Bottom line: Beijing should offer more incentives to local governments to tackle piracy at its roots, or risk seeing homegrown high-flyers like Xiaomi get undermined by fakes.
Xiaomi knock-offs wash up in Germany
China’s fast-rising high-tech sector passed a dubious milestone last week, when media reported that fake copies of smartphones made by local superstar Xiaomi have begun appearing in Germany, marking one of the first such cases for a Chinese brand. Xiaomi wasn’t the only company in the headlines for piracy, as other media reported that fake copies of the new Apple Watch (Nasdaq: AAPL) were already widely available in China, as the US tech giant began taking orders for its latest gadget. Read Full Post…
Bottom line: Shares of Sina and its Weibo unit could come under pressure this week and for the next few months, as the regulator pushes for a clean up of its core news sites amid a broader Internet clean-up campaign.
Regulator clamps down on Sina news sites
A year-old Internet clean-up by Beijing is coming full circle to where it first began, with word that regulators have criticized and warned online stalwart Sina (Nasdaq: SINA) for failing to adequately censor its core web portal business. China Internet followers may recall that this prolonged clean-up began almost exactly a year ago when Sina’s video license was suspended after pornographic content was discovered on its literature and photo-sharing sites. (previous post) That case wasn’t too alarming since video is quite peripheral to Sina’s business. By comparison, this latest case looks a bit more worrisome, since it involves the portal news business that accounts for a big portion of Sina’s core advertising revenue. Read Full Post…
Bottom line: Momo’s shares could take a hit as Beijing pressures it to clean up its reputation as a “one night stand” app, while a group trying to buy out Jiayuan could raise its bid slightly in response to investor pressure.
Momo warned in Beijing clean-up
A pair of stories involving online matchmaking services are in the headlines as we begin the new week, with Jiayuan (Nasdaq: DATE) and Momo (Nasdaq: MOMO) facing resistance on 2 very different fronts. The first story has a Jiayuan investor crying foul over a recent buy-out offer that it says vastly undervalues the online service that engages in traditional match-making. The second story has Momo coming under fire from puritanical Beijing regulators for its more casual form of dating, which encourages short-term, one-night-stand relationships, similar to the popular US service called Tinder. Read Full Post…
Graveyards in and around Shanghai are probably breathing a collective sigh of relief after the Tomb Sweeping holiday, knowing they can take can now take a long break until they’re flooded again with the next mass migration of people honoring their ancestors. This year’s rush saw not only our local graveyards flooded with visitors, but also produced the usual crush of cars congesting nearby roads and commuters packing our public transport system.
Obviously this annual pilgrimage doesn’t affect me or most other foreigners living in Shanghai. But it did get me to thinking about how we honor the deceased in the west, and why we don’t have a similar tradition to the annual Tomb Sweeping rush. Read Full Post…
Bottom line: Poorly run traditional supermarkets like Lianhua are destined for extinction in the next 5-10 years as they get overtaken by the rapidly rising e-commerce names like Yihaodian and JD.com.
Tired Lianhua sells stake to Yonghui
A couple of supermarket headlines are casting a spotlight on a Chinese market that is rapidly transforming, putting pressure on traditional stores operated by domestic players like Sun Art (HKEx: 6808) and global chains like Carrefour (Paris: CA). The first headline has Shanghai-based operator Lianhua (HKEx: 980) selling a major stake of itself to smaller but more nimble rival Yonghui (Shanghai: 601933) in a $120 million deal. The second has Yihaodian becoming the first online grocer to break into an important annual industry ranking list, underscoring the rapid rise of Internet-based supermarkets. Read Full Post…
Bottom line: A new push into mid-range hotels could provide a boost for Homeinns and other operators, but the relief is likely to be short lived as that part of the market also quickly becomes saturated.
Home Inns goes upscale with new brands
Hotel operators are rushing to fill a relative void in the middle of China’s market, with word that leading budget chain Homeinns (Nasdaq: HMIN) has launched new brands aimed at consumers willing to spend a bit more during their travels. The move looks relatively smart, as growth slows at the top and bottom ends of the market due to overbuilding and a slowing economy that is putting a damper on domestic travel. But Homeinns isn’t the only one to notice this void, and recent similar moves by others could see this middle part of the market also quickly become saturated and oversupplied. Read Full Post…
Bottom line: The move by Yahoo’s former China R&D chief to a major local Internet firm reflects growing work opportunities at Chinese companies, and waning attraction of China as an R&D center for big multinationals.
Former Yahoo R&D exec joins JD.com
A new move by a leading R&D executive is spotlighting a pair of major trends in China’s high-tech space, led by rapidly falling expectations for the market by big multinationals. The actual move has seen the former head of Yahoo’s (Nasdaq: YHOO) China R&D center take a new job at JD.com (Nasdaq: JD), China’s second largest e-commerce company, just weeks after Yahoo closed one of its last remaining Chinese operations. That move also highlights the growing attractiveness of big domestic companies for top R&D executives, who used to eschew such homegrown firms. Read Full Post…
Bottom line: Intel’s latest drive to fund wireless-related Chinese start-ups is part of a growing strategy to promote its struggling telecoms chip business, but it could face big obstacles due to China’s lackluster record at innovation.
Intel launches incubator at Shenzhen event
I have to commend Intel (Nasdaq: INTC) for its perseverance in the telecoms space, with news that the fading microchip giant is adding an incubator initiative to its drive into the sector using China as a backdoor. But that said, this latest project looks pathetically small, with Intel earmarking a meager 120 million yuan, or less than $20 million, to the initiative.
This project is just one of several recent initiatives for Intel in China, and we should point out that many of the companies it’s targeting would probably be happy for just $1 million or less to fund their early development. But that said, this particular initiative looks mostly like a public relations ploy than anything really substantive, and Intel might be advised to get a little more aggressive if it’s serious about promoting a China-based ecosystem for its struggling telecoms chip business. Read Full Post…
Bottom line: 55Tuan’s stock is likely to move steadily downward following its long-delayed IPO, while the booming P2P online lending sector could be due for a bust next year similar to the recent one for group buying sites.
P2P lending site Jimu Box raises big funds
After writing far too much about the repeatedly-delayed IPO for group buying site 55Tuan (Nasdaq: WOWO), I’m happy to report the offering has finally happened and now I can stop following this company. The 2 main reasons for writing about this offering at all were its potential to become China’s first publicly listed group buying site, and also the first Chinese Internet firm to list in New York this year. The actual company and offering were both quite small and the debut went reasonably well, which I’ll detail shortly.
Meantime, another new fund-raising story has me a bit more excited, with peer-to-peer (P2P) lending site Jimu Box on the cusp of a major new funding that will reportedly total about $400 million. It does seem somewhat appropriate to group the 55Tuan and Jimu Box stories together, since P2P companies are now in the midst of a similar boom that group buying sites experienced when they first burst on the scene 5 years ago. Read Full Post…
Bottom line: Xiaomi’s diversified sales strategy in India could help reverse recent setbacks, but could ultimately undermine the carefully cultivated cool and trendy image that has been key to its broader success.
Xiaomi adds traditional retailers in India
Smartphone sensation Xiaomi is making a risky move in India, abandoning its trendy online-only sales model as it faces headwinds in a market that has become its first major stepping stone onto the global stage. Xiaomi is calling the decision to sell its phones through traditional retail stores a tactical move, in a nod to the less advanced state of India’s Internet compared its home China market.
While that may be true, this new move also hints at signs of distress as Xiaomi faces new challenges in India on several fronts. One of those centers on an intellectual property dispute with global telecoms titan Ericsson (Stockholm: ERICb), which forced Xiaomi to stop selling its higher-end phones in India last December. The other big challenge is coming from other Chinese smartphone makers like Meizu, which are attempting to copy Xiaomi’s early success in India. Read Full Post…
Bottom line: Baidu may never recover the medical advertising business it lost during a recent spat with a major hospital group, putting pressure on its stock as its revenue growth takes a hit over the next few quarters.
Baidu stock takes beating in hospital tiff
A spat between leading search engine Baidu (Nasdaq: BIDU) and one of its largest advertisers is taking a toll on the company’s stock, and also casting an illuminating spotlight on the nature of the advertising market in China. If the latest reports are correct, the boycott by members of the Putian Healthcare Industry Chamber of Commerce could be costing Baidu millions of dollars in lost ad revenue each day, underscoring the importance of such advertisers.
The tussle also reflects the strange nature of China’s advertising market, where ads making inflated claims are quite common. Many outsiders may also find it strange that hospitals are such an important source of advertising revenue in China, since such ads are far less common in more developed markets. The bottom line is that exaggerated ads and strange advertisers are the norm in China, but such revenue sources for companies like Baidu could shrink as the market starts to mature and more closely resemble the west. Read Full Post…
