A new report in the Chinese media nicely illustrates why I seldom write about big state-owned enterprises (SOEs) in this space, and shows more broadly why even many of the nation’s entrepreneurial firms are often suspected of misleading accounting. The report details an ongoing scramble among SOEs like shipping behemoth COSCO (Shanghai: 601919; HKEx: 1919) and aluminum giant Chalco (HKEx: 2600; Shanghai: 601600) to sell off assets to make themselves appear profitable and avoid possible de-listing on the Shanghai stock exchange. The report also reveals some other tricks these companies are using to hide their losses and look more attractive to Chinese investors, many of whom often lack the sophistication to look beyond a company’s bottom line. Read Full Post…
Shanghai eatery gets diners hooked with poppy seeds
I thought I’d read about every kind of food safety scandal imaginable until I saw a new report on an eatery here in Shanghai that found a creative way to encourage customer loyalty for its crayfish dishes. I had to smile to myself as I read the report, and even had to slightly admire this restaurant for its creative, albeit illegal, approach to building up repeat business.
At a broader level, this “Case of the cagey crayfish shop” shines a spotlight on a more widespread phenomenon in China that amuses both me and many of my western friends. Put simply, we marvel at the inability of Chinese entrepreneurs to differentiate themselves from their rivals, with the result that many shops often look identical to one another and give little reason for customer loyalty. Read Full Post…
As the solar panel sector continues its painful overhaul, signals are emerging about who will survive the downturn and thrive when the industry returns to health. Canadian Solar (Nasdaq: CSIQ) certainly seems to be one of the strongest players coming out of the retrenchment, with word that the company has sold 4 more plants that it constructed to private buyers. Canadian Solar is quickly emerging as a strong executor of this particular strategy, which sees it construct power plants using its own solar cells and then eventually selling those plants to private sector buyers. Rival Suntech (NYSE: STP) also tried such a strategy, but poor execution made it backfire and dragged the company into bankruptcy. Read Full Post…
After seeing its stock price quadruple over the last year on huge expectations for its online search service, Qihoo 360 (NYSE: QIHU) must be feeling some pressure to start delivering returns to investors who have bet on the company’s strong growth potential. That’s the most positive explanation I can find for a sudden slew of complaints against Qihoo from other Internet executives who accuse the company of tinkering with their software. Those accusations have produced an entertaining war of words on the Twitter-like Weibo service between Qihoo Chairman Zhou Hongyi and top executives from smartphone maker Xiaomi, software maker Kingsoft (HKEx: 3888) and web portal operator Sohu (Nasdaq: SOHU). (previous post) Read Full Post…
After several months of silence as they were targeted for a series of anti-graft investigations, I’m happy to see that western firms are finally speaking out about the biased nature of this Chinese campaign against them. The firms are voicing their grievance through an industry organization, the European Union Chamber of Commerce, which is complaining that western drug makers have been unfairly targeted in the campaign that began around 2 months ago and has netted such big names as Britain’s GlaxoSmithKline (GSK) (London: GSK), Switzerland’s Novartis (Switzerland: NOVN) and French drug maker Sanofi (SAN). At the same time, the United Nations is adding its voice to the debate, saying this kind of anti-corruption campaign should be a welcome step to cleaning up the country’s business environment. Read Full Post…
China has embarked on a recent campaign to clean up its drug sector of aggressive selling tactics that often include bribing doctors and hospital officials to boost sales. The choice of the drug firms looks smart, as it takes aim at a rapidly transforming Chinese medical sector where many business practices are still in their formative stages. More broadly speaking, this kind of campaign also sends a strong signal that Beijing won’t tolerate the kind of bribery and other aggressive and often unethical business practices that have become far too common in many Chinese industries. Read Full Post…
As if its China troubles weren’t bad enough following a weak earnings report, global tech giant Apple (Nasdaq: AAPL) is now coming under political fire from central bureaucrats in Beijing for failing to deliver promised donations after an earthquake earlier this year. Frankly speaking, I don’t have a lot of sympathy for Apple or any of the other firms that get this kind of criticism, since I find their quickness to announce donations after any major disaster somewhat insincere and largely a publicity ploy. But the fact that yet another foreign firm is coming under attack from central government sources this month certainly adds to my previous assertions that Beijing has recently embarked on a drive to discredit foreign firms and divert attention from other domestic problems. Read Full Post…
I don’t usually consider myself paranoid, but the rapid acceleration in Beijing-led probes against foreign firms seems to be hinting at a wave of growing anti-foreign sentiment that could bode poorly for multinationals in China in the months ahead. That’s my assessment following news of the latest probe against European drug giant GlaxoSmithKline (London: GSK) for allegedly giving out bribes. Such periodic waves of backlash against foreign firms used to be common in China, and usually followed periods of openness and rapid expansion. In this case, I suspect this latest crackdown could also be designed to divert attention from China’s sudden economic slowdown, which has left many average Chinese suddenly feeling uneasy about the future. Read Full Post…
Following its initial roll-out of a trial program 2 months ago, mid-sized commercial lender China Merchants Bank (HKEx: 3968; Shanghai: 600036) is boosting its tie-up with Tencent’s (HKEx: 700) popular WeChat mobile instant messaging service. The growing tie-up is leading media to dub the new WeChat-based service as China Merchants Bank’s newest “branch office”, and looks like an interesting model to watch as online products and services migrate from the desktop to the mobile Internet. Read Full Post…
China’s Shuanghui sets the table for Smithfield buy
China’s appetite for foreign food M&A is gaining momentum with news that meat processor ShuanghuiInternational has offered to buy US pork products maker Smithfield Foods (NYSE: SFD) for $4.7 billion. The deal would be the biggest purchase ever of a foreign food maker by a Chinese firm, following a recent spate of smaller but still major deals by names like Bright Food (Shanghai: 600597). But the deal drew controversy almost as soon as it was announced, with at least one US politician and an industry group voicing their concerns about the transaction. Read Full Post…
Former high-flyer Qunar is quickly discovering the risks of using third-party agents to provide many of its travel services, as many of those agents are suddenly leaving the platform in a mass uprising. The revolt in many ways looks similar to what happened 2 years ago to e-commerce leader Alibaba, which saw a similar uprising of smaller third-party merchants on one of its B2C e-commerce platforms after changing some of its pricing policies. Read Full Post…
