Bottom line: New O2O take-out dining investments involving companies backed by Tencent and Alibaba reflects intensifying competition in the space, and is likely to result in a costly price war for market share.
Alibaba, Tencent in new take-out dining investments
The take-out dining space continues to heat up, with word of a major new funding for Ele.me, the service backed by social networking giant Tencent (HKEx: 700), and a big new investment for Koubei, the service owned by e-commerce leader Alibaba (NYSE: BABA). Both investments reflect a recent rush into online-to-offline (O2O) services by all 3 of China’s top Internet companies, as each tries to forge a hybridized mix of services that are likely to make up the retailing landscape of the future.
The larger of the 2 deals has Ele.me raising as much as $630 million in new funding, in a deal that brings in existing investors Tencent, along with its main e-commerce partner JD.com (Nasdaq: JD) and several other major private equity firms. The second has Koubei, Alibaba’s recently resurrected take-out dining site, investing a more modest 300 million yuan ($50 million) in a rival that operates the service called SHBJ.com. Read Full Post…
Following last week’s wild ride for Chinese stocks, now seems like a good opportunity to revisit the flurry of privatization bids for US-listed China Internet companies and how they’re faring. The list of headlines is led by reports that the biggest of the buyout bids for software security maker Qihoo 360 (NYSE: QIHU) is showing signs of unraveling, as investors balk at the widening gap between their original buyout offer and the company’s latest share price following last week’s sharp declines.
Meantime, another much smaller deal first announced at the height of the buyout wave in June has been quietly completed, resulting in the delisting of shares for China Mobile Games. Completion of this second deal just a couple of months after it was originally announced shows that such buyouts can still be done despite the big sell-offs in both China and New York that are making it hard to value such deals. Read Full Post…
Bottom line: Qihoo and Meizu are likely to struggle with their new smartphone campaigns in India, where intensifying competition will also undermine domestic rivals like Xiaomi and Huawei that have recently entered the market.
Qihoo unveils new Qiku smartphones
Qihoo (NYSE: QIHU) and Meizu have announced they are taking their smartphones to India, becoming the latest Chinese brands to export to the fast-growing but increasingly competitive market. India is actually the second stop on Qihoo’s smartphone roadmap, which will begin in its home China market with the launch of the first 2 models of its new Qiku smartphone brand. Meizu has become a major second-tier player in its home China market over the last few years, and formally announced its own move into India this week as it looks to move overseas.
The pair will join several of China’s top smartphone makers in the increasingly crowded India market, which shares many qualities with China. Xiaomi launched in India last year and the market quickly became its second largest globally, while Huawei’s Honor brand has also scored rapid progress in the market. But Qihoo’s biggest competitor in India could be Coolpad (HKEx: 2369), which is already a big player in the market but will also produce Qihoo’s new smartphones through a joint venture formed by the pair last year. Read Full Post…
Bottom line: Strong sales growth for Huawei’s Honor brand in the first half of the year reflects the company’s broader accelerating momentum, and could pose a growing challenge for domestic rival Xiaomi.
Huawei’s Honor brand grows in India, eyes US
More new data is showing the growing momentum for smartphone aspirant Huawei, with word that the company’s Honor brand surpassed its sales target in the first half of the year as it prepares to enter the US. The latest numbers continue to portray a surging Huawei, and show how the company is using its traditional strengths in product development and a newer expertise in consumer marketing to overtake big domestic rivals like Xiaomi and Lenovo (HKEx: 992) and also a host of smaller ones like Meizu and Coolpad (HKEx: 2369).
These latest numbers don’t look extremely impressive at first glance, as they show that Honor just slightly surpassed its sales target for the first half of the year. But in the current climate where many companies are missing their targets due to intense competition in China, the ability to not only meet but even slightly exceed a sales target does seem like a noteworthy accomplishment. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 28. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Chinese Banking Giants: Zero Profit Growth as Bad Loans Pile Up (English article)
Motorola to Lead Lenovo (HKEx: 992) Mobile Unit in New Overhaul (Chinese article)
Cinda (HKEx: 1359) Only Bidder for BOC (HKEx: 3988) Bank Unit with $8.8 Bln Price (English article)
Dalian Wanda Buys Ironman Triathlon Owner for $650 Mln (English article)
Uber China Unit Wins $1 Bln in New Funding – Source (Chinese article)
Bottom line: Upbeat reports from leading pork producer Smithfield and aircraft giant Boeing show that consumer-focused companies should continue to thrive despite China’s slowing economy, while policy-driven state-run firms could suffer more.
Boeing ups China aircraft outlook
A couple of upbeat new reports from aircraft giant Boeing (NYSE: BA) and leading global pork producer Smithfield are providing an interesting contrast to broader forecasts of gloom and doom for China’s slowing economy. In the first instance, Boeing has upgraded its 20 year forecast for aircraft demand in China, while the second has Smithfield has saying its exports to China rose 45 percent in the first half of this year.
Each of these stories is slightly different, but both point to a growing divide in the Chinese economy that has big implications for the nation’s major industries. On one side of the aisle are companies like Boeing and Smithfield, which make products and services directly tied to consumer demand. Such products and services are part of the so-called “real economy” and are things that the market really wants. These should be able to continue thriving even if China’s economy slows. Read Full Post…
Bottom line: Apple will continue to post strong iPhone growth in China but could lose some momentum if the stock market sell-off continues, while Xiaomi’s new push into Africa won’t offset its own rapidly slowing momentum.
iPhone China sales continue strong
Apple (Nasdaq: AAPL) and Chinese imitator Xiaomi are both in the headlines, as the former continues to consolidate its China position at the expense of the fading latter. In this case, Apple’s continuing China surge is reflected in new remarks from CEO Tim Cook, who says his company’s business has remained strong in China during the summer months despite concerns of a slowdown linked to the nation’s tanking stock markets.
While Apple has been feasting on China, Xiaomi is feeling growing pressure at home and is looking to other global markets for growth as it struggles to meet the lofty expectations it set for itself. According to the latest headlines, the latest stop on Xiaomi’s global roadmap is Africa, where the company is eyeing another BRICS country in South Africa. Such a move would put Xiaomi in 4 of the 5 BRICS, following its earlier moves into India and Brazil. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 27. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Global PC Shipments to Fall 8.7 Pct This Year – IDC (Chinese article)
Bottom line: New fund-raising signals indicate car services giant Uber could spin off its China unit within a year, and that Ping An-backed P2P lending platform Lufax could make a major IPO in the same time frame.
Uber, Lufax send new fund-raising signals
Two big new fund-raising stories are in the headlines, led by a modest new funding commitment that hints at a spin-off soon for the China unit of hired car services leader Uber. Meantime, the rush to see which of China’s fast-growing peer-to-peer (P2P) lending sites will be first to market has officially begun, with separate reports saying an IPO is in the planning stages for Lufax, a Shanghai based company that is backed by one of China’s top traditional financial services firms.
Both of these deals are in the mid-range in terms of size, probably worth the $100-$500 million, contrasting with a spate of deals earlier this year that were worth much more when China’s stock market was booming. It’s still possible we could see one or two more mega-fundings worth $1 billion or more by the end of the year, though such large deals could quickly disappear if China’s stock markets and economy remain in the doldrums. Read Full Post…
Bottom line: Premier Chinese Internet names should eschew China’s stock markets and continue to make IPOs in New York, where they can gain more accurate valuations and greater access to global capital markets.
NY offers best value for China Internet listings
Shares of e-commerce giant Alibaba (NYSE: BABA) achieved a dubious milestone late last week, when they officially closed at their lowest price since the company’s record-breaking IPO nearly a year ago. The big rise and subsequent fall of Alibaba’s stock was part of a broader sell-off of US-listed Chinese shares, sparked by an equally large drop on China’s domestic stock markets.
The US sell-off once again cast a spotlight on the question of whether some of China’s most promising private companies should pursue such offshore listings or make IPOs at home where their names are more familiar. Despite occasional volatility like last week’s sell-off, such offshore listings remain the best choice because they provide companies with relative stability and far more accurate valuations than what their peers are getting in China’s immature markets. Read Full Post…
Bottom line: A steady series of leaked photos of a smartphone co-produced by Google and Huawei is designed to give face to Beijing, and could pave the way for a China entry for Google’s Nexus phones and app store by year end.
China wins face in Google-Huawei tie-up
Barely a day has gone by recently without a leaked photo appearing on the Internet of a new smartphone being developed in a landmark tie-up between Chinese up-and-comer Huaweiand Google’s (Nasdaq: GOOG) Nexus brand. A cynic like me would speculate that the growing volume of noise looks rather deliberate, and that both sides are intentionally trying to drum up buzz for a new Nexus model that will become the brand’s first to be made by a Chinese manufacturer.
Huawei
Huawei’s motivations for leaking the information are obvious: this particular tie-up will bring it the validation it craves for its young smartphone business, giving its products the stamp of approval from one of the world’s leading technology names. But Google’s motivations are a bit more subtle. Certainly it’s natural to hype up this kind of new product before the launch. But in this case Google is almost certainly aware of the “face” that China will receive from such a move. That could help to soothe its tense relations with Beijing as it eyes a return to a market it can’t afford to ignore. Read Full Post…
