China :: Business :: Deals

What's Happening Starbucks to Expand Range of Instant Beverages in China, Schultz Says Coca-Colas First Quarter 2011 China Highlights Yum Gets Hungry for Growth in China Golden arches cooks up long-term China strategy Master Kong Allegedly Disguises Price Hikes China Imprisons 14 in Tainted Milk Case Growing concern over school milk program Demotion over expensive drink

Source : Wall Street Journal By Laurie Burkitt Proposal to Take Control of Hot-Pot Chain Little Sheep Indicates New Strategy in U.S. Company's Biggest Market BEIJINGYum Brands Inc.'s preliminary offer to take full control of Little Sheep Group Ltd., the operator of a popular hot-pot chain in China, has signaled a new growth strategy for Yum's largest market. Analysts said the move indicates that Yum, which has 3,800 KFC and Pizza Hut outlets in China, is looking beyond pizza and chicken to establish its own presence in the rapidly growing market for Chinese casual dining. Yum bought a 20% stake in Little Sheep in 2009 and increased its stake to 27.2% last year. Yum said after the close of Hong Kong trading Tuesday that the company had submitted a preliminary proposal to buy all of Little Sheep's outstanding shares, apart from a minority stake to be owned by the chairman and other founders. Little Sheep Chairman Zhang Gang owns 2.4% of the company. Possible Way Internati...

Source : By Zhou Wenting (China Daily) Health scares continue to damage public confidence, reports Zhou Wenting in Beijing. A national school milk program intended to improve children's health has soured again. On Friday morning, 251 children at Yuhe Town Central Primary School in Yulin, Shaanxi province, fell ill after drinking school milk produced by the Mengniu Dairy Group. They were sent to hospital for treatment, and were all discharged by the following day. Test results released on Tuesday afternoon said the milk met China's national standards for food safety, and no pathogens were detected in the milk or the students' vomit and feces. They did not say why 251 students suffered from the discomforts collectively. The tests were conducted by Yulin's Center for Disease Control and Prevention and the results were announced by the city's food safety committee. On Tuesday evening, Mengniu said on its website that it would work with the school and the local health de...

Marbridge on Holiday May 2 Marbridge Consulting, 4/29/11 Marbridge will be closed Monday, May 2 in observance of the Chinese national Labor Day holiday. We will resume business on Tuesday, May 3.

Download this podcast Length 7:10 Download audio file (20110427_ip.mp3) In the news this week was the story of a jury award of $2.3 billion to a division of St. Jude Medical against a Chinese medial device company started by a former employee. The details are specific to the case, but the news was enough to get Technomic Asia principal Michael Zakkour on one of his favorite topics, protecting intellectual property. Zakkour was traveling in the US on his way to southern China, when the China Business Podcast caught up with him for an interview on IP security strategies. There are two main components to IP strategy for companies considering China operations, 1) a significant vetting process, the cornerstone of which is based on relationships that are proven over time; 2) a regularly enforced process to know who is working on the key areas of your product. This means organizations are notified when personnel changes in specified roles among their vendors. Both are easy to articulat...

Digu to Raise USD 25 Mln in Additional Funding Netease Tech, 4/28/11 Chinese location-based service (LBS) mobile SNS Digu has disclosed that it plans to raise USD 25 mln in two more rounds of funding. CEO Li Song revealed that Digu's mobile applications have been downloaded more than 2 mln times. Li added that he expects that the LBS social networking market will double in 2011, reaching RMB 12 mln. Li said that the company is currently working with 30 major brands to provide users with membership cards or discount coupons. Editor's Note: For more background on this topic, please see "Digu Plans to Raise USD 30 Mln in Additional Funding" MD 4/06/11 issue.

Microsoft China Opens First Experience Store SZ-wsh, 4/27/11 Microsoft China has announced the formal launch of its first genuine products experience store in Zhongguancun, Beijing. The store will be operated by licensed Microsoft distributors and mainly sell Microsoft software, such as Windows and Office, and accessories, including keyboards and mice. The experience store will have specialized sales consultants to help the users better understand, experience and purchase Microsoft hardware and software products.

Dianping to Invest RMB 300 Mln to Promote Group Buy in 2011 Oriental Morning Post, 4/27/11 Zhang Tao, CEO of online ratings and social bookmarking site Dianping, recently said that the site will invest RMB 300 mln into market promotions for its group buy operations in 2011. Regarding the widespread proliferation in group buy sites in China this year, Zhang said that he foresees major reshuffling within the group buy sector in 2012, and 2-3 remaining group buy sites once the market settles down. Zhang said the key to success in group buy operations lies in being able to satisfy local businesses' marketing needs and in having strong sales teams on the ground. Zhang pointed out that while the company originally intended to go public this year, private funding efforts this year have proven successful. Zhang said that once the group buy market becomes more stable and more viable products for mobile operations become available, Dianping will then consider its plans to IPO. "Optimist...

Rumor: Dangdang, Suning in E-Commerce Partnership Talks TechWeb, 4/26/11 Peggy Yu, co-president of Chinese B2C e-commerce site Dangdang (NYSE: DANG), has reportedly met with Ling Guosheng, VP of Chinese consumer electronics and home appliances retailer Suning (002024.SZ) and acting general manager of e-commerce platform Suning Yigou (Suning.cn) to discuss a strategic partnership regarding procurement, supply chain resources, operations, distribution centers, and warehouse sharing. According to an industry source, the partnership may not only encompass procurement and distribution but also involve capital investment. Dangdang CEO Li Guoqing previously stated on his microblog that Yu was visiting Suning headquarters in Nanjing last week, and predicted Suning.cn's sales volume would reach RMB 10 bln this year. Li also posted that half the prices on electronics retailers Gome (0493.HK) and Suning's e-commerce platforms are lower than those on competitor Beijing-based B2C e-commerce...

Sohu Q1 2011 Profit Up 34% YoY Sohu PR, 4/25/11 Chinese online media, communication, search, online gaming and wireless value-added services provider Sohu (Nasdaq: SOHU) has announced its unaudited financial results for the first quarter ended March 31, 2011, with total revenue reaching USD 174.4 mln, up 35% year-over-year and 1% quarter-over-quarter. Before deducting the share of net income pertaining to the non-controlling interest in online gaming subsidiary Changyou (Nasdaq: CYOU), GAAP net income for the first quarter of 2011 was USD 55.2 mln, up 34% year-over-year and down 4% quarter-over-quarter. Non-GAAP net income for the first quarter of 2011 was USD 60.6 mln, up 25% year-over-year and down 6% quarter-over-quarter, exceeding the high end of guidance. After deducting the share of net income pertaining to the non-controlling interest in Changyou, GAAP net income for the first quarter of 2011 was USD 39.3 mln, up 41% year-over-year and down 5% quarter-over-quarter. Non-GAAP net ...

What's Happening Starbucks to take on Nestle in instant coffee market Nestl to enter partnership with Chinese food company Yinlu China's leading liquor producers post strong revenues in Q1 Australia Winery Takes Root in China Yum sales surprise, up on strength in China Shaanxi schoolchildren fall ill after drinking Mengniu milk Foreign Dairy Groups Lift Prices in China, Ignore NDRC Calls Asia continues to dominate soy milk consumption Bright Dairy starts work on facility Metro chief plans to open more stores Beijing Jingkelong To Open 30 New Stores In 2011 HNA Retailing Continues to Inject Acquired Assets into Jiadeli Supermarket Ahead of IPO Chamate Forecasts 30 New Retail Tea Outlets Around China In 201! 1 Minute Maid kicks off new marketing campaign in China Pepsi's VP of marketing Yi-Chung Tay to depart

Source : Nestle Vevey, Switzerland, April 18, 2011 Nestlannounced that it had signed a partnership agreement taking a 60% stake in the Chinese food company Yinlu Foods Group (Yinlu). Yinlus Chairman, Mr. Chen Qingyuan, will continue to lead the company in the new partnership. The transaction is subject to regulatory approval in China. Other details of the transaction, including the acquisition price, are not being disclosed. Family-owned Yinlu is a well established household brand in China and a significant marketer for ready-to-drink peanut milk and ready-to-eat canned rice porridge. The agreement builds on an already successful partnership between the two companies, as Yinlu is a co-manufacturer for ready-to-drink Nescaf coffee in China. Yinlus 2010 sales amounted to around CHF 750 million. Yinlus products are tailored to Chinese consumers taste and habits, and complement Nestls existing product portfolio in China, which includes culinary products, coffee, confectionery, bottled wate...

Tencent Invests in USD 100 Mln Android Developer Fund DCM PR, 4/21/11 Chinese internet, WVAS, and online gaming firm Tencent (0700.HK) joined venture capital firm DCM, Japanese social networking giant Gree, and Japanese mobile operator KDDI to launch a USD 100 mln Android strategic investment fund, the A-Fund. The fund will be managed by DCM, with additional partners, including a US-based semiconductor company, to be announced in the coming weeks. The fund is open to Android startups and developers from around the world at any stage and size.

Taobao Launches Online Real Estate E-Commerce Platform Shanghai Evening Post, 4/21/11 Taobao's online real estate platform, Taobao Real Estate (fang.taobao.com), has launched a "New Properties" online real estate e-commerce channel. As of April 20, the channel lists 6,891 new properties in 86 buildings across 27 cities in China for users to purchase directly online. A Taobao spokesperson said that the company is now in talks with property developers in Guangzhou, Chongqing and a number of other cities, and expects to begin adding approximately 7,000 new units from buildings in phase-2 construction to its listings in mid-May. The spokesperson, surnamed Suo, said Taobao Real Estate now primarily focused on online sales of newly constructed housing, and a platform for purchasing pre-owned housing may be launched at a later date. Once the platform has scaled up in terms of the number of participating developers and brokers, Taobao Real Estate will begin considering revenue sh...

Technomic Asia principal Michael Zakkour was interviewed by the China Business Network about future growth for US businesses in China. Zakkour has focused his attention on the 12th Five Year Plan for Chinas economy. He continues to outline the key areas for US companies to develop China business strategies to win in China on this blog, In this presentation, Health Through Wealth, Zakkour makes the case for examining Chinas priorities in healthcare, the health of the environment, and the health of the consumer as keys to economic business growth in China. China Business Toolbox This is a day-long conference focused on successful healthcare business strategies in China. There will be speakers and discussions on medical device and healthcare informatics initiatives in China, understanding Chinas hospital facilities management goals and the opportunities for US healthcare infrastructure companies. China is also developing a significant mergers and acquisition environment which will...

China Mobile App Store Registered Users Reach 39 Mln Sina Tech, 4/21/11 China Mobile (NYSE: CHL; 0941.HK) announced recently that its Mobile Market app store had passed 39 mln registered users and 1.1 mln registered developers. The store offers 50,000 products for download, and has served 1.25 mln downloads to date. China Mobile said that the application store offers a variety of digital content, including music, videos, books, and magazines: more than 1 mln songs, nearly 120,000 books, 265 television shows, and 1,320 single-player games.

China Unicom Begins WLAN Equipment Tender CCID, 4/20/11 Xuan Wenwei, China region technical director of Ruckus Wireless, a U.S-based wireless networking equipment provider, has revealed that China Unicom (NYSE: CHU; 0762.HK; 600050.SH) recently started a new tender for WLAN equipment. Currently, China Unicom is in the process of making initial stage preparations with equipment manufacturers. The tender amount and the cities where the equipment will be deployed are not yet known. Unlike in its past WLAN procurements, for the current tender China Unicom has issued separate requirements for 802.11a/b/g and 802.11n equipment, possibly signaling a next step towards deployment of wireless cities based on 802.11n. In 2010, China Mobile (NYSE: CHL; 0941.HK) and China Telecom (NYSE: CHA; 0728.HK) each bought 370,000 units and 40,000 units of WLAN equipment, while China Unicom bought 200,000 units. As of the end of 2010, China's three telecom operators had deployed 176,000 WLAN hot spots, of...

SARFT to Procure 6 Mln CMMB Terminals in 2011 SARFT.Net, 4/20/11 Chen Ruming, director of the Communications Science and Technology Commission under China's Ministry of Industry and Information Technology (MIIT), said at the China Communications Market 2011 conference held in Beijing on April 19, 2011 that China's State Administration of Radio, Film and Television (SARFT) plans to purchase 6 mln China Multimedia Mobile Broadcasting (CMMB) stand-alone terminals in 2011. China Mobile (NYSE: CHL; 0941.HK), SARFT's exclusive partner among China's three main mobile operators for the development of the CMMB market, has more than 20 mln CMMB mobile phone TV subscribers and that number is expected to exceed 30 mln by the end of 2011.

Qiyi to Focus on Long-Form Commercial Video Content Imeigu, 4/18/11 Gong Yu, CEO of Chinese internet firm Baidu's (Nasdaq: BIDU) subsidiary online video site, Qiyi, recently revealed that Qiyi's central focus is professionally-produced long-form video content. Gong said that short news video clips on the site are only topic-based or related to entertainment news, and added that Qiyi has never carried user generated content, and has no plans whatsoever to do so in the future. Qiyi plans to venture into producing its own dramatic and variety programming this year, though not on a large scale. In the year since its launch, Qiyi has seen traffic and users grow significantly. User statistics for the site indicate that slightly more than 50% of Qiyi users arrive at the site via Baidu, though the percentage has steadily dropped several points each month. Baidu accounted for more than 40% of webpages visited immediately prior to a visit to Qiyi. Gong said that Qiyi's new video SNS ...

Huawei 2010 Net Profit Up 30% Huawei PR, 4/18/11 Chinese telecom equipment and terminal manufacturer Huawei today released its audited financial results for the full year 2010, with revenues up 24.2% YoY to RMB 185.18 bln. International accounting firm KPMG independently audited the financial results. Huawei also reported net profit of RMB 23.76 bln, up 30.0% from 2009. Revenues for the past five years were as follows: Year Revenue (RMB/blns) 2006 66.37 2007 93.79 2008 125.22 2009 149.06 2010 185.18 Net profit for the past five years were as follows: Year Profit (RMB/blns) 2006 3.99 2007 7.56 2008 7.85 2009 18.27 2010 23.76 Revenue from Huawei's Telecom Networks division for 2010 were RMB 122.92 bln, an increase of 23.0% y...

greentechmediaChina's role in greentech has been hyped extensively in the media, but there is some debate about whether it lives up to that hype in reality. For instance, some argue that China is not a friendly place for early-stage greentech startups, because it lacks the venture capital funding communities that are present in the US. However, China makes up for this in deficit in other ways, such as the wealth of government-supported incubators for new technologies. Many local governments in China have a lot of cash, and they want to put it to work. This makes China a healthy field for early-stage opportunity, perhaps even for US or European firms that have technology that could be useful in the Chinese market. Chine is planning to direct the lion's share of its smart grid buildout over the next five years toward massive new transmission systems that will connect solar and wind resources in the west to the biggest cities in the east.

What's Happening PepsiCo boosts food interests China's oldest liquor producer eyes back-door listing Liquor makers urged to keep prices stable 9m yuan for a bottle of Moutai Starbucks plans massive expansion in China Police reveal motive, details of NW China milk poisoning case Shanghai ups price paid to milk producers Wineries urged to change thinking about Chinese market Beijing Wumart To Invest CNY400 Million For China Store Expansion HNA Retailing to Acquire 80% Stake in a Hunan Supermarket Chain Tea Harvest in Central China Tea fair in E China

Source : Reuters (Reuters) - Shaanxi Dukang Group, the maker of China's oldest named liquor, plans to take over a listed company in Shenzhen for a back-door listing in 2011, its chairman, Zhang Hongjun, told Reuters. "We are narrowing the targets to two, and the deal is expected to be completed soon," Zhang told Reuters in an interview on the sidelines of the Boao Forum for Asia, a gathering of political and business leaders on the Chinese island of Hainan. He declined to name the targets. Dukang plans to raise funds to finance a new plant that would cost some 600 million yuan ($91.9 million), he said. The company that produces bajiu, a distilled liquor, is struggling to meet strong demand as wealthier Chinese consumers are spending more on food and beverages, Zhang said. China's baijiu industry produces not only the fiery drinks but also top listed companies in China's A-shares market, such as Kweichow Moutai and Wuliangye . "Our gross profit margin last yea...

China Telecom, Tencent to Launch QQ Handset Tencent Tech, 4/15/11 At the CDMA2000 Handset Design & Development Industry Alliance meeting held by China Telecom (NYSE: CHA; 0728.HK) in Qingdao today, Le Luping, assistant to the president of Tencent's (0700.HK) wireless division, said that China Telecom's operator-customized QQ handset has entered the final phase of development and unveiled Tencent's QQ Service solution. QQ Service integrates various QQ mobile applications such as QQ mobile IM, QZone mobile SNS, and Tencent Microblog under a unified "QQ Passport" that allows users to access all mobile QQ applications after a single log-in. When asked when the QQ Phone might be released, Le said that no launch date had been set and that the phone would be released according to China Telecom's sales timetable. Editor's Note: In a separate article, Tencent Tech reported that Tencent had signed framework agreements with various terminal manufacturers includin...

Rumor: Shanda Developing "Rich Microblog" Product TechWeb, 4/14/11 Chinese online media provider and online game developer and operator Shanda Interactive (Nasdaq: SNDA) has reportedly developed a new "rich microblogging" product, Tuita.com, currently undergoing internal testing by Shanda employees. An industry source said that "rich microblogging" referred to support for publishing more varieties of multimedia and faster sharing than existing platforms. Shanda declined to comment.

Baidu Phoenix Nest Architect Joins SEO Firm Sina Tech, 4/13/11 Zhang Dong, scientist and architect of Chinese internet company Baidu's (Nasdaq: BIDU) Phoenix Nest search advertising platform, recently resigned to become chief scientist for Beijing-based new media marketing firm IM 2.0 Interactive. Zhang, who started the new position earlier this month, will oversee all technology development at IM 2.0, particularly improving the company's search engine optimization (SEO) business. IM 2.0, founded in 2009 by Susan Wang, specializes in PC and mobile application development, SEO, e-commerce solutions, and social media marketing. In October 2010, former Pepsi VP Chris Tung joined as CEO, and the company now counts Haier, Suning, Dell and Pepsi among its clients.

Countries that make and export things have foreign buyers who buy things. But what happens when the country making things is China and the foreign company fails to pay for what they have ordered? Pay Up OK? In the wake of the great global recession there has been a bad debt explosion in China. It is estimated that the number of debts owed to Chinese exporters by US companies has increased 80% over the last two years. It is estimated that 5%-10% of all of purchase orders placed with Chinese manufacturers end up as unpaid bills/bad debt. Furthermore the China Chamber of International Commerce estimates outstanding debt owed to Chinese exporters at $150 billion with an annual increase of $15 billion. At most, only 5% of this debt is currently being recovered. So why does so much of this debt get written off, uncollected and forgotten about in China? Why are so many US and European companies getting away with not paying what they owe, with no effect on their credit rating? Chinese compa...

Rumor: Nokia Sues G'Five for Handset IPR Infringement Sina Tech, 4/11/11 An industry source close to Shenzhen-based handset vendor G'Five Technology said yesterday that Nokia had filed a suit against the company for alleged IPR infringement in the design of a handset G'Five sells in the India market. Nokia's demands are not yet clear, but may well include limitations on G'Five handset sales in India. According to figures from market research firm IDC, a total of 38.6 mln mobile phones were shipped to India last year, 10.6% of which came from G'Five, making it the second largest supplier behind Nokia. Sources involved in the Indian mobile phone trade believe that India is the company's single largest overseas market, accounting for about 45% of its overall sales. When contacted for confirmation yesterday, G'Five's deputy GM of international markets Quan Ou denied the reports, and as of press time Nokia had not responded to requests for comment. Accord...

Emerging Money submits: by Tim Seymour The March import/export Complete Story

Zhong Jin submits: Last week, news of China raising its interest rate by 0.25% barely moved the market. As reported by the Wall Street Journal , most analysts expected that there would be only one interest rate raise left in PBOCs pocket this year. They reasoned that inflation would peak during the first half of 2011 and gradually drop in the second half largely due to a higher base. These analysts might be too optimistic in their forecasts. The first thing that came to mind is a series news stories by both Chinese and English media on the National Development and Reform Commission (NDRC), a powerful economic planning body in China. Near the end of March, NDRC asked Chinese coal miners to keep the coal prices low, as coal is the major input for generating electricity in China. Then, NDRC urged Unilever ( UL ) and other consumer goods producers to stop raising prices. A few Complete Story

Ganaxi Small Cap Movers submits: Chinese Automotive Systems, Inc. ( CAAS ) , a leading supplier of power steering components and systems for Chinese passenger automobiles and commercial vehicles, announced preliminary unaudited selected December 2010 quarterly <a href="http://seekingalpha.com/news-article/892627-china-automotive-systems-reports</span></p><br/><a href='http://seekingalpha.com/article/262841-3-chinese-auto-supplier-stocks-pop-higher-on-positive-news-from-caas?source=feed'>Complete Story </a>

Alfred Little submits: Chinese RTO Puda Coal, Inc ( PUDA ) Chairman Ming Zhao transferred the ownership of PUDAs sole Chinese operating entity, Shanxi Puda Coal Group Co., Ltd (Shanxi Coal), to himself in 2009 without shareholder approval according to official government filings. Then, in 2010, Zhao sold 49% and pledged the other 51% of Shanxi Coal to CITIC Trust Co., Ltd (CITIC), a Chinese private equity fund, for RMB245 million ($37.1 million). Zhao then recklessly leveraged Shanxi Coal by borrowing RMB3.5 billion ($530.3 million) from CITIC at an incredibly high 14.5% annual interest rate (including fees) to finance the development of its coal mines. PUDA shareholders are completely unaware of these transactions that decimate the value of its U.S. listed shares. Background An Industry Facing Government Mandated Consolidation According to PUDAs 2010 10-K filing: In order to improve production efficiency, workplace safety and to reduce coal mine accidents, the Shanx...

What's Happening Kingway Parent Intervenes in China Beer Deal Heineken Should Target China, Not Latin America China: French wine prestige holds sway over rivals Nitrite-tainted milk kills 3 children in China Dairy firm to milk int'l demand China halts nearly half dairy producers in quality crackdown Natural Dairy plans 3,000 specialty stores across China Sale of Hongkelong reflects trend in retail sector Bright Food May Raise $916 Million Selling Bonds in China, Listing Unit China's Mengniu Gained Net Profit Of CNY1.2 Billion In 2010 China Kangtai Cactus CEO Responds to Allegation

Source : Wall Street Journal By Polly Hui HONG KONGKingway Brewery Holdings Ltd., maker of Kingway Beer, said Monday its state-owned parent company exercised a right to buy a 21.37% stake in the brewer held by Heineken-APB (China) Pte., a Singaporean-Dutch joint venture. In buying the 21.37% stake, GDH Ltd., Kingway's parent company, thwarts a plan by conglomerate China Resources Enterprises Ltd. to acquire the holding. GDH, which currently owns 52.5% of Kingway Brewery, will acquire the additional shares on the same terms that Heineken-APB (China) earlier proposed to sell to China Resources, which makes China's top-selling beer, Snow. Last month, Heineken-APB (China), a 50-50 joint venture between Singapore-listed Asia Pacific Breweries Ltd. and Dutch brewer Heineken NV , said it was selling 365.8 million shares in Kingway, in a deal valued at CNY1.08 billion ($164.7 million). The sale marks the end of a seven-year tie-up between Kingway and Heineken-APB, which first bought a ...

Source : Seeking Alpha Heineken (HINKY.PK) won the battle for the Mexican brewer FEMSA last year. This acquisition was seen by analysts as a must-do deal for Heineken, because with it, it secured its position on the American continent, both in the North and South. Moreover, the company's emerging markets exposure increased from about 32% to about 40%. A report has suggested that SABMiller (SBMRY.PK) and Heineken are both considering bidding for Brazil's second-biggest brewer by volume, Primo Schincariol. The report suggests the privately-owned business has been put up for sale for about $2 billion, although both companies have chosen not to comment on the report. Heineken is already active in Brazil with Cervejarias Kaiser and has a market share between 8 and 9%. An acquisition of Schincariol would be a tremendous opportunity and would cement it as Brazil's second-largest operator (right now, Heineken is no. 4). It could immeditely challenge the dominance of Ambev (AHBIF.PK...

Gary Gordon submits: Months ago, equity market pros pounded China mercilessly: China real estate was the next bubble to burst; inflation was spiraling out of control; and commodity stockpiling was proof-positive that China was dead in the dry-bulk shipping water. Well, some folks had a far different perception. For instance, I spoke at the 4th annual Inside ETF Conference on Accessing Asia and China . And on February 7, live from the venue in Florida, I wrote the following: The MSCI China Index trades at 11.5x forward earnings, the lowest forward multiple since 2004. With Hong Kong trading at nearly 18x forward earnings, the disparity is at or near a record there are plenty of reasons to keep an eye on the SPDR S&P China Fund ( GXC ). I expect it to drop a bit further, possibly testing its 200-day moving average. A pullback of 12%-14% from GXCs November peak is my anticipated entry Complete Story

Patrick Chovanec submits: One sure sign of a rising China is its more assertive stance in bilateral talks with the US. So last year, when US negotiators proposed that China help reduce the bilateral trade imbalance by opening up its markets to US exports, Beijing was ready with a proposal of its own: Well buy more American goods, if you scrap restrictions on high-tech exports. The US Cold War-style mentality, they argued, is the main thing standing in the way of more balanced trade. Most experts consider the Chinese argument to be overblown. They estimate the annual amount of sales to China blocked by US export controls at US$2-3 billion. (The only hard number comes from a 2009 survey by the American Chambers of Commerce based in Beijing and Shanghai, which tallied US$560 million in actual lost sales). This barely puts a dent in Chinas $252 billion trade gap with the US for Complete Story

Alicia Damley submits: The growth potential for Chinas financial sector is undisputed, driven by strong growth and an under-penetrated, large population rapidly accumulating wealth (see here ). In anticipation of this, investor valuation of Chinese banks put them into the top group of global banks by market capitalization. Critical to the development of its economy, Chinas domestic financial sector has been nurtured cautiously, shielded from foreign competition and remains under significant regulatory oversight. For example, in banking, lending growth is targeted, lending rates must exceed a floor, deposit rates cannot exceed a ceiling, and all deposits and foreign currency must be transmitted via the banking system. However, this has not prevented a circumvention of letter and spirit of the rules. A recent example of this Complete Story

Variant View Research submits: On 4/6/2011, Advanced Battery Technologies ( ABAT ) issued a press release responding to our research report titled " Advanced Battery Technologies ( ABAT ): The Most Egregious Chinese RTO ." We present, side-by-side, excerpts from ABAT's response and statements from their official filings. ABAT's response contains numerous false and misleading statements which directly contradict its filings. We have provided links to these filings to make it convenient for the reader to verify our claims. In our report, we noted that Chairman Fu now owns the company's key subsidiary, which ABAT had previously claimed ownership of. We wrote: If the filings are accurate, the Chairman transferred ownership of the company's sole operating subsidiary to himself without explanation or compensation. If the filings are inaccurate, then the company is guilty of misrepresenting itself as previously owning 100% of HLJ ZQPT. Excerpt fro...

Jae Jun submits: I understand that shorts have to exist in the market to balance the equation, and let me first say that after having read The Art of Short Selling thoroughly a couple of times, I have the utmost respect for fundamental short sellers such as Kathryn Staley, Jim Chanos and David Einhorn. China MediaExpress ( CCME ) is a Chinese company that I currently hold and is currently under heavy scrutiny as a fraud. Reports by boutiques specializing on shorts have been released, and while I must give credit to Muddy Waters for the work they have put in to their report, the main argument of the shorters report is that the numbers are too good to be true. But Im going to present a case for at least why the SEC filings are accurate. Independent Auditor Required The role of an independent auditor is crucial in protecting investors from dishonest management and Complete Story

Ian Bezek submits: I am short ChinaCast Education ( CAST ) for the following reasons: 1. ChinaCast has engaged in several dubious transactions with seemingly related parties. 2. It's quite possible that ChinaCast investors' funds were misused or misappropriated during these unusual transactions. 3. Several of ChinaCast's important subsidiaries were not audited by Deloitte, but rather, by largely unknown auditing firms. 4. There appear to be numerous errors and omissions in past ChinaCast filings with the SEC and communications with investors. 5. ChinaCast is highly reliant on creating future transactions to keep up its reportedly strong rate on growth. 6. ChinaCast's questionable management team is rapidly losing investors' confidence. The Pitch ChinaCast Education wants you to believe that it, a tiny Chinese company, has managed to create a prosperous education business by purchasing private universities at great prices from, among other people, a peasant...

Robert Salomon submits: Fascinating read in the March 2011 issue of Wired magazine documenting an increasing trend among U.S. small businesses: They seem to be bringing manufacturing work that had been outsourced to China back stateside (see Small Businesses Buck Trend , ht Jon). According to Wired: For U.S. firms, the decision to manufacture overseas has long seemed a no-brainer. Labor costs in China and other developing nations have been so cheap that as recently as two or three years ago, anyone who refused to offshore was viewed as a dinosaur, certain to go extinct as bolder companies built the future in Asia. But stamping out products in Guangdong Province is no longer the bargain it once was, and U.S. manufacturing is no longer as expensive. As the labor equation has balanced out, companiesparticularly the small to medium-size businesses that make up the innovative guts of Americas technology industryare taking a long, hard look Complete Story

Sean Wright submits: We never want to rely on the kindness of strangers in order to meet tomorrows obligations. ~ Warren Buffett Synopsis ADY has serious financial problems. The company is heavily indebted, yet has a history of producing negative cash flow and no immediate prospects for operating improvements. It is highly questionable whether or not ADY should be considered a going concern. ADY is relying on the kindness of its PRC bankers to remain alive at the moment, but with huge near term payment commitments, this kindness will be tested. In order to survive long term, I believe ADY will need to raise at least an additional $100m in equity capital. Yet, ADY is a Chinese RTO that has already burned through three other private equity funds money, has negative cash flow, has no proper CFO, and after over five years as a public company in the USA (including a stretch of Complete Story

Variant View Research submits: In our previous report explaining why we are short Advanced Battery Technologies ( ABAT ), we claimed that ABAT spent $20 million to acquire a company linked to the Chairman without disclosing the relationship. Further research confirms that the truth is even more nefarious than we initially believed. The target company was not only related, but appears to be a company that ABAT had already acquired in 2008 for $1 million . The announcement of a new acquisition appears to be a fabrication allowing Chairman Fu to funnel $20 million of shareholder funds out of the company into his own pocket. We also learned of disturbing allegations by the CEO of the company acquired in 2008. That individual alleges that ABAT's Chairman threatened his life in retaliation for a lawsuit over $600,000 worth of ABAT shares. Background In January 2011, the company claimed that it acquired Shenzhen Zhongqiang New Energy Science & Technology Complete Story

Randy Durig submits: Per share values on 3-18-2011: Market value $6.55 Cash & investments $5.09 Enterprise value $ 1.46 Dividend rate 2.8 % Introduction : Nam Tai Electronics ( NTE ) is an electronics manufacturing and design service provider to a select group of the worlds leading original equipment manufacturers (OEMs) of telecommunications, consumer electronic, medical and automotive products. They specialize in low cost production of small and advance form manufacturing and work to improve production techniques in order to better service the electronic components for the OEM industry. We selected Nam Tai Electronics because it is one of the select few that fits our model. Our goal is to select, purchase and continually monitor companies in an effort to obtain outstanding performing investments while minimizing risk by finding low values for our clients. We will cover part of our review and selection...

Hale Stewart submits: From Bloomberg: China raised interest rates for the fourth time since the end of the global financial crisis to restrain inflation and limit the risk of asset bubbles in the fastest-growing major economy. The benchmark one-year lending rate will increase to 6.31 percent from 6.06 percent, effective tomorrow, the Peoples Bank of China said on its website at the end of a national holiday. The one-year deposit rate rises to 3.25 percent from 3 percent. China -- and to a lesser extent all the BRIC economics -- have been the drivers of Complete Story

Xiaofan Zhang submits: Chinese Internet stocks ended March on a positive note: On average, the 42 Chinese Internet stocks (Table 1) rose 0.7% in the month. At the segment level, Online Travel, Online Video, Online Games, and Online Advertising stocks had positive average performance, while E-Commerce stocks continued to struggle. Below is my detailed analysis of each segment: Online Travel Booking stocks advanced 7.6% on average, the most among all industry segments, as investors welcomed better-than-expected airline traffic data. Chinese airlines' total passengers rose 12.3% year-over-year during the Spring Festival travel season, according to data released by the Civil Aviation Administration of China [CAAC].. This data point suggests China's total travel spending will likely outgrow GDP in 2011, indicating a favorable macro environment for online travel booking companies such as Ctrip.com (NASDAQ: CTRP ) and eLong (NASDAQ: LONG ) . As China's travel booking industry r...

Emerging Money submits: By Tim Seymour While you were sleeping over the weekend, China released a non-manufacturing PMI that came in at 60.1. This was a huge rebound from the previous month. Naturally, the number slipped out over the weekend, when global traders were unable to take immediate advantage of the data much less pay much direct attention. Complete Story

Stone Fox Capital submits: Over the last 6 months, China has had four internet related IPOs that soared nearly 100% on the first trading day. The latest came last week in the form of Qihoo 360 Technology ( QIHU ). The stock was up an amazing 134% in its market debut, but only ranks second trailing the 161% gain of Yoku.com ( YOKU ). Should you buy now? Any prudent investor should take a pause after such a meteoric rise. Sure the company has a lot of potential but most companies don't live up too such grand hype. After all, there was a reason that the investment bankers priced it so much below the closing price. Do you really think they turned down extra fees intentionally? The good news with QIHU is that we have three recent China IPOs that had similar opening day results. What they have done since their respective IPO days could be a great Complete Story

Alfred Little submits: Charles J. Landy, of Pillsbury Winthrop Shaw Pittman LLP, contacted me to announce that he has been engaged as counsel to the Audit Committee of the Board of Directors of China Integrated Energy (NASDAQ: CBEH ) to investigate my allegations. He stated the he appreciates my offer to help find the truth and asked that I send him copies of all of the evidence against CBEH. I referred him first and foremost to the key video evidence ( viewable here ) proving CBEH has not produced any meaningful quantity of biodiesel in the last four months, despite managements repeated public claims that their plants are running at 100% of capacity. I plan to spend the next several days walking Mr. Landy through the documentary evidence, all of which is available by clicking the hyperlinks in my updated report available ( here ). Pillsburys investigation appears to be progressing very quickly. I believe Pillsbury can conclude Complete Story

iMFdirect submits: By Dominique Strauss-Kahn I am delighted to be back in China this week for a high-level seminar in Nanjing on the international monetary system . Every time I come to this part of the world, I am impressed by the dynamism of the economies and the optimism of the people. The future is here. The regions economic performance over the past few decades has been nothing short of remarkable. Asia now accounts for about a third of the global economy, up from under just a fifth in 1980. This trend has been reinforced by the crisis, with the emerging market powerhouses leading the global recovery. Asia has also made tremendous progress with poverty reduction. China alone has pulled hundreds of millions of people out of poverty over the past few decades. Such a feat has never before been accomplished in the history of human civilization. But to sustain this progress, Asia Complete Story

Rocco Pendola submits: Sino Clean Energy ( SCEI ) shares tanked on Friday, closing the session down nearly 14 percent to end the day at $4.91. The company, which produces coal water slurry fuel (CWSF), considers itself a key player in China's commitment to cleaner-burning coal production. Sino reported earnings on Friday. To ensure accuracy, I screenshot the results Sino reported directly from the company press release, posted at Yahoo! Finance . Click to enlarge As noted in the release, the company reports significant sales growth of 131 percent, year-over-year. Sino expects revenues to increase from the 2010 level of $106.3 million to "at least" $170 million in 2011. Sino notified the SEC that it would not be able to file its 10-K on time. To be fair, Sino filed its annual report late last year as well. And doing so, particularly among small companies, is not uncommon. If you read through the company's press releases Complete Story

China Play Stocks submits: In the China small-cap ETF space, there are two main options: the Guggenheim China Small Cap ETF ( HAO ) and the iShares MSCI China Small Cap Index Fund ETF ( ECNS ). Let us start with a quick comparison of the basics: ETF Expense Ratio AUM (USD) Number of Holdings Coverage universe HAO 0.7% $376.9MM 201 H-shares, N-shares, ADRs ECNS 0.65% $23.9MM 313 H-shares, B-shares and Red-chips The main difference between the two ETFs is the universe of stocks they each cover. B-shares are listed on the mainland exchanges (Shanghai and Shenzhen) and available to foreign investors. H-shares companies, incorporated in the mainland, are listed on the Hong Kong stock exchange. Red-chips are government-owned mainland companies, incorporated outside of the mainland, that are listed in ...