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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: China’s traditional broadcasters need to move quickly to forge new, meaningful partnerships with private companies outside the media space, or risk being overtaken by new media rivals.
Mango TV ties with China Mobile
Two of China’s leading regional broadcasters have been in the headlines these last 2 weeks, as they scramble to transform themselves to compete with a new generation of web-based private companies that are rapidly stealing their viewers and advertising dollars. Both stories involve new tie-ups with industry outsiders, reflecting the need to bring in new expertise to help these state-run broadcasters leverage digital and web-based technologies that will dominate the media landscape of the future.
The first big story came 2 weeks ago, when Shanghai Media Group (SMG) signed a landmark deal with e-commerce titan Alibaba (NYSE: BABA) to develop a financial news and information service that could someday take on the likes of global giants like Bloomberg and Reuters (NYSE: TRT). The second came last week, when media reported that Hunan Satellite TV had raised 1 billion yuan ($162 million) in the first private funding round for its fledgling paid video service Mango TV. Read Full Post…
Bottom line: A new strategic investment in LightInTheBox by a major shoemaker is a vote of confidence in its turnaround story, while Bona Film’s buyout offer caps a week of record privatization activity for US-listed Chinese firms.
LightInTheBox gets new strategic partner
Last week’s privatization frenzy for US-listed Chinese firms saw one more company join the queue on the final day of the week, with movie maker Bona Film (Nasdaq: BONA) adding its name to the list of companies looking to end their relationship with fickle New York investors. That final offer brought the number of US-listed Chinese firms receiving buyout offers last week to 5, which must surely be a record for such bids in a single week.
Meantime, another interesting deal has seen underperforming e-commerce company LightInTheBox (NYSE: LITB) receive its own big new investment from one of China’s leading shoemakers. That deal saw Aokang Shoes (Shanghai: 603001) buy about a quarter of LightInTheBox’s shares, hinting at a major new direction for the foreign-focused e-commerce company and also implying it’s unlikely to de-list from New York anytime soon. Read Full Post…
Bottom line: Xiaomi’s newest technology headache, if true, could delay the launch of its fifth-generation phone, further sapping its momentum and making it difficult to reach its 2015 sales target.
Xiaomi reportedly hits technology glitch
The once invincible Xiaomi is starting to look increasingly mortal, with reports that the smartphone high-flyer may have to delay the launch of its newest model due to technical reasons. I’m not too knowledgeable on the technical issues in this instance, but the potential new delays for the release of the Xiaomi 5 appear to be related to fingerprint recognition technology that the company plans to build into the new models.
If these latest reports are true, the delays could put a big crimp in the Xiaomi’s ambitious sales plans this year as it attempts to maintain its breakneck growth. Maintaining that kind of growth looks increasingly difficult due to all the technical issues, combined with intensifying competition in Xiaomi’s core China market. That competition is causing the company to abandon the online-only sales model that helps it keep costs down, which will ultimately undermine its profit margins. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 13-15. To view a full article or story, click on the link next to the headline.
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Bullish Uber Plans to Invest $1 Bln in China in 2015 (English article)
Prada (HKEx: 1913) Profit Tumbles as Luxury Company Struggles in China (English article)
Bottom line: A new management-led privatization bid for Homeinns and many other similar recent plans could stand a 50-50 chance of failing if they don’t complete the process before China’s stock market rally ends.
Homeinns joins privatization queue
Leading budget hotel chain Homeinns (Nasdaq: HMIN) has become the latest US-listed Chinese company to receive a buyout offer, capping a record week that has seen at least 4 such bids. In the past, 4 privatizations in a 6-month period would be considered big, even though such bids have been coming at a slow trickle over the last 3 years for Chinese companies whose shares have languished on Wall Street. But that tickle has turned into a flood these last 2 months, fueled mostly by greed, as company owners look enviously at China’s rallying stock markets that have more than doubled over the last year. Read Full Post…
Bottom line: China’s securities regulator should work with overseas-listed Chinese firms to chart a well-defined path for them to return home to list, to encourage such movement and avoid burdensome bureaucracy.
Chinese “turtles” return home to list
A growing trend that is seeing Chinese firms abandon US listings to return home gained big momentum last week, when 2 more companies announced plans to de-list from New York and a third that privatized 2 years ago moved close to a China re-listing.
In the first category, medical devices maker Mindray Medical (NYSE: MR) announced a management led buy-out offer late in the week, which was followed a day later by a similar offer for solar panel maker JA Solar (Nasdaq: JASO). Meantime, formerly New York-listed outdoor advertising specialist Focus Media took a major step toward becoming the first Chinese company to re-list at home by injecting itself to an existing Shenzhen-traded company. Read Full Post…
Bottom line: Alibaba’s new hiring of a Washington insider to head its international government affairs reflects its attempts to look more global, and also an intense lobbying campaign to ensure its name stays off an annual US piracy list.
Alibaba bulks up in Washington
E-commerce giant Alibaba (NYSE: BABA) has just made a major new addition to its Washington lobbying team, as it gears up for what’s likely to become one of its biggest battles yet on Capitol Hill. That battle will see the company try to convince the Obama administration that it’s a strong partner in the battle against piracy, as it tries to stay off an annual list published by Washington that singles out major internet sites that don’t do enough to stamp out counterfeiting.
Alibaba’s new hire of former GE Capital executive Eric Pelletier to head its international government affairs is also part of its attempts to look more global by adding big-powered non-Chinese to its top management ranks. The move parallels similar hires by equally globally-minded companies including networking equipment giant Huawei and leading PC maker Lenovo (HKEx: 992), which are also trying to convince the world that they’re truly global players and not just Chinese companies. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 6-8. To view a full article or story, click on the link next to the headline.
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Three China Solar-Panel Groups Lose EU-Tariff Exemptions (English article)
China Resources Expands Vanguard Convenience Stores, Targets 6,300 by 2020 (Chinese article)
JA Solar (Nasdaq: JASO) Receives Going Private Proposal at $9.69 Per ADS (GlobeNewswire)
Lenovo (HKEx: 992) Parent Legend Gets HK Approval for up to $2 Bln IPO: Sources (English article)
WoWo (Nasdaq: WOWO), JMU to Merge, Creating Top Online Foodservice Firm (PRNewswire)
Bottom line: Alibaba’s new tie-up with SMG could produce a homegrown financial news and information giant drawing on both companies’ strengths, but could also face obstacles due to the 2 partners’ differing backgrounds and styles.
Alibaba buys into SMG financial newspaper
E-commerce titan Alibaba (NYSE: BABA) is taking an interesting new step into the news media realm, with word that it’s investing 1.2 billion yuan ($200 million) in one of China’s leading financial newspapers that is owned by Shanghai Media Group (SMG), the country’s second largest state-owned media company. I’ve watched for the last couple of years as traditional newspapers like SMG’s China Business News, or CBN, have struggled to chart a new path in the digital media age.
For many of these traditional media, that movement has meant putting their content online, and launching a mobile app, but not much more. As a result, many are seeing their revenue shrink as advertisers flock to more dynamic new media, mirroring a trend in the west. In that light, this new Alibaba tie-up could breathe some new life into CBN’s new media push, providing new ideas and other expertise to reverse the newspaper’s decline.
Bottom line: Caffebene could become the first big victim of an unsustainable Chinese coffee explosion, while KFC’s new lawsuit against rumor mongers reflects one of the many challenges it will face as it tries to rebuild its China image.
Caffebene China chief quits
A couple of new China fast-food headlines reflect the rapidly changing environment, as traditional players like KFC (NSYE: YUM) try to move upscale to attract consumers who now have many more choices than they did a decade ago. The upscale move has seen a massive explosion in premium coffee shops, which is behind one headline that has South Korean giant Caffebene showing signs of distress following its recent aggressive China expansion.
Meantime, the other more humorous headline has KFC suing 3 companies for spreading false rumors about its products on social media, including one saying it uses chickens that have 8 legs. On a more serious note, this story comes as KFC struggles to regain its skidding China momentum, and shows that Beijing isn’t the only one frustrated over the kind of rumor-mongering that regularly happens on popular services like Weibo (Nasdaq: WB) and Tencent’s (HKEx: 700) WeChat. Read Full Post…
Two campaigns aimed at improving public behavior are center stage in this week’s Street View, spotlighting different ways that Shanghai is tackling the many smaller problems that come with its rapid modernization. One instance has the city using the “face factor” to promote more responsible behavior, in this case by shaming litterbugs. The city is taking a harder line in the second case, threatening black marks on credit records of people who use their properties for illegal group apartments.
Both cases target forms of behavior that need to be discouraged, but aren’t bad enough to justify legal action like arrest or even big fines that could have a more deterrent effect. That means the city has to look for other ways to combat these kinds of problems. I have to commend our officials for their creative and varied approaches, even if I sometimes doubt their effectiveness. Read Full Post…
