Bottom line: Gree’s new largess to employees with an across-the-board raise is an attempt to win back public good will, following setbacks for chief executive Dong Mingzhu in her attempt to defy shareholder wishes.
Gree’s Dong Mingzhu offers Christmas largess
I don’t usually write about Gree (Shenzhen: 000651), but an unusual storm of controversy around the home appliance maker nicely summarizes several tendencies that make Chinese companies both entertaining but also frustrating for westerners like myself to observe. The company’s main claims to fame are its air conditioners, and also its colorful chief executive Dong Mingzhu, who is often called China’s most powerful businesswoman.
Dong was doing a bit of goodwill hunting in the latest headlines, with word that Gree has decided to boost wages for all of its 70,000 employees by a 1,000 yuan ($145) each per month, a relatively large figure that probably equates to raises of 10 percent or more. The bigger subtext is that this raise comes after a series of personal setbacks for Dong, making the move look like her attempt to win back public approval and restore confidence in her leadership. Read Full Post…
Bottom line: Growing national security concerns are likely to kill the pending purchase of Germany’s Aixtron by a Chinese buyer, and could also kill the pending sale of NXP’s standard products unit to a similar buyer.
Germany calls for review of Aixtron sale to China
A major cross-border chip deal that I failed to notice earlier this year is suddenly in doubt, with word that Germany has reversed course and wants a security review for the proposed sale of local chipmaker Aixtron (Frankfurt: AIXA) to a Chinese buyer. Such a move would mark the first potential killing of a cross-border chip deal in Europe, which would be following the US and Taiwan in voicing concerns about China’s sudden voracity for overseas makers of high-tech microchips. Read Full Post…
Bottom line: Meizu will be forced to sign a new licensing agreement with Qualcomm after new lawsuits against it in the US, France and Germany, while NXP’s sale of a major unit to a Chinese buyer could still get vetoed in Europe despite new US clearance.
NXP chip sale cleared in US
A couple of cross-border stories involving global western chip giants Qualcomm (Nasdaq: QCOM) and NXP (Nasdaq: NXPI) are in the headlines, reflecting China’s growing role in the global semiconductor market. The first has Qualcomm suing Chinese smartphone maker Meizu for patent infringement in the US, Germany and France, some 4 months after taking similar action in China. The other has the US clearing NXP’s planned sale of one of its major units to a Chinese group for $2.75 billion, indicating that Washington won’t attempt to block a deal in the sensitive high-tech chip space. Read Full Post…
Bottom line: Many US-listed Chinese companies that have yet to complete privatization bids announced last year are likely to formally abandon the plans in the next few months, after new withdrawals from Autohome and China Information Technology.
Autohome abandons buyout bid
It’s been well over a year since the cresting for a wave of privatization bids by US-listed Chinese firms, which were hoping to leave New York and get better valuations by re-listing back in China. But despite the early enthusiasm, many of the firms that announced such bids at the height of the frenzy have yet to complete their plans.
A small group of larger names, including Internet companies YY (Nasdaq: YY) and Momo (Nasdaq: MOMO), have formally announced the scrapping of their bids. Now 2 more have joined their ranks, with online car specialist Autohome (NYSE: ATHM) and cloud services provider China Information Technology (CNIT) (Nasdaq: CNIT) both announcing they have also abandoned their bids. At the same time, game developer Sky-mobi is moving forward with its own privatization bid, and has just announced the scheduling of a shareholder meeting to vote on the proposal. Read Full Post…
Bottom line: SMIC’s new plan for a $10 billion cutting-edge chip plant shows it could be well positioned to find a place on the global stage by tapping strong government support after an overhaul of its own operations.
SMIC announces $10 bln chip plant
I rarely write these days about SMIC (HKEx: 981; NYSE: SMI), since the company once billed as China’s best hope to challenge global chip giants like Intel (Nasdaq: INTC) and TSMC (Taipei: 2330) has been a major disappointment since its Hong Kong listing a decade ago. But the company’s newly announced plan for a $10 billion cutting-edge plant was enough to catch my attention, and shows SMIC could become a company to watch due to Beijing’s sudden determination to build up a globally competitive chip sector at any cost. Read Full Post…
Bottom line: A Chinese buyer’s plan to purchase US chip maker Analogix for more than $500 million is unlikely to meet with political resistance, and could mark a new template for similar cross-border chip M&A by China.
Chinese group bids for US-based Analogix
After failing at several high-profile attempts to buy US microchip technology, China is trying once again with a newly announced plan to acquire venture-backed chipmaker Analogix Semiconductor for more than $500 million. Unlike previous failed efforts that targeted more mature companies, the acquisition target in this case is much younger, since Analogix was only founded in 2002.
This new deal looks strikingly similar to another one earlier this year that saw the Shanghai-based National Silicon Industry Group purchase a similarly young Finnish chipmaker called Okmetic in a deal that valued the company at nearly $200 million. (previous post) That deal and this latest one don’t appear to be related, though one can never be completely sure due to the vague descriptions of the buyers in both cases. Read Full Post…
Bottom line: Chinese companies need to become more proactive in ending practices that harm consumers, or risk facing pressure from regulators and hurting their prospects for expansion abroad.
Telcos get tough with real name registration
A campaign requiring all mobile phone users to register with their real names was in the headlines for much of last week, in the latest step to curtail rampant phone fraud in China that has grabbed recent attention due to several high-profile cases. Notably, the real-name registration drive was led by 6 government ministries, rather than the nation’s 3 major wireless carriers whose networks are the primary platform for committing most of the fraud.
Both the government and carriers have known about this kind of fraud for years, but did little to aggressively tackle the problem until the recent wave of negative publicity. Read Full Post…
Bottom line: A new PR campaign by Huawei and Microsoft to ease Washington and Beijing cybersecurity concerns that are hurting their cross-border business will have limited impact, and what’s really needed is better technology to prevent against hacking.
Huawei, Microsoft in odd new alliance
The growing paranoia in Beijing and Washington over cybersecurity threats is creating odd bedfellows of two of the world’s leading tech companies on opposite sides of the Great Firewall of China. That pairing is bringing together software giant Microsoft (Nasdaq: MSFT), one of the biggest China boosters among US tech firms, with Huawei, a globally ambitious Chinese company that would desperately like to enter the lucrative US market for telecoms networking equipment. Read Full Post…
Bottom line: Western Digital’s new China joint venture is unlikely to raise national security objections from Washington, but could add to a looming global semiconductor glut due to an aggressive build-up of the sector by Beijing.
Western Digital China JV moves ahead
Just a half year after Washington killed its plans for a major investment from China, memory storage giant Western Digital (Nasdaq: WDC) is thumbing its nose at US security regulators by moving ahead with joint venture that was part of the earlier tie-up plan. I’m probably overstating Washington’s objections in this instance, since US officials never formally vetoed a deal that would have seen Western Digital sell 15 percent of itself to China’s Unisplendour for $3.8 billion.
Instead, Washington simply said the deal would require a review for national security risk, refuting Western Digital’s earlier view that the sale shouldn’t require such approval. The threat of a review was enough for both sides to decide to scrap the sale, though their latest announcement shows they are continuing ahead with a joint venture that was part of their broader tie-up plan. Read Full Post…
Bottom line: China Mobile and its peers could take a big hit to their voice call revenues as they roll-out anti-fraud systems to counter negative publicity, while Alibaba could suffer similar but smaller impact to its pre-paid phone card business.
China Mobile cracks down on phone conmen
The same week it officially lost its crown as China’s most valuable listed company, China Mobile (HKEx: 941; NYSE: CHL) is back in the headlines with more bad news related to a swell of publicity involving the nation’s rampant phone fraud. Normally I might dismiss this story, since phone fraud has been common in China for years and is really nothing new. But another similar case this year ended up becoming a huge headache Baidu (Nasdaq: BIDU), and cost the online search giant huge sums in both market value and lost revenue. Read Full Post…
Bottom line: Lei Jun’s resignation as YY chairman to focus on his struggling Xiaomi reflects his own fading star power, while Huawei is unlikely to reach its goal of taking 10 percent of the India smartphone market by the end of next year.
Lei Jun steps down as YY chairman
A couple of smartphone stories are in the headlines on this final day of the work week, capping a flurry of industry news that reflects the turmoil in China’s overheated market. Both items are relatively second-tier news, led by the resignation of Lei Jun from his position as chairman of social networking site YY (Nasdaq: YY) to focus on reviving his ailing Xiaomi smartphone empire. The other item has market leader Huawei hyping India, where it is getting set to launch a manufacturing facility and has ambitious plans for taking 10 percent of the market. Read Full Post…
