The following press releases and media reports about Chinese companies were carried on July 15. To view a full article or story, click on the link next to the headline.
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Yum’s (NYSE: YUM) Sales Miss Projections After Slump Persists in China (English article)
Bottom line: Suning’s Japanese expansion and receipt of a new license to build and operate a private broadband network are both positive developments, but also reflect a lack of quick progress in transforming its core China-based retail business.
Suning in Japanese expansion
A couple of new reports involving Suning (Shenzhen: 002024) made me realize it’s been quite a while since I’ve written about this company that is trying to transform from a traditional retailer to a major e-commerce player. Both reports are interesting and noteworthy, though neither is related to its e-commerce drive, which doesn’t appear to be going anywhere quickly.
One of the deals involves Suning’s purchase of a money-losing Japanese electronics seller 5 years ago, and will see it now plow several billion yuan into a major expansion of the Laox chain of home appliance stores. The second deal has Suning named as one of 4 companies to receive licenses to build broadband networks to offer services under a newly announced pilot program to open the sector to private money. Read Full Post…
Bottom line: Poorly run traditional supermarkets like Lianhua are destined for extinction in the next 5-10 years as they get overtaken by the rapidly rising e-commerce names like Yihaodian and JD.com.
Tired Lianhua sells stake to Yonghui
A couple of supermarket headlines are casting a spotlight on a Chinese market that is rapidly transforming, putting pressure on traditional stores operated by domestic players like Sun Art (HKEx: 6808) and global chains like Carrefour (Paris: CA). The first headline has Shanghai-based operator Lianhua (HKEx: 980) selling a major stake of itself to smaller but more nimble rival Yonghui (Shanghai: 601933) in a $120 million deal. The second has Yihaodian becoming the first online grocer to break into an important annual industry ranking list, underscoring the rapid rise of Internet-based supermarkets. Read Full Post…
Bottom line: Carrefour’s new China strategy ends a period of uncertainty about its commitment to the market, though its move into e-commerce is long overdue and could fail due to its lateness.
Carrefour decides to stay in China
After sending a stream of mixed signals over the last 2 years about its commitment to China, global retailing giant Carrefour (Paris: CA) has finally decided it will stay in the market for now, but only after overhauling its operations. The decision will see the company do a major consolidation of its procurement centers, and also push into convenience stores and e-commerce. The signals seem to imply that the days of rapid expansion for its core chain of superstores is probably finished, with e-commerce and smaller stores likely to form the bulk of its China expansion going forward. Read Full Post…
Bottom line: Alibaba’s stock is likely to come under continued pressure over the next 6 months, as it grapples with overvaluation, piracy issues and a large volume of shares coming back into the market from Yahoo.
Yahoo to spin off Alibaba stake
E-commerce giant Alibaba (NYSE: BABA) is in a couple of major headlines today, raising questions about its future ownership and also its open platform business model. On the ownership side, US Internet giant Yahoo (Nasdaq: YHOO) has announced it will spin off its large stake in Alibaba into a separate company, and then distribute shares in that new firm to existing Yahoo shareholders. On the business model side, Alibaba has enlisted one of the thousands of merchants on its popular Taobao C2C marketplace to respond to a government audit that found nearly two-thirds of goods sold on Taobao were fakes. Read Full Post…
Bottom line: A new audit reveals how widespread counterfeit goods are on Chinese e-commerce sites, which will remain a major risk for site operators and their shareholders.
Taobao slammed in piracy audit
A new audit from State Administration For Industry and Commerce (SAIC) is showing just how pervasive fake goods are on the Chinese Internet, underscoring the huge risk that consumers face when purchasing online. The results underscore the huge risk to e-commerce firms as well, since many of China’s top names including Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD) operate so-called “open platforms” that are simply online marketplaces where third-party merchants can sell their goods. Such merchants are notoriously hard to police, and these latest results show that they frequently offer fake and substandard products to buyers. Read Full Post…
Bottom line: Best Buy’s sale of its Five Star chain represents a long-overdue withdrawal from traditional retailing in China, and it would be wise to consider an e-commerce option if it tries to return later.
Best Buy sells Five Star chain
Some might see retailing giant Best Buy’s (NYSE: BBY) newly announced sale of its Five Star electronics chain as a retreat from China, but I would personally congratulate the company for a shrewd move that was long overdue. That’s because traditional retailing is rapidly dying in China, as shoppers opt for the convenience, better selection and lower prices of e-commerce. What’s more, the traditional electronics retailing sector is already overcrowded and highly competitive, dominated by big national chains led by Suning (Shenzhen: 002024) and Gome (HKEx: 493) Read Full Post…
Two of the world’s biggest retailers are in the e-commerce headlines, led by a move into Shanghai’s new pilot free trade zone by global giant Amazon (Nasdaq: AMZN). At the same time, Wal-Mart-controlled (NYSE: WMT) Yhd has become China’s first e-commerce firm licensed to operate online drugstores, giving it a potential edge over other rivals also eying the space. Both of these stories highlight how the big international names are trying to use their clout and global connections to carve out a space in China’s fast growing but highly competitive e-commerce space, which is now dominated by the domestic pair of Alibaba and JD.com (Nasdaq: JD). Read Full Post…
Consolidation continues to advance in the Chinese supermarket aisle, with word that Hong Kong grocery operator Dairy Farm (London: DFIB) is paying nearly $1 billion for 20 percent of Yonghui (Shanghai: 601933), one of China’s top chains. A couple of years ago I would have said this deal looked like a good one for both sides, combining Dairy Farm’s well-run Hong Kong-based chain of Wellcome supermarkets with Yonghui’s sizable Chinese operations. But frankly speaking, China’s rapid migration of food shopping into the e-commerce realm makes the whole idea of consolidation of brick-and-mortar operations look like a belated effort with limited growth potential. Read Full Post…
There’s a flurry of news out today on China’s 2 leading e-commerce firms, led by a new IPO filing and major boardroom adjustment at JD.com as the nation’s second largest player prepares to raise up to $1.5 billion through a New York listing. Meantime, industry leader Alibaba has reported impressive earnings for the fourth quarter of 2013, as it also heads towards a major New York listing as soon as later this year. JD’s boardroom change looks most interesting to me, as it’s a bit unusual to see such major movement in a company’s top ranks so close to an IPO. That leads me to wonder if this is the first in a series of moves leading to the eventual marginalization of JD founder and CEO Liu Qiangdong. Read Full Post…
The new week is just beginning, but it could well go down as a pivotal moment in Chinese Internet history with Tencent’s (HKEx: 700) new announcement of an e-commerce alliance with JD.com that could threaten the dominance of sector leader Alibaba. The tie-up, which was first rumored last month, will see Tencent pay $215 million for 15 percent of JD.com, which will also receive some of Tencent’s e-commerce assets including a minority stake of its flagship Yixun.com B2C service. (company announcement) The companies will merge their e-commerce businesses, creating a new player with nearly a quarter of China’s B2C e-commerce market. Read Full Post…
