The following press releases and news reports about Chinese companies were carried on March 1. To view a full article or story, click on the link next to the headline.
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US Lawmakers Urge Caution on Potential Chinese Deal to Buy US Crane Maker (English article)
Citi (NYSE: C) to Sell Stake in China Guangfa Bank (Businesswire)
SAPPRFT to Strengthen Supervision of Online Video Series (English article)
Gree (Shenzhen: 000651) Products to Return to Suning (Shenzhen: 002024) Stores (Chinese article)
Alibaba (NYSE: BABA) Joined by Ma, Tsai for $500 Mln Stock Purchase (English article)
China’s growing love affair with Hollywood is reaching new peaks, with word that major studio Paramount Pictures may be preparing to sell a stake of itself to a Chinese buyer. Such a deal would be the highest profile investment yet in an ever-growing string of Chinese tie-ups with Tinseltown over the last 2 years. In some ways the movement looks strangely similar to Japan’s invasion of Hollywood more than 25 years ago, which saw Universal and Columbia Pictures sold to Japanese buyers.
That parallel may lead some to wonder if this latest Chinese drive into Hollywood could end with similarly disappointing results that saw both studios sputter under Japanese ownership. Prickly US-China relations could also add an element of discomfort to this new budding love affair, since Beijing enjoys a far less friendly relationship with Washington than Tokyo. Read Full Post…
Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
Bottom line: A strong reception for Apple Pay from consumers, banks and merchants bodes well for the service, which should attract a major audience among iPhone users but won’t pose a major threat to rival services from Alipay and WeChat.
Apple Pay launches in China
The launch of Apple Pay in China is buzzing through the local headlines a day after the roll-out, in a move that looks certain to shake up a stodgy industry dominated by homegrown names like Alipay. The most revealing headlines report on the rush by everyone, from consumers to banks and merchants to jump onto the Apple Pay bandwagon. That reflects the buzz that any major move by Apple (Nasdaq: AAPL) can create in the world’s largest smartphone market.
Local consumers are undoubtedly pleased that Apple chose China for the Asia launch of Apple Pay, selecting their market over more traditional candidates like Japan and South Korea. China is only the fifth global market for Apple Pay, following launches in the US, Canada, Britain and Australia. The pride element at being first in Asia, combined with Apple’s existing premium image here, will draw a big majority of Chinese iPhone and iPad users to try out Apple Pay on their devices. Read Full Post…
Bottom line: Meituan-Dianping’s IPO is likely to raise more than $2 billion and should get a strong reception when it comes, most likely by mid-year in New York, while ZTO Express’ $1-$2 billion IPO will get a cooler reception due to its steep losses.
Meituan-Dianping eyes IPO
After a quiet start to the year, the market for offshore Chinese IPOs is slowing coming to life with word of 2 listing plans that should both top the $1 billion mark. One would see leading group buying site Meituan-Dianping list, most likely in New York or possibly Hong Kong, in a deal that would probably raise at least $2 billion. The second is also Internet-related, and would see parcel delivery giant ZTO Express also raise up to $2 billion in a New York IPO.
Perhaps not surprisingly, both of these companies are losing money despite their position as industry leaders. That’s because competition has been cut-throat in both spaces, especially in the parcel delivery business that supports China’s booming e-commerce sector. Meituan and Dianping were also locked in heated competition before they merged late last year to face the current company, which still faces stiff competition from 2 of China’s leading Internet companies, Baidu(Nasdaq: BIDU) and Alibaba (NYSE: BABA). 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: Baidu’s sale of its Qiyi video unit is a first step before a domestic IPO, and the valuation from that sale shows that Alibaba is overpaying for rival video site Youku Tudou and that industry leader LeTV is still highly overvalued.
Baidu sells Qiyi video unit in run-up to IPO
Two of China’s largest online video sites are in the headlines as the nation returns to work after the week-long Lunar New Year holiday, led by word that Baidu (Nasdaq: BIDU) is selling its controlling stake of its iQiyi online video unit. In this case the move looks like preparation for a domestic IPO by the unit, since the buyer of the stake is a group led by Baidu founder Robin Li and iQiyi chief Gong Yu.
The second report has Youku Tudou (NYSE: YOKU) announcing a date for its shareholders to vote on an offer to sell the company to e-commerce leader Alibaba (NYSE: BABA). The meeting will take place on March 14, and will mark a final step before Youku Tudou ceases its brief but stormy life as a publicly traded company and becomes part of Alibaba. Read Full Post…
Bottom line: A new equity alliance between Qihoo and Norway’s Opera web browser is a smart move that could see initial turbulence due to differing management styles, but should ultimately benefit both sides.
Qihoo in group buying Opera
Security software specialist Qihoo 360 (NYSE: QIHU) is taking an important step towards its ambitions of becoming a global Internet brand, with word that it’s part of a group set to buy Norway-based Opera (Oslo: OPERA), maker of the world’s fourth most popular mobile Internet browser. Qihoo is already the maker of one of China’s most popular homegrown web browsers, and is also posing one of the first serious challenges in years to online search leader Baidu(Nasdaq: BIDU) with its Haosou.com engine. It’s also making a big push to move its highly popular security software products into the global marketplace.
Against that backdrop, this new deal looks quite intriguing and also like a smart step for Qihoo to complement its current strengths. But I would also caution that Qihoo is famous for its business tactics, which many might describe as highly aggressive and even unethical. Those include designing products that make big changes to computer and smartphone configurations without their users’ knowledge, most often to favor Qihoo at the expense of rival products. Read Full Post…
Bottom line: Results from Chinese New Year promotions show that WeChat will continue to dominate over Alipay in gift-giving and other friend-to-friend transactions over the mobile Internet due to its original design as a SNS service.
WeChat trounces Alipay in online hongbao promotions
Most of China has been on holiday these last few days, but leading Internet companies Tencent (HKEx: 700) and Alibaba (NYSE: BABA) have been working overtime trying to put the best possible face on dizzying numbers from their red envelope gift-giving promotions over the holiday.
Tencent is focusing on the headline figure of 8 billion money-filled virtual red envelopes, known in Chinese as hongbao, that changed hands on its wildly popular WeChat messaging service through the second day of the Lunar New Year. Alibaba, meanwhile, is focusing on its own headline figure that shows its Alipay electronic payments service received a whopping 21 billion hits per minute at the height of a New Year’s promotion it held with leading TV broadcaster CCTV. Read Full Post…
Bottom line: Xiaomi and Meizu are trying to expand their exports by working through third-party distributors, and could make a formal entry into the US later this year after studying the market for patent-related liability.
Meizu eyeing US?
After dancing around the edges of the lucrative but extremely competitive US market for much of the last 2 years, fast-fading Chinese superstar Xiaomi and up-and-coming local rival Meizu may finally be preparing to enter the market through tie-ups with local carriers. A flurry of new media reports say the pair of Chinese brands are already making the move via a tie-up that will see their smartphones offered by US Mobile, a virtual network operator (VNO) that uses T-Mobile’s (Nasdaq: TMUS) network.
But no sooner did the reports emerge that Xiaomi issued its own statement saying it had no plans to sell its phones in the US, and that US Mobile was not one of its authorized distributors. Meizu also said it has no announced plans to enter the US. What seems clear from all this is that both companies are probably talking with one or more distributors about selling their smartphones in the US and possibly other western markets, even though neither is quite ready to make a formal announcement. Read Full Post…
The wildly popular “Voice of China” variety show has landed at the center of a major copyright dispute in China, attracting big audiences in its own right. How the conflict gets resolved will pose a major test for China’s young and fiercely competitive industry that makes programs for TV and other video channels.
The conflict’s origins lie in “Voice of China’s” copyright owner, the Dutch company Talpa, and Vico Systems, which has been producing the program for the last 4 seasons. After failing to come to financial terms for a fifth season of the show, Talpa found a new production partner, Talent TV and Film (Shenzhen: 300426). (Chinese article) Read Full Post…
