Search Results for: ant

Yum’s New China Strategy: Fill Up With Gas, Food

By on

Just weeks after getting regulatory approval for its purchase of leading hot pot chain Little Sheep (HKEx: 968), KFC parent Yum Brands (NYSE: YUM) is making headlines once again for yet another tie-up, this time with Sinopec (HKEx: 386; NYSE: SNP), China’s top oil refiner. (English article) But Yum is less interested Sinopec’s oil refining prowess, and has its eye instead of the company’s 30,000 gas stations located across China, many of which could host new outlets for Yum’s KFC and Pizza Hut stores. I have to say that this strategy looks quite intriguing, as Sinopec’s vast chain of gas stations in China would instantly complement Yum’s own 3,500 KFCs and 560 Pizza Huts throughout the country, providing real estate and other infrastructure that Yum could instantly use to quickly open lots of new stores to boost its already strong position as China’s leading fast-food operator. The strategy looks similar to rival McDonalds’ (NYSE: MCD) launch earlier this year of a major new initiative to open drive-through restaurants, catering to China’s new generation of young, affluent car owners. (previous post) I personally like Yum’s strategy a bit more, as opening outlets in Sinopec stations will give it lots of new locations to choose from, and allow it to quickly build outlets in the ones that it likes. The McDonalds strategy looks a bit more time-consuming, calling on the company to explore locations and then build new restaurants on its own. The big question, of course, is will Chinese consumers want to purchase fried chicken, pizzas and maybe even hot-pots-to-go at the same place that they fill up their car with gas? Honestly speaking I’m not sure what the answer is, as I’ve never seen this concept at gas stations outside China. In the US many gas stations house convenience stores, but it’s far less common to see actual restaurants inside them. That said, I don’t see why the concept won’t work, and would give this latest tie-up between Yum and Sinopec and strong chance of success.

Bottom line: Yum’s new tie-up with Sinopec will allow it to expand its KFC and Pizza Hut business to thousands of Chinese gas stations, tapping China’s new generation of car owners.

Related postings 相关文章:

◙ McDonald’s Revs Up for China Drive-Thru 麦当劳寄望“得来速”汽车餐厅拓宽中国市场

◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢

◙ Starbucks Wide Open for China Business with New JV 星巴克在云南建合资厂

Govt’s Microblog Shift Looks Good for Weibo 政府口风转变或有利於新浪微博

By on

It seems like barely a day goes by lately without state media singing the latest praises of microblogging, a development which could bode well for dominant player Weibo but which could also hold risks if Beijing decides this popular form of social networking is too important to leave to organic development in the hands of private developers. Followers of Weibo, often called the Twitter of China, will recall that the platform was the source of criticism by state media for much of the first half of the year, which blamed it for spreading rumors from users who could hide behind cloaks of anonymity. One official even came out as recently as last month and suggested that all microblog users might have to register with their real names, a development that would have sent a huge chill through networks like Weibo and other services operated by names like NetEase (Nasdaq: NTES). (previous post) Fast forward to now, when the tone in the debate has changed quite a bit, following Beijing’s latest  decision that microblogging was a great tool for the government to communicate with the people. Following that shift, major state media gush almost daily about the latest government agencies that have opened accounts on Weibo, and have also taken to reporting the other positive effects of microblogging sites. The lead story on page 1 of today’s China Daily is headlined “Micro blogs open a world of communication”, and a search on the subject on its web page reveals positive stories praising everything from microblogging’s role in fighting organized crime to helping people to find love. No mention seems to be made anymore of rumor mongering and the medium’s ability to create social unrest. Of course all that should be good for Weibo and its struggling parent, Sina (Nasdaq: SINA), whose shares have lost about half their value since June as many of its investments outside its core web portal business have stumbled. All this latest praise from Beijing seems to indicate Weibo won’t be shut down or reined in anytime soon, which should be a relief to Sina. Now it just has to find a way to make money off the platform, and also take care to keep Beijing happy by convincing it of Weibo’s important role in developing a harmonious society.

Bottom line: Beijing’s recent shift in tone marks a positive development for microblogging services like Weibo, which are now being called important communicators rather than rumor mongers.

Related postings 相关文章:

◙ Sina Results: Not So Diversified After All 新浪仍依赖广告,突围遇阻

◙ Weibo Still Faces Crackdown Despite Govt Tie-Up 新浪微博难改“被监管”命运

◙ Sina’s Weibo: Growth Engine or Growing Burden? 新浪微博：动力or负担？

Stumbling CNOOC Replaces Chief Executive 中海油换将李凡荣接棒CEO

By on

Just months after losing its top executive to a rival in one of the period shuffles at the top of China’s major state-run industries, CNOOC (HKEx: 883; NYSE: CEO) is replacing its CEO after two major setbacks that have proven not only embarrassing but also hurt the company’s bottom line. The shuffle, which will see executive director Li Fanrong take over from Yang Hua (English article), comes just a half year after CNOOC saw its former top executive Fu Chengyu, leave the company to take over at the top of Sinopec (HKEx: 386; NYSE: SNP), another of China’s top 3 energy producers. (previous article) This latest move does seem to indicate that top executives at China’s biggest state-run firms, while all clearly appointed by the Communist Party, are being held more accountable for their performance, regardless of their credentials as loyal party members and seasoned bureaucrats. No explanation was given for the change, but industry observers will note that it comes after CNOOC has seen 2 major setbacks in the last few months that have undermined its stock, which is down nearly 30 percent since early June. The first of those, which has been widely reported in the Chinese media, has been a recurrent series of leaks at an oil drilling operation owned by CNOOC and US firm ConocoPhillips (NYSE: COP) in north China’s Bohai Bay, which forced several halts to production and will likely result in a costly clean-up, not to mention huge negative publicity. (previous post) The second more recent setback saw the collapse of CNOOC’s deal to purchase a major asset in Argentina from BP (London: BP) as part of Beijing’s directive for its oil companies to purchase overseas assets to help fuel China’s hungry economy. (English article) I don’t know enough about the people involved in this new shuffle at the top of CNOOC, but the move looks like punishment for Yang for failing to strongly execute corporate strategy, costing the state, as CNOOC’s largest shareholder, lots of money as the company lost nearly a third of its value. Perhaps this move marks the beginning of a more active role by Beijing in switching top executives at the top of its less well-performing state-run giants — a change in approach that would also undoubtedly be welcome by minority shareholders.

Bottom line: A change of CEO at the top of CNOOC may be in response to recent stumbles at the company, and could signal a more activist approach by Beijing in the future.

Related postings 相关文章:

◙ Bohai Spill: A Slippery Mess for CNOOC 中海油的漏油危机

◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦

◙ China’s Oil Shuffle: Not So Fast, Naysayers 石油巨头高管轮换：先别急着唱衰

Solar Slips Squarely Into the Red 太阳能行业陷入全线亏损

By on

The negative news just keeps coming from the solar sector, where industry leader Suntech (NYSE: STP) reported its second consecutive quarterly loss and Canadian Solar (Nasdaq: CSIQ), one of the few firms that had managed to stay profitable, finally slipped into the loss column as inventories swelled and their margins continued a downward slide. (Suntech announcement; Canadian Solar announcement) It goes without saying that industry laggard LDK Solar (NYSE: LDK) also reported a massive third-quarter loss (company announcement), and all 3 companies predicted more turbulence ahead. The one potential bright spot is plummeting prices for polysilicon, the main raw material used to make their solar cells, which, ironically could someday push solar cell prices down to the point where they become competitive with traditional power sources like coal and oil. Unfortunately, by the time that happens many of these solar cell makers could be out of business. In addition to huge oversupply in the market, the Chinese firms face potential punitive tariffs from the US — one of the solar industry’s top markets — if an ongoing investigation determines they are selling their products at below-market prices. (previous post) The Chinese companies have said they may request their own anti-dumping investigation against Western makers of polysilicon, in a clear tit-for-tat move that certainly won’t help the industry if China implements its own retaliatory punitive tariffs against polysilicon makers. Foreign media are reporting that Chinese solar cell manufacturers are quietly making plans to move some of their production to the United States and other Western markets to avoid potential punitive tariffs, and are also stepping up their efforts to improve technology to make their products more efficient at converting sunlight into electricity. (English article) I still see at least 1 and possibly 2 more painful years ahead for this sector, with at least 2-3 major players likely to either close or be purchased by other companies before the crisis ends. In the meantime, look for the bad news to continue in the fourth quarter and into 2012.

Bottom line: Latest results show the entire solar cell sector has now slipped solidly into the red, with losses likely to continue through most or all of next year.

Related postings 相关文章:

◙ Beijing, Yingli Send Mixed Solar Signals 英利和中国政府似乎“背道而驰”

◙ New Solar Signals: Slowdown Easing Amid Writedowns 太阳能企业减计库存 行业或将开始摆脱危机

◙ Solar Fight Sees Accusations Flying 中美太阳能纠纷引发口水大战

 

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

By on

It seems I may have been wrong when I questioned the sincerity of Chen Tianqiao after he announced a potential bid to privatize his company, Shanda Interactive (Nasdaq: SNDA), as Chen has now gone ahead and actually launched the buyout. (company announcement; Chinese article) Chen put forth the plan last month to buy back his company’s shares for $41.35 each (previous post), and is now keeping his word with this latest offer. Interestingly, Shanda’s shares rose to only $40.28 in Tuesday trading after the announcement, representing a 2.6 percent discount to the offer price, indicating investors still aren’t totally convinced that this privatization will be completed. In fact, Chen has no real intention of keeping his company private for long, as he wants to list it on one of China’s domestic stock exchanges, according to Chinese media reports. I have to admit that this kind of a strategy does seem to make sense, as Shanda is quite well known in China, where it is considered a leader in online games. Furthermore, Shanda’s online game unit, Shanda Games (Nasdaq: GAME) is still listed on the Nasdaq, and the company is also planning a US listing for its online literature unit, Cloudary. (previous post) The only problem with his latest plan is that Chen may have to wait a long time to list his company at home, as China has shown a strong bias against privately-funded firms in choosing IPO candidates for its two main boards in Shanghai and Shenzhen, preferring to list companies with strong government ties, mostly former state-run enterprises. Chen could opt for the 2-year-old Nasdaq-style ChiNext board in Shenzhen targeting smaller, high-growth companies. But that board has turned out to be hugely speculative, with firms that trade there subject to huge swings in their share prices. All that said, if Chen really completes this privatization, it could be a while before we see Shanda Interactive shares publicly traded again. Perhaps in the meantime, Chen could focus on trying to better run his various businesses, including struggling Ku6 Media (Nasdaq: KUTV), and temporarily put aside the deal making that he seems to love so much.

Bottom line: Shanda Interactive appears intent to go through with a privatization bid, but will face a long wait before it can re-list in its home China market.

Related postings 相关文章:

◙ Grentech Follows Shanda in Privatization Ploy 国人通信赴盛大网络後尘宣布私有化

◙ Shanda’s Private Ploy: For Real or Market Manipulation? 盛大拟退市：是动真格还是虚晃一枪？

◙ Boring Games, Video Drain Drag Down Shanda

Beijing, Yingli Send Mixed Solar Signals 英利和中国政府似乎“背道而驰”

By on

China’s solar sector is sending mixed signals as it faces a potentially crippling anti-dumping investigation in the US, with major player Yingli (NYSE: YGE) sending out what looks like a conciliatory message even as China itself puts forth a plan that looks more defiant. First Yingli, which announced a new tie-up with CIT Group (NYSE: CIT), a US-based financial services firm, aimed at providing financing for sale of Yingli’s solar cells in the US. (company announcement) This announcement looks like Yingli’s way of trying to refute allegations by foreign solar cell makers that Chinese firms enjoy a wide array of unfair subsidies from Beijing, including below-market financing from China’s big state banks to help them sell their products overseas. Yingli’s new agreement may carry some public relations value, but is unlikely to sway public opinion in the US very much without some major conciliatory moves from Beijing. Meantime, Chinese leaders seem to be doing just the opposite of that with an official’s new announcement that China will launch a new campaign to help developing countries build new solar plants. It’s unclear to me if the new remarks by Xie Zhenhua, vice chairman of the National Development and Reform Commission, China’s powerful state planner, are related to the ongoing trade spat with the US or not. (English article) My guess is that these comments, made during a climate change training seminar attended by officials from 26 small island states on Monday, were just the result of poor timing and weren’t aimed at provoking the US or showing Chinese defiance in the face of potential US action against Chinese solar cell makers. But either way, Xie’s remarks show that China has no immediate plans to halt its strong support for its solar cell makers, as any solar energy plants that China builds in developing nations are almost guaranteed to be supplied with solar cells that are 100 percent made in China. I’ve said before that punitive tariffs by the US look likely in this case of trade friction, and announcements like Xie’s — while they may be good intentioned — won’t do anything to help diffuse the situation.

Bottom line: Chinese solar cell makers are trying to diffuse an anti-dumping investigation by the US, but aren’t getting much help from Beijing, making punitive tariffs more likely.

Related postings 相关文章:

◙ New Solar Signals: Slowdown Easing Amid Writedowns 太阳能企业减计库存 行业或将开始摆脱危机

◙ Solar Fight Sees Accusations Flying 中美太阳能纠纷引发口水大战

◙ China Solars Brace for Icy 2012 With US Trade Complaint 中国太阳能产业需直面美欧关税壁垒

Expedia Boosts China Ties, Watch Out Ctrip Expedia增持艺龙股份携程要小心了

By on

There’s  been some interesting movement in the lucrative online travel space, where US online giant Expedia (Nasdaq: EXPE) has just boosted its ownership eLong (Nasdaq: LONG) for a hefty premium, boosting its stake in China’s number-two online travel agent to more than 60 percent. (company announcement; Chinese article) Not surprisingly, eLong shares jumped 10 percent after the purchase, though at $15.41 per share were still well below Expedia’s purchase price of $23. That indicates the market realizes that Expedia, which has owned more than 50 percent of eLong for a while now, was more interested in boosting its stake than in getting a good price. From my perspective, the more interesting element here is that this purchase may indicate that Expedia, after years of taking a mostly hands-off approach to eLong’s operations, may finally be feeling confident enough to try and bring some of its background and expertise to the Chinese company, including integrating it more with Expedia’s own very successful global network. If it indeed makes such a move, that could spell more headaches for China’s industry leader Ctrip (Nasdaq: CTRP), whose own recent third-quarter results showed slowing growth, sparking a 25 percent decline in its shares over the last week. (previous post) If Expedia does indeed take a more hands-on approach to eLong, it would mirror a more recent trend that has seen foreign Internet giants coming back to China for a new attempt to be more active in the world’s biggest Internet market by users, after their previous attempts mostly failed. Amazon (Nasdaq: AMZN) appeared to be leading the charge on the China market with the recent launch of a massive new warehouse near Shanghai for Joyo.com, the online merchant it bought several years ago. Amazon had also taken a low-key approach to Joyo for the first few years of its ownership, though that looks set to change. (previous post) The next few months will be interesting to see what, if anything, changes at eLong following Expedia’s latest move, with Ctrip no doubt watching the situation very closely.

Bottom line: Expedia’s increase of its share in eLong could presage a more active partnership between the 2 companies, posing a major challenge to industry leader Ctrip.

Related postings 相关文章:

◙ China Lodging: Rebound Ahead 中国经济型酒店业绩回升在望

◙ China Hotels: Is the Holiday Over?

◙ Ctrip’s Latest Initiative: Insurance 携程新举动：保险

Education Getting Lesson in Competition

By on

The latest signals from the education sector, including a mid-sized acquisition by a major foreign player, indicate competition is heating up in the space, posing future challenges for everyone. The latest deal is seeing British publishing giant Pearson (London: PSON) offering to buy a relatively small Chinese firm, Global Education and Technology Group (Nasdaq: GEDU) for just over $11 per share, or $155 million. (English article) That represented a 100 percent premium to Global Education’s last close before the deal was announced, and is nearly 4 times where it was trading in the days before that. The news didn’t help homegrown education leaders New Oriental Education (NYSE: EDU), TAL Education (NYSE: XRS) and Xueda (NYSE: XUE), whose shares all fell amid a broader Wall Street sell-off. Pearson’s latest China education buy follows its earlier purchase of Wall Street English, another major provider of English-language teaching in China, and also follows a move into the market earlier this year by US education giant DeVry (NYSE: DV) (previous post), showing foreign giants, whose ranks also include Disney (NYSE: DIS), realize the big potential in the market and are looking to capitalize on it. Of course all this could mean bad news for homegrown players like New Oriental and Xueda, the former of which reported slowing growth last week while the later posted a widening quarter loss. (previous post) Perhaps sensing vulnerability among the homegrown players, a small investment house, OLP Global, launched a short-selling attack on New Oriental late last week, drawing on recent concerns about the quality of accounting at many US-listed Chinese firms to imply New Oriental may have been playing tricks with its own accounting. The attack prompted New Oriental to issue a statement denying the allegations (company announcement) The statement may have stopped a broad slide for New Oriental shares, but its stock is still down 24 percent since the beginning of November, including a 10 percent drop after it announced its third quarter results. The way things are going, don’t look for the situation to improve for domestic education firms anytime soon.

Bottom line: The latest M&A by a foreign company in China’s education market show competition is growing intense, leaving domestic players vulnerable.

Related postings 相关文章:

◙ New Oriental Results: Slowing Education Growth Story 新东方发表最新财报 中国教育服务增长减速？

◙ Parade of China Money-Losers Report to Wall Street 多家中国企业亏损凸显市场竞争激烈

◙ Education: DeVry Deal Showcases Corporate Opportunity

BYD’s New EV Plan: Hook Them With Investment 比亚迪拉美电动车之路堪忧

By on

Despite all its recent woes, I have to applaud electric vehicle aspirant BYD (HKEx: 1211; Shenzhen: 002594) for its determination to make its EV dream a reality. This time the company, backed by billionaire investor Warren Buffett, is using an old trick to try sell its electric cars and buses outside China, namely by building manufacturing plants overseas, in this case in Argentina. (English article) Of course, this kind of investment will be strongly welcomed in the Argentina and is generally welcome in any country, which means BYD shouldn’t have any difficulty selling similar plans in other overseas markets. Now the only issue is whether BYD can actually find a market for its cars in Argentina and other Latin American markets. The answer is almost certainly no. BYD hopes to leverage the Argentina plant as a springboard to sell its EVs in other Latin American markets. But in any of these markets, the company is likely to face a difficult road as most are unlikely to offer the same strong support as China, which gives big subsidies for EV buyers and helps to build out the charging stations necessary to make electric vehicles an appealing proposition for consumers. Even if these markets offer monetary incentives, an EV is still likely to cost far more than a traditional gas-powered vehicle, which will make them a tough sell in price sensitive Latin American countries where BYD will also face competition from other Chinese automakers selling low-priced made-in-China cars. I don’t know where BYD is getting the money to build all these plants, since its profits have fallen to nearly zero as its China sales plummet. Given its own tenuous finances, I would be wary of BYD’s ability to build and operate these new overseas plants over the longer term, not to mention helping to build new infrastructure to make its EVs attractive to overseas buyers.

Bottom line: BYD’s new plans to build its EVs in Argentina will face numerous obstacles, with the result that the project may not survive very long.

Related postings 相关文章:

◙ BYD True Test Begins With EV Consumer Roll-Out 比亚迪电动车上市 真正的考验刚刚开始

◙ Beijing Sends Mixed EV Signals 中国应推进电动车基础设施建设和宣传

◙ Hertz, GE Give Jolt to BYD Electric Cars 赫兹新项目为比亚迪“加油

Apple Prepares to Take on China Pirates 苹果开始接受人民币付款购买应用软件

By on

The latest signals from Apple (Nasdaq: AAPL) indicate it may be preparing to tackle the China piracy machine by offering legal music online, hoping to succeed where years of government effort from both the West and Beijing have largely failed. According to media reports, Apple has just begun accepting payments in yuan for apps downloads from its Chinese iTunes store. (English article; Chinese article) The move should provide an instant boost to Apple’s China business, as millions of Chinese who use iPhones and iPads will now be able to easily download apps for both devices. But from my perspective, the much more interesting and intriguing question is whether Apple is using this move as a precursor to making its core iTunes music store available to Chinese consumers. Techies will recall that Apple’s original iTunes store dealt a major blow to online music piracy in the United States several years ago when it began offering a wide range of legally-obtained tunes from most major music labels for reasonable prices of about $1 per song download. Apple’s breakthrough was followed by the opening of similar online stores, resulting in a sharp reduction in illegal online music swapping as consumers opted for better quality, reasonably priced legal copies of their favorite music. If Apple does indeed launch an iTunes music store in China, the big question, of course will be whether or not it can succeed. The answer in my view would be “probably,” with perhaps a 70 percent chance of success. Like their American counterparts, most young Chinese do have some spending money that they regularly use to buy the latest trendy clothes and personal care products and go to the movies. There’s no reason they wouldn’t spend some of that money on music downloads as well if the situation was right. The key to success a China iTunes store will be pricing. The $1-per-tune price tag may be a bit high for the average Chinese youngster, meaning Apple may have to accept a reduced amount for any China iTunes offering. But the big music labels would no doubt be happy to get any money they can from the China market, and I could see iTunes offering Chinese music downloads for 3-4 yuan each, or 40-60 cents, which could easily prove acceptable to consumers.

Bottom line: Apple’s new acceptance of yuan for its China apps store looks like a precursor for the opening of an iTunes music store, which would have a good chance of success.

Related postings 相关文章:

◙ Hulu Makes First Global Stop in Japan, China Next?

◙ Apple Overlooks China — Again 苹果再次撇开中国内地市场

◙ After Years, Baidu Does the Right Thing 百度多年来的一个正确之举

US China Bashing Hits New High With Telecoms Probe 华为中兴应巧选时机应对调查

By on

China-basing has become an unusually major theme in the current US election season, with rhetoric hitting a new high as politicians launch yet another anti-China investigation, this time targeting 2 of the nation’s most prominent exporters, Huawei Technologies and ZTE (HKEx: 763; Shenzhen 000063). Telecoms headlines were buzzing loudly late last week with word of the investigation, which was launched by the Republican-controlled House of Representatives to examine potential threats to national security posed by US-based telecoms networks built by Chinese companies. (English article) This very same concern was put forward by India a couple of years ago, resulting in a temporary ban of the import of Chinese telecoms equipment into the country. After months of talks, which reportedly saw Huawei and ZTE reveal their source codes to the Indian government, both companies were allowed to resume selling their products in the country. Furthermore, if Huawei and ZTE products really do pose such a threat, then most of Europe is now at major risk of Chinese telecoms spying, since telcos in most of its countries now count Huawei and ZTE as 2 of their major telecoms equipment suppliers. Of course, all this talk in the US is nothing new, especially in an election season when politicians have nothing to lose by sounding a tough anti-China note. Politicians in the House of Representatives have already launched anti-dumping probes into Chinese solar cell makers and passed legislation that would punish China as a currency manipulator in the last few months (previous post), and the Obama administration itself also recently denied Huawei permission to bid on contracts to upgrade government-run networks meant for use in emergencies. (previous post) Huawei’s US spokesman took a prudent approach to this latest investigation, saying it was natural for the US to reassure itself of national security on such sensitive matters. If Huawei and ZTE are smart, they will put their US campaigns on hold until after the election and let Beijing issue the periodic statement expressing outrage and disappointment at all the latest unnecessary but politically-motivated anti-China rhetoric.

Bottom line: A new US investigation into security threats posed by Huawei and ZTE is the latest in a string of anti-China campaigns that will continue until the 2012 presidential election.

Related postings 相关文章:

◙ Huawei: Fight Them With Innovation 华为欲借创新论低调进军美国市场

◙ Huawei Undermines US Push With Foolish Request 华为讨要说法很不明智唯有阻碍进军美国市场

◙ Huawei, Lenovo Look to Foreign Advisors in Westward Drive