Bottom line: Huawei’s ongoing surge should help to consolidate its position as China’s leading domestic smartphone brand, while a newly formed cell tower operator will relieve China’s 3 telcos of the burden of owning and operating such assets.
New cell tower operator takes shape
The telecoms space is buzzing on both the operator and consumer products sides, with surging smartphone maker Huawei and a new cell tower operator called China Tower both rising in the latest headlines. The higher profile of these 2 telecoms headlines has Huawei continuing its rise to become the world’s third largest smartphone brand, stealing the title from the fading Xiaomi. Meantime, all 3 of China’s big state-run telcos have come out with one of their simultaneous announcements saying they have formally transferred their cell tower assets to China Tower.
This pair of stories is quite different, but the bigger picture is one of trying to improve by becoming more efficient and diverse. In the case of Huawei the company is trying to leverage its long experience in making telecoms equipment to diversify into the consumer-oriented smartphone space. In the second case, China’s telecoms regulator is trying to improve efficiency among the nation’s 3 stodgy telcos by doing something that carriers in the west did on their own long ago. Read Full Post…
Bottom line: Lenovo and Tsinghua Unigroup may be considering rival bids for EMC following a $67 billion offer from Dell, but will ultimately abandon any such plans due to high price and political sensitivities.
Unigroup, Lenovo eying rival bids for EMC?
As the blockbuster deal that would see faded PC giant Dell buy leading memory products maker EMC (NYSE: EMC) for $67 billion buzzes through the high-tech headlines, I thought I would look at 2 leading Chinese candidates whose names were noticeably absent on the list of companies that might make rival bids for EMC. China tech watchers will know I’m referring to local PC giant Lenovo (HKEx: 992), which has never seen an acquisition opportunity it didn’t like, and the more recently acquisitive Tsinghua Unigroup.
Both of these names could be interested in EMC for similar reasons, and each could theoretically make rival bid for the US company. Dell’s newly announced purchase of EMC would be one of the biggest-ever sales in the high-tech world, but also includes a 60 day period where others could make counter offers. Other names mentioned that could make such bids include the likes of IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Hewlett-Packard (NYSE: HPQ), though sources say the chances of such a bid are slim. Read Full Post…
Bottom line: New global initiatives by Alibaba and JD.com are largely cosmetic and could bring some short-term support to their stocks, but both will need to show results to satisfy investors over the longer term.
Alibaba, JD in outbound migration
China’s 2 leading e-commerce firms are in a sudden migratory mood, with Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) both announcing the opening of new offices in the US and Europe. At the same time, Alibaba has also declared that the headquarters for its annual November 11 Singles’ Day shopping extravaganza will migrate, leaving its original location in the company’s hometown of Hangzhou to set up a new shop in Beijing.
The sudden migratory story looks squarely aimed at investors, who want to see these domestic e-commerce giants laying the groundwork for future growth beyond their home China market. But while opening new offices may look nice on the surface, the US and European markets that both companies are targeting will be extremely tough due to competition from entrenched local players and global giant Amazon (Nasdaq: AMZN). Read Full Post…
Bottom line: YIngli’s sudden repayment of 70 percent of a maturing bond shows the government may provide partial assistance for struggling solar panel makers, in an effort to engineer an orderly shut-down of these weaker companies.
Yingli makes surprise debt repayment
The story of China’s troubled solar panel sector has taken an unexpected twist, with word of a last-minute partial reprieve for Yingli (NYSE: YGE), one of the weakest major players that looked set to default on a large debt payment. The development came quite quickly and had a few unusual elements that hint strongly at government intervention.
Yingli’s case is important because it will show to what extent Beijing and local governments may come to the rescue of ailing companies from the solar panel sector. Earlier signals had indicated Beijing was prepared to let weaker companies fail or get acquired, providing a second round of much-needed consolidation for a sector plagued by overcapacity. But this latest sign shows Beijing and especially local governments may be losing some of that resolve as China’s economy slows. Read Full Post…
Bottom line: Mark Zuckerberg’s increasingly blatant groveling in his effort to bring Facebook to China could backfire if he’s not careful, and instead he should work behind the scenes and be patient for approval that could come within the next 1-2 years.
Top China Internet official visits Facebook last December
There’s still more than 2 months left in the year, but I’m already giving my “China Brown Noser of the Year” award to Facebook (Nasdaq: FB) founder Mark Zuckerberg, who has become quite unabashed about doing anything he can to win favor from Beijing. Chinese President Xi Jinping was front and center on the Facebook chief’s radar screen during his recent visit to the US, where Zuckerberg managed to attend 2 high profile events where China’s most powerful man was present.
I previously wrote about the first event in Seattle where numerous US tech leaders were also present. (previous post). But it was the latter White House event later in the week that prompted me to give Zuckerberg the dubious honors as China brown noser supreme. That’s because reports earlier this week revealed that Zuckerberg actually approached Xi at the White House dinner and requested an honorary name for his unborn daughter from the Chinese president. Read Full Post…
The following press releases and media reports about Chinese companies were carried on October 14. To view a full article or story, click on the link next to the headline.
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China Huarong IPO Seeks $2.8 Bln; Boost Seen From Cinda (HKEx: 1359) Surge (English article)
Alibaba (Nasdaq: BABA) Moves Main Singles Day Venue to Beijing (Chinese article)
Pepsi Cola (NYSE: PEP) Confirms Plans for Cellphone in China (Chinese article)
Shanda Games (Nasdaq: GAME) to Hold Shareholder Meeting to Vote on Privatizing (PRNewswire)
Yingli (NYSE: YGE) Repaid Substantial Amount of Notes Due Oct 13 (PRNewswire)
Bottom line: The latest global acquisitions by Tsinghua Unigroup and Unisplendour show the company still aims to build a global IT services and hardware giant, which could culminate with a new bid for Micron in 2017.
Unigroup makes major boardroom acquisition
The ambitious Tsinghua Unigroup may have abandoned its controversial bid for leading US memory chip maker Micron (Nasdaq: MU) for now, but the Chinese high-tech wannabe certainly isn’t giving up on its global aspirations. That’s my interpretation of the company’s latest moves, which include its hiring of a Taiwanese executive with ties to Micron, as well as the recent purchase of a major stake in leading US hard drive giant Western Digital (Nasdaq: WDC) by a sister company.
Unigroup and sister company Unisplendour‘s names have appeared all over the map this past year, as they form a steady string of major equity tie-ups with the likes of leading global chip maker Intel (Nasdaq: INTC) and IT services and hardware giant Hewlett-Packard (NYSE: HPQ). But the companies’ ambitious plans to create an IT services and hardware megaplex similar to IBM’s (NYSE: IBM) hit a major roadblock over the summer, when Unigroup had to scrap its plans to buy Micron due to potential political opposition in Washington. (previous post) Read Full Post…
Bottom line: New $200-$300 million investments by Baidu and Alibaba in smaller Internet companies show such fundings are starting to recede in size after peaking earlier this year.
58 Home gets investment from Alibaba, KKR
Two big fund-raising stories are in the headlines today, each involving a top Internet company as China’s “big 3” trio of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700) look for ways to put their big cash pots to work. It’s interesting to note that neither Baidu nor Alibaba is the central player in either of these latest deals, one in e-commerce and the other in online-to-offline (O2O) services. Instead, both are playing secondary roles, supporting other companies with good growth potential.
The larger of the 2 investments is seeing Alibaba participate in a new $300 million first funding round for a 1-year-old company that helps web surfers find home-based services like cleaning and baby sitting. The second has Baidu participating in a $200 million funding for an older e-commerce company with close ties to state-run cereals giant COFCO. Read Full Post…
Bottom line: China should expand its plans for a new enterprise board in Shanghai to include a place for the Chinese units of big multinationals like Yum and Uber, allowing domestic investors to buy into these big foreign names.
Calls grow for KFC parent to spin off China unit
Global fast food giant Yum Brands (NYSE: YUM) became the latest major multinational to contemplate a spin-off for its China business last week, following in the tracks of Uber and IMAX (NYSE: IMAX), two leaders in their respective areas of hired car services and big-screen theater technology. The trend acknowledges that China will soon become the world’s largest consumer market, and its unique qualities and complexities often justify creation of separate companies for these big global names to effectively develop the market.
China should seize on this trend and modify its current plans for a new Nasdaq-style enterprise board based in Shanghai to also include a place for these larger, newly created companies with foreign roots. Reports earlier this year indicated the regulator was aiming to roll out the new strategic industries board as soon as next year, though its plans could be delayed due to the recent turmoil on China’s stock markets. Read Full Post…
Bottom line: The bankruptcy of a major component supplier to ZTE and Huawei is the latest sign of stress in the overheated smartphone sector, and at least 1-2 small to mid-sized brands are likely to leave the market by mid-2016.
Smartphone price wars undermine parts maker Fosunny
Fresh new cracks are appearing in China’s smartphone making machinery, with reports that a major component supplier to Huawei and ZTE (HKEx: 763; Shenzhen: 000063) has gone bankrupt. At the same time, another report is citing bad weather for a supplier’s delivery delays that are causing Alibaba-backed (NYSE: BABA) smartphone maker Meizu to postpone the launch of a new high-end model.
The most worrisome of these 2 stories is the bankruptcy of Fosunny, a maker of metal casings used for smartphones. The company lists US wireless carrier AT&T (NYSE: T) and Europe’s Vodafone (London: VOD) among its customers on its website, but I suspect that both of those relationships come via third-parties like Huawei and ZTE that supply smartphones to those telcos. Read Full Post…
As Shanghai returns to work from the week-long holiday, we’re getting bombarded by the usual crush of statistics that show just how many people visited our city, how many traveled outside, and which tourist sites were the most popular during the fall Golden Week. But this year really seems like a case where pictures are worth a thousand words, as many of my personal images seemed to capture an intensifying mobility and anxiousness that were new and just slightly unsettling during this year’s holiday.
I spent most of the latest Golden Week here in Shanghai, though I did make a day trip to the nearby water town of Xitang where the third installment of the “Mission: Impossible” movie series was filmed. That trip, along with my single venture to the East Nanjing Road pedestrian street, gave me more than enough reminder of the huge holiday crowds that typically flood into tourist attractions in both the city as well as in nearby towns. Read Full Post…
