It seems that ZTE (HKEx: 763; Shenzhen: 000063), already reeling from more recent setbacks than I can recount in this space, has just received yet another blow in its own backyard from crosstown rival Huawei Technologies. To be more precise, the actual blow has come in Europe where Huawei has sued ZTE for stealing its intellectual property, Chinese media are reporting (Chinese report) The recent follies of Huawei and ZTE, both aspirants on the global telecoms equipment stage, are beginning to look more and more like a soap opera. On the one hand, the latest lawsuit comes as a second blow to ZTE, which is also being sued in Europe by local giant Ericsson (Stockholm: ERICb). (previous post) Meantime, Huawei, seemingly frustrated at its slowing growth, is turning to lawsuits to fill its time, as this latest action follows another similar one against Motorola that briefly held up the purchase of Motorola’s networking assets by Nokia Siemens Networks. (previous post) Seeing Huawei actually turn on ZTE almost seems like a sad comedy, reflecting the frustrations that this pair of companies have faced on the global stage in the last six months.

Bottom line: Huawei’s latest legal attack on reflects a new stage in hostilities with crosstown rival ZTE, a development that will ultimately undermine both.

Related postings 相关文章:

◙ Growth-Addicted Huawei Looks to the Cloud 华为渴求增长上瘾 着眼云计算

◙ Motorola, Huawei Settle, Now Everyone Can Move On 华为与摩托罗拉和解，各方均受益

◙ ZTE, Huawei Stumble Some More 华为中兴：难兄难弟

What a difference a multibillion-dollar capital raising makes! ICBC (HKEx: 939; Shanghai: 601939) has just reported its first-quarter results, which show its profit rose an impressive 29 percent as it benefited from a growing interest margin spread fueled by China’s recent rate hikes. (English announcement; Chinese announcement) What’s less impressive is the fact that its earnings per share grew quite a bit less, at about 25 percent, as shareholders saw their equity significantly diluted last year after ICBC and China’s other major banks raised over $100 billion through a series of rights offers to boost their shaky balance sheets. While many are congratulating ICBC and its peers on keeping their non-performing loan rates low at around 1 percent, I would advise people to focus on the fact that Beijing has indicated that billions more in capital raising is likely to come (previous post). That means that EPS growth will sharply lag actual earnings growth, even if earnings growth itself remains strong, which is far from certain. I still see a mild to moderate downturn in China’s housing market coming, which will undoubtedly pressure ICBC and its peers in the next year or two and will ultimately draw attention to the tenuous position these banks are in.

Bottom line: ICBC and China’s other major banks will continue to remain risky plays for at least the next 2 years due to uncertainties about China’s real estate market.

Related postings 相关文章:

◙ China Readies Market for More Bank Begging 中资银行准备再筹资

◙ Banks: CCB Bets on Downturn, BOC Keeps Head in Sand 中行依旧高歌猛进，建行趋向保守

◙ Minsheng Fund-Raising Shift Reveals Govt Angst

In the latest twist in the increasingly complex race to market between Renren and Kaixin, China’s two Facebook wannabes, Renren has apparently confessed to US stock regulators that its initial public filing significantly inflated its user numbers. According to Chinese media, Renren has told the SEC in a new filing that it added 5 million new users in the first quarter, not a bad figure but quite a bit less than the 7 million it originally reported. (Chinese article) That means its user base grew base grew 19 percent in the quarter to 31 million, again not bad but well below the 32 percent growth it previously reported. Obviously people are starting to pay extra close attention to the numbers, not least of all rival Kaixin, which is seeking to derail Renren’s IPO plan with a lawsuit over one of Renren’s Internet domain names that is being heard in China’s highest court. (previous post). This latest twist would seem to indicate Renren’s plan and early lead in the race may be quickly losing momentum, as now people will start to question their other numbers as well. At this point Renren needs a quick boost from something, perhaps a court victory, a major investor endorsement or something else, if it wants to maintain its quickly fading lead in this race.

Bottom line: Renren’s latest admission that it inflated first-quarter user numbers is taking more momentum out of its fast-dwindling lead in its race to market with Kaixin.

Related postings 相关文章:

◙ Kaixin Fights Back in Race With Renren to Market 人人、开心上市大PK：开心扳回一局

◙ Renren Takes Lead Over Kaixin With Blockbuster Filing 人人网：风风火火IPO 气势盖过开心

◙ Renren Vs Kaixin: Who Will Get There First? 开心网PK人人网：谁能抢先上市？

While growth is generally good, it seems to have become an addiction for telecoms equipment superstar Huawei Technologies. After recently saying it would develop IT services to maintain its stellar growth as its manufacturing business matures, a Huawei exec has come out and said the company aims to boost sales another 200 percent over the next 5-10 years. (English article) The executive went on to say that Huawei’s next cash cow would lie in providing IT services in the enterprise and cloud computing spaces. While I admire Huawei for wanting to keep posting triple-digit growth (heaven forbid they should slip into double digits!), it does in many ways feel like this company has become obsessed with growth at any cost and may be losing its common sense. I’m not saying it can’t make such a transition — after all, IBM (NYSE: IBM) made such a move, and HP (NYSE: HPQ) is moving in that direction. But given that such transitions can be difficult —  Lenovo (HKEx: 992) tried and failed at a similar move less than a decade ago — Huawei and rival ZTE (HKEx: 763; Shenzhen: 000063) might be better advised to focus on developing new products that take advantage of their expertise as low-cost, quality manufacturers.

Bottom line: Huawei needs to give up its obsession with triple-digit growth and focus its energies on manufacturing of low-cost, quality telecoms products.

虽然一般来说增长是好事，但对於电信设备生产领域的明星公司华为来说，它对增长的渴望好像上了瘾。华为刚刚表示要发展IT服务业务，以保持强劲增长趋势之後，一位高管又站出来说，华为打算在未来5-10年把销售再增加200%。这位高管继续说，华为下一个现金增长源头将取决於IT服务业务和云计算。虽然我敬佩华为想要保持三位数增长的愿望（但愿不会下滑到两位数！），但从很多方面都能感觉到，这家公司已经到了不计代价寻求增长的地步，并可能会丢掉常识。我并不是说这家公司不能做出这样的转型—毕竟IBM<IBM.N>已经转型了，惠普<HPQ.N>也正在朝这个方向转型。但考虑到这种转型可能不容易—联想<0992.HK>不到十年前的类似尝试以失败告终—华为和中兴通讯<000063.SZ> <0763.HK> 也许更应该把精力集中在开发新产品，充分利用其在低成本、高质量电信产品方面的技术优势更好。

一句话：华为应该放弃对三位数增长的狂热，集中精力制造物美价廉的电信产品。

Related postings 相关文章:

◙ Huawei Looks for Growth in IT Services 华为在IT服务领域寻求增长机遇

◙ ZTE Results: Weak Link in Networks, Handset Hopes 中兴通讯财报：薄弱环节在网络设备手机有希望

◙ Troublesome Timing As China Approves NSN-Motorola 中国监管部门批准诺基亚西门子购买摩托罗拉网络业务时机不佳

The sun isn’t shining too brightly these days on solar energy firm LDK Solar (NYSE: LDK), which has just announced some decidedly downbeat updated guidance for its latest results. (company announcement) Among the headline numbers, the company lowered its revenue guidance for the first quarter to about $750 million, nearly 10 percent lower than a previous forecast of $825 billion. Clearly this company’s less-than-stellar management is starting to hurt both its top and bottom lines, as it battles for share in China’s ultra-competitive solar energy market and staggers under a huge debt load. If things continue this way, and there’s no sign they won’t, the company could face a major cash crunch in the near future. Market talk has it that LDK is looking to spin off its polysilicon assets into a $1-3 billion company to be listed in Hong Kong in a bid to raise cash to stave off the debt collector. But even if the talk is true, there’s no guarantee investors will be interested and it may take more anyway to turn this company around before it’s too late.

Bottom line: LDK’s latest downward revision to guidance marks the latest milepost in its broader downward spiral.

对於赛维LDK太阳能有限公司<LDK.N>来说，这几天阳光没有那麽明媚。这家公司刚刚公布看起来有些惨淡的经营展望，把一季度营收预期下调至7.5亿美元，比此前的8.25亿美元预期少了将近10%。很显然，这家债台高筑、步履蹒跚的公司在竞争异常激烈的中国太阳能市场抢夺市场份额之际，表现欠佳的管理团队已经开始损害其营收和利润了。如果还这样继续下去，似乎看起来也是如此，这家公司将很快面临现金短缺的状况。坊间传言，赛维LDK打算把其在多晶硅领域的资产剥离成一个估值10-30亿美元的公司，在香港上市，以缓解窘境。但即使传言是真的，也不能保证投资者%E

In a major about-face, Apple (Nasdaq: AAPL), after initially leaving China off its Asia launch list for the iPad 2 (previous post), has decided that maybe China is worth a second look after all. In a new announcement detailing its plans for Asia and non-European markets, Apple has suddenly added China to the launch list, saying the iPad 2 will be available there starting May 6 — just a week after it goes on sale in the usual list of major markets including Japan, Korea, Singapore and Hong Kong. (official announcement) This marks a major breakthrough for China, which, despite its growing consumer power, has until now remained a second-class market for major product launches. Chipmaker Micron Technology made a similar realization of China’s growing clout as a major gadget hub, announcing earlier this month it would triple the size of its China plant as the market accounts for more than half of its sales. (previous post) Interestingly, Apple said it will only launch its wi-fi iPad 2 in China for now, probably as it looks for a Chinese telco that will sign a revenue-sharing agreement rather than just purchase the iPads outright. If that’s the case, look for another major announcement from Apple and either China Unicom (HKEx: 762; NYSE: CHU) or China Telecom (HKEx: 728; NYSE: CHT) in the months ahead.

Bottom line: Apple’s decision to add China to its global launch list reflects the growing clout of China consumers, and Apple’s belief it can earn major returns there.

苹果<AAPL.O>起初没有把中国内地列入iPad 2在亚洲的首批发售市场之内，但现在却发现，也许中国内地还是值得考虑一下的。在苹果新近宣布的亚洲和欧洲以外地区发售声明里，突然将中国内地列入了名单中–5月6日起将开始在中国内地发售iPad2，仅比其在其常规重要市场–日本、韩国、新加坡和香港发售日期晚一周。对於中国内地市场来说，这是一个重大突破，因为尽管中国大陆购买力日益增强，但在苹果重大产品发布中仍然属於“二线市场”。芯片制造商Micron Technology也认识到了中国将来作为电子元器件中心的地位，本月初便宣布将把其在中国的工厂规模增加两倍，目前其在中国的销量也占到其全部销量的半数以上。有趣的是，苹果说目前只会在中国内地推出Wi-Fi版本iPad2，也许苹果是在寻找一家可与其签署收入分成协议，而不是仅仅买断iPad2经销权的中国电信运营商。如果是这样，那麽过几个月我们可能会看到苹果与中国联通<0762.HK><CHU.N>或是中国电信<0728.HK> <CHA.N>发表重要声明。

一句话：苹果决定将中国内地列入全球发售名单，说明中国消费者的影响力日益巨大，苹果相信可以在中国内地取得很大回报。

Related postings 相关文章:

◙ Apple to China: Sorry, You’re Not On Our List 中国达不到苹果iPad2的水平

◙  Motorola Comes Xooming Into China 摩托罗拉平板电脑偏重中国市场

◙ Lenovo’s LePad: Finally a Game Plan That Could Work 联想乐Pad：终於拿出了像样的东西

I love the imagery associated with the latest blockbuster deal on China’s fast food scene, which would see YUM brands (NYSE: YUM), operator of KFC and Pizza Hut restaurants, swallow up Little Sheep (HKEx: 968), China’s leading hot pot chain. (company announcement; English article; Chinese article) YUM is already well acquainted with Little Sheep, owning 27 percent of the Hong Kong-listed company. Its purchase of most of the remaining stake could make the total deal a sizable one, worth up to $500 million based on Little Sheep’s latest market cap. A purchase by YUM, whose KFC is already China’s largest fast food chain, could do wonders for Little Sheep, helping it boost its already strong position at home and even potentially taking it abroad in markets like Taiwan, Japan and South Korea, where hot pots are also popular. The big potential obstacle in all this is China’s regulator, which has shown an increasing tendency to use its anti-trust powers as a political tool, as it did two years ago when it vetoed Coke’s (NYSE: KU) proposed purchase of leading chinese juice maker Huiyuan (HKEx: 1886). If the regulator is smart, it will approve this deal and ignore any nationalistic sentiment, or risk further damaging its reputation as an objective and impartial anti-trust body.

Bottom line: China needs to approve YUM’s purchase of Little Sheep to improve its reputation, a move that could propel the Chinese hot pot chain to a domestic and even regional powerhouse.

近日媒体报美国百胜集团<YUM.N>将收购中国火锅连锁小肥羊<0968.HK>，这样的甜蜜姻缘我个人非常喜欢。百胜对小肥羊绝非陌生，它已拥有後者27%股权。百胜购小肥羊多数剩余股权，该交易规模较为可观，基於小肥羊目前市场，大约相当於5亿美元。如果收购成功，小肥羊有望壮大国内市场影响力，触角甚至有望伸向台湾、日本与韩国等地市场。牵手的最大潜在障碍在於中国监管机构。两年前可口可乐提议收购汇源果汁，就遭中国监管机构否决。中国监管机构如头脑灵活的话，就该放行交易，忽略任何民族品牌情绪，否则其客观与公正名声会进一步受损。

一句话：中国从名声考虑应批准百胜购小肥羊，而小肥羊也有希望成为国内，甚至地区性火锅连锁大品牌。

Related postings 相关文章:

◙ Troublesome Timing As China Approves NSN-Motorola 中国监管部门批准诺基亚西门子购买摩托罗拉网络业务时机不佳

◙ Starbucks China Expansion: New Brew Needed to Serve Up Success

◙ What’s in a Name? Plenty for Best Buy in China

China Unicom (NYSE: CHU; HKEx: 762) has just announced its Q1 results, which have triggered alarm bells for many as its profit tumbled 87 percent and it warned of more low profits ahead due to aggressive spending on handset subsidies to boost its fledgling 3G business. (English announcement; English article; Chinese article) The plunge in profit isn’t necessarily bad, as Unicom does need to take advantage of its superior 3G technology to steal market share from dominant rival China Mobile (NYSE: CHL; HKEx: 941). But the bigger cause for concern, which no one is really talking about, is the fact that Unicom needs to be spending more not only on getting more of its handsets into consumers hands, but also on upgrading its 2G and 3G networks, which are both very weak as a result of neglect over the last five years. Too many of my friends and acquaintances have complained to me that they subscribed to Unicom’s 3G service, only to discover it either slow or nonexistent much of the time even in big cities like Shanghai. If it doesn’t make solving this problem a top priority, which I’m not sure it’s doing, Unicom could discover its sharp drop in profits is more than just a short-term issue.

Bottom line: Unicom needs to focus equal energy on upgrading its networks as it is on selling handsets, or it risks losing a golden opportunity to steal share from China Mobile.

中国联通<0762.HK><CHU.N>刚刚公布一季度财报，公司净利大幅下滑87%。联通且表示由於大规模的3G终端补贴开 支，未来利润可能还会较低。利润下滑未必就是坏事，因联通确实需要利用3G技术优势，与中国移动<0941.HK>、中国电 信<0728.HK>争夺市场份额。但这里真正忧人的问题是，联通不仅需要在3G推广上增加开支，2G、3G网络升级也不能忽略。因为联通一 直忽略问题，这两个网络目前都比较差。很多朋友与熟人都向我抱怨联通3G服务问题，称在上海等大城市，联通3G网络不仅网速太慢，而且很多时候根本无网。 联通如不优先解决这个问题，利润急跌可能不仅只是暂时问题。

一句话：中国联通在升级网络、推广3G手机上需要均分精力，否则可能错失抢占中国移动市场份额的黄金机会。

Related postings 相关文章:

◙ 2011: Year of the Unicom 2011：联通的好运年

◙ Wo! China Unicom OS Stumbles Onto the Wire

◙ Don’t Hang Up On Unicom Just Yet: Seeing is Believing

In what’s shaping up as one of China’s most colorful races to market in a long time, social networking site Kaixin says it has won a coveted hearing with China’s highest court in its ongoing grievance with archrival Renren. (Chinese article) The move is an obvious ploy by Kaixin to derail Renren’s IPO plan, which took an early lead over Kaixin’s own similar plan when Renren made its first public IPO filing in New York earlier this month. (previous post) Kaixin’s ongoing spat with Renren is too complex to discuss here, but suffice it to say that a decision by the high court in Kaixin’s favor could raise some serious questions for Renren’s future prospects, less in terms of monetary damages (Kaixin is asking for a relatively modest 10 million yuan) but more in potential restrictions on a disputed Web address that is one of Renren’s two primary URLs. Until the high court makes its decision and provides some clarity, which could be relatively soon, I see no way that Renren can move forward with its IPO. In the meantime, I wouldn’t be surprised if Kaixin makes its own initial public filing for a New York IPO very soon, seeking to trump Renren’s own plans to raise up to $500 milliion.

Bottom line: The race to market between Kaixin and Renren is far from over, with Kaixin gaining the latest edge through a small victory in Chinese courts.

在中国最具看点的企业上市赛跑中，开心网、人人网你挣我夺，互有胜负。今日人人网称最高人民法院同意就“真假开心网”问题举行听证，此举显然是在破坏人人网IPO计划。此前人人网率先提交IPO申请，获得领跑优势。开心、人人恩怨过於复杂，这里就不再赘述。不过，最高法院的决定可能会对人人未来前景提出一些严肃问题，不在於金钱损失（开心网要求赔偿大约1,000万元人民币），主要是争议域名kaixin.com使用有可能会被限制。我认为，法院作出裁决前，人人网无法推进IPO计划。同时，开心网如迅速向纽约提交IPO申请，也不算意外。

一句话：人人、开心上市赛跑远未落幕；赛场看点不断，最新战报：开心通过法庭小胜利扳回一局。

Related postings 相关文章:

◙ Renren Takes Lead Over Kaixin With Blockbuster Filing 人人网：风风火火IPO 气势盖过开心

◙ Renren Vs Kaixin: Who Will Get There First? 开心网PK人人网：谁能抢先上市？

◙ China Legal System Takes Bite Out of Tencent’s Qihoo Lawsuit 中国法律体系让奇虎在与腾讯的官司中免受重大损失