Bottom line: Wanda Group founder Wang Jianlin and other major Chinese entrepreneurs intent on building wide-ranging conglomerates should look to the western failure of such firms instead focus on their core business areas.
Wanda’s Wang buys Carmike Cinemas
Billionaire deal maker Wang Jianlin was back in the acquisition headlines last week, when his increasingly diverse Wanda empire announced it would buy US-based Carmike Cinemas (Nasdaq: CKEC) as part of it its dream of building the world’s biggest theater chain operator. But theaters are just one of a growing number of items on Wanda’s recent list of mega-projects, which has also included plans for a multibillion-dollar European theme park, a major e-commerce venture, and investments related to sports and its core real estate products and services.
The sudden diversification looks similar to ones by other cash-rich Chinese companies, most notably e-commerce giant Alibaba(NYSE: BABA), and reflects a desire to move beyond their original businesses into new growth areas. While such a strategy seems logical, western experience has shown that such rapid diversification more often results in dysfunction rather than synergies, and frequently ends with the eventual break-up of such companies into smaller units focused on individual areas of expertise. Read Full Post…
It’s a quiet day on China’s corporate news front, as many companies stay silent and hope that the latest sell-off on the nation’s stock exchanges calms as the week progresses. So in the absence of major news, I thought I’d look at the latest Hollywood tie-up involving Youku Tudou (NYSE: YOKU), and do some reading between the lines about what it means for the struggling online video company.
The thing that most caught my attention about this latest licensing deal between Youku Tudou and Paramount Pictures was how passe it seemed. Youku Tudou and its rivals were frequently making this kind of announcement a couple of years ago, when they were trying to secure premium content that web surfers would pay to watch on their sites. But nowadays such deals don’t seem like big news anymore, and instead companies are focused on creating their own exclusive content. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 16. To view a full article or story, click on the link next to the headline.
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Carmakers Curb China Output as Sales Growth Stalls (English article)
Tencent (HKEx: 700) to Invest 2 Bln Yuan in Cloud Unit Over Next 12 Months (English article)
Meituan Denies Rumors of Failure for Latest Funding Round (Chinese article)
New reports are saying that Alibaba (NYSE: BABA) CEO Jack Ma, flush with cash just weeks after his company’s blockbuster New York IPO, is headed to Hollywood to talk deals with the industry’s top players. The reports focus mostly on the potential for new content-purchasing deals, as Alibaba looks for a spot in China’s booming market for movies and online video. But what caught my attention was a brief mention in the reports that Ma may be looking for something bigger on his trip, namely a stake in a major or mid-sized Hollywood studio. Read Full Post…
