Sina’s Weibo Suffers New Setback With Lawsuit 吉林市驻京办可能起诉新浪微博

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Sina’s (Nasdaq: SINA) Weibo service is suffering yet another setback as the Beijing representative office of northeastern Jilin province prepares to sue the wildly popular microblogging service, marking an ominous start to the new year for the former high flyer. In this latest setback, the Jilin representative office says it will sue Weibo for defamation after a woman with “verified” status on the site falsely claimed the office as her employer and boasted of a lavish lifestyle. (Chinese article) The case underscores the difficulty Sina will have in verifying the identities of its 250 million users over the next 2 months, after Beijing ordered it and other social network sites to do so as part of a campaign to crack down on rumor-mongering and general unruliness in the space. (previous post) It also exposes the vulnerability that Weibo will face from similar lawsuits by others who say their reputations have been damaged by things that are said and happen on the site, potentially burying Weibo in a pile of legal actions that distract it from its core mission of becoming profitable. The case behind this looming lawsuit looks very similar to another more high-profile one earlier last year, which saw scandal erupt after a woman named Guo Meimei, who had similar “verified” status as an employee for a unit of the China Red Cross, boasted of a lavish lifestyle on the site. Her boasts led many to question how their donations to the Red Cross were being used, and it was later discovered that she really didn’t work for the organization despite her “verified” status. This latest case has seen another woman named Gao Yue, who had similar “verified” status as an employee of the Jilin representative office, make similar claims of a lavish lifestyle, again raising the ire of other Weibo users. The Jilin office  responded by filing a formal complaint with the police, and saying it intends to sue Weibo for defamation. Luckily for Weibo, Chinese law strictly limits potential damages for such lawsuits, meaning Sina is unlikely to face serious financial consequences even if it loses such a suit. But such a development will damage Weibo’s reputation, and could open the doors to many more suits from people and organizations unhappy about activity on the site. I previously predicted that Weibo could make an IPO later this year when its business was booming last year, but now I think the service will be lucky if it can even become profitable by year end.

Bottom line: A looming lawsuit against Sina’s Weibo shows that 2012 will be a year of challenges for the former high-flyer, which will be lucky if it can even become profitable by year end.

Related postings 相关文章:

◙ Microblog Clampdown: Only Chapter 1? 实名制向网络行业吹去冷风

◙ Watch Out Weibo, Weixin Is Growing 新浪微博要小心腾讯微信要崛起

◙ Govt’s Microblog Shift Looks Good for Weibo 政府口风转变或有利於新浪微博

Google, Apple OS Rivalry Intensifies 苹果与谷歌在华智能手机战白热化

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The intense rivalry between Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) is heating up in China, with the former hosting a somewhat unruly launch of its latest iPhone 4S in Beijing and Shanghai as the latter prepares to launch an app store for competing smartphones using its Android operating system. Apple made headlines in China over the weekend after scuffles broke out at some of its stores when the iPhone 4S formally went on sale the day before under service contracts with China Unicom (HKEx: 762; NYSE: CHU), China’s second biggest mobile carrier and Apple’s only iPhone partner in China so far. The biggest scuffle occurred when one Beijing store decide not to open due to safety concerns after large crowds lined up overnight to buy the phones as soon as they went on sale. (English article) Such news certainly isn’t great publicity for Apple and could provide some negative impact in the short term. But it also shows just how popular Apple products are in China, since the launch was still able to generate that much buzz even though the 4S was already available on the gray market following its US launch 3 months ago. That fact bodes well for China Telecom (HKEx: 728), China’s smallest mobile carrier, which is also reportedly near its own deal to offer the iPhone 4S on its 3G network and could hold launch the model as soon as next month. (previous post) Meantime, Chinese media are reporting that Google is preparing to launch a mainland Chinese version of its app store for Android phones, which would come just 2 months after Apple made a similar move by starting to accept payments in local currency, the renminbi, for its own China app store. (English article) Of course all this just shows the war between Apple and Google in the smartphone space will only intensify in the Year of the Dragon, and I wouldn’t be surprised to see the former sue the latter in China later this year as part of its global strategy of fighting Android through litigation.

Bottom line: The smartphone war between Apple and Google is heating up in China with new products from both, and could see Apple launch China-based lawsuits targeting Google’s Android later this year.

Related postings 相关文章:

◙ Apple Suffers Setback in China Lawsuit Loss 苹果在华商标侵权案初尝苦果

◙ Unicom, China Telecom in iPhone 4S 中国电信有望领先推出iPhone 4S Race

◙ Apple Overlooks China — Again 苹果再次撇开中国内地市场

Battle Heats Up For China Gas

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What looks like one of the first true hostile takeover bids in the brief history of Chinese M&A just got a little more interesting, as a major shareholder of takeover target China Gas (HKEx: 384) has boosted its stake in the company, in what looks like a challenge to rebuffed suitors Sinopec (HKEx: 386; Shanghai: 600028; NYSE: SNP) and ENN Energy Holdings (HKEx: 2688). Sinopec and ENN launched their unsolicited $2.2 billion takeover bid for China Gas, owner of some lucrative China-based natural gas distribution networks, back in December, and was surprised when China Gas rebuffed the offer saying it was too low. (previous post) The rebuff showed that major state-run firms like Sinopec clearly aren’t accustomed to other major Chinese companies refusing their takeover offers, in a market where everything used to be state-owned and central most of the country’s M&A was planned by central leaders in Beijing. Sinopec declined to comment at the time on whether it would raise its offer, but many predicted it might do so and that a bidding war could even break out for China Gas if another suitor entered the picture. Now it seems that one of China Gas’ major stakeholders, South Korea’s SK Holdings (Seoul: 003600), has been quietly buying up China Gas shares, bringing its stake to more than 12 percent of the company. (English article) SK’s recent buying spree looks more opportunistic than reflecting any real long-term commitment to China Gas, and shows that the takeover saga is still developing. I wouldn’t be surprised to see Sinopec and ENN raise their offer for China Gas in the next month or two, and could easily imagine one or more new bidders also entering the picture to chase one of the few more interesting energy assets in China that is privately owned. If that happens, look for a lively bidding war to develop that could see China Gas ultimately sell for as much as $3 billion.

Bottom line: SK Holdings’ recent increase in its stake of hostile takeover target China Gas presages a potential bidding war that could see the company sell for as much as $3 billion.

Related postings 相关文章:

◙ Sinopec Balks at Rebuff to Hostile M&A Bid 中石化试水敌意收购碰壁

◙ Cash-Rich China Eyes More Global Energy Assets　　财大气粗的中国企业着眼更多全球资源并购

◙ Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空

News Digest: January 14-16, 2012

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The following press releases and media reports about Chinese companies were carried on January 14-16. To view a full article or story, click on the link next to the headline.

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◙ Jilin City’s Beijing Office Warns Over Bogus Weibo User, Plans to Sue Sina (Nasdaq: SINA) (Chinese article)

◙ Google (Nasdaq: GOOG) to Launch Android App Store in China (English article)

◙ Apple (Nasdaq: AAPL) Suspends iPhone Sales in China After Crowd Turns Violent (English article)

◙ Battle For China Gas (HKEx: 384) Heats Up As SK Holdings (Seoul: 003600) Boosts Stake (English article)

◙ People’s Daily Website Gets Regulatory Approval For A-Share IPO (Chinese article)

Xunlei, Muddy Waters Sound Upbeat Notes 迅雷和Muddy Waters保持谨慎乐观

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It’s the new year, and that means a time for new beginnings — or at least that’s what video sharing site Xunlei and infamous short-seller Muddy Waters are saying, as both sound notes of cautious optimism that the worst of the confidence crisis for US-listed Chinese stocks may be past. Let’s start with Xunlei, China’s seventh largest online video site, which is reportedly preparing to relaunch plans for a US initial public offering that it initially aimed to make last year. (English article) Readers will recall that Xunlei had planned to raise up to $200 million when it first announced its IPO plans last July, only to steadily scale back those plans as market sentiment plummeted due to a series of accounting scandals at US-listed Chinese companies. (previous post) It ultimately shelved the IPO, but has now completed preparations to restart the process, a company official said, without being more specific. Meantime, Carson Block, whose Muddy Waters research firm was behind several high-profile short selling attacks that helped to start the confidence crisis, is changing his tone slightly and saying he may actually buy some of the Chinese stocks whose shares took a beating last year. (English article; Chinese article) Block is still being quite cautious, saying only investors with the resources to conduct their own independent research should consider buying Chinese stocks at this point, implying we may still see yet another accounting scandal or 2 emerge before this latest confidence crisis ends, which I expect will be around the middle of this year. But the fact that he would even consider buying some of these companies — many of whose shares fell by half or more last year — indicates he thinks that valuations are probably in a more reasonable range now than they were a year ago. Industry watchers will no doubt be looking closely at Xunlei if it moves ahead with its IPO plan, as investor response could set the tone for the rest of the year, especially if the IPO is even moderately successful. I would expect Xunlei to move forward and take steps to keep expectations relatively low, with the result that it should be able to see modest success with an offering that will probably raise around $100 million in the first quarter.

Bottom line: Recent signals from Muddy Waters and Xunlei indicate the confidence crisis toward US-listed China stocks may be easing, with a sustained recovery likely in the second half of 2012.

Related postings 相关文章:

◙ Xunlei’s Shrinking IPO Disappears 迅雷无限期推迟IPO时间

◙ Cleanup Resumes, Facebook Sniffs Out China Investors 在美上市的中国企业将继续面临“大清洗”

◙ Short Sellers Target China in Year End Assault 做空抛盘年底将矛头对准在美上市中国企业

Search Blocking Wars Expand to Video 搜索屏蔽战蔓延至在线视频业

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The search-blocking wars that gripped the e-commerce sector in the second half of last year have spread to the online video space, where Tudou (Nasdaq: TUDO) and Sohu (Nasdaq: SOHU) video, the second and third largest operators, have blocked their content from a video search engine operated by top player Youku (NYSE: YOKU). (English article) Of course the biggest loser in this latest blockage battle will be the Chinese consumer, who will find it difficult to find the movies and TV shows he wants to view, which will also hurt the broader industry’s development. Let’s backtrack a moment and look at this latest development in a vibrant but perplexing industry where company behavior more often resembles children fighting in a sandlot than major corporations trying to do business. According to Chinese media reports citing a Tudou representative, Tudou and Sohu video, along with another major video site operator LeTV (Shenzhen: 300104), all decided to block their content from searches by Soku, an online video search engine operated by Yoku. The move comes as Tudou and Youku are embroiled in a series of lawsuits over copyright infringement (previous post), and just as the online video sector has started to sign a series of ground-breaking deals to legally license popular TV shows and movies as they try to wean themselves from the pirated content that was traditionally the main attraction on their sites. Youku announced the latest such deal just yesterday in a new tie-up with Twentieth Century Fox (Nasdaq: NWSA) (company announcement); but this latest spat will surely overshadow that news. In fact, moves like this could ultimately threaten future licensing deals, as this kind of blockage will ultimately make it more difficult for consumers to find the programs they want to watch online, putting a serious damper on the industry’s development. This latest development also comes as Chinese regulators consider restricting the amount of advertising that online video sites can put in their programs, potentially dealing another big blow. (previous post) From a broader perspective, these kind of developments don’t bode well for online video in 2012, and could even delay the money-losing industry’s march to long-term profitability.

Bottom line: A new search blocking war in the online video industry will hamper its development and, along with other negative developments, delay a transition to long-term profitability.

Related postings 相关文章:

◙ Tudou, Youku: China’s New Piracy Police　　土豆和优酷：中国打击盗版的民间警察

◙ 2011: A Breakthrough Year in Copyright Protection 2011年：中国版权保护取得突破的一年

◙ Search Wars Heat Up With Latest Anti-Baidu Moves 中国网络搜索战升温

Huawei Puts Brakes on India Drive 华为印度建厂计划推迟

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Telecoms equipment maker Huawei Technologies, which hit numerous roadblocks ast year in its drive to enter the US, has hit another obstacle in the fast developing and important India market as well, indefinitely postponing plans to build a major factory there. (Chinese article) The decision comes a couple of years after a major flare-up between China and India that saw the latter ban the import of telecoms equipment from both Huawei and Chinese rival ZTE (HKEx: 763; Shenzhen: 000063) for several months over security concerns. This latest move by Huawei, which probably would have involved an investment of $100 million or more, looks more related to a series of government corruption scandals that has gripped India’s telecoms industry in the last year, paralyzing new development. Reports in the Chinese media cite a Huawei official saying the new plant was designed to localize more of the company’s production and also address some of India’s security concerns, but that recent sputtering demand in light of the industry’s paralysis has made such new investment unnecessary. That kind of explanation is probably true, but also means that both Huawei and ZTE will take a hit in their India business this year, which is one of their most important Asian markets. It also shows that Huawei and ZTE will continue to face numerous obstacles as they try to expand in overseas markets, where concerns run high that their equipment may contain security loopholes designed for Beijing to use for spying purposes. Huawei has met with repeated resistance in the US due to such concerns, and with the presidential election coming there this year I wouldn’t expect the company to make its first major deal in the market until 2013 at the earliest. That reality, combined with the latest problems in India and weakening demand in Europe as it struggles with its ongoing debt crisis, means that 2012 could be a bleak year for both Huawei and ZTE in terms of telecoms equipment sales, with no relief in sight until 2013 at the earliest.

Bottom line: Huawei’s plans to delay construction of a major new factory in India reflects recent difficulty in the important market, and augers a difficult year for the company in 2012.

Related postings 相关文章:

◙ US China Bashing Hits New High With Telecoms Probe 华为中兴应巧选时机应对调查

◙ Huawei: Fight Them With Innovation 华为欲借创新论低调进军美国市场

◙ Huawei Undermines US Push With Foolish Request 华为讨要说法很不明智唯有阻碍进军美国市场

News Digest: January 13, 2012

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The following press releases and media reports about Chinese companies were carried on January 13. To view a full article or story, click on the link next to the headline.

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◙ China’s Auto-Sales Growth Trails U.S. for First Time in At Least 14 Years (English article)

◙ Xunlei Prepares for Second IPO Attempt (English article)

◙ Tudou (Nasdaq: TUDO), Sohu (Nasdaq: SOHU) Block Youku (NYSE: YOKU) Search Engine (English article)

◙ Shanda Games (Nasdaq: GAME) Announces Date of January 23 for Special Cash Dividend (PRNewswire)

◙ China To Open Domestic Parcel Delivery Market to Foreign Investment in H1 (Chinese article)

E-Commerce: 360Buy Explores IM, Wal-Mart Gets Serious 京东商城内测即时通讯工具,沃尔玛有意控股一号店

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There are a couple of interesting tidbits from the e-commerce space today, with 360Buy reportedly making a dubious move into instant messaging, as Wal-Mart (NYSE: WMT) prepares to boost its online presence by taking control of its Chinese online partner, Yihaodian. Let’s look first at 360Buy, also known as Jingdong Mall, which has reportedly developed an instant messaging product that it will launch later this year, according to Chinese media reports. (English article) If you had asked me 10 years ago about this move, I would have said that maybe it looked smart, as online shoppers and merchants should theoretically enjoy chatting with each other about their latest favorite products, discounts and so forth, just like any other community. The problem is, online auctions leader eBay (Nasdaq: EBAY) tried just such a move with its purchase of IM specialist Skype in 2005, in what looked like a logical move at the time. Of course, industry watchers will know that move ended in disappointment with eBay selling Skype to Microsoft (Nasdaq: MSFT) last year after failing to reap any synergies from the company. The case here is a little different as 360Buy is a B2C specialist whereas eBay is C2C. But I see no reason why the result will be any different, especially as 360Buy’s IM product will face stiff competition from existing offerings like Skype, Microsoft’s MSN Messenger and Tencent’s (HKEx: 700) popular QQ service. In the other news bit, financial services group Ping An is getting ready to sell some or all of its large stake in online retailer Yihaodian, with Wal-Mart lining up to buy more shares to become the company’s controlling stakeholder, Chinese media are reporting. (Chinese article) Wal-Mart already bought an undisclosed minority stake in Yihaodian last year (previous post), and has made it clear it intends to become a major player in Chinese e-commerce, after largely losing out in its home US market to big names like Amazon (Nasdaq: AMZN) due to its initial dismissal of the potential of online retailing. Yihaodian has already begun to boost its activity following Wal-Mart’s initial purchase, and look for it to become even more aggressive after the world’s biggest traditional retailer takes control, adding even more pressure to a space plagued by rampant competition and non-ending price wars.

Bottom line: 360Buy’s new instant messaging product is bound to fail, while Wal-Mart will add even more competition to the overheated e-commerce market by taking control of Yihaodian.

Related postings 相关文章:

◙ 360Buy Heats Up E-Books, People’s Daily Goes to Mkt 京东商城高调进军电子书,人民网开启上市进程

◙ Wal-Mart Buys Into China E-Commerce 沃尔玛进军中国电子商务

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

Lenovo: Finally a Risk Taker In Intel Tie-Up 联想联手英特尔,终於肯冒险

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I have to applaud Chinese PC maker Lenovo (HKEx: 992) for its decision to be one of the first backers for a new smartphone chip developed by Intel (Nasdaq: INTC), not so much because I believe this new product will succeed but more because it shows Lenovo is finally starting to shed its image as a follower and take some intelligent risks. This is exactly the kind of thing the company needs to do more if it wants to become a true global leader, even though such risks are likely to produce some big failures, and this one is no exception. Let’s look more closely at this move, which Lenovo announced at the massive Consumer Electronics Show this week in Las Vegas. Lenovo, along with Motorola Mobility (NYSE: MMI), announced they will be the first partners to use a new chip that Intel has developed for smartphones and tablet PCs that are stealing share from the chipmaker’s traditional PC business. (English article) The current smartphone market is dominated by chipmaker ARM (London: ARM), working with companies like Qualcomm (Nasdaq: QCOM) and Broadcom (Nasdaq: BRCM). Intel has never been able to break into the market, but realizes it must do so or risk watching its PC chip business shrivel as more people use tablets and smartphones for their computing. Lenovo, which already makes smartphones but hasn’t found much success in the area, is taking what looks like a smart risk here by signing up as one of the first customers for Intel’s new chip. By making this move, it will immediately have access to Intel’s huge resources to help it develop new smartphones that could differentiate themselves in areas like computing speed and energy consumption from similar ARM-based products. And as one of Intel’s first customers, it will also receive goodwill from the US chip giant that it can use for future collaboration. On the downside, Intel has a spotty record for developing chips outside is core PC business, and in this case it is already far behind existing products. I would ultimately give this initiative less than a 50 percent chance of success, but still must congratulate Lenovo for trying to shed its image as follower and finally become a leader in new product development.

Bottom line: Lenovo’s new smartphone partnership with Intel is likely to fail in the long run, but still reflects the company’s aim to become a leader in new product development.

Related postings 相关文章:

◙ Lenovo Starts Year With New Europe Chief, TV Tie-Up 联想新年新气象：聘用新高管并推互联网电视

◙ Lenovo Considers Japan Production 联想向日本转移制造业务为明智公关手段

◙ Liu Steps Down at Lenovo — Again 柳传志再度卸任联想董事会主席

Taobao Mall Becomes Tianmao: IPO Coming?

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The e-commerce world is buzzing this morning about the new cat in town, a website called Tianmao, translating to “Sky Cat,” which is the new Internet domain where Alibaba Group’s industry leading Taobao Mall will set up its new shop. (Chinese article) The move is the latest in a series designed to separate the highly popular online shopping mall from its roots in Alibaba’s broader Taobao family of companies catering to consumer buyers, and looks like the latest step in the march towards an IPO for the unit, probably sometime later this year. Alibaba started Taobao about a decade ago as a specialist in the then-popular online auctions business, also known as C2C, where it fought a high-profile battle with global industry leader eBay (Nasdaq: EBAY) that ultimately saw the US giant largely withdraw from the domestic Chinese market. Since then, however, Alibaba’s online auctions business has been a lackluster performer, in part because it refuses to charge for most services; instead, Taobao has found more success in its Taobao Mall, an online shopping mall, known in the industry as a B2C site, populated by third-party retailers that are generally quite large and are more than happy to pay handsome fees for the privilege of renting a space on the site. Alibaba formally split off Taobao Mall from the rest of Taobao in a reorganization last year (previous post), and has been quietly building it up as a separate stand-alone business. The new company experienced a bit of controversy last fall when it announced a sharp price hike for smaller merchants, prompting them to rise up and create widespread disruption, saying the move was aimed at kicking them off the site. (previous post) Stakeholders of Alibaba, whose only listed unit is its B2B site, Alibaba.com (HKEx: 1688), have repeatedly pressed founder Jack Ma to do more IPOs for his company’s other units to let them get more money back from their investments; but Ma has countered by saying Taobao will never make an IPO. This latest name change for Taobao Mall looks like a clever way for Ma to keep his promise, while moving ahead with an IPO for this successful unit that could raise several billion dollars or more if and when it comes later this year.

Bottom line: Alibaba’s renaming of its popular Taobao Mall as Tianmao is the latest step in the march towards a multibillion-dollar IPO  that could come later this year.

Related postings 相关文章:

◙ Albaba Faces New Assaults From Merchants, 360Buy 阿里巴巴受到中小商户和京东商城的双重夹攻

◙ Taobao Mall’s IPO March Collides With Merchant Uprising 淘宝商城IPO或因商户“起义”被推迟

◙ Alibaba Sharpens Focus in Yahoo Buy-Out, Taobao Mall 阿里巴巴回购雅虎所持股权有望