The following press releases and media reports about Chinese companies were carried on January 9-11. To view a full article or story, click on the link next to the headline.
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Ping An’s Online Finance Platform Lufax Wins $900 Mln Series B Funding (English article)
Lenovo (HKEx: 992) Making First Google (Nasdaq: GOOG) Project Tango Phone (English article)
Vipshop (NYSE: VIPS) Apologizes Over Fake Moutai Scandal (Chinese article)
Alibaba (NYSE: BABA) Sports in Alliance with NFL American Football League (Chinese article)
Xiaomi Removes Qihoo 360 (NYSE: QIHU) Products From App Store (Chinese article)
Bottom line: Huawei’s move into the US smartphone market looks like a logical and necessary step to consolidating its place as a top global brand, but will require years of major investment to succeed.
Huawei to sell smartphones in US
Riding high on strong momentum from the second half of 2015, smartphone maker Huaweiis aiming to fill the last major black hole in its global footprint by entering the US. The new campaign carries special significance for Huawei, since the company was banned from selling its older networking equipment in the US several years back due to national security concerns from Washington.
The move into the US was just one of many topics that Huawei executives discussed at CES, the world’s biggest consumer electronics show taking place this week in Las Vegas. But it was the move the attracted the most attention due to Huawei’s past frustrations with one of the world’s biggest markets for both networking equipment and smartphones. Read Full Post…
It’s official: the fast-rising Huawei has formally passed the 100 million mark for smartphone sales this year, cementing its place as the world’s undisputed third largest player behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). In a relatively unusual move for this low-profile company, Huawei is also trumpeting the milestone in a formal press release and forecasting more strong growth for next year.
Huawei has been China’s biggest success story to date in the young smartphone space, gaining rapid momentum over a crowded field of domestic rivals that includes Lenovo (HKEx: 992), ZTE (HKEx: 763; Shenzhen: 000063) and smaller names like Alibaba-backed Meizu. But the company should also carefully watch the case of the stumbling Xiaomi, which was being called a homegrown Chinese version of Apple before it began its recent rapid fall from grace. 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: 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: Lenovo’s latest results show a company on the cusp of prolonged downturn over the next 2-3 years, as efforts to resuscitate its ailing smartphone business look set to sputter.
Lenovo stands at a crossroads
When is a $714 million loss good news? It appears the answer is when your name is Lenovo(HKEx: 992), the world’s biggest PC maker, which has just thrilled investors by reporting the massive loss in its latest quarterly results. It seems investors were braced for even worse, expecting a loss of just over $800 million due to a previously announced $923 million one-time charge as it cleared out massive inventory of its low-end smartphones that have failed to find a market in China or overseas.
Of course I’m being slightly sarcastic in my assessment, since such a massive loss is never a good thing and Lenovo in this case simply wasn’t losing as money as quickly as many were expecting. But the better-than-expected result still sparked a rally for Lenovo’s shares in Hong Kong, with the stock finishing up nearly 6 percent after an earnings report that was quite uninspired otherwise. Read Full Post…
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)
Bottom line: Lenovo’s focus on PCs for its latest product launch is designed to divert attention from its struggling smartphones, which are likely to show more losses and weak performance in the company’s upcoming quarterly results.
Lenovo targets bargain hunters
It was just 2 years ago that Chinese tech titan Lenovo (HKEx: 992) was on top of the world, having just gained the title as the world’s biggest PC brand from Hewlett-Packard (NYSE: HPQ) and declaring that Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930) were its next targets. But you don’t hear the company’s chatty chief Yang Yuanqing talking about Apple, Samsung or even smartphones that much these days, most likely because all of its efforts in that space have struggled to find an audience.
Instead, Yang was falling back on his company’s older PC business in the latest headlines, showing off a few new models from its Yoga line that can function as both laptop and tablet PCs. The only problem is that both of these types of computer are in rapid decline, as consumers increasingly flock to large-screen smartphones for simple functions like reading news and e-commerce shopping that they used to do on their PCs. Read Full Post…
Bottom line: Larry Page’s latest remarks are the newest signal that Google is working to return to China with a local version of its Play store and Nexus phones, as it tries to open a new chapter in its tense relationship with Beijing.
Larry Page hands off Google China strategy to new CEO
Observers are putting the latest China comments from one of Google’s(Nasdaq: GOOG) co-founders under the microscope, trying to figure out the company’s intentions towards a market that it both loves and hates. The bottom line seems to be that Larry Page wants to personally distance himself from China, following his company’s high profile spat with Beijing over censorship that saw Google withdraw from the Chinese search market in 2010.
But at the same time, Page wants to let others take Google back into China, in a nod to the importance of a market that has become the world’s largest for both smartphones and Internet use. That’s probably quite a prudent approach in face-conscious China, where personal relationships are a key element to doing business. That same principle also means that meetings between people with strained relationships should also be avoided, which is what Page appears to be doing by personally distancing himself from Google’s future operations in China. Read Full Post…
Bottom line: The arrest of a leading private equity executive for insider trading and Jin Jiang’s new fund-raising represent the latest efforts to clean up China’s unruly stock markets and make them more attractive to international investors.
Private equity giant detained for insider trading
I don’t normally write too much about China’s domestic stock markets due to their chaotic nature, but a couple of news items are shining a spotlight on the ongoing major task of cleaning up these unruly venues as they try to become more international. The larger of the 2 stories is making big waves here in China, where the one of the nation’s best-known private equity chiefs has been detained for insider trading. The second item has recently acquisitive hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600574) preparing for a major new fund raising, as it tries to clean up its own financial house in a bid to become China’s first global hotel operator.
Each of these items is quite different, though both are focused on different aspects of cleaning up a domestic stock market that often seems more like the Wild West than a place for serious investors. Share price manipulation is common practice in the market, which is reflected in the insider trading story. The Jin Jiang story reflects the murky relationships that often exist between listed companies and government entities, making it nearly impossible for serious investors to clearly understand a company’s financial health. Read Full Post…
Bottom line: VMWare’s new China joint venture is the latest such tie-up for a major western tech firm to ease Beijing’s national security concerns, and could prompt the US to implement tougher restrictions on technology transfers to China.
VMWare in China cloud joint venture
EMC (NYSE: EMC) and its acquirer Dell are jumping on a high-tech train that goes directly to Beijing, with word that EMC-controlled VMWare (NYSE: VMW) has become the latest IT firm to set up a joint venture with a Chinese partner. The trio of high-tech giants join a growing number of other leading US tech firms to form similar ventures, with Hewlett Packard (NYSE: HPQ), IBM (NYSE: IBM) and Cisco (Nasdaq: CSCO) all forming similar tie-ups over the past year.
The rush to form such alliances comes as China rolls out a new national security law that could otherwise limit the big multinationals’ ability to sell their products and services to the Chinese government and big state-owned enterprises. But at the same time, a new New York Times report is pointing out that many of the Chinese firms in these new tie-ups also have links to China’s defense establishment, potentially setting the stage for a showdown between Washington and Beijing over national security. Read Full Post…
