CITIC Securities, Koreans Challenge Western Giants 中信证券和韩国电视台挑战西方企业

By newsdoug on December 28, 2011

CITIC Securities, Koreans challenge Westerns in growth areas Two separate news bits out today show that Asian firms, in this case leading brokerage CITIC Securities (HKEx: 6030; Shanghai: 600030) and 3 Korean TV program makers, may pose an interesting challenge to Western names in lucrative developing new business areas in now taking shape in China. In the first of those bits, CITIC Securities announced it has just received regulatory approval to become a renminbi qualified foreign institutional investor (RQFII), a new program that allows financial services firms to raise Chinese yuan outside the country for re-investment in China stocks and other financial products. (company announcement) RQFII specifically targets a growing number of foreigners who want to invest in the yuan offshore as China moves to internationalize its currency, also known as the renminbi. To date, this offshore yuan business, mostly centered in Hong Kong, has been dominated by big foreign names like HSBC (HKEx: 5; London: HSBA), so it’s interesting to see a big Chinese name like CITIC Securities getting involved so quickly in the new RQFII scheme. Of course CITIC Securities will now have to convince foreign investors that it can get them better returns for their yuan than big foreign names that are also applying for RQFII status. But given its market-leading position in China and strong knowledge of Chinese markets, I would expect to see CITIC Securities become a top-tier player in this new and potentially lucrative area in the next 1-2 years. In the second news bit, PPLive, an IPO candidate and one of China’s top video sharing websites, has signed an exclusive deal to license all TV dramas from 3 Korean TV networks for the next 3 years. (English article) No financial details were given and I’ll admit I don’t know anything about the 3 Korean networks in this deal; but the amount of programming does look massive, involving 12,000 episodes of various TV series with 13,500 hours of programming. This deal is interesting in the light of a recent series of high-profile licensing deals between other video sharing sites like Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO) with major Hollywood studios, and shows that other Asian program makers, whose shows are popular among many Chinese, will also be competing to cash in on demand from these content-hungry Chinese video sites. Look for more such blockbuster deals from other Asian markets like Japan, Taiwan and Hong Kong in the months ahead.

Bottom line: New deals involving CITIC Securities in the offshore yuan business and Koreans in video licensing show Asian firms will win growing business in areas traditionally dominated by Westerners.

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