Bottom line: Huawei’s new push into India looks like a smart and well-timed move to take advantage of the country’s emerging middle class, and could help it take the global smartphone crown by the end of next year.
Huawei takes aim at India
As it creeps up on its goal of becoming the world’s largest smartphone maker, the controversial Huaweiappears to finally be waking up to the potential of the fast-growing India market. That’s the key takeaway from some Indian media reports last week, which quoted a company executive saying Huawei is planning a major push into an India market that it has largely ignored up until now.
The bigger theme in this particular story is that India is quickly emerging as a market not to be taken lightly on the smartphone scene. Global leader Samsung(Seoul: 005930) learned that early on, and until recently was the market leader before getting eclipsed by China’s Xiaomi(HKEx: 1810). I was quite surprised when doing some quick research for this post to learn that India actually passed the US to become the world’s second largest smartphone market in the third quarter, behind only China. Read Full Post…
Bottom line: A major new campaign calling on Google to abandon its plan to return to China’s search market will add pressure on the company to reconsider its decision, but is unlikely to succeed unless the pressure grows significantly stronger.
Amnesty launches petition to protest Google’s China return
If Google (Nasdaq: GOOG) CEO Sundar Pichai thought he could quietly launch a new filtered China search engine without any major backlash, he’s quickly finding out otherwise. The search giant’s controversial plan to return to the world’s biggest search market is facing its stiffest resistance to date, in a frontal assault coordinated by human rights group Amnesty International and Google’s own employees.
The message from both groups is the same: Don’t do it. In Amnesty’s case, the group has launched an online petition (announcement) calling on Google not to go through with the plan, code named Dragonfly, that was first uncovered back in August. (previous post) At the same time, a group of more than 300 Google employees has signed a petition urging the company to reconsider its China plans on the blogging site Medium. (online petition) Read Full Post…
Bottom line: China’s drive to boost imports will benefit the nation’s big e-commerce companies with cross-border trade capabilities, though such purchasing will still be a small fraction of their overall volume.
China steps on import accelerator
It may be election day in the US, but here in China the focus is decidedly on imports with the staging this week of a massive import-focused expo in Shanghai. This particular event, officially called the China International Import Expo, has big political overtones, which I’ve looked at in a bit more depth in my weekly column on doing business in China, for anyone who is interested. (English article)
I’ll recap that element briefly in a moment, but the focus of this post will fall squarely on some relatively big numbers coming out of three of China’s leading e-commerce companies, in terms of the kinds of imports they think they can facilitate over the next few years. One report has added up commitments from Alibaba(NYSE: BABA), JD.com(Nasdaq: JD), Suning (Shenzhen: 002024) and NetEase (Nasdaq: NTES), and determined the four have collectively said they could facilitate 1.5 trillion yuan in imports, equal to about $216 billion. (Chinese article) Read Full Post…
Bottom line: Washington’s punishment of a Chinese chipmaker accused of stealing from Micron Technology is part of a savvy targeted approach by the Trump administration aimed at spotlighting illegal business practices by Chinese tech firms.
Trump punishes China chipmaker for IP theft
I thought I’d begin this Monday with a wrap and look at what’s ahead for a Chinese chipmaker called Jinhua, which fell squarely in the crosshairs of Donald Trump’s trade war with Beijing in a series of breakneck developments last week. This particular case seems to be part of a growing pattern that is seeing Trump pick his battles one at a time, at least when it comes to handling Chinese technology companies.
We’ll review the details on this latest case involving Jinhua and its dispute with US chip giant Micron Technology (Nasdaq: MU) shortly. But the bigger picture is that Trump has accused Chinese companies of stealing US intellectual property and has made that issue central in his current push for a trade deal. Previously US companies with such complaints could only seek assistance from the courts, mostly in the US and EU, since few believe the Chinese court system could handle such cases effectively and objectively. But the government can obviously take action much more quickly and effectively, as Trump is showing with his latest actions. Read Full Post…
Bottom line: Alibaba’s vague road map in its latest chairman and CEO annual shareholder letter is too far off to be meaningful, but does chart its aspirations to change from its current form to something more like an IT services company.
Alibaba shares future vision in shareholder letter
Alibaba(NYSE: BABA) founder Jack Ma and his heir apparent Daniel Zhang have just laid out their vision for the e-commerce giant in their latest annual letter to shareholders, and I have to say it’s at once very grand while also being quite short on detail. There are some lofty goals revealed inside, headlined by a new plan with some targets for what the company hopes to achieve by 2036. Never mind that that’s nearly 20 years away, which is like an eternity when it comes to the Internet.
At the same time, there’s a very general road map for how we get there, all of which I’ll detail shortly. Alibaba has actually executed relatively well so far on some of its road map, which roughly has it transforming from a mere e-commerce company to something more like an IT services provider. But nearly all of that diversification has been within its highly protected domestic market so far, and it’s far from clear it can replicate that model into its nascent international operations. Read Full Post…
Bottom line: Haier’s weak IPO under a new German program to internationalize Chinese stocks owes to lack of awareness and thin trading, and reflects challenges the new market will face in its drive for recognition.
Haier IPO party draws low interest
What if you threw an IPO and nobody came? That’s what seems to be happening for home appliance giant Haier, which has just made the inaugural listing on a new Sino-German stock exchange aimed at internationalizing Chinese companies. The program captured headlines earlier this year when it was first announced that Haier had been selected to make the inaugural listing. But momentum has rapidly faded since then.
I’ll examine some of the reasons for the lackluster debut shortly, and what it might mean for the internationalization of Chinese stocks, which appears to be the bigger goal with this program. But first let’s review this latest less-than-dazzling end to a story that began with relatively strong sentiment and big hopes. Read Full Post…
Bottom line: Google’s decision to finally talk openly about its plan to return to China looks smart though slightly late, by explaining the desperate need for alternatives in the massive though tightly controlled search market.
Google breaks silence on plan to return to China search
After staying mum on the subject for quite some time, Google(Nasdaq: GOOG) is finally speaking out on its controversial decision to return to the China search market. Its CEO Sundar Pichai broke the company’s silence on the matter at an event this week sponsored by Wired magazine, going on the offensive to try and defend his company’s decision.
It does seem like the company should have taken this kind of more aggressive approach sooner, rather than waiting more than two months from when the news first broke. (previous post). From my perspective as someone living in China, this country is really in dire need of an alternative to current search leader Baidu(Nasdaq: BIDU), and the argument has nothing to do with propaganda or censorship. Read Full Post…
Bottom line: A Bloomberg report on Chinese government spying microchips in hardware used by Apple, Amazon and others may be flawed, but highlights the potential for such spying due to China’s important place in the global supply chain.
Controversy builds over story of China spyware
As I return to blogging after a couple weeks absence, I wanted to weigh in on an explosive story that ran last week in Bloomberg about tiny spying chips that had been secretly loaded by China’s military onto globally used motherboards. Quite a bit has happened since the original story’s publication (English article), which said that tiny custom-made chips developed by the People’s Liberation Army had secretly been installed into motherboards assembled in China by US hardware maker Supermicro (OTC: SMCI).
The story, which went out of its way to quote quite a few unnamed sources to bolster its credibility, went on to say that those motherboards had been used in servers used by a wide range of companies and government agencies, including Apple(Nasdaq: AAPL) and Amazon (Nasdaq: AMZN). Everyone initially applauded the ground-breaking report, which appeared to show how China could easily insert itself into the global high-tech complex by taking advantage of its important place in the hardware supply chain. Read Full Post…
Bottom line: The collapse of Dangdang’s $1.2 billion sale of itself to HNA shows the deal was most likely fueled by backdoor connections with no grounding in financial reality, and the company will probably be sold ultimately at a much lower price.
Dangdang comes out a lemon after HNA sale collapses
It’s Friday and I’m quite looking forward to the weekend, so I thought I’d indulge myself with a more gossipy post on the latest troubles of e-commerce has-been Dangdang. Anyone looking for good stock tips with this one will probably be somewhat disappointed, since Dangdang was one of a large group of Chinese firms to privatize from New York over the last few years in pursuit of higher valuations by re-listing at home.
A number of companies from that re-listing wave have already re-listed here in China, often with results that bore out the thesis that such a process was well worth the effort. Among those are names like Focus Media (Shenzhen: 002027) and Homeinns (Shanghai: 600258), which are now worth considerably more as China-traded companies than they ever were in New York. Another notable success is WuXi AppTec (Shanghai: 603259), a drug maker that was part of the larger WuXi PharmaTech that de-listed from New York in 2015. Read Full Post…
Bottom line: Big volatility for first-week trading debuts of Nio and Qutoutiao point to problems with pricing and investor indecision in the current market, and could point to more rocky debuts for at least the next few weeks.
Nio, Qutotiao go “pop”, but then fizzle
When I previously wrote about low expectation for an IPO last week by new energy startup Nio (NYSE: NIO), I wasn’t all that surprised when the company notched a more upbeat New York debut with a 5 percent gain on its first trading day. After all, the company had been so beaten down during the IPO process that this was something akin to a dead-cat bounce and a small present for the money-losing company as it entered the publicly traded realm.
But then the stock suddenly soared by more than 70 percent on its second trading day — something one seldom sees with new IPOs. I was tempted to write the whole thing off as manipulation, even though I had no direct evidence, since the company sold around 90 percent of its IPO shares to just 10 investors. That meant that a couple of large investors could have simply traded their huge blocks of shares between each other at inflated prices, and neither would have lost any money in the process. Read Full Post…
Bottom line: Nio stock is likely to give back most of its huge second day gains over the next couple of weeks, while Meituan-Dianping could debut strongly but will likely stagnate for its first two years as a public company.
Meituan, Nio display surprising strength
It seems that perhaps I was a bit premature earlier this week when I wrote the latest listing by electric vehicle (EV) maker Nio showed investors had lost appetite for money-losing Chinese tech firms. Nio’s stock has actually done quite well in its first two trading days, after a tepid pre-debut reception. And now we’re getting word that money-losing online-to-offline (O2O) services giant Meituan-Dianping has also priced its own mega-offering in Hong Kong at the top of its range.
Such a sudden shift in sentiment seems hard to explain, and I do suspect there may be at least a little manipulation going on behind the scenes. Still, perhaps investors are feeling just a tad more upbeat about Chinese tech these last few days in light of new signs that the US-China trade war may soon ease with new talks scheduled to try to hammer out a deal. Read Full Post…
