Bottom line: A new global tie-up with Uber marks a major advance for Ant Financial’s Alipay, while new Internet car initiatives by Tencent and Alibaba are unlikely to find big audiences despite getting big resources from their backers.
Alibaba, Tencent car initiatives drive ahead
A series of stories involving Alibaba (NYSE: BABA) and Tencent (HKEx: 700) reflect the growing importance China’s leading Internet firms are placing on cars, which could be the next major battleground for web-based services. Alibaba is in 2 related headlines, including one that says its affiliated Ant Financial unit has signed a major tie-up that will allow anyone in the world to use its Alipay electronic payments service to pay for Uber hired cars.
The other 2 headlines both involve car manufacturing, including one that says mass production has begun for the first Internet-equipped model co-produced through a tie-up between Alibaba and SAIC (Shanghai: 600104), China’s leading car maker. The other headline says a car-making venture backed by Tencent has been quietly poaching workers from the likes of Google (Nasdaq: GOOG) and Germany’s Daimler (Frankfurt: DAIGn), as it gears up for its own production. Read Full Post…
The following press releases and news reports about China companies were carried on May 4. To view a full article or story, click on the link next to the headline.
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Tencent (HKEx: 700) Venture Poaches Google Talent as Chinese Techs Pile into Autos (English article)
SAIC Begins Mass Production for Car Jointly Produced With Alibaba (NYSE: BABA) (Chinese article)
Bottom line: UnionPay’s move into the dollar-denominated US credit card market looks smart strategically, but is likely to fail due to clumsy execution and fierce competition from Visa and MasterCard.
UnionPay issues first US credit cards
Watch out, Visa (NYSE: V) and MasterCard (NYSE: MA). China’s UnionPay is taking on this global pair of credit card giants on their home turf, with word that the Chinese company will launch its first US-based card in partnership with ICBC (NYSE: 1398; Shanghai: 601398), China’s biggest bank.
Of course I’m being just a bit facetious here, since UnionPay’s first-ever US credit card will have to overcome huge obstacles to ever become a serious rival to local cards from Visa, MasterCard or American Express (NYSE: AXP). But I have to at least commend UnionPay for taking the offensive, since it’s likely to face a major assault on its own home turf later this year when Beijing finally opens the Chinese credit card market to foreigners. Read Full Post…
Bottom line: LinkedIn’s rapid growth in China has been aided by its low-key approach to the sensitive market, and a high degree of autonomy for its local unit from its distant US-based parent.
LinkedIn reaches 20 mln China users
US business networking giant LinkedIn (NYSE: LNKD) is quietly emerging as one of the few foreign success stories in China’s social networking (SNS) landscape, using a low-key approach that has helped it steer clear of controversy. I haven’t written much about the company since its slightly controversial entry to China 2 years ago, when it issued a statement acknowledging it would be subject to the country’s strict self-censorship rules.
LinkedIn’s ability to avoid controversy is probably due in large part to its low-key approach, and its choice of an industry veteran with experience in both the US and China to head its local operations. True to his low-key style, company chief Derek Shen is making some minor headlines today with comments at a Shanghai event, including his disclosure that LinkedIn has signed up more than 20 million local users during its first 2 years in China. Read Full Post…
Bottom line: Beijing should take more aggressive steps to ensure true competition between China’s 3 telcos, to prevent collusion like their current resistance to ending domestic roaming fees.
China telcos resist end to roaming fees
The latest sign of collusion in China’s telecoms sector was in the headlines last week, as the nation’s big 3 carriers appeared to band together to counter new calls for an end to domestic roaming charges. A number of arguments were put forth for maintaining such fees, but the bottom line is that carrier costs of providing such service are negligible and the fees themselves remain an important revenue source.
The US market, which is most similar to China, eliminated such fees more than a decade ago due to competition between 4 major carriers that emerged in the 1990s. But China’s carriers, while competitive in some areas, appear to be acting together in anti-competitive fashion to resist the change, a common occurrence due to close ties between the companies. Read Full Post…
Bottom line: 58.com’s stock could be set for some upside in the second half of the year, as it returns to profitability after a well-executed acquisition spree that has sharply boosted its revenue growth.
58.com feasts on ads, acquisitions
Classified ads may not sound like the sexiest area of the Internet, but they’ve provided some strong growth for the acquisitive 58.com (NYSE: WUBA), which is fast emerging as a leader in the space and is often called the Craigslist of China. The company’s aggressive acquisition campaign has led to explosive revenue growth, but has also pushed the company into the loss column as it digests its many recent purchases.
That could present a good buying opportunity for investors with a longer term perspective, as 58.com looks set to return to the profit column and continue its strong revenue growth. If all goes according to plan, 58.com could end next year as China’s undisputed leader in the online advertising services realm. The company is already squarely ahead of the older 51job.com (Nasdaq: JOBS) and is on track to surpass current leader Zhaopin (Nasdaq: ZPIN), which both focus on online job recruiting. Read Full Post…
Bottom line: Pony Ma’s big charitable donation reflects some restlessness with his Tencent empire, while Robin Li’s potential pursuit of the AC Milan soccer club reflects a recent interest by Chinese billionaires in sports club ownership.
Robin Li chasing AC Milan?
Two of China’s richest Internet entrepreneurs are in the headlines today for their personal spending, led by a huge gift from Tencent (HKEx: 700) chief Pony Ma as he follows many of his western peers into philanthropy. Meantime, Baidu (Nasdaq: BIDU) chief Robin Li may also be following several of his Chinese peers into the realm of sports team ownership, with word that he may be one of the leaders of a group aiming to buy Italian soccer club AC Milan.
Neither of these stories will have much impact on Tencent or Baidu, since both involve each companies’ founder engaging in personal interests. But they do provide some insight into the personalities of these multi-billionaires, who still make most or all of the major decisions about their companies. Read Full Post…
Bottom line: Beijing and local governments should move more aggressively to regulate O2O takeout dining services, and encourage consolidation around 2-3 players with the scale and resources to ensure the sector’s healthy development.
Ele.me gets big new funding from Alibaba, Ant
New signs of overheating emerged in China’s online takeout dining realm last week, as one of the nation’s top players and a smaller rival landed major new funds to fuel their money-losing operations. The pair of deals saw China’s two leading e-commerce companies, Alibaba (NYSE: BABA) and JD.com, collectively pump nearly $1.5 billion into new investments in the space, even as other major players like Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU) are also beefing up their services.
The flood of new money has produced a rapidly escalating round of price wars, offering deals for consumers but creating chaos in the market and on the streets of major cities like Beijing and Shanghai. This kind of boom is quite typical for China’s emerging high-tech sectors, but in this case also poses unique challenges due to practical dangers such as threats to food and road safety. Read Full Post…
The following press releases and news reports about China companies were carried on April 19. To view a full article or story, click on the link next to the headline.
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Alipay Owner Ant Financial to Start Shanghai IPO Process as Soon as 2016 (English article)
Tencent (HKEx: 700) CEO Ma to Donate 100 Mln Company Shares Towards Charity (company announcement)
Chinese Group Wants to Seal AC Milan Takeover by June (English article)
Siliconware Precision (Taipei: 2325) Says $1.7 Billion Tsinghua Deal Is on Hold (English article)
Bottom line: Positive buzz in China bodes well for Huawei’s latest higher-end model, the P9, which could help the company meet its target of selling 10 million of the smartphones and continue its positive momentum.
Huawei launches P9 in China
A week after unveiling its new mid-range smartphone at an event in London, the fast-rising Huawei has launched the P9 at an event here in China that is drawing strong interest from media and fans attracted by its high-end camera. I visited a Huawei shop over the weekend on the popular Nanjing Road pedestrian street here in Shanghai, and was quite surprised to see large crowds checking out the new model.
Of course the crowds were even larger at the much bigger Apple (Nasdaq: AAPL) store just down the street, even though it’s been a month since Apple launched its latest model, the small-screen iPhone SE. But the fact that Huawei could draw big crowds at all testifies to the company’s recent growing momentum, as it looks to overtake Apple and Samsung (Seoul: 005930) to become the world’s largest smartphone brand. Read Full Post…
The following press releases and news reports about China companies were carried on April 16-18. To view a full article or story, click on the link next to the headline.
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Tencent (HKEx: 700) Said in Talks for Syndicated Loan Up to $2 Bln (English article)
Alipay, Huawei Join in Fingerprint Verification Mobile Payments (Chinese article)
JD.com (Nasdaq: JD) in $200 Mln Merger With Take-Out Dining Platform Dada (English article)
