Tech executives welcomed in the New Year with some intriguing hints on their microblogs, with posts suggesting major new moves in China from global media titan News Corp (Nasdsaq: NWSA) and online video operator LeTV (Shenzhen: 300104). In the former case, a local tech executive posted a photo of himself meeting with Rupert Murdoch in China, indicating the News Corp chief was back doing business in the country after a long absence. In the latter case, LeTV chief Jia Yueting was hinting that his company could soon become the latest Chinese Internet firm to enter the overheated smartphone market. Read Full Post…
Bottom line: UnionPay will see its market share stagnate or even start to decline at home as it faces new competition in the next 3 years, while it’s likely to see sharp growth in its overseas expansion.
UnionPay faces new challenges at home
The coming year could be a groundbreaking one for the important but low-profile business of providing financial settlement services in China, now dominated by bank card issuer UnionPay. Such services allow banks and companies to transfer money back and forth between each other electronically, facilitating things like credit and debit card purchases and letting people withdraw cash from other banks’ ATMs besides their own.
While UnionPay has dominated the sector for domestic transaction settlement service for the last decade, its state-granted monopoly will officially end this year as China complies with a WTO ruling in response to complaints from global leaders MasterCard (NYSE: MA) and Visa (NYSE: V). At the same time, UnionPay is getting challenged by homegrown domestic players led by e-commerce giant Alibaba (NYSE: BABA), whose financial arm is also pushing into the business. Read Full Post…
Bottom line: WeBank and other newly approved private lenders are likely to struggle to find an audience due to operational limitations and competition from state-run banks and gray-market institutions.
WeBank makes first loan in Shenzhen
Some have predicted that a new group of private banks could shake up China’s stodgy financial sector, though the first loan from the group doesn’t look all that threatening. That loan came over the weekend, when WeBank, which is backed by Internet giant Tencent (HKEx: 700), made its first loan since receiving its license late last year. (previous post) The loan was for a modest amount and went to a truck driver in the southern boomtown of Shenzhen where WeBank is based. It carried a relatively high interest rate of 7.5 percent, which is probably suitable for that risk level. (English article) Read Full Post…
Bottom line: Chinese appliance makers and Internet companies need to focus their smart device efforts on one or two key alliances each, or risk spreading their resources too thin.
Haier in new tie-up with Evergrande
Smart devices look set to become a theme of the New Year, with new reports that domestic appliance giants Haier (HKEx: 1169) and Midea (Shenzhen: 000333) have formed major new tie-ups to develop the space. Similar alliances began accelerating in the second half of last year and are aimed at developing the “Internet of Things”, which envisions an interconnected world where devices and their owners can talk to each other at any time over a wide range of wired and wireless networks. Read Full Post…
Bottom line: Fosun’s purchase of Club Med looks like a good bet despite the deal’s big premium, and could be followed by a major Chinese expansion and new IPO in Hong Kong in the next 5 years.
Fosun wins Club Med bidding war
Normally I’m not a big fan of bidding wars since they tend to overinflate asset prices, but I’ll admit I was quite encouraged to read that Chinese private equity giant Fosun International (HKEx: 656) finally appears to have won a buyout battle for French resort operator Club Med (Paris: CU). My optimism is based on a number of factors, both financial and also on the strong future growth that Club Med could enjoy if and when the longest buyout in history for a Paris-traded company finally closes. Read Full Post…
Bottom line: Perfect World’s de-listing plan is likely to succeed and could be followed by a merger with Shanda or Giant Interactive, while Renren is likely to also get bought out and de-list by the end of the year.
Perfect World gets buyout offer
Perfect World (Nasdaq: PWRD) has become the latest US-listed online game operator to decide it’s unappreciated by shareholders, announcing a plan to privatize and de-list its shares from New York. The management-led buyout offer shouldn’t come as a surprise, as it follows a steady stream of similar moves that has seen peers like Giant Interactive and Shanda Games (Nasdaq: GAME) also leave or prepare to leave the market.
At the same time, another headline from struggling social networking site (SNS) Renren (NYSE: RENN) is fueling speculation of a similar imminent de-listing. That news has Renren announcing the resignation of its CFO — news which should normally have a neutral to negative effect on the company’s stock. But in this case the stock has jumped on the news, indicating investors may think a buy-out offer is coming. Read Full Post…
Bottom line: ZTE’s relaunch to focus on a wider range of interconnectivity products and services looks smart and well-conceived, but could be harder to execute if it tries to do too much too quickly.
ZTE launches new logo
The last few years have been a difficult time for telecoms equipment giant ZTE (HKEx: 763; Shenzhen: 000063), but the company is hoping to kick off a new chapter this year with the launch of a new strategy that focuses on interconnectivity at all levels. A news release and CEO’s letter detailing this new approach are filled with hype and buzzwords, though the broader idea looks strategically smart. I’ll admit I’m just a little skeptical that this company is capable of such a broad transformation, though I’m also hopeful that it can achieve at least some of its goals to jump-start its prospects. Read Full Post…
Bottom line: Xiaomi’s success story is likely to continue into 2015 with big growth for its core smartphones, but it could face headwinds with other smart devices that are based on less mature technologies.
Xiaomi: China’s tech company of the year
I’ll end this year by naming Xiaomi as my “Top Company Of 2014”, following a flurry of year-end headlines that show just how quickly this marketing-savvy firm has shot to fame on its trendy, low-cost smartphones. Leading the headlines is word that Xiaomi has raised $1.1 billion in its latest funding round, valuing the company at a hefty $45 billion. (Chinese article) Xiaomi is also in a flurry of other headlines that I’ll recap shortly, leading me to declare this hyperactive company has officially unseated former champion Alibaba (NYSE: BABA) as China’s most publicity savvy high-tech name. Read Full Post…
Bottom line: New IPOs by Chinese tech firms will slow sharply next year, with profitable, sector-leading companies the most likely to make successful offerings.
Linekong finishes flat in banner year for IPOs
On this final day of 2014, I thought I’d take a look at the scorecard for high-tech IPOs this year, including how they’ve performed since their debuts and what we might expect for next year. It seems fitting to start the discussion with the final high-tech IPO of the year, which came with a flat trading debut on Tuesday for mobile gaming company Linekong (HKEx: 8267). That may sound bad, but it’s actually quite good for gaming stocks that have become investor pariahs over the last 2 years. Read Full Post…
Bottom line: Chinese brokerages are in a fund-raising frenzy to take advantage of strong market sentiment, but their shares could pull back sharply in the second half of next year if China’s stock market rally runs out of steam.
Guosen shares soar in trading debut
It’s hard to read the financial headlines these days without seeing a story about the massive recent rally in Chinese brokerage stocks, which is being fueled by several factors. The brokerages themselves haven’t been blind to the fact, and are racing to take advantage of the positive sentiment to raise big chunks of new cash. Now leading brokerage Citic Securities (HKEx: 6030; Shanghai: 600030) and mid-sized player Guosen (Shenzhen: 002736) have joined the binge, with new share issues that could end up collectively raising up to $6.5 billion. Read Full Post…
The final week of the year has seen 2 of China’s top technology leaders looking inward, with Alibaba (NYSE: BABA) founder Jack Ma and TCL (Shenzhen: 000100) chief Li Dongsheng both taking the occasion to reflect on some of the people and events that put them on their paths to success. In one of his occasional posts since recently resuming microblogging, Ma reflects on an impressionable meal with a friend more than 20 years when China was a far different place from now and he was a universe away from his current status as China’s richest man. Meantime, Li reflected in a series of posts on the recent passing of his mother, and the huge influence she had on his life. Read Full Post…
