Bottom line: Twitter’s naming of its first China managing director indicates the company is re-thinking its China strategy, and may mark the start of a campaign to get permission to launch a Chinese version of its service.
Twitter names first China chief
Nearly a year after the departure of its former CEO, social networking high-flyer Twitter (NYSE: TWTR) has just made a baby peep that indicates it may finally be contemplating a serious move into the heavily censored China market. The move comes in the form of a low-key executive appointment, which had company co-founder and current CEO Jack Dorsey announcing Twitter’s first managing director for China.
Before I predict an imminent arrival of Twitter to China with this appointment, I should stop and say that Twitter’s new path looks similar to one forged by 2 other Internet giants, Facebook (Nasdaq: FB) and Google (Nasdaq: GOOG). All 3 of these companies are currently blocked in China due to information that China considers sensitive on their online services. But Facebook has indicated it wants to launch a version of its social networking site in China, and Google reportedly is taking steps to launch a Chinese version of its Google Play app store. Read Full Post…
Bottom line: China Mobile’s latest results show that its business is starting to pick up after years of stagnation, which could provide some upside for its stock over the next 1-2 years as it steals share from its two smaller rivals.
China Mobile posts solid results
Profit growth of 0.5 percent may not sound like anything to boast about, but at least it’s growth and not contraction. That’s the message that telecoms giant China Mobile (HKEx: 941; NYSE: CHL) hopes to send with its latest results, which show the company returned to profit growth in the first quarter of this year after a sharp drop in last year’s fourth quarter.
China Mobile’s return to profit gains was fueled by strong revenue growth, as the company took advantage of its early entry to 4G and aggressive promotions to build up its customer base and steal market share from its 2 smaller rivals, China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: 728). The trend certainly looks positive for China’s largest telco, since its profit growth is likely to accelerate now that the most aggressive spending on its new 4G network is in the past. Read Full Post…
The following press releases and news reports about China companies were carried on April 26. To view a full article or story, click on the link next to the headline.
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Bottom line: Beijing and local governments should move more aggressively to regulate O2O takeout dining services, and encourage consolidation around 2-3 players with the scale and resources to ensure the sector’s healthy development.
Ele.me gets big new funding from Alibaba, Ant
New signs of overheating emerged in China’s online takeout dining realm last week, as one of the nation’s top players and a smaller rival landed major new funds to fuel their money-losing operations. The pair of deals saw China’s two leading e-commerce companies, Alibaba (NYSE: BABA) and JD.com, collectively pump nearly $1.5 billion into new investments in the space, even as other major players like Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU) are also beefing up their services.
The flood of new money has produced a rapidly escalating round of price wars, offering deals for consumers but creating chaos in the market and on the streets of major cities like Beijing and Shanghai. This kind of boom is quite typical for China’s emerging high-tech sectors, but in this case also poses unique challenges due to practical dangers such as threats to food and road safety. Read Full Post…
Bottom line: McDonald’s plan to sell its wholly owned China stores to China Resources looks like a smart move that should help it achieve its aggressive new expansion plans in the market and broadly benefit both sides.
McDonald’s, China Resources eye tie-up
Leading consumer conglomerate China Resources looks like a company with an identity crisis these days, with word that it’s bidding to buy the China store operations of global fast food giant McDonald’s (NYSE: MCD). Such a deal would be huge, since China is now home to more than 2,200 McDonald’s, and the US company recently announced plans to open another 1,000 restaurants in the market over the next 5 years.
It’s important to note that many of McDonald’s existing China restaurants are run by local franchising partners, and that a potential sale of its China stores to China Resources wouldn’t affect those outlets. McDonald’s uses a similar franchising model throughout most of the rest of the world. It originally owned and operated most of its China restaurants when it entered the country in the 1990s due to the newness of the market and lack of suitable partners. But it has said recently that it wants to move to a franchising model there as well. Read Full Post…
The following press releases and news reports about China companies were carried on April 15. To view a full article or story, click on the link next to the headline.
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McDonald’s (NYSE: MCD) Targeting Buyout Firms As It Seeks to Sell North Asia Stores (English article)
Google (Nasdaq: GOOG) in New China Move with Event for Entrepreneurs (Chinese article)
Okmetic (Helsinki: OKM1V) Board Recommends National Silicon Industry Group Offer (GlobeNewswire)
Focus Media (Shenzhen: 002027) to Raise 5 Bln Yuan in Share Issue After Backdoor Listing
US Says China to Scrap Some Export Subsidies (English article)
Bottom line: Unigroup’s cautious approach to the potential acquisition of a small US chip maker reflects political realities that make larger purchases difficult, dealing a setback to China’s dreams of quickly building a chip-making giant.
Unigroup buys into Lattice Semiconductor
After being rebuffed several times in the US and Taiwan, China’s ambitious Tsinghua Unigroup is back in the chip acquisition headlines with word that it’s exploring a possible purchase of smaller US chip designer Lattice Semiconductor (Nasdaq: LSCC). Unlike the earlier failed deals that were either outright acquisitions or purchases of major stakes worth billions of dollars, this latest deal is quite small both in dollar terms and stake size.
That would seem to indicate that Unigroup and its affiliated sister companies, all housed at the prestigious Tsinghua University, are shifting to a more cautious approach targeting smaller companies in their global M&A strategy. We saw a similar move earlier this month, when a Shanghai-based government-backed buyer bid for Okmetic (Helsinki: OKM1V), a Finnish chip design house with a market value of about $200 million. (previous post) Read Full Post…
The following press releases and news reports about China companies were carried on April 14. To view a full article or story, click on the link next to the headline.
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Just a day after fast-growing car services firm UCar confirmed a major new tie-up with e-commerce giant Alibaba (NYSE: BABA), we’re getting more details about the new alliance that appears to auger an end to Alibaba’s previous relationship with homegrown Uber rival Didi Kuaidi. At the same time, Alibaba has just announced its largest overseas purchase ever by paying $1 billion for a controlling stake of Southeast Asian e-commerce specialist Lazada.
These 2 news items continue a recent acceleration in M&A activity for the hyperactive Alibaba, which is quite in line with the hyperactive nature of its founder and chief pilot Jack Ma. This kind of cyclical hyperactivity has become the norm for Alibaba in recent years. It typically sees the company’s high-profile activity go into overdrive for a year or so, only to come to a sudden halt when things become overheated and problems emerge. Read Full Post…
The following press releases and news reports about China companies were carried on April 13. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Buys Control of Lazada in $1 Bln Bet on SE Asia E-commerce (English article)
Shanda Group Makes Long Term Strategic Investment In Legg Mason (NYSE: LM) (PRNewswire)
Private Chinese Firm Sharing Mobile in Deal to Buy Nigerian Telco GiCell (Chinese article)
China Hotelier Jin Jiang (HKEx: 2006) Said to Weigh Boosting Accor (Paris: AC) Stake (English article)
Car Services Firm UCar secures $569 Mln, Files for Listing on New Third Board (English article)
Bottom line: A new report spotlighting suspicious sales by BYD shows that last year’s EV explosion in China was fueled by people seeking to pocket government subsidies, while Yingli looks set to receive a government bailout from Beijing.
Yingli set to get new government rescue
A couple of stories from China’s new energy sector, one from the car space and the other from solar panels, are shining a spotlight on the challenges companies are facing after becoming too reliant on government support. One recounts a twisted tale involving electric car maker BYD (HKEx: 1211), and shows how its boom in sales last year may have been largely due to big government rebates for buyers. The other has Beijing telling one of the nation’s biggest policy lenders to provide money for struggling solar panel maker Yingli (NYSE: YGE) before it defaults on a bond payment due next month.
Let’s begin with BYD, which has experienced a rocky road over the last few years as its dream of a future filled with new energy vehicles failed to take off. That seemed to change last year, as new energy vehicle sales suddenly exploded at the company backed by billionaire investor Warren Buffett. BYD and industry boosters said the sales explosion showed that Beijing’s years of support for the sector was finally bearing fruit. Read Full Post…
