Bottom line: Lenovo and TCL Communications’ profits are likely to take a hit in the current quarter and into early 2015 due to currency loses related to economic turmoil in Russia.
Geely profits slip on Russia crisis
The economic crisis in Russia is capturing headlines around the world, but far less attention is going to non-Russian companies that are likely to take a hit as a direct result of the turmoil. Automaker Geely (HKEx: 175) has become one of the first to reveal the damage that some companies may face, citing the slide in the Russian ruble as one of the biggest causes for a halving of its profits for 2014. Read Full Post…
A national anti-corruption campaign at major state-run firms has filled the headlines these last few months, but a spate of smaller scandals last week cast a spotlight on another lower-profile problem that is far too common in China’s private corporate sector. That problem is deficient business ethics, which created embarrassments twice for smartphone sensation Xiaomi, and also for social networking app developer Momo (Nasdaq: MOMO) and security software specialist NQ Mobile (NYSE: NQ). Read Full Post…
Bottom line: Wuliangye’s new tie-up with Brown-Forman continues its drive to diversify and create new products for younger consumers, which could help it emerge as a leader when liquor makers emerge from their current downturn.
Brown-Forman links with Wuliangye
It’s not often that I get to write about foreign company involvement in China’s traditional liquor industry, which is largely closed to overseas investment and is also quite fragmented and filled with pitfalls due to dominance by local interests. So I was quite excited to read a new report saying Brown-Forman (NYSE: BF-B), a major US liquor maker whose brands include Jack Daniels whiskey, has teamed up with leading Chinese spirits maker Wuliangye (Shenzhen: 000858) to develop new products for emerging markets. Read Full Post…
Bottom line: The target of Qihoo’s rumored smartphone purchase could be Coolpad, while Xiaomi’s new tie-up with Midea could be followed by similar pairings in a broader drive to develop smart appliances.
Qihoo eying Coolpad?
A couple of big deals are bubbling around in the smartphone space today, led by yet another new tie-up involving smartphone sensation Xiaomi, this time with home appliance maker Midea (Shenzhen: 000333). But the hyperactive Xiaomi is having to share the spotlight with the edgier security software specialist Qihoo 360 (NYSE: QIHU), which is reportedly eying a deal for its own major smartphone acquisition worth up to $1 billion.
Each of these deals has slightly different motivating factors, but the central theme is that companies like Qihoo and Xiaomi increasingly see smartphones as a central element of larger suites of product and services rather than just a stand-alone product. In Xiaomi’s case, the company already counts smartphones as its core central product and is trying to build up an ecosystem of related products and services like smart TVs and air conditioners. Qihoo is eying smartphones as a vehicle for propagating its core software and Internet services. Read Full Post…
Two scandals in China’s tech world were hot topics in the microblogging realm this past week, drawing heated discussion on allegations of copycatting and other unethical business behavior at smartphone sensation Xiaomi and newly listed social networking app maker Momo (Nasdaq: MOMO). The debate reflected the wide range of views on the many dubious business practices like intellectual property theft and violation of business contracts that are a regular feature in China’s corporate business landscape.
In less controversial chatter, computing giant Lenovo (HKEx: 992) was also tooting its own horn loud and clear as it celebrated the 10th anniversary of its landmark purchase of IBM’s (NYSE: IBM) PC business. As a long-time China tech writer it was hard for me to believe that historic deal is already a decade in the past, and it certainly kicked off a drive that would propel Lenovo to become the world’s biggest PC brand. Read Full Post…
Bottom line: The resignation of Tesla’s China president hints the company is getting off to a slow China start, while BAIC’s Hong Kong IPO will get a lukewarm reception and trade flat to down over the next year.
Tesla China head resigns after 9 months
Mixed signals are coming from China’s car sector, with state-run automaker BAIC getting a so-so reception for its upcoming IPO as US new energy superstar Tesla (Nasdaq: TSLA) suffers a setback with the departure of its China president. Among these 2 news bits, the one involving BAIC doesn’t come as a huge surprise, since I wasn’t expecting much from the IPO for this stodgy state-run firm. The Tesla news will disappoint the company’s overseas boosters and electric vehicle (EV) fans in general, and hints that this new energy superstar’s drive into China isn’t going as smoothly as hoped.
Let’s begin with the Tesla news, as that’s the sexier of these 2 stories due to the company’s extremely high hopes for China created by its charismatic chief Elon Musk. The latest headlines say Tesla’s China President Veronica Wu, or Wu Bixuan, has resigned after just 9 months on the job. (English article; Chinese article) Tesla declined to comment further on Wu’s departure, but one analyst said the move may reflect slower than expected progress in developing the China market. Read Full Post…
Bottom line: Accor’s new tie-up with China Lodging looks like a smart deal that will bring together complementary partners, and is likely to spark a new round of similar cross-border partnerships in the year ahead.
China Lodging moves in with Accor
A development I’ve been predicting for quite a while has finally happened in China’s lucrative but crowded hotel space, with news of a major new tie-up between global giant Accor (Paris: AC) and domestic budget operator China Lodging Group (Nasdaq: HTHT), which also calls itself Huazhu. The tie-up will essentially see China Lodging take over operation of much of Accor’s China portfolio, and could ultimately see Accor purchase the Chinese company outright. The move could also spark a round of similar tie-ups that sees other major foreign operators pair up with Chinese partners like Home Inns (Nasdaq: HMIN). Read Full Post…
Bottom line: New copycat claims by a Japanese air purifier maker reflect the kinds of challenges Xiaomi will face as its profile rises, slowing down its global expansion and potentially undermining its cool image.
Xiaomi faces new coypcat allegations
The last couple of months have been a tough time for smartphone sensation Xiaomi, which is becoming a growing target of accusations that increasingly portray the company as China’s leading copycat. The latest such accusations are coming from a Japanese firm, which says its designs were ripped off for a new line of high-tech air purifiers that Xiaomi announced earlier this week. Those allegations come the same week that Xiaomi was penalized in India for illegally using patented technology from telecoms equipment giant Ericsson (Stockholm: ERICb), and 2 months after Xiaomi was slammed by a top Apple (Nasdaq: AAPL) executive for being China’s copycat supreme. Read Full Post…
Bottom line: NQ Mobile and Qihoo stocks are likely to come under pressure over the next 12 months due to ongoing questions about boardroom stability and aggressive accounting practices.
Qihoo independent board member resigns
“Scandal” seems to be the buzzword in China’s corporate Internet world this week, following the resignations of top officials at 2 of the nation’s leading security software makers, NQ Mobile (NYSE: NQ) and Qihoo (NYSE: QIHU). The former case looks the most serious, with NQ’s Chairman and co-CEO Henry Lin, also known as Lin Yu, resigning for murky reasons. Meantime, another one of Qihoo’s independent board members has resigned, following similar departures earlier this year, suggesting disagreement over aggressive accounting practices favored by the company’s opinionated CEO Zhou Hongyi. Read Full Post…
Bottom line: Momo’s stock should continue to perform well over the next few months as investors ignore a scandal around its CEO, while Spring Airlines stock should also debut strongly later this month in its newly approved IPO.
Spring Airlines approved for Shanghai IPO
It seems investors aren’t too concerned when CEOs of their companies are accused of corporate crimes, at least based on the strong trading debut for mobile social networking app maker Momo (Nasdaq: MOMO). Frankly speaking, I’m not surprised about the strong performance for Momo, whose CEO was accused of stealing property from his former employer NetEase (Nasdaq: NTES) and using that property to start up his new company. The fact of the matter is that such dishonesty and unethical behavior is quiet common in China’s corporate sector, and thus is unlikely to result in any punishment, be it a jail sentence or even negative investor sentiment. Read Full Post…
This week’s Street View took me to a leafy, residential area of Huashan Road where I went to check out a private museum dedicated to propaganda poster art after reading about it in the news. Housed in the basement of an ordinary apartment building, the collection of striking and boldly colored posters provided a fascinating look at China’s modern history dating all the way back to the 1950s.
Many foreigners like myself have a particular fascination with this kind of propaganda poster, which may partly explain why the popular TripAdvisor travel website ranks the Shanghai Propaganda Poster Art Centre as one of the top attractions for foreigners visiting the city. The museum gets little or no mention in most Chinese tourism literature, and even most mainstream foreign travel books don’t mention it, partly because it’s small and relatively new after opening in 2012. Read Full Post…
