Bottom line: Dell’s massive new China commitment could foreshadow a major new tie-up that could see it sell a big stake of itself to a local partner, while Lenovo could be eyeing a major shift to OEM production for its floundering smartphone unit.
Dell bets big on China
Two of the world’s top PC makers are in the China headlines today, with homegrown leader Lenovo (HKEx: 992) and US giant Dell both making major strategic moves. But in a sign of the times, neither item is related to either companies’ core PC business, showing just how quickly personal computers are losing their relevance in the fast-changing gadget world.
Dell’s announcement contains the biggest headline figure, with the company announcing a new commitment to spend a whopping $125 billion in China over the next 5 years. But the Lenovo news is equally intriguing if it’s true, and hints the company could be preparing a major shift for its floundering move into smartphones. That shift would see Lenovo’s smartphone unit build up its business of taking manufacturing orders from third-party brands, a model known contract manufacturing or OEM production. Read Full Post…
Bottom line: Mindray is likely to finally privatize following its announcement of a new, lowered offer price, kicking off a new round of revised bids for some of the other Chinese companies that received similar offers earlier this year.
Mindray lowers buyout offer price
In a move that didn’t get investors too excited, medical device maker Mindray (NYSE: MR) announced that a group aiming to privatize the company has lowered its earlier offer price to reflect recent declines in the company stock. Shareholders greeted the news by dumping Mindray stock, which ended the latest session at $23.60, or 13 percent below the revised offer price of $27 per American Depositary Share (ADS).
Frankly speaking, I’m quite impressed that this deal is moving forward at all, since I fully expect most of the 3 dozen similar privatization bids announced earlier this year to ultimately collapse. Mindray is the first of the huge field of buyout candidates to update investors on the status of its bid since shares of US-listed Chinese companies began to tank in sync with a much louder sell-off on China’s domestic stock markets in June. Read Full Post…
Bottom line: Major new funding raising by Uber, its Chinese equivalent, and Alibaba’s logistics arm reflect continued interest in such leading Internet firms by major global Investors, though funding will slow sharply for smaller, less known players.
Three new Internet deals raise $5 bln
It seems my earlier forecast was incorrect that major fund-raising for Chinese Internet companies could be cooling due to waning investor sentiment during the recent market volatility. The latest headlines include 3 major new deal close to completion, worth a collective $5 billion. The largest has Didi Kuaidi, the homegrown Chinese equivalent of private car services giant Uber, on the cusp of new a funding deal worth $3 billion. The second has the actual Uber also near a deal to raise $1.2 billion for its Chinese business, as it prepares to spin off the unit into a separate company.
Meantime, the smallest of the deals has e-commerce leader Alibaba ‘s(NYSE: BABA) Cainiao logistics unit also on the verge of a deal to provide hundreds of millions of yuan for a small logistics company. In this case the move appears aimed at helping Cainiao to build up its stable of partners providing logistics service. The addition of such outsiders would also help to validate Alibaba’s 2-year-old program to plow 100 billion yuan into its logistics capabilities.
Bottom line: Apple is likely to log strong orders for its new iPhone 6S models, aided by its own strong reputation and aggressive promotions by China’s telcos for their new 4G service.
New iPhones on order in China
What a different 3 years makes. In that brief period China has transformed from ugly stepchild to a new Cinderella for gadget giant Apple (Nasdaq: AAPL), whose newly announced iPhone 6S models will make one of their first global stops in the world’s largest smartphone market. That’s the word trickling out from China-based sources, which were leaking the information as Apple unveiled its latest iPhone models at a globally-watched event in California.
While most eyes were fixated on that launch for the new series of iPhones, China watchers were more focused on when the models will come to a market that is now Apple’s largest outside the US, and even briefly passed the US early this year. Apple’s China fans weren’t disappointed, with reports that the nation’s big 3 telcos would begin taking orders for the new iPhones just a day after the US launch event. Read Full Post…
Bottom line: Major new moves by Minsheng Investment, SPD Silicon Valley Bank and Ant Financial spotlight Shanghai’s leading role in China’s push to liberalize its financial services sector with more private investment.
Shanghai leads charge into private banking
Three Shanghai banking stories are in the headlines today, spotlighting the leading role the city is playing as China tries to develop a private banking sector. Leading the trio of headlines is the year-old China Minsheng Investment, a major new private equity company backed by the nation’s oldest private bank, which is exploring a major new infrastructure project in Indonesia.
The second story has media reporting that Ant Financial, the finance unit of e-commerce giant Alibaba (NYSE: BABA), will become the biggest tenant in Shanghai’s new tallest building when Shanghai Tower opens for business soon. The final news bit involves Shanghai’s own SPD Bank (Shanghai: 600000), whose joint venture with US-based Silicon Valley Bank has finally received permission to do business in China’s currency, the yuan, 3 years after the venture’s formation. Read Full Post…
Bottom line: Alipay’s move into Hong Kong through a tie-up with Marriott marks the start of a major global expansion for the online payment service, with Hong Kong the likely first stop due to its strong China ties.
Alipay in new Marriott tie-up
Homegrown Chinese electronic payments service Alipay is taking its growing rivalry with state-owned behemoth UnionPay to the global stage, with word of a major new move outside its home China market. That move will see Alipay follow a familiar route for many globally-minded Chinese companies, with a first stop in Hong Kong. It has Alipay forming a major new alliance in the former British colony with global hotel giant Marriott (NYSE: MAR), as the first stop on an overseas tour that could ultimately see the financial services affiliate of Alibaba (NYSE: BABA) challenge global names like Visa (NYSE: V) and MasterCard (NYSE: MA).
This latest move is part of a larger new tie-up between Marriott and Alipay, which is part of the Alibaba-affiliated but separately owned Ant Financial. The tie-up is mostly limited to mainland China initially, but significantly includes Hong Kong-based hotels. It also marks one of the biggest moves to date into Hong Kong by Alipay, which is better known as an electronic payments service used for smaller items usually costing $20 or less using shoppers’ online accounts and smartphones. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 10. To view a full article or story, click on the link next to the headline.
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3 China Telcos to Start Taking iPhone 6s Orders from Sept 10 (Chinese article)
Alibaba’s (NYSE: BABA) Koubei to Spend 5 Bln Yuan on Offline Merchants in 2015 (English article)
Minsheng Investment to Spend 30 Bln Yuan on Indonesia Industrial Park (Chinese article)
Coolpad (HKEx: 2369) Shares Drop 17 Pct at Trading Resume, Amid Qihoo Dispute (Chinese article)
LeTV (Shenzhen: 300104) Invests in Battery Charging Company (Chinese article)
Bottom line: Alibaba’s latest sell-off is part of an ongoing correction in the company’s value, reflecting a new era of more realistic expectations from investors.
Bloom continues to shrivel from Alibaba’s rose
After years of basking in the hype of adoring investors who briefly valued it even higher than much-older and far more global rival Amazon (Nasdaq: AMZN), Chinese e-commcerce leader Alibaba (NYSE: BABA) has entered a new phase centered on more realistic expectations for the company. That new phase has seen Alibaba’s stock tumble to a more realistic level this year on a steady series of bad news, including the latest reports that one of its key sales metrics wasn’t as strong as previously estimated last quarter.
But that wasn’t the only bad news for Alibaba in the last few days. Earlier reports this week said the company was cutting back in its college recruitment, in what looked like another sign of slowing growth. (previous post) An Alibaba official seemed to refute those initial reports, only to have a second series of reports emerge that seemed to confirm that the recruitment slowdown was indeed happening. (English article) Read Full Post…
Bottom line: The next few months are likely to see a battle unfold for control of Coolpad, with Qihoo as the likely victor and a smaller chance that LeTV could emerge as a white knight savior.
Tug of war brews for control of Qihoo
What’s likely to become an entertaining battle for control of smartphone maker Coolpad (HKEx: 2369) has taken a new twist, with the company criticizing its joint venture partner Qihoo 360 (NYSE: QIHU) for being a control freak. The remarks from an unnamed Coolpad executive represent the first semi-official response to a surprise move by Qihoo to shut down their joint venture formed less than a year ago.
Qihoo’s said earlier this week that it planned to exercise a “put option” that would effectively shutter the joint venture, forcing Coolpad to pay $1.5 billion to buy out Qihoo’s stake. Qihoo said it was entitled to make the move after Coolpad violated a non-compete clause in their agreement by selling a major stake in itself to online video firm LeTV (Shenzhen: 300104), which was also planning a move into the smartphone business. But the struggling Coolpad can hardly afford the $1.5 billion price tag that Qihoo has said dissolution of the venture will cost. Read Full Post…
Bottom line: JD.com’s new share repurchase program looks like a good use of cash due to likelihood of a rebound for its stock, while its tie-up with a top Korean peer also looks like a good way to target Chinese consumers who like imported goods.
JD launches share buy-back
After amassing huge quantities of cash through a series of IPOs and other fund-raising activities, Chinese Internet companies are rapidly discovering a new use for those idle funds by buying back their own stock. The latest such move has JD.com (Nasdaq: JD), the nation’s second largest e-commerce company, announcing a new plan to buy back up to $1 billion worth of its shares, on the belief they have become undervalued in a recent sell-off.
JD was also in the headlines for another new tie-up with a major Korean retailer, announcing the opening of a flagship store to offer imported goods from South Korean e-commerce giant Lotte.com. This particular move is part of an ongoing drive by Chinese e-commerce firms to offer more imported goods to local consumers who are often wary of domestic products that are fakes and suffer from poor quality. Rival Alibaba (NYSE: BABA) has embarked on a similar drive, announcing its own new tie-up with Germany’s Metro Group the same day as the JD announcement. (company announcement) Read Full Post…
Bottom line: Qihoo’s latest move forcing Coolpad to buy-out their joint venture could be a bargaining tactic to pressure Coolpad into ditching a separate tie-up with LeTV, and could spark a bidding war for Coolpad by Qihoo and LeTV.
Bidding war brewing for Coolpad?
Smartphone maker Coolpad (HKEx: 2369) has become a bit of a hot potato lately, though it’s not clear if the company is hot property or a pariah these days. The company was one of China’s earliest smartphone makers, and quickly built up share as a leading name in its fledgling home market. But rampant competition as others piled into the market hurt its prospects, prompting it to form a major equity tie-up with security software maker Qihoo (NYSE: QIHU) last December, and then with online video firm LeTV (Shenzhen: 300104) last month.
The LeTV tie-up surprised many, and led Qihoo feeling betrayed. Now Qihoo, whose equity tie-up came in the form of a joint venture, appears to be seeking revenge for that betrayal. In its latest move to express its outrage, Qihoo has just announced it will exercise a non-compete option in their agreement that will force Coolpad to buy out their joint venture at double the current market value. Read Full Post…
