It seems the folks at ZTE (HKEx: 763; Shenzhen: 000063) just can’t catch a break these days. After suffering setbacks in North America, where it failed to get a key contract from Sprint (previous post), and in India, where its country head recently resigned (previous post), ZTE is now being sued in Europe by industry heavyweight Ericsson (Stockholm: ERICb) for intellectual property theft. (English article; Chinese article) This move by Ericsson hits ZTE right where it really hurts, as Europe was one of its last major markets where it was still doing well. This latest lawsuit could make potential customers there hesitate before signing any new orders, dealing another blow to its business. I had already flagged 2011 as a year when ZTE could see its growth slow sharply, and this latest development further cements that view. If things keep going this way, we could actually see their overseas new orders shrink in 2011.
Bottom line: Ericsson’s new lawsuit marks the latest bad news for former telecoms superstar ZTE, further denting its already-weak prospects for 2011.
I had a hard time believing the news when I first read about it, but now apparently consumer Web site 360Buy Chairman Liu Qiangdong has gone on the record saying his company has just received a whopping $1.5 billion in third-round investment funding — easily the biggest such investment ever for a China start-up. (English report; Chinese report) Never mind that Dangdang (NYSE: DANG), supposedly the industry leader, only has a market cap of $500 million. In fact, one of the lead investors in the mega-placement, Diginal Sky Technologies, which also owns a stake in Facebook, put in $500 million alone, according to Liu, who adds that an IPO for his company is still a couple of years off. I honestly can’t say that I know much about this company, but if anyone thinks that highly of them to invest that kind of money they surely must be doing something right. Perhaps this could be the next Chinese Amazon (Nasdaq AMZN)?
Bottom line: If 360Buy’s CEO is telling the truth and the company recently got $1.5 billion in funding, this is definitely a company to watch.
The following press releases and media reports about Chinese companies were carried on April 2. To view a full article or story, click on the link next to the headline.
So, who else out there was surprised to read the reports that Baidu’s Robin Li was seen dancing shirtless with two strange women at a Beijing nightclub? April fools! Sorry, I just had to get in at least one April fools reference today. But on a more serious note, there’s an interesting report in the China Securities News saying Japan’s ongoing nuclear woes are making China rethink its nuclear strategy, to the benefit of its thriving solar industry. （Chinese article) According to the report, China may double its already sizable solar power goal for the year 2015 to 10 gW, in a plan to be announced soon. The report only names its source as someone from the NDRC, but if it’s true it could mean a huge boon for industry leaders like Trina (NYSE: TSL), JA Solar (Nasdaq: JASO), LDK (NYSE: LDK), ReneSola (NYSE: SOL) and Suntech (NYSE: STP). This kind of strategy makes total sense, allowing Chinese leaders to capitalize on the current nuclear hysteria at home to bolster one of the country’s most promising home-grown industriesl.
Bottom line: China’s reported plan to accelerate its solar power development will produce a nice windfall for its solar industry.
It looks like tarnished mobile products maker Motorola (NYSE: MOT) has more confidence in China than superstar rival Apple (Nasdaq: AAPL), at least when it comes to tablet PCs. Motorola chose the somewhat strange location of Hainan Island to announce the upcoming launch of its new Xoom tablet PC before the end of June, not long after its global launch earlier this year. (Chinese report) That contrasts sharply with Apple, which left China off the international launch list it published earlier this month for its iPad 2. (previous post) This looks like a smart move by Motorola, though the company will have to work hard to overcome the market dominance of Apple’s original iPad, as well as competition from other products including Lenovo’s (HKEx: 992) new LePad (previous post) But considering the decent reviews this product is getting, combined with Motorola’s strong previous experience in China, Xoom may actually stand a chance of getting some decent sales in a market that is the company’s second largest behind only the US.
Bottom line: Motorola should gain significant share in China’s tablet PC market with the upcoming release of its state-of-the-art Xoom
I was quite surprised to read reports today that Acer (Taipei: 2353) CEO Gianfranco Lanci has resigned over differences with the company about strategic direction. (English report; Chinese report). His departure comes amid a recent downturn for Acer, which shot to stardom under the leadership of Lanci and Taiwanese Chairman J.T. Wang, who made a potent pair by focusing on mid to lower end, consumer PCs with a special attention to notebooks that now dominate the market. While Wang came from an engineering background, Lanci brought much of the marketing savvy that helped the company become Europe’s notebook leader 3 or 4 years ago, and i suspect he was also a key player in the company’s successful acquisition strategy. My big concern is that with Lanci gone, Acer will go back to being a very Taiwanese company focused on gaining market share at any costs, very likely to the company’s detriment.
Bottom line: Gianfranco Lanci’s sudden resignation as Acer CEO marks the beginning of a downward spiral for the company, similar to the downturn that almost killed it a decade ago.
The following press releases and media reports about Chinese companies were carried on April 1. To view a full article or story, click on the link next to the headline.
It seems the detectives at CCTV have been working hard these days. After uncovering illegal gambling at online game firm Shanda (Nasdaq: SNDA)(see previous post), CCTV is now reporting a huge discrepancy in what IPO candidate Netqin previously reported for its 2008 sales and what it told US regulators in its IPO prospectus (Chinese article). And this is really a huge discrepancy, with CCTV saying the company, a mobile software maker, previously reported sales that year of 3.76 million yuan, while its prospectus says the annual figure was 26 million yuan. I’m sure they’ll find an explanation for all this, and Netqin’s underwriter will probably convince stock exchange officials that the current prospectus is correct. But this, combined with the fact that the company seems to be locked in a fight with China’s 3 major telcos (see previous posting) certainly can’t bode well for Netqin. Btw, before I sign off with my usual bottom line, I’d like to thank one of my students, Lina Guo (郭文鹃), for bringing it to my attention.
Bottom line: Netqin has too many issues to clarify before I would consider it a good IPO investment.
There’s an ominous article in today’s China Daily basically accusing Google (Nasdaq: GOOG) of failing to get the proper license to operate its popular mapping service in China. According to the report, any Internet company providing China-based mapping services had to register with the government earlier this week or risk breaking the law after July 1. There’s a lot more in the article for those who want to look, but to me this looks like China pushing Google one step closer to the exit door by putting up rules the US search giant doesn’t want to follow. None of this would probably even matter if it weren’t for the huge popularity of Google’s Android operating system for cellphones in China, which appeals to local consumers because it’s free and thus drives down the cost of handsets. If this mapping issue blows up into another major clash, which it might, then Android could easily be the next to get kicked out of China, dealing a huge blow to the OS and thus to Google.
Bottom line: Google’s days in China may be numbered, dealing a major blow to its Android OS.
It seems like after all my warnings to avoid Qihoo’s (NYSE: QIHU) IPO, plenty of greedy investors just couldn’t stay away from this company, whose name means “strange tiger” in Chinese. The company raised less than initially reported in its new IPO, but more than made up for that as its share price more than double on its NYSE trading debut, bringing lots of quick bucks for anyone who got shares at the IPO price. (English article; Chinese article) To those hedge fund managers who followed by advice, my apologies and I owe you a drink. But for longer term investors, for whom my advice was really intended, my advice remains the same: This company is a lightning rod for lawsuits and negative publicity, and much of that is due to questionable business practices that will ultimately drag down the company and possibly put it out of business. (previous blog post) Once again I say: let the buyer beware.
Bottom line: Qihoo is not for longer term investors, but may become a hedge fund darling because of its frequent controversies
The following press releases and media reports about Chinese companies were carried on March 31. To view a full article or story, click on the link next to the headline.
move by Ericsson hits ZTE right where it really hurts, as Europe was one of its last major markets where it was still doing well. This latest lawsuit could make potential customers there hesitate before signing any new orders, dealing another blow to its business. I had already flagged 2011 as a year when ZTE could see its growth slow sharply, and this latest development further cements that view. If things keep going this way, we could actually see their overseas new orders shrink in 2011.
I had a hard time believing the news when I first read about it, but now apparently consumer Web site 360Buy Chairman Liu Qiangdong has gone on the record saying his company has just received a whopping $1.5 billion in third-round investment funding — easily the biggest such investment ever for a China start-up. (
So, who else out there was surprised to read the reports that Baidu’s Robin Li was seen dancing shirtless with two strange women at a Beijing nightclub? April fools! Sorry, I just had to get in at least one April fools reference today. But on a more serious note, there’s an interesting report in the China Securities News saying Japan’s ongoing nuclear woes are making China rethink its nuclear strategy, to the benefit of its thriving solar industry. （
overcome the market dominance of Apple’s original iPad, as well as competition from other products including Lenovo’s (HKEx: 992) new LePad (
PCs with a special attention to notebooks that now dominate the market. While Wang came from an engineering background, Lanci brought much of the marketing savvy that helped the company become Europe’s notebook leader 3 or 4 years ago, and i suspect he was also a key player in the company’s successful acquisition strategy. My big concern is that with Lanci gone, Acer will go back to being a very Taiwanese company focused on gaining market share at any costs, very likely to the company’s detriment.
It seems the detectives at CCTV have been working hard these days. After uncovering illegal gambling at online game firm Shanda (Nasdaq: SNDA)(
China-based mapping services had to register with the government earlier this week or risk breaking the law after July 1. There’s a lot more in the article for those who want to look, but to me this looks like China pushing Google one step closer to the exit door by putting up rules the US search giant doesn’t want to follow. None of this would probably even matter if it weren’t for the huge popularity of Google’s Android operating system for cellphones in China, which appeals to local consumers because it’s free and thus drives down the cost of handsets. If this mapping issue blows up into another major clash, which it might, then Android could easily be the next to get kicked out of China, dealing a huge blow to the OS and thus to Google.
It seems like after all my warnings to avoid Qihoo’s (NYSE: QIHU) IPO, plenty of greedy investors just couldn’t stay away from this company, whose name means “strange tiger” in Chinese. The company raised less than initially reported in its new IPO, but more than made up for that as its share price more than double on its NYSE trading debut, bringing lots of quick bucks for anyone who got shares at the IPO price. (
