Bottom line: Alibaba’s decision to sell one of its early US e-commerce sites just a year after the launch looks smart and decisive for new ventures that aren’t performing well, while its new China-based dining services site will face stiff competition.
Alibaba tries dining services with Koubei
Acquisitive e-commerce leader Alibaba (NYSE: BABA) is throwing up a rare white flag of surrender in the US, selling off its 11 Main site just a year after launching the e-commerce platform. That surrender looks relatively minor, as Alibaba never really gave the site much time to develop. But the quick decision to call it quits reflects the challenges Alibaba will face as it tries to show investors that it can be competitive outside its home China market, which will be critical to its future growth.
Meantime, Alibaba was in another separate headline that looks much more typical for the company, announcing a new mega tie-up worth nearly $1 billion that will take it into the dining services category. That initiative looks squarely aimed at Dianping, often called the Yelp (NYSE: YELP) of China, and Dianping’s major backer Tencent (HKEx: 700). Read Full Post…
Bottom line: Alibaba’s new fund-raising activities are relatively small but provide insight about its future direction, hinting at a major pushes into the gadget and financial services spaces.
Alibaba, Foxconn invest in Pepper
A couple of new fund-raising headlines involving e-commerce giant Alibaba (NYSE: BABA) show company founder Jack Ma engaged at one of the things he does best, namely making deals and forging new partnerships. Neither deal is particularly big in terms of dollar investment, but both provide some insight on the kinds of partners and tie-ups that Ma is pursuing for both the New York-listed Alibaba and its separate but affiliated Ant Financial unit. Read Full Post…
Bottom line: A probe against WeChat in Taiwan is likely to see its local offices shut down and Tencent evicted, reflecting the many challenges Chinese tech companies will face as they try to expand abroad.
WeChat faces Taiwan eviction
Taiwan may share many cultural traits with China, but its government certainly doesn’t seem to have much love for Chinese technology. The list of Chinese firms running into trouble on the island has just gained a new member, with word that Tencent’s (HKEx: 700) hugely popular WeChat is facing eviction from Taiwan for possibly violating local investment rules.
This brewing setback is interesting mostly for political reasons, and also because it reflects the troubles that WeChat has faced in its fledgling global expansion. From a practical perspective, Taiwan looks like an easy market for Chinese tech companies due to the shared language and culture. But the fact is that Taiwanese preferences are often quite different from China’s, and in this case the reality is that Japan-leaning Taiwanese far favor rival Japanese product Line to WeChat. Read Full Post…
Bottom line: Alibaba’s new video streaming service could presage a buyout offer for Youku Tudou, while Didi Kuaidi’s massive new fund-raising presages a bloody battle with Uber in the hired car services market.
Didi Kuaidi in big new fund-raising
Two major strategic moves are in the Internet headlines today, reflecting growing rivalries between some of the biggest names in the red-hot markets for online video and hired car services. One move has e-commerce giant Alibaba (NYSE: BABA) disclosing its plans to launch a video streaming service that it hopes can emulate the success of US giant Netflix (Nasdaq: NFLX). The second has Didi Kuaidi, which was recently formed by the merger of China’s 2 largest taxi app operators, disclosing it is raising $1.5 billion in new funding to take on the aggressive Uber. Read Full Post…
Bottom line: Beijing’s latest online video clean-up is part of its drive to guide a bigger transition from a traditional TV to an Internet-based broadcasting landscape, with more similar moves likely over the next 1-2 years.
Beijing cracks down on cartoons
It’s been at least a month or two since Beijing’s latest crackdown on unhealthy Internet content, so it should come as no surprise that the morality police have launched yet another campaign, this time targeting cartoons. The latest dragnet has snared video superstar LeTV (Shenzhen: 300104), Baidu-backed (Nasdaq: BIDU) iQiyi and most other top industry players, who are among 29 companies being investigated in this latest web clampdown.
China’s broader Internet clean-up campaign is now actually entering its second year, and dates back to April last year when leading web portal Sina (Nasdaq: SINA) had its video license revoked for hosting pornographic content. (previous post) Since then, nearly ever major video site has been investigated and punished at one point or another, and social networking sites (SNS) like Tencent (HKEx: 700) WeChat have also embarked on clean-ups of controversial content. Read Full Post…
Bottom line: Priceline’s new China foray with Ctrip will get off to a positive start, but will run into problems and ultimately collapse due both sides’ inability to gain much from the partnership.
Ctrip boosts Priceline alliance
Just days after global online travel giant Expedia (Nasdaq: EXPE) announced its withdrawal from China, rival Priceline (Nasdaq: PCLN) is moving in the other direction with a significant boost to its partnership with local sector leader Ctrip (Nasdaq: CTRP). I’ve previously been quite skeptical of this particular partnership, after previous similar tie-ups failed due to the fiercely independent nature of Ctrip’s top management. I’m still quite skeptical, though a string of other major tie-ups by Ctrip recently seem to show it’s realizing it needs to be more flexible to fend off the growing threat from fast-rising local rival Qunar (Nasdaq: QUNR). Read Full Post…
Bottom line: Didi Kuaidi’s IPO could come as early as the fourth quarter, with Hong Kong, China and New York standing equal chances of winning what could be the year’s biggest China Internet listing, worth up to $2 billion.
Didi Kuaidi to list in Q4
Just days after launching a massive promotion to attract new customers to its private hired car services, Didi Kuaidi is reportedly starting the process that could end with a major IPO for China’s largest taxi app operator by year end. Such a development wouldn’t come as a huge surprise, following the company’s formation earlier this year through the merger of 2 bitter rivals to create a Chinese market leader reportedly valued at up to $9 billion.
But equally interesting will be where this fast-driving company chooses to list. Just a year ago the answer would have almost certainly been New York, which is where most of China’s top Internet companies are traded. But a recent boom in China’s own stock markets and a new program that allows mainland investors to buy Hong Kong stocks have made Chinese Internet companies start to seriously consider both of these markets for IPOs as well. Read Full Post…
Bottom line: Shares of Youku Tudou and Vipshop are likely to remain stable over the next few weeks, as the former moves towards a rumored merger with iQiyi and the latter fends off a short seller attack.
Vipshop likely to fend off short seller attack
Two stories with big implications for individual company stocks are in the news as we begin the new week, led by a denial from Baidu-backed (Nasdaq: BIDU) online video site iQiyi that it’s in talks for a merger with large rival Youku Tudou (NYSE: YOKU). The other big news has high-flying discount e-commerce site Vipshop (NYSE: VIPS) coming under a short-seller attack, prompting it to issue not one but two separate statements denying the allegations. The week ahead could be bumpy for both of these stocks, which is why I’m weighing in with my own view of what may be happening behind the scenes. Read Full Post…
Bottom line: A merger between Youku Tudou and iQiyi looks like a strong possibility because it would greatly benefit both companies, creating a clear market leader to rival LeTV and traditional broadcasters.
Youku Tudou in merger talks with iQiyi?
Rumors that former online video leader Youku Tudou (NYSE: YOKU) is in talks to merge with rival iQiyi have reignited interest in the former’s beleaguered stock, as investors get excited about another landmark deal in the space. Youku Tudou’s shares soared 17 percent in the latest trading session, and have now nearly doubled since the beginning of April.
The sourcing is quite vague on the reported talks for a merger with iQiyi, which is owned by online search leader Baidu (Nasdaq: BIDU). But I would give the reports a strong chance of being true, as this kind of a move seems consistent with past behavior of Youku Tudou’s CEO Victor Koo, who is highly practical and thus would seriously consider selling his company if such a move made financial sense. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 5. To view a full article or story, click on the link next to the headline.
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China Said To Probe Medical Device Firms On Bribe Suspicions (English article)
Bottom line: Tencent, Baidu and other Chinese Internet giants should rein in their appetite for new debt in anticipation of an economic slowdown that could sharply dampen their growth.
Tencent doubles bond program to $10 bln
Social networking (SNS) giant Tencent (HKEx: 700) shattered Chinese Internet records late last week when it said it would double the size of its already-large bond program to a massive $10 billion, becoming one of the biggest such programs ever for a private Chinese company. The move is part of a broader trend that has seen Chinese Internet firms raise billions of dollars over the last 2 years through a combination of bond offerings and IPOs, tapping strong investor appetite for their high-growth story.
Such sums would have been unthinkable just 2 or 3 years ago, even though China’s economy was growing much faster then and so were the profits and revenues at companies like Tencent. Floating so much debt is normally not a problem in such boom times, and is often used by strong companies like Tencent to fund their growth. Read Full Post…
