Japan’s foreign minister was in China yesterday on an official visit, so I thought I’d start the week with 2 items on Chinese companies in the notoriously difficult Japanese market, including an interesting move into the chip sector by a sister company of PC giant Lenovo (HKEx: 992) and a hasty retreat by e-commerce giant Alibaba. Let’s start with the more intriguing of the items, which is seeing Hony Capital, the high-profile technology investment arm of Lenovo parent Legend Group, pairing with US private equity giant TPG Capital to make a planned bid for bankrupt memory chipmaker Elpida (Tokyo: 6665), according to a Japanese media report. (English article) If they made a bid, the pair would join 2 other suitors, Korea’s Hynix Semiconductor (Seoul: 000660) and US-based Micron (NYSE: MU) in pursuing the Japanese company that controls 12 percent of the global DRAM market. Frankly speaking, Hynix and Micron look like much better suitors for Elpida, as both are competitors that could consolidate the Japanese company into their own operations for an industry that has been in desperate need of consolidation for the last 5 or 6 years. But the Hony-TPG pairing does include one interesting element, namely the Lenovo connection. Lenovo itself has been trying to break into Japan for years now, following its 2005 purchase of IBM’s PC assets that included sales and distribution networks in Japan. More recently Lenovo has taken over the PC assets of NEC (Tokyo: 6701), and has discussed setting up a manufacturing base in Japan. (previous post) A successful bid for Elpida could theoretically provide Lenovo with a strong DRAM supply for its Japan-based business. Still, I would be wary of such a purchase since Lenovo has little or no experience in running a DRAM operation, and it’s unclear what kind of savings it could achieve by combining its Japanese PC business with Elpida’s money-losing memory business. Moving on, the other Japanese news bit has seen Alibaba’s Taobao service officially shutter its Japanese shopping channel that was operating on a platform run by Yahoo Japan (Tokyo: 4689). (Chinese article) Alibaba made a relatively low-key move into Japan several years ago, seeking to take advantage of ties to one of its earliest investors, Japan’s Softbank (Japan: 9984), which is also the main investor in Yahoo Japan along with Yahoo (Nasdaq: YHOO) itself. Clearly the market hasn’t proven as easy to penetrate as Alibaba had hoped, and the media report even says that sales on the Taobao Japan channel were below the company’s targets. This withdrawal doesn’t surprise me at all, as Chinese firms of all types have had a difficult time in the Japanese market, which has become famous for its impenetrability by foreign firms. The other big Chinese web firm trying to crack the market is search leader Baidu (Nasdaq: BIDU), which has spent millions of dollars over the last 3 years on a Japanese search portal with little results to show for that investment. This Taobao withdrawal from the market was completely predictable, and I wouldn’t be surprised at all to see a similar retreat by Baidu within the next 12 months.
Bottom line: A bid by a Lenovo sister company for bankrupt Japanese chipmaker Elpida is likely to fail, while Baidu is likely to follow a recent Alibaba retreat from Japan in the next 12 months.
Related postings 相关文章:
◙ Lenovo Considers Japan Production 联想向日本转移制造业务为明智公关手段
◙ NEC China Cellphones: New Lenovo Tie-Up? NEC计划重回中国手机市场 或与联想联姻
There’s quite a bit of telecoms news coming out this week from the city of Barcelona in Spain, where China’s telcos and equipment makers are all showing off their latest wares at the world’s biggest annual telecoms show. Most of it looks like the usual display of new gizmos and gadgets, but the item that caught my eye was a relatively detailed update on China Mobile’s (HKEx: 941; NYSE: CHL) 4G plans, which indicate that both the company and, perhaps more importantly also the government, are moving aggressively forward to build a commercial network based on a homegrown Chinese standard called TD-LTE. Equally significant is who was discussing the plans, as the comments came from a relatively youthful Li Yue, a fast rising star who recently took over as president of China Mobile’s state-run parent, rather than the company’s longtime aging Chairman Wang Jianzhou, who is getting set to retire. Li said China Mobile will move ahead with plans to expand its large-scale trials of TD-LTE to 9 cities later this year, adding Qingdao, Tianjin and most importantly Beijing, to its current trails in 6 major cities that began last year. (
Alibaba chief Jack Ma is clearly not someone to take “no” for an answer, as evidenced by his company’s latest effort to assemble a group to buy out its controlling shareholder, Yahoo (Nasdaq: YHOO). There’s not enough detail in a media report (
It’s only 3 months since Alibaba split its consumer-oriented Taobao Website into two units, and already it’s starting to hype the more promising of the two, the B2C-focused Taobao Mall, in what’s no doubt the run-up to an IPO that could come as soon as next year. At the same time, Alibaba.com (HKEx: 1688) is continuing with its battle to win back credibility following a scandal earlier this year, in a clear divergence of strategy for these two sister companies that are both part of Chinese e-commerce leader Alibaba Group. Let’s look at Taobao Mall first. The 3-month-old company has held what was probably its first stand-alone press conference, in which it boasted it expects its sales volume to double to 200 billion yuan next year, or about $31 billion, and where it announced a new strategy where it will open its site to other online retailers like Wal-Mart-invested (NYSE: WMT) Yihaodian in addition to traditional retail names like Dell. (Nasdaq: DELL) (
After months of wrangling, Alibaba Group Chairman Jack Ma has finally reached a settlement of his dispute with stakeholders Softbank (Tokyo: 9984) and Yahoo (Nasdaq: YHOO) over the spin-off of the company’s Alipay electronic payments service, in what looks to be both a PR and monetary victory for Ma himself. (
Alibaba’s Taobao Mall, the B2C portion of Taobao that was split off into a separate entity under a restructuring last month (
