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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: Didi Kuaidi’s Lyft investment looks smart but will disappoint those hoping for a more aggressive move into the US, while a new taxi app backed by 2 Beijing fleet operators is unlikely to pose a major challenge to private rivals.
Didi Kuaidi drives into US with Lyft investment
Anyone with big hopes for Chinese hired car services leader Didi Kuaidi following its latest mega fund-raising will be disappointed to hear the company’s highly anticipated move to the US is coming through a minor investment that’s unlikely to yield much results. Many were hoping for bigger things from this aggressive Chinese company, but instead Didi Kuaidi looks set to enter the US through an investment and strategic tie-up with local partner Lyft, a rival of the more high-profile and very aggressive Uber.
My view that many will be disappointed by this move is sincere, but at the same time I would also add that Didi Kuaid’s decision to avoid the US for now looks quite shrewd. History has shown that Chinese start-ups have far better prospects when they make developing markets the first stop on their global expansion road maps, rather than focusing on western markets that are lucrative but also far more competitive. Read Full Post…
Bottom line: China’s award of a big US high-speed rail contract reflects improving high-tech ties the 2 sides hope to build in an upcoming presidential summit, which could help prospects for a sale of US chipmaker Atmel to China’s CEC.
Xi Jinping heads to Washington
A couple of Sino-US deals from the sensitive high-tech space are in the news today, ahead of a summit between Presidents Xi Jinping and Barack Obama that could ease some of their recent bilateral tensions over technology issues. Leading the headlines is a breakthrough deal that will see leading Chinese high-speed rail company CRRC (HKEx: 1776; Shanghai: 601776) help to build a planned line linking the western US cities of Las Vegas and Los Angeles.
While timing of that announcement looks squarely tied to the Xi visit and should be welcome by both sides, the second looks more controversial since it could see a mid-sized US chipmaker bought by a Chinese company. That deal, which was disclosed by unnamed sources, would see the state-owned China Electronics Corp (CEC) purchase Atmel (Nasdaq: ATML), in a deal that could value the latter at more than $3 billion. Read Full Post…
Bottom line: A threat to privatize Baidu by chairman Robin Li is probably the result of frustration at recent declines in the company’s stock and is unlikely to result in a serious buy-out bid.
Frustrated Robin Li threatens Baidu privatization
The biggest privatization threat to date by a US-listed Chinese company has just come from online search leader Baidu (Nasdaq: BIDU), whose chairman Robin Li is joining a growing chorus of executives who say their shares are underappreciated by Wall Street investors. In this case it’s easy to see why Li is unhappy, since Baidu’s stock has lost a quarter of its value since July, when the company reported a spending binge on new businesses had sapped its profits.
Baidu’s shares were actually down by an even greater 30 percent at the start of this week, but surged 6 percent in the latest session amid a broader rally for Chinese Internet stocks. It should come as no surprise that the US surge was sparked by a rally earlier in the day on China’s domestic stock markets, which is where Baidu and many of its other US-listed Internet peers say they would like to re-list. Read Full Post…
It’s a quiet day on China’s corporate news front, as many companies stay silent and hope that the latest sell-off on the nation’s stock exchanges calms as the week progresses. So in the absence of major news, I thought I’d look at the latest Hollywood tie-up involving Youku Tudou (NYSE: YOKU), and do some reading between the lines about what it means for the struggling online video company.
The thing that most caught my attention about this latest licensing deal between Youku Tudou and Paramount Pictures was how passe it seemed. Youku Tudou and its rivals were frequently making this kind of announcement a couple of years ago, when they were trying to secure premium content that web surfers would pay to watch on their sites. But nowadays such deals don’t seem like big news anymore, and instead companies are focused on creating their own exclusive content. Read Full Post…
Bottom line: Trina’s plan to separately list its solar plant-building assets is likely to meet with lukewarm to frosty demand, while Yingli’s downward spiral will continue as customers abandon the company due to its financial weakness.
Trina eyes IPO for plant-building unit
More signs of stress are on display in the solar panel sector, where shares of the stumbling Yingli (NYSE: YGE) are coming under pressure after its latest earnings report and a new plan by Trina (NYSE: TSL) to separately list some capital-intensive assets has overtones of desperation. These 2 stories reflect the intense pressure solar panel makers continue to feel as their sector still struggles to recover from a downturn that dates back 4 years due to massive oversupply.
Panel prices have rebounded somewhat over the last 2 years and many of the best-run companies have returned to profitability during that time. But intense pressure still remains for less well-run companies like Yingli. Even better performers like Trina are feeling pressure as they pour massive money into construction of new solar power plants, in a bid to create more demand for their products. Read Full Post…
This week’s Street View takes us to Yangpu District and my workplace at Fudan University, as classes resume after our long summer recess and students surprise me with the latest new trends in higher education. My own classes in the Journalism School contain the usual lists of students in their early 20s, but I was amused to see that my colleagues in the math department will be welcoming a youthful 14-year-old prodigy into their ranks this year.
In a different sign of the times, another headline noted that up to 40 percent of incoming freshmen at Fudan are using the Tenpay online payments service to pay their tuition this year. Of course the more popular Alipay might dispute that figure, which does seem quite high for such a new service. But the bottom line is that students are conducting more and more of their lives electronically, especially over popular platforms like Tencent’s WeChat and Alibaba’s Tmall. Read Full Post…
Bottom line: Dell’s massive new China commitment could foreshadow a major new tie-up that could see it sell a big stake of itself to a local partner, while Lenovo could be eyeing a major shift to OEM production for its floundering smartphone unit.
Dell bets big on China
Two of the world’s top PC makers are in the China headlines today, with homegrown leader Lenovo (HKEx: 992) and US giant Dell both making major strategic moves. But in a sign of the times, neither item is related to either companies’ core PC business, showing just how quickly personal computers are losing their relevance in the fast-changing gadget world.
Dell’s announcement contains the biggest headline figure, with the company announcing a new commitment to spend a whopping $125 billion in China over the next 5 years. But the Lenovo news is equally intriguing if it’s true, and hints the company could be preparing a major shift for its floundering move into smartphones. That shift would see Lenovo’s smartphone unit build up its business of taking manufacturing orders from third-party brands, a model known contract manufacturing or OEM production. Read Full Post…
Bottom line: Major new funding raising by Uber, its Chinese equivalent, and Alibaba’s logistics arm reflect continued interest in such leading Internet firms by major global Investors, though funding will slow sharply for smaller, less known players.
Three new Internet deals raise $5 bln
It seems my earlier forecast was incorrect that major fund-raising for Chinese Internet companies could be cooling due to waning investor sentiment during the recent market volatility. The latest headlines include 3 major new deal close to completion, worth a collective $5 billion. The largest has Didi Kuaidi, the homegrown Chinese equivalent of private car services giant Uber, on the cusp of new a funding deal worth $3 billion. The second has the actual Uber also near a deal to raise $1.2 billion for its Chinese business, as it prepares to spin off the unit into a separate company.
Meantime, the smallest of the deals has e-commerce leader Alibaba ‘s(NYSE: BABA) Cainiao logistics unit also on the verge of a deal to provide hundreds of millions of yuan for a small logistics company. In this case the move appears aimed at helping Cainiao to build up its stable of partners providing logistics service. The addition of such outsiders would also help to validate Alibaba’s 2-year-old program to plow 100 billion yuan into its logistics capabilities.
Bottom line: The next few months are likely to see a battle unfold for control of Coolpad, with Qihoo as the likely victor and a smaller chance that LeTV could emerge as a white knight savior.
Tug of war brews for control of Qihoo
What’s likely to become an entertaining battle for control of smartphone maker Coolpad (HKEx: 2369) has taken a new twist, with the company criticizing its joint venture partner Qihoo 360 (NYSE: QIHU) for being a control freak. The remarks from an unnamed Coolpad executive represent the first semi-official response to a surprise move by Qihoo to shut down their joint venture formed less than a year ago.
Qihoo’s said earlier this week that it planned to exercise a “put option” that would effectively shutter the joint venture, forcing Coolpad to pay $1.5 billion to buy out Qihoo’s stake. Qihoo said it was entitled to make the move after Coolpad violated a non-compete clause in their agreement by selling a major stake in itself to online video firm LeTV (Shenzhen: 300104), which was also planning a move into the smartphone business. But the struggling Coolpad can hardly afford the $1.5 billion price tag that Qihoo has said dissolution of the venture will cost. Read Full Post…
Bottom line: JD.com’s new share repurchase program looks like a good use of cash due to likelihood of a rebound for its stock, while its tie-up with a top Korean peer also looks like a good way to target Chinese consumers who like imported goods.
JD launches share buy-back
After amassing huge quantities of cash through a series of IPOs and other fund-raising activities, Chinese Internet companies are rapidly discovering a new use for those idle funds by buying back their own stock. The latest such move has JD.com (Nasdaq: JD), the nation’s second largest e-commerce company, announcing a new plan to buy back up to $1 billion worth of its shares, on the belief they have become undervalued in a recent sell-off.
JD was also in the headlines for another new tie-up with a major Korean retailer, announcing the opening of a flagship store to offer imported goods from South Korean e-commerce giant Lotte.com. This particular move is part of an ongoing drive by Chinese e-commerce firms to offer more imported goods to local consumers who are often wary of domestic products that are fakes and suffer from poor quality. Rival Alibaba (NYSE: BABA) has embarked on a similar drive, announcing its own new tie-up with Germany’s Metro Group the same day as the JD announcement. (company announcement) Read Full Post…
Bottom line: Qihoo’s latest move forcing Coolpad to buy-out their joint venture could be a bargaining tactic to pressure Coolpad into ditching a separate tie-up with LeTV, and could spark a bidding war for Coolpad by Qihoo and LeTV.
Bidding war brewing for Coolpad?
Smartphone maker Coolpad (HKEx: 2369) has become a bit of a hot potato lately, though it’s not clear if the company is hot property or a pariah these days. The company was one of China’s earliest smartphone makers, and quickly built up share as a leading name in its fledgling home market. But rampant competition as others piled into the market hurt its prospects, prompting it to form a major equity tie-up with security software maker Qihoo (NYSE: QIHU) last December, and then with online video firm LeTV (Shenzhen: 300104) last month.
The LeTV tie-up surprised many, and led Qihoo feeling betrayed. Now Qihoo, whose equity tie-up came in the form of a joint venture, appears to be seeking revenge for that betrayal. In its latest move to express its outrage, Qihoo has just announced it will exercise a non-compete option in their agreement that will force Coolpad to buy out their joint venture at double the current market value. Read Full Post…
