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Facebook in China latest Business & Financial news from Doug Young, the Expert on Chinese High Tech Market, (former Journalist and Chief editor at Reuters)
Bottom line: A US prosecutor’s decision not to file rape charges against JD.com’s founder may bring short-term relief to the stock, but the case still shows the importance of understanding the unusual role Chinese founders play at their companies.
Scales of justice tip in JD.com’s favor
On this day after Christmas I thought I’d play a little catch-up by weighing in on the controversial decision that saw a Minnesota prosecutor decline to press rape charges against JD.com’s(Nasdaq: JD) founder and CEO Richard Liu. Following the big announcement at the end of last week, there’s been a minor follow-up as another former China e-commerce executive came to Liu’s defense, only to get blasted himself and end up issuing an apology.
There are several big lessons in this tale, led by the fact that Chinese standards for what constitutes acceptable behavior are not always in sync with those in the West. That’s an important lesson for Western investors who may buy into these companies thinking that, for example, a JD.com is the same thing as Amazon.com (Nasdaq: AMZN). The JD case shows that clearly there are major differences in terms of behavior by both the companies and their founders. Read Full Post…
Bottom line: Facebook and Google’s latest micro-moves into China reflect their longer term efforts to get permission to launch major services in the market, though it’s unclear if they will get such a green-light anytime soon.
Facebook, Google take new baby steps in China
You have to give China-challenged Internet giants Facebook (Nasdaq: FB) and Google(Nasdaq: GOOG) an “e” for effort. Both companies have popped into the China headlines over the last two weeks for micro-moves into the world’s largest Internet market, including the latest news that Facebook plans to set up a company in Hangzhou that will become an “innovation hub”.
The Facebook news comes just about a week after Google confirmed that it has launched a new artificial intelligence (AI) game in China on a platform operated by local Internet giant Tencent(HKEx: 700). Both of these moves are miniscule in the big scheme of things, especially for companies of Google’s and Facebook’s size. But they do reflect the kind of baby steps, some might also say groveling, that such corporate giants will need to take to get a hold in the world’s largest Internet market where they are now mostly denied permission to operate. Read Full Post…
Bottom line: A new IPO by e-commerce company Pingduoduo could do reasonably well due to its rapid growth and unusual business model, but could suffer from a “flavor of the day” element over the longer term.
Pinduoduo puts new spin on group buying
After years of basically having just two choices to invest in China’s e-commerce market, investors will soon have another new and interesting option with the upcoming listing of a company called Pinduoduo. I’ll admit that I was unfamiliar with Pinduoduo before reading about this upcoming listing. But that said, the numbers do point to a potential high-flyer in the making, including a business model that combines elements of Groupon (Nasdaq: GRPN) and Facebook (Nasdaq: FB) to let people recruit their friends to get good deals on merchandise.
The company is also noteworthy for its ties to social networking giant Tencent(HKEx: 700), whose wildly popular WeChat platform is apparently the main venue where friends can get together to get their deals. This particular deal comes as China’s own homegrown Groupon, Meituan-Dianping, prepares for its own Hong Kong listing in a deal expected to raise up to $6 billion, amid a broader bumper IPO season for China new economy offerings. Read Full Post…
Bottom line: Twitter’s conservative approach to China reflects a broader indecision at the company that is limiting its growth potential.
Twitter shackled by indecision in China
While social networking giant Facebook (Nasdaq: FB) actively flirts with China in a bid to enter the world’s largest Internet market, the smaller, struggling Twitter (NYSE: TWTR) seems unable to make up its mind. That seems to be the key takeaway from a new interview on the prickly subject of China between Maya Hari, Twitter’s Asia Pacific chief, and Caixin, a well-respected Chinese financial media that also happens to be my current employer.
This particular message seems to be a recurrent theme with Twitter, which, like Facebook, doesn’t like China’s strict self-censorship policies but also finds it hard to ignore such a big market. In Facebook’s case, the company has made it quite clear it’s willing to tolerate China’s self-censorship policies for a chance to build a presence in the market, most likely through a future joint venture with a local partner. Read Full Post…
Bottom line: Tencent and Alibaba stocks have become overvalued at current levels compared with global peers, and are due for a pullback of up to 30 percent in 2018.
Tencent looks frothy at current levels
Much ado is being made about the meteoric rise in value for Tencent(HKEx: 700), the Chinese social media giant that is now neck-and-neck with global heavyweight Facebook (Nasdaq: FB). Specifically, the pair now boast nearly identical market values in the $520-$530 billion range, which one report points out is larger than the entire GDP of Taiwan. That makes them the world’s fifth and sixth largest companies by market cap.
Such a reality would have been unthinkable just four or five years ago, when the only Chinese companies that ever periodically made the global top 10 were big state-run firms like banking giant ICBC (HKEx: 1398), which were government owned behemoths operating in highly protected sectors. Tencent breaks that pattern, as the company is most decidedly private, and also operates in a highly competitive but also high growth area in the online realm. Read Full Post…
Bottom line: Whatsapp has likely been permanently blocked in China, while Satya Nadella’s visit to Xiaomi underscores Microsoft’s growing ties with the company, and Google’s China AI push is mostly PR.
Whatsapp booted from China?
A couple of the big high-tech multinationals are in the headlines as we head into the next-to-last month of the year, which seems like a good opportunity to review where these companies stand heading into the second term of President Xi Jinping and also as Donald Trump gets set to make his first China visit. One of those headlines involves Google(Nasdaq: GOOG), and comes in a soft-ish report pointing out the company is actively pushing its artificial intelligence (AI) development software in China.
Next there is Microsoft (Nasdaq: MSFT) CEO Satya Nadella, who is in China this week where he paid a visit on recovering smartphone maker Xiaomi. I’m not a huge fan of Microsoft’s strategy in general. But its growing ties with Xiaomi do look like an interesting new approach that could ultimately pay off nice dividends under Nadella’s 3-year-old leadership at the software giant. Read Full Post…
Bottom line: China’s apparent partial blockage of some Whatsapp functions for brief periods is unlikely to end with a total blockage, mostly because the service is used almost exclusively by foreigners.
Whatsapp temporarily blocked in China
Foreign media are buzzing about what appears to be the blockage of some functions on Whatsapp, with the obvious implication that a full blockage of the the popular instant messaging app could be next. This particular story has a few interesting angles, led by the fact that Whatsapp isn’t used by very many Chinese and also that it’s owned by social networking giant Facebook (Nasdaq: FB).
There are a also a number of precedents to go by, none of which looks too positive for the future of Whatsapp. Just about every other major global social networking app has been blocked in China by now, including Facebook itself, as well as Twitter (NYSE: TWTR) and Japan-listed Line (Tokyo: 3938). But there are a few notable exceptions that have been allowed to keep operating in China, one of which is Whatsapp and two others being the Microsoft (Nasdaq: MSFT) owned Skype and LinkedIn. Read Full Post…
Bottom line: Google will get permission from Beijing to open a Chinese version of its app Play Store later this year, most likely through a joint venture with NetEase or Tencent.
Google, NetEase talk China Play Store JV
The glacial return to China for Internet titan Google (Nasdaq: GOOG) is making its debut in the 2017 headlines, with word that the company is in talks to open a Chinese version of its app store with online game giant NetEase (Nasdaq: NTES). That tidbit nicely sets the stage for what’s likely to be a banner year for Google and possibly US Internet rival Facebook (Nasdaq: FB) in their race to see who can be first to plant a tent pole in China. Read Full Post…
Bottom line: iQiyi won’t make an IPO next year even though Baidu would like to get the company off its books, while Renren’s privatization marks one of the last buyouts for a US-listed Chinese firm from a wave dating back to last year.
iQiyi reportedly eyes 2017 IPO
The year 2016 is winding down as an unmemorable one for Chinese IPOs, thanks to a rocky start that cast a chill over the entire space. That said, the new year could be a bit more lively, amid signs that China’s securities regulator is opening the gates a bit wider to new offerings. That signal could bode well for offshore listings as well, with word that loss-making online video site iQiyi, controlled by online search leader Baidu (Nasdaq: BIDU), is contemplating such an offering next year. Read Full Post…
Bottom line: Meituan should be able to eventually monetize the vast audience for its selfie app, but may have to settle for a valuation below the $5 billion it wants for its IPO due to shorter-term investor skepticism.
Meituan banks on beauty for $750 mln IPO
Plans for a Hong Kong listing by selfie app Meitu are steaming ahead, but are also drawing some differing opinions from different sides of the East-West border. It seems Chinese fans of the app that lets users enhance photos of themselves to show their best face have quite a high opinion of this local beauty, believing it could be worth up to $5 billion. But westerners are a tad more skeptical, noting that Meitu now derives most of its money from smartphone sales rather than from anything directly related to the app. Read Full Post…
Bottom line: Tencent’s new crown as Asia’s most valuable company reflects the rapid growth of China’s private sector in the last decade, and could auger an eventual challenge to global social networking leader Facebook.
Tencent takes crown for most valuable Chinese company
Media are fawning on Chinese Internet sensation Tencent (HKEx: 700), which has just edged past telecoms giant China Mobile (HKEx: 941; NYSE: CHL) to become the nation’s most valuable publicly traded company. Such a feat would have been unthinkable a decade ago, when the nation’s private sector was still in its infancy and state-run monoliths like China Mobile still dominated China’s corporate landscape. But much has changed over the last 10 years, and Tencent in many ways reflects the huge potential that investors see in a Chinese private sector that has come to dominate many emerging industries like Internet-based products and services. Read Full Post…
