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News Digest: September 5, 2012 报摘： 2012年9月5日

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The following press releases and media reports about Chinese companies were carried on September 5. To view a full article or story, click on the link next to the headline.
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  • Japan’s NEC (Tokyo: 6701) to Sell Lenovo (HKEx: 992) Stake in $235 Mln Deal (English article)
  • SEC Charges China Sky One (Nasdaq OTC: CSKI) With Securities Fraud (English article)
  • Wanda Group Completes Acquisition of AMC Entertainment Holdings (Businesswire)
  • News Report Exposes Xiaomi Re-Selling Used Phones as New (Chinese article)

Sharp Explores China Cellphone Tie-Up 夏普联手富士康打造低端手机

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There’s an interesting story out today saying that fading Japanese electronics giant Sharp (Tokyo: 3128) is exploring the possibility of a cellphone tie-up with Taiwan’s Foxconn (HKEx: 2038), the latest wrinkle in a story that is seeing a growing number of Japanese firms hand over many of their struggling consumer electronics to Chinese firms that specialize in low-cost manufacturing. The latest media reports indicate that talks are very preliminary, saying only that top executives from Foxconn and Sharp met in Beijing this week to discuss such a tie-up. (English article; Chinese article) It adds that Foxconn could find such a tie-up attractive as it seeks to develop its own brands and move away from its core contract manufacturing, a low-margin business that sees it make products for other companies such as Apple’s (Nasdaq: AAPL) popular iPhones. For Sharp, such a tie-up would be part of its ongoing strategy to either sell or outsource many of its less profitable businesses to other firms. In this case, Sharp is still clearly a recognizable name in the cellphone space, but it’s also a decidedly second-tier player and its cellphone operations are probably not very profitable. That could be a good fit for Foxconn, which could significantly lower Sharp’s manufacturing costs and also has good resources for developing new products. In fact, this deal, if it happens, would look strikingly similar to a growing relationship between Chinese PC specialist Lenovo (HKEx: 992) and Japan’s NEC (Tokyo: 6701). That relationship began last year when NEC and Lenovo formed a joint venture that saw Lenovo take over the operation of NEC’s PC operations. (previous post) Like Sharp in cellphones, NEC is a relatively well known PC brand, but also a decidedly second-tier player that is rapidly losing relevance outside its home Japan market. After that tie-up was formed, NEC announced later in the year that it was re-entering the China cellphone market after withdrawing several years earlier. (previous post) There were few details in that announcement, but the timing so close after the PC tie-up with Lenovo led me to speculate that NEC was going to rely heavily on Lenovo’s well-established sales channels in China to relaunch its cellphones in the market. I further speculated that if NEC was successful in gaining some market share, it could eventually put its cellphone business into another joint venture with Lenovo, effectively handing over the brand to the Chinese firm. Such a move would certainly make sense for Lenovo, as it wants to rapidly build up its cellphone business but has had trouble developing its own brand, especially at the higher end of the market where it faces still competition from names like Apple, HTC (Taipei: 2498) and Samsung (Seoul: 005930). I would give these latest talks between Sharp and Foxconn a 50-50 chance of resulting in a new joint venture, and would look for more similar tie-ups in the next couple of years.

Bottom line: Sharp’s cellphone talks with Foxconn have a 50-50 chance of producing a joint venture, and reflect the growing ties between Chinese and Japanese electronics makers.

Related postings 相关文章:

◙ Lenovo Sister Firm Looks to Japan, Taobao Quits “围城”日本：弘毅想冲进去 淘宝想撤出来

◙ NEC China Cellphones: New Lenovo Tie-Up? NEC计划重回中国手机市场 或与联想联姻

◙ Lenovo-NEC: Let the Defections Begin 联想与NEC结盟注定失败

News Digest: December 2, 2011

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The following press releases and media reports about Chinese companies were carried on December 2. To view a full article or story, click on the link next to the headline.

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◙ Hua Hong NEC, Grace Close To Merger – Sources (English article)

◙ Sina-Invested (Nasdaq: SINA) Mecox Lane (Nasdaq: MCOX) Reports $14.4 Mln Q3 Loss (Chinese article)

◙ Sina (Nasdaq: SINA) Weibo Launches Voluntary Real Name System (English article)

◙ NetEase’s (Nasdaq: NTES) Board Approves New Share Repurchase Program (PRNewswire)

◙ Lenovo (HKEx: 992) To Launch Windows-Based Smartphone Next Year (Chinese article)

US China Bashing Hits New High With Telecoms Probe 华为中兴应巧选时机应对调查

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China-basing has become an unusually major theme in the current US election season, with rhetoric hitting a new high as politicians launch yet another anti-China investigation, this time targeting 2 of the nation’s most prominent exporters, Huawei Technologies and ZTE (HKEx: 763; Shenzhen 000063). Telecoms headlines were buzzing loudly late last week with word of the investigation, which was launched by the Republican-controlled House of Representatives to examine potential threats to national security posed by US-based telecoms networks built by Chinese companies. (English article) This very same concern was put forward by India a couple of years ago, resulting in a temporary ban of the import of Chinese telecoms equipment into the country. After months of talks, which reportedly saw Huawei and ZTE reveal their source codes to the Indian government, both companies were allowed to resume selling their products in the country. Furthermore, if Huawei and ZTE products really do pose such a threat, then most of Europe is now at major risk of Chinese telecoms spying, since telcos in most of its countries now count Huawei and ZTE as 2 of their major telecoms equipment suppliers. Of course, all this talk in the US is nothing new, especially in an election season when politicians have nothing to lose by sounding a tough anti-China note. Politicians in the House of Representatives have already launched anti-dumping probes into Chinese solar cell makers and passed legislation that would punish China as a currency manipulator in the last few months (previous post), and the Obama administration itself also recently denied Huawei permission to bid on contracts to upgrade government-run networks meant for use in emergencies. (previous post) Huawei’s US spokesman took a prudent approach to this latest investigation, saying it was natural for the US to reassure itself of national security on such sensitive matters. If Huawei and ZTE are smart, they will put their US campaigns on hold until after the election and let Beijing issue the periodic statement expressing outrage and disappointment at all the latest unnecessary but politically-motivated anti-China rhetoric.

Bottom line: A new US investigation into security threats posed by Huawei and ZTE is the latest in a string of anti-China campaigns that will continue until the 2012 presidential election.

Related postings 相关文章:

◙ Huawei: Fight Them With Innovation 华为欲借创新论低调进军美国市场

◙ Huawei Undermines US Push With Foolish Request 华为讨要说法很不明智唯有阻碍进军美国市场

◙ Huawei, Lenovo Look to Foreign Advisors in Westward Drive

Shanda’s Private Ploy: For Real or Market Manipulation? 盛大拟退市：是动真格还是虚晃一枪？

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The big news of the day from the tech world is most certainly the announcement by online game operator Shanda Interactive (Nasdaq: SNDA) that its founder and chairman Chen Tianqiao may take the company private, in the latest development for US-listed China shares that have seen their prices plummet in the last few months amid a broader confidence crisis. (company annoiuncement) The real questions, of course, is whether Chen is really serious, and, if he is, will we see other companies follow his lead as they search for investors who better appreciate their shares. My prediction is that Chen’s offer, which would give shareholders $41.35 per ADS, or a 24 percent premium to their last closing price, is largely a stunt that Chen has no intention of actually executing. The offer is explicitly non-binding, and, in a nod to the market’s skepticism, Shanda’s shares rallied 14 percent after the announcement but still finished on Monday at $38.33, or well below the privatization offer price. Some Chinese observers said perhaps Chen wants to bring his shares back to China to list in his home market where the company is better known, perhaps on a new international board for overseas-registered firms expected to launch in the next year or so. (Chinese article) This could be a long-term possibility, although Shanda might have to wait a while, as many other bigger-name firms like China Mobile (HKEx: 941; NYSE: CHL), Lenovo (HKEx: 992) and HSBC (HKEx: 0005; London: HSBA) are already cuing to list on this new high-profile international board and will probably be given priority. In addition, there’s no reason that Shanda can’t list its shares both in the US and China at the same time, which makes a privatization of its US shares even less necessary. At the end of the day, Chen loves the spotlight and any privatization would move his company back into the shadows for a while, which he would no doubt dislike. Instead, this latest move to privatize looks largely like a show, and Shanda and other US-listed China firms will continue to maintain their overseas listings despite current negative sentiment.

Bottom line: A management-led plan to privatize Shanda Interactive is most likely just a stunt that will never happen, and other US-listed China firms are unlikely to follow with similar actions.

Related postings 相关文章:

◙ CDC Kicks Off China Bankruptcy Parade 中华网打开赴美上市公司破产魔盒

◙ US China Stocks: Bloodbath Becomes Correction 在美上市中资股遭抛售 迈入股价修正新阶段

◙ US-Listed China Firms Fight Back — Finally 中国赴美上市公司最终还击

Haier Takes Strong SE Asia Step With Sanyo Buy 海尔购三洋白电业务

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Home appliance maker Haier (HKEx: 1169), a former rising star among Chinese exporters that has gone quiet in recent years, has re-entered the spotlight with its pending purchase of the Southeast Asian refrigerator and washing machine business of Japan’s Sanyo Electronics. (company announcement) This deal could provide a nice boost for Haier, which was already working with Sanyo in some of the markets included in this deal, but strong execution will be critical — something Haier may or may not be able of doing. Sanyo says it is selling the business to Haier as part of a broader reorganization to eliminate overlap with its parent, Panasonic (Tokyo: 6752), which purchased a majority stake in Sanyo in late 2009.  I have no doubt that this is true, but it’s also true that Sanyo lost money in its last fiscal year, and I wouldn’t be surprised if its home appliance division contributed to those losses. Part of those losses no doubt come from any of Sanyo’s costs structures in expensive Japan that Haier would inherit as part of this deal. Haier would presumably move any such operations to cheaper locations to make the business profitable. Working to Haier’s advantage, the business it is buying is also relatively modest, with revenue of around $1 billion. Haier also brings a few strong points to this deal, including its previous joint ownership of the Sanyo Thailand refrigerator business. Overall, given the relatively small scale of the business Haier is acquiring, combined with Haier’s own experience working in developing markets like its own home China market, this purchase looks like a relatively safe one for Haier and should ultimately contribute to its bottom line if it can successfully integrate the business into its own global network.

Bottom line: Haier’s plan to purchase Sanyo’s Southeast Asia white goods business looks like a smart and manageable move for Haier in its quest to become a global brand.

中国家电制造商海尔集团<1169.HK>重新进入人们的视野，公司将购入日本三洋电机在东南亚的洗衣机和冰箱业务。这项交易可对海尔起到很好的提振作用，但关键是执行，海尔在这方面的能力还不是很好说。三洋电机称向海尔出售业务属整体重组的一部分，目的是砍掉与母公司松下<6752.T>重叠的业务。我认为这种说法不假，但还有一点也不假：三洋上财年亏损，如果家电业务对其亏损有一定“贡献”，我不感意外。毫无疑问，部分亏损源於三洋在日本的成本结构，其中部分可能也会转嫁到海尔身上。海尔估计会让此类业务转入成本较低的地点，以实现盈利。海尔所购业务规模不算大，营收大约10亿美元，这点对海尔有利。总体而言，由於海尔所购业务规模不大，加上海尔自身在新兴市场的丰富经验，此桩交易对海尔似乎相对保险，而且最终应会增加海尔的净利，但前提是海尔能将收购的业务成功融入其全球网络中。

一句话：在海尔努力成就全球品牌地位之际，公司购三洋在东南亚白电业务看起来比较明智、可控。

Related postings 相关文章:

◙ Philips Taps Electric Rice Bowl With Shanghai Deal 飞利浦收购奔腾 进军中国电饭煲市场

◙ Lenovo-NEC: Let the Defections Begin 联想与NEC结盟注定失败

 

News Digest: July 5, 2011

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The following press releases and media reports about Chinese companies were carried on July 5. To view a full article or story, click on the link next to the headline.

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◙ NEC, Lenovo (HKEx: 992) Finalize JV, Launch Japan’s #1 PC Company (Businesswire)

◙ Google (Nasdaq: GOOG) Maps Chinese License Still Awaiting Approval (Chinese article)

◙ Chinese Internet company Xunlei Limited sets IPO pricing terms (English article)

◙ Baidu: Still No Overseas Income After 3 Years, 700 Mln Yuan (Chinese article)

◙ China Mobile (HKEx: 941) Exec: Still No Agreement With Apple (Nasdaq: AAPL) (Chinese article)

Trust in Baidu? No One Likes a Net Hog

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Interesting reports out there saying a company called Hudong is seeking anti-trust action against Chinese search gorilla Baidu (Nasdaq: BIDU) and seeking 790 million yuan in damages. The damages figure is really beside the point. What’s interesting here is that Baidu, by virtue of its phenomenal success at cornering China’s online search market, has become a lightning rod for unhappy would-be competitors appealing to China’s increasingly assertive anti-trust regulators to intervene and create a more level playing field. Investors may have cheered Google’s (Nasdaq: GOOG) retreat from China a year ago, but the departure of the only serious competitor to Baidu has just provided more fuel for the anti-trust complainers. The growing potential for government intervention, coupled with Baidu’s sky-high stock valuation, are making this one look increasingly like a hot potato at least until the regulator takes a stand on this issue. Others that could also be at risk for similar reasons include Internet juggernaut Tencent (HKEx: 700), which is also the frequent target of complaints by many China web firms, Alibaba Group’s Taobao and potentially even well-connected giants like Lenovo (HKEx: 992).