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I’ve often wondered these last few months about what happened to an anti-trust lawsuit filed against Tencent (HKEx: 700) by security software firm Qihoo 360 (NYSE: QIHU) about a year ago. Now I finally have my answer, with word that the Chinese courts have rejected Qihoo’s complaint, meaning that life will now continue as usual for Tencent and other major Chinese Internet firms. (Chinese article) Read Full Post…
The latest results from China Lodging Group (Nasdaq: HTHT) are showing the highly cyclical hotel industry may be headed into a new downturn, while industry leader Home Inns (Nasdaq: HMIN) is taking an interesting new tack into the outdoor advertising business in its search for new revenue sources. Let’s start our look at the latest hotel news with China Lodging, operator of the popular Hanting chain of hotels. The company’s stock is now trading near a 52-week high, as China’s hotel industry has made a steady comeback following a downturn that began in late 2010 after the Shanghai World Expo.
A couple of interesting news bits are coming from the Internet portal space, where a perennially underappreciated Sohu (Nasdaq: SOHU) is denying reports of a plan to go private, as other separate reports indicate that Sina’s (Nasdaq: SINA) stalled talks for a tie-up with e-commerce leader Alibaba may be dead. Both developments underscore how difficult it is to do deals in the current climate, where many top company executives can’t agree on valuations and owners often believe their assets are worth much more than others in the market might agree with.
I’ve been following the world of technology for more than a decade now, and so many big names have come and gone during that time that nothing really surprises me anymore, especially in the cellphone space where 2 years is the equivalent of an eternity. That seems like an appropriate backdrop for the latest smarphone data, which show that Huawei has come roaring out of nowhere to become the world’s third largest player, according to the latest quarterly figures from data-tracking firm IDC. (English article; Chinese article) At the same time, another recent Chinese fast-riser, ZTE (HKEx: 763; Shenzhen: 000063), has also cemented its place in the global top 5 by finishing at number 5. For anyone too lazy to connect the dots, that means that China now owns 2 of the top 5 spots in the important global smartphone market, with Huawei and ZTE collectively controlling about 9.2 percent of the market in the fourth quarter of last year, up from 7.5 percent a year earlier.
Chinese e-commerce leader Alibaba and web portal Sohu (Nasdaq: SOHU) won a major victory last week when web sites operated by both were removed from an annual US list of companies that facilitate rampant piracy. The victory came after both firms made efforts to aggressively police their sites and quickly remove any pirated or counterfeit materials. While the companies should be commended for their effort, the achievement came with an important footnote that shows there is still work to be done.
Just a month after I accused SAIC (Shanghai: 600104) of having a weak stomach for overseas expansion, we’re getting word that China’s leading automaker may be preparing to move into Southeast Asia with its longtime US partner General Motors (NYSE: GM). If the reports are correct, this would look like a smart move for SAIC, taking it into a relatively straightforward region similar to its own home market in partnership with a globally experienced major partner like GM.
I was amused to read a new report saying that German business software giant SAP (Frankfurt: SAP) may list its shares on China’s planned International Board in Shanghai, since it’s been quite a while since I’ve read any reports like this, which were still quite common as recently as 2010. If I were an optimist, I would say these new reports might indicate a launch is coming in the first half of next year for the long-planned International Board, which would allow offshore companies to raise funds through IPOs in China. But instead, these latest reports, which appear to have originated offshore, are probably just a public relations exercise by SAP, which probably just wants to remind everyone of its commitment to China.
I’ll finish this Friday by taking a look ahead to next week, which should see the creation of a Chinese IT outsourcing leader when shareholders are likely to approve the combination of HiSoft (Nasdaq: HSFT) and VanceInfo (NYSE: VIT), the nation’s top 2 listed firms. I hesitate to use the word “giant” to describe this newly merged leader, as it will still be relatively small with a modest $670 million in annual revenue and a market capitalization of just under $700 million. By comparison, Indian IT outsourcing giant Infosys (Mumbai: INFY) expects to earn over $7 billion in revenue for its current fiscal year, meaning the new HiSoft-VanceInfo will be less than a tenth as big.
Internet search leader Baidu (Nasdaq: BIDU) made plenty of noise last year when it announced a series of landmark licensing agreements with major Hollywood music labels, trumpeting the move as part of its drive to wean itself from the trading of pirated material on its platforms. But while it tooted its horn over the deals with Universal, Warner Music (NYSE: WMG) and Sony Music (previous post), it also quietly continued to operate its controversial music swapping platform that was the source of much of the earlier criticism. Now in an interesting move, Baidu is being much more low-keye in what looks like its attempt to quietly de-emphasize and perhaps eventually phase out the controversial music swapping service.
E-commerce leader Alibaba loves to talk about how the business model for its popular TMall online mall gives it an edge over most of its rivals by letting it focus on its role as a web mall operator while leaving the actual business of managing online stores to third-party merchants. But the company is much less talkative about some of the downsides to such a business model, most notably the issue of quality control for the products and service provided by thousands of merchants that sell their goods on TMall. A sharp and sudden price hike in store rentals fees by TMall last year provoked a sharp backlash from many smaller merchants, creating huge headaches and a publicity nightmare for Alibaba. Now, many of those same small- and medium-sized merchants, known in the industry as SMEs, are complaining once again about new policies that Alibaba says are designed to improve quality and customer service, even as the SMEs argue those policies discriminate against them and lack transparency. (Chinese article)
There’s lots of interesting news on smaller company developments today, but I want to take a step back from some of those to write about a much bigger development that will probably get much less attention, namely a massive new memory chip being built by Samsung (Seoul: 005930) in the interior city of Xi’an. This plant, which was first announced in April, will manufacture NAND memory chips used in smartphones and USB computer memory drives. The plant is in the news once again because construction has just officially begun in Xi’an, with top officials from Samsung, South Korea and Shaanxi province all in attendance at a ground-breaking event. (company announcement)
