Bottom line: New anti-corruption moves at JD.com and Meituan-Dianping show the cleanup campaign is moving down to the grass-roots level, in a positive development that should help the companies as many seek to go abroad.
Meituan, JD.com in new anti-corruption snares
Anyone unfamiliar with China might find it peculiar and even worrisome that near simultaneous announcements appear to show problematic internal corruption at two of the nation’s top Internet companies, e-commerce giant JD.com (Nasdaq: JD) and leading group buying site Meituan-Dianping. While the timing does seem somewhat coincidental, this kind of thing is becoming quite common these days, as China’s companies fall in behind the central government’s nearly 4-year-old anti-corruption campaign.
From an observer’s perspective, I have to say this kind of campaign is sorely needed in China’s corporate sector, both for state-run and private companies. The kinds of internal corruption detailed in these latest reports are far too common in companies, where employees regularly use their position to do things like extort money from and cheat customers, and even rip off their own companies. Read Full Post…
Bottom line: Alibaba’s Koubei is unlikely to gain major traction despite its $1.1 billion in new funding, due to its late arrival to a crowded O2O take-out dining space already dominated by Baidu, Ele.me and Meituan-Dianping.
Koubei raises $1.1 billion
The longer I stay in China, the more the latest stories coming from the Internet sector look like I’ve seen them before. That’s certainly the case with Koubei, the Alibaba (NYSE: BABA) online-to-offline (O2O) take-out dining delivery service, which is close to landing a fresh $1.1 billion in new funding. In this case, Alibaba’s extremely late arrival to the space looks a lot like its vain attempt to play catch-up to Tencent’s (HKEx: 700) WeChat with a service called Laiwang back in 2013. Read Full Post…
Bottom line: NetEase could abandon a newly announced New York IPO plan for its media arm if it can find a suitable buyer, while a previously announced New York listing plan by ZTO Express could be revived before year-end.
NetEase news unit makes filing for NY IPO
What’s shaping up as a quiet year for Chinese IPOs in New York has just gotten a small boost, with word that online gaming giant NetEase (NYSE: NTES) has made an initial filing to list its respected but financially-challenged news portal business. Meantime, rumors are building for what’s likely to be one of next year’s biggest offerings from Ant Financial, the financial services affiliate of e-commerce giant Alibaba(NYSE: BABA) and owner of the Alipay e-payments service. But in this case, Ant is shooting down the latest buzz that specific plans are in place for a Hong Kong IPO next year. Read Full Post…
Bottom line: Wanda is likely to succeed in its purchase of Dick Clark Productions, but could pay a rich premium for the awards show producer as part of an effort to develop similar programs in China.
Wanda in talks to buy Dick Clark Productions
Just a week after making headlines through a strategic tie-up with Sony Pictures, China’s star-struck Wanda Group is in talks for yet another blockbuster deal to buy Dick Clark Productions, known for producing a number of popular award shows. My first reaction to the headline was a big “So what?” since the production company’s namesake, who died in 2012, is best known to me as the maker of the aging annual program celebrating New Year’s Eve in Times Square, New York. Read Full Post…
Bottom line: NetEase’s move into cloud computing and closure of its forum service are part of an overhaul positioning it for future growth, and could propel it into China’s top 3 Internet companies in the next 5 years.
NetEase launches cloud service
China’s lowest-key Internet giant NetEase is making some more new adjustments, extending reports last week that it was planning to spin off or sell its old but stagnating web portal business. One of the new moves includes word that the company has shuttered its equally slow-growth web forum business. The other has the company launching a new cloud service, with plans to pump hundreds of millions of dollars into the business over the next few years. Read Full Post…
Bottom line: NetEase is likely to complete a spin-off of its news division, possibly through a sale to Sina, while Postal Savings Bank’s massive IPO will meet with tepid reception due to limited growth prospects.
NetEase plans portal spin-off
Two significant but very different IPOs are in the headlines as we get set for the Mid-Autumn holiday break, one from China’s vibrant private sector and the other from a big state-run behemoth. In the former category is NetEase (Nasdaq: NTES), one of China’s oldest Internet companies, which is reportedly mulling an IPO for its news portal, one of its original businesses with a history dating back to the 1990s. In the other news, China Postal Savings Bank has reportedly placed most of the shares for its massive $8 billion listing with a group of 6 cornerstone investors. Read Full Post…
Bottom line: Tencent’s new crown as Asia’s most valuable company reflects the rapid growth of China’s private sector in the last decade, and could auger an eventual challenge to global social networking leader Facebook.
Tencent takes crown for most valuable Chinese company
Media are fawning on Chinese Internet sensation Tencent (HKEx: 700), which has just edged past telecoms giant China Mobile (HKEx: 941; NYSE: CHL) to become the nation’s most valuable publicly traded company. Such a feat would have been unthinkable a decade ago, when the nation’s private sector was still in its infancy and state-run monoliths like China Mobile still dominated China’s corporate landscape. But much has changed over the last 10 years, and Tencent in many ways reflects the huge potential that investors see in a Chinese private sector that has come to dominate many emerging industries like Internet-based products and services. Read Full Post…
Bottom line: China Mobile and its peers could take a big hit to their voice call revenues as they roll-out anti-fraud systems to counter negative publicity, while Alibaba could suffer similar but smaller impact to its pre-paid phone card business.
China Mobile cracks down on phone conmen
The same week it officially lost its crown as China’s most valuable listed company, China Mobile (HKEx: 941; NYSE: CHL) is back in the headlines with more bad news related to a swell of publicity involving the nation’s rampant phone fraud. Normally I might dismiss this story, since phone fraud has been common in China for years and is really nothing new. But another similar case this year ended up becoming a huge headache Baidu (Nasdaq: BIDU), and cost the online search giant huge sums in both market value and lost revenue. Read Full Post…
Bottom line: The antitrust regulator’s decision to review Didi’s proposed union with Uber China marks the start of a new era of much-needed government oversight of major Internet mergers.
Antitrust regulator starts review of Didi-Uber union
After years of turning a blind eye to rapid consolidation in many emerging high-tech industries, China’s anti-trust regulator has finally adopted a more active posture with its recent decision to review the proposed landmark merger of homegrown car services firm Didi Chuxing with the Chinese unit of US rival Uber. The announcement by the Ministry of Commerce that the deal would require its approval caught Didi and Uber by surprise, since such a review would be the first for a major Internet deal since China rolled out its anti-monopoly law 8 years ago. Read Full Post…
Bottom line: Wanda’s recent steam of announcements for multibillion dollar deals, including the latest for a $10 billion entertainment complex in Shandong, are mostly hype, and many will never get completed.
Wanda announces new multibillion-dollar project in Shandong
It used to be that I would get quite excited on seeing the word “billion” when used in connection with new investments, since such major sums are relatively rare. But these days the word is becoming almost a cliche in China, and one of the most egregious abusers of the figure is real estate and aspiring entertainment giant Wanda Group. True to that tendency, Wanda and its increasingly chatty chief Wang Jianlin have just announced yet another multibillion-dollar investment, this time for an entertainment complex in the industrial city of Jinan in eastern China’s Shandong province. Read Full Post…
Bottom line: Sina’s latest financials show it could be benefiting from recent woes at Baidu, while JD.com’s results show its growth is slowing as it moves towards its important goal of becoming profitable.
Sina jumps on strong profit growth
Two of China’s top Internet companies have just reported their latest quarterly earnings, with web stalwart Sina (Nasdaq: SINA) wowing Wall Street with new numbers that show its Twitter-like Weibo (Nasdaq: WB) service may finally be gaining some traction. Meantime, investors were less impressed by e-commerce giant JD.com (Nasdsaq: JD), which continued to post strong revenue growth but remained squarely in the loss column. JD tried to comfort investors by saying its operations are now quite profitable on a non-GAAP basis, but that didn’t seem to change sentiment too much. Read Full Post…
