Bottom line: Midea could buy another global brand following its purchase of Toshiba’s home appliance business, while hometown rival Gree will also feel pressure to make a small to mid-sized overseas acquisition in the next 1-2 years.
Midea in MOU for Toshiba’s appliance unit
Following several days of rumors, struggling Japanese tech giant Toshiba (Tokyo: 6502) has confirmed it will sell a controlling stake in its home appliance business to Midea (Shenzhen: 000333), extending a fledgling movement by Chinese buyers abroad. The move could pressure other Chinese rivals, most notably Gree (Shenzhen: 000651), to follow in the footsteps of Midea and Haier (HKEx: 1169), which is also in the process of buying General Electric’s (NYSE: GE) appliance business.
From a bigger perspective, this particular trend looks a bit like what happened several decades ago in the older industry for TV sets. That trend saw Asian buyers purchase big western brands in the fading TV industry, with storied names like Zenith and RCA ultimately get gobbled up. Fast forward to the present, when most of those older brands no longer exist or are insignificant, which could hint at what may lie ahead for these new purchases by the Chinese companies. Read Full Post…
The following press releases and news reports about China companies were carried on March 18. To view a full article or story, click on the link next to the headline.
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Bottom line: Midea’s reported bid for Toshiba’s home appliance business reflects a renewed global push by Chinese white goods maker, but is likely to fail due to Midea’s lack of experience managing a global brand.
Midea eyeing Toshiba’s white goods?
Leading appliance maker Haier (HKEx: 1169) could quickly discover it’s not the only Chinese company roaming the globe for acquisitions, with word that domestic rival Midea (Shenzhen: 000333) is in talks to buy the white goods business of Japan’s Toshiba (Tokyo: Tokyo). This particular news comes as Haier finalizes its purchase of the home appliance unit of General Electric (NYSE: GE), and is part of a larger push by big western companies to sell their lower-margin white goods businesses.
A subset of that bigger story has seen Japanese brands engage in their own campaign to sell off assets from their lower margin businesses, many of which are losing money. That trend has culminated in prolonged talks that are likely to see the struggling Sharp Corp (Tokyo: 6753) sell itself to Taiwan’s Hon Hai (Taipei: 2317), in what would mark the largest-ever sale of a Japanese electronics company to a foreign buyer. Read Full Post…
The following press releases and news reports about China companies were carried on March 16. To view a full article or story, click on the link next to the headline.
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Zoomlion (HKEx: 1157) Sweetens Offer for US Crane Maker Terex (NYSE: TEX): Sources (English article)
Anbang wins US Security Panel OK to Buy Fidelity & Guaranty (English article)
Midea (Shenzhen:000333) to Buy Toshiba (Tokyo: 6502) White Goods Unit – Source (Chinese article)
China’s Consumer Rights Show Trains Sights on Local Food-Delivery Site Ele.me (English article)
JD.Com (Nasdaq: JD) Gains on Alibaba as Spending Jumps, Profit Estimates Drop (English article)
Bottom line: Alibaba’s shares will continue to sag through the rest of the year on any news about the company, whether good or bad, as investors exit the stock to lock in big gains.
Alibaba shares continue downward trend
My earlier theory that shares of e-commerce giant Alibaba (NYSE: BABA) will continue to slump on any news, good or bad, is playing out as the shares re-approach a post-IPO low on a mixed series of headlines about the company. At this point the stock is simply on a downward track, as investors of all ilk who made big profits from the company’s meteoric rise sell their shares to lock in some gains. The pressure looks set to continue for the rest of the year, following the end of a post-IPO lock-up period last month that will allow Alibaba’s earliest investors to join the selling frenzy. (previous post) Read Full Post…
Bottom line: Chinese appliance makers and Internet companies need to focus their smart device efforts on one or two key alliances each, or risk spreading their resources too thin.
Haier in new tie-up with Evergrande
Smart devices look set to become a theme of the New Year, with new reports that domestic appliance giants Haier (HKEx: 1169) and Midea (Shenzhen: 000333) have formed major new tie-ups to develop the space. Similar alliances began accelerating in the second half of last year and are aimed at developing the “Internet of Things”, which envisions an interconnected world where devices and their owners can talk to each other at any time over a wide range of wired and wireless networks. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 3-5. To view a full article or story, click on the link next to the headline.
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Fosun (HKEx: 656) Wins Contest For Club Med As Andrea Bonomi To Drop Bid (English article)
Haier-Evergrande, JD.com-Midea In New Alliances For 2015 (Chinese article)
Perfect World (Nasdaq: PWRD) Receves “Going Private” Proposal at $20 Per ADS (PRNewswire)
Renren (NYSE: RENN) Announces Resignation Of CFO, Board Changes (PRNewswire)
Xiaomi Doubles Revenue to $12 Billion as Phone Sales Triple (English article)
Bottom line: The snowballing of a recent series of mudslinging remarks by major companies underscores the rampant lack of business ethics in China, and could prompt some much-needed public debate on the topic.
China business ethics in need of fixing
What started as a couple of stories highlighting the shady business practices that are all too common in China is starting to snowball, with home appliance giant Gree (Shenzhen: 000651) and a local start-up air purifier maker adding their voices to this entertaining year-end war of words. At the heart of this verbal mudslinging is a toxic Chinese business culture where practices like illegal copycatting, corporate espionage and violation of business contracts are quite common and even accepted to a certain degree. Read Full Post…
Bottom line: The target of Qihoo’s rumored smartphone purchase could be Coolpad, while Xiaomi’s new tie-up with Midea could be followed by similar pairings in a broader drive to develop smart appliances.
Qihoo eying Coolpad?
A couple of big deals are bubbling around in the smartphone space today, led by yet another new tie-up involving smartphone sensation Xiaomi, this time with home appliance maker Midea (Shenzhen: 000333). But the hyperactive Xiaomi is having to share the spotlight with the edgier security software specialist Qihoo 360 (NYSE: QIHU), which is reportedly eying a deal for its own major smartphone acquisition worth up to $1 billion.
Each of these deals has slightly different motivating factors, but the central theme is that companies like Qihoo and Xiaomi increasingly see smartphones as a central element of larger suites of product and services rather than just a stand-alone product. In Xiaomi’s case, the company already counts smartphones as its core central product and is trying to build up an ecosystem of related products and services like smart TVs and air conditioners. Qihoo is eying smartphones as a vehicle for propagating its core software and Internet services. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 16. To view a full article or story, click on the link next to the headline.
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Qihoo (NYSE: QIHU) Set To Buy Smartphone Maker For 5 Bln Yuan – Source (Chinese article)
Xiaomi Makes 1.266 Bln Yuan Investment In Midea (Shenzhen: 000333) (Chinese article)
Tuniu (Nasdaq: TOUR) Wins $148 Mln From Hony, JD.com, Ctrip (Chinese article)
China Unicom (HKEx: 762) Drops to Eight-Month Low As Manager Probed (English article)
Childcare E-commerce Site ‘Miyabaobei’ Secures $60 Mln Series C Funding (English article)
I’m quickly getting tired of writing so much about the flood of new initiatives coming from Internet leaders Alibaba and Tencent (HKEx: 700), which is why I’m combining the latest word of new tie-ups for both into a single posting today. Frankly speaking, both of these initiatives look quite interesting and a year ago I would have done a separate posting and analysis for each. But these latest alliances look less interesting in the current frenzy of similar new announcements. One will see Alibaba partner with appliance maker Midea (Shenzhen: 000333), and the other Tencent and educational services provider New Oriental (NYSE: EDU). Read Full Post…
