We will be on hiatus for most of the month of November, and expect to resume publishing in December. We apologize for the brief pause.
Journalist China
YCBB on Mid-Autumn Holiday
YCBB will be on holiday for the Mid-Autumn Festival in China, and resume regular publishing on Monday, September 19.
BANKING: Local Govt Meddling Worsens Chinese Bad Debt Crisis
Bottom line: Beijing and local governments need to let struggling companies fail and stop ordering banks to continue lending to them, or risk exacerbating the country’s growing bad debt crisis.
A couple of news stories last week cast a spotlight on how local governments are preventing banks from effectively managing their growing volume of bad loans, creating obstacles that could cause the problem to worsen and even spiral out of control. Neither story was actual “news”, but instead detailed practices increasingly used by local officials to support struggling state-owned companies, often to the detriment of local banks.
In one case officials ordered banks to lend to a failing local ship builder, even though the company was almost certain to default. The other case detailed how local officials had compiled lists of struggling companies for their own records, but then withheld the information from banks due to worries that disclosure might cause those companies to lose access to new loans. Read Full Post…
China News Digest: August 16, 2016
The following press releases and news reports about China companies were carried on August 16. To view a full article or story, click on the link next to the headline.
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- Top 3 China Smartphone Vendors Get Combined 47 Pct Market Share in Q2 – IDC (press release)
- Tesla (Nasdaq: TSLA) Removes ‘Autopilot’ From China Website After Beijing Crash (English article)
- Direct Broadcasting Platform Douyu Raises 1.5 Bln Yuan in Series C Funding (Chinese article)
- Bulls and Bears Collide as Weibo (Nasdaq: WB) Surges to Record (English article)
- Didi Chuxing Adds Hired Driver Feature to Platform (Chinese article)
- Latest calendar for Q2 earnings reports (Earnings calendar)
VIDEO: Wanda Moves Into Online Video, China Telecom Checks Out
Bottom line: China Telecom’s sale of its online video business looks like an exit from the space under its new chairman, while Wanda’s purchase of an online movie site could mark the start of a major new round of investment in online video.
Just days after search giant Baidu (Nasdaq: BIDU) abandoned plans to spin off its iQiyi video unit, 2 more online video headlines are reflecting the rapid changes taking place in the space. The larger will see China Telecom (HKEx: 728; NYSE: CHA), the smallest of China’s 3 telcos, sell its online video unit TV189 to a hotel operator called Besttone Holdings (Shanghai: 600640) for 3.9 billion yuan ($580 million). The smaller will see the fast-growing Wanda Group buy the online movie site Mtime for $280 million. Read Full Post…
IPOs: China’s Wanda Bulks Up on Hollywood Feast, IPO in Sight?
Bottom line: Wanda’s first half report shows that entertainment continues to be the company’s focus going forward, and could hint at an eventual IPO for the entire group similar to Alibaba’s record offering 2 years ago.
The fast-rising but privately held Wanda Group has just released first-half results in English for the first time that I can recall, in a report that has plenty of room for improvement due to its highly selective disclosure. But the report does provide some color on Wanda’s overall makeup, including the fact that its original real estate business now accounts for just half of overall revenue. One intriguing footnote to this new reporting trend is the company’s growing efforts to reach an international audience, which could hint at plans for an eventual IPO by one of China’s largest privately owned groups. Read Full Post…
SMARTPHONES: LeEco Ups Coolpad Stake, Eyes Silicon Valley Campus
Bottom line: LeEco will try to buy out Coolpad later this year in its new position as the company’s largest stakeholder, while its plans for a massive Silicon Valley campus stand a less than 50 percent chance of getting completed.
The phenomenal but problematic entertainment superstar LeEco (Shenzhen: 300104) is in a couple of big headlines as the new week begins, led by word that a new transaction has made it the largest stakeholder in struggling smartphone maker Coolpad (HKEx: 2369). Rumors were flying thick and fast last week that LeEco, formerly known as LeTV, was on the cusp of an outright takeover of Coolpad, and this latest move certainly looks like a possible prelude to such an bid. Meantime, separate media reports are confirming news from earlier this year saying LeEco has purchased a piece of prime Silicon Valley land that it hopes to develop as a campus for its future US headquarters. Read Full Post…
Shanghai Street View: Culinary Culture
A couple of culinary headlines this week are spotlighting the important role that food plays in defining a city’s character, not only in terms of local tastes but also its openness to out-of-town flavors. Shanghai’s culinary evolution over the last 2 decades has been nothing short of spectacular in that regard, as the city transformed from a regional backwater dominated by local fare like xiaolongbao to one where top-notch flavors from throughout China and abroad are widely available. Read Full Post…
IPOs: Better Oversight, Not Ban, Needed for China Backdoor Listings
Bottom line: The CSRC should take steps to better regulate backdoor listings by Chinese companies privatizing from New York to ensure market stability, but shouldn’t ban the process completely.
Chinese companies planning to re-list at home after disappointing results with overseas IPOs got some troublesome signals last week, when rumors emerged that China’s securities regulator might be planning to slow or halt a mechanism that has quickly become the preferred route for such homecomings.
That mechanism has seen newly privatized companies make back-door listings using Shenzhen- and Shanghai-traded firms that are often just shells of former state-run enterprises whose own businesses have withered. Returning companies have chosen such a path because conventional IPOs in China have slowed to a crawl due to the regulator’s concerns about market volatility, creating a huge waiting line for new listings. Read Full Post…
INTERNET: Twitter Flits to China with First Country Chief
Bottom line: Twitter’s naming of its first China managing director indicates the company is re-thinking its China strategy, and may mark the start of a campaign to get permission to launch a Chinese version of its service.
Nearly a year after the departure of its former CEO, social networking high-flyer Twitter (NYSE: TWTR) has just made a baby peep that indicates it may finally be contemplating a serious move into the heavily censored China market. The move comes in the form of a low-key executive appointment, which had company co-founder and current CEO Jack Dorsey announcing Twitter’s first managing director for China.
Before I predict an imminent arrival of Twitter to China with this appointment, I should stop and say that Twitter’s new path looks similar to one forged by 2 other Internet giants, Facebook (Nasdaq: FB) and Google (Nasdaq: GOOG). All 3 of these companies are currently blocked in China due to information that China considers sensitive on their online services. But Facebook has indicated it wants to launch a version of its social networking site in China, and Google reportedly is taking steps to launch a Chinese version of its Google Play app store. Read Full Post…
FINANCE: Shanda Enters New Phase with Legg Mason Investment
Bottom line: Shanda’s purchase of a major stake in Legg Mason marks the start of a global investment spree that is likely to see 2-3 similar sized deals in the Chinese and global financial services sectors by the end of this year.
With its former online entertainment empire now firmly in the past, Shanda Group looks set to embark on the next chapter of its development as a private equity investor in the financial services sector. The first major step in that campaign is in the headlines today, with US asset manager Legg Mason (NYSE: LM) announcing that Shanda has just purchased 10 percent of the company.
The purchase looks like a small first step for Shanda onto the global stage in its new carnation. The company was formerly a Shanghai-based group founded by the financially savvy Chen Tianqiao, who was an early pioneer in China’s online game industry. But poor management and a series of unlucky developments led Shanda to lose its early lead in the space, and Chen has spent much of the last 3 years selling off his various entertainment assets. Read Full Post…
