China index: Beijing cleans up skies, not its act 7 Aug 2014 Air in the capital is the cleanest it has been since 2011, data shows. Dirty industrials are leaving town or even shutting down amid a weak economy, but that’s no real fix. Clean, sustainable growth across China needs robust institutions with persuasive carrots and sticks.
Xiaomi creative destruction may reach beyond China 6 Aug 2014 In just four years, the frugal yet funky upstart has passed mighty Samsung as the top smartphone seller in the People’s Republic. Financial success is unclear: margins are probably thin. Even so, Xiaomi’s combination of cheap phones and software could threaten rivals elsewhere.
Chinese shares pumped up by acronym rally 5 Aug 2014 The stock market’s best month since 2012 rests on four abbreviations. There’s GDP, which has stabilised; SOEs, some of which are poised for reform; and PSL, a rumoured plan to pump liquidity into the economy. But don’t forget TBTF: everything that matters is still too big to fail.
Microsoft’s China dream sorely strains credibility 5 Aug 2014 After 22 years, it’s hard to believe how little the U.S. tech giant has achieved in China. The country looks to account for just 2 percent of Microsoft’s revenue. Cloud services and Xbox sales may multiply that. But an antitrust probe raises the cost of business - possibly too high.
U.S.-backed China tech shows investment curb folly 1 Aug 2014 Foreign funds sank $5 bln into venture capital the first half of 2014 – three times what local funds raised. That the country’s next Alibaba will probably be funded by Silicon Valley investors may jar with national pride and official rules. But China’s economy is the undeniable beneficiary.
Yahoo’s Mayer nears post-Alibaba reckoning 31 Jul 2014 A stake in the Chinese e-commerce group makes up over half the U.S. internet firm’s value, a Breakingviews calculator shows. When investors can buy Alibaba shares directly - potentially next month - Yahoo chief Marissa Mayer will find herself under a narrower, brighter spotlight.
Line’s $13 bln valuation shows chat app exuberance 31 Jul 2014 The Japanese chat app reported a 26 pct jump in revenue from the previous quarter, pushing up valuation expectations ahead of its planned IPO. Yet Line’s valuation hangs on an assumption that new overseas users will spend like those back home. That seems like wishful thinking.
China’s political purges call for financial sequel 30 Jul 2014 Investigating ex-security chief Zhou Yongkang shows China’s president is firmly in charge. That may help sustain faith in the Party. But other institutions need a scrub too. Exposing the money trail, and those who help the rich and mighty bypass the rules, is a logical next step.
China online funds’ yield hunt piles on risk 29 Jul 2014 Money market funds like the one linked to Alibaba are buying longer-term assets to bolster yields. That could create a crunch if savers realise their assets aren’t as safe as cash. Freeing up bank deposit rates would remove the distortion that fueled the boom in the first place.
China throws weight around on car parts costs 28 Jul 2014 The whiff of a price probe into vehicle parts was enough to bring concessions from luxury groups Audi and Jaguar Land Rover. That will hit profits, but experience shows in China it is better to admit guilt early than risk bigger fines, or lose access to a critical market.
Baidu’s costly transition to mobile is not over 25 Jul 2014 The Chinese search engine operator’s share of revenue from mobile jumped to 30 pct. Better-than-expected margins suggest heavy investments are paying off. But smaller search rivals backed by giants Alibaba and Tencent are creeping in. Baidu’s margin squeeze may not be over yet.
Qualcomm turns from predator to prey in China 25 Jul 2014 Beijing has branded the US chipmaker a monopolist, even as its dominance, which rests on smartphone chips and 3G patents, may be sliding. If that weren’t enough, some Chinese customers aren’t paying their dues. As friction over US-China spying persists, things may only get worse.
China’s old meat is a corporate health warning 24 Jul 2014 KFC’s parent and McDonald’s have been tainted by stale meat that slipped through a supplier’s controls. Monitoring a rapidly growing business is tough, and global brands face a high bar – just ask JPMorgan or Glaxo. Being foreign and successful is fast becoming a health risk.
China’s Haier can make a GE appliance deal wash 24 Jul 2014 Acquiring the U.S. conglomerate’s white-goods division would be a Lenovo-IBM moment for KKR-backed Qingdao Haier. The purchase, at up to $2.5 bln, would give the Chinese refrigerator-to-dryer maker a trusted Western brand that widens its appeal and helps expand global scale.
Apple’s growth in China less impressive close up 23 Jul 2014 The 48 percent growth in China iPhone sales in the last quarter-year is strong. But seen from the Middle Kingdom, Apple vies with large rivals U.S. consumers have barely heard of, like Xiaomi and Coolpad. As they gain share too, Apple will struggle to be more than an also-ran.
Club Med organisers can welcome latest arrival 22 Jul 2014 Andrea Bonomi’s Investindustrial is offering 790 mln euros for the all-inclusive holiday group. This may not be a five-star price but it blows a rival Franco-Chinese bid out of the water. And investors have spent years in the wilderness. This is an offer the board can recommend.
China default shows market forces exist for some 22 Jul 2014 A second bond looks set to fail, and funding costs for riskier issuers have been rising. Yet big and state-linked borrowers still enjoy low rates, because investors believe failure is only for the unlucky few. The real shift will come when China challenges that tenet.
The perks and pitfalls of depending on Jack Ma 21 Jul 2014 Alibaba’s founder, chairman and spiritual sultan will continue to exert near-total control of the Chinese e-commerce giant even after its massive IPO. For prospective shareholders, the question is whether Ma can be trusted to act in their interest. The answer is a qualified yes.
Huawei suggests life is good behind Great Wall 21 Jul 2014 China’s high-speed network roll-out helped the tech group almost double its revenue growth in the first half, as U.S. rivals brace for gloomy results. Huawei may not be welcome in the United States, but the market heft of the People’s Republic makes it a good consolation prize.
Alibaba’s fortune doesn’t depend on lucky digits 18 Jul 2014 The e-commerce colossus has moved its likely listing date from August to September, so will miss the “double 8,” numbers seen as charmed in China. Given its growth, Alibaba doesn’t need the gimmickry. And as Facebook learned, reaching for magic numbers in an IPO can backfire.