As a nearly continuous China resident for much of the last quarter century, one of the biggest annoyances I find with daily life here is the constant need to register your presence in a wide range of situations. The need by authorities to know who I am, and prove it with a valid ID, dogs me on a regular basis in Shanghai, forcing me to declare myself each time I want to buy a plane ticket or stay in a hotel, and even for such minor things as visiting some offices buildings.
That obsession with registrations has been in the headlines these last two weeks in a relatively minor but quite typical story that saw a foreign tourist refused permission to stay at a public campground on Chongming Island. The reasons for the denial were something that could only happen in China, related to the campground’s uncertainty over whether it could properly accept such foreign guests without proper registration. Read Full Post…
Bottom line: Baidu’s tie-up with a major Japanese noodle chain looks like a smart move to build up its fledgling takeout dining business, though it will need to do more to win back investors concerned about its aggressive spending on O2O investments.
Baidu ties with Ajisen Ramen
A week after its stock was hammered by concerns about big spending on its online-to-offline (O2O) services, leading search engine Baidu (Nasdaq: BIDU) has found a major new ally for that part of its business in Japanese noodle chain Ajisen Ramen (HKEx: 538). This particular deal will see the Hong Kong-listed Ajisen and another investor pump $70 million into Baidu’s takeout dining service, providing a major supporter not only due to the investment but also the chain’s strong presence in major Chinese cities.
Baidu’s stock is still recovering from a hammering last week that saw the shares fall by nearly 20 percent to a year-low after it reported anemic 3.3 percent profit growth in its latest reporting quarter due to heavy spending on O2O services. (previous post) Such services include things like buying takeout restaurant food online, and purchasing items from real-world stores through group buying sites. Read Full Post…
Bottom line: Suning’s plan to invest 1 billion yuan into PPTV’s smart TV foray is coming a bit late, but could stand a good chance of success by drawing on Suning’s position as one of China’s top TV retailers.
PPTV, Suning in smart TV partnership
Many of us were a bit surprised 2 years ago when electronics retailer Suning (Shenzhen: 002024) emerged as one of the winning bidders for PPTV, which was one of China’s leading online video sites at the time. The pair didn’t really seem like a great match, since Suning’s main business was its traditional retail stores that originally specialized in home electronics but later added more general merchandise. Suning’s newer e-commerce business didn’t seem like a great fit either, since retailing and online video entertainment don’t have too much in common.
Fast forward to the present, when Suning has finally developed a strategy for the asset with plans to pump 1 billion yuan ($160 million) into PPTV as part of PPTV’s own new drive into Internet TVs. This particular combination actually seems intriguing, since Suning is in a good position to promote such Internet TVs due to its position as one of China’s biggest home electronics retailers. Read Full Post…
Bottom line: Focus Media will re-list with a high valuation on a new enterprise-style board set to launch in Shanghai next year, while China Renaissance’s new fund to help US-listed firms privatize will attract strong investor interest.
Focus Media changes IPO re-listing plan
A couple of items are in the news involving the recent buyout wave for US-listed Chinese companies, which are rapidly abandoning New York in search of higher valuations in their home market. In an abrupt and somewhat surprising shift, Focus Media, one of the first companies in this homecoming wave, is reportedly abandoning its original plan for Shanghai.
The second item has China Renaissance, a well-respected domestic private equity firm, preparing to raise a major new fund that will help to finance privatizations of Chinese firms from New York. This particular deal looks significant, since many of the nearly 3 dozens firms to announce privatization plans this year could soon need new funding if previous commitments collapse due to recent volatility in China’s domestic stock markets. Read Full Post…
Bottom line: Jiuxian’s raising of a seventh funding round reflects fading investor interest in online wine sellers due to a luxury slowdown, while Baidu’s share buyback plan looks like a good use of cash to support its sagging stock.
Investors lose taste for online wine sellers
I’ve been a financial news reporter for quite some time now, but even I was surprised to read that online wine seller Jiuxian has just raised funds in a new round of G-series funding. This marks the first time I’ve seen the letter “G” in such a context, and I had to do some counting on my fingers to finally figure out the 500 million yuan ($80 million) funding round represents the seventh for this company that apparently has yet to make a profit despite so much private investment.
Baidu
Meantime, online search leader Baidu (Nasdaq: BIDU) was in a spending mode with its announcement that it would dole out up to $1 billion over the next year to support its sagging stock that plunged to a 1-year low this week on a weak earnings report. This particular use of money looks reasonable for a cash-rich company like Baidu. I do find the timing just slightly ironic, since Baidu raised $1.25 billion through a bond offer just a month ago, meaning this latest buyback will be funded by the same investors who have recently been dumping the company’s stock. more information hereRead Full Post…
Bottom line: Alibaba’s massive online grocery promotion looks aimed at countering potential new challenges from Walmart, as the US retailing giant overhauls its China e-commerce operations.
Alibaba launches major grocery promotion
Just days after Walmart (NYSE: WMT) made a major shift in its China e-commerce strategy, local market leader Alibaba (NYSE: BABA) is firing back with a massive 1 billion yuan ($160 million) promotion that looks squarely aimed at the US retailing giant. This particular promotion comes in the grocery space, which also happens to be a core strength of Yihaodian, the major plank in Walmart’s China e-commerce operation. Alibaba’s announcement also comes just days after Walmart announced it was buying out its partners in Yahaodian to take full control of the site and better integrate it with its existing China operations. Read Full Post…
Bottom line: Tencent’s new WeChat push into Europe looks like a better strategy than its previous failed US effort, though it should provide more support to its local partners if it wants to succeed.
WeChat signs on Italian partner
After a disastrous and costly foray into the US, leading Chinese mobile messaging app WeChat is gearing up for a new attempt at going global, this time setting its sights on Europe. This particular push has WeChat, a unit of Chinese Internet giant Tencent (HKEx: 700), forming small tie-ups with local European partners to promote the service. The latest of those has seen WeChat link with a small Italian start-up called ChatSim, which provides technology that lets users link up different mobile chatting apps.
Announcement of this particular tie-up is clearly the work of ChatSim, which has put out a slightly amateurish press release announcing the partnership. (company announcement) That said, I do think that more broadly speaking Europe looks like a better place for Tencent to try its luck at global expansion. That’s because the US is already quite hotly contested not only with WhatsApp but also rival instant messaging products from Internet giants like Google (Nasdaq: GOOG) and Facebook (Nasdaq: FB), which also owns WhatsApp. Read Full Post…
Bottom line: Tencent WeBank’s rapid growth over the last 2 months shows it intends to focus on high-interest small loans aimed at consumers and small businesses, challenging credit cards and credit lines from traditional banks.
WeBank lends $130 mln in 2 months
Seven months after its launch, Tecent-backed (HKEx: 700) WeBank is showing off some of its first financial accomplishments that hint at the direction it may take as it carves out a place in China’s banking sector. The numbers reveals that the bank, the first to launch under a private-sector pilot program by Beijing, is setting its sights on providing credit to small businesses and consumers. The tack looks like a direct challenge to traditional credit card issuers, and could ultimately provide consumers with yet another payment option in both the online and offline worlds. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 30. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
Alibaba (NYSE: BABA) Cloud Unit Sets Sights on Amazon in $1 Bln Global Push (English article)
Giant Interactive Seeks 100 Bln Yuan Valuation in China Re-Listing Plan (Chinese article)
ICBC (HKEx: 1398) VP Zheng Wanchun May Become New Minsheng Bank Chief (Chinese article)
Departing China Mobile (HKEx: 941) Workers Complain of No Raises in 10 Years (Chinese article)
China’s Great Short Seller Suddenly Turns Bullish (English article)
Bottom line: Sputtering demand for luxury goods and cars is likely to hamstring Phoenix Satellite TV’s earnings for at least the next year, as the company increasingly loses ground to new media rivals.
Sliding luxury demand undermines Phoenix
The recent slowdown in China’s luxury goods market is claiming one of its first victims in the media realm, with Phoenix Satellite TV (HKEx: 2008) warning that a sudden chill in luxury ad sales has wiped out its profits in the first half of the year. The news certainly doesn’t bode well for traditional media companies, which are a favored place for luxury goods makers to advertise. Car makers are another major source of ad revenue for these older media companies, and rapidly slowing sales in that sector also means that names like Phoenix and even some new media high-flyers like Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) could be looking at a difficult period ahead. Read Full Post…
Bottom line: Walmart’s Yihaodian could sharply boost its share of China’s e-commerce market in the next 2-3 years, following a buyout that will give the site better access to its parent’s experience, offline stores and global connections.
Walmart buys out Yihaodian partners
Just a week after sacking the 2 founders and top executives of its China e-commerce site, global retailing giant Walmart (NYSE: WMT) has taken the next step and bought out its partners in their Yihaodian joint venture. The buyout completes a takeover that began with Walmart’s purchase of a controlling 51 percent of Yihaodian 3 years ago. It also signals that Walmart is preparing to pump major new investment into the site, as it tries to become a major player in a market dominated by local giants Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD).
I have to applaud Walmart for finally taking control and tossing out Yihaodian’s founders, who weren’t doing much to challenge any of the nation’s top e-commerce sites. But that said, foreign companies have a very poor track record competing with homegrown Chinese Internet firms, and its far from clear if Walmart can succeed where other big names like Google (Nasdaq: GOOG), Yahoo (Nasdaq: YHOO), Expedia (Nasdaq: EXPE) and eBay (Nasdaq: EBAY) have failed in the past. Read Full Post…
