Bottom line: Qunar’s management overhaul marks the start of a new chapter as a partner of former arch-rival Ctrip, while its dispute with 2 major airlines reflects challenges it will face due to its open platform business model.
Qunar in management overhaul
Online travel giant Qunar (Nasdaq: QUNR) is experiencing a turbulent new year, announcing a major overhaul that will see 3 of its top managers depart. The shake-up is the first big fallout following a landmark tie-up with former arch-rival Ctrip (Nasdaq: CTRP) last year, and looks aimed at stripping Qunar of its independence as it gets set to work more closely with its former foe.
Meantime, Qunar is also feeling some turbulence due to a dispute with 2 of China’s largest airlines. That spat has China Southern (HKEx: 1055; Shanghai: 601766) and Hainan Airlines (Shanghai: 600221) both reportedly blocking their tickets from being sold on Qunar’s websites. The airlines’ noise is the latest in a growing chorus of discontent from companies whose travel products and services are sold by Qunar and its rivals. Read Full Post…
Bottom line: Alibaba’s shares and Ant Financial’s new fund-raising plans will come under pressure if China’s stock markets enter a new correction, a possibility that looks high in the current environment.
China sell-off pressures Alibaba shares
E-commerce giant Alibaba (NYSE: BABA) is facing several new challenges as we head into 2016, led by a big drop in its stock on the first trading day of the year after China’s domestic stock markets plunged 7 percent. The 5.6 percent drop in Alibaba’s stock in New York on Monday wiped out around $10 billion in market value, as investors worried that US-listed Chinese stocks could get infected by a potential a new correction on China’s stock markets.
In separate headlines, Alibaba-affiliated Ant Financial is reportedly back in the market to raise at least $1.5 billion, in the run-up to a potential IPO as soon as later this year. That figure looks quite large, and I’ve previously said we’re unlikely to see many private fund-raising rounds of that size this year. But the figure is actually down quite a bit from Ant’s only other fund raising last July, reflecting growing caution from investors worried about China’s slowing economy. Read Full Post…
Bottom line: iDreamSky’s finalized buyout offer marks the start of a new wave that will see more than a half dozen US-listed Chinese firms sign similar offers by the Lunar New Year, mostly at the same prices from original privatization deals announced last year.
iDreamSky finalizes buyout bid
The New Year is kicking off with a shot of deja vu, as a wave of companies that announced privatization bids in the first half of 2015 are now returning to investors with concrete offers. In the latest chapter of this two-part wave, mobile game operator iDreamSky (Nasdaq: DSKY) has just announced its signing of a formal deal to take the company private.
iDreamSky announced its original intent to privatize last June, at the height of a wave that saw about 3 dozen such de-listing bids proposed last year, mostly in the first half. The wave of announcements skidded to a halt in mid June when China’s stock markets underwent a massive correction after an even larger rally. But with China’s markets showing signs of stability, the de-listing movement has resumed. Read Full Post…
Bottom line: Rumors that Shanghai Media Group is in talks for a strategic stake of Baidu’s iQiyi could quite possibly be true, with an investment of about $3 billion likely in exchange for half of the company.
iQiyi talking tie-up with SMG?
The New Year is starting with a salient rumor from the online video space, with reports that the new media investment arm of Shanghai Media Group (SMG) may be eyeing a major stake purchase of Baidu’s (Nasdaq: BIDU) iQiyi. The reports aren’t being widely circulated in the Chinese media yet, which suggests they may not be accurate. The head of SMG’s China Media Capital (CMC), which would reportedly make the investment, has also previously said he’s not interested in online video assets right now.
But such a tie-up would be quite consistent with Baidu’s recent strategy of selling major stakes in its non-core businesses to strategic partners. From SMG’s perspective, such a deal would also make sense, as it plays catch-up with both private companies and also state-owned rival Hunan Broadcasting in the fast-evolving online video space. Read Full Post…
Bottom line: Baidu’s new fund raising for its O2O take-out dining service is aimed at finding strategic partners and deflecting criticism from its shareholders, while Spring Airlines new fund-raising presages an aggressive expansion into Japan.
Baidu beefs up take-out dining service
A couple of major fund-raising stories are in the headlines on this final trading day of 2015, setting the stage for what’s likely to be a busy year ahead in the take-out dining and budget air travel sectors. The larger of the 2 items has online search leader Baidu (Nasdaq: BIDU) reportedly near a deal to raise up to $500 million for its young and fast-growing online-to-offline (O2O) take-out dining service. The smaller has China’s oldest budget carrier Spring Airlines (Shanghai: 601021) in the process of raising nearly 1 billion yuan ($150 million) to fuel its expansion into nearby Japan.
These 2 deals cap a year that saw an explosion in private funding for start up Chinese companies in the first half of 2015, including several deals worth more than $1 billion. But the pace of funding has slowed sharply in the last few months due to concerns over China’s slowing economy, and these latest 2 deals are likely to become the new norm in terms of deal sizes we’ll see in 2016. Read Full Post…
Bottom line: LeTV will announce the launch of a new smart TV and video services in the US during the Consumer Electronics Show in last Vegas next month, but the foray will end in failure due to inexperience and fierce competition.
LeTV goes to CES
China’s LeTV (Shenzhen: 300104) looks set to launch its trademark smart TVs and affiliated video service in the US, a move that would make it the first Chinese player to enter a major western market. In this case LeTV is making lots of noises that point to such a move, though it hasn’t officially announced anything just yet.
The company is preparing to attend the massive Consumer Electronics Show (CES) in Las Vegas next month for the first time, providing the perfect venue for such an announcement. The other major signals for such a launch come from LeTV’s own recently launched US online mall, lemall.com/us, whose product offerings include a $799 smart TV that is currently not available but “coming soon”. Read Full Post…
Bottom line: Alibaba is placing its take-out dining service bets on Ele.me with its new $1.25 billion investment, and will spend other major resources next year to try to clean up its sites of trafficking in fake goods.
Alibaba invests in Ele.me
E-commerce juggernaut Alibaba (NYSE: BABA) is back in the M&A market, gobbling up a headline-grabbing 28 percent of leading online-to-offline (O2O) take-out dining service Ele.me for a tidy $1.25 billion. Alibaba has yet to confirm the deal, which would become the latest in a growing string of investments worth $1 billion or more for the company. A deal of this size would have been major news just 3 years ago before a wave of M&A began sweeping China’s Internet, though now such transactions have become far more common.
Meantime, Alibaba is in another set of headlines in its battle against piracy, with word that it’s adding 200 people to the team charged with ridding its huge online marketplaces of trafficking in pirated goods. This particular move comes less than 2 weeks after Alibaba managed to avoid seeing its name reappear in an annual US list of the world’s most notorious marketplaces for trafficking in pirated goods. Having dodged that bullet, Alibaba is now showing it plans to get far more serious in tackling the problem next year. Read Full Post…
Bottom line: Apple should put out a short statement to answer online chatter that its new China headquarters looks like an older software park in Shandong, while Alibaba’s latest high-profile hire is its own move to tackle piracy on its sites.
Alibaba prioritizes piracy in 2016
A trio of piracy-related stories are in the headlines as we head into year-end, reflecting the recent focus that Beijing has put on an issue that is likely to get big attention in 2016. Leading the news are online observations by some web surfers that Apple’s (Nasdaq: AAPL) new China headquarters building bears a striking resemblance to a much older software park in northeastern Shandong province.
Next there’s the announcement of a major new anti-piracy hire by e-commerce juggernaut Alibaba (NYSE: BABA), which dodged a bullet last week by keeping its name off an annual US list naming the world’s most notorious markets for pirated goods. Alibaba’s new announcement has seen it name a former top Apple investigator to lead a renewed campaign to rid its online marketplaces of trafficking in pirated goods. Read Full Post…
Bottom line: The new alliance between Tencent and Zhejiang TV reflects the growing strength of China’s big Internet companies in online video, and will benefit but also challenge both sides.
By Lin Nanwei
Tencent, Zhejiang TV in new partnership
Last week’s World Internet Conference in the scenic water town of Wuzhen attracted media attention due to attendance by most of the sector’s top leaders, even though few said anything substantial. But Tencent(HKEx: 700) Chairman and CEO Pony did a little homework before he came.
The day before the curtain came down on the big event, Ma appeared at another event in nearby Hangzhou to announce a strategic partnership between Tencent and Zhejiang Television & Radio Group, the province’s largest state-owned TV broadcaster. According to reports, the 2 sides will focus on cooperation in development of content, channels and promotional activities. (Chinese article) Read Full Post…
Bottom line: China’s global Internet conference this week was mostly empty pageantry, but it did reveal that Baidu might like to privatize from New York one day, and attracted a handful of China-friendly global executives.
Wuzhen Internet pow-wow mostly empty talk
China’s big Internet pow-wow this week in the picturesque town of Wuzhen hasn’t produced much news despite its big aspirations, reflecting Beijing’s tight control over cyberspace and companies that do business there. But the globally-minded event did produce at least one interesting tidbit on the recent privatization wave by US-listed Chinese companies, and also an entertaining photo of 2 top executives that went viral online.
The news item came from Robin Li, founder of leading Chinese search engine Baidu (Nasdaq: BIDU), who hinted that he hopes to someday join the recent wave of Chinese companies now privatizing from New York due to undervaluation. The photo that went viral captured a humorous moment involving a catnap during the conference by Zhou Hongyi, the controversial and more often outspoken CEO of security software specialist Qihoo 360 (NYSE: QIHU). Read Full Post…
Bottom line: Suning’s move into sports is aimed at providing content for its PPTV online video service, but is also the latest in a string of wide-ranging investments that reflect a company with an identity crisis.
Suning invests in soccer
Sports teams are becoming flavor of the day for Chinese firms with entertainment aspirations, with word that retailing giant Suning (Shenzhen: 002024) has joined the bandwagon via a new investment in a local soccer club. The company’s latest deal will see it invest 523 million yuan ($80 million) in the Jiangsu Sainty Football Club, which like many other professional Chinese sports teams is struggling financially.
Suning’s interest in soccer is probably related to its 2013 purchase of PPTV, a relatively large player in China’s crowded online video space. The Suning-PPTV tie-up left many people puzzled at thee time of that announcement, since the 2 companies have little in common. But Suning has been aggressively promoting the service in its trademark consumer electronics stores, and in August it announced a plan to invest 1 billion yuan into a campaign to sell smart TVs equipped with PPTV’s online video service. Read Full Post…
