Bottom line: CIC’s withdrawal from the bidding for a stake in Yum’s China unit represents a minor setback, but Yum’s long history in the market makes finding major local investor less important.
CIC ends bid for Yum China stake
KFC parent Yum Brands (NYSE: YUM) has lost a major potential ally as it prepares to spin off its China business, with word that China’s sovereign wealth fund has dropped out of the bidding for 20 percent of the unit. Reuters is reporting that China Investment Corp (CIC) abandoned its bid for a number of reasons, including Yum’s refusal to sell a controlling stake to the new investor group. Yum has previously said it wants to sell just 20 percent of the China unit, which includes 7,200 stores. It also plans to sell more of the unit’s shares through an IPO later this year in Hong Kong or New York. Read Full Post…
Bottom line: Huge publicity around the new Shanghai Disneyland ensures it will rapidly become a major new profit center after it opens in June, but will also expose Disney to a wide range of mini scandals like one involving its high food prices.
Thousands flock to Shanghai Disney before opening
The hype is rapidly building as Disney (NYSE: DIS) gets set to launch its first theme park in more than a decade, attracting droves of visitors and also the first of what are likely to be many mini-scandals involving the $5.5 billion Shanghai resort. Leading the headlines is word that nearly 1 million people have already flocked to the areas outside the official park just to catch a glimpse of China’s first Disneyland from the outside.
The park has also been admitting smaller numbers of guests on a trial basis to sample the rides and other attractions in the run-up to the official June 16 opening. Some of those got indigestion from the high prices for food at restaurants in the park, leading to a mini-firestorm of criticism that Disney has quickly tried to control. Read Full Post…
Bottom line: Apple’s $1 billion investment in a Chinese car services firm and establishment of an India R&D lab reflect China’s strength as an incubator of strong private companies and India’s as a software development hub.
Apple’s Tim Cook calls on China, India
It’s been an Asia-themed week for Apple (Nasdaq: AAPL) CEO Tim Cook, whose tour to China and then India casts a spotlight on 2 massive markets with huge potential for the company. This particular trip has been quite revealing for the gifts that Cook has awarded during the week, reflecting each country’s strengths and also its weaknesses.
China’s biggest gift was a $1 billion investment in local private car services firm Didi Chuxing, and also a smaller gift in the form of a new app to promote local musicians. India, meanwhile, secured a coveted R&D lab, which is one of Apple’s few outside the US and hugely prestigious. Read Full Post…
Bottom line: Seagate’s new partnership with Sugon is the latest tie-up designed to give a major western hardware maker continued access to China’s IT services market, even as such partnerships sharply raise the risk of IP theft.
Seagate in new China tie-up
The steady stream of US tech firms bowing to Beijing’s tough new rules for doing business in China has just gained a new member, with word that data storage specialist Seagate (Nasdaq: STX) has just formed a new local joint venture. This particular tie-up comes just a half year after Seagate’s new partner, a company called Sugon (Shanghai: 603019), formed another similar cloud computing partnership with VMWare (Nasdaq: VMW), a unit of data storage giant EMC (NYSE: EMC).
The new Seagate alliance and slightly older VMWare venture come as most major US high-tech hardware makers, including the likes of IBM (NYSE: IBM), Hewlett Packard Enterprise (NYSE: HPE) and Cisco (Nasdaq: CSCO), have all formed similar tie-ups in a new love affair with Beijing. Of course I’m being slightly facetious in calling it a love affair, since these companies really didn’t have any choice in the matter. Read Full Post…
Bottom line: Midea should limit its new plan to buy a major stake in Germany’s Kuka to a strategic partnership, and avoid temptation to help Kuka lower costs by moving major parts of its manufacturing to China.
Midea eyes Germany’s Kuka
A recent overseas M&A binge by top Chinese home appliance makers is taking a somewhat unexpected turn, with word that Midea (Shenzhen: 000333) is pursuing a deal to buy a major stake or even outright purchase Germany’s Kuka (Frankfurt: KU2). In this case the deal comes as something of a surprise, since Kuka isn’t an appliance maker but instead manufactures industrial robots that Midea is using to modernize its production lines.
This particular deal could carry a price tag of more than $1 billion, and would come just 2 months after Midea’s smaller deal to purchase the home appliance business of scandal-tainted Japanese electronics giant Toshiba (Tokyo: 6502). (previous post) This latest deal is logical, though could also carry a large degree of risk due to previous poor results for Chinese companies that bought manufacturers in the tough French and German markets. Read Full Post…
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
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…
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…
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…
Bottom line: The 5 percent drop in China smartphone sales during the first quarter reflects the market’s current state of saturation, which will lead to more bankruptcies this year for suppliers and second-tier brands.
Xiaomi slips to third in China smartphone market
New data from China are shining a spotlight on the sudden slipping of global giant Apple (Nasdaq: AAPL) in the world’s largest smartphone market, as well as the slower decline of homegrown challenger Xiaomi. At the same time, the 5 percent decline in first-quarter shipments in the huge but intensely competitive China market bodes poorly for everyone. That includes a growing number of suppliers to the big brands like contract manufacturing giant FIH Mobile (HKEx: 2038), which has just warned that its profits are coming under intense pressure.
Much has been written about the effects that intense competition are having on Chinese smartphone brands, many of which are either barely profitable or are even losing money. But the toll has been even bigger on many of their suppliers like FIH, which makes phones for the likes of Xioami and Sony (Tokyo: 6758) and are coming under even bigger pressure due to slowing orders and cries from their customers for lower prices. Read Full Post…
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…
Bottom line: More big global brands are likely to leave a major US anti-piracy group after its admission of Alibaba, which will suffer some negative publicity as it tries to clean up its sites of trafficking in fake goods.
Gucci quits US anti-piracy group after Alibaba joins
How would you feel if your former foe who constantly stole from you suddenly applied for membership in one of your favorite clubs? The answer is “probably not very happy”, which has led luxury goods giant Gucci to abruptly resign from a global anti-counterfeiting group after it admitted Chinese e-commerce leader Alibaba (NYSE: BABA) as its newest member.
This pair of companies have plenty of bad blood between them due to Gucci’s allegations of pirated goods being sold over Alibaba’s popular online marketplaces. Gucci parent Kering has sued Alibaba twice over the issue, most recently a year ago in New York, accusing the Chinese company of knowingly assisting in trade of counterfeit goods over its platforms and profiting from the process. Read Full Post…
