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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: Reports of the insolvency of online grocer Yummy77 are probably correct, but the company could still engineer an emergency rescue that would see it emerge as a wholly owned subsidiary of a big backer like Amazon.
Yummy77 reportedly insolvent
Just a week after 2 major new fundings highlighted the big potential for online grocers, a new headline is shining a spotlight on the darker side of a market that has rapidly overheated as new companies rush to cash in on the trend. That headline has media reporting that 2-year-old online grocer Yummy77, which is backed by global e-commerce giant Amazon (Nasdaq: AMZN), has run out of cash and become insolvent, making it the first major casualty in the space.
Before we go any further, I should note that the news on Yummy77 is all coming from media reports that haven’t been confirmed by the company. But at least one of those reports comes from the highly reputable China Business Network (CBN), which cites a number of sources that seem to indicate the news is true. My own visit to Yummy77’s site, www.yummy77.com, showed no signs of anything unusual, and I was able to select items for sale and put them into my shopping cart as normal. Read Full Post…
Bottom line: Mark Zuckerberg’s latest visit to Beijing and meeting with a top propaganda official show his hopes of bringing Facebook to China are still alive, and could result in announcement of a new joint venture by year-end.
Facebook’s Zuckerberg back in Beijing
Facebook (Nasdaq: FB) chief Mark Zuckerberg may not have much chemistry with Chinese President Xi Jinping, but he certainly seems quite capable of getting meetings with high-ranking Chinese Internet and propaganda officials. Just a couple of months after returning from paternity leave for the birth of his daughter, Zuckerberg was back in Beijing over the weekend to attend a government-sponsored forum, as he pursues his aim of bringing Facebook to the world’s biggest Internet market.
Zuckerberg is certainly no stranger to meetings with top Chinese officials as he pursues his goal. Last year he made headlines when he reportedly asked President Xi Jinping to choose an honorary Chinese name for his daughter during Xi’s state visit to Washington, even though his request was ultimately declined. And in late 2014, he hosted a tour at Facebook’s Silicon Valley campus for Lu Wei, minister of the Cyberspace Administration for China. Read Full Post…
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Bottom line: Lenovo chief Yang Yuanqing is likely to resign or get replaced as company head by the end of this year as sales continue to stumble, possibly by recently named President Gianfranco Lanci from its European operations.
Lenovo looks at tough year ahead
If there’s a single word to summarize the latest quarterly results from struggling PC giant Lenovo (HKEx: 992), it’s “down”. Just about every major metric in its just-released results was down, though the company did manage to boost its net profit for the quarter thanks to recent aggressive cost cutting. But lowering costs isn’t a long-term formula for success, and investors are clearly worried about the prospects for Lenovo’s shriveling core PC business and a sputtering mobile device unit that is supposed to be its new growth driver.
Investors were clearly most spooked by Lenovo’s top line revenue, which shrank 8 percent to $12.9 billion in its latest quarter. That was the first time Lenovo has posted such a revenue decline in more than 6 years, and nicely summarizes the company’s struggles in just about all of its major product areas. Lenovo did achieve one notable milestone as its mobile device unit finally climbed from the loss column to break even. But even that is hardly an accomplishment since cost cutting was most likely the main driver behind that movement. Read Full Post…
Bottom line: McDonald’s could see a strong rebound in China over the next few years, as consumers give the chain a second look following an overhaul that includes the roll out of a high-tech burger customization program.
McDonald’s expands China high-tech burger program
Chinese consumers are welcoming a McDonald’s (NYSE: MCD) high-tech program for customized hamburgers, with word that the world’s largest burger chain will aggressively expand the concept in China this year. I have yet to visit one of the new stores in the program, but admit I’m intrigued by the concept that allows customers to personalize their burgers at computer kiosks inside stores before having them delivered to their tables.
That kind of curiosity and novelty factor could be key to jump-starting McDonald’s China business, which has stalled over the last few years as customers flock to a wide range of other alternatives more suited to local tastes. Both McDonald’s and crosstown rival KFC (NYSE: YUM), which is in the process of spinning off its China unit into a separate company, have suffered from slowdowns to their China operations in recent years for similar reasons. Read Full Post…
The newest “Star Wars” movie is in two headlines this week, led by a strong debut for the seventh installment in the franchise that has just opened in China several weeks after its global premier. The movie is also in headlines related to a new initiative by the hyperactive China Media Capital (CMC), which has just formed a joint venture with a company that made some of the special effects for “Star Wars: The Force Awakens”. In this case CMC’s new partner is Base FX, a Beijing-based start-up with strong ties to Hollywood.
Much has been written about prospects for the new “Star Wars” movie in China, where the franchise isn’t very well known because none of the first 6 films in the series were screened in the country unit recently. To address that problem, the movie’s producer Disney (NYSE: DIS) has been working overtime to promote the film in China, with relatively strong results. Read Full Post…
Many things have changed about China over the last 30 years, but one of the few that’s remained constant over that time is the country’s love of collecting stamps and other commemorative memorabilia. We were reminded of that fact once more this past week, when throngs of people lined up outside our local post offices and waited for hours in the winter cold to buy a new set of stamps celebrating the upcoming Year of the Monkey.
It’s interesting to see that stamps have retained such a strong place in the local consciousness, since the sending of snail mail that’s their true purpose is quickly becoming a thing of the past. But a closer look at the lingering stamp-collecting craze shines a spotlight on yet another major trend in contemporary China, since a big majority of people who often wait in line for hours are often older retirees who actually do still send letters. Read Full Post…
Bottom line: New acquisitions by China Lodging and Tongcheng reflect consolidation in China’s travel industry, which is likely to accelerate in 2016 as the nation’s economy slows.
China Lodging goes upmarket with new buy
Two smaller acquisitions from the travel realm are in the headlines as we close out 2015, with China Lodging (Nasdaq: HTHT) and Tongcheng both buying domestic companies. The first deal will see China Lodging, operator of the HanTing budget hotel chain, purchase a smaller operator called Hotel Home. The other comes in the related travel services space, and has Tongcheng buying a smaller rival called Shanghai MCTS.
Neither of these deals looks extremely exciting as both are quite small, but both do reflect a recent wave of consolidation that is sweeping China’s fragmented travel industry. Industry veteran Ctrip (Nasdaq: CTRP) is emerging as the clear leader and top consolidator in the travel services space. The hotel space is a bit less clear, with China Lodging, Homeinns (Nasdaq: HMIN) and Jin Jiang (HKEx: 2006; Shanghai: 600574) all jockeying for position in that space. Read Full Post…
Bottom line: The recent case involving criticism of Alibaba by Washington and Beijing over piracy should form a template for how the 2 governments can collaborate on commercial issues where they have common interests.
US warns Alibaba over fake goods
Washington and Beijing showed a rare sign of collaboration on commercial issues last week when the US sternly rebuked e-commerce giant Alibaba (NYSE: BABA) for widespread trafficking of pirated goods on its websites, reinforcing a similar message delivered by China at the start of this year. While it’s doubtful the US Trade Representative’s (USTR) office and China’s State Administration for Industry and Commerce (SAIC) consulted each other in their separate actions, the parallel moves showed just how effective the 2 governments can be when they work together in some of the many areas where their interests overlap.
That contrasts sharply with a more clashing style on many other issues like high-tech hardware security and new energy products, where both sides have similarly common interests but more often take actions that result in trade wars and angry verbal exchanges. Read Full Post…
Bottom line: Setbacks in 2 major global chip acquisitions by Chinese buyers show the Chinese are likely to be seen as foreigners by western manufacturers who would prefer to be bought by more familiar hometown rivals.
China chip buyers hit resistance in US, Taiwan
Two new developments in China’s global chip-buying spree are showing that political opposition isn’t the only obstacle Chinese buyers will encounter in their quest to acquire foreign technology. The Chinese could also face competition from rival suitors, with word that recent bids by the fast-growing Tsinghua Unigroup and newcomer China Resources have both hit such resistance.
In the first case, Unigroup’s recently announced plan to buy 25 percent of Taiwanese chip tester Siliconware Precision Industries (Taipei: 2325) has been followed by a new counter bid from Taiwan’s own Advanced Semiconductor Engineering (Taipei: 2311). The second case has US-based Fairchild Semiconductor (Nasdaq: FCS), which is in the process of merging with ON Semiconductor (Nasdaq: ON), rebuffing a higher rival bid from China Resources. Read Full Post…
