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CNOOC Woes Spotlight Environmental Perils

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We’re getting a bit more color on the ongoing oil spill saga in the Bohai Bay, from CNOOC (HKEx: 883; NYSE: CEO), which has revised down its 2011 output target in light of the stubborn spill in the drilling project operated by ConocoPhillips (NYSE: COP) (English article) The company, one of China’s top 3 oil producers along with PetroChina (NYSE: PTR; HKEx: 857; Shanghai: 601857) and Sinopec (NYSE: SNP; HKEx: 386), said it will reduce its 2011 output target by up to 9 percent in light of the spill, which has seen persistent leeks spring up at the wells being drilled by ConocoPhillips, even as it reported its first-half profit rose 51 percent (company announcement) as it and its peers feasted off high global oil prices. CNOOC’s lowering of its output target spotlights its dependence on joint projects like the one with ConocoPhilliips, as well as its vulnerability to accidents like the one in Bohai Bay. What it hasn’t discussed, and what could potentially provide even more headaches in the coming months, is the issue of liability for the spill, which has become the subject of daily headlines in the Chinese media. A government environmental watchdog has already announced its intent to sue for damages, and buzz is building that the country needs to reform its system of financial penalties to provide adequate punishment. Under the current system, designed to protect state-owned firms that once dominated China’s business landscape, most fines are essentially meaningless because they are too small to seriously impact a company’s profits. If the system is revised, which looks likely, future liability for accidents at home could become a major new risk for not only CNOOC, but also any domestic or foreign energy company doing business in China.

Bottom line: The ongoing oil spill in the Bohai Bay will not only hurt CNOOC’s output this year, but could provide additional headaches in the form of longer-term liability.

Related postings 相关文章:

◙ 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

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

◙ PetroChina Seeks Global Integration 中石油试图融入全球市场

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

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After months of announcing electric car deals that have largely left me unimpressed, BYD (HKEx: 1211) has finally come up with a tie-up that looks like a move in the right direction in its uphill quest to boost its costly alternate energy vehicle program. Ironically, or perhaps appropriately, BYD, the struggling auto maker backed by Warren Buffett, was surprisingly quiet during this latest announcement, leaving most of the talking to Hertz, the US auto rental giant which is teaming up with General Electric (NYSE: GE) in this latest initiative. (English article) The initiative will see Hertz offer BYD’s E6 electric vehicles for rent in Beijing, Shanghai and BYD’s hometown of Shenzhen, with GE helping to build up an initial network of 770 charging stations. This is exactly the kind of public-private partnership that we need to see more of from BYD, whose electric vehicle tie-ups to date have mostly been with local governments and have put few if any of its cars in the hands of consumers whose mass buying power will be critical to the success of any electric car initiative. Hertz and GE bring two strong private-sector partners into this equation, no doubt with strong support from city governments, ensuring that decisions will be made on a commercial basis rather than a political one. This program also offers the advantage of scalability if it proves popular, with the national potential that only a private sector organizer could bring. If it works, I wouldn’t be surprised to see Hertz and GE eventually bring EVs by other car makers like SAIC (Shanghai: 600104) into the program eventually, and expand the program throughout China

Bottom line: BYD’s new partnership with Hertz and GE marks its smartest tie-up to date to promote its struggling electric car business, and could provide a template for future development.

数月来比亚迪(1211.HK)宣布的电动车协议大多平淡无奇，但日前一次联合看起来终于像是走到了正确的方向上，朝着推动比亚迪替代能源汽车目标努力。不过很有意思但也很恰当的是，比亚迪对于此次合作意外地安静，大多数发言都出自美国租车公司赫兹国际(HTZ.N)。 赫兹联合通用电气（GE）(GE.N)在华推广电动车，且将优先采购中国国产电动汽车，最先选定车型是比亚迪E6，初期先在上海、北京和深圳三地试点推广。GE将帮助建成第一批共770个充电站。这正是比亚迪需要推出更多的“公私联姻”模式。迄今为止比亚迪的联合对象多属地方政府，并未把多少电动汽车推到消费者手中。此次合作中，当地政府的支持当然毋庸置疑，而赫兹与GE的参与，相当于两个强大的私营部门角色加入其中，从而保证相关决定基于经济基础而非政治基础。该项目如被证明很受欢迎，具备在全国推广的潜力，将带来规模效应，而向全国推广，操作上只有私营力量才能运作。我认为，如果方案可行，赫兹与GE可能会逐步将其他厂商，如上汽集团(600104.SS)的电动车引入项目中，并面向全国推广该项目。

一句话：比亚迪与赫兹、GE的新项目是比亚迪迄今最明智的“联姻”，有助于其苦苦挣扎的电动汽车业务，并为未来发展提供一个样板。

Related postings 相关文章:

◙ BYD Toots Electric Horn in Shenzhen 比亚迪在深圳奏响电动汽车号角

◙ BYD: Running on Empty? 比亚迪：累了？

◙  BYD EV Buses Get German Toehold 比亚迪电动车在德国找到立足点

News Digest: August 25, 2011

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The following press releases and media reports about Chinese companies were carried on August 25. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ CNOOC (NYSE: CEO; HKEx: 883) Achieves a Significant 51.4% Increase in H1 Profit (PRNewswire)

◙ Hertz, General Electric (NYSE: GE) partner in building electric vehicle market in China (English article)

◙ China Unicom (NYSE: CHU; HKEx: 762) H1 Profit Falls 9.2% (English article)

◙ 360Buy Stops Using Alipay For Electronic Payments (Chinese article)

◙ Renren (NYSE: RENN) and MSN China Announce Strategic Cooperation (PRNewswire)

Youku’s New Formula: Sponsored Programs 优酷“新配方”：赞助项目

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At first glance, video sharing site Youku’s (NYSE: YOKU) new announcement regarding the creation of a new video series together with Dutch electronics giant Philips (Amsterdam: PHG) looks like little more than PR, which led me to pay little attention when it landed in my email box. (company announcement) But closer inspection reveals a more innovative tie-up, which has Philips essentially paying for the creation of an exclusive new video series for Youku in exchange for sponsorship rights, much the way advertisers pay for traditional TV series with their advertising dollars. According to Youku, the first episode of the series, about a young designer trying to win back his girlfriend from a wealthy man, was viewed 2 million times in its first 24 hours — numbers that would make most TV channels envious. While I’m still not completely convinced about Youku’s long-term viability as a stand-alone online video provider, initiatives like this, which are costing it nothing and bringing in millions of viewers, look like a smart formula for success as the money-losing company seeks ways to turn a profit. This latest effort follows another Youku initiative back in June, when it became China’s first big portal to sign a licensing deal with a major Hollywood studio, in this case offering content from Warner Brothers (NYSE: TWX) to its premium subscribers. (pervious posting) These kind of initiatives are exactly the kind of thing that Youku and video- and music-sharing rivals like Tudou (Nasdaq: TUDO), Xunlei and even Baidu (Nasdaq: BIDU) need to be doing in order to ensure their long-term viability. Recent talk that Youku may be in talks with for an equity tie-up with China Internet leader Tencent (HKEx: 700) (previous post) are making this company look like an even stronger bet to maintain its position as China’s leading online video site, and potentially even a profitable one in the near future!

Bottom line: Youku’s foray into sponsored video series looks like a good move with strong future potential as it weans itself from pirated content.

乍看起来，中国视频分享网站优酷(YOKU.N)与荷兰电子厂商飞利浦(PHG.AS)联合出品系列网络电影的新项目不过是公司公关而已，所以一开始邮箱里出现这条消息时，我并未在意。但是进一步的观察发现，其实这一合作还有着非常创新的一面：飞利浦其实通过出资为优酷创作独家网络电影，以换取赞助权。据优酷介绍，系列电影第一支短片《爱有多久》首映24小时内，点播量高达200万，这一数字足以让多数电视频道感到眼红。短片讲述一名年轻设计师如何从一名富翁手中赢回自己的女朋友。虽然我对优酷能否长期扮演在线视频提供者的角色还存有质疑，但此类创意举措，用不着优酷花钱，还能吸引数以百万计的观众，看起来像是优酷寻求扭亏为盈的“巧妙配方”。此前，优酷6月份宣布与华纳兄弟(TWX.N)合作，由优酷通过视频付费点播服务，向高端用户提供450部华纳影片，并成为第一家赢得好莱坞主流片商授权的中国大型门户网站。此类做法正是优酷、土豆(TUDO.O)、迅雷，甚至百度(BIDU.O)等类音乐与视频分享网站需要去做的事情，因为这样可以保证他们的长久生命力。而且最近还有传言称优酷可能正在与腾讯(0700.HK)洽谈股权合作事宜，似乎意味着优酷保持国内在线视频网站领头羊的机率更高，甚至有可能近期扭亏为盈。

一句话：优酷涉足有赞助的网络电影项目看似是明智之举，未来颇为看好，有助于其摆脱盗版内容。

Related postings 相关文章:

◙ Video Sharing: Let the Tie-Ups Begin

◙ Tudou IPO Set to Stumble Out of the Gate 土豆上市首日难有精彩表现

◙ Youku, TCL Discover Hollywood in New Tie-Ups 优酷、TCL双双联手好莱坞大品牌

Spreadtrum Takes Smart Gamble on China 3G

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Having survived an attack by short-sellers, cellphone chip designer Spreadtrum (Nasdaq: SPRD) is broadening its smart move into smartphones, this time by taking a big gamble on TD-SCDMA, the homegrown third-generation (3G) mobile standard being developed and promoted by China Mobile (HKEx: 941; NYSE: CHL). Many will recall that this company made headlines earlier this year when short sellers attacked it over questions about its inventory — questions the company later successfully fended off. (previous post) In the meantime, the company said it was placing its bets for the future on smartphones (previous post), which have shown huge growth potential as celllphones become more and more like wireless computing devices. In the latest wrinkle, the company has disclosed that it now controls more than half of the market for chipsets used in smartphones that run on TD-SCDMA, the homegrown Chinese 3G wireless standard being used by China Mobile. (company announcement) If you had asked me 3 months ago what I thought about this, I would have said that Spreadtrum was wasting its time and money, as China Mobile was showing little interest in promoting its 3G service, which many considered unreliable due to the untested nature of the technology. But in just the last two months, China Mobile has suddenly shown a new interest in promoting the service, making Spreadtrum’s bet suddenly look much better. Its investment in TD-SCDMA will also inevitably give it a headstart in developing chipsets for the standard’s 4G successor, TD-LTE, which China Mobile is actively developing and could launch commercially as soon as next year. Many carriers outside China are also taking a serious look at TD-LTE, which could further boost the market for this standard. Of course, other chipset makers will probably see what’s happening and jump on the TD bandwagon, but Spreadtrum’s early entry into this space should give it a clear advantage for at least the next 1-2 years.

Bottom line: Spreadtrum’s aggressive push into TD-SCDMA looks like a smart move in light of China Mobile’s recent promotion of its 3G service.

Related postings 相关文章:

◙ China Mobile Nears iPhone Deal, Continues 4G Press 中移动iPhone协议近尾声 加紧4G攻势

◙ Spreadtrum On Cusp of Putting Out Short-Seller Fire 展讯力抗卖空方

◙ Spreadtrum Steps Up Smart Drive 展讯通信向智能手机市场迈出精明一步

China Takes Global PC Crown – But Does It Matter? 中国PC出货全球居冠 但有何意义?

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The inevitable as finally happened, as China overtook the US in the second quarter of this year to become the world’s biggest PC market both in terms of unit sales and revenue, according to new data from IDC. (English announcement) The only question is: what does it mean and does the PC element really matter,  as PCs are showing signs of becoming a sort of high-tech dinosaur, being rapidly replaced by lighter, more adaptable devices like smartphones and tablets computers. But first the data. According to IDC, PC makers shipped 18.5 million computers worth $11.9 billion to China in the second quarter, versus 17.7 million units worth $11.7 billion for the US. For anyone who’s doing the math, you can see that the average PC sold in China cost around $643, versus $661 for the US, meaning the difference in price wasn’t all that big for the two markets. But at the end of the day, the PC is probably a dying breed and will ultimately be replaced by an array of more specialized, portable devices much the way that desktop PCs have become all but obsolete due to the rise of laptops. As that happens, China will undoubtedly become a leader in many new product categories, at least in terms of sales, simply due to the sheer size of its market, much the way that it has in terms of Internet users and cellphone subscribers. But the recent rise of Apple (Nasdaq: AAPL), which overtook Lenovo (HKEx: 992) in terms of overall China sales (previous post), shows that China’s market for computing devices will become much more competitive as the equation changes, with global players fighting much more aggressively for a piece of this huge market. Hewlett-Packard’s (NYSE: HPQ) planned sale of its PC business will also throw an interesting new element into this  equation, providing the buyer of that business with a strong launch pad to take an important piece of this fast-growing market.

Bottom line: China’s emergence as the world’s biggest PC market was inevitable due to its size, bringing a new dynamic as both domestic and international players fight for a bigger piece of the pie.

该来的终究来了。据IDC最新数据，中国今年第二季度无论是从出货额上还是出货量上均超过美国，成为全球最大的个人电脑（PC）市场。唯一的问题是：这有 何意义？PC真的重要吗？当今，PC正在某种程度上变成高科技恐龙，被更轻、更便捷的设备如智能手机与平板电脑等迅速替代。不过，还是先来说数据。根据IDC的数字，中国第二季度PC出货量达1,850万台，发货额共计119亿美元；相比之下，美国第二季PC发货量1,770 万台，发货额117亿美元。简单计算一下，在中国每台PC的平均售价约为643美元，美国则为661美元，也就是说在两个国家PC售价差别不大。但是归根到底，PC可能是垂死的一个产品系，最终会被一系列更加专业、便于携带的设备取代，正如目前由于笔记本电脑的崛起，台式机已经江河日下一样。按此形势，中国必定在很多类新产品上都是领头羊，至少在销量上会这样，原因仅仅在于中国市场规模实在是太大了，正如现在中国互联网用户与手机用户全球排名第一一样。但是苹果公司(AAPL.O)近期发威，最近在华整体销量超过本土品牌联想(0992.HK)，显示随着市场形势的改变，中国电脑类市场竞争还会更加激烈，国际品牌将会更加努力争取份额。惠普(HPQ.N)计划出售其PC业务，也会为这个变化的形式中加入新的元素，为买家冲击中国市场提供一个很好的启动基础。

一句话：中国市场规模巨大，成为全球最大PC市场是自然而然、不可避免的结果，在国内外企业竞争这块大蛋糕之际，为他们加入新的动力。

Related postings 相关文章:

◙ Apple on a China Roll, Ambushing Nokia, Lenovo 苹果伏击诺基亚和联想 在华发展势如破竹

◙ Lenovo’s LePad: Finally a Game Plan That Could Work 联想乐Pad：终於拿出了像样的东西

◙ Acer and Dell: One Cuts, One Pastes 宏基裁人、戴尔建厂

Education: DeVry Deal Showcases Corporate Opportunity

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While big question marks loom over many of China’s growth industries like high-tech and alternate energy, one area that seems resistant to the turbulence is education, as evidenced by a new deal announced by a unit of US education services giant DeVry (NYSE: DV). The announcement is short and simple, saying the China licensee of Becker Professional, DeVry’s finance education arm, will provide education services to GE’s (NYSE: GE) China employees to bring them up to global accounting standards. (company announcement) I’ve said before that I’m quite bullish on the education sector, as Chinese and many Asians in general have shown a willingness to invest lavishly on themselves and their children to improve their chances in these ultra-competitive societies — even and perhaps especially in times of economic trouble. Chinese companies have been the first to realize and take advantage of this seemingly recession-proof demand, with industry leaders New Oriental Education (NYSE: EDU) and TAL Education (NYSE: XRS) both reporting their revenue rose around 60 percent in the second quarter, though each gave more conservative guidance for the third quarter. (previous post) Still, those kinds of numbers, when other sectors are reporting much slower growth, should certainly be catching the attention of major Western players like DeVry and Disney (NYSE: DIS), which last year officially launched a chain of Disney-branded English learning schools for pre-school and elementary school aged children. The corporate tie-up like the one just announced by DeVry is a sign of things to come, as Western companies and Chinese alike look to bring their employees up to international standards with this kind of educational corporate tie-up. As that happens, look for both the domestic and international players to keep notching strong growth in this market thirsty for education services.

Bottom line: DeVry’s new education services deal with GE China reflects continuing strong demand for such services from both Chinese consumers and businesses and bodes well for the sector.

Related postings 相关文章:

◙ New Oriental Shows Why Education Pays 新东方告诉你为何教育会有回报

◙ China NY Stocks on Cusp of Comeback? 中国赴美上市公司股票即将触底反弹？

Gaopeng, Kaixin Spotlight China Internet Turmoil 高朋网、开心网凸显中国互联网混乱现状

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Signs of turbulence continue in China’s cutthroat and overinflated Internet space, with worrisome news coming from Kaixin, China’s second biggest social networking site (SNS), as well as Gaopeng, the group buying site operated by Groupon and Tencent (HKEx: 700). First Gaopeng. Despite its denials that anything is amiss, Gaopeng has just laid off 400 employees across its various locations, in what looks like the biggest in a steady stream of cuts that have made headlines in the Chinese media in recent weeks. (Chinese article) The company is facing intense competition from at least three major rivals, Lashou, Dianping and 55tuan, which collectively raised $500 million in venture funding earlier this year (previous post) and are clearly engaging in a cutthroat grab for share in this market that is certainly lucrative but lacks the size to support so many major players. I suspect that Groupon started up Gaopeng early this year to give itself a “China story” to please US investors in the run-up to its upcoming IPO. But now that it sees how cutthroat the market is, it could easily shutter Gapeng before the offering in a bid to hide what are undoubtedly some ugly financials from investors from this struggling joint venture. Meantime, Kaixin, which lost a race earlier this year with Renren (NYSE: RENN) to become China’s first publicly listed SNS, has broken a months-long silence to address recent reports of massive subscriber losses. The company’s low-key founder Cheng Binghao held an unusual media briefing in which he said Kaixin’s previous explosive growth rate is slowing to a more realistic level, and added the days of heady growth for China’s Internet may be finished. (Chinese article) Cheng said the company now has 117 million registered users, just behind Renren’s 124 million, though I suspect many of those are inactive, which Cheng hinted is the case. With that kind of a slowing growth story and the current general market turbulence, along with the threat of a new SNS service from Sina (Nasdaq: SINA) (previous post), I wouldn’t look for Kaixin to move ahead with its IPO until it has a better story to tell, which would be next year at the earliest.

Bottom line: Downbeat reports surrounding Gaopeng and Kaixin reflect a China Internet market in turmoil, with consolidation and few new IPOs likely through the rest of the year.

中国互联网急剧扩张的混乱状况持续，开心网和高朋网接连传来令人担忧的消息。先是美国Groupon和腾讯联合在华经营的团购网站–高朋网。尽管公司否认运营出现状况，但高朋网在各地站点已裁员400人，似乎是逐步裁员规模最大的一次，近几周高朋网裁员成为中国媒体热门焦点。高朋网面临团购市场竞争加剧的局面，大的竞争对手至少包括三家：拉手网、大众点评网和窝窝团，上述三家公司今年早些时候共募集5亿美元风险投资，也正积极投入团购市场的激烈厮杀。团购市场利润确实可观，但规模不足以支持如此多的大型团购网站。我怀疑，Groupon今年稍早成立高朋网时，是想给自己创造一个“中国故事”，从而在其IPO筹备阶段取悦美国投资者。但鉴于中国团购市场竞争激烈的现状，Groupon或在IPO前轻而易举地关闭高朋网，避免投资者看到这一合资公司中难看的财报。今年早些时候，开心网在赴美上市赛跑中输给人人网(RENN.N)，未能成为第一家在美国上市的社交网站。开心网打破一个月来的沉默，回应近期有关开心网用户大量流失的报导。开心网低调的创始人程炳皓罕见举行媒体吹风会，称开心网爆发性增长期已经过去，增长放缓至一个更实际的水平，并称中国互联网强势增长的时代或已结束。程炳皓透露，开心网现有1.17亿注册用户，稍低于人人网的1.24亿人，但我怀疑，其中许多并非活跃用户，程炳皓的表态似乎暗示了这一点。鉴于开心网用户增长放缓，目前市场普遍混乱，再加上新浪(SINA.O)微博的威胁，我认为，除非开心网能有更好的故事，否则不会推进其IPO，估计最早也要到明年了。

一句话：有关高朋网和开心网的负面消息表明，中国互联网市场现状混乱，今年内或将进行调整，不太可能有新的IPO。

Related postings 相关文章:

◙ Sina, Tencent Pose Threat in SNS, E-Commerce 新浪腾讯攻城掠地

◙ Advertising Squeeze Continues, Slowdown Looms 广告支出初显放缓迹象

◙ Gaopeng Lay-Offs Auger Ad Spending Downturn 1高朋裁员预示网络广告支出或大幅下降

 

Baidu Comes Under Government Fire 政府“修理”百度

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The central government, unwilling to directly tackle Baidu (Nasdaq: BIDU) as a monopoly despite its dominant position in the online search market, is instead attacking the company on several smaller fronts in a bid to curtail its influence. In one of two major developments, Chinese media are reporting that the telecoms regulator is preparing new online search regulations that would force all search engines to clearly state which of their results are paid and which are organic. (English article) Baidu currently mixes both types of results together, a practice many consider misleading, and charges advertisers a premium to have their paid results appear alongside organic results — something global leaders Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) stopped doing long ago after public criticism. The influential China Central Television (CCTV), China’s national broadcaster, has been leading the charge on this front, fanning consumer outrage by broadcasting a series of investigative reports on the issue. (English article) In the second development, another industry regulator has called on all major Web sites to stop offering pirated music, in what again looks like a shot aimed at Baidu, whose popular music swapping service is rife with pirated songs. Baidu last month signed its first-ever deal with threel major music labels to provide legal copies of their songs, but added it had no plans to shut down the more popular site offering pirated titles. (previous post) These latest two government campaigns appear to be Beijing’s attempt to create a more level playing field in the lucrative online search market by attacking two of Baidu’s most popular tactics, both of which are ethically questionable. While such moves may help global leaders like Google and Yahoo, which operate in more transparent fashion, they are unlikely to boost domestic search engines like those operated by Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU), which probably also use questionable tactics similar to Baidu’s.

Bottom line: The central government appears to be launching a campaign to rein in monopolistic Baidu, but will need to do more to create a more level playing field in online search.

对于百度(BIDU.O)在中国网络搜索市场上一家独大的局面，政府虽不愿直接开刀，但为限制其影响力，似乎已选择在一些小的方面敲打百度了，就以最近两个较大的事件为例来说明问题。其一，据中国媒体报导，电信监管机构正准备出台在线搜索新规，迫使所有搜索引擎明确列出哪些是付费搜索结果、哪些是自然搜索结果。目前百度是把两种结果混在一起，容易造成误解，这种做法因遭非议，早已被谷歌(GOOG.O)与雅虎(YHOO.O)等弃用。中国中央电视台在炮轰百度问题上打起头阵，针对百度相关问题播报了大量的调查性报导，鼓动公众情绪。 第二例，另一家行业监管机构要求各大网站停止提供盗版音乐，此举看起来又是针对百度，人气很高的百度音乐搜索服务充斥着盗版歌曲。百度上月与三大唱片公司签署正版音乐使用协议，为用户提供合法音乐内容，但百度补充说无意关闭人气更高的、提供盗版音乐下载的音乐搜索服务。政府近来这两大举措出击百度两种受欢迎的应用，其意似乎在于为在线搜索市场创造更加平等的竞争环境。此类举措可能让操作较为透明的谷歌与雅虎等全球巨头渔翁得利，但国内搜索引擎，如腾讯(0700.HK)与搜狐(SOHU.O)等，恐怕难得到好处。

一句话：政府似乎开始出招修理一家独大的百度，但要想创造网络搜索市场竞争氛围更加公平，政府还要拿出更多行动。

Related postings 相关文章:

◙ Baidu’s One-Dimensional Growth Story Continues 百度亮丽财报难掩前景不确定性

◙ Baidu Seeks Diversification in Tudou Talks 百度求购土豆，寻求多元化

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

China Car Brands Look Like One-Hit Wonders

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It’s Monday morning, which means there’s not too much news in the market yet and instead it’s a good time for one of my period looks at the broader auto industry. A wide array of new data is out on July sales, which show the continuing decline of China’s top 3 independent auto brands, BYD (HKEx: 1211), Chery and Geely (HKEx: 165). BYD’s top-selling model, the F3, continued its plunge in July, with sales down 41 percent from a year earlier. Sales for Chery’s top model, the QQ, grew just 0.9 percent, lagging the broader market and causing it to lose share. Geely doesn’t have a model in the top 20, but its overall sales fell 6.3 percent in July, a month when overall passenger vehicle sales rose 12 percent. The stumbling of these top 3 domestic brands bears a striking resemblance to a similar trend from six or seven years ago, when domestic cellphone makers like TCL (HKEx: 2618) and Ningbo Bird suddenly emerged to challenge the then-dominant positions of market leaders Nokia, Motorola and Samsung. But in that instance the domestic firms soon fell almost as quickly as they rose, never to return in most cases. The reason was relatively simple: they all soared to prominence on the strength of one or two popular models that captured the public’s interest. But then they failed to follow with more popular models in an industry where product life-cycles typically run around 2-3 years, causing them to quickly fade. The same now appears to be happening with these domestic car makers. Both BYD and Chery found quick success with the F3 and QQ, respectively, but are now struggling to develop popular new models as these successful ones near the end of their life cycles. If they fail to find other new hits soon, they could easily find themselves following in the footsteps of faded names like Ningbo Bird and TCL.

Bottom line: Domestic Chinese car brands Geely, BYD and Chery face a slow decline into irrelevance unless they can develop new models to replace their fast-fading older popular ones.

Related postings 相关文章:

◙ Ford Comments Signal Accelerating Price Pressure 福特暗示中国车市价格压力加剧

◙ Nissan Jumps on China Expansion Bandwagon, Overcapacity Ahead 日产加入中国市场扩张潮 未来料产能过剩

◙ BYD Toots Electric Horn in Shenzhen 比亚迪在深圳奏响电动汽车号角

Lenovo Discovers the Right Formula a Little Too Late 联想再次“晚一步”

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Leading Chinese PC maker Lenovo (HKEx: 992) has finally discovered a winning formula, beating market expectations with a profit that doubled in its latest fiscal quarter on the back of strong sales in its core emerging markets business. (company announcement) Unfortunately for Lenovo, however, it has discovered the formula just a little too late, underscoring its record for late arrivals to new product areas and boding poorly for its future. The company boasted that six years after its landmark purchase of IBM’s (NYSE: IBM) struggling PC business, it has finally managed to turn that unit around and posted a $77 million profit for its developed markets business in the quarter ended June 30. But it was less boastful about the fact that Apple (Nasdaq: AAPL), in a much shorter period, has come from nowhere to overtake it in terms of revenue in its home China market, which accounts for about half of Lenovo’s sales. (previous post) The company was also more muted on its recently launched smartphone and tablet PC offerings, the LePhone and LePad, which are clearly two important products of the future as people move away from traditional laptops and desktop models towards lighter, more mobile computing. According to calculations in one Chinese meida report, the company has sold just over 700,000 LePhones in the last 3 quarters in China (Chinese article), and the company itself admitted to an anemic 80,000 LePads sold in the latest quarter. (English article) That compares with Apple’s estimated 1 million iPads sold in China in the latest quarter alone, although obviously Apple has a head start there. Still, considering Lenovo’s weak performance for these key new products in its own home market, where it has numerous advantages over Apple, its latest seemingly strong results point to strong headwinds in the future, both at home and abroad.

Bottom line: Lenovo’s strong profit in its latest quarterly results masks serious weakness in the key future growth areas of smartphones and tablet PCs.

中国电脑巨头联想(0992.HK)终于发现了制胜法宝，公布其季度净利超乎预期地增长一倍，这主要得益于其核心的新兴市场业务强劲。但不幸的是，联想发现这个法宝的时机有点太晚了，正如联想在进军新产品领域方面常常都会晚一步，这对未来可不是个好兆头。联想收购IBM个人电脑(PC)业务已六年，终于已扭亏为盈，在截至6月30日的会计年度，联想成熟市场业务贡献了7,700万美元的利润，但这与苹果相比就不值一提了。苹果在比这短得多的时间里，在中国市场几乎从零开始，在该市场销售已经超过联想。此外，联想最近推出的智能手机和平板电脑，市场反响平平，而这两个产品代表着未来发展方向。据中国媒体报导，联想在过去三个季度中乐Phone销量仅略超出70万支，而联想也表示上季乐Pad仅卖出8万台。与之形成鲜明对比的是，单是上季苹果iPad在中国销量就达到100万台，当然苹果在平板电脑市场是占了先机的。中国是联想的本土市场，本应享有天时地利，其新产品表现却远远不及苹果，因此尽管其最新季度财报貌似强劲，未来不管在国内市场，还是国际市场，都还面临沉重压力。

一句话：联想最新季度获利强劲，但千万别忽略其在智能手机和平板电脑领域的薄弱表现。

Related postings 相关文章:

◙ Apple on a China Roll, Ambushing Nokia, Lenovo 苹果伏击诺基亚和联想 在华发展势如破竹

◙ Lenovo-NEC: Let the Defections Begin 联想与NEC结盟注定失败

◙ Lenovo Makes Strange Move Into Germany 联想进军德国令人摸不着头脑