UPDATE: After publishing this earlier this morning, a source in Barcelona informs me that Oppo is indeed attending and is holding a press event to show off their newest products. Headline and photo caption changed to reflect Oppo’s attendance, but the rest of the original post remains the same.
Bottom line: The absence of Oppo and Vivo from the world’s top telecoms trade show in Spain this week reflects their overwhelming reliance on China sales, while Xiaomi’s absence from the show could be a cash conservation move.
Vivo, Xiaomi absent from top telecoms trade show
Most eyes from the telecoms world will be focused on Barcelona this week, where an annual show that’s arguably the world’s most important for smartphones is taking place. That seems like a good opportunity to look at who from China’s crowded smartphone arena is attending this year’s Mobile World Congress (MWC) in Spain, even though I’m personally not at the show.
Attending the event is by no means cheap, which is probably why some companies may choose the skip the affair. But the decision to attend or not does provide some insight as to what companies are thinking, since you would expect anyone with truly global aspirations to make an appearance at this showcase for the newest telecoms products. Read Full Post…
Bottom line: China’s VNO program appears to be gaining momentum heading into its third year, and could reach the 200 million subscriber mark by the end of 2017.
Virtual network operators gain momentum
It’s been more than a year since I last wrote about China’s fledgling attempt to breathe new life into its telecoms services sector by creating virtual network operators (VNO), mostly because the program seemed to be sputtering in its first couple of years. But new data from the telecoms regulator seems to suggest the industry may finally be finding its legs, and could be starting to take some meaningful market share from the nation’s monopoly of 3 big state-run telcos.
The headline figure underpinning my assertion is 43 million, which appears to be the number of VNO subscribers in China at the end of last year. (Chinese article) I need to give a quick disclaimer here, as nowhere in the article is the term VNO or variant MVNO used to describe this sector, which is called the “mobile resale business”. But that term, combined with a description of the program, does seem to indicate that these are VNO subscribers. Read Full Post…
Bottom line: Xiaomi stands a better than 50 percent chance of stabilizing this year and reversing its 2-year-old decline, based on its push into brick-and-mortar retailing and positive reviews for its newest higher-end model.
Xiaomi builds up brick-and-mortar presence
Blame it on the Internet. That seems to be the message coming from Xiaomi, the smartphone maker that’s in a bit of an identity crisis, trying to explain its rapid descent over the last 2 years following a meteoric rise in 2014. A couple of other reports are also saying the company is preparing to roll out its own processor later this year, and have charismatic chief Lei Jun criticizing rival Huawei for lacking the “internet sensibility” needed to succeed in the online era. Read Full Post…
Bottom line: Xiaomi could return to growth mode in China this year on the strength of stronger models, while Huawei’s local market share will contract as it focuses on profitable sales and backs away from money-losing businesses.
Huawei meets reduced smartphone target
Two of China’s former smartphone leaders are in the headlines going into the weekend, casting a spotlight on the difficulties these past high-flyers face after becoming king of the world’s biggest market. In one story the faded Xiaomi is saying the worst is behind it, and the company is aiming for a relatively ambitious 100 billion yuan ($14.5 billion) in sales this year.
In the other, the still-buoyant Huawei is announcing its smartphone sales rose an impressive 29 percent last year. But that figure is still below its earlier target, and also is being revealed just a week after the company said it was abandoning its older model of growth at any cost. Accordingly, I expect we’ll see sharply slower growth this year for Huawei in China, as it looks for profitable gains over simply getting more market share. Read Full Post…
Bottom line: Seagate’s closure of its Suzhou factory, combined with its earlier formation of a Chinese technology-sharing joint venture, reflect the changing approach away from local manufacturing that western tech firms are taking towards China.
Seagate closes Suzhou factory
New reports are saying that hard disk drive maker Seagate (NYSE: STX) is closing down a factory in the eastern city of Suzhou, as part of a restructuring plan to revive its operations. Such a development isn’t huge news, since the global semiconductor sector is undergoing a major consolidation.
But this particular closure also comes just months after Seagate announced a new tie-up with Chinese partner Sugon to tap the local market for IT products and services. So the bigger question becomes: What’s the meaning of this factory closure and the newer joint venture, and what’s the outlook for semiconductor and high-tech equipment manufacturing in China? Read Full Post…
Bottom line: Huawei’s revenue growth for 2017 is likely to drop by more than half from 2016’s rate of 32 percent as it cuts its money-losing businesses, with the biggest slowdown likely to come in its smartphone unit.
Huawei to focus on profitability in 2017
Quality over quantity is a growing theme in China these days, as the nation puts aside its previous pursuit of high growth at any cost in exchange for more sustainable expansion in high-quality areas. After starting at the top in Beijing, that theme is trickling down the corporate food chain to telecoms giant Huawei, whose New Year’s message hints that company growth could slow sharply this year.
Or course everything is relative, since Huawei has just announced preliminary results that show its revenue for 2016 jumped an impressive 32 percent to 520 billion yuan, or a whopping $74 billion. To put things in perspective, its biggest global rival Ericsson (Stockholm: ERICb) is seeing its sales contract, and is expected to post about $65 billion in revenue this year. Read Full Post…
Bottom line: China Telecom’s sale of several key entertainment assets to a separately run and listed unit reflects the company’s more dynamic nature compared with its 2 peers, as it tries to create services that can compete with private-sector rivals.
China Telecom (HKEx: 728; NYSE: CHA) is showing once more why it’s a telco to watch, with word that it’s formally spinning off 4 of the main entertainment businesses on its main E Surfing platform to one of its independently run and listed units. In this case the telco is spinning off the four to its fully-owned but separately managed Besttone Holdings (Shanghai: 600640) unit, in what looks like a bid to make these services more competitive with private sector rivals. Read Full Post…
Bottom line: ZTE’s move into smart cars and Gome’s into smartphones follow a typical Chinese pattern of herd mentality investing, and are both likely to fare poorly.
ZTE buys car maker Granton
A couple of headlines are shining a spotlight on the herd mentality you often see among Chinese companies looking for the next big growth opportunity. One of those has telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) buying a small bus maker, parroting a trend among a growing number of firms who see the future in smart vehicles. The other has the increasingly irrelevant electronics retailer Gome (HKEx: 493) rolling into the smartphone business, an area in desperate need of consolidation due to cutthroat competition. Read Full Post…
Bottom line: TCL’s new licensing deal with BlackBerry will end up as a quiet failure due to TCL’s weak R&D skills and lack of consumer appeal to the BlackBerry name.
TCL, BlackBerry in licensing tie-up
When does adding two negatives yield a positive? The answer is “never”, but dying smartphone makers BlackBerry (Toronto: BB) and TCL (Shenzhen: 000100) are hoping that maybe this time will be different. Of course, it’s easy for me to predict disaster for this particular new alliance, and I’d be much bolder if I said this partnership might revive the two dying companies. But the truth is that neither BlackBerry’s nor TCL’s smartphone business have much going for them these days. Read Full Post…
Bottom line: Unicom is likely to choose all 3 of the BAT companies as equity and strategic partners under Beijing’s pilot program to invigorate big state-run companies, but none of the tie-ups will produce meaningful results.
Unicom eyes BAT partnerships
China Unicom (HKEx: 762; NYSE: CHU), the perennial laggard among China’s 3 major telcos, is reportedly looking for new life by tying up with the nation’s big 3 Internet companies, Tencent (HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). I might normally say “so what?” to this particular development, since it seems like Unicom and its 2 fellow state-run telcos are regularly announcing this kind of partnership, always with little or no meaningful impact on their business. Read Full Post…
Bottom line: A Chinese bid for the Chicago Stock Exchange could get vetoed on concerns about exposure to the US financial system, while a similar bid for chip maker Lattice could get approved due to its relatively small size.
Lattice buyer has Beijing backing
Two cross-border deals involving China M&A in the US appear to be stalling, even before the protectionist-minded Donald Trump becomes the next US president. That certainly doesn’t bode well for either deal, one in the high-tech chip space and the other in the financial sector, since both could easily have Chinese government backing. One of those has a Sichuan-based investor group trying to buy the tiny Chicago Stock Exchange, while the other has a different group trying to buy mid-sized chip design house Lattice Semiconductor (Nasdaq: LSCC). Read Full Post…
