Bottom line: Huawei’s smartphone prices should continue to rise this year as it rolls out more higher-end models, while Xiaomi’s new drone product looks like a publicity ploy to draw attention back to its sputtering smartphones.
Huawei smartphone prices rise in 2015
Just days after new data showed Huawei finishing 2015 as China’s smartphone leader, different new data is revealing the company was the market’s only domestic brand that was able to raise prices for its products during the year. That boosts the growing perception that Huawei is emerging as China’s first solid mid-range smartphone brand, as it tries to climb the value ladder to someday challenge global leader Apple (Nasdaq: AAPL).
Meantime, domestic rival Xiaomi, which once also liked to compare itself to Apple, is diverging from its former US role model by preparing to roll out a drone product, according to media reports. If the reports are true, this would look like a somewhat desperate move by the fast-fading Xiaomi, which is unable to generate much positive buzz these days for news related to its struggling smartphone division. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 19. To view a full article or story, click on the link next to the headline.
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Major Banks in Rush to Support Apple Pay (Nasdaq: AAPL) After China Launch (Chinese article)
Uber Losing $1 Bln a Year to Compete in China (English article)
Xiaomi to Release Consumer Drone – Reports (English article)
Average Huawei Smartphone Price in China Rose in 2015 to $213, As Others Fall (Chinese article)
Bottom line: Huawei is likely to consolidate its position as China’s top smartphone brand this year, while Lenovo and Samsung could regain some market share as each mounts aggressive turnaround campaigns.
Huawei takes China smartphone crown
A year is almost like an eternity in the fast-moving smartphone world, and nowhere is that reality more on display than in the latest quarterly data on China’s cut-throat market. In the smartphone history books, 2015 will go down as the year that saw Huawei surge to become China’s largest player, with smaller homegrown brands Vivo and Oppo also making impressive gains. On the other side of the aisle, the year is one that former high-flyers Samsung(Seoul: 005930) and especially Lenovo (HKEx: 992) would rather forget, as both plunged out of the nation’s top 5 brands.
Smartphones are an extremely big business due to their high prices, a fact that has drawn numerous companies to the space and created intense competition in China. But constant changes to technology, combined with increasing commoditization due to the dominance of the free Android operating system, means that unknown companies can quickly rise to become major players. Similarly, a winner one year can quickly stumble to become a loser the next. Read Full Post…
Bottom line: An internal review that netted a Youku Tudou executive for suspected abuse of position was likely linked to the company’s pending purchase by Alibaba, and could be followed by more similar internal actions by China’s big tech companies this year.
Internal probe nets Youku VP
E-commerce leader Alibaba (NYSE: BABA) is quickly learning that major M&A can be a tricky business, as 2 of its largest purchases deliver headaches with the exposure of problems at acquired companies. First there were a series of accounting irregularities and a criminal investigation against an official at its Alibaba Pictures (HKEx: 1060) unit purchased in 2014, and now newly acquired online video unit Youku Tudou (NYSE: YOKU) is providing yet more headaches.
The latest problems are related to a single executive, with reports that a company vice president named Lu Fanxi has been taken away for questioning by police on suspicion of using his position for personal gain. This kind of activity is quite common in smaller Chinese companies, and Alibaba itself uncovered similarly inappropriate behavior by salespeople and fraudulent merchants at its B2B marketplace unit in 2011. Read Full Post…
Bottom line: Washington and Beijing risk seriously hindering global trade and M&A in high-tech products in the name of national security, and should be more transparent when blocking deals and trade over such concerns.
National security vetoes look increasingly protectionist
The national security debate was in 2 major headlines last week, as word emerged that Washington might consider blocking proposed major acquisitions of US companies by Chinese construction equipment giant Zoomlion (HKEx: 1157; Shenzhen: 000157) and memory chip maker Tsinghua Unisplendour. While neither deal has been vetoed yet, the talk comes less than a year after several Washington politicians expressed reservations that ultimately killed another deal by a Chinese company to purchase leading US memory chip maker Micron (Nasdaq: MU).
With the US entering an election year, the likelihood of more deals being killed for similar reasons could grow due to opposition from politicians seeking to curry favor from voters. The growing noise from Washington comes against a backdrop of similar moves by Beijing, which last year rolled out a new national security law that foreign technology firms said was overly invasive and discriminates against them. Read Full Post…
Bottom line: Apple’s China sales are likely to enter a new period of slower growth as the Chinese domestic smartphone market stalls and a growing number of higher-end buyers flock to the surging Huawei.
Apple faces long-term China slowdown
Everyone is buzzing about Apple’s (Nasdaq: AAPL) latest quarterly results, which show that sales of its iconic iPhones may have finally peaked and be set for a longer period of slow growth or even contraction. A key piece of that equation is the China market, where the company’s growth slowed sharply in the quarter due to fierce competition from a growing field of rising domestic competitors led by the surging Huawei.
As someone living in China, I can say with relative confidence that Huawei smartphones are indeed becoming increasingly common here on the streets of Shanghai. The brand is still seen as distinctly Chinese, in contrast to the trendier but fast-fading Xiaomi that rose to prominence partly on its ability to escape the “made in China” image. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 19. To view a full article or story, click on the link next to the headline.
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Lufax Completes Fundraising, Valuing Company at $18.5 Bln (English article)
Qualcomm (Nasdaq: QCOM) Unveils $280 Mln Joint Venture with Chinese Province (English article)
Fosun’s Guo Guangchang in Sports Tie-Up With European “Super Broker” (Chinese article)
Synutra (Nasdaq: SYUT) Announces Receipt of “Going Private” Proposal (PRNewswire)
Huawei Sets 2016 Sales Target of $81.8 Bln (Chinese article)
Bottom line: Huawei’s new move into notebook PCs could seriously challenge the existing establishment, and it could become a top 5 brand by the end of next year.
Huawei moves into notebook PCs
Telecoms giant Huawei is making a surprise move into the PC market, with word that it will launch a new line of notebook models next month using chips supplied by Intel (Nasdaq: INTC). The move would put Huawei into direct competition with leading PC maker Lenovo (HKEx: 992), as it aggressively expands beyond its older networking equipment business and diversifies into consumer electronics.
Huawei’s move into notebooks isn’t a huge surprise, since such products are increasingly similar to the new generation of smartphones where Huawei has found recent success. Huawei already sells tablet PCs, which perform many of the functions as notebooks as well. But the move does represent an entire new product area for Huawei, and is almost certain to put the company on collision course with Lenovo in their home China market. Read Full Post…
Bottom line: Competition will remain fierce in China’s smartphone market this year, as major players including Huawei and Xiaomi compete aggressively with newcomers like LeTV for market share.
LeTV sets ambitious smartphone goal
The sputtering Xiaomi and high-flying LeTV (Shenzhen: 300104) have become 2 of China’s first smartphone makers to announce 2015 sales figures, as broader industry data show just how crowded the field has become. Xiaomi’s first-look sales figures come in a microblog post from one of its executives, and show the company missed its 2015 sales target by around 10 percent. LeTV’s figures come from an emailed statement, and say the company sold a relatively modest 4 million smartphones last year following its entry to the space.
Then there’s the broader industry data that points out 7 of the world’s top 10 smartphone brands last year came from China. That report notes that among the top 10, only Samsung (Seoul: 005930), Apple (Nasdaq: AAPL) and LG (Seoul: 066570) were non-Chinese, and that a surging Huawei overtook Lenovo (HKEx: 992) to become the world’s leading Chinese brand. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 16-18. To view a full article or story, click on the link next to the headline.
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China’s Haier to Buy GE’s (NYSE: GE) Appliance Unit for $5.4 Bln (English article)
Huawei Says to Launch Notebook PCs in February with Intel (Nasdaq: INTC) (Chinese article)
Regulator Orders Removal of False Claims Posts on Baidu (Nasdaq: BIDU) Tieba Service (Chinese article)
Xiaomi Misses Smartphone Sales Target by 10 Pct on China Slowdown (English article)
JD.com (Nasdaq: JD) Finance Arm Raises 6.65 Bln Yuan, Valued at 46.7 Bln Yuan
Bottom line: Google’s new alliance with Lenovo and its rare response to rumors Chinese media rumors are the latest signals of its plans to launch an app store and sell its Nexus smartphones in China later this year.
Google Tangos with Lenovo
Google (Nasdaq: GOOG) has been in the China headlines twice these last few days, announcing a new tie-up with local PC giant Lenovo (HKEx: 992) and issuing a rare response to the latest rumors on its slow march back to the world’s biggest Internet market. These latest signals seem to show that a return to China is almost inevitable for Google, which wants to avoid a negative publicity backlash that will inevitably come when it announces the move later this year.
Google abruptly shuttered its China search service nearly 6 years ago, after Beijing refused the company’s demands to ease strict Chinese rules that require all Internet sites to self-police themselves for politically sensitive content. The closure and acrimony that followed carried a healthy dose of self-righteousness by Google, and thus a return to a market it once scorned might seem just a tad hypocritical. Read Full Post…
