Bottom line: A new landscape in China’s O2O restaurant services market is taking shape around the “big 3” firms of Alibaba, Baidu and Tencent, with a Tencent-backed Meituan-Dianping the most likely to succeed.
Alibaba eyes Ele.me stake
We’re seeing more signs of a major shuffle in the China market for online-to-offline (O2O) dining services, with e-commerce leader Alibaba(NYSE: BABA) at the center of 2 major new developments in the space. One would see Alibaba invest $1.5 billion for about a third of Ele.me, the leader in O2O takeout dining services. The other has media reporting that Alibaba is looking to sell its 7 percent stake in Meituan-Dianping, China’s recently formed leading group buying site that operates a rival takeout dining service.
The big driver behind both of these stories is a major consolidation taking place in the O2O marketplace, where money-losing companies are suddenly scrambling to find wealthy backers after being cut off by their more traditional funding sources. Many of those companies have found a receptive audience from China’s cash-rich “big 3” Internet titans of Alibaba, Tencent(HKEx: 700) and Baidu (Nasdaq: BIDU). Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 24. To view a full article or story, click on the link next to the headline.
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Tuniu (Nasdaq: TOUR) Announces $500 Mln Investment from HNA Tourism (GlobeNewswire)
Alibaba (NYSE: BABA) to Invest $1.5 Bln in Takeout Delivery Platform Ele.me (English article)
Alibaba’s Jack Ma Said to Be in Discussions to Buy SCMP (HKEx: 583) Stake (English article)
Trina Solar (NYSE: TSL) Announces Q3 Results (PRNewswire)
Bank of Jinzhou Starts $943 Mln Hong Kong Initial Offering (English article)
The following press releases and media reports about Chinese companies were carried on November 13. To view a full article or story, click on the link next to the headline.
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China’s Postal Savings Bank Nears $8 Bln Stake Sale Ahead of IPO (English article)
Lenovo (HKEx: 992) Posts First Quarterly Loss in 6 Years (English article)
JD.com (Nasdaq: JD) Announces Singles Day Orders Up 130 Pct (GlobeNewswire)
Ele.me Confirms to Receive Investment from Car Services Provider Didi (Chinese article)
MSCI to Include Chinese ADRs in Benchmarks as Xi Focuses on Tech (English article)
The following press releases and media reports about Chinese companies were carried on November 10. To view a full article or story, click on the link next to the headline.
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China’s Oldest Investment Bank CICC (HKEx: 3908) Jumps in HK Trading Debut (English article)
Online Wine Seller Jiuxian Lists on China OTC, Eyes Main Board Next Year (Chinese article)
Alibaba (NYSE: BABA) ‘On the Move’ to Buy Stake in SCMP (HKEx: 583) – Market Talk (English article)
Shenzhen Probes Meituan, Ele.me for Using Unauthorized Restaurants (Chinese article)
The following press releases and media reports about Chinese companies were carried on October 30. To view a full article or story, click on the link next to the headline.
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This week’s Street View gets us into the festive holiday mood with a look at food, including the latest take-out dining craze sweeping our city and a much smaller but still significant development in the main campus cafeteria at the university where I teach.
The bigger trend has seen a sudden explosion of take-out dining services in our city, resulting in a new flood of bicycles and other deliver vehicles zipping through the streets of Shanghai. The smaller item saw the main dining hall at Fudan University officially launch a western-style restaurant over the past week, bringing tasty but greasy items like pizza, pasta, steaks and upscale coffee to some of our city’s best and brightest young minds.
One of my favorite things about writing this column is getting to chronicle the many booms and subsequent busts that continually sweep through a major city like Shanghai. I’ve previously written about local explosions in convenience stores, beauty salons, coffee shops and most recently asset management companies, as entrepreneurs and big chains flocked to these latest business trends. Read Full Post…
Bottom line: Contention around Meituan’s new mega-funding and Ele.me’s urgent desire to sell itself reflect overheated competition in the O2O restaurant services market, which could result in a major shake-up over the next 12 months.
Meituan denies rumors of funding collapse
Just a couple of days after reports emerged about the latest fund-raising by leading group buying site Meituan, the newest reports are painting a more chaotic scene in the sector for online-to-offline (O2O) services involving collaboration between web sites and restaurants. Meituan is once again in the news, though this time it’s denying rumors that its latest fund-raising has collapsed. Meantime, take-out dining delivery specialist Ele.me is also reportedly in frantic need of cash due to stiff competition gobbling up the industry.
This pair of stories reflects a cycle that’s all too common for emerging industries in China. That cycle typically sees one or two companies find success in a new business area, sparking a gold-rush that sees many others rush into the space. The result is always a surge in overcapacity, which is almost always followed by a shake-out that sees most companies close or withdraw from the business. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 29-31. To view a full article or story, click on the link next to the headline.
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Investor Group Considers Cutting $9 Bln Offer for Qihoo (NYSE: QIHU) (English article)
Take-Out Dining Platform Ele.me Completes $630 Mln Series F (English article)
Bottom line: Baidu’s tie-up with a major Japanese noodle chain looks like a smart move to build up its fledgling takeout dining business, though it will need to do more to win back investors concerned about its aggressive spending on O2O investments.
Baidu ties with Ajisen Ramen
A week after its stock was hammered by concerns about big spending on its online-to-offline (O2O) services, leading search engine Baidu (Nasdaq: BIDU) has found a major new ally for that part of its business in Japanese noodle chain Ajisen Ramen (HKEx: 538). This particular deal will see the Hong Kong-listed Ajisen and another investor pump $70 million into Baidu’s takeout dining service, providing a major supporter not only due to the investment but also the chain’s strong presence in major Chinese cities.
Baidu’s stock is still recovering from a hammering last week that saw the shares fall by nearly 20 percent to a year-low after it reported anemic 3.3 percent profit growth in its latest reporting quarter due to heavy spending on O2O services. (previous post) Such services include things like buying takeout restaurant food online, and purchasing items from real-world stores through group buying sites. Read Full Post…
Bottom line: Baidu’s new $200 million investment in its take-out dining service is likely to be followed by a sale of the platform to its Nuomi group buying unit, as part of its effort to build up an O2O company to compete with Dianping.
Baidu pumps up take-out dining site
Online search leader Baidu (Nasdaq: BIDU) continues to play catch-up to leading group buying sites Meituan and Dianping, with word that it’s investing a fresh $200 million in its young Internet-based take-out dining service. The move comes just weeks after e-commerce leader Alibaba (NYSE: BABA) announced a similar move to boost its own take-out delivery service, and as Tencent-backed (HKEx: 700) Dianping boosts its own early lead in the space through its Ele.me take-out delivery unit.
All of these companies are scrambling to build up their online-to-offline (O2O) businesses, which bring together Internet-based platforms for services like ordering food and merchandise, with real-world retailers like restaurants and department stores. Tencent is clearly placing its O2O bets with Dianping, which began life as a restaurant ratings site but has moved into a growing number of related areas like group buying and take-out delivery. Read Full Post…
Bottom line: Alibaba’s decision to sell one of its early US e-commerce sites just a year after the launch looks smart and decisive for new ventures that aren’t performing well, while its new China-based dining services site will face stiff competition.
Alibaba tries dining services with Koubei
Acquisitive e-commerce leader Alibaba (NYSE: BABA) is throwing up a rare white flag of surrender in the US, selling off its 11 Main site just a year after launching the e-commerce platform. That surrender looks relatively minor, as Alibaba never really gave the site much time to develop. But the quick decision to call it quits reflects the challenges Alibaba will face as it tries to show investors that it can be competitive outside its home China market, which will be critical to its future growth.
Meantime, Alibaba was in another separate headline that looks much more typical for the company, announcing a new mega tie-up worth nearly $1 billion that will take it into the dining services category. That initiative looks squarely aimed at Dianping, often called the Yelp (NYSE: YELP) of China, and Dianping’s major backer Tencent (HKEx: 700). Read Full Post…
