The following press releases and news reports about China companies were carried on May 21-23. To view a full article or story, click on the link next to the headline.
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CIC Ends Talks With Yum Brands (NYSE: YUM) Over China Business – Sources (English article)
Mystery Canadian Hotel Buyer Said Potentially Tied to Anbang (English article)
Samsung (Seoul: 005930) Integrates Alipay Mobile Pay Function Into Smartphones (Chinese article)
Chinese Buyers Circle Soccer “Super” Agent Stellar Group (English article)
TCL (HKEx: 1070) Sets Up TV Joint Venture Factory in Egypt (Chinese article)
Bottom line: Huge publicity around the new Shanghai Disneyland ensures it will rapidly become a major new profit center after it opens in June, but will also expose Disney to a wide range of mini scandals like one involving its high food prices.
Thousands flock to Shanghai Disney before opening
The hype is rapidly building as Disney (NYSE: DIS) gets set to launch its first theme park in more than a decade, attracting droves of visitors and also the first of what are likely to be many mini-scandals involving the $5.5 billion Shanghai resort. Leading the headlines is word that nearly 1 million people have already flocked to the areas outside the official park just to catch a glimpse of China’s first Disneyland from the outside.
The park has also been admitting smaller numbers of guests on a trial basis to sample the rides and other attractions in the run-up to the official June 16 opening. Some of those got indigestion from the high prices for food at restaurants in the park, leading to a mini-firestorm of criticism that Disney has quickly tried to control. Read Full Post…
Bottom line: Apple’s $1 billion investment in a Chinese car services firm and establishment of an India R&D lab reflect China’s strength as an incubator of strong private companies and India’s as a software development hub.
Apple’s Tim Cook calls on China, India
It’s been an Asia-themed week for Apple (Nasdaq: AAPL) CEO Tim Cook, whose tour to China and then India casts a spotlight on 2 massive markets with huge potential for the company. This particular trip has been quite revealing for the gifts that Cook has awarded during the week, reflecting each country’s strengths and also its weaknesses.
China’s biggest gift was a $1 billion investment in local private car services firm Didi Chuxing, and also a smaller gift in the form of a new app to promote local musicians. India, meanwhile, secured a coveted R&D lab, which is one of Apple’s few outside the US and hugely prestigious. Read Full Post…
Bottom line: Seagate’s new partnership with Sugon is the latest tie-up designed to give a major western hardware maker continued access to China’s IT services market, even as such partnerships sharply raise the risk of IP theft.
Seagate in new China tie-up
The steady stream of US tech firms bowing to Beijing’s tough new rules for doing business in China has just gained a new member, with word that data storage specialist Seagate (Nasdaq: STX) has just formed a new local joint venture. This particular tie-up comes just a half year after Seagate’s new partner, a company called Sugon (Shanghai: 603019), formed another similar cloud computing partnership with VMWare (Nasdaq: VMW), a unit of data storage giant EMC (NYSE: EMC).
The new Seagate alliance and slightly older VMWare venture come as most major US high-tech hardware makers, including the likes of IBM (NYSE: IBM), Hewlett Packard Enterprise (NYSE: HPE) and Cisco (Nasdaq: CSCO), have all formed similar tie-ups in a new love affair with Beijing. Of course I’m being slightly facetious in calling it a love affair, since these companies really didn’t have any choice in the matter. Read Full Post…
The following press releases and news reports about China companies were carried on May 20. To view a full article or story, click on the link next to the headline.
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Temasek, CIC-KKR Advance to 2nd Round of Yum (NYSE: YUM) China Stake Sale (English article)
BT (London: BT) Applies for Telecoms Value Added Service License In Shanghai FTZ (Chinese aticle)
Bottom line: CEO Lei Jun’s decision to directly oversee Xiaomi’s product development could help to revive the company by addressing a key problem area, but its new set-top box is unlikely to gain much traction in the US due to stiff competition.
Xiaomi unveils set-top box for US
Amid growing signs of stagnating sales for its core smartphones, the stumbling Xiaomi is taking a couple of big new steps to try and reinvigorate its business, led by a shuffle that will see charismatic CEO Lei Jun take direct control of product development. In a separate but also significant move, the company has just announced a highly-anticipated first big step into the lucrative but ultra-competitive US market, with plans to launch a local version of its online video service.
Among these 2 big new moves, the management shuffle is the most significant and also most reflects Xiaomi’s problems. The company rose to prominence on an extremely successful marketing campaign that used online buzz, artificial product shortages and strategically leaked information. But Xiaomi’s actual smartphones couldn’t meet the high expectations created by Lei’s brilliant marketing campaigns, and instead are seen as largely the same as many of the other many models now on the market. Read Full Post…
Bottom line: China Mobile’s retirement of its Internet-based texting and video services reflect its inability to compete with private providers of such services, and underscores its growing position as a slow-growth network operator.
China Mobile shutters Internet text, video services
In a move that was long overdue, leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) has thrown up the white flag with a symbolic surrender to WeChat, Youku and the many other private companies that have steadily stolen its new business opportunities. In this case the surrender comes in the form of formal retirements for China Mobile’s Internet-based Fetion texting service, and also its lesser known mobile video product.
Fetion was once hugely popular in China, allowing users to send SMS text messages for free by routing them over the Internet. China Mobile was an early innovator in creating that kind of “over the top” (OTT) service that took advantage of the mobile Internet. But more recently it has rapidly lost that position to more nimble private companies like Tencent (HKEx: 700) and Youku. Read Full Post…
The following press releases and news reports about China companies were carried on May 19. To view a full article or story, click on the link next to the headline.
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Alibaba’s (NYSE: BABA) Ma Cancels Speech After Row With Anti-Counterfeiting Group (English article)
Bottom line: Alibaba’s new lower-key approach to publicizing its fight against piracy is in response to an embarrassing spat with a major industry group, and looks like a smarter way to handle its anti-counterfeiting efforts.
Alibaba takes lower-key approach in anti-piracy fight
Just days after a high-profile and embarrassing tussle with some of the world’s top luxury brands, e-commerce giant Alibaba (NYSE: BABA) is trying to put the matter in the past by reaffirming its commitment to fighting piracy outside an industry alliance it previously joined. At the same time, the company’s talkative chief Jack Ma was uncharacteristically quiet after a trip this week to Washington to meet with unspecified officials.
Anyone who has followed Alibaba for a while knows this kind of behavior is quite typical for the company. Alibaba’s is usually quite talkative and self-promotional, which reflects Ma’s own nature. But that high-profile behavior often magnifies the inevitable setbacks that occur for any company of this size, and Alibaba and Ma often go into “quiet mode” after such negative news. Read Full Post…
Bottom line: Midea should limit its new plan to buy a major stake in Germany’s Kuka to a strategic partnership, and avoid temptation to help Kuka lower costs by moving major parts of its manufacturing to China.
Midea eyes Germany’s Kuka
A recent overseas M&A binge by top Chinese home appliance makers is taking a somewhat unexpected turn, with word that Midea (Shenzhen: 000333) is pursuing a deal to buy a major stake or even outright purchase Germany’s Kuka (Frankfurt: KU2). In this case the deal comes as something of a surprise, since Kuka isn’t an appliance maker but instead manufactures industrial robots that Midea is using to modernize its production lines.
This particular deal could carry a price tag of more than $1 billion, and would come just 2 months after Midea’s smaller deal to purchase the home appliance business of scandal-tainted Japanese electronics giant Toshiba (Tokyo: 6502). (previous post) This latest deal is logical, though could also carry a large degree of risk due to previous poor results for Chinese companies that bought manufacturers in the tough French and German markets. Read Full Post…
Bottom line: Dangdang’s latest buyout offer is likely to meet with minority shareholder resistance due to its sharp downward revision, while Momo is also likely to lower its earlier buyout price if and when it announces a final offer.
Dangdang gets lowered buyout offer
After pausing briefly last week, the train of publicly-traded Chinese firms leaving New York has resumed with the receipt of a new offer for faded e-commerce company Dangdang (NYSE: DANG). In this case it’s significant that Dangdang has announced a revised buyout offer from its founders, since that means the deal most likely has the necessary funding and is likely to move ahead. But it’s also significant that this revised offer is sharply lower than 2 earlier offers for the company, one from its founders and one from a rival bidder.
Next there’s social networking app operator Momo (Nasdaq: MOMO), which has remained mum on its own pending buyout bid in its latest quarterly results. That doesn’t mean the bid is necessarily on hold, especially after word emerged last month that e-commerce giant Alibaba (NYSE: BABA) was joining the buyout group. But Momo’s shares now trade well below their earlier buyout price, and I suspect that if and when it finally announces a concrete offer the price will also be revised downward from the earlier bid. Read Full Post…
