Bottom line: Baidu’s withdrawal from Brazil reflects a broader inability of Chinese companies to succeed overseas due to their different practices and local wariness about their ability to protect user privacy.
Baidu says bye-bye to Brazil
In what is probably coming as a surprise to no one, media reports are saying that search leader Baidu(Nasdaq: BIDU) is pulling out of Brazil. This would represent the company’s latest failure abroad, and is really part of a broader string of failures not only for the company but China’s internet sector in general. This particular group is quite good at milking the China market for all it’s worth, but then being unable to replicate its success in other markets.
There are lots of reasons for the inability of China’s Internet companies to succeed outside their home market. One is simply inexperience. But another is really the direct result of Beijing’s determination to set up what almost amounts to a parallel Internet in China that in some ways is identical to the global Internet but in others is very different. Read Full Post…
Bottom line: Xiaomi appears to be gaining confidence of investors through moves like its entry into South Korea, but it will take at least another year to prove it really has the savvy to thrive over the longer term.
Xiaomi calls on South Korea
Newly listed smartphone maker Xiaomi(HKEx: 1810) has kept the world guessing these past two weeks with its on-again-off-again performance both on the Hong Kong stock exchange and now in the real world. The former is a reference to its stock, which did quite poorly in the run-up to its trading debut last Monday but has done a U-turn since then and posted some impressive gains.
The latter is a reference to the company’s latest strategic move, which has it launching its low-end smartphones in South Korea. That may not sound like much, since the market is relatively small and Xiaomi already sells its products in more than 70 countries and regions globally. But the symbolic significance is quite large, since South Korea is home to leading global smartphone maker Samsung(Seoul: 005930). Read Full Post…
Bottom line: Tencent’s WeGame could stand a 50-50 chance of success in moving abroad, since the company already has a proven track record in games and will face relatively low privacy protection concerns due to the less-sensitive nature of gaming.
Tencent takes its gaming global
Despite their huge success at home, none of China’s big Internet companies has ever scored a major victory outside its home market, despite a number of low-profile attempts. Social networking giant Tencent (HKEx: 700) is about to become the latest to take a stab at the market, with word that the company will soon launch an international edition of its gaming platform called WeGame.
There are a number of reasons why Chinese Internet companies have yet to really crack any major foreign markets, underscoring the uphill battle Tencent will face. The largest is probably well-established competition in most places, both from local players as well as global giants like Amazon (Nasdaq: AMZN) and Google (Nasdaq: GOOG). The second biggest element is probably trust, since many foreigners are a bit suspicious of these Chinese companies and their ability to protect customer privacy. Read Full Post…
Bottom line: Live broadcasting specialists Inke and Huya should do well over the next year but could face difficulty after that as popularity of such services fades, while Xiaomi’s stock gains over the last two days look like a dead-cat bounce.
Inke goes live with strong trading debut
Following the unimpressive debut of smartphone maker Xiaomi(HKEx: 1810) earlier this week, live streaming site Inke (HKEx: 3700) is the latest high-tech listing in the headlines with a more impressive debut in Hong Kong. This latest deal follows the US listing for Huya (NYSE: HUYA), China’s first live streaming site to make an IPO, which has tripled since its New York IPO in May.
There are some mixed messages in here, perhaps indicating mixed investor sentiment towards many of these new-economy companies as investors try to separate the wheat from the chaff. If that’s the case, investors certainly seem to think that Huya and perhaps Yinke represent the wheat in the hot online streaming category. Meanwhile, they seem less certain about Xiaomi, which fizzled in its trading debut on Monday but has come bouncing back somewhat since then. Read Full Post…
Bottom line: Xiaomi’s stock is likely to be volatile over the next year and could move broadly downward as investors wait to see if the company’s comeback has legs and it can move into higher-end products.
Xiaomi fizzles in trading debut
Smartphone maker Xiaomi(HKEx: 1810) seems to have become the proverbial lead zepplyn sinking further and further into the mire as it finally made its trading debut in Hong Kong. The company has been dogged by skepticism almost since the get-go of its blockbuster IPO, which ended this morning here in Asia with the stock’s official trading debut. The question from here now becomes: how far will the stock sink before it finds a bottom, and what are its real prospects over the mid- to longer-term?
Let’s jump right in with the news, which had Xiaomi shares dipping 2.3 percent when their long awaited trading began here in Hong Kong on Monday morning. The shares opened at HK$16.60, versus an IPO price of HK$17. Things didn’t get much better after that, and the stock was down to HK$16.36 the last time I checked midway through the morning session. Read Full Post…
Bottom line: A court order barring Micron Technology from China and Donald Trump’s attempts to keep China Mobile out of the US reflect blurring lines between business and politics in heightening US-China trade tensions.
Fujian court bars Micron sales in China
Two new headlines are showing how trade tensions between the US and China are spilling over into the high-tech realm, while also reflecting a certain amount of confusion and twisting of the facts. Leading the somewhat misleading headlines is an item that has U.S. memory chip giant Micron (Nasdaq: MU) suddenly being shut out of China for a number of its products due to a patent dispute. The other headline has Donald Trump saying that leading Chinese telco China Mobile(HKEx: 941; NYSE: CHL) shouldn’t be allowed to offer services in the US due to national security concerns.
The Micron story is being spun by some media as having a US-China trade tensions angle, when really that’s not the case and it’s just a typical patent dispute. The same could be said for the much larger case involving a US ban on telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063), which is being spun as part of US-China trade tensions, even though ZTE is being punished for violating much older US sanctions against sales to Iran. China Mobile, on the other hand, is clearly a Trump pet project and does reflect his protectionist tendencies. Read Full Post…
Bottom line: A new IPO by e-commerce company Pingduoduo could do reasonably well due to its rapid growth and unusual business model, but could suffer from a “flavor of the day” element over the longer term.
Pinduoduo puts new spin on group buying
After years of basically having just two choices to invest in China’s e-commerce market, investors will soon have another new and interesting option with the upcoming listing of a company called Pinduoduo. I’ll admit that I was unfamiliar with Pinduoduo before reading about this upcoming listing. But that said, the numbers do point to a potential high-flyer in the making, including a business model that combines elements of Groupon (Nasdaq: GRPN) and Facebook (Nasdaq: FB) to let people recruit their friends to get good deals on merchandise.
The company is also noteworthy for its ties to social networking giant Tencent(HKEx: 700), whose wildly popular WeChat platform is apparently the main venue where friends can get together to get their deals. This particular deal comes as China’s own homegrown Groupon, Meituan-Dianping, prepares for its own Hong Kong listing in a deal expected to raise up to $6 billion, amid a broader bumper IPO season for China new economy offerings. Read Full Post…
Bottom line: ZTE will experience fallout from its run-in with Washington through much of next year, and could see an even longer-term hit to its global business as international customers start to look for alternate suppliers.
ZTE off life support, but major challenges remain
The saga of embattled smartphone and telecoms equipment maker ZTE(HKEx: 763; Shenzhen: 00006) appears to be nearing an end, as trading resumed in the company’s stock following an official settlement with Washington over illegal sales to Iran. The ending to this story certainly came with a big climax, with ZTE shares plunging by 42 percent in Hong Kong on the first day after trading resumed.
They fell by a smaller 10 percent in China on Wednesday, but only because China places a 10 percent limit on daily rises and declines in individual stock prices. Not surprisingly, the stock was down another 10 percent in China on its second day of trade, while the Hong Kong shares did a dead cat bounce and were up slightly. Read Full Post…
Bottom line: New listing plans by used car platform operator Uxin, EV battery maker Amperex and medical device maker Mindray should all do well, driven by strong growth potential and their leading positions in China.
Bumper crop of new China IPOs headed to market
The latest IPO season for Chinese firms is kicking into high gear on both sides of the Pacific, with announcement of several hot new offerings that each has a slightly different story to tell. At the head of the class is a new listing for used car platform operator Uxin, which is aiming to raise up to $500 million in New York.
That’s followed by a listing plan for electric vehicle battery maker Amperex, which is having to settle for a sharply-lower valuation than it had been originally seeking with a listing in China. Last but not least there’s medical device maker Mindray, which de-listed from New York and has just submitted a plan to list on China’s enterprise-style ChiNext board, after its initial plan to re-list on one of China’s larger main boards was rejected. Read Full Post…
Bottom line: China Mobile’s first-ever drop in 4G subscribers in April owes to the company’s early arrival to the space, and reflects the broader market’s maturation that is also adding similar pressures to Unicom and China Telecom.
China Mobile 4G users takes first-ever dip
Much ado is being made about new data from the three big telcos that includes a first-ever drop in 4G subscribers for industry heavyweight China Mobile (HKEx: 941; NYSE: CHL). This particular first seems to have been a long time coming, and really shouldn’t surprise anyone too much. The fact of the matter is that China’s mobile market has been nearing saturation for a while, and the nation’s big 3 telcos have been increasingly stealing customers from each other for the last two or three years as the number of unserved users dwindles.
The bigger question raised by this data is what the slowdown could mean over the longer term, when China Mobile and smaller peers Unicom(HKEx: 762; NYSE: CHU) and China Telecom(HKEx: 728; NYSE: CHA) might see slow or negative growth in subscriber terms. The answer to that question is that this trio will be able to feast on their protected home market for many years to come, though they may be forced to innovate a bit more in order to get a tapped-out audience to keep paying more for services. Read Full Post…
Bottom line: The departure of Lu Qi from Baidu could deal a setback to some of the company’s less advanced and more ambitious efforts in artificial intelligence.
Baidu’s AI drive takes detour
Just a year after being named as the man who would lead search leader Baidu (Nasdaq: BIDU) into a future filled with artificial intelligence (AI), Lu Qi has abruptly abandoned his post as the company’s COO. Investors were clearly spooked by the move, dumping Baidu’s stock on Friday to the tune of a nearly 10 percent drop, the kind of one-day decline not seen since the company became embroiled in an advertising scandal two years ago.
Put simply, this particular departure seems to throw Baidu’s entire AI future into a bit of doubt. But then again, this kind of move seems to be quite par for the course for Baidu founder Robin Li, who has become famous for his “flavor of the day” approach that sees him delve whole-heartedly into new businesses one day, only to jettison them a year or two later. Read Full Post…
