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: Apple’s and Samsung’s simultaneous new mobile payment tie-ups with UnionPay indicate Beijing will open the market next year to foreign companies, many of whom may choose to partner with not only UnionPay, but also Alibaba or Tencent.
Apple ties with UnionPay
In what should come as a big surprise to no one, Apple(Nasdaq: AAPL) has formally announced a tie-up with Chinese electronic payments giant UnionPay to bring its Apple Pay service to China as soon as early next year. This particular development isn’t hugely unexpected, since Apple CEO Tim Cook had previously talked of such plans and media reported Apple was close to such a deal last month. (previous post)
What does come as a slight surprise is the addition of Samsung’s (Seoul: 005930) name to the latest reports, as the South Korean smartphone giant announced its own separate deal with UnionPay. Apple’s choice of UnionPay also is a slight surprise, since the earlier reports only said that Apple was in talks with several major Chinese banks. Last but not least, this latest announcement seems to be the strongest indicator yet that China will finally open up its electronic payments market to foreign companies in the first half of next year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 19-21. To view a full article or story, click on the link next to the headline.
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Apple (Nasdaq: AAPL), Samsung to Enter China Payments Market With UnionPay (English article)
Qihoo 360 (NYSE: QIHU) Enters into Definitive Agreement for Going Private (PRNewswire)
Microsoft (Nasdaq: MSFT) Unveils Plans for China Joint Venture (English article)
Amazon (Nasdaq: AMZN), Oriental Pearl in Cloud Computing Partnership (Chinese article)
BOCI (HKEx: 3988) Sells Nanyang Commercial Bank to Cinda for HK$68 Bln (HKEx announcement)
Bottom line: The lack of news or attendance by major worldwide executives at China’s global Internet conference this week shows the country’s Internet remains relatively closed and under strict government control.
Global Internet pow-wow takes place in scenic Wuzhen
I had big hopes for the second edition of China’s World Internet Conference happening this week in the picturesque town of Wuzhen, as all of the country’s top executives are in attendance at an event intended to showcase the country’s online prowess. The list of domestic executives in attendance certainly hasn’t disappointed, and many are undoubtedly there to network with China’s top Internet bureaucrats and President Xi Jinping, who gave this year’s opening speech.
But a look at some of the comments from names like Alibaba (NYSE: BABA) founder Jack Ma and Baidu (Nasdaq: BIDU) founder Robin Li turns up mostly empty talk, mixed with the expected self-promotion. What’s more, I also find the near-absence of any major foreign names from the conference somewhat puzzling, since China is trying to bill this as a global conference. Read Full Post…
Bottom line: Huawei’s smartphone unit is finishing 2015 on a solid note, meeting its annual targets a month early, while Xiaomi will need to show better overseas performance next year to regain some of its fading momentum.
Huawei meets smartphone targets early
A flurry of new numbers are coming from the smartphone space as we head into year end, reflecting the different focuses of domestic leaders Huawei and Xioami. When the history books are written, 2015 will be remembered as the year when Huawei surged to become the world’s third biggest smartphone brand behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930), and also the clear Chinese leader. But for Xiaomi, 2015 could be a year the company would rather forget, as it lost momentum in its home China market due to stiff competition and saw slow progress in its overseas expansion.
The latest headlines have Huawei forecasting its overall revenue will surpass the $60 billion mark this year, equating to a rise of 29 percent or higher from last year’s $46.5 billion. That would mark a nice acceleration from the previous year’s 20.6 percent revenue growth, with much of the gains coming from the company’s rapidly growing smartphone division. Read Full Post…
Bottom line: New comments from OnePlus are the latest sign of a shakeout set to hit China’s smartphone sector in 2016, with at least 3-4 small to mid-sized brands likely to close up shop by the end of next year.
OnePlus trims product line
The latest signs of trouble in the overheated smartphone space are coming from newcomer OnePlus, which is detailing its own missteps and predicting a much-needed industry shakeout will intensify soon. The comments from OnePlus co-founder Carl Pei are some of the most direct I’ve seen so far about the industry’s current woes, though he’s careful to avoid any implication that OnePlus itself might fall victim of the shakeout he’s predicting.
The fact of the matter is that OnePlus is exactly the kind of player that’s likely to go belly up in the looming shakedown, and Pei’s description of his current situation paints a rather bleak picture for his company. Equally intriguing is Pei’s prediction that one or more major players may also withdraw from the space in the coming consolidation. Read Full Post…
Bottom line: TSMC’s plan for a $3 billion Nanjing chip plant marks the latest in a nascent but growing string of China-Taiwan tie-ups in the chip space, which could gain momentum under Beijing’s recent aggressive program to develop the industry.
TSMC to build $3 bln chip plant in Nanjing
After years of disappointment for failing to fulfill its potential, China high-tech chip sector has suddenly come to life over the last year with a flurry of deals that hint Beijing is taking the lead to promote the sector. The latest of those is one of the biggest and most significant yet in terms of technology, with word that Taiwan’s TSMC (Taipei: 2330; NYSE: TSM), the world’s leading contract chip maker, will build a $3 billion state-of-the-art 12-inch wafer plant in the city of Nanjing.
The move is particularly significant because TSMC is the clear global leader in high-tech microchip production, with a client list that includes most of the world’s major companies like Qualcomm (Nasdaq: QCOM) and Apple (Nasdaq: AAPL). The deal also marks the latest in a nascent series of tie-ups between China and Taiwan in the chip-making space, a potent combination that could someday counter current powerhouses in South Korea and Japan. Read Full Post…
Bottom line: The latest muddled comments from Lenovo founder Liu Chuanzhi could reflect his growing frustration with CEO Yang Yuanqing, who could be forced out in the next year if the company’s performance doesn’t improve.
Lenovo’s Yang looks for new rice bowl
It’s no mystery that PC giant Lenovo (HKEx: 992) has been stumbling in the last 2 years due to bad execution in the smartphone space. But slightly more mystifying are new remarks by company founder Liu Chuanzhi on his views about his self-groomed successor and CEO Yang Yuanqing. Liu is currently chairman of Lenovo parent Legend Holdings (HKEx: 3396) and is 71, which isn’t too old. But his remarks on Yang’s performance on the sidelines of a recent event make him seem a bit muddled and also convey the conflicting feelings of loyalty and frustration that he must be feeling about his appointed successor.
Before I attempt to translate his actual remarks, we should put the Lenovo story into a bit of context to understand what Liu is saying. Yang Yuanqing is famous for building Lenovo into a global PC giant through an aggressive acquisition strategy, which began with the landmark purchase of IBM’s (NYSE: IBM) PC business in 2005 and later included other acquisitions in such diverse markets as Germany, Brazil and Japan. Read Full Post…
Bottom line: Beijing should eliminate barriers that are slowing the flow of private money into lending services, in a move to offset a slowdown in lending from traditional banks that are dealing with a growing bad-loan crisis.
Obstacles hinder private lending growth
A flurry of headlines last week highlighted the recent move by private companies into China’s financial services market, led by reports that Apple(Nasdaq: AAPL) could become the first major foreign company to offer electronic payments in the country. At the same time, a chilly reception for a Hong Kong IPO by regional lender Qingdao Bank (HKEx: 3866) highlighted the difficulties many traditional Chinese banks now face due to concerns about a looming bad debt crisis.
Beijing regulators should be commended for their recent efforts to open up the financial services market to more private investment, but should consider accelerating the campaign by streamlining bureaucracy for big and well-financed domestic and foreign names like Apple and Tencent(HKEx: 700). It should also consider a similar streamlining of bureaucracy for foreign banks, many of which have left China off their global roadmaps due to stiff restrictions that make doing business difficult. Read Full Post…
Bottom line: Huawei’s strong sales for its Mate line of mid-range smartphones and positive coverage of Apple’s newest China store opening spotlight 2 of this year’s top Chinese smartphone trends, which should continue into next year.
Huawei aims high with Mate 8 launch
A couple of smartphone headlines are spotlighting 2 of this year’s top trends in the market, namely the rapid rise of Huaweiand the remarkable turnaround in China for Apple(Nasdaq: AAPL). The first headline has Huawei announcing lofty targets for the latest model from its line of mid-range smartphones. The second has Beijing becoming Apple’s unofficial Asian capital, with the opening of its fifth store in the city — more than any other in Asia.
Both of these stories are quite remarkable, as each represents a major shift from previous trends in 2014. Huawei has struggled for the last few years to differentiate itself from a crowded field of domestic smartphone makers, but finally emerged as a leader this year based on its better product designs. Similarly, Apple’s recent surge marked a major turnaround from the last few years, when its reputation took a beating in China due to poor relations with Beijing. Read Full Post…
Bottom line: Apple could become the first big foreign company to offer domestic electronic payment services in China, representing a major accomplishment for CEO Tim Cook in his recent campaign to improve relations with Beijing.
Apple Pay eyes February China launch
Big names like Visa (NYSE: V), MasterCard (NYSE: MA) and PayPal have been waiting for years to offer electronic payment services in China, but now it appears that tech titan Apple(Nasdaq: AAPL) may be the first to break into the lucrative market. That’s the signal coming from the latest headlines, which say that Apple is aiming to formally launch its Apple Pay electronic payments service in its second largest global market in the next few months.
If Apple succeeds, the move would represent a major victory for the company and vindication of CEO Tim Cook’s recent campaign to cultivate better relations with Beijing. Apple Pay would be entering the market less than 2 years after the product’s formal launch, which is extremely fast for bureaucratic China. By comparison, Visa, MasterCard and PayPal have all been waiting more than a decade for China to open the market, and the 2 credit card giants even led a campaign that resulted in a complaint at the WTO. Read Full Post…
