The first third-quarter smartphone sales data are out, revealing that Huawei retained its leading position in the fiercely competitive Chinese market. But the high flying Huawei also saw its share drop by more than one percentage point, indicating its momentum may be slowing. At the same time, other reports are saying that Meizu, the Alibaba-backed (NYSE: BABA) smartphone brand that isn’t in the China top 5, has signed on a small group of new investors in a deal that hints at a possible upcoming IPO.
Let’s jump right in with the big-picture numbers, which are coming in new quarterly data from TrendForce. According to that data, Huawei controlled 19.1 percent of the Chinese smartphone market in the third quarter, down from 20.4 percent in the previous quarter. (Chinese article) Total smartphone sales in China reached 168 million for the quarter. Read Full Post…
Bottom line: Lenovo and other Chinese firms need to abandon their approach that targets declining, older brands for global M&A, and instead focus on organic growth and more strategic assets with better growth potential.
Lenovo eyes Fujitsu’s PC business
The acquisitive Lenovo (HKEx: 992) was in M&A headlines again last week, when media reported it was in talks to buy the aging PC business of Fujitsu, an operation that is largely inconsequential outside its home Japanese market. Such a purchase would continue a trend dating back more than a decade, which has seen Lenovo purchase declining global brands for bargain prices with hopes of resuscitating those names to expand its global footprint. Read Full Post…
The following press releases and news reports about China companies were carried on October 8-10. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) in Talks to Take Over Fujitsu’s PC Business: Source (English article)
NetEase (Nasdaq: NTES) Media Arm Submits Draft Registration to SEC for US IPO (PRNewswire)
Wal-Mart (NYSE: WMT) Doubles Stake in JD.com (Nasdaq: JD) Moving Further Into China (English article)
It’s Official: LeEco (Shenzhen: 300104) Will Break US Boundaries on October 19 (English article)
Hollywood’s Digital Domain Takes Citic and SoftBank China as Strategic Investors (Businesswire)
Bottom line: Lenovo’s big job cuts at Motorola could auger a write-off of the brand in the next half year, while Xiaomi’s huge offline expansion looks necessary but will further undermine its trendy high-tech image.
Lenovo slashes jobs at Moto
Two former smartphone high-flyers are in the headlines today, with PC giant Lenovo (HKEx: 992) and Xiaomi both taking steps to try and regain their former glory. Lenovo’s move looks like a major retreat for its struggling Motorola brand, which has just slashed more than half of its staff. Meantime, Xiaomi has just rolled out two higher-end models in a bid to go upscale. But what caught my attention were details of the company’s plans to sharply boost its offline presence in the latest reports.
Both stories reflect companies in transition, after each tumbled from the ranks of China’s top smartphone brands due to failure to build a loyal customer base. Lenovo bought Motorola for $2.9 billion 2 years ago and was hoping to position the faded brand as its premium product line. Meantime, Xiaomi skyrocketed to fame 3 years ago partly on an online-only sales model that helped it control costs and position itself as a trendy, cutting-edge brand. Read Full Post…
The following press releases and news reports about China companies were carried on September 28. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) Cuts 1,000, Including More than Half of Motorola Staff (Chinese article)
Blizzard, NetEase (Nasdaq: NTES) Renew Operation Agreement in China (PRNewswire)
Paid Q&A Service Fenda Reappears After 47 Day Pause, Only Offers Medical Advice (Chinese article)
Starbucks (Nasdaq: SBUX), Master Kong in Tie-Up for Drinks from 10 Yuan (Chinese article)
Xiaomi Guns for Apple (Nasdaq: AAPL) With Latest Premium Smartphone (English article)
Bottom line: Lenovo’s latest results show a company in transition as it overhauls its struggling smartphone business, and could presage a fledgling turnaround as it focuses on mid-range models with its young Zuk brand.
Lenovo at a turning point?
Newly released quarterly results from the struggling Lenovo (HKEx: 992) are showing some early positive signs, as the company seeks to turn around its miserably performing smartphone business. Lenovo stumbled badly in smartphones, which will play a vital role in its future as its older PC business rapidly matures. The company bet heavily on cheap, low-end models that initially gained big market share, especially in its home market, but then later fizzled due to lack of brand recognition and a reputation for poor quality. Read Full Post…
The following press releases and news reports about China companies were carried on August 5. To view a full article or story, click on the link next to the headline.
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Massive Funding, Apple (Nasdaq: AAPL) Backing Helped Didi Outrun Uber in China (English article)
China Starts to Lose Its Taste for McDonald’s (NYSE: MCD) and KFC (NYSE: YUM) (English article)
Tablet PC Sales Fall in Q2, But Lenovo (HKEx: 992), Huawei Post Gains (Chinese article)
Bitauto (NYSE: BITA) Consortium Invests $550 Mln in Yixin Capital (PRNewswire)
Online Children’s English Learning Platform Vipkid Wins $100 Mln Series C Funding (English article)
Bottom line: Xiaomi’s new move into notebook PCs looks like a necessary step toward its goal of creating an ecosystem of entertainment products and services, but is likely to suffer from weak reviews and stiff competition from established brands.
Xiaomi rolls out notebook PCs
I really want to write something positive about fading smartphone maker Xiaomi these days, but the company really isn’t giving us much suitable material with its steady string of new but uninspired products. The latest of those is a couple of new notebook PC models, marking its move into a crowded area where it will face stiff competition from established players like Apple (Nasdaq: AAPL) and Lenovo (HKEx: 992), as well as new entrant Huawei.
One could argue that while Xiaomi is coming late to the notebook PC game, such a move is still necessary since such computers will be a critical component to the company’s dream of building an ecosystem of products and services around a range of interfaces like PCs, smartphones and TVs. And Xiaomi is still ahead of the more upward trending LeEco (Shenzhen: 300104), which likes the ecosystem idea so much that it actually changed its former name from LeTV to include this recent industry buzzword. Read Full Post…
Bottom line: The appearance of JD.com as China’s first Internet company in the Fortune 500 and exclusion of the nation’s 3 biggest players underscores major shortcomings of the list due to its reliance on revenue as the basis for its rankings.
JD.com lands in Fortune 500
Everyone is buzzing these last few days about the latest edition of the Fortune 500, including the rising presence of China on the list of the world’s largest companies by revenue. But as a China tech watcher, the fact that most caught my attention was the absence of China’s top 3 Internet companies from the list, namely Tencent(HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). Adding to the puzzle was the appearance of Alibaba’s much smaller e-commerce rival JD.com (Nasdaq: JD), which became the first Chinese Internet company to make the Fortune 500 list. Read Full Post…
Bottom line: New data shows Huawei’s smartphone sales growth slowed sharply in the second quarter, and the company will be lucky to log 20 percent annual growth due to saturation in its home China market.
Huawei smartphone growth slows sharply in Q2
The first of many reports for second-quarter smartphone sales has just come out, revealing one of the first declines in more than a year for the surging Huawei. At the same time, the new data from TrendForce show that surging Chinese brands Oppo and Vivo are also seeing rapid slowdowns in their recent breakneck growth. The bigger picture is that the global smartphone market is slowing sharply or even contracting after years of rapid growth, with global leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930) also suffering big drops this year. Read Full Post…
The following press releases and news reports about China companies were carried on July 14. To view a full article or story, click on the link next to the headline.
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Singapore’s GIC Buys 5 Pct of China Telecom’s (HKEx: 728) H-Shares (HKEx announcement)
Inspur, Ericsson (Stockholm: ERICb) Form Tie-Up in Cloud, Internet of Things (Chinese article)
Yum (NYSE: YUM) Shares Rise After CEO Signals China Momentum (English article)
Wanda to Bring First International Soccer Tournament to China (company announcement)
Tishman Teams With Lenovo (HKEx: 992) on South China Real Estate Development (English article)
