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: Cisco’s new joint venture will mostly resell its networking equipment into China, and is unlikely to ease Beijing’s worries that its products could be used by Washington for cyber spying.
Cisco calls on China with new JV
Networking equipment giant Cisco (NYSE: CSCO) has become the latest global tech firm to capitulate to China’s national security paranoia, announcing the formation of a new joint venture with a local partner. The tie-up with Inspur Group is just the latest in a recent string of new China-based partnerships involving big western tech firms. Those companies, whose ranks also include IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ), fear that without such well-connected local partners, they could get locked out of the lucrative IT services market under tough restrictions imposed by a new Chinese national security law.
Announcement of the new joint venture with Inspur marks a major shift for Cisco, which up until now has preferred to do its business in China by itself rather than with a local partner. Cisco’s earlier go-it-alone posture has already come with a high cost it in a country where Beijing prefers to see big foreign tech names transfer technology to local partners. Thus this latest partnership should perhaps help to ease some of that pressure, even though it could ultimately put some of Cisco’s intellectual property at risk. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 24. To view a full article or story, click on the link next to the headline.
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Alibaba’s (NYSE: BABA) Tmall to Split Headquarters Between Hangzhou, Beijing (Chinese article)
Cisco (Nasdaq: CSCO) in $100 Mln JV with China’s Inspur Group (English article)
Apple (Nasdaq: AAPL) Hack Exposes Flaws in Building Apps in China (English article)
ReneSola (NYSE: SOL) Announces $20 Mln Share Repurchase Program (PRNewswire)
Tencent’s (HKEx: 700) Billionaire Founder Sells $414 Mln in Shares (English article)
Bottom line: Cisco’s dismissal of several top China executives reflects its struggles in the market, and the situation will only improve if it takes a more conciliatory approach to address Beijing’s national security concerns.
Cisco lays off China execs
Beijing’s ongoing clampdown on foreign tech companies over national security concerns is taking a toll on Cisco (Nasdaq: CSCO), with word that the US networking equipment giant is laying off several of its top local executives due to falling China sales. This particular development doesn’t come as a huge surprise due to Beijing’s recent obsession with national security and suspicion of foreign tech companies. But Cisco’s struggles do contrast sharply with that of Hewlett-Packard (NYSE: HPQ), which appears to be faring better in China due to its more conciliatory approach to address Beijing’s concerns.
The following press releases and media reports about Chinese companies were carried on June 16. To view a full article or story, click on the link next to the headline.
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Didi Kuaidi Seeks $1.5 Bln in Funding to Fend Off Uber – Source (Chinese article)
Alibaba (NYSE: BABA) Plans to Roll Out Paid Video Service (Chinese article)
Lawson Plans To Triple China Convenience Store Count to 1,000 in 2-3 Years (Chinese article)
iDreamSky (Nasdaq: DSKY) Receives Proposal to Acquire the Company (GlobeNewswire)
Cisco (Nasdaq: CSCO) Plans to Lay Offs Several High-Level China Executives (Chinese article)
Bottom line: Tsinghua Unigroup’s latest investment in an online lottery ticket seller hints that it may add Internet services to its growing list of high-tech products and services through separate tie-ups with Intel and HP.
Unigroup invests in 500.com
A previously little-known company connected with China’s leading science university has made headlines over the last year through major new tie-ups with global tech titans Intel (Nasdaq: INTC) and Hewlett-Packard (NYSE: HP), which makes its latest investment just slightly puzzling. That investment is seeing Tsinghua Unigroup pour a relatively modest but still significant $124 million into 500.com (NYSE: WBAI), a New York-listed Chinese firm that sells lottery tickets over the Internet.
I’m being just slightly whimsical in tying Unigroup’s latest purchase to its much larger recent tie-ups with Intel and HP, which I’ll recap shortly. But that said, Unigroup has rapidly emerged as a player to watch in a China’s underperforming domestic microchip and IT services sectors, and most of its high-profile investments since it first moved into the spotlight have been centered on efforts to assemble a homegrown Chinese giant in those spaces. Read Full Post…
Bottom line: Beijing’s delay of new rules for foreign tech firms selling to Chinese banks could mark a turning point in a looming trade war centered on cybersecurity, and Washington should move to take reciprocal action.
Beijing slows down on new cybersecurity rules
After months of heating tensions, we’re seeing a sudden pause in the growing friction between China and the west that looked set to erupt into a new trade war centered on the sensitive issue of cybersecurity. That’s my assessment on reading that China is delaying implementation of draconian new requirements that would have forced all foreign tech firms to hand over sensitive and highly confidential product information when selling to Chinese banks.
I’m certainly not being naive in believing that China’s delay in this instance is the result of its realization that there’s no security risk posed by products supplied by foreign tech giants like IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Oracle (Nasdaq: ORCL). Instead, this delay is almost certainly the result of repeated protests from the companies themselves and also from Washington and Europe, which all argue the new requirements are overly and unnecessarily intrusive. Read Full Post…
Bottom line: Tsinghua Unigroup’s pending purchase of a controlling stake in H3C could mark the start of a new partnership with HP in routers, but is unlikely to affect its older partnership with Intel in the telecoms chips.
HP eyes router stake sale to Unigroup
Semiconductor company Tsinghua Unigroup was already a name to watch after a string of major deals last year including a tie-up with Intel (Nasdaq: INTC), and now it’s adding to its allure with word of a major new alliance with Hewlett-Packard (NYSE: HPQ). This latest deal would trump the earlier one from Intel in size, and would see Unigroup buy a controlling 51 percent stake of HP’s China-based H3C unit, which makes routers and switches that compete with US giant Cisco (Nasdaq: CSCO).
It’s not completely clear how much Unigroup would pay for the stake, though the amount would almost certainly be more than the $1.5 billion that Intel paid last year for 20 percent of a new company that Unigroup created through its merger of 2 of China’s leading telecoms chip designers. I’m no telecoms expert, but I’ll admit this latest deal is leaving me just a bit puzzled due to the very different natures of the businesses of H3C and the earlier tie-up involving Intel, which revolved around telecoms microchips. Read Full Post…
Bottom line: Washington’s raising of Beijing’s foreign technology restrictions to the WTO and London’s acceptance of Huawei equipment could add to pressure on all parties to soften their restrictive actions over use of foreign technology.
US takes nat’l security dispute to WTO
A pair of stories in the headlines today show a growing divergence in how China’s major trading partners are treating their cyber security clashes with Beijing. The larger of the 2 stories has Washington formally posing questions at the WTO over Beijing’s recent restrictions that limit the sale of foreign technology to Chinese banks. The other has seen Britian issue a report saying products from leading Chinese telecoms equipment maker Huawei pose no threat to the nation’s security, or at least that the threat is controllable. Read Full Post…
Bottom line: The exclusion of foreign tech giants from criticism in a prominent annual consumer rights show is unrelated to the broader bias they are facing from Beijing, and they will continue to come under fire for the next 1-2 years.
Foreign techs not targeted on annual consumer rights show
Top China officials at global tech giants like Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN) are probably breathing a sigh of relief today, after their companies weren’t targeted for attacks in an annual consumer rights show that has become a famous for creating public relations nightmares for its victims. Instead, this year’s edition of the investigative Consumer Rights Day program on China Central Television (CCTV), broadcast on March 15 each year, singled out China’s 3 major telcos for criticism in the tech sector.
Multinationals weren’t completely spared from attack, with a number of car makers including Vokswagen (Frankfurt: VOWG), Nissan (Tokyo: 7201) and Daimler (Frankfurt: DAIGn) coming under fire for things like abusive after-sales practices. (English article) But for now at least, China’s central media seem to be backing away from new attacks on foreign tech companies, following recent criticism that Beijing has unfairly targeted such firms for everything from monopolistic practices to posing national security risks over the last year. Read Full Post…
Bottom line: China needs to realize that hardware from private western firms isn’t a risk to national security, and change its stance on new security-related requirements or risk another major trade war.
China’s growing insecurity
China’s growing insecurity is quickly shaping up as the next front line in a seemingly endless series of business disputes with the west, with word that Beijing is weighing a major new anti-terrorism law that would place huge new intrusive conditions on western technology firms. This story has been gaining rapid momentum over the last year, though until now many of the moves have been largely talk and one-time actions aimed at individual companies.
This new move, involving a proposed counter terrorism law, looks set to formally place many of the previous requirements on all foreign tech companies that sell their equipment to Chinese government agencies and other sensitive sectors like banks. Most of the companies being targeted come from the telecoms and related sectors, including networking equipment and the software that runs such equipment. Read Full Post…
