Bottom line: Cautionary comments from Caixin and Ele.me about investments from Alibaba and its affiliates reflect a growing wariness from companies at accepting money and yielding control to the e-commerce giant.
Alibaba’s Ant invests in Caixin
The voracious Alibaba (NYSE: BABA) is in 2 new M&A headlines as we head into the end of the week, led by word that its Ant Financial affiliate was an investor in a new fund-raising round in Caixin, one of China’s best respected financial media. A second headline has take-out dining pioneer Ele.me denying reports that Alibaba, which is already one of its biggest shareholders, will devour the company completely. Instead, Ele.me is saying it will continue working closely with Alibaba’s own take-out delivery service called Koubei.
Both headlines reflect a growing resistance by founders of these companies to outright ownership by Alibaba-related companies. In the first case, Caixin was quick to issue a statement saying Ant was only one of several new investors in its new funding round. Ele.me’s case is similar, quashing earlier speculation that it would ultimately get swallowed up by its cash-rich backer. Read Full Post…
Bottom line: Alibaba is likely to enter talks to buy a strategic stake in Groupon or even make a bid for the entire company, following its disclosure that it has purchased 5.6 percent of the US company in the open market.
Alibaba buys Groupon stake
What exactly was leading Chinese e-commerce company Alibaba (NYSE: BABA) thinking when it quietly purchased 5.6 percent of Groupon (Nasdaq: GRPN) shares on the open market without informing the faded US group buying pioneer? That’s the question that will be making the rounds this week, following the surprise disclosure of Alibaba’s purchase that Groupon only learned about through a regulatory filing.
Of course the most intriguing possibility is that Alibaba could be weighing a bid to acquire Groupon completely, which wouldn’t be that preposterous for reasons I’ll explain shortly. Other media are putting a less aggressive spin on the move, saying that Alibaba simply hopes to learn from Groupon’s group buying skills that first propelled it to fame about 6 years ago. Read Full Post…
Bottom line: New scandals involving fraudsters using Baidu and Ctrip platforms highlight a major problem for major web companies from third-party merchants, but are unlikely to have a big impact on their business.
Frausters make headaches for Baidu, Ctrip
Two new scandals involving leading travel services provider Ctrip(Nasdaq: CTRP) and top search engine Baidu (Nasdaq: BIDU) are shining a spotlight on the daily battle China’s top Internet firms must do with the hundreds of fraudsters lurking online. The first case has Baidu dealing with fraudsters who tried to sell products on its Tieba social communities service, while Ctrip has landing in trouble after 2 people bought invalid tickets from independent travel agencies on one of its open marketplaces.
The biggest case for this kind of fraud came a year ago, when China’s commerce regulator released a report showing huge volumes of trafficking in pirated goods on the Taobao marketplace operated by leading e-commerce site Alibaba(NYSE: BABA). In all of these cases the fraud isn’t being directly committed by the big-name companies, but rather by small, third-party merchants doing business on their sites. But the big Internet names are realizing that they are ultimately responsible for the reliability of all transactions taking place on their sites. Read Full Post…
Bottom line: Rumors that Shanghai Media Group is in talks for a strategic stake of Baidu’s iQiyi could quite possibly be true, with an investment of about $3 billion likely in exchange for half of the company.
iQiyi talking tie-up with SMG?
The New Year is starting with a salient rumor from the online video space, with reports that the new media investment arm of Shanghai Media Group (SMG) may be eyeing a major stake purchase of Baidu’s (Nasdaq: BIDU) iQiyi. The reports aren’t being widely circulated in the Chinese media yet, which suggests they may not be accurate. The head of SMG’s China Media Capital (CMC), which would reportedly make the investment, has also previously said he’s not interested in online video assets right now.
But such a tie-up would be quite consistent with Baidu’s recent strategy of selling major stakes in its non-core businesses to strategic partners. From SMG’s perspective, such a deal would also make sense, as it plays catch-up with both private companies and also state-owned rival Hunan Broadcasting in the fast-evolving online video space. Read Full Post…
Bottom line: Baidu’s new fund raising for its O2O take-out dining service is aimed at finding strategic partners and deflecting criticism from its shareholders, while Spring Airlines new fund-raising presages an aggressive expansion into Japan.
Baidu beefs up take-out dining service
A couple of major fund-raising stories are in the headlines on this final trading day of 2015, setting the stage for what’s likely to be a busy year ahead in the take-out dining and budget air travel sectors. The larger of the 2 items has online search leader Baidu (Nasdaq: BIDU) reportedly near a deal to raise up to $500 million for its young and fast-growing online-to-offline (O2O) take-out dining service. The smaller has China’s oldest budget carrier Spring Airlines (Shanghai: 601021) in the process of raising nearly 1 billion yuan ($150 million) to fuel its expansion into nearby Japan.
These 2 deals cap a year that saw an explosion in private funding for start up Chinese companies in the first half of 2015, including several deals worth more than $1 billion. But the pace of funding has slowed sharply in the last few months due to concerns over China’s slowing economy, and these latest 2 deals are likely to become the new norm in terms of deal sizes we’ll see in 2016. Read Full Post…
Bottom line: China’s global Internet conference this week was mostly empty pageantry, but it did reveal that Baidu might like to privatize from New York one day, and attracted a handful of China-friendly global executives.
Wuzhen Internet pow-wow mostly empty talk
China’s big Internet pow-wow this week in the picturesque town of Wuzhen hasn’t produced much news despite its big aspirations, reflecting Beijing’s tight control over cyberspace and companies that do business there. But the globally-minded event did produce at least one interesting tidbit on the recent privatization wave by US-listed Chinese companies, and also an entertaining photo of 2 top executives that went viral online.
The news item came from Robin Li, founder of leading Chinese search engine Baidu (Nasdaq: BIDU), who hinted that he hopes to someday join the recent wave of Chinese companies now privatizing from New York due to undervaluation. The photo that went viral captured a humorous moment involving a catnap during the conference by Zhou Hongyi, the controversial and more often outspoken CEO of security software specialist Qihoo 360 (NYSE: QIHU). Read Full Post…
Bottom line: Alibaba’s new Disney tie-up is unlikely to gain much traction due to overcrowding in China’s Internet video market, while its tie-up to sell $8 billion worth of bad debt from asset manager Huarong looks mildly positive.
Alibaba in streaming tie-up with Disney
E-commerce giant Alibaba(NYSE: BABA) is in a trio of headlines as we head into the year-end holidays, led by a new tie-up with Disney (NYSE: DIS) as it looks to leverage its growing stable of media assets. But in a sign of how much attention the company now attracts, the other 2 stories in the headlines aren’t really ones that Alibaba would care to trumpet too much.
The larger of those is mildly positive, with media reporting that Alibaba’s Taobao C2C marketplace is teaming up with one of China’s leading bad asset sellers to auction off $8 billion in soured loans. The other headline is one that’s becoming a small headache for Jack Ma, and involves Evergrande Taobao the soccer team that he co-owns. That story has one of Japanese car maker Nissan’s (Tokyo: 7201) China joint ventures suing the club for breach of contract related to a high-profile sponsorship dispute. Read Full Post…
Bottom line: Baidu’s disposal of its problematic music division looks like a smart move that was long overdue, while its new tie-up with Amazon looks minor but could get much bigger if it expands into the e-commerce sector.
Baidu in Christmas time tie-ups with Amazon, music company
Leading search engine Baidu(Nasdaq: BIDU) is in the headlines with a couple of big strategic moves, led by an intriguing new tie-up with Amazon (Nasdaq: AMZN) that could have broader implications in the e-commerce space. The other news has Baidu merging its problematic music division, which was historically plagued by piracy issues, into a new company headed by an entertainment firm called Taihe Music Culture Development.
Both moves represent incremental strategic tweaks for Baidu, as it tries to expand beyond its core online search business into other areas of the Internet. The Amazon alliance looks relatively superficial, but could hint at a broader future tie-up that might see the companies work together in China’s lucrative but highly competitive e-commerce space dominated by Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD). Read Full Post…
Bottom line: Jack Ma’s meeting this week with Barack Obama and quick followup with major funding commitments for entrepreneurs are part of Alibaba’s efforts to improve its government relations and lay a stronger foundation for future growth.
Alibaba’s Ma hobnobs with Obama
Alibaba’s(NYSE: BABA) outgoing founder Jack Ma is quickly becoming China’s business ambassador to the west, following recent meetings with British Prime Minster David Cameron last month and now this week with US President Barack Obama. I’m usually slightly skeptical of such efforts, which seem more intended to grab headlines and hype Alibaba rather than to do anything substantive.
But even I was impressed at how quickly Alibaba has followed up with its pledge to help young entrepreneurs during the Obama meeting, with its new announcement of more than $400 million in assistance to start-up business owners in Hong Kong and Taiwan. It’s quite likely that these 2 programs were already in the works when Ma met with Obama on Wednesday in Manila, on the sidelines of the annual Asia-Pacific Economic Cooperation summit that brings together world leaders from the Pacific Rim. Read Full Post…
Bottom line: Vipshop’s third-quarter revenue shortfall is the latest signal that China’s e-commmerce sales are set to slow after a period of rapid growth, and could pressure the company’s stock over the next few months.
Warm autumn chills Vipshop sales
Discount e-commerce superstar Vipshop (NYSE: VIPS) has suddenly lost some of its luster, after announcing a revenue shortfall that sparked a 27 percent plunge in its stock. The unusual revenue miss looks even more unusual in China’s broader booming e-commerce sector, where leaders Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are still basking in the glow of a record-breaking Singles Day online shopping blitz last week. (previous post)
The bigger question that many will be asking this week is whether there’s any broader significance to Vipshop’s new announcement that it missed its previous third-quarter revenue forecast by 6 percent. (company announcement; Chinese article) Some others have warned of a similar slowdown, and I previously said the big Singles Day sales totals were at least partly manipulated by online merchants trying to meet tough targets set by online mall operators. (previous post) Read Full Post…
Bottom line: Baidu’s reported plan to sell its online music unit looks like a smart way to rid itself of a controversial piracy-plagued business that holds little value for its main strategic focuses going forward.
Baidu set to dump music unit?
In what could be a move that’s long overdue, leading search engine Baidu (Nasdaq: BIDU) is reportedly eyeing a sale of a music division that was once one of its major attractions but in recent years has become more a liability due to frequent accusations of copyright violations. Baidu wasn’t commenting on the reports, but such a move would be consistent with its recent diversification into a range of new areas, none of which include music as part of their core business.
Such a deal, if it’s really in the works, probably wouldn’t be worth too much, perhaps in the $100-$500 million range at the very most. More significantly would be the disposal of a unit that in the past has come under fire for allowing rampant piracy through illegal peer-to-peer (P2P) trading of copyrighted music. Read Full Post…
