Bottom line: Starbucks and Uber are likely to scale back their latest aggressive China expansion plans as the nation’s economy slows and consumers rein in their spending on non-essential items and services.
Starbucks accelerates China expansion
China’s economy may be heading for a new era of slower growth, but you would never know that by looking at the latest moves by Uber and Starbucks (Nasdaq: SBUX), 2 global leaders in their categories of hired car services and retailing. The first instance has Uber completing a major fund-raising for its China unit and forming a new tie-up in travel services. Meantime, Starbucks is steaming ahead with plans to nearly double its China store count by 2019.
As a neutral observer of both companies, I have to say that both Starbucks and Uber are being just slightly naive in ignoring all the signs of a major Chinese economic slowdown that could ultimately lead to woes now confronting countries like Greece and Spain. In that kind of environment, it’s far from clear that consumers will still enthusiastically shell out $5 for a cup of coffee at Starbucks when they could buy a cup of tea for far less, or that they will pay similar amounts for a hired car instead of taking the bus or subway. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 12. To view a full article or story, click on the link next to the headline.
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China Media Capital Invests in ‘Star Wars’ Special Effects House Base FX (Chinese article)
Apple, Samsung supplier Biel Crystal plans $2 Bln HK IPO in 2016 – IFR (English article)
Uber Drives Into China Tourism Industry With HNA Group Tie-Up (English article)
Women’s Shopping Services Mogujie, Meilishuo Merge to Create $3 Bln Company (Chinese article)
‘Star Wars: Force Awakens’ Breaks Records With $53 Mln China Debut (English article)
Bottom line: A new global car services alliance led by Didi Kuaidi and Lyft won’t pose a serious threat to Uber, though the company could face ongoing challenges in China from Did stakeholders like Tencent.
Uber hits new obstacles from WeChat, Didi alliance
Uber’s road into China hasn’t been an easy one, and 2 new developments reflect the growing challenges it will face from incumbent players and their backers in what’s likely to become the world’s biggest market for hired car services. The bigger of those 2 news items has Uber’s chief China rival Didi Kuaidi forming a global alliance to counter the rapid rise of the US giant.
The latter news has local social networking (SNS) leader Tencent (HKEx: 700) locking Uber out of its hugely popular WeChat instant messaging platform for at least the second time this year. The reports cite Uber’s malicious sales practices as the reason for WeChat’s decision, and it’s true that the company is known for its aggressive tactics to win business. But it’s also noteworthy that Tencent is a major stakeholder in Didi Kuaidi, and no one would be surprised if WeChat’s move was at least partly aimed at protecting that investment. Read Full Post…
A new pilot program for Shanghai’s taxis was small news in the headlines this week, even though the move itself is quite revolutionary. That’s my humble view after reading about the program being rolled out by Qiangsheng, our city’s largest fleet operator, which is taking the ground-breaking step of actually tying taxi drivers’ pay to their service rather than just how many miles they drive each month.
The program probably won’t have much impact on local traffic congestion, but could go miles towards restoring the rapidly-fading image of our city’s thousands of taxi drivers. I remember a time not so long ago when Shanghai was quite proud of its taxi fleet, which consisted of relatively courteous drivers who were immediately identifiable by their trademark white gloves and willingness to take you almost anywhere you wanted to go without complaint. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 9. To view a full article or story, click on the link next to the headline.
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China Resources Challenges ON Semiconductor with Fairchild (Nasdaq: FCS) Bid (English article)
Postal Savings Bank Signs China Life, Ant Financial, Tencent as Investors for HK IPO (Chinese article)
Google (Nasdaq: GOOG) Registers Company in Shanghai Free Trade Zone (Chinese article)
ZTE (HKEx: 763), Shanghai Oriental Pearl in Strategic Cooperation (HKEx announcement)
Uber Releases China ICP Permit Number in Response to WeChat Blockage (Chinese article)
The following press releases and media reports about Chinese companies were carried on December 5-7. To view a full article or story, click on the link next to the headline.
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Ola, Didi Kuaidi, Lyft and GrabTaxi Gang Up to Kill Uber (English article)
The following press releases and media reports about Chinese companies were carried on December 4. To view a full article or story, click on the link next to the headline.
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Mango TV to Complete 1.5 Bln Yuan Funding Round in January (Chinese article)
BaiduMusic (Nasdaq: BIDU), Taihe MusicGroup to Merge into New Company (English article)
Aston Martin Turns to China’s LeTV (Shenzhen: 300104) to Soup Up Supercars (English article)
iKang Healthcare (Nasdaq: KANG) Adopts Shareholder Rights Agreement (GlobeNewswire)
Didi, Lyft Entering Four-Way Alliance to Take on Uber for Rides (English article)
Bottom line: Uber’s 2016 China expansion plan looks aggressive but typical for the company, while Didi Kuaidi should invest its big cash pot on expansion and becoming profitable rather than unrelated services like O2O take-out dining.
Uber, Didi race towards 2016 with big investments
Private car service leaders Uber and Didi Kuaidi are both in the headlines as we race towards the end of 2015, a year that will go down as a watershed for this fast-rising sector both in China and globally. The first news comes from Uber, which is detailing an aggressive expansion plan for 2016 as China surpasses the US to become its largest global market. The second headline has Didi Kuaidi confirming a major new investment in online take-out dining site Ele.me, just days after separate reports said that e-commerce giant Alibaba(NYSE: BABA) also wants to invest in the company.
This year has certainly been a watershed for both Uber and Didi Kuadi in China, reflecting the rapid rise of their private car services that use location-based (LBS) GPS technology to challenge traditional taxi operators. Uber has said repeatedly that China is its top priority outside its home US market. Reflecting that position, Uber took the unusual step of spinning off its China unit into a separate company earlier this year, and also said it would spend $1 billion in 2015 to build up its service in the market. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 27. To view a full article or story, click on the link next to the headline.
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LeTV (Shenzhen: 300104) Raises $530 Mln in 1st Funding Round for Smartphone Unit (Chinese article)
Taobao to Spin Off C2C Second-hand Goods Trading Platform Xianyu – Source (English article)
Bank of Qingdao (HKEx: 3866) HK IPO Gets Chilly Reception, Calls on Friends (Chinese article)
Citic Securities (HKEx: 6030) Says Being Probed for Securities Violations (HKEx announcement)
Uber Says China to Pass US as Company’s Largest Market by Year-End (Chinese article)
Bottom line: LeTV’s latest hired car services investment and high-profile poaching of top talent from a rival look similar to the recent rapid rise and sputtering of Xiaomi, and the company could follow a similar trajectory by this time next year.
LeTV steals top talent from Youku Tudou
After watching the meteoric rise of online video sensation LeTV (Shenzhen: 300104) over the past year, I’m quickly tiring of this company and its hyperactive diversification strategy. The latest move in that drive is taking LeTV onto the road, with word the company is investing a hefty $700 million for a controlling stake of struggling private car services firm Yidao Yongche.
At the same time, other media are reporting that LeTV has just stolen a top executive from chief rival Youku Tudou (NYSE: YOKU), which announced last week it has received a buyout offer from e-commerce giant Alibaba (NYSE: BABA). Anyone feeling a sense of deja vu from these latest 2 LeTV headlines, and from LeTV’s meteoric rise in general, would be correct. Read Full Post…
Bottom line: China should expand its plans for a new enterprise board in Shanghai to include a place for the Chinese units of big multinationals like Yum and Uber, allowing domestic investors to buy into these big foreign names.
Calls grow for KFC parent to spin off China unit
Global fast food giant Yum Brands (NYSE: YUM) became the latest major multinational to contemplate a spin-off for its China business last week, following in the tracks of Uber and IMAX (NYSE: IMAX), two leaders in their respective areas of hired car services and big-screen theater technology. The trend acknowledges that China will soon become the world’s largest consumer market, and its unique qualities and complexities often justify creation of separate companies for these big global names to effectively develop the market.
China should seize on this trend and modify its current plans for a new Nasdaq-style enterprise board based in Shanghai to also include a place for these larger, newly created companies with foreign roots. Reports earlier this year indicated the regulator was aiming to roll out the new strategic industries board as soon as next year, though its plans could be delayed due to the recent turmoil on China’s stock markets. Read Full Post…
