Bottom line: Beijing’s latest online video clean-up is part of its drive to guide a bigger transition from a traditional TV to an Internet-based broadcasting landscape, with more similar moves likely over the next 1-2 years.
Beijing cracks down on cartoons
It’s been at least a month or two since Beijing’s latest crackdown on unhealthy Internet content, so it should come as no surprise that the morality police have launched yet another campaign, this time targeting cartoons. The latest dragnet has snared video superstar LeTV (Shenzhen: 300104), Baidu-backed (Nasdaq: BIDU) iQiyi and most other top industry players, who are among 29 companies being investigated in this latest web clampdown.
China’s broader Internet clean-up campaign is now actually entering its second year, and dates back to April last year when leading web portal Sina (Nasdaq: SINA) had its video license revoked for hosting pornographic content. (previous post) Since then, nearly ever major video site has been investigated and punished at one point or another, and social networking sites (SNS) like Tencent (HKEx: 700) WeChat have also embarked on clean-ups of controversial content. Read Full Post…
Bottom line: Caffebene could become the first big victim of an unsustainable Chinese coffee explosion, while KFC’s new lawsuit against rumor mongers reflects one of the many challenges it will face as it tries to rebuild its China image.
Caffebene China chief quits
A couple of new China fast-food headlines reflect the rapidly changing environment, as traditional players like KFC (NSYE: YUM) try to move upscale to attract consumers who now have many more choices than they did a decade ago. The upscale move has seen a massive explosion in premium coffee shops, which is behind one headline that has South Korean giant Caffebene showing signs of distress following its recent aggressive China expansion.
Meantime, the other more humorous headline has KFC suing 3 companies for spreading false rumors about its products on social media, including one saying it uses chickens that have 8 legs. On a more serious note, this story comes as KFC struggles to regain its skidding China momentum, and shows that Beijing isn’t the only one frustrated over the kind of rumor-mongering that regularly happens on popular services like Weibo (Nasdaq: WB) and Tencent’s (HKEx: 700) WeChat. Read Full Post…
Bottom line: A major new investment in Sina by CEO Charles Chao indicates he wants to take one last try at revitalizing the company’s core portal business, and might consider a sale if a good offer emerges.
Sina CEO Chao buys big stake in company
The China Internet world has been buzzing this week with speculation over what is driving a massive new personal investment of nearly $500 million in leading web portal Sina (Nasdaq: SINA) by its longtime CEO Charles Chao. I have quite a bit of respect for Chao, who is more of a western-style, bottom line-focused CEO than many of his Chinese Internet peers who run their companies like personal fiefdoms.
But that said, I’ve also previously said that Chao lacks the kind of bigger vision that many of his peers have, and that he should consider stepping aside to make way for some new leadership. Accordingly, perhaps this latest move by Chao augers a return to his company’s core portal business, following his focus over the last few years on building up its recently-listed Twitter-like Weibo (Nasdaq: WB) unit. That could be followed by his exit in a year or two, and even a possible sale of some or all of its remaining core assets. Read Full Post…
Bottom line: LeTV’s impressive first fund-raising for its new smartphone unit reflects big hopes due to its earlier success with Internet TVs, while Lenovo’s replacement of its mobile chief reflects concerns about its smartphone unit.
LeTV mobile unit raises big cash
A trio of new smartphone stories are highlighting rapid changes in the highly competitive landscape, where a steady stream of new entrants is creating constant challenges for existing players. Many of the newest entrants aren’t really worth mentioning, as they come from state-run backgrounds and have little or no chance of success.
That’s certainly the profile for construction equipment maker Sany Heavy (Shanghai: 600031), which has no place in this smartphone race but has just unveiled its inaugural model anyhow. Meantime, the industry’s hottest new entrant is online video high-flyer LeTV (Shenzhen: 300104), whose newly formed mobile unit Leshi Mobile has just raised a cool $400 million in its first funding round. Finally there’s the struggling Lenovo (HKEx: 992), whose failure to make a strong name for itself in the space despite numerous advantages may have prompted the departure of its mobile division chief. Read Full Post…
Bottom line: Alibaba’s technical glitch at Alipay, the launch of its new bank and use of its Taobao platform to auction of bad loans reflect its growing clout in financial services, as it attempts to build up its Ant Financial unit for a future IPO.
Technical glitch interrupts Alipay
E-commerce leader Alibaba (NYSE: BABA) is in a trio of finance-related headlines, spotlighting its growing bet on financial services that could be a huge growth area as Beijing opens the sector to private investment. One headline has seen Alibaba get official permission from its home province to open a bank, after it became one of the first 3 entities to receive private banking licenses under a pilot program by Beijing.
The second headline has seen the company’s popular Alipay electronic payments service experience technical problems that cut off access for 2 hours earlier this week, prompting it to quickly say that no accounts were compromised. The final news bit comes in a larger story about China’s growing bad asset crisis, which will see the nation’s top bad asset management company use Alibaba’s Taobao marketplace to auction off some of those assets. Read Full Post…
Bottom line: Twitter’s growing pursuit of business from Chinese advertisers shows it is watching the market for a potential future entry, while a new equity tie-up could see Didi Kuaidi’s hired car services launch on Weibo later this year.
Twitter chases China advertisers
Social networking (SNS) pioneer Twitter (NYSE: TWTR) and its Chinese clone WeiboCorp (Nasdaq: WB) are both in the China headlines today, each taking gambles on different parts of the market. After previously saying that China isn’t a market where it can do business, the original Twitter has quietly begun to court local advertisers, even as its actual service remains blocked in the country. Meantime, Weibo, which rose to prominence after Twitter was first blocked in China in 2009, has announced a relatively large new investment in local hired car services leader Didi Kuaidi. Read Full Post…
Bottom line: Didi Kuaidi’s IPO could come as early as the fourth quarter, with Hong Kong, China and New York standing equal chances of winning what could be the year’s biggest China Internet listing, worth up to $2 billion.
Didi Kuaidi to list in Q4
Just days after launching a massive promotion to attract new customers to its private hired car services, Didi Kuaidi is reportedly starting the process that could end with a major IPO for China’s largest taxi app operator by year end. Such a development wouldn’t come as a huge surprise, following the company’s formation earlier this year through the merger of 2 bitter rivals to create a Chinese market leader reportedly valued at up to $9 billion.
But equally interesting will be where this fast-driving company chooses to list. Just a year ago the answer would have almost certainly been New York, which is where most of China’s top Internet companies are traded. But a recent boom in China’s own stock markets and a new program that allows mainland investors to buy Hong Kong stocks have made Chinese Internet companies start to seriously consider both of these markets for IPOs as well. Read Full Post…
Shanghai may be famous for its entrepreneurial spirit, but its track record isn’t quite so stellar when it comes to nurturing top entrepreneurs. That could be starting to change, however, with word that Dalian Wanda Group, one of China’s most dynamic companies, plans to move its headquarters to Shanghai from its current location in Beijing.
As a longtime foreigner living in Shanghai, I’ve always been surprised by the relatively small number of major private companies for a city of our size. We should certainly be proud of some of our city’s most outstanding entrepreneurs, with names like Guo Guangchang of Fosun Group and Spring Airlines (Shenzhen: 601021) Chairman Wang Zhenghua as 2 outstanding examples. Read Full Post…
Bottom line: Beijing should step in to mitigate the latest cutthroat competition in the smartphone and hired car services spaces, or risk seeing meltdowns that lead to chaos and job losses.
Lenovo, LeTV CEOs in war of words
New battles broke out in 2 of China’s most hotly contested high-tech sectors last week, casting a spotlight on the aggressive and even potentially illegal tactics that Chinese companies sometimes use in their fierce rivalries and quest for market share.
One of those saw taxi app operator Didi Kuadi announce a major promotion offering aggressive subsidies for its hired car services. The other saw video high-flyer LeTV (Shenzhen: 300104) use equally aggressive tactics to launch its new line of smartphones, igniting a war of words after another prominent rival criticized its actions as “irrational”. Read Full Post…
Bottom line: A Yidao Yongche merger with Uber China continues the rapid consolidation in China’s hired car services, which could be followed soon by a successful bid by Uber and Baidu for Nokia’s digital mapping division.
Yidao Yongche to merge with Uber China
Rapid consolidation is taking place in China’s hired car services market, with word that a new alliance is shaping up between major local player Yidao Yongche and an existing tie-up between global giant Uber and local Internet search leader Baidu (Nasdaq: BIDU). As a longtime Chinese Internet watcher, I’m quite surprised at the sudden and rapid speed of consolidation in this particular sector, since such consolidation in other areas tends to be a slow and painful process that often takes years.
A major factor behind this sudden and rapid consolidation could be the participation by all 3 of China’s top Internet players, including Baidu, alongside social networking giant Tencent (HKEx: 700) and e-commerce leader Alibaba (NYSE: BABA). Two of those companies are also involved in a related headline that is seeing Baidu and Tencent making separate bids for the digital mapping division being sold off by former cellphone giant Nokia (Helsinki: NOK1V). Read Full Post…
Bottom line: China Mobile Games could be combined with Shanda Games if buyouts for the 2 companies succeed, followed by a re-listing in China that could gain strong interest from local investors.
China Mobile Games joins de-listing queue
The latest news that China Mobile Games (Nasdaq: CMGE) has received a buyout offer won’t surprise anyone, as it becomes the latest New York-listed Chinese Internet firm to receive such a bid due to its low valuation. What does come as a slight surprise is investor reaction to the bid, which saw China Mobile Games’ share price drop to well below the offer price. The could reflect some skepticism about the quality of this particular bid, which is coming from a Chinese securities brokerage.
This deal marks the latest in a long string of similar buyouts for US-listed Chinese firms whose shares have often languished in New York due to lack of interest from western investors who are unfamiliar with these names. Many of the companies are eying quick re-listings in their home China market, where they believe they can get valuations that are as much as double what they were worth in New York. Read Full Post…
