Bottom line: Fox’s new “Simpsons”-themed China stores will meet with lukewarm response, and will pave the way for announcements later this year of a new Chinese theme park and film production joint venture.
Fox brings ‘Simpsons’ stores to China
After years of standing on the sidelines, media mogul Rupert Murdoch is finally taking his first big step back into China with plans to open a new chain of concept stores based on the popular TV series “The Simpsons”. An executive with Murdoch’s Twentieth Century Fox (Nasdaq: FOX), which owns the animated TV series, discussed this particular plan last year, even mentioning the “Simpsons” name at that time. Still, some are scratching their heads at this particular concept, since the TV series is relatively unknown in China and was actually banned here until recently.
This announcement is probably just a teaser for the bigger events that will come later this year, including announcement of a 20th Century Fox theme park for China, and possibly a new film production tie-up. Fox is actually playing catch-up to other major Hollywood studios in all 3 areas, following its withdrawal from the market with the sale of its main Chinese TV station to Shanghai’s China Media Capital (CMC) in 2010. Read Full Post…
Bottom line: Shanda Group is likely to emerge this year as China’s next major global investor with 2-3 major deals, while Renren’s plans to transform into a high-tech investment company stand a 50-50 chance of success.
Shanda, Renren see future in investment
Two former Internet high-flyers that later flamed out are looking for new beginnings in finance, with Shanda Group and Renren (NYSE: RENN) both discussing their transformation plans in separate reports this week. Shanda was once China’s leading online game operator, and its chief Chen Tianqiao dreamed of creating an online entertainment empire. Similarly, Renren was once China’s leading social networking service (SNS) opeartor, at one time often called the Facebook (Nasdaq: FB) of China.
But both companies got overtaken in recent years, and were largely marginalized by better-run rivals like Tencent (HKEx: 700), NetEase (Nasdaq: NTES) and Weibo (Nasdaq: WB). As a result, Shanda founder Chen Tianqiao has recently sold off the various pieces of his former empire, most recently closing the sale of his original Shanda Games operation. Renren is also in the process of privatizing, as its core SNS business rapidly shrivels. Read Full Post…
This week’s Street View touches on news involving fireworks and bird flu, 2 rites of winter in Shanghai that bring pleasure for some but headaches and even fear for many in the case of bird flu. The first item brought a big smile to my face, as I read that Shanghai will deploy an army of thousands to enforce a complete ban on fireworks inside the outer ring road throughout the Spring Festival period. The second item was a bit more ominous, as the city reported the first 2 cases of humans infected with the deadly H7N9 bird flu virus this year.
Both of these stories come as we head into our coldest period of winter, with temperatures set to hit some of their lowest levels in years under the influence of a super cold front. It’s during times like these that people look to festive activities like setting off fireworks to add some cheer to the otherwise cold and Spartan winter atmosphere. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 27. To view a full article or story, click on the link next to the headline.
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Fox (Nasdaq: FOX) to Launch First Simpsons Stores Soon in China (English article)
Ctrip (Nasdaq: CTRP) Transaction Volume to Reach 1 Trillion Yuan by 2020 – CEO (Chinese article)
Tesla’s (Nasdaq: TSLA) Elon Musk Working to Find Chinese Production Partner (English article)
Family and Friends Lending App Jiedaibao Wins 2.5 Bln yuan Series B Funding (English article)
Merchants Bank (HKEx: 3968) Invests $200 Mln in Didi Kuaidi, Ties in Finance (Chinese article)
Bottom line: Alibaba’s stock will come under pressure through the middle of the year due to short selling interest tied to China’s correcting stock markets, but the shares should see some upside in the second half.
Bears pile into Alibaba
In what looks like a case of history repeating itself, the bears are suddenly piling into shares of leading e-commerce company Alibaba (NYSE: BABA), with investors shorting the stock at levels not seen since late 2014. Company watchers will recall that the last time Alibaba bears were so active was shortly after its record-breaking IPO, when the stock was soaring as legions of short-term investors traded shares in pursuit of quick profits.
That initial post-IPO hype is now well in the past, and so are most of the lock-up periods that were posing some potential downside to the stock in its first year of trading. That means that rather than focusing on company-specific issues, this time the short sellers are betting on something much bigger: a prolonged downturn in China’s economy. That would affect the entire retail sector, including Alibaba’s core e-commerce business. Read Full Post…
There are at least three ways Netflix (Nasdaq: NFLX) can win in China. And they are realistic options that have worked for others.
But first, a few points about the situation in Chinese online streaming.
Point 1: The China entertainment market is rocketing upwards, and it will soon be the largest in the world. This huge opportunity is fueling a major fight between China’s cash-rich Internet and media giants. This hyper-competition is also creating a window of opportunity for Netflix because it has valuable things to offer to these competitors as they slug it out.
Point 2: Online media in China is very political and likely no foreign company will have control of a license or broadcast rights. So Netflix needs to be realistic about what is possible.
Point 3: The other big issue is the strong local competition. If Netflix wants to win in online streaming in China, they need to be prepared to fight for a long time.
Bottom line: Beijing should note the latest trouble signal from ZTE in the smartphone sector, and take steps to prevent future similar boom-bust cycles by encouraging more responsible investing incentives by local governments.
ZTE cautious on China smartphone market
The latest trouble signal from China’s overheated smartphone sector came last week from telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063), which said it would remain cautious in the world’s largest market even as it announced ambitious new sales targets for the rest of the world this year. The company’s relative caution in its own home market comes amid a looming shakeout that is just the latest in a series of boom-bust cycles that have become all too common in China’s business landscape in the last 3 decades.
While market forces play a large role in these bubbles, regional governments looking to spur economic growth may also share some responsibility by offering incentives that encourage local firms to enter unfamiliar areas where the chance of failure is high. Such failures often result in big financial losses and mass layoffs, negating any economic benefit they were supposed to create. Read Full Post…
Bottom line: Apple’s accelerated China store openings and February roll-out of its Apple Pay service represent efforts to boost its local profile, as the broader China smartphone market shows signs of saturation and is likely to contract this year.
Apple Pay coming to China in February
Global smartphone leader Apple (Nasdaq: AAPL) is kicking off the New Year by accelerating its efforts in China on two fronts, opening more of its trademark Apple Stores as it also prepares a February launch for a local version of its Apple Pay electronic payments service. Both campaigns have been in the headlines in recent days, extending a broader campaign by CEO Tim Cook to pay more attention to a market that could soon surpass the US to become Apple’s biggest.
At the same time, these latest campaigns come amid a growing chorus of predictions that sales of Apple’s iPhones could soon start to slow sharply. A primary factor behind that slowdown could be China, where the smartphone market has become saturated and is expected to contract in 2016 after 3 years of explosive growth. Read Full Post…
Bottom line: BYD’s EV sales are likely to see strong growth based on government-supported buying in China this year, but could slow sharply in 2017 if China’s economic slowdown accelerates.
Li Lu boosts BYD stake
Chinese electric vehicle (EV) maker BYD (HKEx: 1211; Shenzhen: 002594) shot into the headlines in 2008 when investment guru Warren Buffett bought 10 percent of the company. But it has struggled to find a mass audience for its cars since then, at times raising doubts about its future. That seems to be changing recently, as a nascent surge in its home China market has quietly begun to charge up the business, bringing some excitement back to the company.
Now one of BYD’s biggest backers, the man who first introduced the company to Buffett, is quietly building up his own stake in BYD, and disclosed that his LL Group recently bought more shares to boost its stake to 8.24 percent. (HKEx announcement) That’s up from 6.3 percent of BYD’s H-shares that LL Group, formerly known as Himalaya Capital, held at the middle of last year, and is a sign of growing confidence by LL Group founder Li Lu. Read Full Post…
Bottom line: Toys “R” Us’ big China expansion plan contrasts with pull-backs and departures for many major western retailers in the tough market, and could be aimed at generating buzz in the run-up to a potential IPO.
Toys “R” Us steps up China expansion
China’s economy may be headed for a rapid slowdown that casts a chill on the retail sector, but don’t tell that to US veteran Toys “R” Us. The retailer whose name is synonymous with children and fun has disclosed it’s planning an ambitious China build-up that will see it increase its local store count by 30 percent this year, even as other major western retailers are closing shops and even leaving the difficult market.
All that leads to the question of whether Toys “R” Us really intends to open so many new stores at a time of uncertainty, or whether this China toy story is part hype with other motivations. If the latter is the case, this particular story could be designed at least partly to generate some excitement around an otherwise boring traditional retailer, as it gets set to potentially re-list in New York more than a decade after being privatized. Read Full Post…
Bottom line: Weibo’s elimination of the 140-character length limit for posts looks like a good strategic decision, as it consolidates its position as an alternative news source to traditional state-owned media.
Weibo lifts length limit for posts
Social networking (SNS) leader Weibo (Nasdaq: WB) is taking a radical new step and dropping the rule that strictly limits the length of microblog posts, in its bid to remain relevant and avoid being marginalized by dominant rival WeChat. The move is quite bold on the one hand, but also probably long overdue, in a world where people have many SNS options that provide more flexibility in the kinds of information and messages they share online.
The decision looks broadly positive for Weibo, which has evolved into an informal news source for many of its 200 million users. The company operates a service nearly identical to American SNS pioneer Twitter (NYSE: TWTR), and rapidly rose to become the clear leader in the space after Twitter itself was blocked in China in 2009. Read Full Post…
