LG Display Mulls China LCD Shift

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Interesting reports coming out of Korea hint that LG Display (Seoul: 034220) may be having second thoughts about building a state-of-the-art LCD plant in China, despite years of lobbying for just such a move, in what could actually be a good development for China’s tech sector. Media are reporting that LG Display, which together with hometown rival Samsung Electronics (Seoul: 005930) and Taiwan’s AU Optronics (Taipei: 2409) received permission to operate cutting edge LCD plants in China early this year, has now put its hard-won approval on hold, believing that global capacity for LCDs may be sufficient and peaking as the technology matures. (English article) I must say that I quite agree with this view, as large LCD screen products could well be headed into a permanent downcycle as rival products based on more power-efficient LED technology gain momentum with larger and larger screens boasting higher resolution hitting the market. The power consumption argument is critical especially for portable devices, as LED-based tablet and notebook computers get significantly more battery life using than LCD-based products. The rise of LEDs could make the looming LCD downturn even more painful with the addition of major new capacity in China being built not only by Samsung and AU, but also a major new plant operated by domestic player TCL (Shenzhen: 000100), which counts Samsung among its investors. If the Korean reports are true, and I suspect they are, I wouldn’t be surprised to see Samsung, AU Optronics, and Taiwan’s Chimei Innolux (Taipei: 3481), which also has China aspirations, make similar adjustments to their China strategy. While China would lose out in the short term as investment dollars for LCD projects are scrapped, it would actually benefit in the longer term by largely skipping the LCD chapter of the video screen story, and instead jumping directly to next-generation LEDs.

Bottom line: LG Display’s potential scrapping of its China LCD plans are an early indicator that China could become a global leader in next-generation LED production.

Related postings 相关文章:

◙ AU Plays Catch-Up With China Panel Plan 台湾友达在大陆LCD面板争夺战中占得先机

◙ TCL on the Comeback Trail With Samsung Tie-Up TCL与三星结盟 重振旗鼓

◙ TCL Comeback Gains Momentum with Italy Deals TCL牵手意大利 复苏之势获动力

Potent Partners Lift SAIC in Wobbly Times 动荡时期 合作夥伴撑起上汽的业绩

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Leading Chinese car maker SAIC Motor (Shanghai: 600104) has just posted its latest results that look quite impressive, underscoring that having strong foreign partners is critical in the highly competitive auto industry as it heads into a major slowdown. SAIC said its profit in the first six months of the year cruised ahead at a rapid 46 percent clip to 8.58 billion yuan, or about $1.3 billion — not bad for a market where growth has slowed dramatically this year and is only expected to reach 5-10 percent following the end of government incentives to boost sales during the global financial crisis. (English article) SAIC’s powerful joint ventures with China’s top two foreign car makers, General Motors (NYSE: GM) and Volkswagen (Frankfurt: VOWG) are clearly a critical part of its continued success, as many of its domestic rivals face a more bleak future with their less-known brands and weaker reputations for quality and after-sales support. Last week former domestic high-flyer BYD (HKEx: 1211), backed by US billionaire investor Warren Buffett, posted a 98 percent plunge in its latest profit (English article), while somewhat stronger domestic rival Geely (HKEx: 165), which made headlines last year with its landmark purchase of Volvo, also posted a modest 17 percent gain in first-half profit. (English article) SAIC should continue to outperform the rest of the market in terms of profit growth for at least the next couple of years, though it too could see its bottom line come under pressure amid growing price wars as companies vie for customers in a cooling market. In the latest development on that front, a GM executive told foreign media that GM’s SAIC-GM-Wuling has recently slashed prices of its low-cost minivans to offset slowing sales, though he added the promotions will be short-lived. (English article) We’ll see.

Bottom line: SAIC’s tie-ups with GM and VW will help it outperform the auto sector during  its latest downturn, but a building price war will also pressure its profits.

中国最大汽车制造商–上海汽车集团股份有限公司(600104.SS)最新财报业绩靓丽，突出在竞争高度激烈、且增长放缓的汽车行业，拥有强大的海外合作夥伴至关重要。上汽业绩报告称，上半年实现归属于上市公司股东的净利润85.76亿元人民币（13亿美元），同比增长46.09%，鉴于今年中国车市增速大幅下滑，这样的业绩已经相当不错了。上汽与中国市场中的两大海外汽车厂商–通用汽车GM.O、大众汽车(VOWG.DE: 行情)建立的合资企业显然是上汽持续成功的一个关键因素。相比之下，国内很多竞争对手因为品牌知名度低、质量声誉一般，售後服务不过硬等，所面临的前景要黯淡很多。上周，国内另一家汽车厂商比亚迪(1211.HK; 002594.SZ)近期利润同比跌幅高达98%，另外一家汽车厂商吉利(0165.HK)中期净利按年不过增长17%。至少在未来数年内，上汽利润表现仍应优于整体市场状况，不过随着中国车市逐步降温，汽车行业价格战渐行渐近，未来上汽利润可能承压。一名通用汽车高管告诉海外媒体，上汽通用五菱近日已经降价销售低价小货车，以提振低迷销量。不过他并指出促销活动不会太长。今後到底如何？我们将拭目以待。

一句话：上汽与通用汽车和大众联合，有助于上汽业绩在最近的车市颓势中鹤立鸡群，但越来越近的价格战也会对其利润造成压力。

Related postings 相关文章:

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

◙  Nissan Jumps on China Expansion Bandwagon, Overcapacity Ahead 日产加入中国市场扩张潮 未来料产能过剩

◙ Ford Comments Signal Accelerating Price Pressure 福特暗示中国车市价格压力加剧

 

Tencent Sends Out Mixed Video Signals 腾讯若持股优酷 有助进军视频业

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As I glanced over today’s headlines, I couldn’t help wondering what is going on with Chinese Internet leader Tencent (HKEx: 700), which is sending out mixed signals about its intent in the hot online video sharing space. A top company executive told Chinese media that Tencent has spent some 100 million yuan, or more than $15 million, in recent months to build up its video sharing infrastructure (English article), following word earlier this year that it had budgeted $100 million to enter a space dominated by industry leaders Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO). (previous post) That’s all fine and good, except that just two weeks ago reports emerged that Tencent was in talks to take an equity stake in Youku itself. (previous post) Tencent clearly wants to get into the video space, and I applaud this decision as online video fits in well with its demographic base, made up of young people, mostly 25 years old and younger, who are the main users for its wildly popular QQ instant messaging service and online games. But it needs to make up its mind soon on which direction it will take, or end up spending lots of unnecessary cash and upsetting potential allies in the market, including members of a video alliance it helped to establish earlier this year. (previous post). My personal choice would be for a tie-up with Youku, preferably through a major equity stake, as this well-managed company is making lots of smart moves lately in its road to profitability, which could come by the end of the year. In the latest of those moves, the company announced a deal giving it first-of-its-kind online video rights to Dreamworks Animation’s (NYSE: DWA) “KungFu Panda” series, which has been hugely popular in China. That deal follows similar recent ones with Warner Brothers (NYSE: TWX) and Philips Electronics (Amsterdam: PHG) (previous post), and shows that Youku is clearly looking for a road to sustainable profits.

Bottom line: Tencent’s move into video is a smart one, catering to its demographic base, but it needs to quickly decide which path it will take, with a Youku equity tie-up looking most attractive.

我浏览了一下今天的头条新闻，不禁猜想腾讯(0700.HK)会有何动作，腾讯对其进军视频分享领域的意图发出不同信号。该公司一名高管告诉中国媒体，腾讯近几个月斥资约一亿元，打造视频分享基础设施，而今年早些时候有传言称，腾讯拨出预算1亿美元，进军优酷网(YOKU.N)和土豆网主导的视频分享领域。这些消息都还不错，除了两周前有报导称，腾讯正在谈判持股优酷网。腾讯显然想进入视频行业，我很赞赏这一决定，因为该服务与腾讯用户结构契合度很好，该公司的QQ即时通讯和在线游戏用户多为25岁以下的年轻人。但腾讯应尽快决定发展方向，以停止耗费大量不必要的资金，令潜在的市场盟友失望，包括今年稍早协助成立的视频版权联盟。我个人观点是腾讯应与优酷网结盟，最好是成为优酷网较大股东的方式，因为优酷网近期采取多项明智之举，年底前即有望实现盈利。优酷网最新举措是，宣布与美国梦工厂(DWA.O)签署《功夫熊猫》系列版权协议。此前，优酷还与华纳兄弟(TWX.N)和飞利浦(PHG.AS)签署类似协议，这表明，优酷显然正在探索持续盈利的途径。

一句话：腾讯进军视频业是明智之举，适合其较年轻的用户结构，但腾讯需迅速决定发展方向，以持股优酷网的方式与其结盟看似最具吸引力。

Related postings 相关文章:

◙ Video Sharing: Let the Tie-Ups Begin

◙ Youku’s New Formula: Sponsored Programs 优酷“新配方”：赞助项目

◙ Tencent Takes Serious Shot at Video 腾讯重拳出击视频业务

News Digest: August 30, 2011

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The following press releases and media reports about Chinese companies were carried on August 30. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ SAIC (Shanghai: 600104) Profit Beats Estimates After GM, VW China Sales Climb (English article)

◙ Bank of America to Sell 13.1 Bln China Construction Bank (HKEx: 939) Shares (Businesswire)

◙ Youku (NYSE: YOKU), DreamWorks Animation In “Kungfu Panda” China Distribution Deal (PRNewswire)

◙ LDK Solar (NYSE: LDK) Reports Q2 Financial Results (PRNewswire)

◙ Tencent (HKEx: 700) Video Invests Over RMB 100 Mln on Infrastructure (English article)

China Mobile Turns Up 3G With New Handset Push 中国移动3G再发力

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With its new top management now firmly running the show, China Mobile (HKEx: 941; NYSE: CHL) continues to embrace its previously neglected 3G network, preparing to roll out a large new array of handsets that will work on the system using a homegrown mobile standard. Local media are reporting that China Mobile is preparing to launch some 30 new 3G handsets for its TD-SCDMA system, covering a wide range of price-points and models from nearly every major manufacturer, including Nokia (Helsinki: NOK1V), Samsung (Seoul: 005930) and BlackBerry (Toronto: RIM), as well as homegrown players ZTE (HKEx: 763; Shenzhen: 000063) and Huawei. (English article) Of course, the big piece still missing is a TD-SCDMA version of Apple’s (Nasdaq: AAPL) iPhone, but all indications point to introduction of an iPhone that can work on China Mobile’s 3G system by the end of the year. (previous post) As its 3G push picks up momentum, look for the balance in China’s young 3G market to swing back in China Mobile’s direction, as it retakes share from rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). Separately on the telecoms front, Nokia has come out and confessed that it is suffering from “channel issues” in China, following media reports earlier this month that its China distributors were rebelling en masse by refusing to sell its increasingly unpopular models after years of bullying. (Chinese article) According to this  latest report, Nokia forced large volumes of its phones on distributors in the first quarter of this year, allowing it to post 30 percent shipment growth in China for the period. But many of those phones couldn’t compete with more popular models, especially in the smartphone space, causing inventories to balloon and distributors to refuse to accept more handsets. As a result, Nokia’s China shipments tumbled 41 percent in the second quarter. Clearly the company is set for more stormy times ahead in China, at least until it comes out with its highly-anticipated new line of smartphones later this year based on Microsoft’s (Nasdaq: MSFT) Mango operating system.

Bottom line: China Mobile’s new 3G push will help it grab market share from rivals, while Nokia will continue to slide in China at least until it rolls out its new Mango-based smartphones.

中国移动(0941.HK; CHL.N)在新的管理层全力指挥下，继续向先前忽略的3G网络发力，准备扎堆推出一系列采用本土3G标准的新款手机。据国内媒体报导，中移动准备发布高、中、低档总数约30款的TD-SCDMA新机型，分别出自诺基亚(NOK1V.HE)、三星电子(005930.KS)、黑莓制造商Research In Motion(RIMM.O)及本土企业中兴通讯(000063.SZ; 0763.HK)与华为等厂商。当然，仍然缺少重量级产品–TD版的苹果iPhone，但所有迹象都表明：适用于中国移动3G网络的TD版iPhone今年年底前可能推出。随着中移动突击发展3G网络，中国诞生不久的3G格局可能会向中移动倾斜，因它可能会从竞争对手中国联通(0762.HK; CHU.N)与中国电信(0728.HK; CHA.N)中抢回一些市场份额。另外，在手机制造商方面，诺基亚已经承认在中国市场“渠道”环节出问题。此前媒体报导称，由于中国渠道商不愿出售诺基亚越来越受不欢迎的机型，诺基亚开始遭遇集体“反水”。根据最新报导，诺基亚今年第一季度在向渠道商大量压货的情况下，手机出货量有不错表现，录得30%的同比增长。但很多诺基亚机型无法与对手竞争，尤其是在智能手机领域，造成库存高企，渠道商拒绝接受更多现货。结果，诺基亚第二季度在中国的手机出货量同比大跌41%。显然，诺基亚未来在中国还要面临很多困难，至少今年稍晚推出搭载微软最新的Mango操作系统的新产品系列前，道路会很坎坷。

一句话：中移动在3G领域再发力，有助于帮助它从竞争对手手中夺回一些市场份额；诺基亚近期在华业绩仍会下滑，至少其Mango系统新机推出前难改颓势。

Related postings 相关文章:

◙ China Mobile Nears iPhone Deal, Continues 4G Press 中移动iPhone协议近尾声 加紧4G攻势

◙ Nokia Facing China Backlash After Years of Dominance 诺基亚手机在华“失宠”

◙ China Mobile: New iPhone Steps as Wang Exit Moves Closer 中移动与苹果接近达成协议

Record Profits Bolster Banks as Storm Looms 创纪录利润有助银行抵御楼市低迷隐忧

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There’s not a lot to say about any one of China’s major state-owned banks for the latest earnings period, except that collectively they all posted record profits as they continue to reap strong revenue from record lending in 2009 and strong margins as China raises interest rates. (English article) ICBC (HKEx: 1398; Shanghai: 601398), the nation’s largest bank and last to report, said its profit jumped 30 percent in the second quarter to $17 billion, in a typical scenario for most banks. If the banks are smart, I hope they’re using all those profits to bolster their capital, which seems to be constantly falling short of Beijing’s ever-rising reserve requirement ratios. Of course all these hikes are designed to brace the banks for an expected shock they will suffer if and when the real estate market corrects, which will severely affect not only their real estate loans, but the debt-repayment ability of local governments that rely heavily on land sales to pay off their loans. We already saw the first signs that a second round of massive capital raising may be coming last month, when China Merchants Bank (HKEx: 3968; Shanghai: 600036) announced plans to raise $5.4 billion through rights offerings. (previous post) China has been so worried about the looming downturn, and forcing its banks to prepare so much, that I’m starting to wonder if perhaps all the panic isn’t a bit overblown. Investors seem to think perhaps Beijing is being a bit too conservative, with ICBC and Agricultural Bank of China (HKEx: 1288; Shanghai: 601288) shares both outperforming the Hang Seng Index this year, though China Construction Bank (HKEx: 939; Shanghai: 601939), which has more exposure to real estate, is faring less well. On the whole, I would say to look for the bank stocks to outperform the market in the months ahead, as investors start to believe that perhaps these troubled lenders have built up a big enough cushion to withstand the coming real estate downturn.

Bottom line: After record profits and massive fund raising two years ago, China’s banks may finally be adequately capitalized to withstand the coming downturn in China’s real estate market.

关于中国各大国有银行最新财报，并没有过多可谈论之处。除了一点：在2009年贷款额创新高及中国加息所带来的利润推动下，各家银行均发布了创纪录的收益。工商银行(1398.HK; 601398.SS)称，该行第二季度利润增加30%，至170亿美元，多数银行都取得了类似增长。如果各大银行聪明的话，我希望他们会利用所有利润充实资金，由于中国政府不断提高存款准备金率门槛，各家银行资金一再告急。当然，如果房地产市场降温，银行料将受到冲击，不仅是房贷严重减少，地方政府还贷能力也将降低，因为其主要依赖卖地还债。上月初步迹象显示，中国银行业或将掀起新一轮大规模融资，中国招商银行(3968.HK; 600036.SS)宣布，将在香港和上海发行权利股，筹集54亿美元。中国政府担忧经济低迷隐现，敦促各大银行提高存准率，我不禁猜想，这一切是否有些过度惊慌。投资者似乎认为，中国似乎有点过于保守，尽管中国建设银行(0939.HK; 601939.SS)受房地产影响较大，股价表现平平，但今年工行和农业银行(1288.HK; 601288.SS)股价均跑赢?生指数。整体而言，由于投资者开始相信，各大银行已搭建起足够大的“软垫”，预防楼市或将出现的低迷情况，我预计，未来几个月银行股将跑赢大盘。

一句话：鉴于中国银行业利润创新高，并在两年前大规模融资，中国银行业或终能保持资本充足，抵御中国楼市或现低迷的隐忧。

Related postings 相关文章:

◙ China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

◙ Beijing Money Shut-Off Reaches a Roar, Real Estate Suffers 银行贷款下降 房地产市场受压

◙ ICBC Sees Potential in Argentina 中国工商银行：阿根廷市场有潜力

 

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

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More than a year after Geely (HKEx: 165) made its landmark purchase of Volvo from Ford (NYSE: F), Volvo has released its first performance numbers that come closest to reflecting its new ownership, pointing to a rosy honeymoon but potential difficulties ahead. In the first half of the year, Volvo’s global sales rose a healthy 20 percent, helping to lift it to an operating profit of $190 million, company officials said at a recent event in Beijing. (English article) What’s more, Volvo’s China sales roses 36 percent, a big number on the surface but still only representing 21,000 vehicles. What these numbers tell me is that Geely is taking a largely hands-off approach to Volvo, continuing to let the Swedes run the show, which is a good thing as they clearly know how to make quality cars that the market wants. While all that looks fine for now, the future problems will come with Geely’s plan to build two massive new factories to produce Volvos in China and significantly boost the brand’s sales in Geely’s home market. This big new investment is clearly coming from Geely, whose Chairman Li Shufu wants to promote Volvo as his company’s luxury brand in China. Once these new plants come on stream and start to produce in earnest, I can see the potential for major clashes between Volvo’s management in Sweden and Geely’s top brass in China, as each will have different views about how these two massive new plants should be run, as well as how Volvos produced at the plants should be marketed. Such turmoil is still probably at least 2-3 years down the road as construction is just beginning on these plants. So for now at least, Geely and Volvo should enjoy their honeymoon as much as they can, and brace themselves for a sobering new reality when they are forced to work together to forge a common vision for the Swedish nameplate.

Bottom line: Volvo has posted a solid first year under its Geely ownership, but conflict lies ahead as the Swedish carmaker presses ahead with ambitious new plans for China.

Related postings 相关文章:

◙ China’s Car Rebound: Price War Looming? 中国车市反弹：价格战越来越近？

◙ Geely’s Volvo Roadmap: Laden With Potholes?

◙ Autos: Good Times Screech to a Halt 中国汽车业：当繁荣已成往事

News Digest: August 27-29, 2011

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The following press releases and media reports about Chinese companies were carried on August 27-29. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ Nokia (Helsinki: NOK1V) Admits to Recent Channel Problems in China (Chinese article)

◙ China Mobile (HKEx: 941) to Release 30 TD-SCDMA Handsets in H2 2011 (English article)

◙ PlayPhone and Perfect World (Nasdaq: PWRD) Announce Strategic Partnership (Businesswire)

◙ AMD (NYSE: AMD) Names Lenovo’s (HKEx: 992) Rory Read Chief After 7-Month Search (English article)

◙ BYD (HKEx: 1211) and Hertz Partner to Bring the First EV Rentals to China (Businesswire)

Lenovo Considers Dangerous HP Computer Bid 联想应慎购惠普PC业务

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Don’t do it! Those are the only words of advice I can offer Lenovo (HKEx: 992) Chairman and founder Liu Chuanzhi, whose latest comments indicate his is weighing a possible bid for the PC assets that global leader Hewlett-Packard (NYSE: HPQ) is putting up for sale. (Chinese article) Liu, who built Lenovo from a local computer builder into the world’s fourth largest PC brand, was understandably reserved in his remarks to reporters on the subject, but his constant use of the phrase “something to consider” indicates to me that his mind is already moving in the direction of making a bid, an easy conclusion to make in light of his fondness for acquisitions that have included his blockbuster purchase of IBM’s (NYSE: IBM) PC business, and its more recent takeover of smaller PC operations in Japan and Germany. (previous post) Liu, if he did make a bid, would clearly be looking to vault his company past Dell (Nasdaq: DELL) and Taiwan’s Acer (Taipei: 2353) to become the world’s top PC player, which this deal would clearly do. But the risks are huge, and it’s not at all clear to me that Lenovo could survive a successful bid, especially as it faces huge new competition from Apple (Nasdaq: AAPL) in its home China market that accounts for half of its sales. (previous post) At the top of my list of concerns is the very real possibility that Lenovo would seriously overpay for the HP unit, as it faced strong rival bids from better-funded companies like Samsung (Seoul: 005930), Acer, and perhaps even Dell. But even more important, Lenovo would have an extremely hard time integrating its own business with HP’s, which is already much bigger and far more complex due to the company’s longer history and vast geographic reach. Lenovo might argue its IBM PC purchase has given it valuable experience in such integrations, which is partly true. But let’s also not forget the IBM integration was especially painful for Lenovo, and there’s every reason to believe that HP would be even more painful. If Liu Chuanzhi is smart, he will do his due diligence on HP’s PC business, and quickly decide it’s not worth bidding.

Bottom line: Recent comments from Lenovo’s chairman indicate he may be considering a bid for HP’s PC business — a move that if successful would prove disastrous.

别收购惠普PC业务！这是我给联想(0992.HK)创始人兼董事长柳传志的唯一建议。柳传志的近期评论暗示他正在权衡是否收购惠普(HPQ.N)旗下的PC业务。柳传志把联想从一个本土电脑商打造为全球第四大PC品牌，对记者的这一问题表示了可以理解的保留态度。但我认为，他多次使用“值得考虑”一词表明，他有意参加这次竞购，何况他向来喜欢并购，联想曾收购IBM(IBM.N)的PC业务，近期又收购日本NEC和德国Medion公司的PC业务。如果柳传志竞购惠普PC业务，明显是希望超过戴尔和台湾宏基(2353.TW: 行情)，成为全球第一大PC制造商，该收购案如果成功确实能实现这一点。但联想收购惠普PC业务风险巨大，而且我尚不清楚，联想是否能竞购成功，尤其是联想在中国市场还面临苹果(AAPL.O: 行情)的巨大挑战。我最担忧的是，竞购惠普PC业务时，联想面对三星(005930.KS)、宏基、甚至戴尔等对手的强劲竞标，可能会出价过高。但更重要的是，联想在整合惠普与其自身业务时可能历经艰辛，因为惠普历史悠久、市场更多，所以业务更庞大，也更复杂。联想可能会辩称，收购IBM PC业务为期提供了宝贵经验，一定程度上确实如此。但请不要忘记，联想整合IBM时非常痛苦，我们有理由相信，整合惠普会更痛苦。如果柳传志聪明的话，他应该对惠普PC业务进行独立的尽职调查，并迅速作出惠普PC业务不值得竞购的决定。

一句话：联想董事长柳传志近期评论表示，他可能考虑竞购惠普PC业务，此举若成功，有可能会带来灾难性後果。

Related postings 相关文章:

◙ Lenovo Discovers the Right Formula a Little Too Late 联想再次“晚一步”

◙ Lenovo-NEC: Let the Defections Begin 联想与NEC结盟注定失败

◙ Lenovo Makes Strange Move Into Germany 联想进军德国令人摸不着头脑

360Buy Cuts Off Alipay As China Internet Froth Builds 京东停用支付宝印证中国互联网泡沫

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Perhaps I’m becoming a bit biased due to my belief that China is in the midst of an Internet bubble, but the latest word from online retailing giant 360Buy that it is cutting off Alibaba’s Alipay online payments service to me looks like the latest sign of a swollen China Internet sector under growing duress. As many will recall, 360Buy made headlines earlier this year when it raised a whopping $1.5 billion in new funding, a record for a private Chinese Internet company and just one of a large number of fundings of $100 million or more as both domestic and foreign investors piled onto the China Internet bandwagon. (previous post) One of the 360Buy investors, Russia’s Digital Sky Media, justified the massive investment by saying the company could be worth a staggering $10 billion — about triple the value of most of China’s biggest Internet firms excluding titans Baidu (Nasdaq: BIDU) and Tencent (HKEx: 700). So I find it a little surprising that 360Buy CEO Liu Qiangdong is citing Alipay’s annual costs of about 5-6 million yuan, or less than $1 million, as the reason behind is company’s decision to cut off the service. (Chinese article) I’m certainly not in favor of needlessly wasting money, but for a company that just raised $1.5 billion to say an annual expense of $1 million is too high, especially in a high-growth area like e-payments, sounds to me like 360Buy is coming under increasing pressure to slash costs as its new impatient investors push it to become profitable — something that may not happen soon due to fierce competition in China’s e-commerce market. This latest move by 360Buy, combined with recent massive layoffs by Gaopeng, the group buying joint venture between Groupon and Tencent, (previous post) are just the latest signs of China’s growing Internet bubble, which could start to burst in dramatic fashion in the next 6 months.

Bottom line: 360Buy’s termination of its agreement to offer Alipay e-payment services is the latest sign of a building Internet bubble in China.

也许我是有点偏见，我认为中国互联网正出现泡沫。不过从京东商城近日宣布停用支付宝来看，似乎确实印证中国互联网产业面临更大压力。许多人应该都还记得，京东商城今年早些时候获得海外15亿美元融资，京东商城投资方之一–俄罗斯投资公司DST当时大谈此宗投资的合理性，称京东商城价值高达100亿美元。因此现在京东CEO刘强东以“费率高”为由，宣布停止与支付宝合作，让我有点意外，毕竟京东每年付给支付宝的费用也就是500-600万元人民币，还不足100万美元。我当然不是主张不必要的浪费，但作为刚融资15亿美元的京东商城，说每年100万美元的电子支付费用太高，让人感觉似乎京东商城在降低成本方面压力加大，因为投资方要求其实现盈利，而这在眼下中国竞争激烈的电子商务市场来说很难。京东商城此举，加之高朋网裁员，都是中国互联网呈现泡沫的迹象，也许未来六个月中我们会看到泡沫开始戏剧性破灭。

一句话：京东商城停用支付宝，是中国互联网产业出现泡沫的最新迹象。

Related postings 相关文章:

◙ Gaopeng, Kaixin Spotlight China Internet Turmoil 高朋网、开心网凸显中国互联网混乱现状

◙ Gaopeng Lay-Offs Auger Ad Spending Downturn 1高朋裁员预示网络广告支出或大幅下降

◙ 360Buy — More Details But Still Pricey 京东商城值多少？

 

Shanda Cloudary Returns to Market, Worth a Look

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Shanda Interactive (Nasdaq: SNDA) Chairman Chen Tianqiao is either very persistent or very stupid, as he returns to market with an IPO for his online literature unit, Shanda Cloudary, just months after he shelved the offering due to poor market sentiment, even as current sentiment remains poor. I’ve heard the guy is quite intelligent, even if most of his business endeavors don’t yield very impressive results, so I’m willing to give this new offering a look. (English article) Based on the numbers, the story actually looks quite interesting. Cloudary’s two biggest income sources, revenue from online users and from its online wireless service, both rose by triple digit percentages in the first half of the year, with the latter up more than 200 percent to a relatively modest 73.7 million yuan, or about $12 million. The company posted a net loss for the first half of the year, but that loss narrowed to about 14 million yuan from 22 million yuan in 2010. With revenue of around $50 million in the first half of this year, Cloudary is clearly not a huge company yet and has lots of room to grow. I’ve previously yawned at this offering, calling it just another attempt by Chen to squeeze more money out of financial markets, but I have to admit the numbers do seem to tell an interesting story. What’s even more interesting for me, however, is the reality on the ground: walking around in Shanghai, it’s nearly impossible to go for more than a few minutes without seeing someone on the subway or waiting in line at a shop reading on their cellphone or tablet computer. Perhaps it’s news, or perhaps it’s literature or perhaps it’s both. But regardless, Cloudary does seem to be in a strong position to take advantage of this trend, which will undoubtedly grow stronger as mobile devices such as e-readers and smartphones become more common. That said, I’m going to tweak my previous prediction and say that despite a dismal debut by video sharing IPO Tudou (Nasdaq: TUDO) earlier this month (previous post), Cloudary could actually do well in its offering and bring back a little buzz to the sputtering China Internet.

Bottom line: Shanda’s Cloudary online literature unit could offer an intriguing play into the growing market for mobile content with its upcoming IPO.

Related postings 相关文章:

◙ Tudou IPO Set to Stumble Out of the Gate 土豆上市首日难有精彩表现

◙ Wall Street Clean-Up Underway Amid Accounting Crisis 会计危机中华尔街展开清理行动

◙  Dud Looms With Shanda Literature Offering 盛大文学上市令人不解