having diffused a potential trade war with the US over unfair subsidies, China’s alternate energy firms are moving quickly to show they can be important investors in the markets where they do business rather than simply selling their products there, as evidenced by 2 newly announced deals in the wind and solar sector. Interestingly, both deals are in Canada rather than the US, with the first seeing solar panel maker Canadian Solar (Nasdaq: CSIQ) announcing a relatively major new solar power plant joint venture with local partner SkyPower. (
China Mobile (HKEx: 941; NYSE: CHL) marked a major milestone last month when Wang Jianzhou stepped down as its long-serving chairman, leaving a mixed legacy at the world’s largest mobile carrier that included the start of what could easily become a long-term decline. Now it is up to the company’s new leaders to try to halt that downward trend, or risk seeing a company that pioneered mobile service in China slowly slide into the realm of second-tier player. One of the first major signals from the company’s new leaders since Wang’s departure a month ago wasn’t very encouraging. That sign came at a recent press conference, where new Chairman Xi Guohua said China Mobile would launch a commercial fourth-generation network in the tech-savvy former British colony by year-end that could support its own homegrown 4G technology standard, called TD-LTE. That announcement — Xi’s first as chairman — continued Wang’s legacy of strongly promoting 4G as the answer to his company’s sputtering fortunes, even though China’s telecoms regulator has indicated it won’t issue commercial 4G licenses for at least a couple of years – the equivalent of an eternity for a fast-moving business like mobile service. Instead of fixating on 4G, Xi and his new leadership team need to turn their focus to China Mobile’s neglected 3G network, based on another homegrown standard called TD-SCDMA. Despite spending billions of dollars to build a TD-SCDMA network, which is already technologically inferior to products from its rivals, China Mobile has done little to promote or develop its 3G service and is rapidly losing position in the space as a result. In his 8 years at China Mobile, Wang built the company into one of the world’s most profitable and cash-rich mobile carriers, increasing its share to a dominant 72 percent of the market by late 2008 from 65 percent when he arrived. But then he hit a roadblock in early 2009 when China formally awarded licenses for 3G. Unlike rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), whose licenses allowed them to build networks based on globally developed technologies, China Mobile was ordered to build its network using the homegrown and problem-plagued TD-SCDMA standard. Rather than use China Mobile’s huge cash pile and dominant market position to aggressively develop 3G, the company under Wang spent billions of dollars to build a patchy 3G network and did little to attract new subscribers. It then proceeded to tell the market it was placing its bets on next-generation 4G technology that looked like it wouldn’t be ready for commercial service for at least 2 to 3 years. As the company did this, its share of the 3G market rapidly deteriorated, from around 45 percent a year ago to a current 39 percent. The recent Hong Kong initiative seems to signal 4G will remain the company’s main focus under Xi’s new leadership, continuing Wang’s policy. The only problem is, if the current trends continue, China Mobile could easily see its share of the 3G market – whose users will be the first to make the switch to 4G – rapidly erode to the point where it falls to second or even third place by the time 4G licenses are awarded. By then, China Mobile could well discover that many of its former subscribers who defected to its rivals’ better 3G networks are happy where they are, meaning it will be too late to win them back to the 4G network that is now receiving so much of its energy and resources.
There are a couple of interesting news bits from the e-commerce space, one from e-commerce giant Dangdang (NYSE: DANG) whose CFO has just resigned, and the other on an interesting new move by an increasingly aggressive Suning (Shenzhen: 002024) into online travel services. I was originally planning to start with Suning, as that news looks the most interesting in terms of broader strategy. But then I had a look at Dangdang’s stock, and was a bit surprised to see it plunged more than 15 percent after news of the CFO resignation came out, indicating investors are clearly concerned about this development. Dangdang itself wasn’t saying much, except that CFO Conor Yang, who joined the company 2 years ago and saw it through its IPO in late 2010, tendered his resignation for personal reasons. (
What do Venezuela and the tiny island nation of Saint Maarten have that China doesn’t? Starting on Friday, the answer will be the latest iPad, as Apple (Nasdaq: AAPL) has just released the latest list of countries where its newest must-have product will go on sale and China is noticeably absent. Many observers might say that Apple is taking a cautious approach to China pending the resolution of a trademark dispute with a near-bankrupt company over the iPad name in the market. But in my view, the exclusion of China from the list is just as much about applying pressure on Beijing for a court ruling in its favor, and says more broadly that Apple could withhold its popular products in the future if it doesn’t believe it is being treated fairly in the market. After all, withholding Apple products could easily anger many Chinese consumers eager to have the latest hot product, perhaps prompting them to hold Beijing responsible. Furthermore, the absence of legally imported iPads will fuel a surge in smuggled products, costing China millions of dollars in lost import duties. But let’s take a look at the specific situation to put things in perspective. Apple announced the launch of its newest iPad on March 7, and the tablet PC went on sale about a week later in the US and several global markets, including Japan, Hong Kong and Singapore in Asia. Another group of countries, mostly in Europe, joined the list about a week later, as sales surged to more than 3 million just 3 days after the initial launch. Now Apple has just announced a third group of countries that will receive the new iPad starting April 20, including the likes of tiny markets like Saint Maarten and Venezuela. (
After pronouncing last year that TCL Communication (HKEx: 2618) had successfully completed a turnaround for its cellphone business that nearly bankrupted the company 6 years ago, it seems I need to update my view on this cyclical firm where history is now repeating itself. The cellphone making sister company of leading Chinese TV maker TCL Multimedia (HKEx: 1070) issued an ominous warning late last week, saying its first-quarter profit would be “significantly lower” that the previous year. (
Shanda’s aspirations to become a major entertainment company are becoming an increasingly distant memory, as the cash-strapped company embarks on a series of asset sales that look like a desperate attempt to pay down its large debt. Of course, Shanda founder Chen Tianqiao is spinning the story a bit differently, saying the sales are designed to dispose of non-core assets to let the company focus on its main entertainment business. The latest in the recent string of spin-offs has seen Shanda sell its Jisheng Technology unit, a maker of Internet cafe management software, to a company called iCafe8 (Shenzhen: 300113) for a relatively modest 80 million yuan, or about $12.7 million. (English article) That follows Shanda’s sale last month of 2 other units, online board and card game operators Bianfang and Haofang, which Shanda had purchased in 2004 for $80 million. (
As China’s mainstream car market shows increasing signs of little or no growth this year, General Motors (NYSE: GM), one of the industry’s top players, is finally noticing the luxury segment still has plenty of growth potential by making a very late move into the space with its upscale Cadillac brand. Now the big question will be whether luxury sales are still so strong in the year or 2 it will take GM to start making Cadillacs in China, especially as Beijing takes moves to restrict luxury car buying by government organizations. (
