Bottom line: Next year’s likely election of a Taiwan president from its current opposition party could delay many of Tsinghua Unigroup’s pending Taiwan acquisitions, crimping its plans to build a Chinese chip giant using Taiwanese technology.
Unigroup buys into 2 more Taiwan chip firms
Barely a week seems to pass without news of a major new acquisition by Tsinghua Unigroup, the Beijing-backed company that suddenly seems intent on building a global chip giant able to challenge worldwide leaders like Intel (NYSE: INTC), TSMC (Taipei: 2330) and Samsung (Seoul: 005930). The company is once again in the headlines as we head into year-end, this time in new deals to buy stakes in 2 Taiwanese chip firms for a combined $2.1 billion.
These latest deals follow another major purchase in Taiwan last month, making it increasingly clear that Unigroup hopes to combine its own financial resources and government connections with Taiwan’s high-tech expertise to realize its chip-making dreams. That plan looks good in principle, since China and Taiwan are highly complementary and also share many cultural elements. But the plan could run into big problems next year, as Taiwan’s political landscape looks set for major change that could see the current China-friendly regime replaced with a more conservative government. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 18. To view a full article or story, click on the link next to the headline.
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Alibaba’s (NYSE: BABA) Anti-Counterfeit Efforts ‘Too Slow,’ Says US Government (English article)
Sohu (Nasdaq: SOHU) Board Says Has Received Privatization Proposal (Chinese article)
Tencent (HKEx: 700) to Restrict Red Envelope Promotions by Didi, Others on WeChat (Chinese article)
Yingli Green Energy (NYSE: YGE) Announces ADS Ratio Change (PRNewswire)
Jefferies Said to Cut Up to 40 Positions in Hong Kong, China (English article)
Bottom line: New remarks by Taiwan’s likely new president indicate a flurry of recent new cross-Strait chip tie-ups could be delayed, but most are likely to ultimately get approved in a new era of more pragmatic cross-Strait relations.
Taiwan presidential candidate cautious on new China chip tie-ups
In a move that I predicted earlier this week, Taiwan’s likely next president is pouring cold water on a nascent series of tie-ups between its fragmented high-tech chip industry and cash-rich partners from mainland China. The latest reports cite Tsai Ing-wen, presidential candidate of the opposition Democratic Progressive Party (DPP), calling a recent series of planned Chinese investments a “huge threat” to the island’s large but also struggling semiconductor industry.
Even I was a bit surprised by the alarmist tone of Tsai’s comments, as I previously predicted that she was likely to call for a slowdown in the recent series of new deals but not an outright halt. (previous post) Beijing was also somewhat surprised, and a top official called on Taiwan not to politicize such commercial transactions. Read Full Post…
Bottom line: The lack of news or attendance by major worldwide executives at China’s global Internet conference this week shows the country’s Internet remains relatively closed and under strict government control.
Global Internet pow-wow takes place in scenic Wuzhen
I had big hopes for the second edition of China’s World Internet Conference happening this week in the picturesque town of Wuzhen, as all of the country’s top executives are in attendance at an event intended to showcase the country’s online prowess. The list of domestic executives in attendance certainly hasn’t disappointed, and many are undoubtedly there to network with China’s top Internet bureaucrats and President Xi Jinping, who gave this year’s opening speech.
But a look at some of the comments from names like Alibaba (NYSE: BABA) founder Jack Ma and Baidu (Nasdaq: BIDU) founder Robin Li turns up mostly empty talk, mixed with the expected self-promotion. What’s more, I also find the near-absence of any major foreign names from the conference somewhat puzzling, since China is trying to bill this as a global conference. Read Full Post…
Bottom line: UnionPay’s launch of a new mobile payments service is a long-overdue answer to challenges by Alibaba and Tencent, and is somewhat late but also vital to maintaining its eroding position in China’s electronic payments market.
UnionPay rolls out mobile wallet card
After coming under growing assault over the last 2 years from the private sector, state-run behemoth UnionPay is finally fighting back by launching a mobile-based payment service to counter rival products from Internet giants Alibaba (NYSE: BABA) and Tencent(HKEx: 700). There’s no mention of either of China’s top 2 Internet companies in an announcement of the new service from UnionPay, even though Alibaba’s Alipay Wallet and Tencent’s WeChat Pay are clearly present in the subtext.
UnionPay is just the latest big state-run company to feel the heat of private sector competition, which is shaking up China’s entire financial sector that was previously dominated by big state-run companies. But UnionPay’s case is even more extreme, since the company operated a state-granted monopoly financial transactions settlement network for the first decade of its existence, similar to global systems run by credit card giants MasterCard (NYSE: MA) and Visa (NYSE: V). Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 17. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Plans Russia Entry in Tie-Up with Yandex – Reports (Chinese article)
Bottom line: Alibaba’s new Disney tie-up is unlikely to gain much traction due to overcrowding in China’s Internet video market, while its tie-up to sell $8 billion worth of bad debt from asset manager Huarong looks mildly positive.
Alibaba in streaming tie-up with Disney
E-commerce giant Alibaba(NYSE: BABA) is in a trio of headlines as we head into the year-end holidays, led by a new tie-up with Disney (NYSE: DIS) as it looks to leverage its growing stable of media assets. But in a sign of how much attention the company now attracts, the other 2 stories in the headlines aren’t really ones that Alibaba would care to trumpet too much.
The larger of those is mildly positive, with media reporting that Alibaba’s Taobao C2C marketplace is teaming up with one of China’s leading bad asset sellers to auction off $8 billion in soured loans. The other headline is one that’s becoming a small headache for Jack Ma, and involves Evergrande Taobao the soccer team that he co-owns. That story has one of Japanese car maker Nissan’s (Tokyo: 7201) China joint ventures suing the club for breach of contract related to a high-profile sponsorship dispute. Read Full Post…
Bottom line: Yum’s plan to potentially list its China unit in Hong Kong, alongside a concurrent New York listing, looks like a smart move that would make the stock more accessible to Asian investors and give it a more local flavor.
Yum eyes HK listing for China unit
The struggling China unit of Yum Brands (NYSE: YUM), owner of the KFC and Pizza Hut chains, has just released a slew of new details on its prospects, including a long-awaited return to same-store sales growth after several years of declines. The announcement comes as Yum, under shareholder pressure, prepares to spin off its China operations into a separately listed company.
Apart from the new forecast for a return to same-store sales growth, one of the most interesting China-related details in the new announcement is the potential for a Hong Kong listing by Yum’s China unit as part of the spin-off. That move would make Yum China’s shares available to many mainland Chinese investors, and would also add a distinctly Asian flavor to a company that has now seen as a downscale purveyor of greasy western fast food. Read Full Post…
Bottom line: Huawei’s smartphone unit is finishing 2015 on a solid note, meeting its annual targets a month early, while Xiaomi will need to show better overseas performance next year to regain some of its fading momentum.
Huawei meets smartphone targets early
A flurry of new numbers are coming from the smartphone space as we head into year end, reflecting the different focuses of domestic leaders Huawei and Xioami. When the history books are written, 2015 will be remembered as the year when Huawei surged to become the world’s third biggest smartphone brand behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930), and also the clear Chinese leader. But for Xiaomi, 2015 could be a year the company would rather forget, as it lost momentum in its home China market due to stiff competition and saw slow progress in its overseas expansion.
The latest headlines have Huawei forecasting its overall revenue will surpass the $60 billion mark this year, equating to a rise of 29 percent or higher from last year’s $46.5 billion. That would mark a nice acceleration from the previous year’s 20.6 percent revenue growth, with much of the gains coming from the company’s rapidly growing smartphone division. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 16. To view a full article or story, click on the link next to the headline.
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Disney (NYSE: DIS), Alibaba (NYSE: BABA) Team to Stream Films to Chinese Viewers (English article)
Huawei Says 2015 Sales to Top $60 Bln, up More Than 29 Pct from 2014 (Chinese article)
China Mobile (HKEx: 941) Expects to Break 500 Mln 4G Users by End 2016 (English article)
Bottom line: Setbacks in 2 major global chip acquisitions by Chinese buyers show the Chinese are likely to be seen as foreigners by western manufacturers who would prefer to be bought by more familiar hometown rivals.
China chip buyers hit resistance in US, Taiwan
Two new developments in China’s global chip-buying spree are showing that political opposition isn’t the only obstacle Chinese buyers will encounter in their quest to acquire foreign technology. The Chinese could also face competition from rival suitors, with word that recent bids by the fast-growing Tsinghua Unigroup and newcomer China Resources have both hit such resistance.
In the first case, Unigroup’s recently announced plan to buy 25 percent of Taiwanese chip tester Siliconware Precision Industries (Taipei: 2325) has been followed by a new counter bid from Taiwan’s own Advanced Semiconductor Engineering (Taipei: 2311). The second case has US-based Fairchild Semiconductor (Nasdaq: FCS), which is in the process of merging with ON Semiconductor (Nasdaq: ON), rebuffing a higher rival bid from China Resources. Read Full Post…
