Bottom line: Lenovo could make significant inroads into western smartphone markets with its newly acquired Motorola if it lets the brand remain independent and maintain its own product development and sales resources.
Lenovo struts phones at trade show
A tour of the Lenovo (HKEx: 9992) booth at a major trade show happening this week in Spain made me realize just how much the company is betting on its recently purchased Motorola brand to boost it into the smartphone big leagues. Motorola’s continuing attraction as a powerful brand was on full display at the Lenovo booth, with large crowds clamoring for a look at what seemed like quite a ho-hum new low-end model being rolled out at the show.
By comparison, a glitzy new Lenovo-brand model from its higher-end VIBE line was drawing far less attention, even as a Brit on the stage sang on with nonstop praises for the unique features of the new model that has many attributes of a high-end camera. Read Full Post…
Bottom line: 58.com’s purchase of a secondary real estate trading site at a big discount looks like a shrewd move for the longer term, but could cause a short-term drag on profits due to weakness in China’s property market.
58.com buys Anjuke for bargain price
Local media are buzzing about a relatively large Internet deal that will see leading online classified advertising site 58.com (NYSE: WUBA) buy Anjuke, one of China’s largest online platforms for services involving secondary real estate. But the source of the buzz isn’t the deal itself, but rather the huge bargain that 58.com is getting compared to what Anjuke said it was worth just a year ago. That massive discount reflects the broader gloom surrounding China’s real estate market as it teeters on the edge of a major correction, and certainly doesn’t bode well for listed peers like E-House (NYSE: EJ) and SouFun (Nasdaq: SFUN). Read Full Post…
Bottom line: Meizu’s rapid India expansion could provide it with some relief from the overheated China market over the short-term, but will result in new price wars over the next 2-3 years as its domestic rivals make similar moves.
Meizu eyes India
Freshly infused with nearly $600 million in new capital after a major investment from e-commerce giant Alibaba (NYSE: BABA), smartphone maker Meizu is getting set to take on higher profile rival Xiaomi outside China with a major new campaign in India. In many ways, this particular move looks like China’s way of exporting the rampant price wars that have plagued its smartphone market to other countries with similar demographics. In this case, Meizu is not only eying a country that has suddenly become Xiaomi’s second largest market, but is also planning to follow its rival into Southeast Asia. Read Full Post…
Bottom line: The absence of Xiaomi and other newer Chinese smartphone makers from the world’s leading telecoms show reflects their focus on emerging markets and limited promotional budgets due to stiff competition at home.
Xiaomi missing at world’s top telecoms show
I’m in Barcelona this week for what has become the world’s biggest annual telecoms show, and thought I’d kick off my coverage with a look at who is attending from China this year. The list contains most of the big names you’d expect, including Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992), though Lenovo has decided to keep its name off the “made in China” list and is opting to call itself a US company.
But equally noteworthy is who isn’t on the list, at least not as an exhibitor. That list of absentees includes all of China’s newer smartphone makers, led by the fast-rising Xiaomi that has come from nowhere over the last 3 years to become the world’s third biggest brand. Others that aren’t on the list include locally well-known Chinese names Coolpad (HKEx: 2369) and Meizu, which have recently formed tie-ups with major Internet companies Qihoo 360 (NYSE: QIHU) and Alibaba (NYSE: BABA, respectively. Read Full Post…
Bottom line: Mobile data usage will grow by triple-digit amounts this year as telcos boost 4G promotions, while box office growth will start to slow and the ongoing decline in traditional SMS text messaging will accelerate.
Hongbao chatter fuels mobile data surge
The usual rush of Lunar New Year-related data is coming in, painting a mixed picture for traditional and new media. The clear winner in the mix is new media, whose surging popularity helped to fuel a 70 percent jump in mobile data traffic over the holiday period. Traditional movies also performed well, with China’s box office rising 36 percent during the period. It will also come as no surprise that the big loser over the holiday was traditional SMS text messages, whose volume plunged by 25 percent. Read Full Post…
Bottom line: A mega IPO by Postal Savings Bank next year is likely to attract little or no interest from private investors, while an upcoming IPO by 55Tuan could do slightly better but will still get only a lukewarm reception.
55Tun misses pricing target date
A couple of unattractive IPOs are in the headlines as China gets back to work after the Lunar New Year holiday, led by a massive plan by China’s Postal Savings Bank to raise up to $25 billion as soon as next year. While that plan may be a year or more away, a more advanced listing by group-buying site 55Tuan has failed to price its shares by a previously announced target date, leading some to speculate that the deal is running into trouble. Neither of these deals looks very exciting to me, and I suspect they won’t attract much interest from private investors either. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 26. To view a full article or story, click on the link next to the headline.
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Lunar New Year Eve SMS Volume Down 25 Pct, Data Traffic Up 70 Pct – MIIT (Chinese article)
Bottom line: The huge success of Tencent’s hongbao promotions over the Lunar New Year reflects the growing dominance of WeChat, which could marginalize other mobile services unless regulators step in to create a more level playing field.
WeChat clobbers Alibaba in red envelope promotions
I remember a time not long ago when we China tech reporters used to write annual stories about the number of people who sent billions of simple Lunar New Year text greetings over their mobile phones. Those days now seem like a distant memory, and new data from Tencent’s (HKEx: 700) WeChat and Alibaba’s (NYSE: BABA) Alipay are showing just how small those earlier figures were, even though they seemed impressive at the time.
But the real story in this new tide of “red envelope grabbing wars”, known as qiang hongbao in Chinese, is the huge victory for Tencent over Alibaba, which I’ll describe shortly. That victory owes directly to the huge popularity of WeChat, which saw many of its hundreds of millions of users glued to their smartphones for much of the Lunar New Year while they ignored everything else. Instead of the usual New Year activities, they spent much of the holiday trying to “grab” millions of yuan in gift money being doled out over WeChat by their friends, bosses and also by Tencent and Alibaba themselves. Read Full Post…
Bottom line: NetEase’s new California R&D center could become an important hub for its future global growth, while Zynga’s China pull-out reflects the extreme difficulties foreign firms face in the local gaming market.
NetEase opens US R&D center
Just a day after I wrote that online gaming giant Tencent (HKEx: 700) may be planning a major new drive into the US, we’re hearing that its top rival NetEase (Nasdaq: NTES) is also moving into the neighborhood with plans for a new California R&D center. NetEase’s move comes after search leader Baidu (Nasdaq: BIDU) and Tencent both set up US offices last year, though only Baidu actually announced a major new product development center. (previous post) All of these moves represent the Chinese companies’ efforts to tap into the Silicon Valley ethos, which has far more of the skills they will need in their quest to enter global markets outside of China. Read Full Post…
Bottom line: Xiaomi’s sales growth will slow this year as it faces stronger competition outside China, while recent momentum by Huawei could position it as the country’s solid number-two manufacturer.
Huawei shakes up Honor brand
I previously gave Xiaomi my award for China’s top tech company of 2014, and now the smartphone superstar has cemented that title by formally unseating global giant Samsung (Seoul: 005930) as last year’s leading Chinese brand. In a separate smartphone news bit, the stodgier and older Huawei has changed the chief for its Honor brand, in one of a series of recent developments that could position the company to become China’s second best-selling manufacturer this year.
As a regular writer about the China smartphone market, I’ve watched the many twists and turns in the rapid development of both Xioami and Huawei, which have emerged as my 2 major players to watch this year. Rivals Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) are also names to keep an eye on; but if I had to bet money, I would say Xiaomi and Huawei are likely to end 2015 as China’s 2 largest smartphone makers by a comfortable margin. Read Full Post…
Bottom line: China’s chocolate market could follow the recent boom for coffee as a lifestyle product, benefiting foreign names like Nestle, Hershey and Dove that can tap the preference for premium brands.
Nestle, Hershey seek success in upscale chocolate
A couple of chocolate stories were in the headlines over the Lunar New Year holiday, spotlighting the big potential for the foreign treat to boom in a similar way that coffee has over the last few years. One story had Swiss giant Nestle (Zurich: NESN) saying it will look to chocolate and premium coffee to boost its stagnating China sales. The other had US chocolate giant Hershey (NYSE: HSY) also predicting strong growth for the China market, following its own recent local acquisition. Read Full Post…
