Bottom line: UnionPay will see its market share stagnate or even start to decline at home as it faces new competition in the next 3 years, while it’s likely to see sharp growth in its overseas expansion.
UnionPay faces new challenges at home
The coming year could be a groundbreaking one for the important but low-profile business of providing financial settlement services in China, now dominated by bank card issuer UnionPay. Such services allow banks and companies to transfer money back and forth between each other electronically, facilitating things like credit and debit card purchases and letting people withdraw cash from other banks’ ATMs besides their own.
While UnionPay has dominated the sector for domestic transaction settlement service for the last decade, its state-granted monopoly will officially end this year as China complies with a WTO ruling in response to complaints from global leaders MasterCard (NYSE: MA) and Visa (NYSE: V). At the same time, UnionPay is getting challenged by homegrown domestic players led by e-commerce giant Alibaba (NYSE: BABA), whose financial arm is also pushing into the business. Read Full Post…
Bottom line: WeBank and other newly approved private lenders are likely to struggle to find an audience due to operational limitations and competition from state-run banks and gray-market institutions.
WeBank makes first loan in Shenzhen
Some have predicted that a new group of private banks could shake up China’s stodgy financial sector, though the first loan from the group doesn’t look all that threatening. That loan came over the weekend, when WeBank, which is backed by Internet giant Tencent (HKEx: 700), made its first loan since receiving its license late last year. (previous post) The loan was for a modest amount and went to a truck driver in the southern boomtown of Shenzhen where WeBank is based. It carried a relatively high interest rate of 7.5 percent, which is probably suitable for that risk level. (English article) Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 6. To view a full article or story, click on the link next to the headline.
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Tencent-backed (HKEx: 700) WeBank Gets The Ball Rolling With First Loan (English article)
Wanda E-Commerce Initiative To Go Online In Fourth Quarter (Chinese article)
Bottom line: Perfect World’s de-listing plan is likely to succeed and could be followed by a merger with Shanda or Giant Interactive, while Renren is likely to also get bought out and de-list by the end of the year.
Perfect World gets buyout offer
Perfect World (Nasdaq: PWRD) has become the latest US-listed online game operator to decide it’s unappreciated by shareholders, announcing a plan to privatize and de-list its shares from New York. The management-led buyout offer shouldn’t come as a surprise, as it follows a steady stream of similar moves that has seen peers like Giant Interactive and Shanda Games (Nasdaq: GAME) also leave or prepare to leave the market.
At the same time, another headline from struggling social networking site (SNS) Renren (NYSE: RENN) is fueling speculation of a similar imminent de-listing. That news has Renren announcing the resignation of its CFO — news which should normally have a neutral to negative effect on the company’s stock. But in this case the stock has jumped on the news, indicating investors may think a buy-out offer is coming. Read Full Post…
Bottom line: New IPOs by Chinese tech firms will slow sharply next year, with profitable, sector-leading companies the most likely to make successful offerings.
Linekong finishes flat in banner year for IPOs
On this final day of 2014, I thought I’d take a look at the scorecard for high-tech IPOs this year, including how they’ve performed since their debuts and what we might expect for next year. It seems fitting to start the discussion with the final high-tech IPO of the year, which came with a flat trading debut on Tuesday for mobile gaming company Linekong (HKEx: 8267). That may sound bad, but it’s actually quite good for gaming stocks that have become investor pariahs over the last 2 years. Read Full Post…
The final week of the year has seen 2 of China’s top technology leaders looking inward, with Alibaba (NYSE: BABA) founder Jack Ma and TCL (Shenzhen: 000100) chief Li Dongsheng both taking the occasion to reflect on some of the people and events that put them on their paths to success. In one of his occasional posts since recently resuming microblogging, Ma reflects on an impressionable meal with a friend more than 20 years when China was a far different place from now and he was a universe away from his current status as China’s richest man. Meantime, Li reflected in a series of posts on the recent passing of his mother, and the huge influence she had on his life. Read Full Post…
Bottom line: Dianping’s major new fund raising is likely to be its last before a New York IPO, which could come as soon as the first half of next year and raise up to $800 million.
Dianping in major new fund raising
I’m having a slight feeling of deja vu today, after reading the latest reports that restaurant ratings and group buying site Dianping has just won a major new funding round worth nearly $800 million. This particular news comes just a week after similar reports came out saying that rival group buying site Meituan was on the cusp of closing a new funding round totaling $700 million, in one of the biggest such private investments for China’s Internet sector this year. Internet watchers will recall that the last time we saw this kind of fund-raising flurry around a single industry came nearly 4 years ago, when investors poured hundreds of millions of dollars into the very same group buying space. Read Full Post…
Bottom line: Wanda will face a steep uphill climb in electronic payments following its purchase of 99Bill, while UnionPay will continue to grow rapidly overseas as more Chinese travelers and businesses go abroad.
Wanda buys control of 99Bill
Two big news bits from the electronic payments space are in the headlines as we round out 2014, led by news of a major new acquisition by property giant Wanda Group just days after a Hong Kong IPO for its core shopping mall unit. The other new revolves around industry giant UnionPay, which has feasted on outbound Chinese tourist and business spending to pass larger global rivals MasterCard (NYSE: MA) and Visa (NYSE: V) for issuing credit cards in nearby South Korea. Read Full Post…
Bottom line: Dianping or Meituan is likely to mount an IPO bid next year, in a deal that could value either at around $5-10 billion and win a premium as China’s first group buying site to list.
Meituan gets new mega-funding
China’s newly consolidated group buying sector could be close to making its first IPO, with word that leading operator Meituan is on the cusp of landing a massive $700 million in new funding. Such a huge amount would be the company’s fourth round of funding since 2010, and would follow not long after it reportedly raised $300 million earlier this year. That kind of funding frenzy often comes just before an IPO, which leads me to expect we could finally see Meituan become China’s first publicly listed group buying Internet company with a New York IPO perhaps in the first half of next year. Read Full Post…
Bottom line: Uber will face a difficult time in its global expansion due to poor understanding of local markets and lack of control of its rental fleets.
By Lu Jin
Uber faces uphill road in China
In the last few days, while I was still pondering the big news about a $600 million investment by China’s leading search engine Baidu (Nasdaq: BIDU) in Uber (English article), the more powerful news broke that the car service provider had quadrupled its fares during the Sydney cafe hostage crisis this week in Australia. This kind of hasty and poorly conceived move convinced me once again that Uber’s global expansion will not succeed in many global markets, especially one like China. Read Full Post…
Bottom line: The target of Qihoo’s rumored smartphone purchase could be Coolpad, while Xiaomi’s new tie-up with Midea could be followed by similar pairings in a broader drive to develop smart appliances.
Qihoo eying Coolpad?
A couple of big deals are bubbling around in the smartphone space today, led by yet another new tie-up involving smartphone sensation Xiaomi, this time with home appliance maker Midea (Shenzhen: 000333). But the hyperactive Xiaomi is having to share the spotlight with the edgier security software specialist Qihoo 360 (NYSE: QIHU), which is reportedly eying a deal for its own major smartphone acquisition worth up to $1 billion.
Each of these deals has slightly different motivating factors, but the central theme is that companies like Qihoo and Xiaomi increasingly see smartphones as a central element of larger suites of product and services rather than just a stand-alone product. In Xiaomi’s case, the company already counts smartphones as its core central product and is trying to build up an ecosystem of related products and services like smart TVs and air conditioners. Qihoo is eying smartphones as a vehicle for propagating its core software and Internet services. Read Full Post…
