Bottom line: China’s sudden worries over Apple’s new love affair with India are probably overblown, but do reflect Apple’s need to find new growth engines to offset its rapidly cooling China sales.
China frets over Apple’s new dance with India
Apple(Nasdaq: AAPL) CEO Tim Cook’s surprise first trip to India 2 weeks ago may be firmly in the history books, but it’s still front page news in the Chinese headlines, revealing an unexpected angst in the world’s biggest smartphone market. China has grown accustomed to being at the center of Apple’s universe, as Cook has made numerous trips to the country over the last 3 years in a bid to curry favor with Beijing and Chinese consumers. So the sudden trip to India, a rival with China in many ways, appears to be causing some unexpected sweating by Chinese who worry they may soon lose their spot as the leading object of Apple’s affections. Read Full Post…
Bottom line: Xiaomi’s rapid slide in China is unlikely to ease soon and it’s likely to fall out of the top 5 brands before year end, while Huawei’s lawsuit against Samsung reflects a new confidence with its recent rapid rise.
Xiaomi rapidly losing steam in China
New headlines are shining a spotlight on 2 of China’s best-known domestic smartphone brands, even though the fast-rising Huawei and rapidly sinking Xiaomi are moving in opposite directions. New data shows just how badly Xiaomi has slipped over the last year at home, where the former market leader is now in danger of dropping out of the top 5 following a huge decline in first quarter sales. Meantime, the same data show a continued surge for Huawei, which is showing its growing confidence by a filing a new patent lawsuit against global smartphone leader Samsung (Seoul: 005930). Read Full Post…
Bottom line: Apple’s $1 billion investment in a Chinese car services firm and establishment of an India R&D lab reflect China’s strength as an incubator of strong private companies and India’s as a software development hub.
Apple’s Tim Cook calls on China, India
It’s been an Asia-themed week for Apple (Nasdaq: AAPL) CEO Tim Cook, whose tour to China and then India casts a spotlight on 2 massive markets with huge potential for the company. This particular trip has been quite revealing for the gifts that Cook has awarded during the week, reflecting each country’s strengths and also its weaknesses.
China’s biggest gift was a $1 billion investment in local private car services firm Didi Chuxing, and also a smaller gift in the form of a new app to promote local musicians. India, meanwhile, secured a coveted R&D lab, which is one of Apple’s few outside the US and hugely prestigious. Read Full Post…
Bottom line: Seagate’s new partnership with Sugon is the latest tie-up designed to give a major western hardware maker continued access to China’s IT services market, even as such partnerships sharply raise the risk of IP theft.
Seagate in new China tie-up
The steady stream of US tech firms bowing to Beijing’s tough new rules for doing business in China has just gained a new member, with word that data storage specialist Seagate (Nasdaq: STX) has just formed a new local joint venture. This particular tie-up comes just a half year after Seagate’s new partner, a company called Sugon (Shanghai: 603019), formed another similar cloud computing partnership with VMWare (Nasdaq: VMW), a unit of data storage giant EMC (NYSE: EMC).
The new Seagate alliance and slightly older VMWare venture come as most major US high-tech hardware makers, including the likes of IBM (NYSE: IBM), Hewlett Packard Enterprise (NYSE: HPE) and Cisco (Nasdaq: CSCO), have all formed similar tie-ups in a new love affair with Beijing. Of course I’m being slightly facetious in calling it a love affair, since these companies really didn’t have any choice in the matter. Read Full Post…
Bottom line: CEO Lei Jun’s decision to directly oversee Xiaomi’s product development could help to revive the company by addressing a key problem area, but its new set-top box is unlikely to gain much traction in the US due to stiff competition.
Xiaomi unveils set-top box for US
Amid growing signs of stagnating sales for its core smartphones, the stumbling Xiaomi is taking a couple of big new steps to try and reinvigorate its business, led by a shuffle that will see charismatic CEO Lei Jun take direct control of product development. In a separate but also significant move, the company has just announced a highly-anticipated first big step into the lucrative but ultra-competitive US market, with plans to launch a local version of its online video service.
Among these 2 big new moves, the management shuffle is the most significant and also most reflects Xiaomi’s problems. The company rose to prominence on an extremely successful marketing campaign that used online buzz, artificial product shortages and strategically leaked information. But Xiaomi’s actual smartphones couldn’t meet the high expectations created by Lei’s brilliant marketing campaigns, and instead are seen as largely the same as many of the other many models now on the market. Read Full Post…
Bottom line: The latest China trip by Apple’s CEO is designed to spotlight the company’s new mega-investment in Didi Chuxing and show its continued relevance for local app makers, as it seeks positive media coverage to halt a recent series of negative news.
Apple CEO looks for positive news on China trip
Less than 2 weeks after media first reported plans for a new China trip by Apple’s (Nasdaq: AAPL) CEO, Tim Cook has appeared in Beijing for the eighth visit to his company’s second largest market. This particular visit comes at a sensitive time for Apple, which has experienced a number of China setbacks recently, led by a sharp drop in sales during the first 3 months of the year.
Against that backdrop, I previously said that Cook’s new trip looked partly aimed at damage control, though we should also note that he was already a frequent visitor to the country. In keeping with the past, Cook was relatively low key this time and didn’t even announce his arrival in China until he was spotted at a meeting with some of the company’s local app development partners in Beijing. (Chinese article) Read Full Post…
Bottom line: Apple’s new $1 billion investment in Didi Chuxing is a smart way to show its commitment to China and pursue car-based services, while avoiding intellectual property theft that might come if it set up its own R&D facility.
Apple invests in Didi Chuxing
I’ve been saying for years that Apple (Nasdaq: AAPL) needs to make a major investment in China to show its commitment to the market, but was quite surprised to read it was finally taking such a step with plans to pump $1 billion into local hired car services giant Didi Chuxing. But after some more thought, I realized this particular investment actually has a certain form of logic that I’ll explain shortly. And it also shows Apple’s commitment to the market.
This particular announcement also comes as Apple experiences a sudden series of setbacks in China, following a good streak that saw it do quite well over the last 2 years. Those setbacks were led by Apple’s disclosure last month that its Greater China sales plunged 26 percent in the first quarter of this year. That bad news was followed by the company’s loss in a local trademark dispute involving the iPhone name, and after its China book and movie services were blocked for unspecified reasons. (previous post) Read Full Post…
The following press releases and news reports about China companies were carried on May 14-16. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Anti-Counterfeiting Group Suspends Alibaba (NYSE: BABA) After Member Outcry (English article)
Apple (Nasdaq: AAPL) Invests $1 Bln in Chinese Ride-Hailing Service Didi Chuxing (English article)
Stock Exchange Queries LeEco (Shenzhen: 300104) Over Film Unit’s High Value (Chinese article)
Bottom line: An upcoming China trip by Apple’s CEO looks hastily arranged and aimed at damage control after several recent setbacks, but won’t stem the company’s recent sales plunge due to intense competition from domestic brands like Huawei.
Apple CEO books hasty trip to China
As the latest China setback for Apple (Nasdaq: AAPL) ripples through the headlines, the global tech giant’s CEO Tim Cook is booking a trip to Beijing to try and halt a growing tide of bad news that has already wiped billions of dollars from his company’s stock. The latest China setback for Apple looks relatively minor, and has local media reporting recent malfunctions and the disappearance of some apps from the company’s China app store.
Those quirks may be an extension of a growing clash between Apple and China’s censors, who a couple of weeks ago shut down the company’s online book and movie services for unspecified violations. (previous post) Since then, Apple has also suffered negative publicity in China after losing a trademark battle involving the iPhone name, and most importantly from a 26 percent plunge in China sales during its latest quarterly report. (previous post) Read Full Post…
Bottom line: The 5 percent drop in China smartphone sales during the first quarter reflects the market’s current state of saturation, which will lead to more bankruptcies this year for suppliers and second-tier brands.
Xiaomi slips to third in China smartphone market
New data from China are shining a spotlight on the sudden slipping of global giant Apple (Nasdaq: AAPL) in the world’s largest smartphone market, as well as the slower decline of homegrown challenger Xiaomi. At the same time, the 5 percent decline in first-quarter shipments in the huge but intensely competitive China market bodes poorly for everyone. That includes a growing number of suppliers to the big brands like contract manufacturing giant FIH Mobile (HKEx: 2038), which has just warned that its profits are coming under intense pressure.
Much has been written about the effects that intense competition are having on Chinese smartphone brands, many of which are either barely profitable or are even losing money. But the toll has been even bigger on many of their suppliers like FIH, which makes phones for the likes of Xioami and Sony (Tokyo: 6758) and are coming under even bigger pressure due to slowing orders and cries from their customers for lower prices. Read Full Post…
Bottom line: A favorable court ruling in a trademark dispute is the latest positive step for Facebook in China, and reinforces a view that it could get permission to open a Chinese service within the next year.
Facebook wins trademark ruling in Beijing
Social networking giant Facebook (Nasdaq: FB) may be absent on the China Internet, but a new victory in a local trademark dispute shows its name is gaining traction in the Chinese legal system. Some are pointing out that Facebook’s victory against a beverage maker that tried to register its trademark contrasts sharply with the loss in a similar case last week for US smartphone giant Apple (Nasdaq: AAPL). (previous post)
While both decisions came from courts in Beijing, it’s probably a bit unfair to compare the 2 since each has to be considered based on individual facts and evidence. But this latest trademark victory does appear to show that Facebook founder Mark Zuckerberg’s strategy of currying favor with Beijing may be producing results, as he pursues his ultimate goal of launching a Chinese version of his social networking service (SNS). Read Full Post…
