Internet

Latest Financial Trends & News for Internet in China

E-COMMERCE: Alibaba Moves on From Piracy Tussle, Goes to Washington

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Bottom line: Alibaba’s new lower-key approach to publicizing its fight against piracy is in response to an embarrassing spat with a major industry group, and looks like a smarter way to handle its anti-counterfeiting efforts.

Alibaba takes lower-key approach in anti-piracy fight
Alibaba takes lower-key approach in anti-piracy fight

Just days after a high-profile and embarrassing tussle with some of the world’s top luxury brands, e-commerce giant Alibaba (NYSE: BABA) is trying to put the matter in the past by reaffirming its commitment to fighting piracy outside an industry alliance it previously joined. At the same time, the company’s talkative chief Jack Ma was uncharacteristically quiet after a trip this week to Washington to meet with unspecified officials.

Anyone who has followed Alibaba for a while knows this kind of behavior is quite typical for the company. Alibaba’s is usually quite talkative and self-promotional, which reflects Ma’s own nature. But that high-profile behavior often magnifies the inevitable setbacks that occur for any company of this size, and Alibaba and Ma often go into “quiet mode” after such negative news. Read Full Post…

BUYOUTS: Dangdang Lowers Buyout Offer, Momo Still Mum

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Bottom line: Dangdang’s latest buyout offer is likely to meet with minority shareholder resistance due to its sharp downward revision, while Momo is also likely to lower its earlier buyout price if and when it announces a final offer.

Dangdang gets lowered buyout offer

After pausing briefly last week, the train of publicly-traded Chinese firms leaving New York has resumed with the receipt of a new offer for faded e-commerce company Dangdang (NYSE: DANG). In this case it’s significant that Dangdang has announced a revised buyout offer from its founders, since that means the deal most likely has the necessary funding and is likely to move ahead. But it’s also significant that this revised offer is sharply lower than 2 earlier offers for the company, one from its founders and one from a rival bidder.

Next there’s social networking app operator Momo (Nasdaq: MOMO), which has remained mum on its own pending buyout bid in its latest quarterly results. That doesn’t mean the bid is necessarily on hold, especially after word emerged last month that e-commerce giant Alibaba (NYSE: BABA) was joining the buyout group. But Momo’s shares now trade well below their earlier buyout price, and I suspect that if and when it finally announces a concrete offer the price will also be revised downward from the earlier bid. Read Full Post…

SMARTPHONES: Apple CEO in Search of Good News on China Call

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Bottom line: The latest China trip by Apple’s CEO is designed to spotlight the company’s new mega-investment in Didi Chuxing and show its continued relevance for local app makers, as it seeks positive media coverage to halt a recent series of negative news.

Apple CEO looks for positive news on China trip
Apple CEO looks for positive news on China trip

Less than 2 weeks after media first reported plans for a new China trip by Apple’s (Nasdaq: AAPL) CEO, Tim Cook has appeared in Beijing for the eighth visit to his company’s second largest market. This particular visit comes at a sensitive time for Apple, which has experienced a number of China setbacks recently, led by a sharp drop in sales during the first 3 months of the year.

Against that backdrop, I previously said that Cook’s new trip looked partly aimed at damage control, though we should also note that he was already a frequent visitor to the country. In keeping with the past, Cook was relatively low key this time and didn’t even announce his arrival in China until he was spotted at a meeting with some of the company’s local app development partners in Beijing. (Chinese article) Read Full Post…

E-COMMERCE: Anti-Piracy Group Pulls Out Welcome Mat from Under Alibaba

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Bottom line: A brouhaha that has seen Alibaba suspended from an anti-counterfeiting group just a month after joining is an embarrassment but won’t have a major longer-term impact on the company’s stock.

Tiffany quits anti-piracy group after Alibaba joins

A brouhaha over the admission of Alibaba (NYSE: BABA) to a leading US anti-piracy coalition has taken a somewhat strange twist, with word that the group has formally suspended the e-commerce giant just a month after it joined. The development occurred after several of the International Anti-Counterfeiting Coalition’s (IACC) members quit after the group accepted Alibaba, including the latest defection last week by Tiffany & Co.

Tiffany’s defection followed earlier withdrawals from the IACC by 2 other luxury goods makers, Michael Kors and then Gucci a short time later. (previous post) The coalition’s members were unhappy because of Alibaba’s previous status as operator of marketplaces with rampant trafficking in counterfeit goods, even though the company has pledged to strongly step up its fight against such trade. Read Full Post…

SMARTPHONES: Apple Finally Invests in China with $1 Bln Didi Deal

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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…

BUYOUTS: Wanda Wavers, Qihoo Hits Currency Snag

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Bottom line: Qihoo’s privatization from New York is likely to move ahead after it resolves a temporary impasse with the foreign exchange regulator, while Wanda’s privatization is also likely to proceed on its belief it can make a quick backdoor re-listing in China.

Qihoo shares fall on latest buyout obstacle

New ripples are spilling through the realm of Chinese companies seeking to return to China after getting lukewarm receptions with offshore listings, reflecting the complexity and difficulty of such deals. Two of the largest such deals are in the headlines as we round out the week, led by word that a privatization plan by software security specialist Qihoo 360 (NYSE: QIHU) may be running into trouble due to China’s strict foreign exchange controls.  The other major deal has real estate giant Dalian Wanda (HKEx: 3699) reportedly moving ahead with a plan to privatize the company, after indicating earlier this week it might abandon its original plan.

It’s becoming quite a challenge to write about this so-called “homecoming trend” by Chinese firms these past 2 weeks, since new obstacles seem to be popping up almost daily on this road back to China. The process was never an easy one, and involves raising hundreds of millions or sometimes even billions of dollars to take a company private. Then the buyout groups, usually led by company managers, must convince New York or Hong Kong shareholders to sell their stock, often at modest premiums. Read Full Post…

IPOs: BOC Aviation Flies in HK, 51Talk Speaks in NY

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Bottom line: BOC Aviation and 51Talk are likely to post moderate performances in their upcoming IPOs in Hong Kong and New York, as investors welcome their growth stories but also show concerns about China’s broader slowing economy.

BOC Aviation IPO gets lukewarm reception

Privatizations and de-listings have been making headlines among overseas listed Chinese firms these days, but a couple of upcoming new IPOs shows that New York and Hong Kong remain attractive options for at least some companies. In the bigger of the 2 plans in the headlines today, Bank of China’s (HKEx: 3988; Shanghai: 601398) BOC Aviation unit has filed updated plans for its IPO first announced in March, which includes a final pricing. The other deal has English language instruction specialist 51Talk filing to make a New York IPO to raise up to $100 million.

This latest pair of deals in some ways reflect the constant state of uncertainty in China’s own stock markets, which is where many of these Chinese companies would prefer to list due to higher valuations. IPOs in China are always tough because of a huge waiting line that means new applicants can wait 2 or 3 years or even more. The problem is worsened by political conservatism that often sees the regulator slow or freeze all new offerings when markets become volatile like they are now. Read Full Post…

VIDEO: PPTV’s Cryptic Farewell, Xunlei Swings to Loss

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UPDATE: Since issuing its original microblog post, PPTV has issued new posts on its account that appear to indicate it won’t be closing. To view the latest posts, please click here.

Bottom line: PPTV looks set to become the first major victim of China’s online video wars after its microblog publication of a farewell message, while the money-losing Xunlei could become the second casualty.

PPTV bidding farewell?

Two of China’s major online video companies with mid-sized backers are in the headlines today, with ominous signals coming from PPTV and Xunlei (Nasdaq: XNET) that reflect the intense competition they face. The most intriguing headline has PPTV, which is owned by electronics retailing giant Suning (Shenzhen: 002024), announcing on its official microblog that it is closing, even as its actual website remains active.

The other headline has Xunlei, which is backed by smartphone maker Xiaomi, announcing its latest quarterly results that showed it swung to a loss as it battles with much larger rivals for an audience. We can probably also assume that PPTV was losing big money, and in fact just about everyone in China’s online video space is now in the red. Typical of the group is Youku Tudou, the industry leader whose net loss doubled to $70 million in last year’s third quarter before it was bought by e-commerce giant Alibaba (NYSE: BABA). Read Full Post…

INTERNET: Baidu Cleans Up Search Site, Eyes Values

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Bottom line: Baidu’s new policy of greater transparency in its search results is long overdue, and is unlikely to have a major impact on its business due to lack of other choices for advertisers in the China search market.

Baidu cleans up search site

What a difference a week makes. After coming under unprecedented assault for putting profits above everything else, leading search engine Baidu (Nasdaq: BIDU) has just done a major overhaul of its core search service to make it more transparent and useful. The overhaul was long overdue but was hardly voluntary, and only came after the company faced the biggest crisis since its founding in 2000.

It’s somewhat ironic that this particular crisis took so long to come, since the kinds of misleading practices at the center of the controversy are widely known and central to Baidu’s huge profitability. Those practices include selling preferred positions on search results pages to advertisers who pay the highest prices, even though that fact was never clearly conveyed to Internet users. Read Full Post…

INTERNET: Facebook Makes Name in China with Trademark Win

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Bottom line: A favorable court ruling in a trademark dispute is the latest positive step for Facebook in China, and reinforces a view that it could get permission to open a Chinese service within the next year.

Facebook wins trademark ruling in Beijing

Social networking giant Facebook (Nasdaq: FB) may be absent on the China Internet, but a new victory in a local trademark dispute shows its name is gaining traction in the Chinese legal system. Some are pointing out that Facebook’s victory against a beverage maker that tried to register its trademark contrasts sharply with the loss in a similar case last week for US smartphone giant Apple (Nasdaq: AAPL). (previous post)

While both decisions came from courts in Beijing, it’s probably a bit unfair to compare the 2 since each has to be considered based on individual facts and evidence. But this latest trademark victory does appear to show that Facebook founder Mark Zuckerberg’s strategy of currying favor with Beijing may be producing results, as he pursues his ultimate goal of launching a Chinese version of his social networking service (SNS). Read Full Post…

INTERNET: Baidu Told to Clean Up Act, Investors Unfazed

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Bottom line: Baidu’s shares could see more downside of 5-10 percent as a scandal involving its core search service plays out, but its dominant position means its business is unlikely to suffer a major longer term impact from the crisis.

Baidu ordered to clean up search results
Baidu ordered to clean up search results

It seems that I was wrong when I predicted that a scandal surrounding search leader Baidu (Nasdaq: BIDU) would quickly blow over and not much would change in the company’s misleading ways for displaying search results. The company is still at the center of major headlines In the second week since the scandal broke, this time getting ordered to change the way it displays search results.

That order was part of a broader set of government directives telling Baidu to change its ways, and other reports indicated the company has already taken down ads from thousands of medical companies. Such moves could theoretically have a major impact on Baidu’s lucrative search business, since hospitals, drug companies and medical device makers reportedly account for a very large part of its advertising revenue. Read Full Post…