Bottom line: Apple’s new $1 billion investment in Didi Chuxing is a smart way to show its commitment to China and pursue car-based services, while avoiding intellectual property theft that might come if it set up its own R&D facility.
I’ve been saying for years that Apple (Nasdaq: AAPL) needs to make a major investment in China to show its commitment to the market, but was quite surprised to read it was finally taking such a step with plans to pump $1 billion into local hired car services giant Didi Chuxing. But after some more thought, I realized this particular investment actually has a certain form of logic that I’ll explain shortly. And it also shows Apple’s commitment to the market.
This particular announcement also comes as Apple experiences a sudden series of setbacks in China, following a good streak that saw it do quite well over the last 2 years. Those setbacks were led by Apple’s disclosure last month that its Greater China sales plunged 26 percent in the first quarter of this year. That bad news was followed by the company’s loss in a local trademark dispute involving the iPhone name, and after its China book and movie services were blocked for unspecified reasons. (previous post) Read Full Post…
The following press releases and news reports about China companies were carried on May 14-16. To view a full article or story, click on the link next to the headline.
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Anti-Counterfeiting Group Suspends Alibaba (NYSE: BABA) After Member Outcry (English article)
Apple (Nasdaq: AAPL) Invests $1 Bln in Chinese Ride-Hailing Service Didi Chuxing (English article)
Stock Exchange Queries LeEco (Shenzhen: 300104) Over Film Unit’s High Value (Chinese article)
Bottom line: Qihoo’s privatization from New York is likely to move ahead after it resolves a temporary impasse with the foreign exchange regulator, while Wanda’s privatization is also likely to proceed on its belief it can make a quick backdoor re-listing in China.
New ripples are spilling through the realm of Chinese companies seeking to return to China after getting lukewarm receptions with offshore listings, reflecting the complexity and difficulty of such deals. Two of the largest such deals are in the headlines as we round out the week, led by word that a privatization plan by software security specialist Qihoo 360 (NYSE: QIHU) may be running into trouble due to China’s strict foreign exchange controls. The other major deal has real estate giant Dalian Wanda (HKEx: 3699) reportedly moving ahead with a plan to privatize the company, after indicating earlier this week it might abandon its original plan.
It’s becoming quite a challenge to write about this so-called “homecoming trend” by Chinese firms these past 2 weeks, since new obstacles seem to be popping up almost daily on this road back to China. The process was never an easy one, and involves raising hundreds of millions or sometimes even billions of dollars to take a company private. Then the buyout groups, usually led by company managers, must convince New York or Hong Kong shareholders to sell their stock, often at modest premiums. Read Full Post…
Bottom line: BOC Aviation and 51Talk are likely to post moderate performances in their upcoming IPOs in Hong Kong and New York, as investors welcome their growth stories but also show concerns about China’s broader slowing economy.
Privatizations and de-listings have been making headlines among overseas listed Chinese firms these days, but a couple of upcoming new IPOs shows that New York and Hong Kong remain attractive options for at least some companies. In the bigger of the 2 plans in the headlines today, Bank of China’s (HKEx: 3988; Shanghai: 601398) BOC Aviation unit has filed updated plans for its IPO first announced in March, which includes a final pricing. The other deal has English language instruction specialist 51Talk filing to make a New York IPO to raise up to $100 million.
This latest pair of deals in some ways reflect the constant state of uncertainty in China’s own stock markets, which is where many of these Chinese companies would prefer to list due to higher valuations. IPOs in China are always tough because of a huge waiting line that means new applicants can wait 2 or 3 years or even more. The problem is worsened by political conservatism that often sees the regulator slow or freeze all new offerings when markets become volatile like they are now. Read Full Post…
Bottom line: An upcoming China trip by Apple’s CEO looks hastily arranged and aimed at damage control after several recent setbacks, but won’t stem the company’s recent sales plunge due to intense competition from domestic brands like Huawei.
As the latest China setback for Apple (Nasdaq: AAPL) ripples through the headlines, the global tech giant’s CEO Tim Cook is booking a trip to Beijing to try and halt a growing tide of bad news that has already wiped billions of dollars from his company’s stock. The latest China setback for Apple looks relatively minor, and has local media reporting recent malfunctions and the disappearance of some apps from the company’s China app store.
Those quirks may be an extension of a growing clash between Apple and China’s censors, who a couple of weeks ago shut down the company’s online book and movie services for unspecified violations. (previous post) Since then, Apple has also suffered negative publicity in China after losing a trademark battle involving the iPhone name, and most importantly from a 26 percent plunge in China sales during its latest quarterly report. (previous post) Read Full Post…
The following press releases and news reports about China companies were carried on May 13. To view a full article or story, click on the link next to the headline.
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BOC Aviation Prices IPO, to Raise up to $1.3 Bln (HKEx announcement)
The following press releases and news reports about China companies were carried on May 12. To view a full article or story, click on the link next to the headline.
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PPTV Posts Farewell Microblog Message, Website Remains Active (Chinese article)
Canadian Solar (Nasdaq: CSIQ) Reports Q1 Results, Raises Annual Revenue Guidance (PRNewswire)
Wanda Group Reconsiders De-Listing Property Unit: Sources (English article)
LeEco (Shenzhen: 300104) Joins Forces with Twitter for Global Brand Expansion (Businesswire)
Bottom line: A favorable court ruling in a trademark dispute is the latest positive step for Facebook in China, and reinforces a view that it could get permission to open a Chinese service within the next year.
Social networking giant Facebook (Nasdaq: FB) may be absent on the China Internet, but a new victory in a local trademark dispute shows its name is gaining traction in the Chinese legal system. Some are pointing out that Facebook’s victory against a beverage maker that tried to register its trademark contrasts sharply with the loss in a similar case last week for US smartphone giant Apple (Nasdaq: AAPL). (previous post)
While both decisions came from courts in Beijing, it’s probably a bit unfair to compare the 2 since each has to be considered based on individual facts and evidence. But this latest trademark victory does appear to show that Facebook founder Mark Zuckerberg’s strategy of currying favor with Beijing may be producing results, as he pursues his ultimate goal of launching a Chinese version of his social networking service (SNS). Read Full Post…
Bottom line: Many privatization bids by Chinese firms hoping to re-list in China could collapse if the CSRC cracks down on backdoor listings, though de-listing plans backed by big private equity names could still succeed.
Rumors that they might get a chilly reception from China’s securities regulator has sparked a major sell-off for shares of US-traded companies trying to privatize and re-list at home in search of higher valuations. The dive is one of the largest I’ve seen for any single group in quite a while, and could present a great buying opportunity for anyone who believes these companies can still successfully privatize and re-list in China.
But in this case I might be more inclined to agree with the pessimists, since China’s securities regulator is quite conservative, even though I’ve said it should continue to allow these re-listings. (previous post) In this case the China Securities Regulatory Commission (CSRC) may also be acting under direct orders from Beijing, which is already worried about another major sell-off on domestic stock exchanges like one early this year. Read Full Post…
Bottom line: The CSRC should take steps to better regulate backdoor listings by Chinese companies privatizing from New York to ensure market stability, but shouldn’t ban the process completely.
Chinese companies planning to re-list at home after disappointing results with overseas IPOs got some troublesome signals last week, when rumors emerged that China’s securities regulator might be planning to slow or halt a mechanism that has quickly become the preferred route for such homecomings.
That mechanism has seen newly privatized companies make back-door listings using Shenzhen- and Shanghai-traded firms that are often just shells of former state-run enterprises whose own businesses have withered. Returning companies have chosen such a path because conventional IPOs in China have slowed to a crawl due to the regulator’s concerns about market volatility, creating a huge waiting line for new listings. Read Full Post…
The following press releases and news reports about China companies were carried on May 10. To view a full article or story, click on the link next to the headline.
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China Going-Private Targets Extend Selloff on Deal Scrutiny (English article)
Regulator Tells Baidu (Nasdaq: BIDU) to Change Ad Auctioning System (English article)
JD.com (Nasdaq: JD) Announces First Quarter 2016 Results (GlobeNewswire)
Facebook (Nasdaq: FB) Beverages Won’t Be a Thing in China After Rare Trademark Win (English article)
Meituan Cuts Off E-Commerce to Focus on O2O Businesses (Chinese article)