Bottom line: Apple is likely to reach a deal to bring Apple Pay to China in the next 12 months, while Xiaomi’s addition of traditional offline sales channels acknowledges it needs to diversify its approach to maintain its breakneck growth.
Cook eyes Apple Pay for China
The old saying “An apple a day” seems to be appropriate this week in China, where Apple’s (Nasdaq: AAPL) CEO Tim Cook is being quite talkative on his latest China trip with a steady stream of small but noteworthy news. He began the week by announcing a new environmental China initiative for Apple, then followed by launching his own microblog on the locally popular Sina Weibo (Nasdaq: WB), often called the Twitter of China. (previous post)
Now he’s candidly talking about hopes for bringing his company’s Apple Pay electronic payments service to China, perhaps through tie-ups with local e-commerce giant Alibaba (NYSE: BABA) or UnionPay, China’s largest electronic transactions network operator. Read Full Post…
Bottom line: A worker rebellion over layoffs at an online recruitment site being bought by 58.com underscores the company’s inexperience at M&A, even though the purchase itself looks like a good move.
Workers rebel over layoffs at ChinaHR
Chinese media are flocking to news that leading online classified ad site 58.com (NYSE: WUBA) has begun slashing jobs at its newly acquired ChinaHR, just days after it announced it would purchase the struggling online recruitment site. The move looks a bit hasty and perhaps extreme, and also comes across as just slightly ironic since many people now losing their jobs may soon have to use rival services to find new work.
But irony aside, this particular story looks quite similar to something that happened just 2 years ago at the very same ChinaHR. In that case workers mutinied and even briefly held an executive hostage after its then-owner, US online recruitment giant Monster Worldwide (Nasdaq: MWW), also tried to lay off employees as part of its own plans to sell the company. If history repeats itself, which is showing early signs of happening, 58.com could be looking at some turbulent times ahead over the next week or two. Read Full Post…
Bottom line: Recent raids on Uber’s offices in 2 major Chinese cities reflect resistance it is meeting from traditional taxi operators, which could significantly limit its growth potential in the politically sensitive market.
Uber’s offices raided in Chengdu, Guangzhou
The turmoil in China’s overheated market for paid car services has cruised into the offices of global fast-riser Uber, which has been raided twice in the last 2 weeks over its aggressive move into the market. The first raid came last week, when local officials visited the company’s offices in the southern metropolis of Guangzhou, sometimes also called Canton. (Chinese article) Now the raids have extended to the interior city of Chengdu, where Uber’s offices have again been visited by local officials conducting an unspecified investigation. (English article) Read Full Post…
Bottom line: Apple’s retention of China’s smartphone crown for a second consecutive quarter is partly due to timing, but also owes to CEO Tim Cook’s new PR campaign that will help to win favor from Beijing and the broader Chinese public.
Apple’s Cook opens Weibo account
Media are fixated today on a new report showing China’s smartphone sales fell for the first time in this year’s first quarter, in a development that shouldn’t surprise anyone due to the market’s supersaturation. But equally impressive in the report is the ongoing surge of Apple (Nasdaq: AAPL), which managed to hold onto its title as the nation’s leading smartphone brand for a second quarter after stealing the crown from the high-flying Xiaomi.
Some may say Apple’s surge is due to timing, since it released its latest iPhones in October, fueling a fourth-quarter sales boom that lingered into the first quarter. That may be partly true, though I personally have to applaud CEO Tim Cook for mounting a very focused campaign to woo both Beijing and average Chinese consumers. In the latest move of that campaign, Cook has just opened his official account on Sina Weibo (Nasdaq: WB), China’s equivalent of Twitter (NYSE: TWTR), as he moves to communicate more directly with customers in one of his most important markets. Read Full Post…
Bottom line: Baidu’s crackdown on internal corruption and big jump in a ranking of global media firms are both good publicity, but won’t change the fact that it’s facing sharply slowing growth over the next year.
Baidu probes 3 directors for corruption
Following a bruising battle with some of its leading advertisers in March, leading search engine Baidu (Nasdaq: BIDU) is in the headlines this week on a more positive note with a report it is cracking down on internal corruption. At the same time Baidu is in a separate similarly positive headline that shows it is quickly climbing the ladder on a list of global media companies, surpassing much older rivals like Yahoo (Nasdaq: YHOO) and Microsoft (Nasdaq: MSFT).
The first of these headlines casts a spotlight on the many corrupt practices that frequently occur in China’s young business culture, such as preferential treatment for customers who pay “special” fees and bribe individual employees. Such practices were almost certainly a factor behind the high-profile spat that saw one of China’s largest associations of hospital owners boycott Baidu’s advertising services in March, dealing a significant blow to Baidu. (previous post) Read Full Post…
Bottom line: Beijing should be commended for its recent program to open up telecoms services to private investment, and should consider accelerating the program and allowing in foreign participation.
Beijing injects competition into telecoms services
A campaign to bring private money into China’s telecoms sector was in the headlines twice over the last 2 weeks, reflecting a broader Beijing campaign to inject new life into traditional sectors like banking and energy that are now dominated by large and often slow-moving state-run firms.
One headline came late last week, when media reported that 20 million new phone numbers would be injected into a year-old program allowing private companies to sell mobile service. That followed even bigger news a week earlier, when media said the telecoms regulator hoped to allow private investors to build domestic telecoms network infrastructure for the first time. Read Full Post…
Bottom line: JD.com’s latest results show it could reach profitability on an operating basis later this year, while its new tie-up with Tuniu looks like a well-conceived plan that reflects a growing wave of equity tie-ups among Chinese Internet firms.
JD’s loss narrows, ties with Tuniu
China’s second largest e-commerce firm JD.com (Nasdaq: JD) has been busy wowing investors these last few days, starting with its latest quarterly ressults that shows it is making strong progress in moving towards sustainable profits. Meantime, the company has also become the largest individual stakeholder in online travel site Tuniu (Nasdaq: TOUR) through its participation in a deal that saw Tuniu raise $500 million by selling shares to a larger group of investors.
Wall Street greeted the pair of news stories with mildly positive reaction, bidding up JD.com shares by 2 percent after the reports came out. The stock has rallied nearly 50 percent this year and is 77 percent above its IPO price from a year ago, as investors grow more bullish on this company that is China’s biggest challenger to the much larger Alibaba (NYSE: BABA). Tuniu shares also got a nice lift from the news, rising 4.5 percent. Read Full Post…
Bottom line: Baozun’s IPO is likely to price in the middle of its range and debut flat despite its strong credentials, as waning sentiment towards Chinese Internet companies may prompt other recently listed names like Jumei to launch privatization bids.
Baozun IPO gets lukewarm response
Sentiment towards China-listed US firms continues to show signs of weakening, with word that e-commerce website designer Baozun has had to scale back its IPO in New York as its shares move closer to their trading debut. Meantime, shares have jumped over the last week for e-commerce firm Jumei International (NYSE: JMEI), amid talk that it may be considering a privatization bid to re-list back back in China.
Both stories reflect a recent trend that has seen a growing number of second-tier Chinese Internet companies abandon New York listings due to lack of investor interest. Many are believed to be eying re-listings in China, where their names are better known and companies of all types have achieved lofty valuations these days during a stock market surge that has seen shares double since a rally dating back to last summer. Read Full Post…
Photo of student helping teacher draws controversy
This week’s Street View takes us to the Baoshan District, where a series of pictures of a teacher and one of her students has created a bit of controversy online. Anyone looking for a scandal involving inappropriate teacher-student relations should stop reading now, as this particular incident has none of that and seems quite harmless in my view.
Instead, it involves photos of a primary school student holding up an umbrella for his teacher to protect her from the sun. The controversy arose because some people considered the act inappropriate, presumably because it implied the teacher was demanding this kind of subservient and possibly degrading behavior from one of her students. Read Full Post…
Bottom line: Alibaba’s change of CEO shows that founder Jack Ma is still calling the shots at the company, and a rally for its shares will be short-lived before they continue a gradual downward movement back toward their IPO level.
Alibaba shifts course with new CEO
Investors nervously awaiting the release of e-commerce giant Alibaba’s (NYSE: BABA) latest quarterly results were instead greeted with the surprising news that the company has just named its third CEO in 2 years. Alibaba founder Jack Ma is spinning the story as part of a plan to hand over the running of his company to a generation of Internet-savvy youngsters born after 1970. That may be true, though I do find it somewhat ironic that the replacement of former CEO Jonathan Lu with the younger Daniel Zhang shows quite clearly who is still firmly in control at Alibaba, namely Ma himself, who is hardly a post-1970s youngster. Read Full Post…
Bottom line: 58.com’s new purchase of an online job site extends its spree of recent acquisitions and partnerships, which looks like a focused, well-conceived plan that could position it to emerge as a leading Chinese Internet advertising specialist.
58.com gets into jobs space
The savvy online classifieds site 58.com (NYSE: WUBA) is back in the headlines as we close out the week, with word that it’s signed a deal to purchase online job specialist ChinaHR. If true, the deal would mark the latest in a steady stream of acquisitions for 58.com, which looks well positioned to become a truly diversified leader in online classified advertising services.
Such a focused strategy looks much better than the more diversified M&A being practiced these days by China’s largest Internet companies, which are all venturing far beyond the core businesses that brought them their initial success. Of course it’s much easier for companies like 58.com to keep their focus due to their small size. Compared to names like Tencent (HKEx: 700) and Alibaba (NYSE: BABA), which are each valued at around $200 billion, 58.com still has a relatively small market value of about $7 billion. Read Full Post…
