Bottom line: Alibaba’s Koubei is unlikely to gain major traction despite its $1.1 billion in new funding, due to its late arrival to a crowded O2O take-out dining space already dominated by Baidu, Ele.me and Meituan-Dianping.
Koubei raises $1.1 billion
The longer I stay in China, the more the latest stories coming from the Internet sector look like I’ve seen them before. That’s certainly the case with Koubei, the Alibaba (NYSE: BABA) online-to-offline (O2O) take-out dining delivery service, which is close to landing a fresh $1.1 billion in new funding. In this case, Alibaba’s extremely late arrival to the space looks a lot like its vain attempt to play catch-up to Tencent’s (HKEx: 700) WeChat with a service called Laiwang back in 2013. Read Full Post…
Bottom line: The departure of former Google executive Hugo Barra from Xiaomi marks the end of a chapter for the smartphone maker, which stands only a 50-50 chance of surviving over the next 5 years in the cutthroat market.
Xiaomi’s Barra heads back to US
The world was all abuzz in 2013 when Hugo Barra suddenly gave up his cozy position as a high executive at Google (Nasdaq: GOOG) to join a then-little-known Chinese smartphone maker called Xiaomi. Gossip swirled that his departure might be linked to a high-powered love triangle, even though the more obvious explanation was that Barra was leaving to join one of the hottest companies in the world’s hottest emerging market.
Fast forward to the present, where Barra has just announced his resignation from Xiaomi, citing health reasons, among other things. Lots was read into Barra’s original move, so it seems appropriate that we look for similar symbolism in his sudden departure after just over 3 years on the job. We should also look at what the future holds for Xiaomi, whose star has faded considerably since Barra first joined the company. Read Full Post…
Bottom line: IDG Capital is likely to buy out the venture funding business of US affiliate IDG in the next year, setting the stage for the emergence of China’s first global venture capital firm.
IDG Capital roars with purchase of US parent
A sort of “mouse that roared” story is in the headlines today, with word that US tech finance and information giant International Data Group (IDG) has been bought out by its China affiliate. The China affiliate, IDG Capital, is actually teaming up with another major local partner, China Oceanwide Holdings, to purchase Boston-based IDG, whose assets include the well-respected market research firm International Data Corp (IDC), as well as PCWorld Magazine. Read Full Post…
Bottom line: Meitu’s new disclosure of rapid growth in its internet services revenue looks encouraging, as it takes advantage of its early arrival status in a beauty products sector with big profit potential.
Meitu makes over image with internet revenue growth
A month after its lackluster IPO, beauty app operator Meitu (HKEx: 1357) is trying to shore up its sagging stock by releasing some financial data that proves it’s more than just a place for people to doll up selfies to share with friends. The particular data shows that Meitu actually earned some relatively sizable Internet revenue from online sales and advertising in the month of December, proving it can make money more directly linked to its core beauty app.
Before that, the lion’s share of the company’s revenue had come from sales of smartphones optimized for its app. Critics had argued such a business model wasn’t really sustainable, since many such purchases are one-time items that might not be repeated. By comparison, online advertising and sales of products linked to its core app seem more sustainable. Read Full Post…
Bottom line: Xiaomi could return to growth mode in China this year on the strength of stronger models, while Huawei’s local market share will contract as it focuses on profitable sales and backs away from money-losing businesses.
Huawei meets reduced smartphone target
Two of China’s former smartphone leaders are in the headlines going into the weekend, casting a spotlight on the difficulties these past high-flyers face after becoming king of the world’s biggest market. In one story the faded Xiaomi is saying the worst is behind it, and the company is aiming for a relatively ambitious 100 billion yuan ($14.5 billion) in sales this year.
In the other, the still-buoyant Huawei is announcing its smartphone sales rose an impressive 29 percent last year. But that figure is still below its earlier target, and also is being revealed just a week after the company said it was abandoning its older model of growth at any cost. Accordingly, I expect we’ll see sharply slower growth this year for Huawei in China, as it looks for profitable gains over simply getting more market share. Read Full Post…
Bottom line: Seagate’s closure of its Suzhou factory, combined with its earlier formation of a Chinese technology-sharing joint venture, reflect the changing approach away from local manufacturing that western tech firms are taking towards China.
Seagate closes Suzhou factory
New reports are saying that hard disk drive maker Seagate (NYSE: STX) is closing down a factory in the eastern city of Suzhou, as part of a restructuring plan to revive its operations. Such a development isn’t huge news, since the global semiconductor sector is undergoing a major consolidation.
But this particular closure also comes just months after Seagate announced a new tie-up with Chinese partner Sugon to tap the local market for IT products and services. So the bigger question becomes: What’s the meaning of this factory closure and the newer joint venture, and what’s the outlook for semiconductor and high-tech equipment manufacturing in China? Read Full Post…
Bottom line: Alibaba will closely watch the performance of the newly minted Altaba over the next 1-2 years, and could make a privatization bid with Softbank if it feels the company is undermining its own stock.
Yahoo to morph into Altaba
Yahoo (Nasdaq: YHOO) co-founder Jerry Yang never would have dreamed a decade ago that the ground-breaking search engine he co-founded might someday morph into a Chinese e-commerce company called Alibaba (NYSE: BABA). But that’s pretty much what has just happened, with official word from Yang’s former baby that it will change its name to Altaba following the pending sale of its core Internet business. Read Full Post…
Bottom line: A meeting between Jack Ma and Donald Trump is a major coup for Alibaba and bodes well for its US relations, while a privatization plan for its partly owned Intime Retail reflects its spottier record for strategic investments.
Jack Ma scores Donald Trump meeting
E-commerce giant Alibaba (NYSE: BABA) is wasting no time making big headlines in the New Year, starting with a major coup that has seen founder Jack Ma become the first big Chinese business leader to score a meeting with incoming US president Donald Trump. At the same time, the company is also suffering a much smaller defeat back at home, with word that Alibaba will help to privatize Intime Retail (HKEx: 1833), after becoming a major shareholder in the brick-and-mortar retailer nearly 3 years ago. Read Full Post…
Bottom line: Chinese smartphone brands with local production are most likely to survive upcoming price wars they are exporting to India, while Nokia’s new smartphones are unlikely to make any inroads in China over the next 2-3 years.
China exports smartphone price wars to India
A case of deja vu is rapidly shaping up in India, where Chinese smartphone makers have flocked over the last two years in search of growth outside their overheated home market. In this case media are reporting that Chinese brands have surged to take half of the Indian market by dumping millions of their cheap look-alike Android phones into the country.
Meantime back in their own home country, nostalgia has become the word of the moment with word that Nokia (Helsinki: NOK1V) has officially re-entered a market it once dominated. Nokia joins a number of other faded brands to rediscover China, including former arch-rival Motorola, which has become the smartphone flagship of the brand’s current owner Lenovo (HKEx: 992). Read Full Post…
Bottom line: A new arbitration claim by a LeEco supplier could trigger a domino effect that sends the company into crisis, while TCL’s first BlackBerry model is likely to get lukewarm reviews when it debuts in March.
TCL teases first BlackBerry model at CES
We’ll close out the week with a couple of smartphone headlines, which seems appropriate since the world’s biggest consumer electronics show, CES, is taking place this week in Las Vegas. All 3 companies in the news are showing off their wares at CES, including cellphone stalwart TCL (Shenzhen: 000100), which is teasing us with video of its first model under a new tie-up with struggling smartphone pioneer BlackBerry (Toronto: BB).
Meantime, the other company on my radar, the cash-challenged LeEco (Shenzhen: 300104), was also in CES headlines earlier this week after showing off a sexy new energy car it’s helping to develop. But the company has just landed in a far more ominous headline here in China, where one of its smartphone manufacturing partners is calling for arbitration to try and get cash for a growing pile of unpaid bills. Read Full Post…
Bottom line: Sogou is unlikely to make an IPO this year, despite new talk of potential for such a plan from its CEO, and may ultimately never list due to its lackluster performance.
Sogou floats another IPO plan
Online search engine Sogou is testing the market yet again for a potential IPO, hoping to spin a story of opportunity to grab market share from scandal-tainted industry leader Baidu (Nasdaq: BIDU). That story may sound attractive to investors unfamiliar with this perennial number-three in China’s search market, whose main shareholders are web portal Sohu (Nasdaq: SOHU) and Internet titan Tencent (HKEx: 700).
The only problem is that Sogou’s credibility is nearly nil these days, a direct result of the equally low credibility of controlling shareholder Sohu, which seizes on any opportunity to talk up IPOs for its various units. Accordingly, I will quite definitively go on the record saying this particular IPO won’t happen this year, and possibly not ever, regardless of what anyone at Sohu or Sogou says. Read Full Post…
