Bottom line: Didi’s foray into takeout delivery and Meituan’s into private car services look like moves of desperation to make the companies more attractive as they get pressured to make IPOs by the end of next year.
Meituan eyes car services
Two of China’s biggest unlisted internet companies are in the headlines as the week winds down, each taking a shot at the other’s turf. One headline has the Uber-like Didi Chuxing hiring in preparation to launch a takeout dining service like the one operated by Meituan-Dianping. The other has Meituan-Dianping preparing to roll out its own private car services in seven Chinese cities, taking a direct shot at Didi.
The timing of these two news bits is probably coincidental, since I doubt they share information on their strategic planning. What’s more, the Meituan move into car services is just an extension of previous earlier news. From a bigger perspective, both items smack just slightly of desperation as these two companies look for growth in the face of stagnating core businesses. Read Full Post…
Bottom line: Didi’s Brazilian acquisition looks relatively shrewd and could be followed by more such moves in developing markets, while its purchase of a local bike-sharing firm looks less prudent.
Didi drives into Brazil
China’s homegrown Uber is in a couple of headlines as we round out the first week of the new year, reflecting its global aspirations and also its desire to expand beyond its original car-based services at home. The first headline has Didi Chuxing making its first major overseas acquisition in Brazil, while the second has it buying what is probably China’s largest shared bike operator behind the leading pair of Mobike and Ofo.
Each of these headlines is interesting though not earth shattering, and in my view probably reflect the fact that Didi has too much cash more than anything else. This is a classic problem for this kind of superstar Chinese startup, which often runs into the unusual problem of raising more cash than it really needs simply because so many investors want to buy in. At the same time, Didi’s own car services business has probably shrunk over the last year, following a clampdown by many major cities and also as the novelty factor wears off for many consumers. Read Full Post…
Bottom line: Homestay specialist Tujia could make a play to merge with the China operations of Airbnb, following its major new tie-up with leading online travel sites Ctrip and Qunar.
Ctrip ties with Tujia
Leading online travel agent Ctrip (Nasdaq: CTRP) is back to doing what it knows best, neutralizing competition through formation of savvy alliances with its rivals. In this case the company is taking aim at the market for short-term stays at private homes, with its announcement of a major new tie-up with homegrown industry leader Tujia. That alliance is seeing Ctrip merge its own homestay business with Tujia, in what looks like a clear shot at global leader and sector pioneer Airbnb. Read Full Post…
Bottom line: ZTO’s proposed New York IPO is getting modest interest due to concerns about competition in the parcel delivery sector, while bike sharing service Ofo could make its own offshore IPO in the next 3 years.
Bike sharing service Ofo raises funds
Just a day after I noted the disappearance of a previously discussed New York listing plan by parcel delivery service ZTO Express, the company has re-emerged in the IPO headlines with a filing saying it plans to raise up to $1.5 billion. At the same time, an intriguing bicycle-sharing service called Ofo is also in the fund-raising headlines, picking up a smaller $130 million in new money from its own impressive list of investors that includes ride-sharing giant and Uber-killer Didi Chuxing. Read Full Post…
The following press releases and news reports about China companies were carried on September 13. To view a full article or story, click on the link next to the headline.
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Alipay Adds Transaction Fee for Transfers to Bank Accounts (Chinese article)
China’s Regulator Tightens Control on Live Video Broadcasting (English article)
Didi Chuxing, Uber China Join With Local Partner to Promote New Energy Cars (Chinese article)
Google’s (Nasdaq: GOOG) Former China Chief Raises $674 Mln in New Funds (English article)
Thomas Cook, Fosun (HKEx: 656) in Joint Venture to Tap China Travel Market (Chinese article)
Bottom line: Rumors that Baidu may be planning to merge its take-out dining and group buying units with Meituan-Dianping are consistent with recent market trends, but are less likely to be true due to Baidu’s strong denial.
Baidu denies merger plan for group buying, dining units
I normally try to avoid writing about rumors that lack strong foundation, but the latest gossip about a potential new mega tie-up between 2 non-core units of online search leader Baidu(Nasdaq: BIDU) and group buying giant Meituan-Dianping look too spicy to ignore. Baidu came out with a statement late on Tuesday denying any talks were taking place to combine its take-out dining and Nuomi group buying services with Meituan-Dianping. But that said, any veteran China watcher will know that companies frequently deny such rumors even when they’re true. Read Full Post…
Bottom line: The antitrust regulator’s decision to review Didi’s proposed union with Uber China marks the start of a new era of much-needed government oversight of major Internet mergers.
Antitrust regulator starts review of Didi-Uber union
After years of turning a blind eye to rapid consolidation in many emerging high-tech industries, China’s anti-trust regulator has finally adopted a more active posture with its recent decision to review the proposed landmark merger of homegrown car services firm Didi Chuxing with the Chinese unit of US rival Uber. The announcement by the Ministry of Commerce that the deal would require its approval caught Didi and Uber by surprise, since such a review would be the first for a major Internet deal since China rolled out its anti-monopoly law 8 years ago. Read Full Post…
The following press releases and news reports about China companies were carried on September 3-5. To view a full article or story, click on the link next to the headline.
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China Opens Antitrust Investigation Into Uber’s Deal with Didi (English article)
Yum (NYSE: YUM) to Sell Stake in China Unit to Ant, Primavera Ahead of Spinoff (English article)
Much of the conventional wisdom and press commentary about Uber’s recent decision to sell its China business to Chinese rival Didi portrayed the move not just as a defeat for Uber, but a broader setback for all American tech companies in China.
The New York Times described the development as “a stark signal of how difficult it is for American technology companies to thrive in China,” while the Financial Times wrote that Uber had become “the latest in a succession of US Internet companies that have tried to conquer the China market, and walked away with much less than they had hoped for.” Read Full Post…
Bottom line: Ele.me’s new fees will raise the ire of restaurant partners on its platform but is unlikely to produce a mass revolt, and reflects growing pressure on the company to find new revenue sources and become profitable.
Restaurants grumble over new fees from Ele.me
Signs of stress are showing up at leading online take-out dining service Ele.me, which is facing howls of protest from its restaurants partners over a major new fee. This kind of mass complaining is relatively common in China’s cyber realm, especially in industries where online companies are losing money and desperately looking for new revenue sources. The take-out dining industry certainly fits that description, as stiff competition from names like Baidu (Nasdaq: BIDU) and Meituan-Dianping forces companies like Ele.me deeply into the red. Read Full Post…
Bottom line: China’s anti-trust regulator’s assertion that the Didi-Uber China mega-merger will require its approval could mark the beginning of a new, tougher stance towards the nation’s rapidly consolidating Internet sector.
Anti-trust regulator steps into Didi-Uber marriage
After years of sitting by and doing almost nothing to stop the formation of near monopolies in a number of emerging high-tech sectors, China’s anti-trust regulator may finally be taking notice of rapid consolidation happening in the country’s cyber realm. I’ve frequently complained that China’s commerce ministry has taken a relatively tough position on cross-border M&A for anti-competitive reviews, but pays little or no attention to similar domestic deals that could have similar effects for local consumers. But perhaps that may finally be changing, with word that the Ministry of Commerce is saying its blessing will be necessary for the newly announced mega-marriage between private car services giants Didi Chuxing and the China unit of global leader Uber. Read Full Post…
