Bottom line: A new scandal surrounding deceptive results on Baidu’s search service could force the company to be more transparent, but is unlikely to have a long-term impact on the company’s stock.
Baidu at center of new scandal
I have to admit I’ve been quite surprised by a new storm involving the manipulative ways of search leader Baidu (Nasdaq: BIDU), which began building over the May Day holiday and became so big it splashed into global headlines after the company’s stock tanked on Monday. My surprise is mostly that this scandal became so big, since Baidu’s manipulative pay-to-play tactics for search results are quite well known, and should be obvious to anyone who uses the search engine regularly.
The scandal that’s riveting China saw a 21-year-old student search on Baidu for a hospital to treat his rare form of cancer, and select what he thought was the best option partly based on a high search ranking. The young man later died, but not before blasting the hospital and Baidu for their misleading ways, resulting in a firestorm of criticism on the web. The growing noise caused Baidu’s stock to tank on Wall Street, shedding nearly 8 percent in Monday trade. Read Full Post…
Bottom line: Apple’s sudden loss of China market share to domestic rivals Huawei, Oppo and Vivo is a wake-up call that the tech giant needs to find new cutting-edge product areas to replace rapidly commoditizing smartphones.
Apple under pressure from China brands
The latest message for Apple (Nasdaq: AAPL) is coming in loud and clear from China, saying the company needs to find the next big thing if it wants to retain its crown as a global high-tech leader. That message has been playing out from numerous sources throughout this week, starting with Apple’s own latest financial results that showed its sales plummeted in China in the first quarter of this year.
That report was quickly followed by a flurry of new data from various research houses, all showing that Apple was rapidly losing China market share to homegrown up-and-comers like Huawei, as well as a recently rising duo of Oppo and Vivo. Adding insult to the injury was the disclosure by billionaire investor Carl Icahn that he recently dumped his Apple shares over concerns about the company’s eroding position in China. Read Full Post…
The following press releases and news reports about China companies were carried on April 30. To view a full article or story, click on the link next to the headline.
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AIG (NYSE: AIG) Selling Down $1.2 Bln Stake in Chinese Insurer PICC (HKEx: 2328) (English article)
MIIT Vice Minister to Meet with Tesla (Nasdaq: TSLA) Asia Chief, Plant Coming? (Chinese article)
Yingli (NYSE: YGE) Discloses Preliminary Financial Results for Full Year 2015 (PRNewswire)
Yahoo in Talks to Sell Major Silicon Valley Office to LeEco (Shenzhen: 300104) – Report (Chinese article)
21Vianet (Nasdaq:VNET) Issues 1.75 Bln Yuan in Convertible Bonds (GlobeNewswire)
Bottom line: Major new hotel acquisitions by HNA Group and Jin Jiang reflect a recent wave of domestic consolidation and global hotel buying by Chinese companies, and could culminate with a Jin Jiang bid for France’s Accor.
Jin Jiang buys Vienna Hotels
Two of China’s biggest acquirers from the travel sector are in the headlines today, both with very European-sounding investments. The larger of those will see HNA Group, parent of Hainan Airlines (Shanghai: 600221), purchase the Belgium-based owner of the Radisson hotel brand. The other will see Shanghai-based hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600754) buy 80 percent of Vienna Hotels Group, a European-sounding name that is actually just a Chinese operator based in the southern boomtown of Shenzhen.
Both deals reflect a recent Chinese appetite for global hotel companies, including property owners and management firms. That appetite was on prominent display last month, when insurance company Anbang got in a heated bidding war for US-based Starwood (NYSE: HOT), owner of the Sheraton and Westin brands. Anbang bid aggressively against US operator Marriott (NYSE: MAR) in that battle, but ultimately bowed out under pressure from China’s insurance regulator. (previous post) Read Full Post…
Bottom line: UnionPay’s move into the dollar-denominated US credit card market looks smart strategically, but is likely to fail due to clumsy execution and fierce competition from Visa and MasterCard.
UnionPay issues first US credit cards
Watch out, Visa (NYSE: V) and MasterCard (NYSE: MA). China’s UnionPay is taking on this global pair of credit card giants on their home turf, with word that the Chinese company will launch its first US-based card in partnership with ICBC (NYSE: 1398; Shanghai: 601398), China’s biggest bank.
Of course I’m being just a bit facetious here, since UnionPay’s first-ever US credit card will have to overcome huge obstacles to ever become a serious rival to local cards from Visa, MasterCard or American Express (NYSE: AXP). But I have to at least commend UnionPay for taking the offensive, since it’s likely to face a major assault on its own home turf later this year when Beijing finally opens the Chinese credit card market to foreigners. Read Full Post…
Bottom line: A new strategic partnership between Amazon and Chinese retailer Gome could expand later this year into an equity alliance that would see the former buy about a fifth of the latter for around $500 million.
Gome ties with Amazon
A year after getting dumped by private equity giant Bain, fading electronics retailer Gome (HKEx: 493) is being courted by yet another big western name, with word of a new major tie-up with global e-commerce leader Amazon (Nasdaq: AMZN). This particular tie-up is most intriguing due to the timing, which comes after reports emerged last year saying Gome’s controversial founder Huang Guangyu might soon be freed from prison after serving about half of a 14-year sentence for bribery and insider trading.
Reports of the early release, combined with a buyout of Bain’s 5 percent stake last year, hint that Huang may be making new plans for Gome if and when he emerges from prison soon. This new tie-up with Amazon suggests that a major investment from the US e-commerce giant could be in the offing, which could be part of Huang’s plan to breathe new life into his faded retailing empire. Read Full Post…
Bottom line: A sell-off of JD.com shares after announcement of a big bond issue and a lukewarm debut for Yintech’s New York IPO reflect growing investor skepticism towards US-traded Chinese stocks due to the nation’s economic slowdown.
JD shares tank on mega bond sale
China startups may be all the rage among private equity investors in Asia, but they’re quickly losing their luster for smaller US-based investors. That seems to be the bottom line, following a lukewarm reception for the new IPO by a metals trading platform operator called Yintech (Nasdaq: YIN), and a plunge in shares of e-commerce giant JD.com (Nasdaq: JD) after it announced a major new fund-raising plan.
Neither of these stories surprises me too much, since China’s economy is standing on the cusp of a major slowdown that is likely to severely crimp all companies’ growth. But that said, it’s also noteworthy that private equity investors are still pumping billions of dollars into companies like Ant Financial and Didi Kuaidi even as sentiment cools on Wall Street. Read Full Post…
Bottom line: New China setbacks for Disney and Paramount look relatively minor, and reflect their growing involvement in a market whose fast growth is also driving Comcast’s pursuit of DreamWorks Animation.
DreamWorks’ China exposure draws Comcast
In a very rare occurrence, 3 top Hollywood studios are all in the China headlines today, reflecting the growing links between these media titans and a country that could become the world’s largest entertainment market in the next decade. Leading the headlines are relatively minor China setbacks for Disney (NYSE: DIS) and Paramount Pictures, which are facing new battles with Beijing censors and unhappy local clients, respectively.
Meantime, DreamWorks Animation (NYSE: DWA) is reportedly in talks to be bought by US cable TV giant Comcast (Nasdaq: CMCSA), and some are pointing out that a major driver behind the deal may be DreamWorks’ strong China exposure. That’s because DreamWorks Animation has bet big on the market, with a major joint venture in Shanghai that produced the latest installment in its Kung Fu Panda series. Read Full Post…
Anyone who has followed this series on my favorite Chinese stocks knows that all of my picks so far have come from the private sector, and that I’m generally not a fan of big state-owned enterprises (SOEs). But given the huge weight that SOEs carry in China’s economy and their preferential status in many key sectors, I feel obliged to recommend at least one such company in this series.
With that background in mind, my top pick among this group is the Hong Kong-listed Citic Ltd (HKEx: 267), one of China’s oldest conglomerates and a company often considered one of the nation’s most entrepreneurial SOEs. I particularly like Citic for its financial services focus, which includes its private equity arm, a bank and China’s leading brokerage, all of which are more commercially driven than many of China’s other big financial companies. Read Full Post…
Bottom line: LinkedIn’s rapid growth in China has been aided by its low-key approach to the sensitive market, and a high degree of autonomy for its local unit from its distant US-based parent.
LinkedIn reaches 20 mln China users
US business networking giant LinkedIn (NYSE: LNKD) is quietly emerging as one of the few foreign success stories in China’s social networking (SNS) landscape, using a low-key approach that has helped it steer clear of controversy. I haven’t written much about the company since its slightly controversial entry to China 2 years ago, when it issued a statement acknowledging it would be subject to the country’s strict self-censorship rules.
LinkedIn’s ability to avoid controversy is probably due in large part to its low-key approach, and its choice of an industry veteran with experience in both the US and China to head its local operations. True to his low-key style, company chief Derek Shen is making some minor headlines today with comments at a Shanghai event, including his disclosure that LinkedIn has signed up more than 20 million local users during its first 2 years in China. Read Full Post…
Bottom line: New court actions by Huawei, Weibo and NBA star Michael Jordan reflect China’s efforts to crack down on white collar crimes that are common but threaten to hamper the country’s economic development.
Huawei tussles with corporate thief
The headlines are bubbling today with a few notable stories from the courtroom, which spotlight the slow but steady progress China is making against corporate cheats who undermine the nation’s business climate. Leading the news is telecoms giant Huawei, which is chasing a rogue former executive who was already jailed once for stealing company property and tried to continue his illegal ways after being released from prison.
Another headline has a judge ruling in favor of the Twitter-like Weibo (Nasdaq: WB), which accused a software maker of illegally stealing data from its service. Last but not least there’s the NBA, whose legendary Michael Jordan is closing in on a high-court decision that could finally force a rogue sporting goods maker to stop illegally using his trademark. Read Full Post…
