The following press releases and news reports about China companies were carried on July 28. To view a full article or story, click on the link next to the headline.
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Greater China Loses Status as Apple’s (Nasdaq: AAPL) Second Largest Region (Chinese article)
Wanda Buys Movie Portal Mtime for $280 Mln (Chinese article)
Sale of Yum Brands (NYSE: YUM) China Franchise at a Standstill (English article)
Alibaba (NYSE: BABA) Bids for East Europe’s Top Online Auction Site Allegro (Chinese article)
Xiaomi Launches Notebook Computer With Starting Price of 3499 Yuan (Chinese article)
Bottom line: Huawei’s eroding profit margins and slowing smartphone sales growth reflect stresses being felt both at home and abroad in an overheated industry showing rapid signs of global saturation.
Huawei announces H1 results
The latest financial results from Huawei are showing how smartphones are at once becoming a growth engine but also a drag on the telecoms giant. The company’s fast-growing smartphone business was one of the main engines behind a 40 percent surge in sales during the first half of this year, as Huawei consolidated its position as the world’s third largest brand behind only Samsung (Seoul: 005930) and Apple(Nasdaq: AAPL). But at the same time, fierce competition in the sector also sharply eroded Huawei’s profit margins. Read Full Post…
Bottom line: New data shows Huawei’s smartphone sales growth slowed sharply in the second quarter, and the company will be lucky to log 20 percent annual growth due to saturation in its home China market.
Huawei smartphone growth slows sharply in Q2
The first of many reports for second-quarter smartphone sales has just come out, revealing one of the first declines in more than a year for the surging Huawei. At the same time, the new data from TrendForce show that surging Chinese brands Oppo and Vivo are also seeing rapid slowdowns in their recent breakneck growth. The bigger picture is that the global smartphone market is slowing sharply or even contracting after years of rapid growth, with global leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930) also suffering big drops this year. Read Full Post…
Bottom line: Xiaomi’s new campaign that includes the hiring of 3 celebrity spokespeople and an aim of moving upscale looks like a move of desperation and is unlikely to produce strong results due to difficulty of making such a transition.
Xiaomi tries star power to revive fortunes
Struggling smartphone maker Xiaomi is having a bit of an identity crisis these days, as it tries to reposition itself in a bid to jump start its growth by becoming more mainstream. At the same time, the company also wants a more upscale image as part of its new look, in a nod to the intense competition that has thrust many makers of lower-end models into the red. To make the transition, the company is embarking on a major new campaign that includes the hiring of 3 big celebrities to promote the new image. Read Full Post…
The following press releases and news reports about China companies were carried on July 15. To view a full article or story, click on the link next to the headline.
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Xiaomi in Major New Campaign to Go Upscale (Chinese article)
Car Inc’s (HKEx: 699) Hired Car Services Unit Approved to List on New Third Board (Chinese article)
Qihoo 360 (NYSE: QIHU) to De-List Before July 18 Market Opening (Chinese article)
Tencent (HKEx: 700) Buys Controlling Stake in Online Music Firm China Music Corp (English article)
Bottom line: Kingsoft’s write-down in the value of its investments in 21Vianet and Xunlei could auger a sale of its stakes in both companies, following a failed privatization bid for 21Vianet and little hope for a Xunlei recovery.
Kingsoft writes down 21Vianet, Xunlei investments
A week after data center operator 21Vianet (Nasdaq: VNET) became the second US-listed Chinese company to abandon its privatization bid, one of the financial backers that was leading that bid is providing some hints at what led to its actions. That’s my interpretation of the new disclosure from software maker Kingsoft (HKEx: 3888) saying it has written down $125 million related to slumps in the values of its investments in 21Vianet and also in struggling online video downloading site Xunlei (Nasdaq: XNET). Read Full Post…
Bottom line: 21Vianet could get a new privatization offer from Tsinghua Unigroup by year end, following withdrawal of a previous bid; while Xiaomi chief Lei Jun may start selling non-core assets to raise money for his struggling company.
Buyout group scraps 21Vianet bid
Data center operator 21Vianet (Nasdaq: VNET) has finally done the inevitable and formally scrapped its de-listing plan, becoming the second company to do so among some 40 US-listed Chinese firms trying to privatize from New York. This particular move has been coming for a while now, and signs appeared as early as May that 21Vianet was abandoning its privatization plans. But new Chinese media reports are casting some light on why this particular bid collapsed, and it appears the reasons are linked to struggling smartphone maker Xiaomi, whose chief and co-founder Lei Jun was helping to finance the deal. Read Full Post…
Bottom line: Smartisan is likely to close or get sold by the end of this year, possibly to Meizu, while Xiaomi’s valuation is likely to fall by up to half when it returns to private investors for new funding with a year.
No near-term IPO for Xiaomi
A couple of fund-raising stories involving smartphone makers Smartisan and Xiaomi are in the headlines, reflecting in different ways the intense pressure each is feeling due to stiff competition that could soon claim a major victim. One headline has everyone buzzing over a recent share sale to raise cash by the founder of Smartisan, a highbrow niche brand set up by China’s most famous English teacher Luo Yonghao. The other has Xiaomi chief Lei Jun saying that his company may make an IPO in 2025, in what looks like a sarcastic response to a reporter’s question. Read Full Post…
Bottom line: Reports of big sales target reductions could point to a looming slowdown for Huawei, as it tries to move out of low-end smartphones and into an increasingly saturated higher end of the market.
Huawei set for slowdown?
After posting phenomenal growth over the last year to become the world’s third biggest smartphone brand, China’s Huawei may be seeing a slowdown that’s reportedly prompting it to sharply cut its sales targets for this year. If the reports are true, the downward revision would mark a sudden reversal for Huawei, which has been posting sales growth in the 50-60 percent range since the middle of last year when its recent surge began. Such a shift would hardly be unprecedented in the fast-changing smartphone world, though it would come as a slight surprise since the company’s phones have become quite popular here in China, approaching the status of global superstar Apple (Nasdaq: AAPL). Read Full Post…
Bottom line: Micromax’s plan to sell smartphones in China is likely to sputter due to intense competition, while Huawei stands a 50-60 percent chance of becoming one of the world’s top 2 smartphone brands by 2020.
India’s Micromax eyes China smartphone market
It seems the smartphone road connecting China and India isn’t just one-way, with word that leading Indian brand Micromax is planning to enter the intensely cut-throat Chinese market. Meantime, Chinese leader Huawei is looking beyond its home market and to the rest of the globe, with its brash smartphone chief declaring his target of passing Apple(Nasdaq: AAPL) and Samsung (Seoul: 005930) to take the world’s smartphone crown within 5 years. Read Full Post…
Bottom line: Microsoft probably took a 10-20 percent stake in Xiaomi as part of the pair’s new alliance, and could use the Chinese company as its primary vehicle for participating in the mobile devices market.
Xiaomi lines up with Microsoft
The high-tech world is buzzing today with news of a major new tie-up between Microsoft (Nasdaq: MSFT) and struggling smartphone maker Xiaomi, in a pairing that has interesting implications on many levels. At the biggest level, this alliance looks strikingly similar to an earlier one that ultimately saw Microsoft purchase the core smartphone business of former global leader Nokia. At another level, the alliance could give Xiaomi a powerful ally to help revive its fading fortunes, including a partner that could help it to move into the lucrative but difficult US market. Read Full Post…
