China’s Internet companies are famous for straying from their core businesses in pursuit of new growth even though such initiatives seldom work, and now e-commerce specialist 360Buy looks set to joint the club with a new travel services initiative. (English article) Nearly ever major Chinese Internet firm has dabbled in areas outside its core competency, with names like Baidu (Nasdaq: BIDU), Sina (Nasdaq: SINA) and Alibaba all making such initiatives, nearly all of which have ended in abysmal failures. None of these companies seem to have noticed that the big western names like Google (Nasdaq: GOOG), Amazon (Nasdaq: AMZN) and Expedia (Nasdaq: EXPE) have succeeded largely by focusing on their core areas, and only expanding into new ones when they can leverage some of their existing expertise. So that makes the latest move by 360Buy, which also goes by the name Jingdong Mall, look perfectly consistent with what other Chinese companies have done. In this case, 360Buy says it will launch a hotel booking service, and that it has already signed up 20,000 hotels in China, Hong Kong and Macau as partners. A company spokesman said the move is part of the company’s drive to become a more diversified online services company, instead of just an e-commerce specialist. Never mind the fact that the online travel services sector is already quite competitive, dominated by Ctrip (Nasdaq: CTRP) and Expedia-controlled eLong (Nasdaq: LONG), or that Baidu also recently entered the space with its investment in a company called Qunar. (previous post) We should also ignore the fact that 360Buy is currently locked in a series of price wars with rivals like Dangdang (NYSE DANG), and that rival Alibaba has learned its lesson and remains focused on e-commerce after its foray into online search ended in a complete disaster several years ago. In fact, I suspect this latest initiative is probably designed to generate market interest in 360Buy, which wants desperately to make a New York IPO to raise much needed cash. 360Buy launched its IPO process last fall, only to see the offering fall victim to abysmal market sentiment due to a series of accounting scandals at US-listed Chinese companies. This new travel services initiative looks like fantasy to me, and an initiative that’s 95 percent likely to fail. But those kinds of difficult odds never stopped a Chinese company from this kind of initiative before, and I would expect to see a few more strange initiatives coming out of 360Buy before it relaunches its IPO bid, probably sometime in the first half of this year.
Bottom line: 360Buy’s new initiative in the travel services space is almost guaranteed to fail, and could be more designed to generate hype in the run-up to a US IPO later this year.
Related postings 相关文章:
◙ E-Commerce: 360Buy Awaits IPO Window, Amazon Expands 京东IPO融资心切 亚马逊物流扩张加剧竞争
◙ 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
◙ Internet Investors Seek Refuge in Big Names 互联网投资者选择性支持中国市场领头羊
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The online world has been buzzing since yesterday when Alibaba.com (HKEx: 1688), the only listed unit of e-commerce giant Alibaba Group, suspended trading of its shares pending a major announcement. Many, myself included, were eagerly awaiting an announcement from the parent Alibaba Group, which has been negotiating a buyback of the 40 percent in itself held by Yahoo (Nasdaq: YHOO); but few were expecting anything from the publicly listed Alibaba.com, which is the struggling B2B arm of the larger company. Now foreign media are citing unnamed sources saying Alibaba Group wants to privatize Alibaba.com, undoubtedly because it feels the unit is not fully appreciated by investors and could potentially drag down the parent company’s valuation as it seeks to buy out the Yahoo stake. (
The year of the Rabbit may be one that many US-listed Chinese companies would rather forget, and now it’s looking like the Year of the Dragon may offer little relief, as short sellers and class action lawyers continue their assaults. In the latest news, Muddy Waters, whose name became synonymous with short selling attacks on US-listed Chinese firms last year, has renewed its recent attack on Focus Media (Nasdaq: FMCN), while a law firm is putting out a call for investors to join its pending class action lawsuit against information technology software maker Camelot Information Systems (NYSE: CIS). Let’s look at Focus Media first, which has always been a slightly controversial company for various reasons, making it an easier target for short sellers like Muddy Waters that try to raise doubts about such companies’ accounting and other strategic issues to pressure their share prices. Muddy Waters first raised doubts about one of Focus Media’s transactions that looked unrelated to its core outdoor advertising business last year (
Lenovo (HKEx: 992), arguably China’s best known consumer brand, has just released its latest quarterly results that show strong growth but lack any real excitement, as new acquisitions contribute to its top line for the first time. (
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SMIC (HKEx: 981; NYSE: SMI), China’s largest semiconductor chip maker that seems to hop from one internal crisis to the next, seems to be telling the world with its latest earnings that the days of trouble will soon be behind it. (
The ongoing legal tiff between Apple (Nasdaq: AAPL) and a relatively obscure Taiwanese company over the rights to the iPad name in China has mesmerized the Chinese media and Apple fans in general, but what it really shows is how badly broken the Chinese legal system is when it comes to copyright and intellectual property (IP) protection. Instead of protecting companies like Apple, which are the innovators that drive technology, this series of Chinese lawsuits is doing just the opposite, with the Taiwanese company using China’s inept legal system to try and extort money from this global giant. What’s scarier, the Taiwanese company, an affiliate of Proview Technology, could very well win the case, forcing Apple to either pay an extortionate fee for the use of the iPad name in China, or potentially to abandon the name altogether in this important market. Surely this is not what trademark protection law was meant to do. Let’s quickly review the facts in this case to show why it’s become a bit of a farce, albeit a closely watched one. Apparently the Proview affiliate registered the iPad name back in 2001 when the Taiwan parent was developing a product that clearly had no relationship to Apple’s highly popular product of the same name launched in 2010. That Proview product was no doubt a dud, and the company later sold the global rights to the name to a British firm, which ended up selling the rights to Apple. So now it seems the Proview affiliate has discovered the transfer of the iPad name was never properly executed in China. But rather than admit its fault in the matter and complete the name transfer, it is actually suing Apple in China, saying it still owns the iPad name and Apple is violating its copyright. And rather than force the Proview affiliate to correct the situation, which is what would probably happen in any Western courtroom, the Chinese courts seem to be interpreting the law quite literally and saying that Proview still owns the iPad trademark, and that Apple therefore must either license the name again or stop using it. The case isn’t over yet, with hearings taking place in several Chinese courtrooms. But if China is smart, some senior judicial officials should quickly step in and talk with the judges involved and quickly end the case in Apple’s favor or with a reasonable settlement. Otherwise they risk tarnishing the image of a Chinese copyright protection system that, while headed in a positive direction, is still rife with problems.
