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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
The following press releases and media reports about Chinese companies were carried on December 3. To view a full article or story, click on the link next to the headline.
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Wanda Group In Talks to Buy Lions Gate (NYSE: LGF), MGM in Hollywood Push (English article)
21Vianet (Nasdaq: VNET) Gets $296 Mln From Kingsoft, Xiaomi and Temasek (Globe Newswire)
Wal-Mart (NYSE: WMT) Cuts Another 250 China Jobs, Shuts Dalian Office (English article)
Bottom line: China’s plan to allow private competition in the wire-line broadband sector will move forward slowly, but should provide needed competition for Unicom and China Telecom within the next 3-5 years.
China opens broadband to private investment
China’s drive to open up its telecoms services sector to more competition could soon gain some new momentum, with word that the telecoms regulator is crafting a plan that would let private companies offer wire-line broadband services. This particular move looks like an extension of a campaign that launched earlier this year, allowing private companies to offer traditional mobile service through the creation of virtual network operators (VNOs).
This new campaign would also come as China works to break the current monopoly in the wire-line broadband sector held by China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (NYSE: CHU; NYSE: CHA), which previously were probed for monopolistic practices. It would also come as Beijing assembles a new national wire-line broadband company through consolidation of the nation’s dozens of cable TV operators. Read Full Post…
Bottom line: WeChat will face slow progress in the US and other global markets due to strong competition, and will be hobbled by concerns that it may monitor its users activities like it does in China.
WeChat in US promotion on UCLA campus
Tencent’s (HKEx: 700) WeChat mobile messaging service may be wildly popular in China, but it’s facing a steep uphill climb outside its protected home market. My own recent experience using the service in Hong Kong this week highlights one of WeChat’s biggest problems, namely concerns among users that their activities may be monitored and censored. That kind of issue could push users to more popular western brands like WhatsApp and Line, which have cleaner reputations. Tencent itself isn’t helping the situation by using a half-hearted promotion strategy in the US, as highlighted in a new report on some of its recent activities to crack that highly competitive market. Read Full Post…
Bottom line: China is likely to fall well short of its plan for 35 gigawatts of solar power capacity by the end of next year due to profit-seeking speculation and lack of experience among plant builders and operators.
China struggles to meet solar power targets
I’ve been quite skeptical for a while about China’s ambitious plans to rapidly build up its solar power capacity, arguing that many of the plants being built are more designed to please central planners in Beijing than of real practical use. Now it seems at least one researcher at a major government institute agrees with that view, prompting him to slash his forecasts for new construction this year. That certainly doesn’t look good for big domestic names like Yingli (NYSE: YGE) and Trina (NYSE: TSL), which are hoping to keep their recent positive momentum going with big new demand from plant developers in their home market. Read Full Post…
Bottom line: Renren’s situation is likely to continue deteriorating as its core SNS business struggles and it sells off assets, with the company likely to close up shop or sell itself within the next 2 years.
Renren losses balloon
During the last boom for Chinese Internet IPOs in late 2010 and early 2011, one of the last names to make a successful listing was money-losing social networking (SNS) leader Renren (NYSE: RENN), which billed itself as the Facebook (Nasdaq: FB) of China. More than 3 years later, the company is still losing money and the figure is starting to balloon, according to Renren’s just released quarterly earnings.
Somewhat surprisingly, Renren still has a market value of $1 billion, even as it shows every sign of becoming a bargain buy for an acquirer or going out of business completely. But this is China, and Internet stocks that normally wouldn’t get any attention from US investors can still get noticed when they carry the “made in China” label. Read Full Post…
Bottom line: The post-November 11 sell-off for Chinese e-commerce shares will persist for the next few months until most trade at or slightly below their IPO levels, and then shares will trade mostly sideways next year.
E-commerce shares under presssure
Black Friday may only be a week away in the United States, but the landscape for China’s high-flying e-commerce companies was notably red with blood in the latest Wall Street trading session after a number of players issued new financial results. The numbers weren’t all that bad for the red-hot Vipshop (NYSE: VIPS), though people were probably expecting more from this company whose shares have exploded 40-fold since their IPO 2 and a half years ago. The picture was far more mixed for second-tier e-commerce players Jumei (NYSE: JMEI) and LightInTheBox (NYSE: LTIB), which also isn’t surprising due to the stiff competition in the market. Read Full Post…
Bottom Line: Despite strong competition, e-commerce giant Amazon stands a chance of success in China by leveraging its unique strength supported by its global logistic system and trusted brand.
By Lu Jin
Amazon launches imported goods store for China
Even as numerous buyers and sellers in China created another record online shopping spree in the virtual malls of Alibaba (NYSE: BABA) on Double Eleven day last week, global e-commerce giant Amazon (Nasdaq: AMZN) also did something new: It launched its Chinese language online store offering imported goods, called “shop overseas”.
Voices were heard in the market in no time: “Here comes the wolf!”
Just how bad is this “wolf”, or is the wolf really even coming? Read Full Post…
Bottom line: NetEase’s withdrawal from microblogging represents a broader decline for the overall sector, and is likely to put downward pressure on Weibo shares over the medium to longer term.
NetEase microblog withdrawal looks bad for Weibo
Media reports that web stalwart NetEase (Nasdaq: NTES) will finally shutter its microblogging service don’t come as a big surprise, since it’s been years since anyone has posed a challenge to the dominance of sector leader Weibo (Nasdaq: WB). But what does come as a slight surprise was the reaction to the news in Weibo’s share price. One would normally expect Weibo shares to rally on news of a competitor’s demise, but instead Weibo’s shares actually fell nearly 4 percent in the latest trading session. Read Full Post…
Bottom line: Shares of Alibaba could be due for a pull-back as investors become aware of its aggressive spending and shrinking profits, which could benefit the more conservative Tencent and Baidu.
Alibaba wows Wall Street with mediocre results
Everyone is buzzing about the maiden earnings report from newly listed e-commerce giant Alibaba (NYSE: BABA), which shows strong revenue growth and rapidly shrinking profits. So rather than repeat everyone else by simply reviewing the numbers, I’ll take this occasion to compare the Alibaba figures with those from leading rivals Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU), often called the Internet “big 3” of China and increasingly referred to collectively by the name BAT. Read Full Post…
Bottom line: Qatar’s new $10 billion China-focused investment fund and PICC’s new rights offer spotlight growing distress at Chinese companies, presenting a buying opportunity for opportunistic investors.
Qatar in fund venture with Citic
Two big finance stories are highlighting an interesting divergence in the China market, which has some investors bullish on new opportunities even as actual financial institutions and many other companies brace for a major downturn. The former instance has the Qatar Investment Authority (QIA) in a major new initiative to set up a $10 billion China investment fund with local financial giant Citic Group. At the same time, the growing distress in China’s financial sector is also apparent in a new plan to raise $1.2 billion by PICC (HKEx: 2328), China’s largest non-life insurance company. Read Full Post…
Bottom line: Sohu’s latest results hint at lingering weakness in online games and Internet advertising, while online video also continues to suffer amid a regulatory crackdown.
Sohu looks weak in games, advertising
The latest results from diversified web portal Sohu (Nasdaq: SOHU) are quite a mixed bag, with its lackluster search business finally showing some promising signs of accelerating growth, even as its core advertising and online gaming businesses sputter. Then there’s its money-losing online video business, which is facing a growing number of hurdles due to a regulatory crackdown, just as the unit looks set to make a minor acquisition that probably won’t add very much to its future prospects. Read Full Post…
