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The past 2 weeks have seen solar energy pioneer Suntech (NYSE: STP) plunge into a downward spiral after revelations of questionable accounting, leaving the firm on the edge of financial collapse and its fate largely in the hands of Beijing. But rather than come to Suntech’s rescue, Beijing should let the company collapse to send a high-profile message that it won’t support companies that engage in such financial shenanigans.
Domestic car makers Chery and Great Wall Motor (HKEx: 2333) have hit a first major speed bump in their recent export drive, spotlighting the uphill road China’s big domestic brands will face as they look overseas to offset sputtering sales at home. Media are reporting that both companies have launched recalls for most of their cars sold in Australia after asbestos, a well-known carcinogen, was found in the engines and exhaust systems of some vehicles. (English article)
I’ll end out this peak week of second-quarter earnings season with a couple of telecoms items, starting with comments from dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL) that indicate it may finally be preparing for a much-needed offensive to breathe new life into its flagging 3G network. While China Mobile struggles under its own massive weight, separate news bites indicate the up-and-coming Xioami, a maker of low-cost, high performance smartphones, may be running into its first troubles after a strong debut for its first product last summer.
It’s Friday and almost the weekend, so I thought I’d take a break from all the e-commerce price wars and woes at solar panel maker Suntech (NYSE: STP) that have dominated headlines this week to take a look at something a little more fun, namely toys. Specifically, leading US toy store operator Toys R Us has announced its first big China expansion since buying out a majority stake from the partner in its Asia operations about a year ago. (company announcement) While I have fond memories of this retailer, I’m predicting this new push will ultimately fail due to a poor game plan and lack of brand recognition.
Shanghai is no stranger to imported greasy snack foods, with Cantonese roast meats becoming all the rage these past few years on the booming popularity of Hong Kong-style diners known as cha canting. But clearly the city still yearns for more oily eats from outside, this time with the new arrival of Taiwan’s premier maker of deep fried chicken fillets.
I don’t like to write too much about the same topics in a single week, but I can’t really ignore separate breaking developments at solar cell pioneer Suntech (NYSE: STP) and in the e-commerce space that could be critical for the future of each. In the former case, Suntech has just announced the resignation as CEO of Shi Zhengrong, the company’s founder who was once lauded as a visionary when Suntech became China’s first publicly listed solar panel maker in 2005. (company announcement) In the latter case, leading Chinese home appliance maker Haier has announced it is severing its relationship with Jingdong Mall, also known as 360Buy, as the temperature continues to rise in a rapidly escalating price war that has broken out this week with rivals Suning (Shenzhen:002024), Gome (HKEx: 493) and others. (English article)
I wrote yesterday that China’s big e-commerce names are showing no signs of easing up their fierce battle for market share (previous post), and today we’re getting news bites from industry giant Jingdong Mall and global retail titan Wal-Mart (NYSE: WMT) that indicate the situation could get considerably worse before it starts to improve. Leading the news today are the latest comments from Jingdong Mall’s talkative CEO Liu Qiangdong, who has suddenly decided that profits aren’t important for his recently established electronics business, at least not for the next 3 years. (English article; Chinese article) Meantime, in separate news Wal-Mart has won approval from China’s regulator for its previously announced plan to boost its minority share in e-commerce firm Yihaodian to a majority stake, meaning we could soon see a major new offensive from Yihaodian in this already crowded and massively money-losing market. (Chinese article)
A plan by aluminum giant Chalco (HKEx: 2600; Shanghai: 601600) to buy a Mongolian-focused mining company is reportedly on the verge of collapse due to politics, a development that could have big implications for China’s recent buying spree for global resource assets. For anyone who hasn’t been paying close attention, Chinese energy and resource firms, from oil and coal giants to gold and iron ore miners, have embarked on a multibillion-dollar spending spree over the last few years to feed the country’s growing economy. The buying binge has gained momentum in the last year, as cash-rich Chinese companies, with strong support from Beijing, have purchased assets from cash-challenged international owners still struggling as a result of the global economic downturn. Now, at least one country that has become a favorite destination for Chinese buying, Mongolia, appears to finally be saying “no”.
Troubled solar panel maker Suntech (NYSE: STP) is trying to calm worried investors with news of a victory in a fraud case that could leave it liable for more than $600 million. The only problem is, the company itself may not survive long enough to enjoy the victory, which has come in the courtroom in this fast-evolving case. Suntech shareholders, who bid down the company’s stock to all-time lows after word of the fraud first came out, were largely indifferent to news of the courtroom victory, bidding the stock up a tiny 2 percent to remain near its all-time low.
The headlines have been buzzing this week with news of a management-led privatization offer for leading outdoor advertising firm Focus Media (Nasdaq: FMCN), marking the latest in a recent string of developments that I suspect will end with a sale of this colorful but faded company. The buyout is the latest in a series of similar plans by US-listed Chinese firms in recent months, following a series of accounting scandals that have caused shares of the entire sector to tumble.
A new announcement from solar panel maker Canadian Solar (Nasdaq: CSIQ) indicates that Beijing may be preparing to help fund a much-needed consolidation in the oversupplied sector. The news should be welcome by money-losing Chinese solar companies in general, as it indicates that Beijing will continue to provide them with funds to continue their operations as private sector options evaporate. But the move will inevitably raise new complaints from foreign rivals, who will say this funding is exactly the kind of unfair state support that has led to dumping investigations in both the US and European Union.
