Bottom line: Apple’s new $1 billion investment in Didi Chuxing is a smart way to show its commitment to China and pursue car-based services, while avoiding intellectual property theft that might come if it set up its own R&D facility.
Apple invests in Didi Chuxing
I’ve been saying for years that Apple (Nasdaq: AAPL) needs to make a major investment in China to show its commitment to the market, but was quite surprised to read it was finally taking such a step with plans to pump $1 billion into local hired car services giant Didi Chuxing. But after some more thought, I realized this particular investment actually has a certain form of logic that I’ll explain shortly. And it also shows Apple’s commitment to the market.
This particular announcement also comes as Apple experiences a sudden series of setbacks in China, following a good streak that saw it do quite well over the last 2 years. Those setbacks were led by Apple’s disclosure last month that its Greater China sales plunged 26 percent in the first quarter of this year. That bad news was followed by the company’s loss in a local trademark dispute involving the iPhone name, and after its China book and movie services were blocked for unspecified reasons. (previous post) Read Full Post…
Bottom line: A new global tie-up with Uber marks a major advance for Ant Financial’s Alipay, while new Internet car initiatives by Tencent and Alibaba are unlikely to find big audiences despite getting big resources from their backers.
Alibaba, Tencent car initiatives drive ahead
A series of stories involving Alibaba (NYSE: BABA) and Tencent (HKEx: 700) reflect the growing importance China’s leading Internet firms are placing on cars, which could be the next major battleground for web-based services. Alibaba is in 2 related headlines, including one that says its affiliated Ant Financial unit has signed a major tie-up that will allow anyone in the world to use its Alipay electronic payments service to pay for Uber hired cars.
The other 2 headlines both involve car manufacturing, including one that says mass production has begun for the first Internet-equipped model co-produced through a tie-up between Alibaba and SAIC (Shanghai: 600104), China’s leading car maker. The other headline says a car-making venture backed by Tencent has been quietly poaching workers from the likes of Google (Nasdaq: GOOG) and Germany’s Daimler (Frankfurt: DAIGn), as it gears up for its own production. Read Full Post…
The following press releases and news reports about China companies were carried on May 4. To view a full article or story, click on the link next to the headline.
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Tencent (HKEx: 700) Venture Poaches Google Talent as Chinese Techs Pile into Autos (English article)
SAIC Begins Mass Production for Car Jointly Produced With Alibaba (NYSE: BABA) (Chinese article)
Just a day after fast-growing car services firm UCar confirmed a major new tie-up with e-commerce giant Alibaba (NYSE: BABA), we’re getting more details about the new alliance that appears to auger an end to Alibaba’s previous relationship with homegrown Uber rival Didi Kuaidi. At the same time, Alibaba has just announced its largest overseas purchase ever by paying $1 billion for a controlling stake of Southeast Asian e-commerce specialist Lazada.
These 2 news items continue a recent acceleration in M&A activity for the hyperactive Alibaba, which is quite in line with the hyperactive nature of its founder and chief pilot Jack Ma. This kind of cyclical hyperactivity has become the norm for Alibaba in recent years. It typically sees the company’s high-profile activity go into overdrive for a year or so, only to come to a sudden halt when things become overheated and problems emerge. Read Full Post…
Bottom line: Alibaba’s new tie-up with Car Inc hints at a looming divorce with Didi Kuaidi, while a major new funding for its Koubei unit foreshadows a major new push that will further heat up intense competition in take-out delivery services.
Koubei seeks big new funding
Just days after reports emerged of a massive new funding for its Ant Financial unit, e-commerce leader Alibaba (NYSE: BABA) is back in the fund-raising headlines with big plans for its Koubei take-out dining unit. At the same time, an intriguing new story about a strategic Alibaba alliance with an aggressive new player in the hired car services space hints that the company may also be contemplating a divorce with national leader Didi Kuaidi.
Both of these stories reflect the catch-up game that Alibaba is playing in two important growth areas of the Internet. Alibaba previously had a presence in both through investments in hired car service provider Kuaidi and group buying site Meituan. But both of those partners entered mega-mergers over the last 6 months with their major rivals. As a result, Alibaba has divorced itself from the current Meituan Dianping, and is looking to build up its own rival Koubei take-out dining service. (previous post) Read Full Post…
Bottom line: Massive new fund raising by Ant Financial and Didi Kuaidi show there’s still lots of money looking to invest in emerging Chinese industries, though current valuations are overblown and likely to stagnate as China’s economy slows.
Ant Financial raises $3.5 bln
Every time I write that new funding seems to be cooling for Chinese tech companies, new reports emerge of yet another mega-funding. Two such new fund-raisings are in the headlines as the new week begins, led by a massive $3.5 billion new round for Alibaba-affiliated (NYSE: BABA) Ant Financial. The other mega-deal has homegrown car services provider Didi Kuaidi poised to raise $1.5 billion or more in new funding, as it vows to outspend an equally aggressive Uber for supremacy in the China market.
These 2 fundings show there’s still plenty of money chasing hot deals in China’s emerging industries, many in the tech and financial sectors. Two of my younger friends here have left more traditional media jobs over the last year to join the crowded field of private equity firms that are funding many of these deals, allowing hot companies like Didi Kuaidi and Ant to easily meet their targets and achieve very high valuations in the process. Read Full Post…
Bottom line: Hertz’s sale of its Car Inc stake reflects the Chinese company’s new focus on hired car services, and could see Car Inc fall into the red as its UCar affiliate vies with Uber and Didi Kuaidi in the fiercely competitive market.
Hertz dumps Car Inc
A complex transaction involving Car Inc (HKEx: 699) is making the headlines as the new week begins, reflecting a transformation from its roots as a rental car specialist into a hired car services company competing with Uber and Didi Kuaidi. The deal will see former strategic stakeholder Hertz (NYSE: HTZ) sell most of its stake in the company to UCar, Car Inc’s hired car services affiliate. At the same time, Car Inc’s chairman and one of its largest shareholders will also sell his stake in the company to UCar, which will become one of Car Inc’s biggest shareholders.
There’s no explanation for the shuffle in the announcement, but it does seem to show that Car Inc’s Chairman Charles Lu wants to move his company more quickly into the hired car services sector, which is growing faster but is also fiercely competitive. That would explain Hertz’s decision to sell its stake, since Hertz is a global rental car company that probably has little interest in China’s ultra competitive hired car services market. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 19. To view a full article or story, click on the link next to the headline.
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Major Banks in Rush to Support Apple Pay (Nasdaq: AAPL) After China Launch (Chinese article)
Uber Losing $1 Bln a Year to Compete in China (English article)
Xiaomi to Release Consumer Drone – Reports (English article)
Average Huawei Smartphone Price in China Rose in 2015 to $213, As Others Fall (Chinese article)
Bottom line: A new integrated car-ordering platform being rolled out by Lyft and Didi looks like a smart and low-cost move to expand their geographic reach, while LeEco’s electric car venture with Aston Martin is likely to sputter.
Lyft co-founder John Zimmer in Beijing for Didi announcement
Two of China’s top Internet companies are in car-related headlines today, led by a rapidly cozying relationship between Didi Kuaidi and US counterpart Lyft that has the pair preparing to roll out a joint platform for their signature hired car services. The other news has online video giant LeEco (Shenzhen: 300104), formerly known as LeTV, rolling out a joint venture to make electric cars with super luxury brand Aston Martin.
Both of these deals are incremental, since the original Didi-Lyft partnership was formed last year when the former invested in the latter. Likewise, LeEco was rumored to be near a tie-up with Aston Martin as early as last April. From a broader perspective, both moves show a growing confluence between the Internet and cars, which has opened up a wide range of new services that often incorporate GPS technology. Read Full Post…
Bottom line: A sudden spate of new mega-fundings by Meituan-Dianping, Lufax and JD Finance show there is still big interest in China’s private tech and finance sectors, despite the nation’s rapidly slowing economy.
Investors throw billions at Meituan-Dianping, Lufax, JD Finance
It seems I may have been a bit premature with my recent prediction that the mega-fundings that crested in China a year ago were finished. That’s my assessment after reading about 3 new mega-deals in the tech sector this week, all worth more than $1 billion. Leading the pack was recently merged group buying giant Meituan-Dianping, whose whopping $3.3 billion in new funding values the company at $18 billion.
That latest news came just a day after media reported another deal that saw peer-to-peer (P2P) lending giant Lufax just raise its own new funding of $1.2 billion, valuing the firm at $18.5 billion. Last but not least was announcement at the start of the week that the finance unit of e-commerce giant JD.com (Nasdaq: JD) had just raised 6.65 billion yuan, or just over $1 billion, valuing the firm at 46.7 billion yuan ($7 billion). Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 20. To view a full article or story, click on the link next to the headline.
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Meituan-Dianping Completes $3.3 Bln Funding, Values Company at $18 Bln (Chinese article)
