Bottom line: Amazon’s withdrawal from selling domestic goods to local buyers in China was inevitable due to its lack of a standout service and cut-throat competition from Alibaba and the money-losing JD.com.
Amazon shutters core China e-commerce selling domestic goods to domestic buyers
The e-commerce headlines have been buzzing these last few days with word that global giant Amazon (Nasdaq: AMZN) is abandoning China, representing the latest setback for a western Internet company in the large market. Amazon has come out with some statements clarifying the matter, in a move somewhat akin to what happened when Internet peer Google(Nasdaq: GOOG) made a similar withdrawal nearly a decade ago.
As Google did then and Amazon is doing now, both companies are being quick to point out that they aren’t completely withdrawing from China, but rather are just exiting what’s arguably their most important business. In Google’s case it shuttered its core China search engine. Now with Amazon, the company says it’s shuttering the part of its business that sells domestically-sourced Chinese products to customers in China. (English article) Read Full Post…
Bottom line: Yihaodian could regain momentum in China’s online grocery market under an aggressive 1 billion yuan promotion by new owner JD.com and strong support from former owner Walmart.
Yihaodian launches 1 bln yuan promotion
One major obstacle for foreign companies in China is their reluctance to engage in the kind of cut-throat price wars that are all too common in many of the nation’s huge but extremely competitive emerging markets. Such reluctance was a big factor behind the disappointing progress for Walmart’s (NYSE: WMT) local e-commerce venture Yihaodian, and prompted the US retailer to sell the company in June in exchange for shares of local e-commerce powerhouse JD.com (Nasdaq: JD). Now we’re getting word that JD is preparing to position Yihaodian as its flagship online grocery store, and is getting set to launch a massive price war in its bid to achieve that target. Read Full Post…
Bottom line: Alibaba’s bid for Polish C2C site Allegro looks like a smart move into a related developing market, but could be thwarted by rival Tencent, while affiliate Ant Financial’s new Taiwan insurance tie-up also looks smart though relatively small.
Alibaba bids for Poland’s Allegro
E-commerce giant Alibaba (NYSE: BABA) and its Ant Financial affiliate are in a couple of major headlines as the weekend approaches, each focusing on a strategic growth area. In the first case, Alibaba has entered the bidding for a leading Eastern Europe online auctions site, competing with global rival eBay (Nasdaq: EBAY) for Poland’s Allegro. The second deal has Ant, owner of leading electronic payments service Alipay, expanding its financial services holdings with the purchase of a majority stake in the insurance unit of Taiwan’s Cathay Financial (Taipei: 2882). Read Full Post…
Bottom line: Google should follow the example set by LinkedIn and Apple and be more transparent when it returns to China, and should work with Beijing to forge a more constructive relationship.
Google eyes China return in 2016
One of the strongest signals yet that Google (Nasdaq: GOOG) could soon return to China came late last week, when media reported the company was aiming to open a Chinese version of its Google Play app store next year in accordance with relevant Chinese laws. Such a move would represent an important improvement in the company’s relationship with Beijing, coming 6 years after Google shuttered its China-based search service due to a disagreement on self-policing policies that apply to all sites in China.
The shift is being driven by both sides, amid a realization that they can work together constructively to each other’s benefit. Google’s realizes that China is a market it can’t afford to ignore, with the world’s largest base of 600 million Internet users and 1.3 billion mobile subscribers. Beijing also realizes that a high-tech giant like Google can bring important technology and know-how to the country, whose large stable of smartphone makers already rely heavily on Google’s free Android operating system (OS). Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 12. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
Homeinns (Nasdaq: HMIN) Announces Receipt of “Going Private” Proposal (PRNewswire)
Integrated Silicon (Nasdaq: ISSI) Agrees To Be Bought By China’s Uphill (English article)
Xiaomi Invested 1.8 Bln Yuan in its Content Business Since November 2014 (English article)
Qualcomm (Nasdaq: QCOM) Greater China President Resigns for Job at Xiaomi (Chinese article)
Alibaba (NYSE: BABA) Chief Jack Ma Says No Plans to Buy Yahoo, eBay (Chinese article)
Bottom line: Government officials are being forced to deal carefully with newly minted Internet giants like Alibaba, which sometimes commit transgressions due to their youth but also provide huge contributions to China’s economy.
Alibaba a double-edge sword for govt
A trio of stories about Alibaba (NYSE: BABA) nicely summarize both the risks and benefits that China’s Internet juggernauts present for the government, which must walk a fine line between taming these newly minted giants while being careful not to kill such economic powerhouses. In just the space of a decade, Alibaba, alongside Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU), have grown rapidly from venture-funded start-ups to become some of the world’s most valuable companies.
That growth and status has brought not only big prestige to China, but also valuable tax dollars to local governments and high-tech jobs that Beijing wants to replace lower-tech manufacturing labor. But at the same time, such young companies are particularly vulnerable to missteps, which can create chaos in the marketplace and Beijing needs to be careful to control. Read Full Post…
Bottom line: China should work with its major trading partners to send unified signals on issues like piracy to create a transparent business climate and avoid confusion.
US, China send crossed signals on piracy
In an unusual reversal of roles, Washington officials who regularly criticize China for piracy found themselves defending Alibaba (NYSE: BABA) on the issue last week, just a month after a Beijing regulator blasted the e-commerce leader for allowing rampant fake goods trade on its popular Taobao site. The conflicting messages are at least partly political, since a similar US condemnation would have contradicted Washington’s praise of Alibaba’s piracy-fighting efforts over the last 2 years. Read Full Post…
Bottom line: Unbecoming behavior by people like Alibaba’s Jack Ma and JD.com’s Richard Liu reflect poorly on China’s corporate sector, and reflects a lack of professional standards.
Alibaba’s Ma, JD’s Liu on bad behavior
Alibaba’s (NYSE: BABA) charismatic founder Jack Ma is known for speaking his mind, but he was on the defensive last week after inflammatory remarks he made about rival JD.com (Nasdaq: JD) were published in a book. JD.com graciously accepted Ma’s rare apology for the remarks, even as its founder Richard Liu was also in the Internet gossip columns for his own controversial behavior related to a rumored break-up with his longtime young girlfriend. Read Full Post…
Bottom line: Alibaba’s new online credit product and global shopping mall look like smart new initiatives that could help maintain its strong growth to justify its high valuation.
Alibaba financial unit trials credit product
It’s been quite a while since I’ve written about the actual business of e-commerce giant Alibaba (NYSE: BABA), which has captured global headlines for much of the last 4 months for mostly financial reasons after its record-breaking IPO in September. So on that note, I was quite happy to finally read new headlines on some smart-looking moves the company is making to justify its sky-high valuation, which is built on expectation for continuing super-charged growth.
One of those initiatives has Alibaba’s finance unit rolling out a product that looks like a variation of traditional cards, and is aimed at getting shoppers to spend even more on its popular e-commerce platforms. The other is an update on its new global e-commerce initiative that looks like it’s gaining some strong early momentum, at least according to the company’s own telling of the story. Read Full Post…
Alibaba (NYSE: BABA) fever has finally peaked, as shares of the e-commerce leader and its 2 major proxies took a needed breather after a turbo-charged IPO that made it China’s most valuable Internet firm. As a final footnote, the company also made the widely expected announcement that its underwriters exercised their rights to buy additional shares in the offering, officially making it the biggest IPO of all time. But the looming question for now is whether the sell-off on the second day of trading is short-term or the start of a much-needed correction. Regular readers will know my forecast is that the stock is set for turbulent trading over its first month or two, before it moves steadily downward over the next year to levels closer to its IPO price. Read Full Post…
The following is Part 6 in a multi-part series about the rise of WeChat, the popular mobile instant messaging service owned by Tencent.
By Lanie Nie
WeChat builds up payment capabilities
WeChat has played a key role in Tencent’s (HKEx: 700) recent efforts to build a “federal republic” on the mobile Internet. That interpretation comes from Cheng Lingfeng, a China tech reporter and former Tencent employee, describing Tencent’s strategy of selling stakes to close partners who promote WeChat Payment, a new service that allows users to link their bank cards to their WeChat accounts to facilitate online transaction payments. Such linkage gives WeChat users easy access to selected paid add-on services like shopping, mobile top up and taxi booking. Read Full Post…
