The following press releases and media reports about Chinese companies were carried on December 28-30. To view a full article or story, click on the link next to the headline.
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- China’s 4G Users To Reach 30 Mln in 2014 – Regulator (Chinese article)
- Perfect World (Nasdaq: PWRD) Sells Chinese Online Reading Unit To Baidu (Nasdaq: BIDU) (PRNewswire)
- Oceanwide Real Estate (Shenzhen: 000046) To Spend $200 Mln On First US Project (Chinese article)
- GM (NYSE: GM) Recalls 1.5 Mln Cars In China Over Fuel Pump Bracket (English article)
- Baidu’s (Nasdaq: BIDU) iQiyi Names CFO As IPO Nears – Report (Chinese article)
The auto industry is humming over new data that show China car sales soared 45 percent in January, marking their strongest growth since April 2010 when government incentives during the global economic crisis helped to turbocharge the sector. Industry watchers are acknowledging that seasonal factors played a major role in this latest jump, but point out that they still expect to see a return to strong growth in the upcoming Year of the Snake as China’s economy improves and consumers rediscover their love affair with cars.
A couple of news bits from the auto space are underscoring how competitive the sector has become, with domestic carmaker Dongfeng Motor signing a new tie-up with Swedish truck maker Volvo, as Germany’s Volkswagen (Frankfurt: VOWG) moves closer to entering the low-end market traditionally shunned by foreign names. Both of these cases show that big-name automakers, both domestic and foreign, will have to look for creative new ways to keep their business growing in the hyper-competitive Chinese market, and that the days where companies could simply construct a new multibillion-dollar factory to fuel additional growth may be in the past.
Less than 2 months after signing a major R&D tie-up with rival Chery, leading south China automaker Guangzhou Automobile (HKEx: 2238) is back in the headlines with news of a similar tie-up with 2 other smaller rivals. This latest move makes Guangzhou Auto look increasingly like a potential consolidator for the many smaller and mid-sized automakers in nearby provinces, potentially molding the company into a future General Motors (NYSE: GM) of China. Auto historians will note that GM has no formal brands carrying its own name, but rather was formed through the consolidation of many smaller brands during a similar consolidation of the US auto industry many decades ago.
Just a month after I accused SAIC (Shanghai: 600104) of having a weak stomach for overseas expansion, we’re getting word that China’s leading automaker may be preparing to move into Southeast Asia with its longtime US partner General Motors (NYSE: GM). If the reports are correct, this would look like a smart move for SAIC, taking it into a relatively straightforward region similar to its own home market in partnership with a globally experienced major partner like GM.
We’ve been hearing for weeks now how bad things for Japanese automakers in China due to diplomatic tensions over a territorial dispute, and now we’re finally starting to see some numbers that underscore just how serious the situation is. So now the questions becomes: How long will this sales crisis last, and who are the most obvious winners and losers? I’ll get to that issue in a moment, but first let’s have a look at the news coming from Toyota (Tokyo: 7203), which said its China sales plunged 40 percent in September as Sino-Japanese tensions flared over the ownership of a small chain of islands known in China as the Diaoyu and in Japan as Senkaku. (
