Bottom line: NetEase is likely to complete a spin-off of its news division, possibly through a sale to Sina, while Postal Savings Bank’s massive IPO will meet with tepid reception due to limited growth prospects.
NetEase plans portal spin-off
Two significant but very different IPOs are in the headlines as we get set for the Mid-Autumn holiday break, one from China’s vibrant private sector and the other from a big state-run behemoth. In the former category is NetEase (Nasdaq: NTES), one of China’s oldest Internet companies, which is reportedly mulling an IPO for its news portal, one of its original businesses with a history dating back to the 1990s. In the other news, China Postal Savings Bank has reportedly placed most of the shares for its massive $8 billion listing with a group of 6 cornerstone investors. Read Full Post…
Bottom line: Western Digital’s new China joint venture is unlikely to raise national security objections from Washington, but could add to a looming global semiconductor glut due to an aggressive build-up of the sector by Beijing.
Western Digital China JV moves ahead
Just a half year after Washington killed its plans for a major investment from China, memory storage giant Western Digital (Nasdaq: WDC) is thumbing its nose at US security regulators by moving ahead with joint venture that was part of the earlier tie-up plan. I’m probably overstating Washington’s objections in this instance, since US officials never formally vetoed a deal that would have seen Western Digital sell 15 percent of itself to China’s Unisplendour for $3.8 billion.
Instead, Washington simply said the deal would require a review for national security risk, refuting Western Digital’s earlier view that the sale shouldn’t require such approval. The threat of a review was enough for both sides to decide to scrap the sale, though their latest announcement shows they are continuing ahead with a joint venture that was part of their broader tie-up plan. Read Full Post…
Bottom line: A new alliance between Youku Tudou, Weibo and UCWeb, combined with reports of the imminent resignation of Youku’s CEO, point to a sale of Weibo parent Sina to Alibaba within the next 6 months.
New alliance hints at Sina sale
Two new developments involving several Alibaba-backed (NYSE: BABA) assets are hinting at a major new shakeup in the firm’s online video and social networking (SNS) division, which could include an acquisition of stalwart web portal Sina (Nasdaq: SINA) that I’ve been predicting for a while. This particular series of corporate shuffles is quite complex, but does seem to hint that Alibaba is trying to rationalize and synergize some of its major web-based entertainment and SNS assets outside its core e-commerce business. Read Full Post…
Bottom line: Beijing should mete out stiff punishment, including big fines and jail sentences, for companies that fraudulently obtained subsidies under the government’s program to promote new energy vehicle development.
Chery accused of fraud in new energy car scandal
What started as a wave of criticism against new energy car makers for producing mediocre products that nobody wanted is rapidly becoming a major scandal, with reports that many of those companies submitted fake information in order to get lucrative government subsidies. The scandal netted major car makers King Long and Chery last week, and reports have emerged that even industry leader BYD (HKEx: 1211; Shenzhen: 002594 )may be suspected of illegally obtaining government grants.
Such trickery is an extension of another trend that sees Chinese companies rush into unfamiliar sectors that Beijing has targeted for development, often resulting in a flood of mediocre or inferior products into the market. Such rushes not only create big market disruptions, but also result in huge sums of wasted investment and slow down development of emerging industries. Read Full Post…
Bottom line: The iPhone 7 series of smartphones will log lower sales in China at their launch than the previous iPhone 6 series, due to minimal changes and similar designs to their predecessors.
iPhone 7 to get tepid China reception
By Xiaohan Tay
Apple(Nasdaq: AAPL) announced the launch of its latest iPhone 7 and 7 Plus on 7 September and there were a few things that stood out. The new iPhone is finally IP67 certified and water resistant, has a better dual camera with a lower aperture, and longer battery life. These are upgraded features that consumers will appreciate. Read Full Post…
Mid-Autumn Festival is fast approaching, and that means time for all the usual scandals and other negative news surrounding mooncakes, the ultra-heavy treat that suddenly becomes a fixture in city life during this time. I’ll touch on some of those stories in a moment, including one headline on the plunging black market for mooncake vouchers and another on how unhealthy mooncakes really are.
But this year I want to focus on a more positive mooncake story, and one that’s quite personal. That story saw my university unexpectedly resume its practice of giving out mooncakes to employees this year, ending a two year ban of a tradition that dates back at least for the last few decades.
The resumption did come with a number of changes, mostly designed to discourage waste and which I’ll detail shortly. Read Full Post…
Bottom line: Xiaomi’s progress in India shows its global expansion is moving ahead despite a recent setback in Brazil, but it will need to replicate that success in other markets to revive its sputtering fortunes.
Xiaomi wristband wins North Korean fans
Former smartphone sensation Xiaomi is in a couple of headlines as the week winds down, both showing how the company is looking to foreign markets to offset its sputtering business in China. The bigger of the items shows how quickly Xiaomi is advancing in India, where it has consolidated its position as the third largest brand just 2 years after entering the market. The second item is a bit quirkier, saying that Xiaomi’s wearable fitness band has become a hot-seller in North Korea, a market that isn’t exactly known for its consumer culture. Read Full Post…
Bottom line: Tencent’s new crown as Asia’s most valuable company reflects the rapid growth of China’s private sector in the last decade, and could auger an eventual challenge to global social networking leader Facebook.
Tencent takes crown for most valuable Chinese company
Media are fawning on Chinese Internet sensation Tencent (HKEx: 700), which has just edged past telecoms giant China Mobile (HKEx: 941; NYSE: CHL) to become the nation’s most valuable publicly traded company. Such a feat would have been unthinkable a decade ago, when the nation’s private sector was still in its infancy and state-run monoliths like China Mobile still dominated China’s corporate landscape. But much has changed over the last 10 years, and Tencent in many ways reflects the huge potential that investors see in a Chinese private sector that has come to dominate many emerging industries like Internet-based products and services. Read Full Post…
Bottom line: China Mobile and its peers could take a big hit to their voice call revenues as they roll-out anti-fraud systems to counter negative publicity, while Alibaba could suffer similar but smaller impact to its pre-paid phone card business.
China Mobile cracks down on phone conmen
The same week it officially lost its crown as China’s most valuable listed company, China Mobile (HKEx: 941; NYSE: CHL) is back in the headlines with more bad news related to a swell of publicity involving the nation’s rampant phone fraud. Normally I might dismiss this story, since phone fraud has been common in China for years and is really nothing new. But another similar case this year ended up becoming a huge headache Baidu (Nasdaq: BIDU), and cost the online search giant huge sums in both market value and lost revenue. Read Full Post…
Bottom line: Rumors that Baidu may be planning to merge its take-out dining and group buying units with Meituan-Dianping are consistent with recent market trends, but are less likely to be true due to Baidu’s strong denial.
Baidu denies merger plan for group buying, dining units
I normally try to avoid writing about rumors that lack strong foundation, but the latest gossip about a potential new mega tie-up between 2 non-core units of online search leader Baidu(Nasdaq: BIDU) and group buying giant Meituan-Dianping look too spicy to ignore. Baidu came out with a statement late on Tuesday denying any talks were taking place to combine its take-out dining and Nuomi group buying services with Meituan-Dianping. But that said, any veteran China watcher will know that companies frequently deny such rumors even when they’re true. Read Full Post…
Bottom line: JD’s driverless vehicle delivery program will face problems due to chaos they create on city streets, while its naming of an Yihaodian CEO augers a prolonged new round of price wars with Alibaba for online grocery shoppers.
JD pilots driverless vehicles, names Yihaodian CEO
E-commerce giant JD.com(Nasdaq: JD) is making a couple of major new moves as the summer ends, led by an interesting program using ground-based driverless vehicles to deliver its goods. At the same time, the company has just installed one of its own top executives as CEO for Yihaodian, the online grocery specialist it recently acquired from US retailing giant Walmart (NYSE: WMT). This kind of corporate shuffle is quite common after such acquisitions, and we can probably expect to see some aggressive moves by new Yihaodian CEO Yu Rui as he takes over at the helm of the struggling company. Read Full Post…
