Bottom line: Xiaomi’s new Mi Ecosystem of smart appliances and devices outside its core smartphones are unlikely to gain much traction due to its limited resources and mediocre product designs.
Xiaomi rolls out high-tech rice cooker
Smartphone maker Xiaomi, a former headline grabber whose star has faded over the last year, is steaming back into the news this week with its launch of a new sub-brand that’s part of its attempts to build an ecosystem of interconnected products and services. The new sub-brand, called Mi Ecosystem, looks interesting conceptually and appears to be targeting more ordinary home appliances like rice cookers, which is the first official product carrying the new name.
The only problem is that this kind of ecosystem play has become a buzzword not just in China, but also throughout the world. Everyone is trying to figure out how to make smart devices that can talk to their owners and with each other to run homes more efficiently. Apple (Nasdaq: AAPL) was one of the earliest companies in the space, and in China nearly all of the big Internet companies now have partnerships with appliance and device makers in a bid to develop similar smart products. Read Full Post…
The following press releases and news reports about China companies were carried on March 30. To view a full article or story, click on the link next to the headline.
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Anbang Wouldn’t Cross 15 Pct Offshore Investment Cap with Starwood Buy – Source (Chinese article)
Online Fresh Food Retailer Yiguo Gets $240-$280 Series C Funding from Alibaba, KKR (Chinese article)
China Said to Consider Cutting Subsidies for Electric Vehicles (English article)
Bottom line: Coolpad’s sliding revenue and profits last year reflect intense competition in China’s smartphone market, and the company could become one of the first major victims of an upcoming shake-out for the sector.
Coolpad logs tough year in 2015
Fading smartphone maker Coolpad (HKEx: 2369) has just released financial results that show just how bloody China’s market was last year, with operating profits and revenue both tumbling by nearly half. The outlook certainly doesn’t look too promising for Coolpad, which was once an up-and-comer in the market but more recently has been overwhelmed by the non-stop competition. It also didn’t help that Coolpad lost an important backer last year, following a high-profile dispute with joint venture partner Qihoo 360 (NYSE: QIHU).
The year 2015 wasn’t a pretty one for Coolpad. The company benefited from its relatively early arrival to China’s smartphone market to become a leading local player, but by the end of last year had fallen out of the nation’s top 5 brands. It tried to bolster its position by signing up strategic partners that could ensure its future. But that plan backfired when one of those partners, Qihoo, became enraged after Coolpad formed another separate alliance with online video giant LeEco (Shenzhen: 300104), formerly known as LeTV. Read Full Post…
Bottom line: Xunlei’s performance and stock price could come under pressure over the next year due to stiff competition in China’s consolidating online video market and lack of support from struggling strategic partner Xiaomi.
Xunlei swings to quarterly loss
As rumors swirl of a potential merger between the online video services of Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU), smaller rival Xunlei (Nasdaq: XNET) has just announced its latest quarterly results that show why it may be difficult for the company to remain independent in the rapidly consolidating sector. Xunlei swung to a loss in the quarter and saw its revenue contract — hardly encouraging signs for a company that’s already quite a small player in China’s fiercely competitive online video market.
The big “elephant in the room” in this instance is struggling former smartphone sensation Xiaomi, which purchased 30 percent of Xunlei around the time of its 2014 IPO for a reported price of about $200 million. Xiaomi went on to form a content distribution service with Xunlei last summer, leading me to predict that it could make an offer to buy the company outright. (previous post) Read Full Post…
Bottom line: Huawei’s move into electronic payments is its first foray outside its traditional strength as a hardware developer, and reflects its growing aspiration to challenge global rivals Apple and Samsung.
Huawei tries services with Huawei Pay
Fast-rising smartphone maker Huawei no longer seems content to target homegrown rivals like Xiaomi as its main competitors, and is increasingly looking to challenge global leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). That’s my interpretation of the latest headlines, which say Huawei is preparing to roll out a new mobile payments service in China, less than a month after similar moves by the 2 global leaders.
This particular move comes as a bit of a surprise, since there were no previous indications that Huawei was planning such a foray. Up until now, Huawei was largely been a company focused on hardware, unlike Apple, which has built a big stable of service-related offerings like Apple Pay and its music and video services around its core smartphones and computer products. Read Full Post…
Bottom line: The closure of small smartphone maker Dakele marks the latest distress signal from the sector, with one or more larger, more familiar brands likely to close shop within the next 6 months.
The inevitable has finally happened in China’s 2-year-old smartphone wars, with word that a smaller player named Dakele has officially closed shop after running out of money. It’s not completely true to call Dakele the first victim of China’s smartphone price wars, since we saw a steady stream of bankruptcies among component makers that supply the actual brands toward the end of last year.
But Dakele’s closure does mark a major milestone, since it’s the first case I’ve seen of a sizable brand going bankrupt and probably signals more closures in the year ahead. Some of the most likely candidates for such closure, or perhaps purchase by another larger player, include mid-size brands like OnePlus and Smartisan, which have failed to find an audience and are probably losing big money. Read Full Post…
Bottom line: Xiaomi is likely to need new funds around a year from now, at which time its valuation will stagnate or even come down up to 10 percent as its growth continues to slow.
Xiaomi’s Lei meets reporters at NPC
Struggling smartphone maker Xiaomi is making headlines today for what it’s NOT doing, namely planning to raise cash anytime soon. Xiaomi’s lack of cash raising plans are coming from talkative chief Lei Jun, responding to questions about whether his company has lost value since its last mega funding at the height of its meteoric rise about a year ago.
Most of the reports are focusing on Lei’s comments that Xiaomi has no plans for an IPO in the next 5 years, and also that his company has plenty of cash — more than 10 billion yuan ($1.5 billion) to be precise. Both remarks look aimed a deflecting speculation that Xiaomi might have to return to investors soon for more money, an exercise that would force it to put a new value on the company. Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 8. To view a full article or story, click on the link next to the headline.
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Ant Financial Set to Raise $3.1 Bln, Valued at $50 Bln (Chinese article)
Jin Jiang (HKEx: 2006) Raises Accor Hotels (Paris: AC) Stake to 11.7 Pct (Chinese article)
Xiaomi Won’t Go Public Within 5 Years, Has 10 Bln Yuan in Cash – CEO (Chinese article)
China Media Capital Invests in Ron Howard’s Imagine Entertainment (Chinese article)
China Angered by Planned US Export Restrictions on ZTE (HKEx: 763) (English article)
Bottom line: Xiaomi’s new Mi 5 model is likely to get a tepid reception due to its lateness to market and a fading corporate image, and the company’s valuation is likely to shrink when it returns to market later this year for new funding.
Xiaomi rolls out Mi 5
If faltering smartphone sensation Xiaomi is still in business a decade from now, 2015 could well go down as a “lost year” when the company’s sales slowed sharply as its image for making cool, affordable products took a beating. A major factor behind the sudden stall was Xiaomi’s failure last year to release a new fifth generation of smartphones, which were supposed to power sales in the second half. (previous post)
Now Xiaomi is trying to play catch-up with the unveiling of its Mi 5 more than half a year after its originally intended launch date. (English article; Chinese article) It’s probably far too early to say if the Mi 5, along with another new model called the 4S, will be enough to revive Xiaomi’s fading fortunes. But I suspect the damage has already been done, and this new model will ultimately fail to find a big audience due to its late arrival to a fast-moving smartphone market where half a year is really equal to an eternity. Read Full Post…
The following press releases and news reports about Chinese companies were carried on February 25. To view a full article or story, click on the link next to the headline.
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Didi Kuaidi Raising $1 Bln at Valuation of More Than $20 Bln (English article)
China Southern (HKEx: 1055) Makes Deep Discount Tickets Exclusive to Own Site (Chinese article)
Wanda Seeking $1.5 Bln Investment for Film Unit – WSJ (English article)
Vipshop (NYSE: VIPS) Reports Q4 and Full Year Financial Results (PRNewswire)
Xiaomi Announces Next-Generation Mi 5 Smartphone, Mi 4s (Chinese article)
Bottom line: The absence of most mid-sized Chinese smartphone brands from the world’s biggest telecoms show this week in Spain reflects their inability to mount serious global campaigns, and also growing financial pressures many are facing.
Mid-sized Chinese brands skip MWC
China’s crowded field of low-cost and mid-range smartphone brands may claim to have global aspirations, but you would never know that judging by their loud absence at the world’s biggest telecoms show this week in Spain. I’ll admit that I’m not personally attending this year’s Mobile World Congress in Barcelona, so I’m dependent on the show’s website and media reports to determine who is and who isn’t attending.
But based on my own findings, including talks with spokesmen from at least one of the big domestic brands, most companies are skipping this show that has emerged in recent years as a major venue for debuting new smartphones. There are several reasons for skipping the show, but I suspect that chief among those is costs. Read Full Post…
