The following press releases and media reports about Chinese companies were carried on October 18. To view a full article or story, click on the link next to the headline.
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- White House Review Finds No Evidence of Spying By Huawei – Sources (English article)
- ZTE (HKEx: 763) Executives to Take 50 Pct Pay Cut (English article)
- Suning.com (Shenzhen: 002024) in Final Talks to Buy Masa Maso – Source (English article)
- Baidu (Nasdaq: BIDU) Establishes Location Based Services (LBS) Division (English article)
- Xiaomi Testing TV Set-Top Box – Sources (Chinese article)
- Latest calendar for Q3 earnings reports (Earnings calendar)
I’ve been trying to ignore a noisy war of words developing between e-commerce giant Jingdong Mall and one of its key couriers, but I’m finally surrendering and writing about it because it’s a relatively slow news day and also I haven’t written for a while about China’s chaotic e-commerce space. This particular issue is part of what looks like a broader growing discord between Jingdong, which also goes by the name 360Buy, and many of the courier companies that deliver the millions of goods that consumers buy online. Such discord is just as much a sign of the chaos that now plagues China’s e-commerce space as it is of the rampant competition that has pushed most major players deeply into the red.
E-commerce leader Alibaba loves to talk about how the business model for its popular TMall online mall gives it an edge over most of its rivals by letting it focus on its role as a web mall operator while leaving the actual business of managing online stores to third-party merchants. But the company is much less talkative about some of the downsides to such a business model, most notably the issue of quality control for the products and service provided by thousands of merchants that sell their goods on TMall. A sharp and sudden price hike in store rentals fees by TMall last year provoked a sharp backlash from many smaller merchants, creating huge headaches and a publicity nightmare for Alibaba. Now, many of those same small- and medium-sized merchants, known in the industry as SMEs, are complaining once again about new policies that Alibaba says are designed to improve quality and customer service, even as the SMEs argue those policies discriminate against them and lack transparency. (
Some interesting signs are coming from 2 major Chinese tech firms on the M&A front, with PC leader Lenovo (HKEx: 992) signaling it may finally slow down its acquisition frenzy, even as e-commerce aspirant Suning (Shenzhen: 002024) sends the opposite message with its announcement of a new major purchase. The news from Lenovo would represent a welcome break from the company’s steady stream of acquisitions, which look destined to give the company some major indigestion as it tries to digest such a wide array of assets in a number of very different markets. Meantime, Suning’s purchase of an e-commerce site targeting infants and toddlers isn’t too worrisome by itself, but from a broader perspective also reveals a company trying to grow too big too quickly.
The electronics price wars of 2 weeks ago are already starting to seem like a distant memory to consumers, but 3 companies at the heart of the wars are still feeling a hangover effect as China’s powerful state planner investigates them for fraud in the matter. A steady stream of headlines this week on the National Development and Reform Commission’s (NDRC) investigation into Jingdong Mall, Suning (Shenzhen: 002024) and Gome (HKEx: 493) is reminiscent of the nonstop headlines that flowed from the original price wars themselves 2 weeks ago. This time, however, the tone is decidedly negative and will undoubtedly hurt all 3 companies in the short term as consumers punish the trio for their deceptive practices.
The latest sign of distress in the battered e-commerce sector is coming from online clothing retailer Vancl, with media reporting the company has slashed operations at its package delivery arm in what looks like a desperate cost-saving move. Frankly speaking, I wholeheartedly support this kind of move, if it’s really true, as I personally believe that e-commerce companies shouldn’t be delivering parcels to begin with, and instead should leave that part of the business to professional specialists like UPS (NYSE: UPS) and China’s own China Postal Express, which itself is preparing for a domestic IPO to help fund its ongoing expansion. (
The recent round of online price wars took an interesting turn over the weekend, with data that looks suspiciously like it was provided by e-commerce leader Alibaba showing that a big part of the so-called wars may have been mostly talk and potentially just a publicity stunt by Jingdong Mall’s talkative CEO Liu Qiangdong. (
