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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: A round of April Fool’s Day pranks by China’s Internet companies marks a nice break from their usual cut-throat tactics, while the soaring valuation for a newly created taxi app leader looks more typical for the sector.
Internet firms get into April Fool’s spirit
It’s a relatively quiet news day as we head into April, so I thought I’d take a break from all the latest crackdowns and controversies by looking at some of the clever pranks played by China’s top Internet names on April Fool’s Day. At the same time, one company that’s in no fooling mood is a new taxi app giant that’s being formed with a merger of the 2 top players, and could soon receive an impressive $8.75 billion valuation after a new investment.
These 2 particular headlines don’t really have much in common, since one is largely playful and meant to be fun while the other involves the far more serious business of determining a company’s value. The April Fool’s stories are a nice break from the usual competition and wars of words that are standard fare on China’s Internet. By comparison, bidding up valuations to inflated levels like we’re now seeing with the pending merger of DidiDache and Kuaidi Dache has become standard fare on China’s Internet, as investors bet big on future growth in the market. Read Full Post…
Bottom line: AP’s willingness to consider new tie-ups with Xinhua is the result of economic pressures being felt by western media, but is unlikely to produce any major alliances due to the potential for negative publicity.
AP open to deeper partnership with Xinhua
Rapid changes in the traditional media realm are creating some strange bedfellows, and the situation looks even stranger in China due to the strong elements of censorship and state control. That odd combination of circumstances is creating a perfect storm that has led some western media companies to do the previously unthinkable and consider partnerships with some of China’s most centrally controlled media. Recent rumors have said that global financial news leader Bloomberg may be considering such a tie-up, and now the latest reports are saying US media giant Associated Press (AP) is also open to such partnerships. Read Full Post…
Bottom line: Tesla’s China reboot appears to be complete, paving the way for it to gain some traction in the market by year end if it can effectively target the nation’s wealthy, image-conscious trend setters.
Tesla finishes China reboot
Nearly a year after driving into China on a wave of fanfare and big hopes, electric vehicle (EV) superstar Tesla (Nasdaq: TSLA) is pressing the reset button on a market that has huge potential but also some major obstacles. This particular reset has been in the works for the last few months, but appears to be near completion with indications that the company has discarded its previous short-term aggressive sales targets for the market.
The reboot to Tesla’s China business is discussed in a series of interviews by Zhao Kuiming, its head of China sales, who was on a PR offensive following the recent overhaul. (Chinese article) It’s unclear from the reports if Zhao is new to Tesla, but he appears to be the company’s new public face after previous China President Veronica Wu resigned in December after just 9 months on the job. (previous post) Read Full Post…
Bottom line: Caixin’s new lawsuit against leading portals Sohu, Sina and Hexun could mark the start of a much-needed clean-up that will end the practice of rampant copyright violations among major Chinese news sites.
Caixin sues Sina, Sohu for illegal copying
I’m giving this week’s special award for bravery to cutting-edge financial news publisher Caixin, which is challenging the widespread illegal copying of copyrighted articles that occurs daily on Chinese news sites. Everyone knows that this kind of piracy is rampant in China, but some might be surprised to learn that companies targeted in Caixin’s new lawsuit include some of China’s top news portals, led by Sina (Nasdaq: SINA) and Sohu (Nasdaq: SOHU). I was also just slightly embarrassed to see that one of the companies being sued is financial news and information site Hexun, which is backed by my former employer Reuters (Toronto: TRI). Read Full Post…
Bottom line: Starbucks’ new tie-up with mass-market food maker Tingyi looks like a smart partnership that could help the pair quickly develop China’s largely untapped market for premium bottled beverages.
Starbucks, Tingyi tie on bottled drinks
Following its phenomenal success in China’s retail dining market, US coffee giant Starbucks (Nasdaq: SBUX) is taking aim at bottled beverages in a new tie-up with one of the nation’s leading food product makers. The pairing is a big odd on the surface, bringing together the premium-minded Starbucks with Tingyi (HKEx: 322), a Taiwanese company whose main Master Kong brand is synonymous with tasty but decidedly low-end instant noodles.
But then again, nobody ever dreamed that Starbucks could overcome the huge odds against it by not only convincing tea-minded Chinese to drink coffee, but also getting them pay handsomely for the privilege. Accordingly, I would give the company a fairly strong chance for working similar magic in the highly competitive bottled beverage space, which would provide a huge new source of revenue from its China business. Read Full Post…
Bottom line: Yahoo’s closure of its Beijing R&D center marks its final withdrawal from China, in a shift mostly related to internal issues but also reflecting the difficulties foreign Internet firms face in the tightly controlled market.
Yahoo closes Beijing R&D center
Nearly 2 years after shuttering its Chinese email service, faded US search giant Yahoo (Nasdaq: YHOO) looks finally set to completely leave the China market, with word that it’s preparing to close up its sizable R&D shop in Beijing. I’m not intimately familiar with Yahoo’s current China assets, but it does appear that this move represents the shuttering of the company’s last major Chinese operation. The move also comes as Yahoo prepares to spin off its sizable stake in Chinese e-commerce giant Alibaba (NYSE: BABA) into a separate company, bringing an end to the company’s decade-long marriage with China. Read Full Post…
Bottom line: New developments in the break-up of Shanda Group are likely to result in the successful sales of its games and literature units in the next 6 months.
Cloudary pools resources with Tencent literarture
The slow-motion break-up of former online entertainment superstar Shanda Group continues in 2 different headlines, with word that its core online literature and gaming businesses are set to be taken over by Internet giant Tencent (HKEx: 700) and a couple of major brokerages, respectively, in separate deals. Both of these deals look quite exciting, as they involve the entry of serious-looking buyers who could ultimately use their acquired Shanda assets to create some interesting and potentially competitive new companies in their respective spaces. Read Full Post…
Bottom line: Huawei’s and ZTE’s attempts to cultivate alternative brands with Honor and Nubia could both stand a relatively strong chance of success, though ZTE’s slower, more focused approach looks a bit more prudent.
Huawei holds Honor gala
Chinese smartphone makers Huawei and ZTE (HKEx: 763; Shenzhen; 000063) are trying to shed their stodgy images with newer brands targeting the kind of young trendsetters that have propelled start-up sensation Xiaomi onto the global stage. I got a chance to check out Huawei’s Honor brand phones and ZTE’s Nubia models last week at a major trade show in Spain, where both were trying to show that they can be just as hip and edgy as Xiaomi and Apple (Nasdaq: AAPL), the global leader in trendy, cutting edge smartphones. Read Full Post…
Bottom line: Amazon’s opening of a shop on Alibaba’s popular Tmall looks like a shrewd move to boost its struggling China business, but is unlikely to raise its market share significantly.
Amazon opening store on Alibaba’s Tmall
Word that Amazon (Nasdaq: AMZN) will open a China store on Alibaba’s (NYSE BABA) popular Tmall marketplace has the online world buzzing that the US e-commerce giant is admitting defeat and failure of its China strategy. Some are even saying the move could mark an eventual closure of Amazon’s own China site, which has failed to attract a major audience despite huge investments by the company. But anyone reaching those conclusion should think again, as this particular move looks quite shrewd and could actually help Amazon to boost its struggling China business. Read Full Post…
Bottom line: China job cuts at GSK and Tesla reflect broader adjustments that major multinationals are making as Beijing cleans up its business climate and fails to meet many of its aggressive targets for new sectors.
GSK, Tesla take tough medicine with job cuts
Two high-profile multinationals are slimming down in China, with word that British drug giant GlaxoSmithKline (London: GSK) and US electric car superstar Tesla (Nasdaq: TSLA) have both made major job cuts to their local operations. Both cases acknowledge the difficulties of navigating the tricky China market, which superficially looks quite large and full of potential but in reality is quite fraught with obstacles.
Despite their differences, these 2 cases actually share some fundamental similarities based on unrealistic expectations many foreign firms have when they come to China. GSK’s woes stem from a bribery scandal that dates back almost 2 years, in which Beijing exposed and later punished the company for systematically bribing doctors and other medical professionals to purchase its drugs. Such practice is common in China, but Beijing is trying to clean up the business landscape. Read Full Post…
Bottom line: The EU is likely to resolve its latest dispute with Chinese solar firms over implementation of a year-old pricing agreement, but the clash will undermine trust and hints at future conflict over the issue.
Canadian Solar denies violating EU agreement
After several months of relative quiet, Chinese solar panel makers are back in the headlines this week with another looming trade dispute in Europe. This particular story, and much of the industry’s woes over the last 2 years, stems from broader western allegations of unfair government support for Chinese panel makers. In this case China and the EU signed a deal a year ago to resolve their dispute, but now the EU is accusing several Chinese firms of violating the deal.
The EU had previously threatened to levy punitive tariffs on Chinese panel makers, saying they received unfair support through policies like cheap loans from state-run banks and low-cost land from local governments. Washington made similar claims and ultimately did impose punitive tariffs, but the EU took a more conciliatory approach and reached a settlement after the intervention of several top government leaders. Read Full Post…
