Bottom line: China’s VNO program appears to be gaining momentum heading into its third year, and could reach the 200 million subscriber mark by the end of 2017.
Virtual network operators gain momentum
It’s been more than a year since I last wrote about China’s fledgling attempt to breathe new life into its telecoms services sector by creating virtual network operators (VNO), mostly because the program seemed to be sputtering in its first couple of years. But new data from the telecoms regulator seems to suggest the industry may finally be finding its legs, and could be starting to take some meaningful market share from the nation’s monopoly of 3 big state-run telcos.
The headline figure underpinning my assertion is 43 million, which appears to be the number of VNO subscribers in China at the end of last year. (Chinese article) I need to give a quick disclaimer here, as nowhere in the article is the term VNO or variant MVNO used to describe this sector, which is called the “mobile resale business”. But that term, combined with a description of the program, does seem to indicate that these are VNO subscribers. Read Full Post…
Bottom line: Weibo’s rise from the ashes is likely to be followed by a decline similar to the one after its initial rise, as the current boom in live broadcasting wanes or that part of its business gets stolen by a better product from rival Tencent.
Weibo links with People’s Daily
A turbo-charged Weibo (Nasdaq: WB) is in a couple of headlines as the new week begins, led by a new partnership with Beijing’s powerful central media that looks eerily similar to one from about 5 years ago. At the same time, the company is also in headlines for passing its role model, U.S. social networking pioneer Twitter (Nasdaq: TWTR), in terms of market value, in a case of the offspring outrunning the parent.
The sub-story to all of this is the huge and sudden explosion of live streaming services in China, which has helped Weibo to rise from the ashes and suddenly become one of China’s hottest companies again. That same live streaming phenomenon is also helping to revive others, such as Momo (Nasdaq: MOMO), sometimes called China’s equivalent of U.S. hooking-up app Tinder. Read Full Post…
Bottom line: Alibaba could buy the RT-Mart supermarket chain this year to boost its grocery business, while JD.com’s more online-focused effort and push into smaller cities looks like a better approach to the sector.
Alibaba grocer drives into Sun Art, JD goes to small cities
The online supermarket wars that began last year between e-commerce rivals Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are heating up in the Year of the Rooster, though the pair seem to be taking slightly different tacks, at least based on the latest headlines. Leading those are reports that Alibaba is in talks for a tie-up of some sort with Sun Art (HKEx: 6808), operator of the popular RT-Mart supermarket chain. Meantime, JD is making its own headlines in the space, with an executive detailing the company’s plans to achieve 100 billion yuan ($14.5 billion) in sales from its operation this year. Read Full Post…
Bottom line: Wanda will continue to operate its ffan e-commerce site for another year, following the departure of its CEO, but could quietly end the initiative afterwards due to lack of synergies with its brick-and-mortar shopping malls.
Success evades Wanda in e-commerce
The headlines have been buzzing this week about the departure of the chief executive of the e-commerce unit Wanda Group, the real estate-turned-entertainment giant with a voracious appetite for global acquisitions. The big theme from the chatter is that the departure of Li Jinling, the unit’s third CEO in 3 years, marks a setback and possibly even presages a death knell for the Wanda initiative into the online shopping realm.
Wanda is speaking out on the subject, saying it never intended to launch a website that would compete directly with the likes of sector leaders Alibaba (NYSE: BABA) and JD.com(Nasdaq: JD). Perhaps that’s true, though that didn’t stop Wanda and its ultra-confident chief Wang Jianlin from boasting of lofty ambitions when it signed up Internet titans Baidu(Nasdaq: BIDU) and Tencent (HKEx: 700) as partners to its ffan e-commerce site in 2014. Read Full Post…
Bottom line: Baidu could soon make big cuts at Nuomi and sell or spin off the unit by year end, while it will also put its takeout dining unit on a strict diet that forces it to show a clear path to profitability by year end.
Nuomi set for haircut in 2017?
After years of hemorrhaging money from its newer online-to-offline (O2O) businesses, leading search engine Baidu (Nasdaq: BIUD) may finally be saying enough is enough. That seems to be the message coming from new reports that say the company has launched a campaign to improve performance at its massive businesses that combine real-world services like watching movies and buying restaurant food with web-based ordering systems.
The reports point to Baidu’s Nuomi group buying site as a particular center where the clean-up campaign has begun, but I also suspect a similar move may be taking place at its equally massive and money-losing takeout dining service. That pair of new businesses are massive cash-burners at Baidu, alongside the company’s iQiyi online video service and its Qunar (Nasdaq: QUNR) online travel agent. Read Full Post…
Bottom line: Ofo and rival Mobike will use their hundreds of millions of dollars in new funds to buy better and more expensive bikes to flood city streets, even though neither has a sustainable business model that can justify such long-term expense.
Ofo raising $150 mln in new funds
The race for supremacy in China’s fast-moving shared bicycle realm is kicking into high gear, with word that second-place Ofo is raising $150 million with an eye on achieving a $1 billion valuation. That would come just a month after sector leader Mobike raised a larger $215 million, in a deal that also valued the company at about $1 billion.
Readers may note that I’ve called this particular contest a “dead-end race”, because I really do think there’s no winner here. That’s because I honestly believe this business is based on a model that won’t work, especially in China. The reality here is that a lack of public spirit means that many people simply use bikes and then carelessly discard them without much thought about whether they might be damaging those bikes or putting them in places that effectively take them out of circulation. Read Full Post…
Bottom line: Xiaomi stands a better than 50 percent chance of stabilizing this year and reversing its 2-year-old decline, based on its push into brick-and-mortar retailing and positive reviews for its newest higher-end model.
Xiaomi builds up brick-and-mortar presence
Blame it on the Internet. That seems to be the message coming from Xiaomi, the smartphone maker that’s in a bit of an identity crisis, trying to explain its rapid descent over the last 2 years following a meteoric rise in 2014. A couple of other reports are also saying the company is preparing to roll out its own processor later this year, and have charismatic chief Lei Jun criticizing rival Huawei for lacking the “internet sensibility” needed to succeed in the online era. Read Full Post…
Bottom line: Google will get permission from Beijing to open a Chinese version of its app Play Store later this year, most likely through a joint venture with NetEase or Tencent.
Google, NetEase talk China Play Store JV
The glacial return to China for Internet titan Google (Nasdaq: GOOG) is making its debut in the 2017 headlines, with word that the company is in talks to open a Chinese version of its app store with online game giant NetEase (Nasdaq: NTES). That tidbit nicely sets the stage for what’s likely to be a banner year for Google and possibly US Internet rival Facebook (Nasdaq: FB) in their race to see who can be first to plant a tent pole in China. Read Full Post…
Bottom line: Yum China’s maiden quarterly report and $300 million share buyback program highlight a company that needs to move more aggressively and take more risks to regain its footing after being spun off from its US parent.
Yum China posts unimpressive maiden quarterly report
Fast food operator Yum China (NYSE: YUM) has just put out its maiden quarterly earnings report that looks decidedly ho-hum, including a somewhat surprising announcement of a $300 million share repurchase program. The operator of KFC and Pizza Hut stores in China was formally split off from its parent, Yum Brands (NYSE: YUM), late last year, following shareholder pressure to let the unit operate more independently in the somewhat unique and fast-changing Chinese market. Read Full Post…
Bottom line: Lenovo could reverse its smartphone decline this year under a new leadership team anchored by a respected company veteran, though chances of success are relatively low due to stiff competition and magnitude of the task.
Lenovo nets former Samsung smartphone exec
My first post in the new lunar Year of the Rooster seems like a good time to look at the ultra-competitive smartphone market, and what may lie ahead for the embattled Lenovo (HKEx: 992) as it seeks to regain its footing in the space. CEO Yang Yuanqing has made repeated overhauls of his mobile devices division, including the naming of longtime executive Gina Qiao to try and turn the division around late last yaer. Now the latest reports are saying that Qiao has made one of her first big moves in that post by hiring an executive from rival producer Samsung (Seoul: 005930). Read Full Post…
Bottom line: Xiaomi’s poor handling of a case involving malfunctioning fitness bands in the US is unlikely to erupt into a crisis, but shows how unprepared the company is for moving into PR-savvy western markets.
Xiaomi wristband suffers from bad race relations in US
Smartphone maker Xiaomi just can’t seem to catch a break in the final days before the Lunar New Year. Earlier this week the company made headlines when Hugo Barra, its prized foreign catch who was heading its global expansion, announced he would be resigning and returning to his home in Silicon Valley. Now the latest negative headline is also coming from the US, where media are reporting that blacks are complaining that Xiaomi’s wristband-style fitness tracker doesn’t seem to work for people with dark skin.
It does seem somewhat coincidental that this pair of negative items have occurred in the same week, since Xiaomi has largely fallen from the top news pages these days. If we wanted to say that bad news comes in threes, I could even mention another more significant headline saying Xiaomi’s share of the global smartphone market fell to 3.7 percent last year from 5.2 in 2015. (press release) But that’s a story for another day. Read Full Post…
