Bottom line: Beijing should step in to mitigate the latest cutthroat competition in the smartphone and hired car services spaces, or risk seeing meltdowns that lead to chaos and job losses.
Lenovo, LeTV CEOs in war of words
New battles broke out in 2 of China’s most hotly contested high-tech sectors last week, casting a spotlight on the aggressive and even potentially illegal tactics that Chinese companies sometimes use in their fierce rivalries and quest for market share.
One of those saw taxi app operator Didi Kuadi announce a major promotion offering aggressive subsidies for its hired car services. The other saw video high-flyer LeTV (Shenzhen: 300104) use equally aggressive tactics to launch its new line of smartphones, igniting a war of words after another prominent rival criticized its actions as “irrational”. Read Full Post…
Bottom line: LeTV’s strong smartphone launch shows that stiff competition in China won’t ease soon, which could push Lenovo’s mobile operations further into the red and prompt ZTE to further lighten its efforts in the market.
LeTV smartphones make strong debut
A series of smartphone items are in the headlines as we close out the week, spotlighting the tough situation in a China market that is at once the world’s largest but also extremely competitive. That competition just got a bit louder, with the first headline that says new arrival LeTV (Shenzhen: 300104) debuted quite strongly with when its first smartphone models went on sale this week. Meantime, industry stalwarts Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) continue to reflect the stresses of selling in China, with the former posting a big loss for its mobile business last year while the latter continues to lighten its reliance on the market by looking for growth in the US. Read Full Post…
Bottom line: Xiaomi’s rush into competitive western markets with beta testing of new online stores hints at internal concerns over the company’s rapidly slowing growth, and is likely to meet with a lukewarm reception.
Xiaomi eyes US, Germany, France, UK
The upwardly mobile Xiaomi is making its latest moves on the global stage, with word that it’s beta testing online stores in the US, France, Britain and Germany. The planned move into the US was previously disclosed earlier this year, with reports that Xiaomi would start by selling accessories like earphones. (previous post) But this addition of 3 major Western European markets hints that Xiaomi is moving ahead aggressively with its global expansion, and could even start selling its signature smartphones in some or all of those markets by year-end.
Xiaomi is accelerating its move into these lucrative but also highly competitive new western markets as it comes under growing pressure to maintain its breakneck growth that has given it a rich valuation of $45 billion just 5 years after its founding. That pressure is evident in a second headline, which says Xiaomi’s smartphone sales rose by just 50 percent in this year’s first quarter, far less than the triple-digit growth rates it has become used to in its relatively short life. Read Full Post…
Bottom line: Apple’s latest environmental initiative in China looks like a savvy and inexpensive way to raise local awareness of environmental protection, in a move that will please Beijing and help it improve its government relations.
Apple tries forest management
Just 3 weeks after capturing local headlines with its plans to invest in solar farms in China, global gadget leader Apple (Nasdaq: AAPL) is rolling out more environmentally friendly initiatives in an attempt to woo both consumers and government officials in one of its most important markets. This latest initiative probably won’t get much attention in western media, as it looks mostly like a publicity ploy even though it does lay out big goals. But foreigners were never Apple’s real target with this announcement, which instead is part of its recent campaign to win over Beijing as well as a broader base of Chinese consumers. Read Full Post…
Bottom line: Apple CEO Tim Cook’s latest meetings in Beijing are important steps in his bid to cultivate better government relations, but he may need to make more substantive moves to earn serious goodwill.
Apple’s Cook meets with Chinese vice premier
We’ll continue this week’s tradition of closely following Apple (Nasdaq: AAPL) CEO Tim Cook on his latest trip to China, with word that he’s met with one of the nation’s vice premiers and also with officials from China Telecom (HKEx: 728; NYSE: CHA), one of its 3 big state-run telcos. I’ll begin with just a slight note of cynicism by saying that both of these meetings seem just slightly second-tier, for reasons I’ll explain shortly, and therefore one could argue that Cook has yet to make it into the “big leagues” of Chinese politics.
But that said, these and other visits on this trip still mark a huge step forward for both Cook and Apple, which just 2 years ago were criticized by the powerful People’s Daily, the official newspaper of the Communist Party, for its unparalleled arrogance. Cook has been working hard to change that image, and this particular weeklong trip seems to be almost as much about public relations as it is about doing business. Read Full Post…
Bottom line: Apple is likely to reach a deal to bring Apple Pay to China in the next 12 months, while Xiaomi’s addition of traditional offline sales channels acknowledges it needs to diversify its approach to maintain its breakneck growth.
Cook eyes Apple Pay for China
The old saying “An apple a day” seems to be appropriate this week in China, where Apple’s (Nasdaq: AAPL) CEO Tim Cook is being quite talkative on his latest China trip with a steady stream of small but noteworthy news. He began the week by announcing a new environmental China initiative for Apple, then followed by launching his own microblog on the locally popular Sina Weibo (Nasdaq: WB), often called the Twitter of China. (previous post)
Now he’s candidly talking about hopes for bringing his company’s Apple Pay electronic payments service to China, perhaps through tie-ups with local e-commerce giant Alibaba (NYSE: BABA) or UnionPay, China’s largest electronic transactions network operator. Read Full Post…
Bottom line: Apple’s retention of China’s smartphone crown for a second consecutive quarter is partly due to timing, but also owes to CEO Tim Cook’s new PR campaign that will help to win favor from Beijing and the broader Chinese public.
Apple’s Cook opens Weibo account
Media are fixated today on a new report showing China’s smartphone sales fell for the first time in this year’s first quarter, in a development that shouldn’t surprise anyone due to the market’s supersaturation. But equally impressive in the report is the ongoing surge of Apple (Nasdaq: AAPL), which managed to hold onto its title as the nation’s leading smartphone brand for a second quarter after stealing the crown from the high-flying Xiaomi.
Some may say Apple’s surge is due to timing, since it released its latest iPhones in October, fueling a fourth-quarter sales boom that lingered into the first quarter. That may be partly true, though I personally have to applaud CEO Tim Cook for mounting a very focused campaign to woo both Beijing and average Chinese consumers. In the latest move of that campaign, Cook has just opened his official account on Sina Weibo (Nasdaq: WB), China’s equivalent of Twitter (NYSE: TWTR), as he moves to communicate more directly with customers in one of his most important markets. Read Full Post…
Bottom line: Lenovo has done remarkably well since defying skeptics with its landmark IBM PC buy a decade ago, and could stand a 50-50 chance of remaining relevant a decade from now in the fast-changing world of high-tech gadgets.
Lenovo celebrates a decade since landmark IBM buy
Global PC leader Lenovo (HKEx: 992) is commending itself on how far it has come since its landmark purchase of IBM’s (NYSE: IBM) PC business 10 years ago, setting it on a path that has made it the world’s top computer seller. (company announcement) I’ll admit I was a skeptic at the time of the IBM deal in 2005, and have become much more bullish on Lenovo since then. Still, the company hasn’t completely convinced me that it has the necessary skill and vision to move past its global PC crown, which is fast becoming yesterday’s news as traditional computers rapidly lose ground to newer devices like smartphones and tablets.
Before I look at the challenges that Lenovo is facing, I want to start by personally congratulating the company on its huge accomplishments over the last decade since it announced it would purchase IBM’s storied PC business for $1.25 billion. I and many others predicted at the time that Lenovo could stumble badly with the move, since it had no experience at running such a major foreign business that was clearly in decline and need of restructuring. Read Full Post…
Bottom line: LeTV’s new smartphones should generate major buzz when they go on sale this weekend and could easily sell 1 million units in their first 3-4 months, challenging domestic “cool” incumbent Xiaomi.
LeTV takes pre-orders for new smartphones
Smartphone sensation Xiaomi has emerged as one of China’s hottest tech names in the last few years with its cool and trendy image, focusing its sights largely on global leaders Samsung (Seoul: 005930) and especially Apple (Nasdaq: AAPL) as it looks for a place on the global stage. But this globally-minded company could soon have to watch its back as well, with the recent meteoric rise of LeTV (Shenzhen: 300104) as the newest hipster in town.
LeTV went largely unnoticed for the first part of its life, when it was mostly an Internet-based provider of video content similar to YouTube. But it has zipped into the spotlight over the last year, first as it posed a serious challenge to China’s traditional broadcasters and now as it rolls out its own new line of smartphones. Read Full Post…
Bottom line: Citic Capital and Fosun are expanding their tastes beyond the traditional Chinese preference for distressed assets, reflecting growing sophistication and diverging strategies of China’s emerging private equity buyers.
Citic Capital in group buying OmniVision
Chinese private equity is in a few major headlines this week, picking up assets in the technology, insurance and retail sectors in the US and Japan. The wide range of deals and geographies reflects the diverging strategies of some of China’s emerging private equity giants, which are rapidly developing their own individual personalities on the global stage. Citic Capital is behind 2 of the latest deals, picking up a retail asset in Japan and a US company that specializes in imaging technology. Meantime, Fosun International (HKEx: 656) has made a major new purchase in the US, offering to buy the remaining stake in an insurer that it first invested in last year. Read Full Post…
Bottom line: Gree’s launch of a smartphone line is far too late and could signal the start of a major shake-out for the sector, while ZTE’s move into Japan will be tough but could reap big rewards if it can gain traction.
Gree starts shipping smartphones
You know China’s smartphone market is due for a major correction when a stodgy home appliance maker like Gree (Shenzhen: 000651), better known for its air conditioners, enters the market. But that’s exactly what’s happened, in a move that has the word “dud” written all over it. Meantime, the more established smartphone maker ZTE (HKEx: 763; Shenzhen: 000063) is making a risky but wiser move by targeting the lucrative but often ignored Japanese market, as it looks for growth alternatives outside a Chinese market that is the world’s largest for smartphones but also incredibly competitive. Read Full Post…
