Bottom line: Wal-Mart’s discussion of plans to open 115 new China stores and several new local initiatives look like mostly PR to show its commitment to the market, following its announcement of a major global overhaul earlier this month.
Wal-Mart discusses commitment to China
Just a week after announcing a major retrenchment for its global empire, retailing giant Wal-Mart (NYSE: WMT) is saying it will continue to open new stores at a brisk pace in China. The vast and somewhat unique China market also looks set to become a testing ground for new concepts, with Wal-Mart discussing plans to open its first shopping center format and also to expand its cross-border e-commerce business in the country.
The latest developments are discussed in a local media interview with a top Wal-Mart China executive, which is probably timed to quash any potential buzz that the company is planning a similar retrenchment in China to the global plan announced earlier this month. That plan saw Wal-Mart announce it will close 269 stores this year, representing just over 2 percent of its global count of 11,600. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 29. To view a full article or story, click on the link next to the headline.
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Alibaba Group (NYSE: BABA) Announces December Quarter Results (Businesswire)
Baidu (Nasdaq: BIDU) to Spin Off and IPO Music, Literature, iQiyi, Other Units – Reports (English article)
JD.com (Nasdaq: JD) Tests Drones to Speed Rural Area Deliveries (Chinese article)
Western Digital (NYSE: WDC) Clock Reset Shows Hurdles for Tsinghua Unigroup Sale (English article)
Carrefour (Paris: CA) to Expand China E-Commerce Drive with App Roll Out (Chinese article)
Bottom line: Apple’s China sales are likely to enter a new period of slower growth as the Chinese domestic smartphone market stalls and a growing number of higher-end buyers flock to the surging Huawei.
Apple faces long-term China slowdown
Everyone is buzzing about Apple’s (Nasdaq: AAPL) latest quarterly results, which show that sales of its iconic iPhones may have finally peaked and be set for a longer period of slow growth or even contraction. A key piece of that equation is the China market, where the company’s growth slowed sharply in the quarter due to fierce competition from a growing field of rising domestic competitors led by the surging Huawei.
As someone living in China, I can say with relative confidence that Huawei smartphones are indeed becoming increasingly common here on the streets of Shanghai. The brand is still seen as distinctly Chinese, in contrast to the trendier but fast-fading Xiaomi that rose to prominence partly on its ability to escape the “made in China” image. Read Full Post…
Bottom line: A subdued mood at Chinese high-tech firms’ New Years parties reflects a growing realism that the days of breakneck growth may be over for many, due to stiff competition and a slowing domestic economy.
Subdued mood at Year of the Monkey parties
The Year of the Monkey is still more than a week away, but already online gaming giant NetEase (NYSE: NTES) is taking the prize for most unusual New Year’s party for including sex toys among its cache of prizes during the lottery at its annual bash. Meantime, stumbling smartphone sensation Xiaomi ushered in the New Year with an unusual dose of new realism from chief Lei Jun, who also added a bit of historical revisionism in a bid to cheer up staff at his annual party.
Theses yearly parties are a good indicator of how companies feel about their performance in the previous year, and also offer some insight into their mood going into the year ahead. A media report sums up highlights from some of this year’s biggest parties, which typically bring together hundreds and sometimes thousands of employees at a single event to celebrate the New Year as a corporate “family”. Read Full Post…
Bottom line: Coolpad’s shares are likely to come under pressure for the rest of 2016 due to stiff competition in China’s smartphone market, and it could be forced to raise more money last this year following its newly-announced rights issue plan.
Coolpad taps stakeholders for more funds
It seems like $700 million and 2 major new alliances weren’t enough to prop up financially challenged smartphone maker Coolpad (HKEx: 2369), which has just announced a new share rights offer to raise up to HK$736 million ($95 million). The deal marks the latest distress signal coming from China’s overheated smartphone sector, which has seen Coolpad and a vibrant field of other domestic brands engage in a fierce game of price wars over the last 2 years.
What’s somewhat revealing about this new capital raising plan is its relatively paltry size, and also the large discount that Coolpad had to offer to sell the new shares. Even worse, one of the main buyers of the new shares is Chinese online video giant LeTV (Shenzhen: 300104), which should have been willing to pay closer to market levels for the new shares after becoming one of Coolpad’s largest stakeholders last year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 28. To view a full article or story, click on the link next to the headline.
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Greater China Still Biggest Contributing Region as iPhone Sales Top Out (Chinese article)
China Cinda Said to Study Joining Yingli’s (NYSE: YGE) Debt Restructuring (English article)
Ericsson (NYSE: ERIC) Q4 Results Beat Expectations on China Rebound (Chinese article)
Qihoo (NYSE: QIHU) CEO Pledges 10 Pct Stake to Encourage Staff Entrepreneurship (English article)
TAL Education (NYSE: XRS) Announces Financial Results for Its Fiscal Q3 (PRNewswire)
Bottom line: Fox’s new “Simpsons”-themed China stores will meet with lukewarm response, and will pave the way for announcements later this year of a new Chinese theme park and film production joint venture.
Fox brings ‘Simpsons’ stores to China
After years of standing on the sidelines, media mogul Rupert Murdoch is finally taking his first big step back into China with plans to open a new chain of concept stores based on the popular TV series “The Simpsons”. An executive with Murdoch’s Twentieth Century Fox (Nasdaq: FOX), which owns the animated TV series, discussed this particular plan last year, even mentioning the “Simpsons” name at that time. Still, some are scratching their heads at this particular concept, since the TV series is relatively unknown in China and was actually banned here until recently.
This announcement is probably just a teaser for the bigger events that will come later this year, including announcement of a 20th Century Fox theme park for China, and possibly a new film production tie-up. Fox is actually playing catch-up to other major Hollywood studios in all 3 areas, following its withdrawal from the market with the sale of its main Chinese TV station to Shanghai’s China Media Capital (CMC) in 2010. Read Full Post…
Bottom line: Shanda Group is likely to emerge this year as China’s next major global investor with 2-3 major deals, while Renren’s plans to transform into a high-tech investment company stand a 50-50 chance of success.
Shanda, Renren see future in investment
Two former Internet high-flyers that later flamed out are looking for new beginnings in finance, with Shanda Group and Renren (NYSE: RENN) both discussing their transformation plans in separate reports this week. Shanda was once China’s leading online game operator, and its chief Chen Tianqiao dreamed of creating an online entertainment empire. Similarly, Renren was once China’s leading social networking service (SNS) opeartor, at one time often called the Facebook (Nasdaq: FB) of China.
But both companies got overtaken in recent years, and were largely marginalized by better-run rivals like Tencent (HKEx: 700), NetEase (Nasdaq: NTES) and Weibo (Nasdaq: WB). As a result, Shanda founder Chen Tianqiao has recently sold off the various pieces of his former empire, most recently closing the sale of his original Shanda Games operation. Renren is also in the process of privatizing, as its core SNS business rapidly shrivels. Read Full Post…
This week’s Street View touches on news involving fireworks and bird flu, 2 rites of winter in Shanghai that bring pleasure for some but headaches and even fear for many in the case of bird flu. The first item brought a big smile to my face, as I read that Shanghai will deploy an army of thousands to enforce a complete ban on fireworks inside the outer ring road throughout the Spring Festival period. The second item was a bit more ominous, as the city reported the first 2 cases of humans infected with the deadly H7N9 bird flu virus this year.
Both of these stories come as we head into our coldest period of winter, with temperatures set to hit some of their lowest levels in years under the influence of a super cold front. It’s during times like these that people look to festive activities like setting off fireworks to add some cheer to the otherwise cold and Spartan winter atmosphere. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 27. To view a full article or story, click on the link next to the headline.
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Fox (Nasdaq: FOX) to Launch First Simpsons Stores Soon in China (English article)
Ctrip (Nasdaq: CTRP) Transaction Volume to Reach 1 Trillion Yuan by 2020 – CEO (Chinese article)
Tesla’s (Nasdaq: TSLA) Elon Musk Working to Find Chinese Production Partner (English article)
Family and Friends Lending App Jiedaibao Wins 2.5 Bln yuan Series B Funding (English article)
Merchants Bank (HKEx: 3968) Invests $200 Mln in Didi Kuaidi, Ties in Finance (Chinese article)
Bottom line: Alibaba’s stock will come under pressure through the middle of the year due to short selling interest tied to China’s correcting stock markets, but the shares should see some upside in the second half.
Bears pile into Alibaba
In what looks like a case of history repeating itself, the bears are suddenly piling into shares of leading e-commerce company Alibaba (NYSE: BABA), with investors shorting the stock at levels not seen since late 2014. Company watchers will recall that the last time Alibaba bears were so active was shortly after its record-breaking IPO, when the stock was soaring as legions of short-term investors traded shares in pursuit of quick profits.
That initial post-IPO hype is now well in the past, and so are most of the lock-up periods that were posing some potential downside to the stock in its first year of trading. That means that rather than focusing on company-specific issues, this time the short sellers are betting on something much bigger: a prolonged downturn in China’s economy. That would affect the entire retail sector, including Alibaba’s core e-commerce business. Read Full Post…
