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Latest business news and financial news from E-Commerce China Dangdang Inc. (DANG) by Business expert on China’s market Doug Young

News Digest: January 12, 2012

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The following press releases and media reports about Chinese companies were carried on January 12. To view a full article or story, click on the link next to the headline.

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◙ Ping An May Sell Yihaodian Stake, Giving Control To Wal-Mart (NYSE: WMT) – Report (Chinese article)

◙ Dangdang (NYSE: DANG) Expects 20% Profit Margin on E-Books (English article)

◙ Youku (NYSE: YOKU) Signs Content Deal With Twentieth Century Fox (Nasdaq: NWSA) (PRNewswire)

◙ Motorola (NYSE: MMI), Lenovo (HKEx: 992) Sign On To First Intel-Powered Smartphones (English article)

◙ Taobao Mall Changes Name To Tianmao, Buys tianmao.com URL (Chinese article)

360Buy Heats Up E-Books, People’s Daily Goes to Market 京东商城高调进军电子书,人民网开启上市进程

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E-commerce leaders 360Buy and Dangdang (NYSE: DANG) seem to be locked together in a dangerous dance that has seen them launch one price war after another in their attempts to steal business from each other. Just weeks after Dangdang, which rose to prominence as an online book seller, finally discovered e-books (previous post), 360Buy, which also goes by the name of Jingdong Mall, has launched its own very high profile move into e-books as well, in what’s likely to turn into yet the latest bloody price war between these two companies. (English article; Chinese article) 360Buy has released lots of details about this latest high-profile initiative, saying its online bookstore will launch next month and will include more than 80,000 titles from 200 suppliers. Look for lots of bargains when this new online bookstore comes online, which no doubt will be met with equal bargains from Dangdang, pushing both companies deeper into the red. This latest looming price war, which looks to be quite big, is an appropriate start to 2012, when we can expect to see a major cleanup of China’s unruly e-commerce and group buying spaces where competition has become rampant and many companies are now losing big money. Many companies are likely to close in the cleanup, though I would expect both Dangdang and 360Buy to survive, as the latter chases an IPO to raise $1 billion or more in the US. Speaking of IPOs, domestic media are reporting that People’s Net, the online site of the People’s Daily, the official newspaper of the Communist Party, has started a process to raise around 527 million yuan, or $82 million, through a domestic IPO. (Chinese article) That news comes just 2 weeks after similar reports emerged that another major state-run media, Xinhua, was also planning a $150 million IPO for its website, Xinhuanet. (previous post) IPOs by these 2 big hallmarks of state-run media are a clear signal that China is finally loosening its grip on the sensitive media sector, and we should expect to see a steady stream of major media firms listing some of their assets in the year ahead, including some potentially interesting offerings from other major players like Shanghai Media Group and Southern Media Group.

Bottom line: 2012 is starting with a dramatic new price war between Dangdang and 360Buy in e-books, while an IPO by People’s Daily’s website augers a new wave of media listings.

Related postings 相关文章:

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

◙ Dangdang Discovers E-Books — Finally 当当推电子书仍有成功希望

◙ Xinhuanet IPO Sets Stage For Media Listings 新华网IPO或将开启媒体上市热潮

Post Office: A Good E-Commerce Play 中国邮政分拆速递物流可谓电子商务”妙招

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I’ve written lots on China’s e-commerce boom and the huge opportunity it provides, but the less visible courier business is a sideline that is quietly zooming to riches as well on the nation’s growing fondness for buying things online. I haven’t written about this lower-profile part of the e-commerce story before now, mostly because the vast majority of courier firms are small local outfits, often operating with a few bikes, some mopeds and perhaps a van or 2. But now local media are saying that China’s postal service wants to spin off its courier and logistics unit into a separate business, which would then be publicly listed. (Chinese article) Of course this kind of plan must still receive many government approvals and would probably require some major internal restructuring, meaning any such spin-off is still likely a year or more away and an IPO would be even further off. But if and when it happens, such an offering would provide an attractive opportunity for investors looking to cash in on China’s e-commerce craze that has seen nearly all major retailers open online shops and has given rise to major online giants like 360Buy, Dangdang (NYSE: DANG), Alibaba’s Taobao Mall and Wal-Mart (NYSE: WMT) invested Yihaodian. Then of course there’s global giant Amazon (Nasdaq: AMZN), which recently launched a massive new warehouse near Shanghai that will no doubt need thousands of couriers to make sure items get from the facility to their final buyers. Such a postal spin off would also free the new company of many of the burdensome regulations and bureaucracy it now faces, potentially laying the foundation for an eventual Chinese version of a global shipping and logistics company to rival names like UPS (NYSE: UPS) and FedEx. All that said, competition in the courier space is also becoming rampant, similar to the overheated competition among e-commerce companies themselves. Still, this new company, if it takes shape, will have the obvious advantage of huge scale and strong government ties, meaning it could be perfectly placed to cash in on the e-commerce craze for the next 5-10 years.

Bottom line: The China post office’s plan to spin off its courier and logistics service into a separate company for an IPO looks like a great way for investors to cash in on the e-commerce craze.

Related postings 相关文章:

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

◙ New Regulatory, Competitive Waves Hit E-Commerce 监管和竞争冲击电子商务领域

◙ Amazon Name Shift Signals China Ramp-Up 亚马逊改名背后折射中国野心

Dangdang Discovers E-Books — Finally 当当推电子书仍有成功希望

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I’ll finish my postings on this Winter Solstice day with a few tidbits from the retail sector, which offer some interesting glimpses into the potential power of e-commerce to help Chinese firms expand both at home and abroad. The biggest of these news bits comes from Dangdang (NYSE: DANG), China’s only listed major e-commerce firm, which is launching an electronic book service to complement its industry-leading online book store. (company announcement) My initial reaction to this news is “What took them so long to do this?” After all, online retail pioneer Amazon (Nasdaq: AMZN) has been selling electronic books for years now and there’s absolutely no reason why Dangdang waited so long to get into this space, where it will have to compete with established players like Shanda’s (Nasdaq: SNDA) online literature unit, Cloudary, and new services from other big names like 360Buy. But that said, at least Dangdang is finally realizing the importance of e-books, and it still looks early enough for it to become a dominant player in the space if it offers a good books and e-readers. In another online retail news bit, sportswear clothing chain Li Ning (HKEx: 2331) is taking its first small step outside China by opening an online store for US customers. (Chinese article) I suppose I should commend Li Ning for looking beyond China, but I’m honestly not sure that the online store approach, which is certainly cheaper than opening traditional brick-and-mortar stores, is the right route for entering a major new market like the US, where competition is already fierce from big names like Adidas and Nike. I don’t think I would be taking a very big risk in predicting this initiative is very likely to fail, as it has all the markings of a company trying to expand internationally without properly funding the campaign. Last but not least, sportswear bearing the name of Bjorn Borg (Stockholm: BORG) will soon be coming to China, as the Swedish licensee of the legendary tennis star’s name seeks out a local partner with plans to open stores in China next year. (company announcement) This initiative also looks destined for failure, as Bjorn Borg isn’t very well known in China and this company doesn’t appear to have lots of money for the expansion. But considering the Chinese love of famous brands, perhaps it could still succeed if it finds a good Chinese partner to help fund and market the campaign.

Bottom line: Dangdang’s move to e-books looks late but still likely to do well, while a new overseas foray by Li Ning looks underfunded and set to fail.

Related postings 相关文章:

◙ Amazon Name Shift Signals China Ramp-Up 亚马逊改名背后折射中国野心

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

◙ Shanda Cloudary Returns to Market, Worth a Look

News Digest: December 22, 2011

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The following press releases and media reports about Chinese companies were carried on December 22. To view a full article or story, click on the link next to the headline.

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◙ 7 Web Sites in Guangzhou, Shenzhen To Test Real Name Registration From Dec 22 (Chinese article)

◙ Baidu (Nasdaq: BIDU) Removed From U.S. Piracy List of ‘Notorious Markets’ (English article)

◙ Dangdang (NYSE: DANG) Launches E-book Platform in China (PRNewswire)

◙ ConocoPhillips (NYSE: COP) Provides Further Details on Bohai Bay Funds (Businesswire)

◙ China Tops US, Japan To Become Top Patent Filer (English article)

Alibaba Scrambles to Prove High Valuation 阿里巴巴高估值或将作茧自缚

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E-commerce leader Alibaba, scrambling to find financing to buy back a 40 percent stake in itself held by Yahoo (Nasdaq: YHOO), is in a sudden scramble to tell the world why it’s worth $32 billion — a number it helped to float into the market back in September and one which, in my view, seems ridiculously high. In separate news bits from the last day or so, media are reporting the company’s Etao e-commerce search engine has launched a historical pricing search feature (English article), while its popular Taobao consumer-oriented sites have launched social networking functions. (English article) First Etao, which Alibaba hopes to build up as an e-commerce search specialist to one day take on industry titan Baidu (Nasdaq: BIDU). This historical price search function seems like a good idea, as it would make it easier for cost-conscious consumers to track previous prices for items they want to buy. The only problem is that historical prices could soon be the only thing that Etao can show, as several major online retailers, including 360Buy and Dangdang (NYSE: DANG), have blocked their items from being indexed in Etao search results. (previous post) Meantime, the social networking functions being built into Taobao seem like a direct attempt to take on existing SNS sites like Renren (NYSE: RENN) and Sina’s (Nasdaq: SINA) Weibo. While this strategy of building on its industry-leading C2C and B2C platforms to build up SNS sounds interesting, the two areas are relatively unrelated and few if any Chinese web firms have successfully executed similar strategies despite many efforts to leverage popular existing services to build up a new, unrelated ones. This flurry of initiatives seems designed, at least in part, to show the world why Alibaba thinks it may be worth $32 billion. Its only listed unit, Alibaba.com (HKEx: 1688) has a market cap of about $5 billion. That means that its other big assets, which mostly consist of a very successful Taobao Mall and more modestly successful Etao and its Alipay e-payment service, would have to be worth $27 billion collectively, which seems unlikely. Ironically, Alibaba’s high estimation of its own value could ultimately come back to hurt it, as Yahoo apparently seems to want to sell its 40 percent of Alibaba based on that overinflated value. The true amount will come out when a sale finally occurs, but I suspect the final valuation will be closer to $20 billion.

Bottom line: Alibaba is trying to convince the market it is worth $32 billion, but a sale of 40 percent of the company held by Yahoo will probably show a much lower valuation.

Related postings 相关文章:

◙ Alibaba Tests Waters for Yahoo Buyout – Again 阿里巴巴再试水竞购雅虎股权

◙ Alibaba’s Incredible Shrinking Profit Growth 阿里巴巴盈利呈加速放缓趋势

◙ Albaba Faces New Assaults From Merchants, 360Buy 阿里巴巴受到中小商户和京东商城的双重夹攻

 

Search Wars Heat Up With Latest Anti-Baidu Moves 中国网络搜索战升温

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The latest mass movement against online search leader Baidu (Nasdaq: BIDU) looks set to sow new chaos in China’s online community, once again underscoring that Beijing needs to step in and bring some order to the marketplace or risk major disruptions. Chinese media are reporting that 3 major web firms, Tencent (HKEx: 700), Qihoo 360 (NYSE: QIHU) and Youku (NYSE: YOKU), have all announced new search engine initiatives to rival Baidu, which dominates the market with nearly 80 percent share. (Chinese article) Tencent’s search engine, Soso, is actually already 5 years old, so that part of the story isn’t really news. (previous post) But what’s alarming is that the report says Youku, China’s leading online video sharing site, is launching its initiative after noticing that the number of Baidu search results directing users to its site has dropped sharply since Baidu launched its own video sharing service, called Qiyi. In fact, this is just the latest example of a frequent Baidu practice, namely tampering with its search results to make its advertisers and its own products appear at or near the top of its search results even when other web pages would rank higher under more objective conditions. This latest conflict pitting Baidu against 3 other major web firms comes just weeks after another similar mass protest saw major online retailers including Dangdang (NYSE: DANG) and 360Buy block their web pages from searches by Alibaba’s Etao search engine. (previous post) These kind of turf wars between major online players have the potential to create real chaos on the Chinese Internet by undermining the credibility of search engines that are often the first place web surfers go to find what they want on the vast worldwide web. I’m usually opposed to any attempts by Beijing to step in and regulate the online world, but this really seems like one exception where the government should step in and act as impartial arbitrator to set up some basic ground rules that everyone can agree upon to end these turf wars. Otherwise, China’s online world could be looking at 1-2 years of major disruptions until the building brouhaha gets resolved by market forces.

Bottom line: A new uprising by 3 major web firms against Baidu marks the latest unrest in China’s online search market, which needs Beijing to step in and act as impartial arbitrator.

Related postings 相关文章:

◙ Alibaba’s Etao Faces New Merchant Revolt

◙ Tencent Search: Baidu Beware? 腾讯搜搜成功关键依赖创新

Parade of China Money-Losers Report to Wall Street 多家中国企业亏损凸显市场竞争激烈

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Online video leader Youku (NYSE: YOKU), online retailer Dangdang (NYSE: DANG) and education services firm Xueda (NYSE: XUE) have all reported net losses in their latest results, underscoring the fact that Western investors don’t seem to care all that much about profits when it comes to Chinese firms, especially Internet companies. Each of these firms has a different story to tell, although frankly speaking all 3 look disappointing to me and show movement in the wrong direction. Let’s start with Youku, which reported a third-quarter loss of 47 million yuan, narrowing 11 percent from a year ago but ballooning from the second quarter’s 28 million yuan loss. (company announcement) The company also forecast a slowdown in fourth-quarter revenue growth to 90-100 percent from 130 percent in the third quarter. None of these trends looks particularly positive, especially after chief rival and much smaller Tudou (Nasdaq: TUDO) surprised the market earlier this week by becoming profitable in the third quarter. (previous post) As to Dangdang, the situation looks even more discouraging, as the company faces what seems like daily price wars with the likes of 360Buy and Wal-Mart’s (NYSE: WMT) Yihaodian in the super-competitive e-commerce space. Dangdang reported its third-quarter net loss ballooned to 73 million yuan, or more than double the 33 million yuan loss from a year earlier, as it tries to expand beyond its original model as a book seller to the ultra-competitive general merchandise business. (company announcement; Chinese article) Lastly there’s Xueda, which seems unable to get out of the loss column despite being in the high-growth education services area. It reported a $6.3 million loss for the third quarter, more than double the year-ago loss of $2.4 million, again reflecting tough competition in the market but also in sharp contrast to steady profits reported by industry leader New Oriental Education. (previous post) This parade of losses certainly is still more the exception than the rule among US-listed Chinese companies. But it also reflects a worrisome trend that competition for many has become way too intense, and consolidation in many areas is sorely needed.

Bottom line: Money-losing results from Youku, Dangdang and Xueda reflect stiff competition in their respective spaces, with no immediate relief in sight.

Related postings 相关文章:

◙ Tudou Surprises With Profit, Licensing Deal 土豆网意外扭亏为盈视频分享市场的好兆头

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

◙ New Oriental Results: Slowing Education Growth Story 新东方发表最新财报 中国教育服务增长减速？

News Digest: November 17, 2011

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The following press releases and media reports about Chinese companies were carried on November 17. To view a full article or story, click on the link next to the headline.

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◙ Dangdang (NYSE: DANG) Announces Q3 Results (PRNewswire)

◙ Shandong Gold (Shanghai: 600547) Offers $1 Billion for Jaguar Mining (NYSE: JAG) (English article)

◙ Youku (NYSE: YOKU) Announces Unaudited Q3 Results (PRNewswire)

◙ Qihoo 360 (NYSE: QIHU) Reports Unaudited Q3 Results (PRNewswire)

◙ Online Wine Merchant Jiuxian Secures Second-Round VC Funding (English article)

Price Wars Beat Up Online Retailers 网上零售商引爆价格战

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Barely a day has passed these last few weeks without a report in the Chinese media about the latest price wars between major online retailers, reflecting rampant competition that is causing companies to hemorrhage cash. Two of the biggest rivals in the never-ending wars are Dangdang (NYSE: DANG) and 360Buy, also known as Jingdong Mall, with Dangdang reportedly preparing to turn up the heat with a major new offensive. According to domestic media, Dangdang is preparing to launch a major new campaign against 360Buy, extending a current drive that already specifically undercuts prices for popular items on 360Buy by significant amounts. (English article) For its part, 360Buy is also offering a near non-stop stream of promotions that have been so popular that an unusually high volume of shoppers caused its site to crash earlier this week, forcing the company to install more servers. (Chinese article) While such a high volume of shoppers would normally be good news, the business disruption will hardly help 360Buy’s reputation. Furthermore, the new servers will only add to the company’s costs, and I suspect many of the goods that attracted such attention in the first place were being sold at a loss. If the competition remains this rampant, look for a cash-hungry 360Buy to potentially try to accelerate its stalled plan for a multibillion-dollar IPO to raise more cash (previous post), and for Dangdang, which already reported a widening loss in the second quarter, to see its losses widen even further going forward.

Bottom line: Chinese online merchants engaged in non-stop price wars are facing a cash crunch that could soon result in consolidation for the overheated sector.

Related postings 相关文章:

◙ New Regulatory, Competitive Waves Hit E-Commerce 监管和竞争冲击电子商务领域

◙ Amazon Name Shift Signals China Ramp-Up 亚马逊改名背后折射中国野心

◙ Albaba Faces New Assaults From Merchants, 360Buy 阿里巴巴受到中小商户和京东商城的双重夹攻

Tidbits: Alibaba, Anhui Conch, Sinopec, China Mobile

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There are quite a few too good stories out there today, so here are some quick takes on a few that didn’t make the headlines but look interesting nonetheless.

— The chief executive of Alibaba’s Etao has held a high-profile media briefing to announce his company, operator of a search engine specializing in e-commerce, will invest 1 billion yuan in its business. (English article) This event is a clear signal to the market that Alibaba intends to stand by this investment despite recent moves by a number of major e-commerce sites, including 360Buy, Dangdang (NYSE: DANG) and Suning (Shenzhen: 002024), to block their pages from inclusion in Etao’s search results.

— Sinopec (HKEx: 386; NYSE: SNP) is reportedly in talks to buy a stake in Galp’s Brazilian Unit, for what’s sure to be an overinflated price. (English article) This latest potential mega-acquisition by a Chinese oil major just shows how China’s policy of buying global assets at any cost to feed its growing economy continues to be in effect, even as oil prices show every sign of coming down for an extended period.

— The China Daily is reporting that Anhui Conch (Shanghai: 600585; HKEx: 914), one of the country’s leading cement makers, aims to go global by purchasing distressed international assets for bargain prices, as most of the world’s construction industry suffers during the global downturn. I would look for this company to carry through with this plan with a major announcement or two over the next year, but have serious doubts about its ability to manage such global assets.

— Chinese media are reporting that China Mobile‘s (HKEx: 941) long-running talks with Apple (Nasdaq: AAPL) to make a TD-SCDMA iPhone have finally broken down, confirming what I had already suspected several weeks back. (Chinese article) If true, which seems likely, this would be a relatively major setback for China Mobile, which was counting on the iPhone to breathe some life into its anemic 3G business.