China Retaliates With Own US Solar Probe 中国启动对美可再生能源补贴调查

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The building trade war between the US and China over subsidies to solar panel makers is heating up further still, with China launching its own anti-dumping investigation against US firms in a clear retaliatory move for a similar ongoing US investigation. Amid all this latest wrangling in Beijing and Washington, major industry players are announcing a new wave of specific and potential plans to build new production bases in the West and emerging markets, indicating people are starting to feel a bit uneasy with the dominant slice that China has taken of the market. First let’s look at the latest development in Beijing, which has seen China’s Commerce Ministry launch an investigation into government subsidies for US solar panel makers. (English article) I won’t even begin to comment on the absurdity of such an investigation, as a big portion of US solar panel makers are no longer in business after many were forced into bankruptcy this year as the sector struggles through its worst-ever downturn amid huge overcapacity. For that same reason, any punitive tariffs by China probably wouldn’t have much effect, since there aren’t many US solar panel makers left to punish and China hasn’t built many solar power plants to date anyhow. But the tone in the debate is certainly counterproductive if nothing else, and the two sides should sit down and try to work out a solution that everyone can live with rather than engaging in this kind of angry rhetoric. Meantime, Japan’s Panasonic (Tokyo: 6752) has just announced a plan to spend more than $500 million to build a major new solar panel production base in Malaysia. (company announcement) I’m not sure if the world needs another major new solar panel plant right now; but that move, combined with recent comments by LDK (NYSE: LDK) and other China manufacturers that they may build new plants outside China to avoid US punitive tariffs, show that the industry is clearly concerned about too much concentration of its resources in China and wants to diversify its production to other markets. Those kinds of moves could help to diffuse this crisis, though Beijing and Washington will also need to show a bit more willingness to work together to iron out their differences to avoid a counterproductive trade war that could really hurt the development of the alternate energy sector.

Bottom line: China’s launch of an unfair subsidy investigation against US solar firms is a counterproductive move that won’t do anything to help settle a growing trade war over the matter.

Related postings 相关文章:

◙ Solar Slips Squarely Into the Red 太阳能行业陷入全线亏损

◙ Beijing, Yingli Send Mixed Solar Signals 英利和中国政府似乎“背道而驰”

◙ New Solar Signals: Slowdown Easing Amid Writedowns 太阳能企业减计库存 行业或将开始摆脱危机

Luxury Cars Zoom, But Who Profits?

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China’s formerly red-hot auto market looks set to stall this year, but you would never know that from looking at luxury car sales. The only problem from a domestic investor’s point of view is that the market is almost completely monopolized by foreign firms, Germans in particular. The country’s 3 top luxury car sellers, Volkswagen’s (Frankfurt: VOWG) Audi, BMW (Frankfurt: BMW) and Mercedes-Benz (Frankfurt: DAI) all saw their China sales rise 30 percent or more in the first 10 months of this year. (English article) That turbo-charged growth came even as the broader market stumbled and the country’s main industry association forecast just 5 percent growth for the year, as Beijing took steps to tame inflation and ease congestion on the nation’s busy roads. The logic behind the strong luxury sales isn’t hard to see. As China makes it more difficult for people to buy new cars through measures such as restricting new licenses and phasing out incentives for cheaper, more gas efficient models, a bigger percentage of sales will go to the luxury segment that is far less price sensitive. What’s more, luxury cars in China now account for just 8 percent of the total car market, compared with 10-20 percent in the West. Right now the best bets from China to capitalize on this trend are limited. Audi’s China partner, FAW Auto, isn’t publicly traded, and even if it was the brand looks set for a rough road as it rapidly loses share to its aggressive German rivals. BMW also makes cars in China with partner Brilliance China Automotive (HKEx: 1114), while Mercedes-Benz parent Daimler works with privately held BAIC, which has said for several years now it wants to make an IPO. BAIC has shown aspirations to build its own higher-end models with its purchase of several older models a couple of years ago from Swedish automaker Saab, which is now near death. Another interesting play could be Geely (HKEx: 165), which is trying to reposition its recently acquired Volvo nameplate as a luxury brand in China. (previous post) I’m dubious whether this plan can work, but if it does then Geely could see itself also in a strong position as sales of its more mainstream cars slow in this latest downturn.

Bottom line: The German automakers are best positioned to capitalize on China’s luxury car boom, but domestic names like BAIC, Brilliance China and Geely could also benefit.

Related postings 相关文章:

◙ China Autos Set for Long Slowdown

◙ Chery, Luxury Cars Hit New Speed Bumps

◙ Geely-Volvo: Good First Year, But Fork in the Road Ahead

News Digest: November 26-28, 2011

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

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◙ Alibaba (HKEx: 1688) Drops Most in More Than Two Years on 2012 Outlook (English article)

◙ Now China to Probe US Renewable Energy Support (English article)

◙ Gap (NYSE: GPS) Says to Triple China Network in 2012 (English article)

◙ China Lodging Group (Nasdaq: HTHT) Updates October Hotel Operating Performance (PRNewswire)

◙ NDRC Dispenses RMB 660 Mln in Cloud Subsidies – Source (English article)

 

Alibaba’s Incredible Shrinking Profit Growth 阿里巴巴盈利呈加速放缓趋势

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Leading B2B e-commerce platform Alibaba.com (HKEx: 1688) has become skilled at putting out its results during times when the least people are watching, as it aims to deflect investor attention from the fact that its profit growth is following a worrisome shrinking pattern. It released its first quarter results in May at the height of its headline-making spat with 40 percent stakeholder Yahoo (Nasdaq: YHOO), and now it has just released an extremely lackluster third-quarter report over the US Thanksgiving holiday, when New York markets are closed and most investors are unlikely to see the results when they get back to work next week. (English article; Chinese article) There’s good reason it doesn’t want too many people to see these results: they show that its third-quarter profit grew at an anemic 12 percent, even after it implemented steep price hikes for merchants who trade on its site in a bid to reignite growth as the actual number of merchants started to fall. (previous post) The 12 percent figure was less than half of the second-quarter’s 28 percent profit growth rate, which itself was down sharply from the first-quarter’s 37 percent growth rate. Do we see a trend here? Profit growth seems to be dropping by 10-15 percentage points each quarter, meaning we might actually see single-digit or no growth in the fourth quarter as the company’s prospects fade. Investors seem to have realized that Alibaba.com’s heady growth days are finished, at least for the next year or 2, as there don’t appear to be any real new growth engines for the company in that time frame. The latest results were actually in line with market forecasts, reflecting investors low expectations for the company, and Alibaba.com shares themselves are trading at half the levels of their 52-week high. Unless it can find some new magic soon, which appears unlikely, look for this stock to be stuck in the doldrums for quite some time and perhaps to even fall further still if a serious, more innovative competitor appears.

Bottom line: Alibaba.com’s profit growth will stall in the fourth quarter and into 2012, as it struggles for new revenue sources amid stagnation at its core B2B trading business.

Related postings 相关文章:

◙ Tencent and Alibaba: It’s Not Easy Being Big 腾讯和阿里巴巴：想当老大不容易

◙ 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

◙ Alibaba.com Blows Smoke With HiChina Spin-Off Plan 阿里巴巴网络分拆万网放烟幕弹

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

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I wrote 3 weeks ago that Apple (Nasdaq: AAPL) had overlooked China in the global roll-out for its newest iPhone, the 4S (previous post), in what looked at the time like a snub to the world’s biggest mobile market where it has had lukewarm relations with its main partner, China Unicom. (HKEx: 762; NYSE: CHU) Now it’s starting to look more like the delays may have been created by the telecoms regulator, which has apparently only recently “validated” the iPhone 4S for use on Unicom’s network, meaning Unicom could offer the hottest new Apple phone by year-end, according to Chinese media reports. Meantime, Chinese media are also reporting that smaller, more nimble rival China Telecom (HKEx: 728; NYSE: CHA), which has been negotiating with Apple for much of this year for its own iPhone deal, has finally signed such a deal, which could allow it to offer the 4S on its own 3G network by the end of this year. (Chinese article) Media have reported several times in the past that China Telecom was on the brink of an iPhone deal, but this is the first time I can recall reports that the company has actually signed a deal, meaning perhaps we could really soon see official iPhone service for China Telecom users. The stakes are relatively high in this race to offer the latest iPhone, as whoever launches the product first will get a first-to-market premium in the form of wide media coverage and extra hype for the product’s official China launch. Based on the current state of play, I would put my bets on China Telecom to win this race, as the company has shown a tendency to be far more market-savvy and aggressive this year than Unicom, which has squandered its chances to pick up market share despite owning China’s best 3G network. China Telecom has seen its share of the 3G market expand steadily this year, to about 28 percent in October from 25 percent in April, while Unicom’s share has stagnated at around 30 percent. If China Telecom does indeed win this race, look for its 3G market share growth to accelerate, which should eventually translate to its bottom line as it reaps profits from this more expensive service.

Bottom line: China Telecom is likely to beat Unicom in the race to be first to offer the iPhone 4S in China, helping it to further boost its share of the 3G market.

Related postings 相关文章:

◙ China Mobile’s TD 3G Fading Fast 中国移动3G网络前景黯淡

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

◙ China Mobile: Poor 3G Approach Yields Weak Results 中移动3G策略不当 拖累公司三季度业绩

 

 

Latest Group Buying Turmoil Shows Up at 24quan, Meituan

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It’s Thanksgiving day in the US, but people in China’s turbulent group buying sector have little to be thankful for, as intense competition appears to have claimed a new victim in the form of a sub-site operated by 24quan. (Chinese article) According to Chinese media reports, the sub-site, called Zhongshan Zhan, has suddenly shut down and its merchants are refusing to honor its coupons. I checked 24quan’s main website (www.24quan.com), and it appears to be still functioning normally, so this report appears a bit unclear about what’s really happening at the parent company. But regardless of the specifics, this latest report, which cites a number of irate customers, reflects the current turmoil afflicting China’s group buying space, where consumer complaints are frequent and companies are bleeding cash. Industry leader LaShou’s pending New York IPO appears to be indefinitely suspended, as the US securities regulator looks into accounting issues (previous post), and there’s no sign that 55tuan, another major player, will be able to make its intended US IPO before the end of this year. (previous post) Another new media report reflecting the current chaos says that a site called Meituan has suddenly started offering all employees who have worked there for 6 months or more stock options. (English article; Chinese article) The company apparently denied the move was related to an upcoming IPO, which doesn’t surprise me. I suspect the move instead means something entirely different, namely that Meituan is worried about its own finances and is using these options as a way to retain employees who might be worried that their company might not survive long enough to make those options worth anything. The report says the options don’t vest until 4 years — which looks like an eternity in the current market. I would honestly be surprised if more than 10 percent of the current crop of group buying companies are still in business 4 years from now, and I’m guessing that Meituan won’t be among that small set that survives the upcoming industry clean-up which should begin in earnest in the next 6 months.

Bottom line: Reports of the shut-down of a unit of one popular group buying site and option awards at another are the latest signs of turmoil, which will result in an industry shake-up very soon.

Related postings 相关文章:

◙ Latest Group Buying Confusion Shows State of Chaos

◙ LaShou Shifts Focus in IPO March 拉手网在上市准备中有意转变战略方向

◙ Lashou Files For IPO, Launching Race With 55tuan 拉手网与窝窝团打响IPO竞争战

 

News Digest: November 25, 2011

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

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◙ Group Buying Site 24quan Closes, Thousands of Users Refused Service (Chinese article)

◙ Alibaba (HKEx: 1688) Third-Quarter Profit 410 Million Yuan; In Line With Estimates (English article)

◙ Group Buying Site Meituan Issues Options to Employees – Source (English article)

◙ China Workers Strike at Lingerie, IBM (NYSE: IBM) Parts Factories Demanding More Pay (English article)

◙ China Telecom (HKEx: 728) Gets China Rights for iPhone 4S – Source (Chinese article)

Yum’s New China Strategy: Fill Up With Gas, Food

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Just weeks after getting regulatory approval for its purchase of leading hot pot chain Little Sheep (HKEx: 968), KFC parent Yum Brands (NYSE: YUM) is making headlines once again for yet another tie-up, this time with Sinopec (HKEx: 386; NYSE: SNP), China’s top oil refiner. (English article) But Yum is less interested Sinopec’s oil refining prowess, and has its eye instead of the company’s 30,000 gas stations located across China, many of which could host new outlets for Yum’s KFC and Pizza Hut stores. I have to say that this strategy looks quite intriguing, as Sinopec’s vast chain of gas stations in China would instantly complement Yum’s own 3,500 KFCs and 560 Pizza Huts throughout the country, providing real estate and other infrastructure that Yum could instantly use to quickly open lots of new stores to boost its already strong position as China’s leading fast-food operator. The strategy looks similar to rival McDonalds’ (NYSE: MCD) launch earlier this year of a major new initiative to open drive-through restaurants, catering to China’s new generation of young, affluent car owners. (previous post) I personally like Yum’s strategy a bit more, as opening outlets in Sinopec stations will give it lots of new locations to choose from, and allow it to quickly build outlets in the ones that it likes. The McDonalds strategy looks a bit more time-consuming, calling on the company to explore locations and then build new restaurants on its own. The big question, of course, is will Chinese consumers want to purchase fried chicken, pizzas and maybe even hot-pots-to-go at the same place that they fill up their car with gas? Honestly speaking I’m not sure what the answer is, as I’ve never seen this concept at gas stations outside China. In the US many gas stations house convenience stores, but it’s far less common to see actual restaurants inside them. That said, I don’t see why the concept won’t work, and would give this latest tie-up between Yum and Sinopec and strong chance of success.

Bottom line: Yum’s new tie-up with Sinopec will allow it to expand its KFC and Pizza Hut business to thousands of Chinese gas stations, tapping China’s new generation of car owners.

Related postings 相关文章:

◙ McDonald’s Revs Up for China Drive-Thru 麦当劳寄望“得来速”汽车餐厅拓宽中国市场

◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

◙ Starbucks Wide Open for China Business with New JV 星巴克在云南建合资厂

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

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It seems like barely a day goes by lately without state media singing the latest praises of microblogging, a development which could bode well for dominant player Weibo but which could also hold risks if Beijing decides this popular form of social networking is too important to leave to organic development in the hands of private developers. Followers of Weibo, often called the Twitter of China, will recall that the platform was the source of criticism by state media for much of the first half of the year, which blamed it for spreading rumors from users who could hide behind cloaks of anonymity. One official even came out as recently as last month and suggested that all microblog users might have to register with their real names, a development that would have sent a huge chill through networks like Weibo and other services operated by names like NetEase (Nasdaq: NTES). (previous post) Fast forward to now, when the tone in the debate has changed quite a bit, following Beijing’s latest  decision that microblogging was a great tool for the government to communicate with the people. Following that shift, major state media gush almost daily about the latest government agencies that have opened accounts on Weibo, and have also taken to reporting the other positive effects of microblogging sites. The lead story on page 1 of today’s China Daily is headlined “Micro blogs open a world of communication”, and a search on the subject on its web page reveals positive stories praising everything from microblogging’s role in fighting organized crime to helping people to find love. No mention seems to be made anymore of rumor mongering and the medium’s ability to create social unrest. Of course all that should be good for Weibo and its struggling parent, Sina (Nasdaq: SINA), whose shares have lost about half their value since June as many of its investments outside its core web portal business have stumbled. All this latest praise from Beijing seems to indicate Weibo won’t be shut down or reined in anytime soon, which should be a relief to Sina. Now it just has to find a way to make money off the platform, and also take care to keep Beijing happy by convincing it of Weibo’s important role in developing a harmonious society.

Bottom line: Beijing’s recent shift in tone marks a positive development for microblogging services like Weibo, which are now being called important communicators rather than rumor mongers.

Related postings 相关文章:

◙ Sina Results: Not So Diversified After All 新浪仍依赖广告,突围遇阻

◙ Weibo Still Faces Crackdown Despite Govt Tie-Up 新浪微博难改“被监管”命运

◙ Sina’s Weibo: Growth Engine or Growing Burden? 新浪微博：动力or负担？

Stumbling CNOOC Replaces Chief Executive 中海油换将李凡荣接棒CEO

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Just months after losing its top executive to a rival in one of the period shuffles at the top of China’s major state-run industries, CNOOC (HKEx: 883; NYSE: CEO) is replacing its CEO after two major setbacks that have proven not only embarrassing but also hurt the company’s bottom line. The shuffle, which will see executive director Li Fanrong take over from Yang Hua (English article), comes just a half year after CNOOC saw its former top executive Fu Chengyu, leave the company to take over at the top of Sinopec (HKEx: 386; NYSE: SNP), another of China’s top 3 energy producers. (previous article) This latest move does seem to indicate that top executives at China’s biggest state-run firms, while all clearly appointed by the Communist Party, are being held more accountable for their performance, regardless of their credentials as loyal party members and seasoned bureaucrats. No explanation was given for the change, but industry observers will note that it comes after CNOOC has seen 2 major setbacks in the last few months that have undermined its stock, which is down nearly 30 percent since early June. The first of those, which has been widely reported in the Chinese media, has been a recurrent series of leaks at an oil drilling operation owned by CNOOC and US firm ConocoPhillips (NYSE: COP) in north China’s Bohai Bay, which forced several halts to production and will likely result in a costly clean-up, not to mention huge negative publicity. (previous post) The second more recent setback saw the collapse of CNOOC’s deal to purchase a major asset in Argentina from BP (London: BP) as part of Beijing’s directive for its oil companies to purchase overseas assets to help fuel China’s hungry economy. (English article) I don’t know enough about the people involved in this new shuffle at the top of CNOOC, but the move looks like punishment for Yang for failing to strongly execute corporate strategy, costing the state, as CNOOC’s largest shareholder, lots of money as the company lost nearly a third of its value. Perhaps this move marks the beginning of a more active role by Beijing in switching top executives at the top of its less well-performing state-run giants — a change in approach that would also undoubtedly be welcome by minority shareholders.

Bottom line: A change of CEO at the top of CNOOC may be in response to recent stumbles at the company, and could signal a more activist approach by Beijing in the future.

Related postings 相关文章:

◙ Bohai Spill: A Slippery Mess for CNOOC 中海油的漏油危机

◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦

◙ China’s Oil Shuffle: Not So Fast, Naysayers 石油巨头高管轮换：先别急着唱衰

News Digest: November 24, 2011

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

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◙ Yum Brands (NYSE: YUM) Signs Deal With Sinopec (HKEx: 386) (English article)

◙ CNOOC (HKEx: 883) Appoints Executive Director Li as Chief Executive as Growth Slows (English article)

◙ Fosun Buys $10.35 Mln Worth of Focus Media (Nasdaq: FMCN) Shares in Open Market (Chinese article)

◙ Yingli Green Energy (NYSE: YGE) Reports Q3 Results (PRNewswire)

◙ ReneSola (NYSE: SOL) Announces Q3 Results (PRNewswire)