Weibo: TCL Dotes On HTC, LinkedIn’s Shen Warns Of Bubble

The microblogging realm has been relatively quiet this past week as Chinese tech executives enjoy the long October 1 holiday. Still, a few couldn’t completely stay away from their online accounts, led by TCL’s (Shenzhen: 000100) thoughtful Chairman Li Dongsheng who hinted at a possible tie-up with struggling former Taiwanese smartphone giant HTC (Taipei: 2498).

Meantime, LinkedIn’s (NYSE: LNKD) China chief Derek Shen commented on the current overheated investment environment in China’s Internet, reinforcing a view I’ve been stating for a while now. Finally there was Lenovo (HKEx: 992) CEO Yang Yuanqing, who let his deputies do the talking on his behalf as he donated a portion of his annual bonus to rank-and-file company employees in a goodwill gesture for the third straight year.

Let’s begin our weekly microblogging round-up with TCL’s Li Dongsheng, who always impresses me as one of China’s more thoughtful tech executives, especially when compared with others who use their microblogs mostly for self promotion. Li often talks about his own personal development on his microblog, and even hints occasionally at things his company is doing behind the scenes such as its Internet TV tie-up a year ago with leading search engine Baidu (Nasdaq: BIDU).

In this case, Li paid a nice tribute to Cher Wang, founder and chairman of Taiwan’s HTC. For those who don’t follow this company closely, HTC was one of the earliest companies to recognize the importance of smartphones. It briefly enjoyed a reputation as one of the world’s top brands, before taking a sudden sharp downturn about 2 years ago.

In a bid to right the company, Wang returned to a more operational role at HTC last year, which was the subject of Li’s microblog post. (microblog post) The post itself was mostly puffery, lauding Wang for her early accomplishments. He even compared her return to HTC to the much better known return of Steve Jobs to Apple (Nasdaq: AAPL) in 1997, some 12 years after he was forced out of the company he co-founded.

That comparison may be a bit exaggerated, but what caught my attention was Li’s comment towards the end of his post where he expressed his hope that HTC could complete a comeback. In expressing that hope, he added that companies from both sides of the Taiwan Strait could join hands to pose a serious smartphone challenge to current leaders Apple and Samsung (Seoul: 005930). That last reference seems to imply that a tie-up could be brewing between HTC and TCL, creating a potentially potent partnership to challenge the current crowded field of companies vying to challenge Apple and Samsung.

Next let’s move on to LinkedIn’s Derek Shen, who has also won my respect through his non-promotional, introspective microblog posts. Shen himself worked at Google (Nasdaq: GOOG) before striking out to form group buying site Nuomi, which was purchased earlier this year by Baidu. As someone with experience and connections in the realm of Chinese tech start-ups, Shen’s view that the sector is now in the midst of a major bubble seems to carry extra weight.

His post on the subject is relatively straightforward, pointing out that when he set out in 2009 to found Nuomi, he was told by venture capitalists to create a real company first with employees and a business model before seeking outside investment. (microblog post) That kind of advice is relatively standard from venture capitalists in normal times. But it has  become largely irrelevant in the current environment, where investors are willing to throw money at just about anything with the word “Internet” in it, even if it’s just an idea proposed by people with little or no experience.

Shen defines this kind of mentality as the classic definition of a “bubble”, and I wholly concur that the Chinese Internet is in the midst of such a bubble that will inevitably burst just like what happened in the US in the late 1990s. When that happens, probably in the next 2 years, we can expect to see not only venture capitalists take a hit, but also China’s “big 3” of Alibaba (NYSE: BABA), Baidu and Tencent (HKEx: 700), which have made billions of dollars in questionable investments over the last year and a half.

Lastly there’s Yang Yuanqing, Lenovo’s talkative and fairly western-style CEO, who was in the microblogging realm this past week after donating part of his annual bonus to company employees for a third straight year. (previous post) Unlike the first 2 years, this year saw little coverage of the gesture by mainstream Chinese media, which have probably tired of the story by now. The fact that Yang is continuing to donate his bonus despite dwindling publicity seems to underline his sincerity in making the move.

Still, Yang’s gesture didn’t go completely unhyped, with senior vice president Gina Qiao and vice president Wei Jianglei both commenting on it in their microblog posts. (Qiao’s post; Wei’s post). I won’t describe the posts themselves, which are mostly praise for their boss. Yang certainly has lots to be happy about, having just closed his company’s landmark purchase of IBM’s (NYSE: IBM) low-end server business for $2.1 billion. Still, I have to commend him for continuing this positive gesture, even after most the mainstream media hype around the move has disappeared.