167.50 -0.58 (-0.35%)
Pre-Market: 8:29AM EDT
|Bid||167.50 x 1100|
|Ask||167.40 x 1400|
|Day's Range||165.78 - 168.88|
|52 Week Range||129.77 - 198.35|
|Beta (3Y Monthly)||1.85|
|PE Ratio (TTM)||48.07|
|Earnings Date||Aug 21, 2019 - Aug 26, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||218.13|
Chinese drone-maker DJI dominates the drone market in the US. Following security concerns heard in the US Senate last week, DJI hit back at accusations with an 1800-word letter.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.For years, companies like Oracle and International Business Machines invested heavily to build new markets in China for their industry-leading databases. Now, boosted in part by escalating U.S. tensions, one Chinese upstart is stepping in, winning over tech giants, startups and financial institutions to its enterprise software.Beijing-based PingCAP already counts more than 300 Chinese customers. Many, including food delivery giant Meituan, its bike-sharing service Mobike, video streaming site iQIYI Inc. and smartphone maker Xiaomi Corp. are migrating away from Oracle and IBM’s services toward PingCAP’s, encapsulating a nation’s resurgent desire to Buy China.PingCAP’s ascendancy comes as the U.S. cuts Huawei Technologies Co. off from key technology, sending chills through the country’s largest entities while raising questions about the security of foreign-made products. That’s a key concern as Chinese companies modernize systems in every industry from finance and manufacturing to healthcare by connecting them to the internet.“A lot of firms that used to resort to Oracle or IBM thought replacing them was a distant milestone, they never thought it would happen tomorrow,” said Huang Dongxu, PingCAP’s co-founder and chief technology officer. “But now they are looking at plan B very seriously.” IBM, which gets over a fifth of its revenue from Asia, declined to comment. Oracle, which gets about 16%, didn’t respond to requests for comment.China has long tried to replace foreign with homegrown technology, particularly in sensitive hardware -- it imports more semiconductors than oil. That imperative has birthed global names like Huawei and Oppo and even carried over into software in recent years, as Alibaba Group Holding Ltd. and Tencent Holdings Ltd. expand into cloud services. That effort has gained urgency since Washington and Beijing began to square off over technology.“China has always wanted to use domestic tech and in areas like cloud, it’s been very successful,” said Julia Pan, a Shanghai-based analyst with UOB Kay Hian. “While it wants to use Chinese chips, its technology is just not there, but when it’s mature enough, they very likely will replace overseas chips with domestic ones.”Now, a coterie of up-and-coming startups are encouraging Chinese firms to go local. Customers use PingCAP to manage databases and improve efficiency, allowing them to store and locate data on everything from online banking transactions to the location of food delivery personnel.Backed by Matrix Partners China and Morningside Venture Capital, PingCAP is competing in a sector traditionally dominated by companies such as Oracle and IBM. The market is expected to grow an average 8% annually to $63 billion globally in the seven years through 2022.The startup is one of the newest members of a cohort of open-source database providers such as PostgreSQL and SQLite that are upending the market. Researcher Gartner forecasts that 70% of new, in-house applications worldwide will be developed on open-source database management systems by 2022.PingCAP -- mashing the term for verifying a web connection, ping, and the CAP computing theorem -- was founded by three programmers whose former employer, a mobile-apps company, was acquired by Alibaba. Inspired by Google’s Cloud Spanner, which pioneered the distributed database model, the trio -- Huang, Liu Qi and Cui Qiu -- began creating an open-source database management system that would allow companies to infinitely expand their data storage by simply linking more servers to existing ones.“Think of traditional database mangers like a fixed glass container, every time you run out of storage you have to get a bigger one,” said Huang. “What our system does is that you can link as many cups together as you want.”Their idea caught on with investors and venture fund hot shots including Matrix agreed to invest about 10 million yuan ($1.4 million) in 2015. To date the company has raised more than $71 million and has about 190 employees.PingCAP is working in a space where competition is fierce -- its database TiDB currently only ranks 121 among global peers, according to database rank compiler DB-Engines, which uses mostly mentions on social media and discussion forums as key metrics. Other open-source database managers such as PostgreSQL ranks 4th and its direct competitor CockroachDB, which also focuses on distributed database systems, leads PingCAP by 30 spots. The Chinese startup also operates in a market where it’s difficult to make money -- PingCAP only has a couple dozen paying customers in China and makes about 10 million yuan in revenue a year. Their best shot is to create successes that can be later replicated on a larger scale, said Owen Chen, an analyst with Gartner. “Work with the 10% early adopters free of charge, and make money off the 90% followers later,” he said.That’s why Huang is working with big names like the Bank of Beijing and Mobike -- so it can create templates for each sector. “Only one thing is certain, data will continue exploding,” said Richard Liu, a founding partner at Morningside Venture Capital. “We have the patience to wait before they figure out the best revenue model.”PingCAP has one thing going for it: Chinese customers are increasingly willing to experiment with technology. Data supplied by some 2,000 companies -- more than 300 in-production users and 1,500 who are testing its system -- will provide PingCAP with what Matrix Partner Kevin Xiong says is akin to a supply of ammunition.“You need bullets to train someone to become a stellar marksman, and PingCAP right now has a lot of bullets,” said Xiong, who invested in the company.Huang points to how PingCAP’s database helped tide over Chinese bike-sharing giant Mobike during stressful days when user and transaction numbers exploded on a daily basis -- at its peak in 2017 the company said it handled as many as 30 million rides a day.“It was a really challenging time for us, and [open-source database] MySQL was no longer able to meet our demands given the jump in data volume,” said Li Kai, a senior tech director at Mobike. “PingCAP really helped us big time.”Huang and his team also made it easy for IT departments to jump ship. With one key stroke, companies could export their entire database on MySQL over to PingCAP’s. Some are considering moving their most sensitive data including transactions and customer info over, Huang said without disclosing names.Yu Zhenhua, an IT manager at Bank of Beijing, said China is constantly trying to enhance information security while his industry wants to lower costs as it rapidly expands. “TiDB’s service meets the demands of what we want in a distributed database manager,” Yu said in a statement posted on PingCAP’s website. A representative for the lender didn’t respond to emailed queries about its collaboration.Longer term, PingCAP wants to venture beyond China -- but there, the geopolitical spat is proving an impediment. Earlier this year, PingCAP was ready to embark on an expansion into the U.S. and said it was already in discussions for getting some prominent tech startups to use its software. Now the prospects of winning over American clients are clouded.“We’re not seeing any immediate impact on our business in the U.S. but the trade war does force us to look at the long term uncertainties of getting important U.S. clients in finance or tech to move to our platform,” Huang said.\--With assistance from Olivia Carville, Nico Grant, Lucas Shaw and Gao Yuan.To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Colum Murphy, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Last week, less than a year after Mr Ma announced his departure, Alibaba said that Maggie Wu, chief financial officer, would take on strategic investments, working alongside Mr Tsai. Messrs Ma and Tsai are inextricably linked with the company, which has grown to a market capitalisation of $400bn-plus and last year generated revenues of $56bn.
(Bloomberg) -- Over the past several years, Shanghai entrepreneur Yung Lin has built a decent business selling wrenches, screwdrivers and other tools on Amazon.com. Then President Donald Trump imposed tariffs on thousands of goods made in China, and Lin faced a difficult choice: eat the additional cost or try and pass it onto his mostly American customers. He chose to raise prices and watched sales of some products dive by as much as one third in just two weeks. Amazon.com Inc. merchants around the world are scrambling to navigate an unpredictable trade war that’s upending their proven business model of buying inexpensive goods in China and selling them at a markup in the U.S. The problem is particularly acute now as Trump weighs another $300 billion worth of tariffs, many on consumer goods.Mom and pop sellers won’t be able to wait for Trump’s decision: They have to place factory orders now and figure out pricing if they want to get their goods made in time for the lucrative Christmas shopping season, when they make as much as half their annual revenue. The most obvious solutions—raising prices, shifting production to other countries, stockpiling inventory—all have costs and complications of their own.These businesses—many of them one-person shops—are especially vulnerable because they lack big companies’ wherewithal to ride out the uncertainty as well as the negotiating power to shift tariff costs onto their suppliers. “The smaller companies have a significant problem,” says Joel Sutherland, Managing Director of the Supply Chain Management Institute at the University of San Diego. “We have an administration that says one thing today and does something else tomorrow, which poses tremendous risks.”Amazon is more insulated than the merchants in the near term but it too could take a hit if sales slow and cut into the commissions and fees the company charges merchants to use its online store. The shares were down less than 1 percent at 12:08 p.m. in New York.Much depends on whether the U.S. and China can come to terms. Trump will meet Chinese President Xi Jinping for the G20 summit in Osaka, Japan, on June 28-29, and both sides have agreed to resume trade talks after a weeks-long stalemate. But even if they hammer out an agreement, the trading relationship between the world’s two largest economies probably will never be the same.“We’re going to assume the tariffs are here to stay,” says Chuck Gregorich, who sells China-made hammocks, patio furniture and 2,000 other products on Amazon. “We can’t have this happen in a year or two and get caught with our pants down again.”Like many other importers, Gregorich tried to move up orders early last year to beat a Jan. 1 tariff hike on Chinese imports from 10% to 25%. He wound up spending an extra $400,000 on shipping only to see the tariff hike delayed. Burned once by the guessing game, Gregorich is looking to shift about 30% of his production to factories in Vietnam and elsewhere. He’s not alone. Many other Amazon merchants are considering having their goods made in India, Southeast Asia and Central America. Michael Michelini relocated to China from New York in 2007 to make Italian coffee presses and upscale bar supplies for U.S shoppers. Eight months ago he decided to move with his wife and kids to Thailand, where he’s working with a new factory to develop a line of high-end kitchenware. “Now when I think of China, I think of risk,” he says.Moving isn’t easy, however. Merchants say finding the right factory, securing raw materials and conducting product quality testing can easily eat up a year. Jerry Kavesh sells cowboys boots and hats on Amazon and recently spent months locating a factory in India that could make his products. But Kavesh discovered he would still have to import raw materials from China, negating any advantage. So as a last resort, he’s cutting his holiday inventory by about 15% and raising prices by about 12%, which he figures will spook enough customers to hurt sales.“When I hear the [U.S.] administration say just move, that's just not realistic,” says Kavesh, the chief executive officer of 3P Marketplace Solutions. “You can’t just suddenly turn all of your production over to someone new.”Even as U.S. sellers try to diversify their manufacturing base, their Chinese counterparts are looking for new customers in Europe, Japan and Australia to offset the potential hit to their U.S. business. “If you are a Chinese seller, money is money,” says Eddie Deng, a former Alibaba Group Holding Ltd. strategist who now runs an online clothing brand called Urbanic that sells Chinese-made, Western-style clothing in India. “It doesn't matter if it's from the U.S., India or the Middle East.”Amazon has said little publicly about the trade war. It wasn’t among 600 businesses including Walmart and Target that wrote the Trump administration earlier this month seeking an end to the trade war because it’s bad for U.S. shoppers. Amazon is a member of the Internet Association trade group, which signed the letter.Behind the scenes, Amazon has agreed to pay some vendors up to 10% more for products affected by tariffs, according to two people familiar with the matter. “Companies of all sizes throughout the supply chain are adjusting to increased costs resulting from new tariffs,” Amazon said in an emailed statement. “We’re working closely with vendors to make this adjustment as smooth as possible.”But that help will apply only to products Amazon buys wholesale and resells itself. The mom and pops that sell directly to consumers on Amazon’s marketplace are on their own.The hardest part is the uncertainty—the temptation to parse Trump tweets in a mostly vain effort to divine the future. “This could all be a head fake,” says Steve Simonson, who sells Chinese-made home goods and electronics and has been scouting factories in India, Vietnam and Central America. “In two months, this could all go away and all of this time and work will be wasted.”(Updates with share price. A previous version of this story corrected name of university in the fourth paragraph.)To contact the authors of this story: Shelly Banjo in Hong Kong at email@example.comSpencer Soper in Seattle at firstname.lastname@example.orgTo contact the editor responsible for this story: Robin Ajello at email@example.com, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Surveys of business leaders in China tell a different story: the manufacturing Purchasing Managers' Index (PMI) is at 50.2, maintaining positive sentiment by a razor's edge. Despite the uncertainty and risk around the U.S. – China trade war, parcel companies like Yunda, STO Express, YTO Express, and SF Holding are benefiting from secular tailwinds like e-commerce growth and large investments from private capital.
While Asian markets were mixed, China’s Shanghai Composite Index gained 0.21% to end on a positive note for five days in a row. However, the tech-heavy Shenzhen Component ended in the red today.
China has grown at a breathtaking pace over the last couple of decades. The growth has been led by a couple of drivers, namely higher infrastructure investments and rising exports. Now, the infrastructure and investment-led model have their own limitations.
Alibaba Group Holding (BABA) plans to open an e-commerce trade hub in Yiwu in a bid to set up a trade platform for small players in global trade.
When Nio Inc. (NASDAQ: NIO) reported first-quarter unit sales that exceeded its prior delivery targets last month on May 29, shares closed at $3.61 that day. Nio stock finally bottomed at around $2.38 by mid-June and is appearing to benefit from the stock market rebound. What are the odds that the Chinese electric vehicle supplier sustains the stock uptrend and rewards shareholders?Source: Shutterstock Nio Reports Strong First-Quarter Unit SalesNio delivered 3,989 ES8s, its high-performance premium electric SUV, in the first quarter. Previously, the company forecast a delivery target of between 3,500 and 3,800. It delivered 16,461 units for the year-to-date period ended April 30. * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 While investors appreciated the strong performance despite seasonal headwinds led by the Chinese New Year holiday slowdown, business worsened afterward. Nio now expects a sequential decline in deliveries for the second quarter. It cited ongoing U.S.-China trade war concerns and a sluggish Chinese auto market.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEV subsidy cuts are bigger than Nio previously expected. The 40% drop in subsidies, from RMB 67,500 (US $9,850) to RMB 40,500 (US $5,900) will hurt sales. Starting June 26, subsidies will fall further to just RMB 11,520. In effect, the subsidy is no longer a positive catalyst for Nio unit sales.The availability of the sportier, less expensive ES6 sedan will hurt ES8 SUV sales. As expected, Nio will align its operating cost structure to the lower demand. In Q1, it already cut R&D spend by 28.8% sequentially. SG&A spend fell 32.2% sequentially. The cuts are necessary and should slow the quarterly operating losses.Still, the shrinking operations also signal that the company will not grow as fast as investors previously thought. Nio shares are already down 34% in the last month. The 51% drop in the quarter is exaggerated. In that period, the stock spiked to the $10 - $13.80 level after getting positive but meaningless coverage from 60 minutes.Nio cut its headcount by 4.5% in Q1 and now has 9,390 employees globally, down from 9,834 at the end of 2018. Future Expectations and Nio StockNio has over 12,000 ES6 pre-orders. It added 5,000 from its exposure at the Shanghai Auto Show. But with business slowing, Nio will also right-size its service networks. It plans to shift its focus to smaller Pop-up Houses. This should lower operating expenses while keeping its sales and marketing coverage unchanged.Its 125 NIO battery swap stations throughout the country are not likely to change. And the 500 Nio Power Mobile on the road should give current and future customers enough support.Nio showcased its next-generation ET7, a high-performance premium electric sedan at the Shanghai Auto Show. Built on NP2 (Nio platform 2.0), the EV will have Level 4 autonomous driving capabilities. The company did not offer any timeline for ET7. Given the current slowdown for selling existing models, it is in no hurry to bring the new model to market. Headwinds for Nio StockAlthough unit sales improved in the first quarter, Nio still reported a negative gross margin of 13.4%. Total revenue fell 52.5% from last year to $243.1 million. Year-over-year SG&A and R&D expenses rose 71.5% and 55.4%, respectively, adding to the $390.9 million loss in the first quarter.Nio cannot accurately predict how many ES6 units it will sell for the full-year 2019. Investors must watch the demand levels for ES6 at launch first. If it reports strong sales momentum, Nio will be in a better position to forecast sales for the year.The company set a high priority for expanding its sales channels. By offering more test drives to the public, Nio might sustain better selling volume. Conversely, cutting marketing spending at a critical period of its growth could hurt its long-term prospects. Your Takeaway on Nio StockNio shares rose slightly in the last week but could fall again if market optimism fades. Much of the near-term upside depends on the U.S. and China resuming trade talks.Predicting how the talks will progress is impossible. Investors might do better speculating on trade talks by holding bigger names like Alibaba Group (NYSE: BABA). Still, Nio has a flashy product and could potentially grow market share in China in the long-term.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post Nio Stock Increasingly Looks Like It's Worth Revisiting appeared first on InvestorPlace.
Despite the hype of being "the Netflix (NASDAQ:NFLX) of China," there has been no love for iQiyi stock (NASDAQ:IQ).Source: Shutterstock Netflix went from a market cap of less than $50 billion at the start of 2016 to more than $160 billion now. That's a three-year triple -- and not including the fact that entering 2010, its market cap was about $3 billion. Jeez, did most of us miss an opportunity or what?That's exactly why I'm perplexed with the underperformance of IQ stock. It's like another opportunity to invest in Netflix from an early start. Granted iQiyi stock has a market cap of about $13 billion, but that's still less than a tenth of the size of NFLX.InvestorPlace - Stock Market News, Stock Advice & Trading Tips iQiyi Stock as the Next NetflixLast quarter, iQiyi grew revenue 43% year-over-year to $1 billion. While it lost 35 cents per share, that was 17 cents less than the 52 cents per share that analysts had expected. Despite four straight bottom-line misses, a sales and profit beat wasn't enough to woo Wall Street.Granted, this came in mid-May when the market was getting crushed and just two weeks after President Trump sent a trade-war tweet that reverberated throughout global markets. In the rebound from the month-long equities tailspin, we haven't seen the same recovery in IQ stock price as we have in other names. * 6 Stocks Ready to Bounce on a Trade Deal Further, losses aren't be shrugged off like they were for Netflix. Even though this quarter's bottom-line results were ahead of expectations, the losses almost doubled year-over-year. Operating margins slipped, too. I was wrong to think the market would overlook these losses, although I think if the trade-war rhetoric was not present, iQiyi stock price would be rallying, not falling. Or at the very least, it would be stable.iQiyi is a blend between Netflix and Alphabet's (NASDAQ:GOOGL) YouTube and if it were a well-known American entity, its valuation would be double or triple what it is now. Last quarter, total subscriber count grew to 96.8 million, up 58% year-over-year from 61.3 million. That's immense growth and shows just how big the addressable market is in China.For comparison purposes, NFLX has 148.8 million subs. Comparatively, IQ has 65% of Netflix's sub count and is growing rapidly, yet just 8% of the valuation. IQ Stock HeadwindsThe stock is caught in the trade-war crossfire, among other headwinds. While IQ stock isn't directly buffeted by tariffs and production, the Chinese economy is. Further, the stigma attached to Chinese equities isn't doing the stock price any favors. The same can be said for Alibaba (NASDAQ:BABA), Baidu (NASDAQ:BIDU) and others.I think iQiyi stock is a solid long-term, speculative bet on streaming. Specifically, Chinese streaming, where the country's population is roughly four times the size of the U.S. It's worth mentioning that Netflix is not allowed in China and therefore it essentially eliminates what would be IQ's largest competitor.If the trade war situation is eliminated, then Chinese stocks and IQ could be back in favor among investors. Aside from that though, it's clear investors want to see better cost control from management. If they can tighten up spending without sacrificing growth, this stock could explode higher. Particularly with some trade war resolution.Estimates call for revenue growth north of 23.5% both this year and next. They also call for losses each year. Better-than-expected bottom-line results could change sentiment a hurry. Trading iQiyi Stock Price Click to EnlargeI'm not a big head-and-shoulders trader, but one could make a case that iQiyi stock price is putting an inverse setup at the moment. That could set the stage for a bullish trade if and when it gets back to the neckline (black line, above). * 7 Value Stocks to Buy for the Second Half Whether it's setting up in that fashion or not doesn't really matter in the short term, given that it has so many hurdles in the way right now.First, IQ stock price needs to hold $18. Below puts its monthly lows of $17.18 on the table, where a break below could send IQ into no man's land toward the year-to-date lows. Provided it holds as support, it will have to contend with the declining 20-day moving average, which is currently weighing on the stock.Above that brings up the backside of prior downtrend support (blue line) and the declining 50-day moving average. It's tough trend after tough trend and it won't be an easy road for the bulls. Bottom Line on IQ StockWhat's the best-case scenario for IQ stock investors? Some of the catalysts discussed above. Solving the trade-war dilemma and a promising quarter or two of earnings could go a long way to repairing the technical damage on the chart -- and doing so in a hurry.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post If iQiyi Stock Is The Netflix Of China, Why Doesn't It Perform Like It? Â appeared first on InvestorPlace.
(Bloomberg) -- Carrefour SA has agreed to sell an 80% stake in its China unit for 4.8 billion yuan ($698 million) in cash to local retailer Suning.com Co. as it rethinks its exposure in the world’s No. 2 economy after years of decline.The yielding of control comes after a long search for a partner for the French company’s struggling Chinese operations. Once the premier foreign supermarket chain locally, it failed to adjust to the onslaught of e-commerce in recent years and sales slumped.The shares rose as much as 2.9% early Monday in Paris.Carrefour will retain a 20% stake in the China business, which generated net sales of 3.6 billion euros (28.5 billion yuan) in 2018. It will also get two seats out of seven on the China unit’s Supervisory Board, according to a statement Sunday. The valuation of Carrefour’s China unit at 0.2 times its 2018 sales -- compared to an industry average of 0.8 times -- is at a “significant discount to peers likely due to poor financial results,” said Citigroup Inc. analysts led by Lydia Ling in a note Monday.“The consolidation in store network, supply chain, logistics and membership could improve efficiency and profitability for both parties,” said the Citi note.A growing number of European and American retailers are either scaling back their presence or tying up with local partners in order to stay competitive in China, where e-commerce penetration is one of the highest globally. Walmart Inc., which has a network of around 400 supermarkets, relies on JD.com Inc. for its delivery service, while Germany’s Metro AG is said to be trying to offload a majority stake in its Chinese business.“The big problem for Carrefour and other western grocery chains is that they have major challenges in their home countries and can’t afford to grow in China,” said Pascal Martin, a Hong Kong-based partner at OC&C Strategy Consultants. “In China, if you want to grow in the groceries space, you have to continue to invest capital in less developed cities.”End of an EraIt’s the end of an era for one of the first foreign brands to gain a loyal following among Chinese consumers. Carrefour entered the country in 1995, ahead of Walmart, and its massive hypermarkets where one could buy fresh pork along with a TV ushered in a new style of shopping for a country just opening up to the outside world.But it has struggled to maintain profitability as buyers moved online rapidly in recent years, a shift that’s favored home-grown giants like Alibaba Group Holding Ltd. Despite efforts to digitize its operations, and an initiative to rent out store space to local retailer Gome Retail Holdings, Carrefour’s China sales declined about 10 percent last year to 3.6 billion euros, according to the company’s annual report.Earnings before interest, tax, depreciation and amortization were 66 million euros or 516 million yuan last year. It operates 210 hypermarkets and 24 convenience stores in China currently.The transaction represents an enterprise value of 1.4 billion euros ($1.6 billion) for Carrefour China. For Nanjing-based Suning, primarily an electronics retailer, the deal will help it cut procurement and logistics costs and boost profitability, the company said in a statement Sunday. Its Shenzhen-listed shares rose as much as 6.5% in early trading on Monday as investors rewarded the retailer for closing the deal at a low price.Alibaba holds a 20% stake in Suning and the two companies are closely allied. They’ve been investing in brick-and-mortar retailers with the goal of building an empire where offline and online shopping are seamlessly integrated. Earlier this year, Suning bought 37 department stores from Wanda Group, while Alibaba paid $2.9 billion in 2017 for a 36% stake in Sun Art Retail Group Ltd., China’s biggest supermarket chain. The Carrefour deal is likely to strengthen Alibaba’s foothold in the fiercely competitive groceries market in China.The acquisition has been cleared by Carrefour’s board and is expected to close by year end, but still needs approval from the Chinese regulator, said the companies.Carrefour’s decision to retain a 20% holding shows how China remains a strategic market for global retailers. Keeping that stake will allow it to maintain a foothold in an innovative retail market, a company spokeswoman said Sunday.(Updates with shares in third paragraph.)\--With assistance from Robert Williams.To contact Bloomberg News staff for this story: Geraldine Amiel in Paris at firstname.lastname@example.org;Daniela Wei in Hong Kong at email@example.comTo contact the editors responsible for this story: Rachel Chang at firstname.lastname@example.org, Bhuma ShrivastavaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Carrefour SA, Europe's largest retailer, may be the latest Western company to pull back from China. It’s unlikely to be the last.On Monday, the hypermarket operator said it would sell 80% of its China business for 4.8 billion yuan ($699 million) in cash to Suning.com, the Chinese retailer backed by Alibaba Group Holding Ltd. Carrefour will retain a 20% stake. Over the past few years, the French company’s plans to shrink its China footprint has been one of the worst-kept secrets in banking. Though Carrefour sold the business pretty cheaply – with a valuation of 0.2 times 2018 sales, compared with the industry average of 0.84, according to Citigroup Inc. – loosening its ties to the mainland may be a smart move, whatever the price. With sales in the country flagging and losses piling up, the deal comes as China’s macroeconomic picture is also darkening.Yet the key challenge for Carrefour preceded the trade war. In recent years, online-only players such as Alibaba have been piling pressure on brick-and-mortar operations, with Tesco Plc, Best Buy Co. and Marks & Spencer Plc each announcing plans to pull back from the mainland market. Carrefour’s share of the country’s hypermarket segment fell to 4.6% last year from 8.2% in 2009, Citi writes.(1) That’s a problem in a country with one of the world’s biggest rates of e-commerce penetration. China's online retail sales reached 3.86 trillion yuan in the first five months of this year, accounting for more than one-fifth of the country's total purchases of consumer goods, according to a recent report by the Chinese Academy of Social Sciences. To make matters worse, foreign brands no longer have the cachet they once enjoyed – at least in low-end consumer goods. In a survey last year, Credit Suisse AG said that Chinese consumers preferred domestic purveyors in categories like food and drinks and home appliances. With the trade war whipping up nationalist fervor, that trend may accelerate: The bank's latest poll of shoppers 18 to 29 years old showed that 41% preferred phones made by Huawei Technologies Co., up from 28%, while interest for Apple Inc.’s products fell to 28% from 40%.For many firms, ceding control to a local partner is probably the best way forward. Carrefour appears to be borrowing a page from the playbook of McDonald’s Corp., which sold 80% of its China business in 2017 to a tie-up between state giant Citic Group Corp. and private equity firm Carlyle Group LP.Or consider Walmart Inc., which sold its e-commerce delivery site to JD.com Inc. in 2016 in exchange for a stake in the Chinese retailer. The U.S. firm now aims to open 40 of its Sam’s Club stores in China by 2020. Costco Wholesale Corp. is also betting on China’s appetite for bulk buying, with plans to open its first bricks-and-mortar store in August. Whether Costco can pull this off without a local partner remains unclear.What is clear is that Carrefour won’t be the last retailer to rethink its China strategy. Germany's Metro AG is also looking to sell its $1.5 billion Chinese business. At a time when Chinese acquisitions overseas have dried up, bankers at least can thank Western firms for managing to drum up some business from the mainland. (1) The bank citesEuromonitor International research.To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Alibaba (NASDAQ:BABA) stock is reacting to the trade war with China by becoming more Chinese.Source: Shutterstock Lured by rules that allow listing of dual-class shares in Hong Kong, Alibaba has announced plans to raise $20 billion there after doing an 8:1 stock split. Dual class shares were forbidden in Hong Kong when Alibaba went public in New York in 2014.The split will make it possible to buy a share in the company, which opened for trade at about $166 on June 19, for just under $21. This makes it affordable to small Chinese investors.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhile American business writers file gigabytes about how to trade this or what it means to us, it's not about us.It's about China. Alibaba as ChinaAlibaba has become a proxy for what is possible to ordinary Chinese by combining the Horatio Alger maxims of co-founder Jack Ma with the absolute obedience preached by Chinese president Xi Jinping. * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 Alibaba bought the South China Morning Post, Hong Kong's leading news outlet, in 2015. It now finds itself caught between the Xi government and the demand of Hong Kong's people for autonomy. Millions of people, a substantial portion of Hong Kong's population, have participated in protests over a proposal to allow quick extradition, to China, of people accused of crimes.China's government could crack down, as it did in Beijing 30 years ago, stifling democratic impulses. But the price could be heavy. So far, the government has backed off its proposal, but has taken no further action.The Post has covered the story but has mostly focused on stories like a call to "restore business confidence." The protests threaten to overshadow the listing and the stock split. Ma's DreamWhile giving full autonomy to CEO Daniel Zhang and a new executive team and preparing for his own retirement in September, Ma is quietly making Alibaba more of a tech play and less of the retail play Zhang had crafted. Its Hema supermarket unit, for instance, will be split off. CEO Zhang told Reuters the moves are meant to "guarantee innovation." The moves indicate more focus on Alibaba's cloud, which is gaining the same global footprint as the American "Cloud Czars." But the Alibaba cloud, unlike the American clouds, is based on Alibaba's own business applications. The company need not worry about charges of being a "monopoly" since, to Chinese leaders, that's not a bad thing, So long as the monopoly is answerable to government power.Ma himself, who is China's richest man and also a member of the Chinese Communist Party, talks about going into teaching and philanthropy. He speaks of following the example of Microsoft (NASDAQ:MSFT) co-founder Bill Gates, who also retired from business in his mid-50s.But Ma won't be, and can't be, Gates, anymore than he can be Forrest Gump, the American movie character he so loves. That's because Ma is Chinese, and Alibaba is Chinese, subjects to a strong central government that hands out freedom with an eye dropper. The Bottom LineIn the end, Alibaba's moves could be a godsend to American companies like Amazon (NASDAQ:AMZN), Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Google, and Facebook (NASDAQ:FB), which face calls in Europe and America to be broken up.Alibaba's market cap, at $435 billion, is a little over $100 billion short of Facebook. Breaking up the American czars would leave the market open to BABA stock. Cloud investors hope that fact will stay any trust-busting hands.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear , available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN and MSFT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post With Alibaba, Itas Not About You, Itas About China appeared first on InvestorPlace.
Sometimes I get it wrong. I have been calling Shopify (NASDAQ:SHOP) stock a bubble stock for nearly two years, ever since short-sale researcher Citron sent out a report questioning how real their customers were.Source: Shopify via FlickrBut the louder I've wailed, the faster SHOP stock has risen. Since the start of 2019, shares are up 136% with a market cap of $36.7 billion.I'm not alone. Our Laura Hoy calls Shopify's current valuation a real problem. Our Chris Tyler suggests you wait for the drop. InvestorPlace - Stock Market News, Stock Advice & Trading TipsMaybe everyone's wrong. But there's a reason why, while I might be extremely bearish on a stock, I never sell short. The Place to BeSome credit for Shopify's rise should go to their niche.Shopify is a cloud-based app that lets anyone open a web store. It also re-sells apps that can make such a store attractive. That's a fashionable niche. It's where money wants to be this year. Cloud-based software companies pay one rent check to their hosts, one that can go down, and get monthly income from their subscribers, which can often go up. It's a sweet, sweet business.This week, Shopify held its annual Unite conference, heralding the new capabilities of its platform. It issued a State of Commerce Report, filled with internet buzzwords that make you swoon, like mobile, social and brand loyalty. * 10 Monthly Dividend Stocks to Buy to Pay the Bills The company announced a two-day shipping service, giving merchants Amazon-like fulfillment. A start-up called Avatria, which specializes in increasing conversion rates, now integrates with Shopify. The company also bought Handshake, a wholesale portal, for under $100 million.The purchase drew breathless gasps about Shopify competing directly with Amazon (NASDAQ:AMZN) and Alibaba (NASDAQ:BABA), which was launched as a wholesale portal 20 years ago. A split from privately-held Mailchimp, and the chimp's purchase of a Shopify competitor called Lemonstand, got more tongues wagging. The Squeeze Is OnThe numbers, however, continue to look ugly for those seeking a safe investment in Shopify stock.SHOP did $320 million of business in its last quarter, less than in the December quarter, and has yet to see a profit. Operating cash flow was just $24 million for March and, while the company has about $2 billion in cash and short-term securities in the bank, with under $100 million in debt, you're paying 30 times sales and 367 times operating cash flow if you buy now.Shopify stock is putting bears through a classic short squeeze, with 28% of the stock's volume being short interest as trade opened. A short squeeze can take a stock well beyond its fundamental value, because those who are short have borrowed shares, and must "buy them back or go to prison."Bulls are calling Shopify's Unite announcements a reason to buy SHOP stock, saying the new Shopify Plus can go head-to-head with Amazon, which has stopped buying from small suppliers and told them to build their own stores. The Bottom Line on SHOP StockMuch of what I'm reading about Shopify sounds like hype, but it will squeeze the shorts until they collapse, and there are indications that is starting to happen.Our Luke Lango asked in late May when Shopify might hit $300. It has since blown past that number and keeps rising.But I also know this. Every bubble bursts. Every short squeeze ends. Every company eventually trades at something like its fundamental value, albeit with a discount or premium based on the type of business it's in.When the Shopify bubble pops, there's a long way it can fall before hitting anything like fundamental value. If you're in it, congratulations and good luck to you. I'm going to keep sitting this dance out.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post Shopify Stock: My Favorite Mistake Keeps Rising appeared first on InvestorPlace.
Chinese e-commerce giant JD.com (NASDAQ:JD) has had a big week. JD.com stock is seeing growth in the 7% range since Monday. Keeping the party going, JD stock is also getting a continued boost from the record-breaking results of the company's 6.18 anniversary sale.Source: JD.com JD Stock Gets Boost From Record-Breaking 6.18 SaleAmazon (NASDAQ:AMZN) has its yearly Prime Day sale, where it pulls out all the stops. The company doesn't release dollar figures for the event, sticking instead to the number of items shipped on the day, but last year it was estimated that shoppers would spent $3.4 billion, making Prime Day the e-commerce giant's single biggest shopping day.JD.com also has a big yearly shopping event it calls the "6.18 anniversary sale." The name is a little deceptive -- it sounds as though it is for a single day, June 18. However, it is actually several weeks worth of promotions, starting June 1 and running through to June 18. The company posted the results for this year's 6.18 sale on its blog and the impressive numbers have helped to boost JD stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 On Thursday, JD stock price hit $29.71, before settling down to close at $29.12 for a 1.61% gain on the day. Here are a few of the highlights for JD.com's record setting 2.18 sale: * $29.2 billion (U.S. dollars) transaction volume * Sold 2.8 million JD Plus premium memberships * Mobile phone sales up 100% year-over-year * 350 million boxes of milk sold * 91% of orders from JD.com fulfillment warehouses delivered same-day or next-day The Importance of Data-Driven ToolsIn its 6.18 blog post, JD.com spiked out the importance of its "Consumer to Manufacturer" or C2M initiative. The company provides data-driven tools to retail clients, including profiling buyers, targeted advertising and an AI-powered chatbot. And the new approach is showing encouraging results."This initiative employs big data and consumer insights, providing insights to brands to adjust their manufacturing and marketing approaches with the goal of providing consumers with products they want before they even know they want them. Transaction volume of new products and C2M products during 6.18 increased 289% compared with the same period last year. One out of every three monitors sold during this year's 6.18 campaign were C2M products. HP saw a 100% increase in sales of its Zhan 66 laptop, a C2M product, during 6.18."A Reuters feature about the new data driven services being rolled out by JD.com and competitor Alibaba (NYSE:BABA) notes that programs like C2M are critical for future growth. The companies have already largely "exhausted" online growth amid a Chinese e-commerce market that is growing saturated. For revenue to increase and JD stock to grow in value, the company needs to provide more value to merchant partners, increase customer loyalty, and convince those customers to buy more. In addition, if data-driven tools like C2M continue to provide value to merchants, the company has the opportunity to monetize them -- providing another source of revenue to help boost JD.com stock.It's nowhere near the $50 it topped to start off 2018, and still lags the $30 level it was trading at through much of the spring, but with a 1.61% gain on Thursday, JD stock is continuing a week of climbing back toward $30. It's up to $29.42 as of this writing.The results of the company's 6.18 anniversary sale are providing a boost, but the big data tools like C2M that were employed to help get those results should help JD stock price to keep growing.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post JD Stock Continues to Surge on Results of the 6.18 Anniversary Celebration appeared first on InvestorPlace.
Alibaba (NYSE:BABA) may be one of the best Chinese companies, but Alibaba stock has been struggling lately. It's not as if there's no go reason, though.Source: Charles Chan Via FlickrThe current rhetoric on U.S.-China trade issues has become the elephant in the room. Now that the FED's interest rate decision is behind us, the markets will once again concentrate on China, namely the trade talks ahead of a meeting between President Trump and the Chinese President Xi at a G20 summit next week.Thus investors have valid reasons to be concerned about the short-term volatility in Chinese stocks, including, the ecommerce giant. So what should BABA stock investors expect amid escalating tensions and the tit-for-tat retaliation between the two countries?InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere are three pros for Alibaba stock and three cons. * 6 Stocks Ready to Bounce on a Trade Deal Three Pros for Alibaba StockLeadership in e-Commerce in China: Alibaba's current share of the Chinese e-commerce space is almost 60%.The group operates through three main ecommerce sites -- Taobao, a Chinese online shopping website, Tmall, a Chinese-language website for business-to-consumer online retail, and Alibaba.com, the group's international trade site.The three sites have hundreds of millions of users globally and host millions of businesses. BABA's mobile monthly active users (MAUs) on its ecommerce platforms is now 721 million.Many analysts believe that BABA stock's bottom line is not going to be too adversely affected by these current trade wars as its business model is tied to China directly, decreasing the long-term risks of bi-party trade wars.With a population of almost 1.4 billion people, China's economic growth is still in its early stages and the Chinese middle class is likely to expand for a long time.Furthermore, consumer disposable incomes are also going up, fueling growth in many sectors, including e-commerce.In fact, the e-commerce market in China is forecast to almost double within the next four years to reach $1.8 trillion. Therefore, even if the Chinese economic growth pauses for a few quarters to come, the country's growth potential is intact.Growth in Cloud: BABA's core ecommerce business contributes to about 85% of its revenue. Yet BABA is rapidly expanding into many other lucrative industries, including cloud computing infrastructure, digital payments, online entertainment, and food delivery.With a population of 1.4 billion people, China is the largest country in the world. A rising middle class leads to higher consumerism, and that bodes well for many industries in China. One of those industries set to benefit is cloud computing.Alibaba's concentrated push deeper into cloud computing is increasingly being compared to the success of Amazon's (NASDAQ:AMZN) cloud business. In cloud computing, BABA is now the market leader in Asia.On May 15, when BABA released its quarterly results, both sales and earnings exceeded estimates. Total revenue came at $56.1 billion, an increase of 51% year-over-year (YoY). Investors cheered that BABA's cloud computing revenue soared 76% YoY.Alibaba has over 40% of the public cloud market in China. The market share of Tencent Holdings (OTCMKTS:TCEHY), its biggest competitor, is about 11%.As a result of increased diversification as well as the growth in the cloud space, Alibaba's total revenue is expected to grow by double-digit-percentage rates. Such a growth rate would indeed be impressive for a company with a market cap of $415 billion.International Expansion: Finally, forward-looking investors may want to pay attention to BABA's international growth numbers too. Currently, more than 90% of the ecommerce giant sales are made in China.But BABA also has investments in start-ups in South Asia and Southeast Asia. Higher incomes and rising internet penetration rates are likely to strengthen both regions' ecommerce markets and contribute to Alibaba stock's bottom line.Among the start-ups in those regions in which BABA has stakes are Paytm, an Indian digital-payments provider, and Lazada, a Singapore-based e-commerce company that is growing in overseas markets.BABA is also looking to partner with European companies. Many European companies are still discovering new ways to enter the Chinese market, and BABA may enable them to connect with Chinese customers faster.BABA's mobile payment network, Alipay, is also seeking to expand in Europe. International growth will not only help increase the company's bottom line, but it will also enable BABA to diversify away from China, lowering the macro risk of BABA stock. Three Cons for Alibaba StockUpcoming Listing in Hong Kong: By the end of year, Alibaba is possibly going to Hong Kong for a second listing. There the company is expected to raise $20 billion.BABA had delisted from Hong Kong in June 2012. Now there is speculation as to why the company wants to move closer to China in a second listing and raise cash. Both the bulls and the bears are debating Alibaba's motives.Is it because BABA management is worried about the trade wars?Can BABA's second listing encourage more Chinese companies to follow Alibaba to Hong Kong?Does Alibaba need the cash for reasons investors do not know yet? Should investors therefore be worried?The exact result of this listing is still hard to pin down. For example, Alibaba has recently announced a one-to-eight stock split. A lower price may lure more Hong Kong-based investors into buying Alibaba stock.However, we do not know how its U.S. shareholders may react. One thing we can possibly count on is increased volatility in BABA stock price.Shorter-Term Technical Analysis: Following the recent volatility in especially Chinese stocks, Alibaba's technical picture is giving mixed signals, pointing to the possibility for more choppiness around the corner.If you still believe in the bull case for BABA stock, you might consider waiting for a better time to get long, such as around the mid-$150 level. In case of general weakness in the tech sector or negative global trade news, the markets may want to go back toward the 2019 low of $148.84 that was seen on May 31.In the coming weeks, I do not expect BABA stock to regain its recent high of $195.72, which was last seen on May 3. Instead, BABA stock is likely to trade in a range, possibly between $170 and $150, for several weeks.Expect nearer-term trading to be choppy at best, possibly until we have more clarity on the potential resolution of U.S.-China trade wars.BABA Stock PEG Ratio: In addition to looking at technical analysis charts and options prices to gauge market sentiment, I keep an eye on a given stock's Price/Earnings to Growth (PEG) ratio.A PEG ratio of one means the market's perceived value of the stock is equal to its anticipated future earnings growth. For example, if a stock had a P/E ratio of 25, and the company's projected earnings growth was 25%, then the PEG ratio would be one. With the PEG number, investors can compare and contrast the relative value of a stock against other stocks.I also compare the change in PEG with the change in a stock's price within a given time-frame to gauge investor sentiment regarding a stock's potential price increase.In 2019, Alibaba stock is up over 20%. To me, given BABA's current level of earnings growth in a global economy that currently offers plenty of questions, Alibaba's PEG of 1.02 is still high.In other words, I regard BABA's stock price of about $165 as somewhat over-stretched. However, please remember that the PEG ratio is just one tool in investors' arsenal.Ultimately, earnings drive stock price growth. Therefore, I will be keeping a close eye on the company's quarterly report expected in August. The Bottom Line on BABA StockAlibaba stock offers U.S. investors the chance to invest in the growing Chinese consumer and ecommerce markets. Over the past two decades, the company has built a strong moat around its ecommerce. Now it is increasingly focusing on diversifying its revenue stream both in China and internationally.Alibaba's growth in ecommerce, cloud computing, and its other investments throughout China and globally make it a disruptor and a sound long-term investment.Therefore long-term investors should view any decline in Alibaba stock as a good opportunity to buy into the shares.However, traders with a short-term horizon should remember that there might be further volatility with a downward bias in Alibaba stock. The daily volatility of Alibaba stock is high, giving it a wide trading range, so short-term traders should proceed with caution.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 6 Things You Need to Know Before Buying Alibaba Stock appeared first on InvestorPlace.
(Bloomberg Opinion) -- 5G networks will allow vast gobs of data to be transmitted at great speeds. And more data usually means more money for mobile carriers like Deutsche Telekom AG and AT&T Inc. But there’s a hitch. Cloud giants such as Amazon.com Inc., Alphabet Inc. and Microsoft Corp. are lurking.The new tech enables ever more computational decision-making to be carried out by powerful processors sitting in the cloud. But when even a few milliseconds of lag can be a problem – as might be the case with high-frequency trading or connected factories – it’s worth trying to slash the time it takes to reach a cloud server.That’s why the cloud giants are pushing what’s known as edge computing: where cloud functions run on servers that are physically closer to the end user, thereby cutting the distance to a computer making a given decision. They’re at the “edge” of the network. It’s a feature of the distributed cloud, where different functions are distributed across different parts of a network.For telecoms firms that could be a problem. They’re terrified of spending hundreds of billions of dollars on upgrading their networks, only to become the providers of dumb pipes exploited by technology behemoths, and miss the most profitable opportunities the investments could generate. They don’t want a repeat of WhatsApp, whose free messaging platform gobbled up carriers’ SMS revenues.The main cloud providers – Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba Group Holding Ltd. – have a headstart when it comes to exploiting these opportunities. They have huge customer bases and developer ecosystems, in addition to their existing hordes of servers. In short, they have scale.It would therefore be foolish for a telco to try to build a cloud offering to rival that scale, according to Nick McQuire, head of enterprise research at CCS Insight. They seem to recognize this, and are instead trying to ensure they’re the gatekeepers for their customers’ relationships with the cloud operators. Unfortunately for the network firms, the lock they have on those relationships can be tenuous.There are different ways carriers can try to control them. Just this month, Spain’s Telefonica SA announced it would sell Google Cloud solutions globally. Alone, that’s unlikely to generate much profit. But by inserting themselves into the transaction, they hope to be in prime position to offer additional lucrative services that run on a third party’s cloud. And when it comes to small- and medium-sized enterprises, network firms’ extensive local teams can offer comprehensive solutions. It’s less scalable than what the cloud operators do, but it’s still an opportunity.Others such as France’s Orange SA think that owning the cybersecurity layer is the best way to manage the process. That encryption key ensures they control enterprise customers’ cloud access, also making it easier to sell value-added services. Both approaches are a gamble. Cloud providers have their own cybersecurity solutions, for one. Convincing customers that a carrier can do it better might be tough.Increasingly, the operators have little choice. The likes of Amazon and Google are proactive in creating demand for their products. Their customers then turn to their telecom providers and request the cloud giants’ services. That all but forces them to play along.Consider Google’s new Netflix for games, Stadia. For a subscription fee, starting in November users can access a bevy of titles running on cloud servers rather than their own computers. They’ll be able to play on a computer more than twice as powerful as Sony Corp.’s Playstation 4 console using just a cellphone, which becomes little more than a screen and a controller. And since the data is never exposed to the public internet, carriers’ importance is diminished.A carrier who can boast about Stadia’s performance on its network might use it as a tool to win customers. The best gaming experience will have no perceptible lag, so the closer Stadia’s servers are to the user, the better.Amazon and Microsoft’s gambits, which are called AWS Outposts and Azure Stack respectively, have similar placement goals. While not yet widely available, they comprise server boxes which sit on customers’ premises – factories, oil rigs or offices – and provide a hybrid of local and cloud computing.The race to the edge really does risk turning the network operators into providers of dumb pipes: enterprise customers’ data enter the network via AWS Outpost at one end, and travel to and from centralized servers without being exposed to the public internet, remaining on a private network. It raises carriers’ risk of disintermediation – that they get all but shut out of the most lucrative parts of the cloud business. Stadia is unlikely to eat the world any time soon, and Google is behind rivals Azure and AWS in many enterprise applications, which is where the real money lies. We’re in the very early days of this struggle.But edge computing could turn into something of a Trojan horse for other cloud services. Carriers have a real challenge on their hands.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
BEIJING/HANGZHOU, China, June 20 (Reuters) - In China, the sales maxim of 'know your customer' is being taken to new lengths. One of the first firms to join an Alibaba Group Holding Ltd programme that provides years of consumer shopping history, snack food chain Bestore Co Ltd plans to link facial recognition technology with the e-commerce giant's account data by the year's end. For customers opting to have their facial data in Bestore's systems, that means shop assistants will be able to check on what food they like the moment they enter one of its stores.
Alibaba Group has entered into a strategic collaboration with the municipal government of Yiwu, Zhejiang Province, China to launch an eWTP hub in Yiwu to digitize trade infrastructure and empower new trade flows for the city, which is the world’s largest wholesale market. This collaboration between Alibaba Group, operator of the world’s largest retail commerce business1, and Yiwu, one of the world’s largest offline “malls,” will make cross-border e-commerce more accessible to small players in global trade.
Alibaba (BABA) has expanded the role of its CFO, Maggie Wu, in a change that seems to speak volumes. Wu, who's been Alibaba’s finance chief since 2013, will take on an additional role as the head of the company’s strategic investment unit.