The following press releases and media reports about Chinese companies were carried on August 27. To view a full article or story, click on the link next to the headline.
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Global PC Shipments to Fall 8.7 Pct This Year – IDC (Chinese article)
Bottom line: Lenovo should write-off its Motorola investment as a failure, and focus its smartphone efforts on building up its own brand rather than relying on more acquired foreign names.
Lenovo in need of Motorola write-off
PC giant Lenovo (HKEx: 992) repeated a frequent pattern last year when it purchased a former global leader, Motorola, with plans to resuscitate the struggling brand to boost its own smartphone business. It repeated yet another pattern last week when it said that early efforts to revive Motorola were failing, undermining its own profits and sparking one of the worst sell-offs for its shares in recent memory.
Having learned once more the difficulties of reviving broken western brands, Lenovo should now take the bold step of considering a complete write-off of its $2.9 billion Motorola purchase, or at least relegating the brand to niche status. The setback also shows more broadly why Lenovo and other globally-minded Chinese companies need to abandon the strategy of buying struggling global brands at bargain prices, and instead should focus on developing their own names. Read Full Post…
Bottom line: Lack of buzz around Xiaomi’s launch of production in India and Lenovo’s new line of ZUK smartphones reflect fatigue that is rapidly consuming domestic Chinese brands due to rampant competition in their home market.
More fatigue signs in China smartphone market
Signs of fatigue continue to grow in China’s overheated smartphone market, where rampant competition and unending price wars these last 2 years have led to saturation and a rapid slowdown. That fatigue is visible in 2 of the latest headlines, one of which has former superstar Xiaomi failing to garner much buzz as it launches production in India to jump-start its stalling growth. The other has the struggling Lenovo (HKEx; 992) launching its own new brand of smartphones, as it also faces lackluster performance for its current lineup sold under its own name and the Motorola brand it acquired last year.
China’s smartphone market is the world’s largest, but also the most competitive due to the presence of many homegrown domestic players. That reality has forced many mid-sized and smaller names to seek tie-ups with wealthier partners, and forced everyone to look abroad for growth as profits shriveled at home. Adding to the woes, China’s smartphone market has been contracting this year, with sales falling 4.3 percent in the first quarter after several years of explosive growth. Read Full Post…
Bottom line: Huawei’s accelerating smartphone sales reflect its growing momentum in China, and could prompt it to consider spinning off the unit for a potential IPO in its drive to become more transparent.
Huawei News
Smartphones power Huawei resurgence
Growing momentum for its smartphone business has become the driving force behind a resurgent Huawei, which has just reported solid first-half revenue growth that is showing signs of accelerating after a recent slowdown. That’s good news for Huawei, but less promising for domestic rivals like Lenovo (HKEx: 992), Xiaomi and Coolpad (HKEx: 2369), which are struggling for direction in a crowded Chinese smartphone market where global giant Apple (Nasdaq: AAPL) has also shown signs of a recent resurgence.
Huawei hasn’t been too generous in providing financial data for the first half of the year, saying only that revenue jumped by 30 percent to 176 billion yuan ($28 billion). (company announcement; Chinese article) For anyone who tracks the global market, that figure is already more than double the $12.5 billion in first half sales reported by Ericsson (Stockholm: ERICb), Huawei’s leading rival in its traditional networking equipment core area. Read Full Post…
Bottom line: Apple could lose its crown as China’s best-selling smartphone brand by the end of the year, as it faces growing competition from domestic names looking for a bigger slice of the high-end market.
China loses crown as top iPhone market
Global smartphone pioneer Apple (Nasdaq: AAPL) has just released its latest quarterly results, which as usual contain very selective bits of information about the China market that are revealing but make it difficult to draw very strong conclusions. One emerging trend appears to have Apple coming under growing threat from Chinese brands eying the higher end of the market. That’s my quick conclusion based on Apple’s admission that China fell to second place among its global markets in its latest reporting quarter, after briefly grabbing the top spot from the US during the previous quarter.
Of course everything is relative, and Apple still looks quite strong in China with iPhone sales in its Greater China market up an impressive 87 percent in its latest reporting quarter. (English article) But that said, there’s really no reason that the US should have retaken the top spot from China during the quarter, since both countries now receive their new iPhones at roughly the same time. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 22. To view a full article or story, click on the link next to the headline.
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Apple (Nasdaq: AAPL) CFO Says ‘Very Confident’ in China After Market Turmoil (English article)
Bottom line: ZTE’s new campaign in its home China smartphone market looks relatively well timed if a wave of consolidation starts by year-end, but it could miss its annual sales target if the competition doesn’t start to subside soon.
ZTE targets high-end with Axon
After quietly falling out of the top 5 in its home smartphone market over the past 2 years, telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) is gearing up for a new push with an aim to become one of China’s top 3 players in the next 3 years. That’s the message coming from Adam Zeng, who has been working hard to breathe new life into ZTE’s smartphone business since taking over the company’s mobile device unit about a year ago.
Zeng detailed his plans for me in an interview last week, including his attempts to go upmarket with a new line of smartphones and also a broader blitz of new models slated for release in China later this year. In my view, ZTE was quite wise to scale back its smartphone campaign in China over the last 2 years, as the market became incredibly competitive with a wide range of established and new names all competing for space. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 14. To view a full article or story, click on the link next to the headline.
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Chip Maker Tsinghua Unigroup Makes $23 Bln Bid for Micron (NYSE: MU) (English article)
Billionaire Wang Plans for Wanda to Expand Into Finance Industry (English article)
Xiaomi, Partners Planning to Open Privately Funded Bank? (Chinese article)
Bottom line: LeTV’s strong smartphone launch shows that stiff competition in China won’t ease soon, which could push Lenovo’s mobile operations further into the red and prompt ZTE to further lighten its efforts in the market.
LeTV smartphones make strong debut
A series of smartphone items are in the headlines as we close out the week, spotlighting the tough situation in a China market that is at once the world’s largest but also extremely competitive. That competition just got a bit louder, with the first headline that says new arrival LeTV (Shenzhen: 300104) debuted quite strongly with when its first smartphone models went on sale this week. Meantime, industry stalwarts Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) continue to reflect the stresses of selling in China, with the former posting a big loss for its mobile business last year while the latter continues to lighten its reliance on the market by looking for growth in the US. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 22. To view a full article or story, click on the link next to the headline.
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Tsinghua Unigroup To Buy 51 Pct of HP’s (NYSE: HPQ) H3C For $2.5 Bln or More (Chinese article)
Bank Of China (HKEx: 3988) Weighs Overhaul For BOCHK (HKEx: 2388) Unit (HKEx announcement)
Lenovo (HKEx: 992) Reports Results For Quarter Ended March 31 (HKEx announcement)
Bottom line: Gree’s launch of a smartphone line is far too late and could signal the start of a major shake-out for the sector, while ZTE’s move into Japan will be tough but could reap big rewards if it can gain traction.
Gree starts shipping smartphones
You know China’s smartphone market is due for a major correction when a stodgy home appliance maker like Gree (Shenzhen: 000651), better known for its air conditioners, enters the market. But that’s exactly what’s happened, in a move that has the word “dud” written all over it. Meantime, the more established smartphone maker ZTE (HKEx: 763; Shenzhen: 000063) is making a risky but wiser move by targeting the lucrative but often ignored Japanese market, as it looks for growth alternatives outside a Chinese market that is the world’s largest for smartphones but also incredibly competitive. Read Full Post…
