Alibaba files for IPO in US
May 7th, 2014
Alibaba Chairman and Non-executive Director Jack Ma.
China's e-commerce giant Alibaba has filed initial public offering (IPO) document to the U.S. Securities and Exchange Commission (SEC) with plans to raise one billion U.S. dollars, according to SEC information and well-informed sources.
Announcing this in an internal communication to employees, founder and chairman of Alibaba Ma Yun said, "Becoming a listed company has never been our goal. It is a tactic and means to realize our mission."
In its filing Alibaba gave no date for the proposed IPO or whether it would be on the New York Stock Exchange or Nasdaq. It cited its advantageous placement in a nation in which e-commerce is fast becoming a way of life, as Chinese consumers turn to the Internet to buy innumerable items.
Noting that being listed in the United States will expose Alibaba to chanlleges in the global financial market, Ma said,"Not all companies have the opportunities to face such global chanlleges. We are honored to be one of them."
Analysts said the one billion U.S. dollar is only an initial figures and that the actual amount could be much bigger.
Often described as a combination of EBay and Amazon, Alibaba handled $240 billion of merchandise in 2013. With more than 7 million merchants, it has more than $2 billion in revenue and profit of more than $1 billion.
Alibaba's sheer size could weigh on the stock price of US rival Amazon.com if the Chinese company's shares are added to indexes and portfolios targeting e-commerce and related sectors, analysts said.
"Amazon simply doesn't measure up to the size of Alibaba's earnings and earnings growth rate," analyst Robert Wagner wrote.
Alibaba's announcement continues a flurry of IPO filings by Chinese technology companies. Internet security application developer Cheetah Mobile is expected to go public on the New York Stock Exchange on Thursday in an IPO expected to raise $153.75 million to $178.35 million. Tuniu, an online tour-booking website, plans to hold an IPO Friday on the Nasdaq Stock Market in a $120 million IPO.
Three weeks ago, Weibo Corp, the Chinese micro blogging service owned by Sina Corp and Alibaba Group Holdings Ltd, raised $285.6 million in a Nasdaq IPO while real-estate listings website Leju Holdings Ltd raised $100 million in an initial offering on the NYSE.
"The key question for China is how much new money, if any, Alibaba will raise in this US IPO," said Peter Fuhrman, chairman and CEO of Bejing-based China First Capital.
If all the cash goes to Japan's Softbank and US's Yahoo, then it's hard to see how Alibaba, its customers and the hundreds of millions of Taobao-addicted Chinese consumers will benefit from the IPO. US web-portal company Yahoo is a 24 percent Alibaba shareholder, while Japan's Softbank has a 37 percent stake.
ChinaHR jobs recruitment firm may float in Hong Kong
May 6th, 2014ChinaHR, the fast growing Asia-focused recruitment company owned by Leslie Buckley and Denis O'Brien, is mulling over plans to float in Hong Kong.
Buckley told the Sunday Independent that an IPO was "one of the options" being considered by the group in coming years. He noted that the investment in China was "a long-term play".
ChinaHR, formerly Saon, sold its European operations to Stepstone for around €76m last year. Its core Chinese business is forecast to grow by 60 per cent this year, having placed 1m jobs. Denis O'Brien owns 75 per cent of the recruiter, and chairman Buckley the other 25 per cent.
"One of the reasons we decided not to sell it to Stepstone was there was still plenty of heavy lifting to be done, which would see more value created over the next two years," Buckley added. This would give the firm further bulk, should it consider raising money on stock markets.
Some of the proceeds of the sale of its European operations will be reinvested in the Chinese operations, according to Buckley. "We've already put in about €60m," he said. The company may need between €20m and €40m more as it moves towards profitability over the next 18 months.
The company employs 2,600 staff in 26 cities across China, though it has a reach into 180 cities.
The acquisition of rival Monster.com in early 2013 catapulted ChinaHR into the number three slot in the competitive Chinese recruitment market. The market leaders are 51 Jobs and Zhaopin. Buckley indicated that ChinaHR was about half the size of Zhaopin, which plans to raise $200m in an IPO this year.
"There's a lot of small companies setting up every day there. The consolidation will come and we're in a very good position," Buckley added.
ChinaHR may seek acquisitions of between €2m and €10m as it continues its growth spurt. "We're always looking at acquisitions and we have an open mind."
While further buyouts may be on the cards, the sheer size of the Chinese jobs market means that there are enormous opportunities for organic growth. "We have moved into other products. We were about 90 per cent online, now we're about 55 per cent online and 45 per cent off line," Buckley said.
Forecast for foreign trade appears grim
May 5th, 2014
Canton Fair, China's largest trade fair, is held every spring and autumn in Guangzhou. Guangdong's trade value dipped sharply in March.
Imports and exports in Guangdong province, which account for nearly a quarters of the country's trade, will face more pressure this year after the southern economic powerhouse reported a sharp drop in trade numbers during the first three months, local government officials say.
Guangdong's trade value fell by 25.2 percent year-on-year to 1.36 trillion yuan ($217 billion) in the first quarter, with exports falling by 22.4 percent to 794 billion yuan, according to provincial customs data.
The customs authorities forecast a grim trade outlook for exporters in the province, especially in the booming Pearl River Delta, and say they will face more challenges due to an unstable global market and increased domestic labor and production costs.
In March, Guangdong's trade value dipped by nearly 38.6 percent year-on-year to 471 billion yuan, according to customs officials.
Lin Jiang, head of the public finance and taxation department of Lingnan College at Sun Yat-sen University in Guangdong, says that the lower trade numbers are a grim reminder that the province needs to change its economic growth model by upgrading industries and boosting domestic consumption.
Before the big trade drop in the first quarter, local authorities had set a trade growth target of just 1 percent in 2014.
Guangzhou, the provincial capital, also expects a lower trade growth target of 3 percent this year as the city will give priority to transforming its economic structure to focus on large investment projects.
Last year, Guangzhou's exports grew by 6.6 percent from 2012 to $62.8 billion, with actual use of foreign investment reaching $4.8 billion, according to the local government.
"The lower growth target, together with the sharp trade drop in the first three months, signals that Guangdong will no longer rely heavily on trade to maintain economic growth," Lin says.
Setting a lower trade growth target means that Guangdong has to develop new growth engines to sustain its leading role in the country's economy, Lin adds.
Guangdong's economy has taken pole position nationally in the country since the reform and opening-up process started. Last year, its GDP grew by 8.5 percent from 2012 to surpass $1 trillion.
In the past five years, Guangdong reported negative trade growth only in 2009, a year after the global financial crisis.
In 2013, Guangdong's import and export value increased by 10.9 percent from a year earlier to $1.09 trillion, according to a provincial government work report.
The province's export value increased by 10.8 percent year-on-year to $636.5 billion last year, the report says.
Guangdong will strive to increase domestic consumption by promoting Guangdong-made products across the country and will continue to optimize investment structure this year, according to the report.
Citing the first quarter statistics, Lin says Guangdong's trade structure has changed a lot, from heavily relying on processing trade in the past to high-tech and value-added exports.
"The trade structure is improving and a growing number of exporters have turned to innovation-driven trade," Lin says.
In sharp contrast to the processing trade, which reported a 22.6 percent decline year-on-year, Guangdong's general trade in the first three months increased by 13.9 percent year-on-year to 550 billion yuan.
Manufacturers in the Pearl River Delta, a major manufacturing and trade hub in Guangdong, also expect a bleak trade outlook in the months ahead.
Zeng Zhaoyang, a manager at the trade department at Guangdong Hopeful Electric Co, says the company reported a loss both in export value and business profits in the first quarter of the year.
"The fast export growth in the 1990s is long gone. Now we are struggling," Zeng says.
The company, a home appliance maker based in Foshan, Guangdong, reported a 10 percent year-on-year drop in exports last year, according to Zeng.
Stiff competition and increased labor and production costs have also squeezed business profits in recent years, Zeng says.
"We have to boost research and design investment and develop more product varieties for overseas markets so that we can stay profitable," he says.
A total of 2,000 exporters in Guangdong surveyed in a recent report by the Shenzhen-based Onetouch Business Service Co reported an export increase of only 1.44 percent year-on-year in the first three months of 2014.
However, Zhu Xiaodan, governor of Guangdong, said during the annual local legislative meeting in January that the province would maintain stable trade growth this year by introducing a series of measures to encourage local companies to better tap the international market.
"We will develop varieties of international markets, support local exporters to participate in overseas trade events, cultivate more overseas sales channels and carry out cross-border e-commerce for sustainable trade growth," Zhu says.
China's first mobile virtual operator launches business
May 5th, 2014T.Mobile, a unit of Telephone World Digital Group, on Sunday became China's first mobile virtual network operator (MVNO) to offer wireless voice and data services.
Currently, the services, wholesaled from China Telecom, are restricted to Hangzhou, capital of east China's Zhejiang Province, but they will expand to other parts of Zhejiang later, the company said without elaborating.
MVNOs do not own telecommunications infrastructure but provide services through network access they have leased at wholesale rates from another mobile operator.
Telephone World Digital Group is one of 19 companies, mostly privately owned, that have received mobile virtual network operator licenses. The companies also include subsidiaries of e-commerce giant Alibaba, and retailers Suning, JD.com and D.Phone.
Several other virtual operators are also expected to begin services soon. Suning and D.Phone started taking pre-orders for their telecom services on May 1.
Zou Xueyong, secretary general of the Industry Association of the Mobile Virtual Network Operators, said the mobile virtual network operators are expected to bring a "catfish effect" to the country's telecom industry, improving prices and services through competition.
"The virtual operators will help push forward reforms in the telecom industry and drive down prices of telecom services," Zou said.
However, many industry insiders remain cautious.
An executive from an MVNO, who declined to be named, said the virtual operators are not expected to bring about sweeping changes to the industry, which is dominated by three state-owned basic telecom operators -- China Mobile, China Unicom and China Telecom -- due to their unequal relations.
It might take a long time before people accept the virtual operators, he said.
The virtual operators will each need 1 million active subscribers to reach the break-even point, said an executive with China Telling Communications who declined to be named.
Sony sells VAIO PC unit
May 4th, 2014Sony Corporation (Sony) and Japan Industrial Partners Inc (JIP) on Friday announced that Sony and a business arm of JIP have entered into an agreement regarding the sale of Sony's personal computer (PC) business operated under the VAIO brand, Sony said on its website.
Following this agreement, Sony's PC business, which is operated in Japan under the VAIO brand, and certain related assets will be transferred to the JIP subsidiary.
Top Chinese dairy company reports 84 pct growth in 2013
April 30th, 2014Yili Group, China's largest manufacturer of dairy products, reported net profits of 3.2 billion yuan ($520 million) in 2013, up 84.4 percent from the previous year, according to its yearly report released on Tuesday night.
Yili took in 47.78 billion yuan in sales revenue last year, according to the report.
Yili's major rival Mengniu Group had sales revenue of 43.36 billion yuan in 2013 with net profits of 1.63 billion yuan, according to its yearly report.
Yili's strong performance was boosted by its integration of global resources and upgrade of products and research, said Chen Lianfang, a dairy industry analyst.
The company reported net profits of 1.088 billion yuan in the first quarter of this year, up 121.8 percent year on year.
Its baby milk powder plant in New Zealand, with an annual production capacity of 47,000 tons, is expected to begin operation in June, according to Zhang Jianqiu, executive president of Yili.
Yili inaugurated its research and development center at Wageningen University this February in the Netherlands, becoming the first Chinese dairy R & D center in Europe.