Bottom line: Tsinghua Unigroup’s bid for Micron could move it towards a goal of becoming China’s first world-class IT products and services provider, though it could face potential rival bids and objections from Washington.
Unigroup makes bid for Micron
After puttering around with a few high-profile deals in $1 billion neighborhood, Tsinghua Unigroup has suddenly turned up the volume in its drive to assemble a Chinese IT giant with a massive $23 billion bid for US memory giant Micron (Nasdaq: MU). I’ll be the first to admit I didn’t see this particular deal coming, and I have some doubts about whether it will actually close due to its large size and also potential political sensitivities.
But Unigroup, which has already formed telecoms technology deals with US tech giants Intel (Nasdaq: INTC) and Hewlett-Packard (NYSE: HPQ), has certainly shown it’s serious about try to assemble a major IT products and services provider. China is currently one of the world’s top consumers of such products, which power most of the world’s electronics and internal company networks. But despite that position, the country has yet to produce a company that can compete with such global giants as Qualcomm (Nasdaq: QCOM) in the chip space, and IBM (NYSE: IBM) in IT services. Read Full Post…
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.
Bottom line: Lenovo has done remarkably well since defying skeptics with its landmark IBM PC buy a decade ago, and could stand a 50-50 chance of remaining relevant a decade from now in the fast-changing world of high-tech gadgets.
Lenovo celebrates a decade since landmark IBM buy
Global PC leader Lenovo (HKEx: 992) is commending itself on how far it has come since its landmark purchase of IBM’s (NYSE: IBM) PC business 10 years ago, setting it on a path that has made it the world’s top computer seller. (company announcement) I’ll admit I was a skeptic at the time of the IBM deal in 2005, and have become much more bullish on Lenovo since then. Still, the company hasn’t completely convinced me that it has the necessary skill and vision to move past its global PC crown, which is fast becoming yesterday’s news as traditional computers rapidly lose ground to newer devices like smartphones and tablets.
Before I look at the challenges that Lenovo is facing, I want to start by personally congratulating the company on its huge accomplishments over the last decade since it announced it would purchase IBM’s storied PC business for $1.25 billion. I and many others predicted at the time that Lenovo could stumble badly with the move, since it had no experience at running such a major foreign business that was clearly in decline and need of restructuring. 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: 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: A record false advertising fine against P&G and Beijing’s selection of Alibaba to host its procurement platform reflect the current government bias against foreign firms, which is likely to remain strong for the next 1-2 years.
Crest gets record fine for false advertising claims
Today I’m grouping 2 headlines together that look quite different on the surface but seem to underscore a growing bias in China against foreign companies, despite Beijing’s insistence on no such prejudice. One headline has global consumer products giant Procter & Gamble (NYSE: PG) receiving what looks like a large and somewhat arbitrary fine for false advertising. The other has media reporting that Beijing has moved its online government procurement platform onto servers operated by AliCloud, the cloud computing division of e-commerce giant Alibaba (NYSE: BABA). 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…
Bottom line: Lenovo could make significant inroads into western smartphone markets with its newly acquired Motorola if it lets the brand remain independent and maintain its own product development and sales resources.
Lenovo struts phones at trade show
A tour of the Lenovo (HKEx: 9992) booth at a major trade show happening this week in Spain made me realize just how much the company is betting on its recently purchased Motorola brand to boost it into the smartphone big leagues. Motorola’s continuing attraction as a powerful brand was on full display at the Lenovo booth, with large crowds clamoring for a look at what seemed like quite a ho-hum new low-end model being rolled out at the show.
By comparison, a glitzy new Lenovo-brand model from its higher-end VIBE line was drawing far less attention, even as a Brit on the stage sang on with nonstop praises for the unique features of the new model that has many attributes of a high-end camera. Read Full Post…
Bottom line: China’s new rules for technology manufacturers over cybersecurity concerns will erupt into a war of words between Beijing and the west this year, and could result in one or more formal complaints to the WTO.
Western firms respond to tough cybersecurity restrictions
After clashing for much of 2014 over a series of antitrust probes that seemed to target big multinationals, China and the west look set for a new showdown in 2015 over broadening rules by Beijing aimed at protecting national security. The growing clash saw the foreign companies, many from the US, take the unusual step of formally complaining last week over new Beijing rules that they complain are increasingly intrusive and opaque. Beijing fired back by saying the rights of foreign technology firms would be protected in accordance with Chinese law. Read Full Post…
Bottom line: Foreign technology suppliers will complain about new requirements for them to reveal source codes to Beijing for selling to Chinese banks, but will ultimately comply over fears of being shut out of the market.
Beijing to force new security rules on foreign tech
China’s sudden obsession with national security risks posed by foreign technology has taken yet another step forward, with word that Beijing is preparing to place yet more restrictions on foreign firms that supply networking products and services to Chinese banks. As a longtime industry watcher, I need to quickly add my own view that this particular move isn’t really discriminatory against firms like IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Hewlett-Packard (NYSE: HPQ), which are likely to feel the biggest effects. Read Full Post…
