The following press releases and media reports about Chinese companies were carried on January 15. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
LeTV (Shenzhen: 300104), TCL (HKEx: 1070) Form Alliance in Large Curved TVs (Chinese article)
36 Charitable Health Organizations Raise Alarm on Baidu (Nasdaq: BIDU) (Chinese article)
Shanghai Quality Inspector Says Xiaomi Air Purifiers Substandard (Chinese article)
Huawei, Ericsson (NYSE: ERIC) Sign Patent Exchange Agreement (Chinese article)
Qunar (Nasdaq: QUNR) Rises as Ctrip Plans to Buy `Significant Minority Stake’ (English article)
Bottom line: A new patent lawsuit against it in the US highlights one of the biggest challenges Xiaomi and other Chinese tech brands will face in their global expansion, and exposes a major weakness in China’s own patent protection system.
Xiaomi hit with US patent lawsuit
Stumbling smartphone sensation Xiaomi suffered a recent new setback in its global aspirations, after being sued in the US for patent infringement involving technology used in several of its popular models. The new action comes a year after Xiaomi was sued over similar allegations in India, and reflects one of the biggest challenges Chinese high-tech brands face as they try to expand beyond their home market.
Foreign companies often choose to pounce when these Chinese brands venture abroad, because they know that legal systems are more mature and patent enforcement more effective in these countries than in China. Many of these countries take immediate action against suspected patent violators if they believe a case is valid, unlike China where cases can often drag on for months or even a year or more before a verdict is reached. Read Full Post…
Bottom line: A plan to pool 4G network resources between Unicom and China Telecom could be a cost saving move, but could also be the latest signal that the regulator may ultimately merge the pair.
New signs of Unicom, China Telecom merger
China’s 2 smaller telcos are reportedly studying a plan to pool their 4G networks, in the latest sign that a major industry overhaul could be coming that would see the merger of Unicom(HKEx: 763; NYSE: CHU) and China Telecom(HKEx: 762; NYSE: 728). It’s hard to say what’s happening behind the scenes in China’s opaque telecoms sector, since any plans for such a merger are probably only known to regulators at the secretive Ministry of Industry and Information Technology (MIIT).
A high-ranking MIIT official said recently that he was unaware of plans for such a merger, indicating that nothing was imminent. But a growing number of signs are pointing to such a plan, though the cautious MIIT appears to be taking a very slow approach whose end goal wouldn’t necessarily be an outright merger but could instead also include a complex network-sharing arrangement. Read Full Post…
Bottom line: A new alliance between Ericsson and Cisco, and inability to quickly bring its new Nexus 6P smartphones to China reflect the challenges Huawei will face to maintain its growth as it comes under new pressures both at home and abroad.
Ericsson-Cisco alliance challenges Huawei
Two new developments involving Huawei are spotlighting the kinds of challenges the Chinese telecoms giant will face as it tries to maintain growth for its older networking equipment and newer and rapidly rising smartphone business. The larger of the two items have global giants Cisco (Nasdaq: CSCO) and Ericsson (NYSE: ERIC) forming a major new alliance that could provide big new competition for Huawei. The second comes in a smaller news item that has Huawei saying it will launch its new Google (Nasdaq: GOOG) smartphone in Taiwan later this month, but quietly adding it won’t be bringing the Nexus 6P model to its home China market anytime soon.
Huawei grew at a breakneck pace in the first decade of the 21st century, as it made quick inroads into global markets where names like Ericsson and Motorola traditionally dominated. But that growth has slowed sharply in the last few years as the building of traditional telecoms networks slows worldwide. The slowdown has hit not only Huawei, but also led to major consolidation in the global networking equipment industry. At the same time, demand has been growing more strongly for individual company-based networks that are a specialty of Cisco. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 11. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Alibaba (NYSE: BABA) Generates $5 Bln GMV in First 90 Minutes of Singles Day Festival (Businesswire)
Bottom line: New signals that China’s 3 telcos are reducing their spending could presage a rumored consolidation of the trio into 2, with China Telecom and Unicom the most likely to be merged.
China telcos rope in spending
The latest sign of a potential shake-up in China’s stodgy telecoms sector came late last week, when global networking equipment giant Ericsson (Nasdaq: ERIC) attributed reorganization and weak spending by the nation’s big 3 carriers as a major factor behind its disappointing quarterly results. Despite expectation that China’s big 3 carriers would spend heavily on 4G this year, actual amounts so far have been relatively modest from the trio of China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
The unexpected spending slowdown could be the latest sign that Beijing is planning an industry overhaul, following reports that first emerged last month of a possible consolidation of the 3 current mobile carriers into just 2. Such a move would reflect Beijing’s disappointment at the failure of China’s state-run carriers to become global innovators over the last decade, even after receiving monopoly rights over a market that has become the world’s largest for mobile and broadband services. Read Full Post…
Bottom line: Huawei’s accelerating smartphone sales reflect its growing momentum in China, and could prompt it to consider spinning off the unit for a potential IPO in its drive to become more transparent.
Huawei News
Smartphones power Huawei resurgence
Growing momentum for its smartphone business has become the driving force behind a resurgent Huawei, which has just reported solid first-half revenue growth that is showing signs of accelerating after a recent slowdown. That’s good news for Huawei, but less promising for domestic rivals like Lenovo (HKEx: 992), Xiaomi and Coolpad (HKEx: 2369), which are struggling for direction in a crowded Chinese smartphone market where global giant Apple (Nasdaq: AAPL) has also shown signs of a recent resurgence.
Huawei hasn’t been too generous in providing financial data for the first half of the year, saying only that revenue jumped by 30 percent to 176 billion yuan ($28 billion). (company announcement; Chinese article) For anyone who tracks the global market, that figure is already more than double the $12.5 billion in first half sales reported by Ericsson (Stockholm: ERICb), Huawei’s leading rival in its traditional networking equipment core area. Read Full Post…
Bottom line: Xiaomi’s latest headaches in India due to a technical glitch are just one of many growing pains it will experience more frequently due to its rapid expansion, as it targets developing markets under its push to become a global brand.
Xiaomi prepares to launch in Brazil
Xiaomi is fast becoming the unofficial smartphone of the BRICS, with word that it’s getting ready to start producing its signature phones in India as it also gets set to launch in Brazil next month. The company is also likely to enter Russia later this year, leaving South Africa as the only BRICS country missing from its global footprint by the end of 2015.
At the same time, Xiaomi’s ride into India has been quick but also bumpy, starting with a patent dispute last year and now including a problem that has seen its latest model in the market, the Mi 4i, experience overheating problems. Those kinds of problems will only be magnified in more developed western markets, which is why Xiaomi says it won’t be selling its smartphones in North America or Europe anytime soon. Read Full Post…
Bottom line: The new Nokia-Alcatel merger, combined with a continued low-key lobbying campaign by Huawei could ultimately convince Washington to ease its ban on Chinese telecoms equipment within the next year.
US to rethink Huawei ban?
A couple of new reports are casting a spotlight on the troubled relationship between Washington and leading Chinese telecoms equipment maker Huawei, and raising the intriguing potential for a much-needed compromise that might end the impasse between the pair. The impasse is really quite one-sided, with Washington banning the sale of all Chinese telecoms equipment in the US due to concerns about the potential for spying. But this kind of policy seems a bit broad, especially amid an accelerating sector consolidation that is leaving wireless carriers with fewer and fewer networking equipment suppliers to choose from. Read Full Post…
Bottom line: Xiaomi’s diversified sales strategy in India could help reverse recent setbacks, but could ultimately undermine the carefully cultivated cool and trendy image that has been key to its broader success.
Xiaomi adds traditional retailers in India
Smartphone sensation Xiaomi is making a risky move in India, abandoning its trendy online-only sales model as it faces headwinds in a market that has become its first major stepping stone onto the global stage. Xiaomi is calling the decision to sell its phones through traditional retail stores a tactical move, in a nod to the less advanced state of India’s Internet compared its home China market.
While that may be true, this new move also hints at signs of distress as Xiaomi faces new challenges in India on several fronts. One of those centers on an intellectual property dispute with global telecoms titan Ericsson (Stockholm: ERICb), which forced Xiaomi to stop selling its higher-end phones in India last December. The other big challenge is coming from other Chinese smartphone makers like Meizu, which are attempting to copy Xiaomi’s early success in India. Read Full Post…
Quiet has fallen over much of the blogosphere in this week before Christmas, though buzz was lingering around smartphone sensation Xiaomias it wrestled with a patent dispute that threatened to halt its nascent overseas expansion. Xiaomi chief Lei Jun was also full of congratulations for his company as it scored a court victory that partially lifted an order banning the sale of its phones in India. Meantime, Lei’s many friends and admirers were offering their congratulations as Xiaomi’s co-founder celebrated his 45th birthday.
Meantime, another courtroom battle saw the chief executive of online cosmetics seller Jumei International (Nasdaq: JMEI) reacting to a series of class action shareholder lawsuits filed against his firm last week. This kind of lawsuit is quite common, and usually comes anytime bad news causes a stock to suddenly drop. Still, the case was obviously an eye-opener for Jumei CEO Chen Ou, and serves as a good reminder of the many dangers that await Chinese tech firms that list overseas. Read Full Post…
