The following press releases and media reports about Chinese companies were carried on July 29. To view a full article or story, click on the link next to the headline.
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Chinese ADRs Drop 3rd Day Amid Mainland Rout, Baidu (Nasdaq: BIDU) Plunges (English article)
WeChat Italy, ChatSim In Deal to Jointly Promote Instant Messaging in Europe (company announcement)
Air China (HKEx: 753) to Raise $1.9 Bln in Share Sale to Buy Planes (English article)
Phoenix Satellite (HKEx: 2008) Warns of Substantial Profit Decline in H1 (HKEx announcement)
Perfect World (Nasdaq: PWRD) Announces Completion of Merger (PRNewswire)
Bottom line: Shanghai’s announcement of formal regulations for hired car services will finally provide legal status for Uber and Didi-Kuaidi, and will be followed by similar policies in other major Chinese cities.
Uber closer to legal status in Shanghai
Just a week after Beijing held a highly unusual meeting of 8 government agencies to discuss the oversight of private car services, China’s commercial capital of Shanghai is sending its own positive signal to this fast-growing group of companies led by US giant Uber and the homegrown Didi-Kuaidi. That signal comes in the form of a newly issued set of rules and regulations that hired car service providers will need to follow to gain formal legal status and remain in compliance with the law. (Chinese article)
This particular move looks incremental but also quite significant, since Shanghai is often considered a leader in developing and regulating new industries in China. In this instance we can probably assume the city was acting under directives from the central government, meaning Beijing has officially decided to support development of private hired car services that compete with traditional taxis. That means we can probably expect to see other major Chinese cities follow soon with their own similar guidelines, ending a period of regulatory uncertainty for Uber, Didi-Kuaidi and other smaller rivals. Read Full Post…
Bottom line: The purchase of Micron by Tsinghua Unigroup offers a good chance for Sino-US confidence building if Washington signals it will fairly consider such a deal and Unigroup demonstrates its actions are commercially driven.
Micron sale offers chance to boost Sino-US trust
A potential mega-deal that would see China’s Tsinghua Unigroup buy leading US memory chip maker Micron Technology (Nasdaq: MU) could become a major trust-building exercise between China and Washington if handled properly, but could also quickly end in an angry war of words if the opposite occurs. Both sides need to take important steps to ensure fair trade in the case, which is sensitive because it involves the acquisition of a US high-tech leader by a company with close ties to China’s top science university.
For its part, Unigroup could take steps to show its independence from Tsinghua University, and more broadly to show that it is a commercially-focused business that doesn’t make decisions based on government orders or support. For its part, Washington could signal it is willing to consider a deal that appears to pose no threat to national security, even though it would see a major technology company taken over by a Chinese peer. Read Full Post…
Bottom line: Baidu could buy a small stake in Xunlei but is unlikely to acquire the company outright as part of their new alliance, while 58.com’s plan to rebuild its newly acquired job site should have good chances of success.
58.com goes to work on ChinaHR
I’ve been predicting a marriage for a while for online video orphan Xunlei (Nasdaq: XNET), even as it remains stubbornly single despite its lack of scale to survive as an independent company. First it appeared the company might get bought by smartphone sensation Xiaomi after the pair boosted their strategic tie-up in May, but then nothing more happened. Now the gossip mills are likely to start turning again, following the latest announcement of a major partnership between Xunlei and Baidu’s (Nasdaq: BIDU) iQiyi online video service.
58.com
Meantime in another Internet news bit, the top executive at leading online classified ad site 58.com(NYSE: WUBA) is saying he will need 2 years to turn around the underperforming online job site ChinaHR, which he acquired earlier this year. His assessment comes after the site laid off nearly all of its staff as part of the deal that saw 58.com buy ChinaHR from its Irish owner. Read Full Post…
Bottom line: Second-quarter smartphone data confirms recent trends that have shown a surge for Huawei and Apple, while Lenovo and Samsung struggle and Xiaomi also faces rapidly slowing growth.
Huawei consolidates spot as world’s No 3 smartphone maker
The latest smartphone sales figures are out, showing a recent surge for Huawei and strong but slowing growth for Xiaomi, as Chinese brands continued to take 3 of the top 5 global spots. Meantime, the same chart shows the lackluster Lenovo (HKEx: 992) continued to stumble as it failed to find an audience for its products, and global leader Samsung (Seoul: 005930) also continues to struggle.
The latest second-quarter figures from IDC come as another smaller data tracking firm IHS Technology released its own numbers showing Xiaomi continued to rule the China roost and even boosted its share of the market. Meantime, Samsung continued to slip in the world’s biggest smartphone market, falling a notch to barely stay in the top 5 brands. Read Full Post…
Bottom line: A special meeting between 8 Chinese government agencies is a positive sign for Uber and its rivals, indicating Beijing wants to forge a unified national policy to foster the development of hired car service operators.
Beijing meeting sends positive signal for Uber
The brash Uber and its rivals are seeing some encouraging signs in China, with reports that Beijing has convened a special meeting of 8 ministries to clearly define a national policy on these up-and-coming providers of hired car services. At the same time, Uber has broadened its stable of China partners by forming an alliance with homegrown smartphone sensation Xiaomi to promote their products and services in Southeast Asia. Lastly, Uber is also in a slightly troubling headline that spotlights some of risks it will face, as media in southern Guangdong province report that one of the company’s drivers may have been murdered by a customer. Read Full Post…
Bottom line: Internet-based financial services should continue to boom over the next few years, while a rapid decline in microblogging could start to ease now that Weibo has consolidated its position as market leader.
Weibo consolidates microblogging market
China’s Internet data tracker has just released a slew of figures for the first half of the year, painting a rosy picture for companies like Alibaba (NYSE: BABA) and others that are moving aggressively into online financial services. At the other end of the spectrum, microblogging continued its rapid decline, as marginal players retreated and industry leader Weibo (Nasdaq: WB) consolidated its position.
On a broader level, I was surprised to see the growth rate in overall Internet users slow sharply in the first half of this year, even as the number of people accessing the web over their mobile phones continued to post strong growth. I also took the time to tally up the subscriber totals for China’s big 3 telcos in the first half of the year, which shows that the dominant China Mobile (HKEx: 941; NYSE: CHL) gained share on its 2 smaller rivals as it aggressively promoted its year-old 4G service. Read Full Post…
Bottom line: WeChat’s recent blockage of Uber reflects challenges the US company will face from rival car service operators and their backers in China, providing yet another obstacle as it tries to build up its local business.
Uber locked out of WeChat
A colorful war of words has broken out in China over the last week between high-flying car services provider Uber and the popular instant messaging service WeChat, providing not only some good entertainment but also valuable lessons for foreign companies doing business on the Chinese Internet. In this instance, WeChat has been blocking keyword searches on Uber, meaning users of the popular mobile messaging service can no longer access Uber’s public account or any articles with the Uber name. WeChat has given its own explanation for the blockage, blaming it on technical issues. Of course it’s probably no coincidence that WeChat’s parent Tencent (HKEx: 700) is also a major backer of rival domestic car services provider Didi Kuaidi. Read Full Post…
Bottom line: China Mobile’s latest salary reduction plan underscores that it and its 2 peers are just big state-run companies that act on orders from Beijing, with little to differentiate them from one another.
China Mobile slashes salaries
I’ve become increasingly disenchanted with China’s big 3 state-run telcos, partly because they lack any kind of originality or inspiration. About the only thing they know how to do is heed the call of Beijing, or sometimes protest orders they don’t like. Another thing they’re good at is launching promotions to try to steal business from each other in their highly protected market. But no one will ever accuse any of the trio or originality or innovation.
With that introduction, I’ll be quite direct and say that the latest news that leading telco China Mobile (HKEx: 941; NYSE: CHL) plans to slash salaries company-wide is just the same old behavior in response to a central government directive. That kind of directive comes regularly from Beijing, which recently has grown frustrated at China Mobile and its 2 peers, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU), for failing to innovate despite their control of the world’s largest telecoms market. Read Full Post…
Bottom line: Huawei’s accelerating smartphone sales reflect its growing momentum in China, and could prompt it to consider spinning off the unit for a potential IPO in its drive to become more transparent.
Huawei News
Smartphones power Huawei resurgence
Growing momentum for its smartphone business has become the driving force behind a resurgent Huawei, which has just reported solid first-half revenue growth that is showing signs of accelerating after a recent slowdown. That’s good news for Huawei, but less promising for domestic rivals like Lenovo (HKEx: 992), Xiaomi and Coolpad (HKEx: 2369), which are struggling for direction in a crowded Chinese smartphone market where global giant Apple (Nasdaq: AAPL) has also shown signs of a recent resurgence.
Huawei hasn’t been too generous in providing financial data for the first half of the year, saying only that revenue jumped by 30 percent to 176 billion yuan ($28 billion). (company announcement; Chinese article) For anyone who tracks the global market, that figure is already more than double the $12.5 billion in first half sales reported by Ericsson (Stockholm: ERICb), Huawei’s leading rival in its traditional networking equipment core area. Read Full Post…
Bottom line: Apple could lose its crown as China’s best-selling smartphone brand by the end of the year, as it faces growing competition from domestic names looking for a bigger slice of the high-end market.
China loses crown as top iPhone market
Global smartphone pioneer Apple (Nasdaq: AAPL) has just released its latest quarterly results, which as usual contain very selective bits of information about the China market that are revealing but make it difficult to draw very strong conclusions. One emerging trend appears to have Apple coming under growing threat from Chinese brands eying the higher end of the market. That’s my quick conclusion based on Apple’s admission that China fell to second place among its global markets in its latest reporting quarter, after briefly grabbing the top spot from the US during the previous quarter.
Of course everything is relative, and Apple still looks quite strong in China with iPhone sales in its Greater China market up an impressive 87 percent in its latest reporting quarter. (English article) But that said, there’s really no reason that the US should have retaken the top spot from China during the quarter, since both countries now receive their new iPhones at roughly the same time. Read Full Post…
