Bottom line: UnionPay’s launch of a new mobile payments service is a long-overdue answer to challenges by Alibaba and Tencent, and is somewhat late but also vital to maintaining its eroding position in China’s electronic payments market.
UnionPay rolls out mobile wallet card
After coming under growing assault over the last 2 years from the private sector, state-run behemoth UnionPay is finally fighting back by launching a mobile-based payment service to counter rival products from Internet giants Alibaba (NYSE: BABA) and Tencent(HKEx: 700). There’s no mention of either of China’s top 2 Internet companies in an announcement of the new service from UnionPay, even though Alibaba’s Alipay Wallet and Tencent’s WeChat Pay are clearly present in the subtext.
UnionPay is just the latest big state-run company to feel the heat of private sector competition, which is shaking up China’s entire financial sector that was previously dominated by big state-run companies. But UnionPay’s case is even more extreme, since the company operated a state-granted monopoly financial transactions settlement network for the first decade of its existence, similar to global systems run by credit card giants MasterCard (NYSE: MA) and Visa (NYSE: V). Read Full Post…
Bottom line: Alibaba’s new Disney tie-up is unlikely to gain much traction due to overcrowding in China’s Internet video market, while its tie-up to sell $8 billion worth of bad debt from asset manager Huarong looks mildly positive.
Alibaba in streaming tie-up with Disney
E-commerce giant Alibaba(NYSE: BABA) is in a trio of headlines as we head into the year-end holidays, led by a new tie-up with Disney (NYSE: DIS) as it looks to leverage its growing stable of media assets. But in a sign of how much attention the company now attracts, the other 2 stories in the headlines aren’t really ones that Alibaba would care to trumpet too much.
The larger of those is mildly positive, with media reporting that Alibaba’s Taobao C2C marketplace is teaming up with one of China’s leading bad asset sellers to auction off $8 billion in soured loans. The other headline is one that’s becoming a small headache for Jack Ma, and involves Evergrande Taobao the soccer team that he co-owns. That story has one of Japanese car maker Nissan’s (Tokyo: 7201) China joint ventures suing the club for breach of contract related to a high-profile sponsorship dispute. Read Full Post…
Bottom line: Yum’s plan to potentially list its China unit in Hong Kong, alongside a concurrent New York listing, looks like a smart move that would make the stock more accessible to Asian investors and give it a more local flavor.
Yum eyes HK listing for China unit
The struggling China unit of Yum Brands (NYSE: YUM), owner of the KFC and Pizza Hut chains, has just released a slew of new details on its prospects, including a long-awaited return to same-store sales growth after several years of declines. The announcement comes as Yum, under shareholder pressure, prepares to spin off its China operations into a separately listed company.
Apart from the new forecast for a return to same-store sales growth, one of the most interesting China-related details in the new announcement is the potential for a Hong Kong listing by Yum’s China unit as part of the spin-off. That move would make Yum China’s shares available to many mainland Chinese investors, and would also add a distinctly Asian flavor to a company that has now seen as a downscale purveyor of greasy western fast food. Read Full Post…
Bottom line: Huawei’s smartphone unit is finishing 2015 on a solid note, meeting its annual targets a month early, while Xiaomi will need to show better overseas performance next year to regain some of its fading momentum.
Huawei meets smartphone targets early
A flurry of new numbers are coming from the smartphone space as we head into year end, reflecting the different focuses of domestic leaders Huawei and Xioami. When the history books are written, 2015 will be remembered as the year when Huawei surged to become the world’s third biggest smartphone brand behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930), and also the clear Chinese leader. But for Xiaomi, 2015 could be a year the company would rather forget, as it lost momentum in its home China market due to stiff competition and saw slow progress in its overseas expansion.
The latest headlines have Huawei forecasting its overall revenue will surpass the $60 billion mark this year, equating to a rise of 29 percent or higher from last year’s $46.5 billion. That would mark a nice acceleration from the previous year’s 20.6 percent revenue growth, with much of the gains coming from the company’s rapidly growing smartphone division. Read Full Post…
Bottom line: Setbacks in 2 major global chip acquisitions by Chinese buyers show the Chinese are likely to be seen as foreigners by western manufacturers who would prefer to be bought by more familiar hometown rivals.
China chip buyers hit resistance in US, Taiwan
Two new developments in China’s global chip-buying spree are showing that political opposition isn’t the only obstacle Chinese buyers will encounter in their quest to acquire foreign technology. The Chinese could also face competition from rival suitors, with word that recent bids by the fast-growing Tsinghua Unigroup and newcomer China Resources have both hit such resistance.
In the first case, Unigroup’s recently announced plan to buy 25 percent of Taiwanese chip tester Siliconware Precision Industries (Taipei: 2325) has been followed by a new counter bid from Taiwan’s own Advanced Semiconductor Engineering (Taipei: 2311). The second case has US-based Fairchild Semiconductor (Nasdaq: FCS), which is in the process of merging with ON Semiconductor (Nasdaq: ON), rebuffing a higher rival bid from China Resources. Read Full Post…
Bottom line: The large premium being offered in Trina Solar’s new buyout reflects a recent flood of private equity chasing privatization deals for US-listed Chinese firms, and could breathe new life into many previously announced bids that have become dormant.
Trina gets rich buyout offer
The homeward migration by US-listed Chinese firms has taken a turn into the new energy sector, with solar panel maker Trina (NYSE: TSL) becoming the first major player in the space to announce a management-led buyout offer. Throughout the current round of buyouts that has seen some 3 dozen US-listed Chinese companies announce privatization bids this year, few have come in the new energy sector that includes about a half dozen of China’s top solar panel makers listed in New York.
That’s not to say that New York has been a comfortable place for these companies. Most of the big names saw their shares soar in their first few years in New York, only to watch them tumble between 2011 and 2013 as panel prices plunged due to massive oversupply. That downturn saw the departure of 2 of the sector’s biggest names from Wall Street, though the exit of Suntech and LDK was prompted by bankruptcy rather than privatization. Read Full Post…
Bottom line: Beijing should make investigators be more transparent when making publicly visible moves like detaining company executives, or risk financial turmoil when markets are left to try and guess what’s happening.
Transparency needed when big execs are detained
Beijing’s anti-corruption campaign took an unexpected turn into the private sector last week with the sudden disappearance of Guo Guangchang, one of China’s richest men and chairman of one of its most successful private conglomerates, Fosun Group. Word of Guo’s disappearance sparked widespread speculation and also some panic among investors in his dozen listed companies, forcing the group to scramble for answers to avoid financial chaos.
The case highlights the need for greater transparency by anti-graft investigators as they dig deeper into China’s corporate realm to root out corruption that has become all too common in the nation’s business culture. Read Full Post…
Bottom line: Hong Kong’s IPO market will heat up in the first quarter of next year for non-financial Chinese offerings, while privatizations of Chinese firms from New York are likely to accelerate at raised offering prices.
Taomee, Wuxi Pharma join homeward migration
A series of new listings in Hong Kong and de-listings from New York are heating up the headlines as we head toward year-end, reflecting 2 of the major themes for 2015 IPOs. Hong Kong hasn’t exactly been a hotbed for new listings this year, but has been gaining recent momentum that includes news of a $300 million planned IPO by hotpot chain Haidilao. At the same time, other reports are saying that Bank of Zhengzhou has just launched its own Hong Kong IPO, spotlighting another trend that has seen a flurry of mainland Chinese banks try to tap the market to bolster their financially-stretched balance sheets.
Meantime across the Pacific in New York, children’s website Taomee (NYSE: TAOM) and drug maker Wuxi PharmaTech (NYSE: WX) have come closer to completing previously announced privatization plans, as part of a broader exodus of Chinese companies from the US. The former case has Taomee announcing it has formally signed a buyout deal to privatize the company, and Wuxi Pharma saying it has completed its own privatization. Read Full Post…
Bottom line: Jack Ma’s hubris is the main driver behind Alibaba’s purchase of the South China Morning Post, and the newspaper’s declining fortunes are unlikely to reverse under its new ownership.
Pride drives Jack Ma’s SCMP purchase
After weeks of speculation, e-commerce giant Alibaba (NYSE: BABA) has finally announced its purchase of Hong Kong’s SCMP Group (HKEx: 583), parent of one of Asia’s oldest and most influential newspapers, the South China Morning Post. Many reports are focusing on the implications of mainland Chinese ownership of a major newspaper in Hong Kong, where editorial standards are much more western and strict self-censorship policies like those required by Beijing don’t exist. But in my view, it’s more interesting to look at what this deal means commercially for Alibaba, and whether it makes sense.
Let’s begin with the news, which came as a slight surprise because it will see Alibaba buy the media assets of SCMP Group for an undisclosed price. (English article; Chinese article) That marks a shift from earlier reports, which had indicated that Alibaba founder Jack Ma would personally buy a minority interest to avoid the sensitive issue of mainland Chinese ownership of a Hong Kong newspaper. There’s no more detail on the actual transaction, though one report estimates the purchase will cost Alibaba around $100 million. Read Full Post…
This week we’ll take a break from the taxi wars and bike promotions shaking up the streets of Shanghai and turn instead to our city’s health care system, where a quieter revolution is taking place in our hospitals. This particular campaign has seen Shanghai’s scores of hospitals and clinics aggressively cut back on their use of antibiotics, in response to growing global concerns that over-prescription of such drugs could lead to the rise of a new generation of superbugs.
This particular campaign is long overdue, and reflects a broader Asian fascination that gives drugs an almost god-like status with the ability to cure anything from minor sniffles to far more serious ailments like chronic pain. That view contrasts sharply with the US, where drugs are revered for their ability to cure many ailments but are also seen as limited in their ability to combat more ordinary conditions like common colds and body aches. Read Full Post…
Bottom line: The detention of Fosun Chairman Guo Guangchang could signal a move into the private sector for Beijing’s anti-corruption drive, a move that would put top executives in traditional sectors like finance and real estate most at risk.
Questions hover over disappearance of Guo Guangchang
Beijing’s 2-year-old anti-corruption drive has taken an unexpected twist into the private sector, with word that one of the country’s richest men and head of the high-profile Fosun Group was taken away by police. There’s very little detail on reasons behind the disappearance of Guo Guangchang, sometimes called the Warren Buffett of China for his investing acumen. But speculation centers on his potential involvement in corruption investigations involving a major figure in his home base of Shanghai.
Up until now, nearly all of the dozens of company executives being investigated for corruption have come from the state-run sector, where officials are much more likely to use their position for personal gain. But corrupt practices like lavish gift giving and bribery are a fundamental part of doing business in China, and there’s little doubt that such practices also occur in the country’s vibrant private sector. Read Full Post…
