Bottom line: Didi’s merger with Uber China was driven by investor pressure to end their fierce price wars, and the newly combined company is likely to quickly reduce its subsidies and become profitable by year-end.
Didi Chuxing merges with Uber China
Just a week after reports emerged of a truce in the nonstop price wars between private car specialists Didi Chuxing and Uber China, the pair have suddenly announced a merger that will become the latest marriage of former bitter rivals in China. This latest shotgun union, which will put Didi Chuxing in the driver’s seat of the newly combined company, testifies to growing investor impatience at fierce price wars and resulting heavy losses that have become the norm in many emerging Chinese high-tech industries. Read Full Post…
Bottom line: Apple could be on the cusp of a prolonged China downturn unless it can roll out smartphones with new breakthrough technology, as it gets overwhelmed by similar Chinese models that sell for far lower prices.
Apple China sales tumble 33 pct in Q2
The latest financial report from Apple (Nasdaq: AAPL) shows the company continues to struggle as sales of its core iPhones pass their prime, and nowhere is that story more apparent than in China. The company’s Greater China sales, which also includes Hong Kong and Taiwan, fell 33 percent in its latest reporting quarter, accelerating from an already sharp drop of 26 percent in the first 3 months of this year.
The rapid decline dropped China to Apple’s third largest market globally from its former spot as the company’s second largest, with Europe taking over the number two position. Apple’s story is hardly unique, as the world’s other global leader Samsung (Seoul: 005930) has also seen a sharp reversal over the last year after its own recent rise to take the global smartphone crown. Read Full Post…
The following press releases and news reports about China companies were carried on August 2. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Didi Chuxing Acquires Uber China Operation, Uber Founder to Enter Didi Board (Chinese article)
Fantasia (HKEx: 177) to Buy Wanda Commercial Property Management Arm for 2 Bln Yuan (Chinese article)
Bottom line: China Telecom’s sale of its online video business looks like an exit from the space under its new chairman, while Wanda’s purchase of an online movie site could mark the start of a major new round of investment in online video.
China Telecom sells TV189 online video unit
Just days after search giant Baidu (Nasdaq: BIDU) abandoned plans to spin off its iQiyi video unit, 2 more online video headlines are reflecting the rapid changes taking place in the space. The larger will see China Telecom (HKEx: 728; NYSE: CHA), the smallest of China’s 3 telcos, sell its online video unit TV189 to a hotel operator called Besttone Holdings (Shanghai: 600640) for 3.9 billion yuan ($580 million). The smaller will see the fast-growing Wanda Group buy the online movie site Mtime for $280 million. Read Full Post…
Bottom line: Fosun’s newest acquisitions indicate it could soon become more active in the asset management and drug sectors outside China, with a focus on emerging markets like the BRICS countries.
Fosun buys India’s Gland Pharma
Private equity giant Fosun (HKEx: 656) is in 2 separate M&A headlines in the BRICS nations of Brazil and India, purchasing an asset manager in the former and a drug maker in the latter. Pharmaceuticals and real estate have been 2 of Fosun’s focus areas in its shopping spree both at home and abroad, though the move into developing markets is relatively new.
Fosun has more traditionally focused its global buying on western markets in the US and Europe. So this latest pair of deals could signal a new focus on emerging markets, especially ones like Brazil and Russia where recent economic malaise could be pressuring some debt-laden companies to sell off assets at bargain prices to raise cash. Read Full Post…
The following press releases and news reports about China companies were carried on July 30-August 1. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Giant Interactive, Alibaba’s (NYSE: BABA) Jack Ma to Pay $4.4 Bln for Game Firm Playtika (Chinese article)
China Postal Bank’s $10 Bln IPO Stirs Foreign Interest, But Valuation a Worry (English article)
Besttone Holdings to Pay 6.9 Bln Yuan for China Telecom (HKEx: 728) Online Video Assets (Chinese article)
Meituan-Dianping Roll Out New Food and Beverage Platform (Chinese article)
Fosun (HKEx: 656) to Buy Brazilian Real Estate Management Fund Rio Bravo (Chinese article)
Bottom line: Recent calls for boycotts of KFC, iPhones and McDonald’s by Chinese patriots are unlikely to result in long-term damage for any of the companies, but could become a problem if any of China’s ongoing territorial disputes escalate.
Chinese patriots call for KFC boycott
It seems China’s restless patriots are back at work following a 4 year break, venting their latest anger at the US by smashing Apple (Nasdaq: AAPL) iPhones and calling for boycotts of KFC. This particular bout of Chinese patriotism follows a ruling 2 weeks ago by an international court that found in favor of the Philippines in a territorial dispute with China. The last major bout of similar patriotism came back in 2012, and involved another territorial dispute between China and Japan. But in that instance, Beijing gave much freer rein to many of the patriots, which resulted in long-term Chinese sales declines for the big Japanese automakers. Read Full Post…
The following press releases and news reports about China companies were carried on July 29. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Bottom line: Xiaomi’s new move into notebook PCs looks like a necessary step toward its goal of creating an ecosystem of entertainment products and services, but is likely to suffer from weak reviews and stiff competition from established brands.
Xiaomi rolls out notebook PCs
I really want to write something positive about fading smartphone maker Xiaomi these days, but the company really isn’t giving us much suitable material with its steady string of new but uninspired products. The latest of those is a couple of new notebook PC models, marking its move into a crowded area where it will face stiff competition from established players like Apple (Nasdaq: AAPL) and Lenovo (HKEx: 992), as well as new entrant Huawei.
One could argue that while Xiaomi is coming late to the notebook PC game, such a move is still necessary since such computers will be a critical component to the company’s dream of building an ecosystem of products and services around a range of interfaces like PCs, smartphones and TVs. And Xiaomi is still ahead of the more upward trending LeEco (Shenzhen: 300104), which likes the ecosystem idea so much that it actually changed its former name from LeTV to include this recent industry buzzword. Read Full Post…
Bottom line: Alibaba’s bid for Polish C2C site Allegro looks like a smart move into a related developing market, but could be thwarted by rival Tencent, while affiliate Ant Financial’s new Taiwan insurance tie-up also looks smart though relatively small.
Alibaba bids for Poland’s Allegro
E-commerce giant Alibaba (NYSE: BABA) and its Ant Financial affiliate are in a couple of major headlines as the weekend approaches, each focusing on a strategic growth area. In the first case, Alibaba has entered the bidding for a leading Eastern Europe online auctions site, competing with global rival eBay (Nasdaq: EBAY) for Poland’s Allegro. The second deal has Ant, owner of leading electronic payments service Alipay, expanding its financial services holdings with the purchase of a majority stake in the insurance unit of Taiwan’s Cathay Financial (Taipei: 2882). Read Full Post…
Bottom line: Geely’s sale of its EV joint venture stakes to its parent company, and BYD’s reinstatement of a major electric bus order from its hometown government, underscore how reliant the industry is on government support for its survival.
Shenzhen reinstates big electric bus order for BYD
A couple of electric vehicle (EV) stories are in the headlines, spotlighting just how dependent the sector is on government subsidies for its survival in China. I’ve written about this over-reliance on state-support frequently, including just last week when a government report said the sector had become bloated with mediocre players without any chance for commercial success. (previous post) Both of the latest headlines reinforce that theme, including one from smaller player Geely (HKEx: 175) and the other from stalwart BYD (HKEx: 1211; Shenzhen: 002594). Read Full Post…
