Apple Pressures Beijing With iPad Snub 苹果在华不售新iPad向中国政府施压

What do Venezuela and the tiny island nation of Saint Maarten have that China doesn’t? Starting on Friday, the answer will be the latest iPad, as Apple (Nasdaq: AAPL) has just released the latest list of countries where its newest must-have product will go on sale and China is noticeably absent. Many observers might say that Apple is taking a cautious approach to China pending the resolution of a trademark dispute with a near-bankrupt company over the iPad name in the market. But in my view, the exclusion of China from the list is just as much about applying pressure on Beijing for a court ruling in its favor, and says more broadly that Apple could withhold its popular products in the future if it doesn’t believe it is being treated fairly in the market. After all, withholding Apple products could easily anger many Chinese consumers eager to have the latest hot product, perhaps prompting them to hold Beijing responsible. Furthermore, the absence of legally imported iPads will fuel a surge in smuggled products, costing China millions of dollars in lost import duties. But let’s take a look at the specific situation to put things in perspective. Apple announced the launch of its newest iPad on March 7, and the tablet PC went on sale about a week later in the US and several global markets, including Japan, Hong Kong and Singapore in Asia. Another group of countries, mostly in Europe, joined the list about a week later, as sales surged to more than 3 million just 3 days after the initial launch. Now Apple has just announced a third group of countries that will receive the new iPad starting April 20, including the likes of tiny markets like Saint Maarten and Venezuela. (company announcement) But nowhere on the list is there any mention of China, and it’s unclear if Apple will even attempt to launch the new iPad here despite receiving a green light last month from a Shanghai court to keep selling the product in that city until a final ruling in the current trademark dispute. An initial ruling last year in that dispute went in favor of the near bankrupt company, Proview, which claims to own the name due to what looks like a technical error that saw it fail to transfer the trademark after Apple thought it bought the name several years ago. Now the case is being heard under appeal, with a ruling likely in the next few months. I personally agree with Apple’s decision to withhold the new iPad from China for now. Countless disappointed Chinese consumers are likely to voice their frustration, while Apple can conveniently blame its decision on the dispute. In the meantime, Beijing will sure be searching for a way to work out the dispute in a way that makes everyone happy and shows the world it is dedicated to fairness in settling this kind of business dispute.

Bottom line: Apple’s withholding of the new iPad from China is partly due to an ongoing trademark dispute, but is also partly designed to pressure Beijing for fair treatment in the case.

Related postings 相关文章:

More Proview Empty Talk in iPad Dispute 唯冠寻求禁售新款iPad将是徒劳之举

Apple Bytes: Labor, a State Visit and Baidu 库克中国行猜想:他在下一盘很大的棋

Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为?

TCL Cellphones: History Repeats Itself TCL手机业务历史重演

After pronouncing last year that TCL Communication (HKEx: 2618) had successfully completed a turnaround for its cellphone business that nearly bankrupted the company 6 years ago, it seems I need to update my view on this cyclical firm where history is now repeating itself. The cellphone making sister company of leading  Chinese TV maker TCL Multimedia (HKEx: 1070) issued an ominous warning late last week, saying its first-quarter profit would be “significantly lower” that the previous year. (company announcement) That announcement prompted the company’s China-listed parent, TCL Corp (Shenzhen: 000100) to issue a similar warning saying its first quarter profit would also tumble 75-85 percent. (Chinese article) What a difference a year makes. At this time last year, TCL Communication was showing all the signs of a successful turnaround from a disastrous purchases of the handset business of France’s Alcatel (Paris: ALUA) in 2004-5 that nearly bankrupted the company. TCL eventually managed to stabilize the business, presumably by moving most of its manufacturing to China, and saw its fortunes soar on strong sales of Alcatel phones in Europe where the brand is well known and respected. Unfortunately, TCL failed to build much of a name for itself in its home China market, where it originally rose to prominence as a maker of cheap cellphones a decade ago but later largely disappeared due to failure to innovate. In this latest profit warning, the company said its core European market is being hard hit by the continent’s ongoing debt crisis, which has dampened sales. But perhaps just as important, TCL also said it is also to blame for failing to develop more products for the booming smartphone segment, which has become dominated by names like Apple (Nasdaq: AAPL), Samsung (Seoul: 005930) and HTC (Taipei: 2498). That failure to keep up with the latest market trends looks strikingly familiar to TCL’s previous downfall in its home China market, showing this company hasn’t learned enough from its past mistakes. Investors have punished TCL Communications stock as a result of these latest missteps,with its shares tumbling more than 50 percent over the last 12 months. The company appears to finally be waking up to the new reality, saying it has signed new deals with China’s top 2 wireless carriers to tap its home market where it enjoys some natural advantages. It said it is also developing more smartphones, in a bid to catch up with Apple and the other leaders in that space. I personally have a lot of respect for TCL’s Chairman Thomson Li and his management teams, and think they could quite possibly engineer another turnaround for this struggling cellphone unit, providing an interesting investment opportunity. But I would also warn that such a turnaround is far from guaranteed, and only strong believers with some extra cash might consider taking that risk right now.

Bottom line: TCL’s cellphone unit is experiencing a sharp decline due to lack of forward-thinking, but is taking steps that could give it a good chance to rebound next year.

Related postings 相关文章:

TCL Comeback Gains Momentum with Italy Deals TCL牵手意大利 复苏之势获动力

All Eyes Turn to TV in TCL Comeback

Low-Cost Apple iPhone to Bite ZTE, Lenovo 苹果推低端iPhone 冲击中兴和联想

 

 

Cash-Hungry Shanda Cleans House 缺乏现金的盛大出售资产

Shanda’s aspirations to become a major entertainment company are becoming an increasingly distant memory, as the cash-strapped company embarks on a series of asset sales that look like a desperate attempt to pay down its large debt. Of course, Shanda founder Chen Tianqiao is spinning the story a bit differently, saying the sales are designed to dispose of non-core assets to let the company focus on its main entertainment business. The latest in the recent string of spin-offs has seen Shanda sell its Jisheng Technology unit, a maker of Internet cafe management software, to a company called iCafe8 (Shenzhen: 300113) for a relatively modest 80 million yuan, or about $12.7 million. (English article) That follows Shanda’s sale last month of 2 other units, online board and card game operators Bianfang and Haofang, which Shanda had purchased in 2004 for $80 million. (English article) Shanda was a superstar 8 years ago when it became China’s first online game company to make a New York IPO, giving investors an entry into China’s fast-growing online game sector. At that time, Chen detailed plans to build his company into a diversified entertainment giant, broadening beyond just online games into the gaming console and filmed entertainment business. But those plans never really went anywhere, with most of Shanda’s initiatives ending in failure or only modest success. Even the spin-off of its core online game business into a separate company, Shanda Games (Nasdaq: GAME) has been largely a failure, with the company’s stock now trading at less than half its 2009 IPO price of $12.50. Frustrated at Wall Street’s lack of appreciation of his companies, Chen last year announced a plan to take his originally listed company, Shanda Interactive, private, in a deal that reportedly cost him more than $600 million. Meantime, Chen has been anxiously awaiting a window to raise some new money with a New York public offering for his money-losing online literature unit, Shanda Cloudary. Shanda was originally set to make that offering last summer, but had to scrap the plan after market sentiment turned sharply against Chinese companies due to a series of accounting scandals. In February it relaunched the plan, saying it aimed to raise up to $200 million. (previous post) Since then, however, the only other New York IPO this year by a Chinese company, made by online discount retailer Vipshop (NYSE: VIPS), performed miserably, raising only half the amount the company was aiming for and falling sharply in its first few days of trading. This recent string of asset sales indicate that Shanda is struggling under a pile of debt from its privatization, and that it’s having trouble finding new funds from lenders and financial markets to pay off that money. If that’s the case, look for more sales from Shanda in the near future, including even possibly some of its more core assets as Chen tries to put his debt-laden company on more solid financial footing.

Bottom line: Shanda’s recent string of asset sales reflect a company struggling under a large pile of debt following its recent privatization, with more sales likely in the next few months.

Related postings 相关文章:

Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划

Shanda Delists: Thanks for the Profits 盛大网络退市:获利可喜

Shanda Moves Ahead With Privatization 投资者对盛大私有化仍持保留态度

GM Discovers China Luxury Market — Finally 通用汽车在华投产凯迪拉克 亡羊补牢犹未为晚

As China’s mainstream car market shows increasing signs of little or no growth this year, General Motors (NYSE: GM), one of the industry’s top players, is finally noticing the luxury segment still has plenty of growth potential by making a very late move into the space with its upscale Cadillac brand. Now the big question will be whether luxury sales are still so strong in the year or 2 it will take GM to start making Cadillacs in China, especially as Beijing takes moves to restrict luxury car buying by government organizations. (previous post) The luxury segment’s big potential has been quite obvious for a while now, as brands like BMW (Frankfurt: BMW) and Volkswagen’s (Frankfurt: VOWG) Audi have seen strong double-digit sales gains of 30 percent or more for the last year, even as the broader market contracted 3.4 percent in the first quarter of this year. That reality is what’s driving GM to finally make a serious initiative for Cadillac, with plans to start manufacturing 3 models in China within a year, according to a foreign media report, adding GM will announce more details at the Beijing Auto Show next month. (English article) GM has sold Cadillacs in China for a while now, but all have been imported, meaning they carry large import taxes and thus are far less competitive than models from the German brands that have all invested heavily in China factories. GM’s latest move looks like a smart one, even though it’s a bit late, since Cadillac already enjoys a relatively strong reputation as a solid luxury brand among average Chinese consumers. That’s an important factor, since the Cadillac brand in GM’s home US market has always been handicapped by its image as a brand for older people. As an American living in China, I have been surprised how GM has built Buick — also considered an older, stodgier brand in the US — into its top selling nameplate in China, where the brand enjoys a very mainstream, quality reputation. There’s no reason GM can’t take advantage of its extensive sales and distribution networks and marketing muscle to do the same for Cadillac, quickly building it into a competitive major luxury brand for the China market. Of course the big risk is that the luxury market will also slow down by the time GM starts mass producing Cadillacs in China, though there should still be plenty of room for growth. Meantime, foreign media are reporting that France’s Renault (Paris: RENA) is also finally discovering China, with plans to form a joint venture with domestic car maker Dongfeng (HKEx: 489). (English article) Apparently the 2 sides are racing to finalize their deal before a deadline that will make such new investments more difficult. I suppose I should commend Renault for finally discovering China and rushing to invest there before the looming deadline. Still, I have to wonder why such a large global brand has taken so long to discover China, which passed the US a couple of years ago to become the world’s largest auto market, and  would say the brand’s late arrival will severely limit its chances for success.

Bottom line: GM’s plan to produce Cadillacs in China looks like a smart move to tap the booming luxury car market, drawing on its existing networks to quickly catch up to established German rivals.

Related postings 相关文章:

China Puts the Brakes on Luxury Cars 中国公务车拟告别豪华车

Luxury Cars Zoom, But Who Profits?

Cars: US, Germany Clobber Japan, Domestic Rivals 美德汽车在华完胜日本和中国车商

News Digest: April 14-16, 2012 报摘: 2012年4月14-16日

The following press releases and media reports about Chinese companies were carried on April 14-16. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════

Qihoo (NYSE: QIHU) Anti-Monopoly Lawsuit Against Tencent (HKEx: 700) to Start April 17 (Chinese article)

Renault (Paris: RENA), Dongfeng (HKEx: 489) Sign Outline China Deal: Sources (English article)

iCafe8 (Shenzhen: 300113) to Acquire Shanda Subsidiary Jisheng (English article)

China Mobile (HKEx: 941) to Launch Commercial 4G Network in Hong Kong in Q4 (Chinese article)

Microsoft’s (Nasdaq: MSFT) Leung Quits as Head of China, Prompting Reshuffle (English article)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Suntech, Canadian Solar in Latest PR Moves 尚德电力和Canadian Solar就西方倾销顾虑作出回应

I’ll close out this week with a couple of items from the solar sector, where heavyweights Suntech (NYSE: STP) and Canadian Solar (Nasdaq: CSIQ) are continuing an ongoing public relations campaign to convince the west that their business is good for everyone and not just China. That campaign comes as growing signs emerge that the industry’s year-long downturn, which has sent most major players into the red, may finally be nearing an end and a new spring may soon arrive. China’s solar sector, which now produces more than half the world’s solar panels, has suffered a double blow over the past year, hit not only by a global supply glut but also by the threat of anti-dumping tariffs in both the US and Europe — the world’s 2 biggest markets. To combat the dumping claims, the sector has made repeated efforts over the last 6 months to show it doesn’t only sell its made-in-China products to the west, but that it can also help western economies by creating new jobs and business opportunities. The latest Suntech and Canadian Solar announcements appear to be part of that PR initiative. In one of the announcement’s Suntech said it has sold solar cells to produce 3.4 megawatts of electricity to Edwards Air Force Base in California, carefully pointing out that cells for the deal were produced at its factory in Arizona. (company announcement) On the other side of the Atlantic, meanwhile, Canadian Solar has just announced it is launching a qualified reseller agreement in Europe. (company announcement) This announcement also seems to be sending a similar message to Suntech’s, by pointing out that resellers in Europe can also make profits from selling Canadian Solar’s solar cells, thus bringing benefits to their local economies. While these announcements are clearly a public relations exercise, I think they also do reflect the very real fact that Suntech, Canadian Solar and their peers realize that they will have to do more to benefit the economies of the countries they sell to, and that they will also have to show the world that they don’t receive unfair subsidies from Beijing in the form of low interest loans, export tax rebates and cheap land. The US has already indicated it won’t punish the Chinese companies with high tariffs if they do more to wean themselves off support from Beijing and do more manufacturing in the US. (previous post) Europe is likely to take a similar approach, meaning the industry should avoid a trade war that would benefit nobody and hurt global development of this important alternate energy sector. Meantime, emerging signs are also appearing that the sector’s downturn has bottomed out, with Suntech’s chairman predicting earlier this month that many players will return to the black by the end of this year. (previous post) If things keep going smoothly on both the trade and pricing fronts, look for a strong rebound from this battered sector starting in the second half of the year, including nice upside potential for solar stocks.

Bottom line: The latest PR moves by Suntech and Canadian Solar show the sector is responding to western dumping concerns, as dangers of a trade war continue to ebb.

Related postings 相关文章:

LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束:赛维裁员,尚德等待

Solar Tariffs: US Takes Middle Road 太阳能关税:美国采取折中路线

New Solar Storm Brews in Europe 欧盟或发起反倾销调查 中国光伏业再蒙阴影

360Buy Looks Around to Real Estate 京东商城试水房地产

I have no idea what’s happening behind the scenes at 360Buy, but a growing number of mixed signals from this online retailing giant seem to portray a company sinking into turmoil, including the latest news that it is now getting into the real estate services business. (English article) According to the latest reports, 360Buy, which also goes by the name of Jingdong Mall, has teamed up with a Beijing real estate company called Tianheng as a potential prelude to entering the online home shopping business. While homes are also a consumer retail product, selling such major items online is far different from 360Buy’s core retail business of selling everyday products like electronics, clothing and books. What’s more, 360Buy has no experience in this kind of transaction, which is far more complex than buying a tube of toothpaste over the Internet. This new initiative is just the latest sign of a company that is losing focus as big new investors who pumped more than $1 billion into it last year seem to be looking for any and every new business opportunity they can think of. The company entered the highly competitive online book selling business in January (previous post), and in February it made a strange move into the online travel business, putting it into direct competition with well established players like Ctrip (Nasdaq: CTRP) and eLong (Nasdaq: LONG). (previous post) The steady stream of new initiatives comes not long after the investor group that included Russia’s Digital Sky Technologies made the $1 billion-plus investment about a year ago, leading me to believe this group is at least partly behind these moves as its members anxiously look to justify their huge investment. Amid the stream of new business initiatives, increasing signs have emerged of a behind-the-scenes battle over the timing of an initial public offering by the company. 360Buy’s founder Liu Qiangdong has repeatedly said that no such offering is in the works for at least the next 2 years. But at the same time, another steady stream of reports that appear to be coming from the banking world keep emerging that say the company has hired an investment bank as it prepares to make a multibillion-dollar IPO. (previous post) The increasingly mixed signals look like a worrisome trend for potential investors, indicating this company is rapidly losing direction and focus as a number of major stakeholders all try to take control. Presumably the company still has lots of cash and doesn’t urgently need to raise money through an IPO after its big fund raising last year. Still, if it does go ahead with a public offering, I would caution investors to be very wary of buying into this company until it can regain some of its focus and concentrate on becoming profitable.

Bottom line: 360Buy’s move into real estate services is the latest mixed signal from the company, which appears to be losing focus as stakeholders and managers battle for control.

Related postings 相关文章:

Message to 360Buy: Make Up Your Mind! 京东商城IPO“暗战”

360Buy Losing Focus With Travel Plan 京东商城涉足在线旅行服务业 偏离核心业务

360Buy Heats Up E-Books, People’s Daily Goes to Market 京东商城高调进军电子书,人民网开启上市进程

Huawei-Motorola Rumors Look Logical 华为收购摩托罗拉手机业务传言看似合情合理

I was highly skeptical at first about a rumor that Google (Nasdaq: GOOG) might be in talks to sell its Motorola Mobility (NYSE: MMI) handset business to telecoms equipment and cellphone giant Huawei; but the more I think about it the more it makes sense, leading me to speculate that the rumor may actually be true. The source of all the buzz is actually quite small, namely a small mention at the very end of a Wall Street Journal article in which the author simply says that rumors are swirling that Google has already offered to sell its newly acquired Motorola handset business to Huawei, even though it also cites a person close to Google denying any such talks. But regardless of what people are saying, such a deal would make good sense for both Google and Huawei, and here’s why. For its part, Google is an Internet and media company first and foremost, and has little or no experience in the highly competitive and lower margin cellphone business. Most believe the only reason Google even purchased Motorola’s handset business at all was to get the company’s extensive patent portfolio, which it hoped to use in its legal battle with Apple (Nasdaq: AAPL) involving Google’s Android cellphone operating system. From Huawei’s perspective, such a purchase would also look attractive since Huawei has made a recent major drive into handsets as it tries to diversify away from its traditional networking equipment business. Motorola would greatly help that drive, as the brand, while somewhat tarnished in recent years, is still globally recognized, and also has well-developed international sales and distribution channels that Huawei could instantly tap. (previous post) There’s one other factor as well that is less obvious but involves a complex history between Huawei and Motorola. The 2 companies previously collaborated in the networking equipment business many years ago, and that collaboration led Huawei to sue Motorola when the latter sold its networking equipment business last year to Nokia Siemens Networks. The pair eventually resolved the lawsuit, and, in a development that appeared to be related, China’s anti-monopoly regulator approved the Motorola sale to Nokia Siemens a short time later after a long unexplained delay. (previous post) The current talks, if they’re really happening, would share a number of similarities with the Nokia Siemens case, as both involve Motorola and Huawei. Furthermore, China’s anti-monopoly regulator has also delayed approving Google’s purchase of Motorola for unexplained reasons, holding up the deal that has cleared regulatory approval in all other major markets. (previous post) It’s difficult to know what’s happening behind the scenes, but I wouldn’t be at all surprised if the Chinese regulator’s delays are somehow related to ongoing talks by Google for a sale of the handset business to Huawei. Of course something like that would never happen in the west, where regulators would never get involved in a deal between 2 private companies. But China isn’t the west, and so really anything is possible.

Bottom line: A rumor that Huawei is in talks to buy the Motorola handset business from Google could well be true, as such a deal would make good sense for both companies.

Related postings 相关文章:

Google Tussles With China on Motorola 延迟批准摩托罗拉移动交易 中国政府对谷歌仍心存芥蒂

Huawei Discovers Cellphones 华为手机要向世界前三进军

Troublesome Timing As China Approves NSN-Motorola 中国监管部门批准诺基亚西门子购买摩托罗拉网络业务时机不佳

IPOs: China Auto Slashes, People’s Daily Marches Ahead IPOs:神州组车减,人民网启动

There’s quite a bit of new listings and delistings news out there today, led by word that car rental specialist China Auto’s (NYSE: CARH) stalled IPO is finally moving ahead, although only after being cut by half as overseas investors continue to show little or no interest in new Chinese offerings. That news comes as another auto rental firm with a similar name, AutoChina (OTC: AUTCF) has announced it is being sued by the US securities regulator, following its delisting from the Nasdaq last year at the height of the confidence crisis against US-listed China stocks. Last but not least, People’s Daily Online, the web site of the official newspaper of the Communist Party, is moving ahead with its own landmark IPO, kicking off the roadshow for an offering that will undoubtedly get a warm welcome from cash-rich Chinese investors who are also party members. Let’s start with China Auto, which has said it now hopes to raise up to $158 million from its IPO, with its New York trading debut set for April 26. (Chinese article) The new fund-raising target is about half of China Auto’s original goal of raising up to $300 million, announced when it became China’s first company this year to file for a US IPO back in January. (previous post) For unexplained reasons the company’s IPO disappeared for a while, and another firm, discount online retailer Vipshop (NYSE: VIPS) became the first Chinese firm to make a New York IPO 3 weeks ago in a dismal offering that showed overseas investors are still skeptical of Chinese firms following a series of accounting scandals last year. (previous post) I predict that China Auto, which posted a net loss of 118 million yuan in the first 9 months of last year, will price its shares at the bottom of their indicated range, and it will end up raising around $130 million. Despite that weakness, I wouldn’t be surprised if some bargain hunters rushed in and helped it to post a modest raise on it first trading day. Meantime, the unrelated AutoChina, which was delisted from the Nasdaq last year, has announced that it’s being sued by the US Securities and Exchange Commission for manipulating trading in its shares to make it look like there was more investor interest in the company than there really was (company announcement) My only comment in this situation is that it’s bad when a law firm sues your company for stock manipulation, but it’s really bad when the securities regulator sues you, and this could well mark the beginning of the end for AutoChina’s shares in the US, which now trade over-the-counter. Finally, there’s the People’s Daily website, which has kicked off its roadshow for a domestic IPO to raise up to 1.5 billion yuan, or about $240 million. (English article) I fully expect this landmark offering, a sign of China’s recent drive to liberalize the media sector, to be a huge success, boosted by cash-rich party members and their associates wishing to give Beijing some face. But from an investor point of view, I wouldn’t get too excited about this company over the longer term, as profits will clearly be a distant secondary priority for an organization so closely associated with the party.

Bottom line: China Auto’s upcoming IPO will price near the bottom of its range, but its share could post a modest rise on their trading debut boosted by bargain hunters.

Related postings 相关文章:

China Auto Wins 2012 Race For 1st US IPO 神州租车抢先成首个赴美IPO的中国企业

China IPO Winter Goes On as Vipshop Flops 唯品会大跌,中国IPO冬季持续

360Buy Heats Up E-Books, People’s Daily Goes to Market 京东商城高调进军电子书,人民网开启上市进程

UnionPay Stirs IPO Pot With Big Numbers 银联有望上市

UnionPay, China’s equivalent of Visa (NYSE: V) and MasterCard (NYSE: MA), is making headlines today with some impressive numbers showing its profit has exploded in the last few years, as it looks to highlight its growth story in the run-up to what could well become the blockbuster Chinese IPO of the year. Of course this is all just my guessing, as UnionPay, whose stakeholders include most of China’s major banks, has never given a detailed timeline for such an offering, which I would expect to come as a dual listing in Hong Kong and Shanghai as soon as the second half of this year. Such an offering would have huge appeal for investors, as it would offer a strong financial services alternative to China’s big banks, which often behave more like policy lenders than true commercial banks and, as a result are now in the midst of a crisis after sharply boost their lending under a directive from Beijing at the height of the global financial crisis. By comparison, UnionPay operates a national electronic payments settlement network similar to the Cirrus and Plus networks operated by MasterCard and Visa, which is much less vulnerable to the whims of government policy. UnionPay has also been aggressively expanding the network globally, leveraging its strong base in China to sign a steady stream of major agreements to extend its network to major global banks and other financial services firms. One of the latest moves in that direction saw the company sign a deal last August to link its network with US Bancorp (NYSE: USB), a top US player, and more recently it inked another deal with another US company called WorldPay. That aggressive expansion and the growth of the financial services industry in China is apparent in UnionPay’s bottom line, which has grown 10-fold over the last 5 years as its profit reached just over 1 billion yuan in 2011, or about $160 million. (Chinese article) According to a Chinese media report, UnionPay, which just celebrated its 10th birthday, made the profit on about 6 billion in revenue, and the company now has some 13.8 billion yuan in assets. The report says that UnionPay’s stakeholders are expressing some dissatisfaction with the level of their dividends from the company, a sign that they want to see more cash returns from this highly profitable investment as they face their own cash crunches following the 2009-2010 lending binge that was part of Beijing’s 4 trillion yuan economic stimulus plan during the global financial crisis. As a result of that binge, many of the big banks are now facing a looming surge in bad loans, and have turned to capital markets to raise more funds to shore up their balance sheets. (previous post) Against that backdrop, a multibillion-dollar IPO for UnionPay looks all but inevitable, providing the banks with a better return on this highly profitable investment, as well as some much needed cash.

Bottom line: UnionPay could make a multibillion-dollar IPO by the end of this year, capitalizing on its explosive growth and a need for cash by its major stakeholders.

Related postings 相关文章:

China I-Banks Zero In on Piper Jaffray 中国投行聚焦美国派杰

New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

E-Payments: Lots of Noise But Little Space

 

55Tuan + Ganji: Group Buying Clean-Up Acclerates 窝窝团携手赶集网:团购洗牌加速

Just a day after writing about a rumored merger between 2 mid-sized group buying sites, we’re getting even bigger news that the long-awaited consolidation in the overcrowded space is accelerating with word that 55tuan, one of the industry’s top players, is taking over operation of the group-buying business of a major player called Ganji. (Chinese article) The first tie-up that I wrote about yesterday has Gaopeng, the joint venture of US group buying giant Groupon (Nasdaq: GRPN), reportedly in talks to merge with another mid-sized player called FTuan, in a deal that is probably being brokered by leading Internet firm Tencent (HKEx: 700), which is a shareholder in both companies. (previous post) This kind of consolidation, which will include both mergers and also a large number of closures, has been a long time coming, and 55tuan’s entry to the picture marks the first such M&A by one of the industry’s top 3 players. I predict we’ll see the industry’s other top 2 names, LaShou and Dianping, announce their own new tie-ups in the next 2-3 months, with LaShou likely to make the first announcement as it tries to create hype for its moribund New York IPO, which it originally filed for last year but later had to put on hold while it cleared up some accounting issues from the US securities regulator. (previous post) Let’s take a look at the latest news first, which has Ganji, a mid-tier group buying player, confirming it has formed a strategic partnership that will see it and 55tuan combine their group buying operations. Since 55tuan is clearly the bigger player and both companies are probably losing big money, I suspect this so-called “strategic agreement” will ultimately turn into an outright sale that will see 55tuan completely take over the Ganji group buying business for a modest fee of $100 million or less. 55tuan itself has said it wants to make its own overseas IPO, and reiterated as recently as last month that its listing plan is still on track for sometime later this year. (previous post) This tie-up with another mid-sized player like Ganji should help to generate some investor interest in 55tuan’s offering if and when it happens, and 55tuan is undoubtedly negotiating with other similar mid-sized players about more M&A even as it wraps up the Ganji deal. This new flurry of activity could be just the tonic the battered group buying space needs to generate some interest in this upcoming parade of planned IPOs, as investors will undoubtedly be excited at the prospect that the ultra-fierce competition that has gripped the market for the last year may soon come to an end and a handful of major companies with potential to be profitable will emerge. To that end, look for both more mergers and closures to come in the next few months, and perhaps for even some investor enthusiasm to emerge if and when 55tuan, LaShou, or another big group buying site manages to finally make a public offering.

Bottom line: The new merger between the group buying business of 55tuan and Ganji marks an acceleration of consolidation that could rekindle investor in the overheated space.

Related postings 相关文章:

Gaopeng, FTuan Lead Group Buying M&A 高朋网和F团或引领中国团购业并购潮

Groupon.cn Becomes 2012 First Group Buy Victim 团宝网员工被放假 中国团购业料将加速整合

55tuan Restarts IPO Race With LaShou 窝窝团和拉手网重启IPO争先赛