Caixin
BUSINESS & TECH

Friday Tech Briefing: Amazon, Lenovo, Hisense

DEALS AND FUNDRAISING

1. Hisense Ups Stake in Slovenia’s Gorenje to Over 95%

What: Hisense Electric, one of China’s largest household appliance makers, has grown its stake in Slovenian counterpart Gorenje to from its original 33 percent to 95.4 percent since May 29, according to Slovenian brokerage Ilirika. Antitrust regulators in Slovenia are expected to finish reviewing the deal by autumn.

Why it’s important: Gorenje, one of Europe’s major appliance makers, has been seeking strategic investors since October. Hisense announced a takeover bid for Gorenje in May, valuing the company at about 293 million euros ($339 million).

Big picture: Taking over Gorenje will help Hisense enter European markets and make Gorenje a research, development and production center for Hisense in Europe. (Source: Reuters)

BIG TECH COMPANIES

2. Legend Holdings to Spin Off, List Subsidiaries

What: Lenovo’s parent company Legend Holdings Corp. is ready to spin off its subsidiary companies and could list four of them, three years after listing on the Hong Kong Stock Exchange, Liu Chuanzhi, chairman of Legend Holdings and founder of Chinese computer giant Lenovo Group, said.

Why it’s important: Spinning off subsidiaries could reduce Lenovo’s exposure to the risk associated with IT innovation, Liu told Caixin. Lenovo has also reportedly been looking into listing on the Chinese mainland under the Chinese depositary receipt program or through other vehicles.

Big picture: Lenovo used to be the world’s top seller of personal computers, but has in recent years lost its crown to U.S. rival HP. The Chinese company’s attempts to diversify, especially its entry into the smartphone market through its purchase of Motorola Mobility in 2014, have delivered mixed results. (Source: Caixin, link in Chinese)

3. Amazon May Launch Small Business Lending Program in China

What: Amazon is said to be launching a small lending program in China and has already posted a recruitment listing on its website, seeking a manager “with end-to-end responsibility for scaling operations and partner programs in a new strategic initiative in China”.

Why it’s important: Amazon’s potential entry into small business lending in China would put it head-to-head against domestic e-commerce companies like Alibaba and JD.com.

Big picture: China remains the biggest e-commerce market in the world, and the lending program could be a way for Amazon to encourage Chinese merchants to use its platform, and finally gain a foothold in the world’s second-largest economy. (Source: CNBC)

4. Huawei to Build Big Data Park in Qinghai

What: Huawei has announced its plan to build a big data park for the clean energy industry in China’s northwestern Qinghai province for the clean energy industry, in a joint project with the local government of Qinghai’s Hainan Tibetan Autonomous Prefecture.

Why it’s important: The big data park will be the telecom company’s 33rd cloud services facility in China, and is expected to cover 265,000 square meters and involve a total investment of 50 billion yuan ($7.53 billion).

Big picture: Qinghai hopes Huawei’s big data park will bring rejuvenation to the landlocked province, which has the second-lowest gross domestic product per capita in the country. Guizhou, China’s poorest province, has also announced similar ambitions, and has worked hard in recent years to persuade companies to build facilities within its “Big Data Valley.” (Source: ChinaDaily)

5. ‘China’s Tinder’ Plunges After It’s Spurned by Short Seller

What: Shares of dating app operator Momo Inc., often called the Chinese equivalent of popular U.S. peer Tinder, fell by more than 5% in the latest trading session on Wall Street, after short seller Spruce Point Capital Management said in a report that Momo “selectively reveals/conceals material disclosures from investors and is diverting attention from new challenges in live video.”

Why it’s important: Spruce Point’s report referred to the livestreaming format used by Momo, which has become highly popular in China. Its rapid rise has attracted attention from regulators worried about problematic broadcasts.

Big picture: Spruce Point’s accusations come just two weeks after a similar attack caused shares of TAL Education to tumble as much as 13%, and spotlights how U.S.-listed Chinese companies are often targets for short sellers due to their relative inaccessibility compared with U.S.-based firms. (Source: Caixin)

POLICY

6. Curtain Falls on Celebrities’ Shady Tax Deals

What: The Chinese government plans to limit the fees that stars can command for their onscreen work to 40% of total production costs, and is stipulating that no single actor should command more than 70% of the total casting bill, following a tax-evasion scandal involving top actress Fan Bingbing.

Why it’s important: The changes are being made in response to reports that famous actors are drawing up fake, or “yin and yang,” contracts to falsify income declarations and other tax evasion practices. News of the shady tax dealings drew ire online, and the shares of several listed film studios have tumbled.

Big picture: The compensation package paid to a star actor can often take up half, or even more, of a film’s total budget, which inevitably squeezes other aspects of production. The government’s move comes amid wider income tax reforms that propose taxing those who earn author remunerations and royalties, for the first time. (Source: Caixin)

Compiled by Qian Tong and Hou Qijiang.


Share this article
Open WeChat and scan the QR code
Copyright © 2017 Caixin Global Limited. All Rights Reserved.