Bottom line: The new purchase of 3 smaller rivals by Ourpalm could position the company as a consolidator for China’s fragmented gaming sector, and could be followed by one or more similar purchases in the next year.
Ourpalm buys 3 smaller rivals
A newly announced deal will see online game operator Ourpalm (Shenzhen: 300315) combine with 3 smaller rivals in a relatively large deal that could lay the foundation for a major new player to drive much-needed consolidation in the space. The new company looks interesting for a number of reasons, including Ourpalm’s existing connection with leading movie maker Huayi Bros, which could become an important strategic partner for the company.
Ourpalm could also become a strong platform to absorb some of the smaller Hong Kong- and New York-listed gaming companies that have struggled for investor attention due to stalling profit and revenue growth caused by their lack of scale. Potential players for future tie-ups could include recently listed Hong Kong players like Linekong (HKEx: 8267) and Forgame (HKEx: 484), or New York-listed Sungy Mobile (Nasdaq: GOMO), whose shares have all languished since their IPOs. Read Full Post…
A recent round of virtual “red envelope wars” was making waves in the microblogging realm in this final week before the Lunar New Year, in one of the many recent battles that have seen Internet titans Alibaba (NYSE: BABA) and Tencent (HKEx: 700) lock horns. This particular rivalry has gained wide attention in the Chinese headlines these last few weeks, though it’s worth noting that many others are staging similar copycat promotions following the huge success of Tencent’s original virtual hongbao promotion last year.
Meantime, the hyperactive Xiaomi moved offshore in its own bid to make sure it continues to garner attention, with a flurry of microblogging buzz related to its new move into the ultra competitive US market. Last but not least, several high-tech leaders extended their well wishes to Internet elder Lee Kai-fu, following his return to his Innovation Works high-tech incubator in Beijing more than a year after returning to his native Taiwan for treatment of cancer. Read Full Post…
Bottom line: China Telecom and Unicom are likely to launch aggressive 4G promotions over the Lunar New Year holiday, sparking a recruiting war that could see up to a third of China’s mobile users on 4G service by the end of 2015.
4G blitz to charge up Year of the Sheep
A flurry of telecoms stories are buzzing through the airwaves on this last trading day of the Lunar Year in China, setting the stage for a turbocharged Year of the Sheep that should see the nation’s 3 telcos embark on a massive free-for-all to sign up subscribers for their new 4G networks. That certainly doesn’t sound too good for profits, since all 3 telcos will be spending heavily on both promotions and infrastructure to build their new networks. But investors could still get excited about these 3 telcos if they can get users to boost their spending, reversing a years-old trend that has seen average user spending steadily decrease. Read Full Post…
Bottom line: China’s regulators are unlikely to veto the merger of taxi apps Didi and Kuaidi, and should encourage similar consolidation to allow for creation of Internet firms that can be globally competitive.
Yongche accuses Didi-Kuaidi of creating monopoly
Just a day after China’s leading 2 taxi apps announced their plan to merge, a series of observers are voicing concerns that the marriage would be anti-competitive and should be vetoed on antitrust grounds. The sudden debate about the merger of Kuaidi Dache and Didi Dache isn’t too surprising, since it would create a company that would control the vast majority of China’s market for taxi and private car services. But the regulator will need to decide whether such talk of monopoly is justified, since in many ways the newly merged company is still quite small and will also face strong competition from global rivals. Read Full Post…
I’ll finish out the Year of the Horse with a bang, by touching on the explosive topic of fireworks and their rapidly evolving role in both our city and more broadly in Chinese culture. Perhaps it’s more appropriate to say we’ll end the year on a whimper rather than a bang, as the latest rules issued by our city are rapidly clamping down on the centuries-old Chinese tradition of lighting off firecrackers to welcome in the Lunar New Year.
I’m certainly not the first to write about this topic, and I should begin by disclosing my own view that the use of firecrackers by individuals should be prohibited completely in a big city like Shanghai. My stance may seem a bit curmudgeonly, and I’ll openly admit I always dread the approach of the New Year because it’s nearly impossible to sleep on the Lunar New Year’s Eve. Read Full Post…
Bottom line: The merger of Didi and Kuaidi taxi apps could mark the start of a new round of consolidation between non-core assets of China’s major Internet firms.
Taxi apps Didi and Kuaidi to merge
After 2 years of making nonstop headlines due to their intense rivalry, leading taxi apps Didi Dache and Kuaidi Dache are leading the news once more with a new and quite unexpected merger. But equally interesting was the fact that this merger also marked an unusual shift in the equally bitter rivalry between Internet titans Alibaba (NYSE: BABA) and Tencent (HKEx: 700), which are Kuaidi’s and Didi’s main backers, respectively. That element of the story has huge implications, as it shows that China’s “Big 3” Internet companies of Tencent, Alibaba and Baidu (Nasdaq: BIDU) may be willing to consider similar mergers of their non-core assets, paving the way for a new and much-needed round of consolidation in areas like online video, mapping and group buying. Read Full Post…
Bottom line: An SEC probe is likely to find that Alibaba misled investors by failing to disclose a government report about widespread piracy on its Taobao site, which will weigh on its shares for the rest of the year as it moves to fix the problem.
Alibaba under scrutiny by the SEC
E-commerce giant Alibaba (NYSE: BABA) is quickly learning that the publicity it craves can be a double-edged sword, with word the company is being investigated for failing to disclose important negative information in the run-up to its blockbuster IPO last year. I’ve never been a big fan of Alibaba’s tendency to hyperbole, even though I do think it’s a fairly well-run company and quite savvy in its core e-commerce area. My general view is that companies should let their performance be their loudest spokesman, and let investors decide the rest.
Alibaba founder Jack Ma is the antithesis of that approach, and loves to hype his company at every opportunity he can. His cheerleading skills helped Alibaba secure a valuation well above what many expected, allowing it to raise a record $25 billion in its New York IPO last fall. Now it seems that the US securities regulator is looking into whether Alibaba failed to disclose key information that could have significantly cooled investor enthusiasm for the company’s IPO shares. Read Full Post…
Bottom line: BYD’s latest asset sale, combined with its new auto finance joint venture, are both aimed at boosting its struggling EV business, but it may have to sell off more assets before the market finally starts to gain some momentum.
BYD sells electronic component unit
Struggling electric car maker BYD (HKEx: 1211; Shenzhen: 002594) is starting to look a bit desperate, announcing a major asset sale just days after it received approval for a stalled finance joint venture aimed at boosting its sputtering sales. The approval this week for its auto finance joint venture comes as rival Geely (HKEx: 175) also has just announced its own approval for a similar stalled joint venture with France’s BNP Paribas (Paris: BNP). That indicates Beijing may be starting to worry about a broader slowdown in China’s car market after several years of breakneck growth. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 14-16. To view a full article or story, click on the link next to the headline.
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China Taxi Apps Didi Dache And Kuaidi Dache Announce Merger (English article)
Chinese Smartphone Giant Xiaomi Makes Debut In US Market (English article)
China’s Alibaba (NYSE: BABA) Attracts Attention From US Regulator (English article)
China Cellphone Sales Top 47 Mln In January, 4G Models Account For 77 Pct (Chinese article)
Tech Financier Lee Kai-fu Returns To Beijing, Says Won’t Retire Due To Illness (Chinese article)
Bottom line: Rumors of a China Telecom-Unicom merger are probably false since they would leave just 2 big players in the market, though the talk could reflect the regulator’s frustration at the continued dominance of China Mobile.
Regulator hangs up on telecoms merger rumors
Everyone else is buzzing today about rumors that the smaller of China’s 3 telcos would merge, so I feel obliged to add my 2 cents to the discussion, even though the deal has been denied by one of the companies and the industry regulator. Of course this kind of denial isn’t very meaningful in China, where companies will vehemently deny a rumor one day and then the next day announce a deal that showed the talk was indeed correct. But in this case, a merger of China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 763; NYSE: CHU) really doesn’t make much sense for a number of reasons. Read Full Post…
Shanghai is full of fascinating historical stories involving foreigners in China, including the story of thousands of Jewish refugees who fled to the city during World War Two and set up a vibrant community in the Hongkou District. Too many of these stories are neglected and remain largely invisible in Shanghai’s emerging modern landscape, which seems like a huge missed opportunity since this kind of history is a defining part of Shanghai’s unique identity as a meeting point between East and West. Read Full Post…
