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Journalist China
Business news from China By Doug Young.
Doug Young, journalist, has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies.
He is based in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.
He contributes regularly to a wide range of publications in both China and the west, including Forbes, CNN, Seeking Alpha and Reuters, as well as Asia-based publications including the South China Morning Post, Global Times, Shanghai Daily and Shanghai Observer
Bottom line: Solar products maker Tianwei is likely to get a government bailout before it defaults on an upcoming bond payment, while a massive 2 GW solar farm being built by a new private equity fund is likely to get completed.
Tianwei struggles under huge debt
Two solar news items are drawing attention to both the opportunities and challenges facing this increasingly schizophrenic sector in China. A new mega-project is spotlighting the huge opportunities for new construction in the space, with word that a recently launched private equity fund plans to build a massive solar farm with a whopping 2 gigawatts of capacity. But big challenges are also apparent in another story, which says mid-sized player Baoding Tianwei is on the cusp of defaulting on a bond interest payment as it faces a cash crunch due to falling prices. Read Full Post…
Bottom line: Baozun’s IPO should achieve its $200 million fund-raising target and the stock could perform relatively well for the rest of the year if it can show that it will become profitable for all 2015.
Baozun files for $200 mln IPO
The first serious Internet IPO of the year could finally be in the pipeline, with word that e-commerce services provider Baozun has filed for a New York listing that would be a first-of-its-kind for this type of company. Media are calling Baozun an e-commerce firm, but the reality is that the company helps others design and operate e-commerce sites, meaning it doesn’t have to compete itself in the fiercely competitive space.
The company’s largest shareholder is actually e-commerce leader Alibaba (NYSE: BABA), which holds 23 percent of Baozun. That relationship underscores Baozun’s unique market position as a service provider rather than actual website operator, and the company cited third-party data saying it currently controls about 20 percent of its market. The Alibaba relationship also provides important ties with many major retailers that already do business on Alibaba’s hugely popular Tmall. Read Full Post…
Bottom line: 58.com’s new Ganji tie-up looks like a smart partnership that should create a clear industry leader with a strong strategic partner in Tencent, though the stock could be set for a short-term correction due to overvaulation.
58.com buys 42 pct of Ganji
China’s Internet has just gained a major new player through the combination of online classified sites 58.com (NYSE: WUBA) and Ganji, which together will have a market value approaching the $10 billion level. Few companies outside the “Big 3” of Baidu (Nasdaq: BIDU), Tencent (HKEx: 700) and Alibaba (NYSE: BABA) can boast such valuations, and this particular deal seems to mark the emergence of a new sector leader that could even become an acquirer on the global stage.
Of course it’s easy to talk about going global, but actually doing that has been far more problematic for China’s booming field of Internet players. Still, this latest deal appears to show that 58.com may have the savvy that some of its larger rivals lack to make the global push, perhaps using this Gangji deal as a template for more strategic acquisitions in developing markets similar to China. Read Full Post…
Shanghai Auto Show says goodbye to sexy car models
Many car fans in Shanghai may be bracing for a shock next week, as the biannual Shanghai International Automobile Industry Exhibition gets set to hold its first-ever edition without skimpily-clad models draping themselves over cars and prancing around the stages. Of course I’m being just slightly sarcastic in saying car buffs may be disappointed, since most of these people probably go to the show to see the automobiles and other latest accessories and gadgets on display.
Instead, the highly-discussed decision to ban the usual sexy models from this year’s Auto Show could disappoint some of the many mainstream consumers who might secretly come more to watch people than actual cars. Some might argue the decision seems overbearing and a bit of a killjoy. But the reality is it should bring a much-needed degree of respect to Chinese trade shows that are sometimes ridiculed by foreigners for their circus-like atmosphere. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 18-20. To view a full article or story, click on the link next to the headline.
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58.com (NYSE: WUBA) Acquires Strategic Stake In Ganji, Investment by Tencent (PRNewswire)
E-Commerce Trust Services Firm Baozun Files For $200 Mln US IPO (Chinese article)
Bond Interest Default Looms For Solar Products Maker Baoding Tianwei (Chinese article)
After 8 Years Of Failing, Baidu (Nasdaq: BIDU) Shuts Japan Search Engine (English article)
China Minsheng Investment Corp To Invest 15 Bln Yuan In 2 GW Solar Farm (Chinese article)
Bottom line: China’s Ninebot most likely purchased Segway for less than $100 million to get its technology, and could make a New York IPO by 2017 that will value the firm at $2-$5 billion.
Ninebot buys Segway
If you can’t beat ’em, then buy ’em. That seems to be the philosophy at a Chinese firm called Ninebot, which has just announced it has purchased US rival Segway, maker of a trendy type of 2 wheel, stand up vehicle used to travel short distances. The pair of companies previously had a stormy relationship, as Segway had accused Ninebot of intellectual property theft. So this new purchase should formally end the copycat allegations. Read Full Post…
Bottom line: LeTV’s smartphone gamble, based on relatively cheap phones tied to its video services, could succeed despite tough competition if its newly launched models get positive reviews.
LeTV launches smartphones
Online video sensation LeTV (Shenzhen: 300104) is all over the tech headlines this morning, with the formal launch of the first 3 models for its previously announced foray into smartphones. The company is taking a page from its successful business model with smart TVs, once again selling what it’s billing as a relatively high-end product for low prices in a bid to attract customers to its core paid video services.
LeTV’s biggest problem will be finding an audience for these models, as it’s quite late to the smartphone game. That fact is being underscored by new industry data that shows China’s cellphone market contracted 5 percent in March, amid growing signs of saturation due to stiff competition. Read Full Post…
Bottom line: A merger between 58.com and Ganji looks like a smart pairing that would create a clear leader in online classified ads with a market value worth up to $8 billion.
58.com eyes Ganji
China’s Internet world has been buzzing these last 2 days on a steady stream of reports involving a possible merger between leading online classified advertising site 58.com (NYSE: WUBA) and Ganji, one of its biggest rivals. The reports have been somewhat conflicting, some saying a deal is imminent and others saying talks have stalled, but it’s clear that something is happening behind the scenes. The deal certainly looks quite exciting if it’s happening, as it would create a clear market leader anchored in the well-run 58.com, which is often called the Craigslist of China.
This kind of merger often fails to happen in China for reasons of pride, as many of these company founders are fiercely independent entrepreneurs who would rather see their empires slowly crumble than sell to someone else. But more recently we’ve seen some of these entrepreneurs become more realistic and realize they can’t survive as independent companies, and I suspect that’s what’s happening in this case. Read Full Post…
Bottom line: Shares of Sina and its Weibo unit could come under pressure this week and for the next few months, as the regulator pushes for a clean up of its core news sites amid a broader Internet clean-up campaign.
Regulator clamps down on Sina news sites
A year-old Internet clean-up by Beijing is coming full circle to where it first began, with word that regulators have criticized and warned online stalwart Sina (Nasdaq: SINA) for failing to adequately censor its core web portal business. China Internet followers may recall that this prolonged clean-up began almost exactly a year ago when Sina’s video license was suspended after pornographic content was discovered on its literature and photo-sharing sites. (previous post) That case wasn’t too alarming since video is quite peripheral to Sina’s business. By comparison, this latest case looks a bit more worrisome, since it involves the portal news business that accounts for a big portion of Sina’s core advertising revenue. Read Full Post…
Graveyards in and around Shanghai are probably breathing a collective sigh of relief after the Tomb Sweeping holiday, knowing they can take can now take a long break until they’re flooded again with the next mass migration of people honoring their ancestors. This year’s rush saw not only our local graveyards flooded with visitors, but also produced the usual crush of cars congesting nearby roads and commuters packing our public transport system.
Obviously this annual pilgrimage doesn’t affect me or most other foreigners living in Shanghai. But it did get me to thinking about how we honor the deceased in the west, and why we don’t have a similar tradition to the annual Tomb Sweeping rush. Read Full Post…
Bottom line: The failure of 3 major tech leaders to discuss issues confronting their companies at a major forum in China reflect a Chinese preference to avoid thorny issues in public and instead focus on more trivial matters.
Bill Gates, Elon Musk avoid tricky issues at China forum
It’s not often that 2 of the hottest US tech personalities can share the stage with one of China’s biggest Internet names and fail to say anything newsworthy. But that’s exactly what has happened in the southern Chinese city of Bo’ao, where Microsoft (Nasdaq; MSFT) founder Bill Gates and Elon Musk, CEO of electric car sensation Tesla (Nasdaq: TSLA), failed to say much of interest as they shared the stage in a dialogue hosted by Robin Li, founder of leading Chinese search engine Baidu (Nasdaq: BIDU).
The lack of insight is even more notable because both Microsoft and Tesla have faced big challenges in China lately, as the former comes under scrutiny for tax evasion and monopolistic practices, and the latter has fallen far short of its ambitious sales targets. But then again, Robin Li isn’t a reporter, and embarrassing his 2 high-profile guests about their recent woes probably wasn’t one of his big priorities as the at 3 men met at the annual Bo’ao Forum in southern Hainan province. Read Full Post…
