Brazil Archives ~ Business China : news for investors in China

INTERNET: Baidu Sambas Out of Brazil

By newsdoug on July 19, 2018

Bottom line: Baidu’s withdrawal from Brazil reflects a broader inability of Chinese companies to succeed overseas due to their different practices and local wariness about their ability to protect user privacy.

In what is probably coming as a surprise to no one, media reports are saying that search leader Baidu (Nasdaq: BIDU) is pulling out of Brazil. This would represent the company’s latest failure abroad, and is really part of a broader string of failures not only for the company but China’s internet sector in general. This particular group is quite good at milking the China market for all it’s worth, but then being unable to replicate its success in other markets.

There are lots of reasons for the inability of China’s Internet companies to succeed outside their home market. One is simply inexperience. But another is really the direct result of Beijing’s determination to set up what almost amounts to a parallel Internet in China that in some ways is identical to the global Internet but in others is very different. Read Full Post…

FINANCE: Fosun Makes BRICS Buys in Drugs, Asset Management

By newsdoug on August 1, 2016

Bottom line: Fosun’s newest acquisitions indicate it could soon become more active in the asset management and drug sectors outside China, with a focus on emerging markets like the BRICS countries.

Fosun buys India’s Gland Pharma

Private equity giant Fosun (HKEx: 656) is in 2 separate M&A headlines in the BRICS nations of Brazil and India, purchasing an asset manager in the former and a drug maker in the latter. Pharmaceuticals and real estate have been 2 of Fosun’s focus areas in its shopping spree both at home and abroad, though the move into developing markets is relatively new.

Fosun has more traditionally focused its global buying on western markets in the US and Europe. So this latest pair of deals could signal a new focus on emerging markets, especially ones like Brazil and Russia where recent economic malaise could be pressuring some debt-laden companies to sell off assets at bargain prices to raise cash. Read Full Post…

INTERNET: Baidu Ends Search For Japan, Hangs Out Egyptian Shingle

By newsdoug on April 24, 2015

Bottom line: Baidu’s new go-slow global expansion strategy focused on emerging markets like Brazil and Egypt looks smart, but will provide limited contributions due to the small size of those markets.

Chinese online search leader Baidu (Nasdaq: BIDU) is making some major strategic adjustments in its global expansion, turning to developing markets and away from more lucrative but also extremely competitive western ones. That’s my main conclusion, following reports that Baidu has finally pulled the plug on its struggling Japan search service 8 years after choosing the market for its first foray abroad. At the same time, the company is making initial moves into Egypt with its first Arabic-language website, following earlier moves into Brazil and more recently into Thailand. Read Full Post…

China Bank Buying Binge Heats Up

By newsdoug on November 4, 2013

CCB eyes Brazil

Note: After first publishing this post, CCB formally announced it will purchase 76 percent of BicBanco for 13.6 billion Brazilian reais ($720 million). To view the announcement, click here.

After living in China for a while, one comes to realize that new trends among big state-owned enterprises often happen quickly and in waves in response to directives from Beijing. That looks like the case among the nation’s big 4 lenders, with word that China Construction Bank (CCB) (HKEx: 939; Shanghai: 601939) is in late stage talks for its first major global acquisition of a bank in Brazil. CCB’s sudden interest in global acquisitions comes just weeks after another domestically-focused big 4 lender, Agricultural Bank of China (AgBank) (HKEx: 1288; Shanghai: 601288) was also reportedly in talks to buy Hong Kong’s Wing Hang Bank (HKEx: 302) Read Full Post…

ZTE Faces More Profit Erosion With Latest Low-Cost Moves 中兴通讯以低价机抢占市场恐损及获利

By newsdoug on November 3, 2011

ZTE rolls the dice with risky cellphone, OEM bets ZTE’s (HKEx: 763; Shenzhen: 000063) latest strategy of flooding the world with low-cost cellphones appears to be working, as the first phase of the its risky bid to become a global brand yields results. According to the latest information from IT data tracking firm IDC, ZTE zoomed past Apple (Nasdaq: AAPL) to become the world’s fourth biggest cellphone seller in the third quarter of the year, shipping more than 19 million handsets to take nearly 5 percent of the global market. (English article) ZTE has previously stated its aim of becoming one of the world’s top 3 cellphone brands, relying in part on a strategy of grabbing market share by selling low-end smarphones powered by Google’s (Nasdaq: GOOG) Android system for $100 or less for little or no profit. That strategy has showed up in ZTE’s results in the last 2 quarters, with profit dropping steadily even as cellphone revenue has soared. The strategy is a very risky one, as it’s often very difficult to raise your prices and corporate image after establishing yourself as a maker of low-cost products. Taiwan’s Acer (Taipei: 2353) learned this lesson about a decade ago, and is now learning it again. But for at least the next year or two, look for ZTE to steadily increase its global cellphone market share, even as its profits continue to erode. In a separate development along similar lines, Brazilian media are reporting that ZTE is preparing another major new initiative in contract manufacturing, opening a new factory in that country that has landed Apple itself as one of its first customers. (Chinese article) The reports are quite brief, but say that ZTE will assemble both iPads and iPhones for Apple in the city of Hortolandia, putting it in direct competition with Taiwanese OEM giant Foxconn (HKEx: 2038), which has also opened a plant in the same city. To this development I say: congratulations to ZTE for winning this prestigious business from Apple, if the reports are true. But at the same time, I suspect ZTE will be assembling the Apple products for little or no profit and most likely at a loss, meaning we could see its bottom line erode even more quickly.

Bottom line: ZTE’s latest aggressive moves to generate new business will erode its profits for the next 2 years at least, with only a 50-50 chance for long-term success.

China Carmakers Lose a BRIC in Export Drive 中国汽车厂商的出口机会将逐步缩窄

By newsdoug on September 21, 2011

Brazil throws up stop sign for China autos Chinese car makers looking to exports to offset slowing sales at home have received a setback, after an alarmed Brazil sharply raised car import tariffs in a move that appears to be aimed at a sudden spike in Chinese imports. (English article) According to a domestic media report, Brazil rushed through the new rates, which will raise tariffs by 30 percentage points, after imports of Chinese cars zoomed from zero last year to 43,000 vehicles in the first eight months of this year, accounting for 3.3 percent of the market. The increase will deal a blow to car makers like Chery and Dongfeng Motor (HKEx: 489), as they look to foreign markets to help offset slowing domestic sales. China’s car makers saw their sales jump by healthy double-digit rates in 2009 and 2010, as their market, with the help of rising incomes and buying incentives from Beijing, zoomed past the US to become the world’s largest by unit sales. But the growth has come skidding to a halt this year as incentives expired, prompting some of the more innovative companies to look abroad to offset the slowdown. Most domestic firms’ cars are too low in quality to compete in developed western markets, leading some to target developing markets like the BRICS. This latest move by Brazil spotlights the risks for that road, as developing markets aren’t likely to welcome a flood of imported vehicles that could hurt their own domestic automakers, and will thus resort to this kind of tax to encourage investment in their domestic industries. Indeed, China itself uses just such tactics, imposing high tariffs on imported autos that have encouraged foreign giants like GM (NYSE: GM) and Volkswagen (Frankfurt: VOWG) to invest heavily in the Chinese domestic industry. Chery has already detailed plans to invest $400 million in a Brazilian manufacturing plant, and this latest move by Brazil is likely to spark more similar moves for companies that have the cash to invest.

Bottom line: Brazil’s tax increase on imported cars will put the brakes on Chinese exports to the market, and spotlights the difficulties they will face exporting to developing markets in general.

巴西大幅提高汽车进口关税，似乎在遏制中国产品进口的骤然增长。这令中国汽车厂商寻求以出口增长抵消内需放缓的努力遭遇挫折。根据巴西媒体报导，巴西今年前八个月进口中国汽车4.3万辆，占到巴西市场的3.3%，而去年进口还是零，这促使巴西政府匆忙出台新关税税率，大幅提高30个百分点。该举措将给奇瑞、东风集团等中国汽车厂商沉重一击，他们原以为可以借助国际市场抵消国内销售放缓的冲击。2009年和2010年，中国汽车厂商销量均以两位数增幅上升，在民众收入提高和中国政府鼓励政策支撑下，中国汽车市场以销量计算已经超过美国，成为全球之首。但是，随着购车刺激政策到期，今年销量增长陷于停滞，促使一些更具创新性的公司开始瞄准海外市场，寻求以此抵消国内市场放缓的影响。多数国产汽车质量太差，无法参与发达国家市场竞争，部分企业于是转向包括金砖国家在内的发展中国家市场。巴西最近开始的关税行动给中国厂商敲响了警钟，发展中国家市场也不大可能容忍进口汽车泛滥，并伤害到本国企业，于是终将拿起关税武器，鼓励外商投资于本国的汽车产业。实际上，中国自己实行的也是这种策略，对进口车徵收高关税，鼓励通用汽车(GM.N)和大众汽车(VOWG.DE)等行业巨头大量投资于中国汽车工业。奇瑞已经制定了详细计划，拟投资4亿美元在巴西建制造厂。巴西提高关税的举动很可能是希望刺激更多有投资能力的企业仿效吉利。

一句话：巴西对进口汽车提高征税标准将遏制中国对巴西汽车出口，也凸显了中国汽车厂商对发展中国家市场出口面临的困难。