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Brand challenge of smart and wearable bands

Chinese telecom giant Huawei Technologies Co Ltd has shown faith in the fledgling smart wearable market with the world’s first hybrid smart band for both Bluetooth calling and fitness tracking.

Shenzhen-based Huawei demonstrated TalkBand B1 at the Mobile World Congress held in Barcelona, Spain, on Sunday.

The smart band, which is worn on the wrist, has a 1.4-inch, flexible organic light-emitting diode (OLED) display and removable earpiece.

Huawei said the device can connect to people’s smartphones so they can stay updated with all the information they need with just a quick glance.

The TalkBand B1’s fitness tracking feature can record how many steps one has taken, what one’s sleep quality is and how many calories one has burned, according to Huawei.

The product will be available for 99 euros ($136) and be out in China next month, whereas Japan, the Middle East, Russia and Western Europe will have to wait until the second quarter of 2014.

Richard Yu, chief executive officer of the Huawei consumer business group, said the company needs to start early in order to acquire a good position in the wearable device industry.

“Because (the smart band market) is new, manufacturers can only march forward by taking tentative steps,” Yu said at a news briefing in Barcelona.

Huawei is not the first Chinese company to launch a smart wearable product.

ZTE Corp, Huawei’s crosstown rival, released its first smart watch in Las Vegas at the Consumer Electronics Show in January.

Zeng Xuezhong, ZTE’s executive vice-president, pointed out that the wearable gadgets market is a “blue sea”, since no company currently dominates this new field and every player has an equal opportunity.

Global smart-watch shipments reached a record 1.9 million units in 2013, according to Strategy Analytics, a US-based research company. Matt Wilkins, the company’s director, said, “We estimate that less than 1 percent of all smartphones shipped worldwide were bundled with smart watches in 2013, so there remains huge scope for smart-watch growth.”

“It is very early days, of course, but the smart-watch market is starting to take shape,” Wilkins said in a research note.

South Korea-based Samsung Electronics Co Ltd, of course, poses the most obstacles for Chinese players hoping to gain a major share in the smart wearable market.

Samsung accounted for more than half of the world’s smart band shipments in the second half of 2013, according to research firm Canalys.

In the same period, Sony was the No 2 smart-band vendor, with a 19 percent global share.

“Samsung launched Galaxy Gear with a major marketing push that received significant consumer interest,” said Chris Jones, principal analyst at Canalys. “Shipments of the device took Samsung to the top of the smart-band category, although disappointing sell-through will necessitate more promotional activity in coming months.”

Canalys estimated this will be the year that wearables become a key consumer technology. The smart-band segment is expected to reach 8 million annual units shipped.

Daniel Matt, another Canalys analyst, said he expects the high-margin smart bands that incorporate sophisticated sensor technology will offer vendors great profit potential.

“With increased awareness about personal well-being, having a computer on your wrist will become increasingly common,” Matt said in an email to China Daily.

Huawei’s Yu predicted that smart-band gadgets likely will utilize cloud technology and that more and more smartphones will be tied to specific wearable products in the near future.

Sina Weibo mulls IPO: report

Comparison of Sina revenue structure between 2012 and first three quarters of 2013 Source: iResearch Inc, Graphics: GT

China’s Twitter-like microblogging service provider Sina Weibo is mulling raising a $500 million share issue in the US for the second quarter of 2014, a media report said Monday.

The company has hired Goldman Sachs and Credit Suisse to manage the New York listing, the Financial Times reported Monday, citing two people familiar with the matter.

Sina Weibo’s public relations office was unavailable for comment when contacted by the Global Times as of press time.

Alibaba Group, China’s leading e-commerce platform, paid $586 million for an 18 percent stake in Weibo in April last year, valuing the microblogging business at $3.3 billion.

Alibaba’s public relations department also declined to comment on the issue Monday when contacted by the Global Times.

Normally Internet companies offer 10-15 percent of their stake for IPO, meaning Sina Weibo could be now worth about $4-5 billion, Wang Guanxiong, a Beijing-based expert on IPOs, told the Global Times Monday.

Sina is due to report its fourth-quarter earnings after the close of trading on Monday in New York.

Some analysts expect its Weibo platform to reach breakeven in the fourth quarter of 2013.

“Turning profitable will be the basis for Weibo’s IPO,” Lin Juan, analyst at research firm Wedge Partners, said in a research note released earlier this month.

“We think Weibo is ready for IPO since management restructuring has finalized, as well as the platform turning profitable,” Lin noted.

In the previous quarter that ended September 30, 2013, advertising revenues generated by Sina Weibo posted a 125 percent year-on-year surge to $43.7 million, while non-advertising revenues from Weibo’s value-added services, such as Weibo membership fees and games, also roared by 121 percent year-on-year to $9.7 million.

“Alibaba’s joining in has speeded up the microblogging platform’s commercialization process,” Ding Daoshi, deputy managing editor of IT website sootoo.com, told the Global Times on Monday.

Sina Weibo’s listing comes at a time when microblogging services in China are losing appeal due to strengthened government regulation and fast emergence of other social networking services, analysts said.

The number of Chinese microblogging users dropped 9 percent year-on-year to 280.8 million by the end of December 2013, China Internet Network Information Center said in a report published on January 16.

The report sent Sina’s share price tumbling 7 percent on the same day.

Weibo is facing increasing competition with Tencent Corp’s mobile messaging app WeChat, which is more private than Weibo, Ding said.

Sina Weibo’s daily active users amounted to 60.2 million by the end of September 2013, while WeChat boasted 272 million monthly active users, data from the two companies showed.

Sina Weibo’s offering also follows a number of Chinese companies which have been flocking to the US stock markets in their biggest numbers since 2010.

“The current market environment is favorable to China-based Internet companies, as US investors have gradually regained their appetite for Chinese stocks based on better performance of some newly listed Chinese firms since the second half of 2013,” Li Ling, an analyst at ChinaVenture Investment Consulting, told the Global Times on Monday.

Jd.com, a major online platform in China, announced in January a plan to raise $1.5 billion in a US IPO that would be the largest by a Chinese Internet company.

Property developers slash home prices

Two property developers slashed their prices and created turmoil in the Hangzhou housing market, the local Qianjiang Evening News reported Sunday.

Hangzhou-based DoThink Real Estate slashed the price of 200 apartments by 12 percent from 18,000 yuan ($2,956) to 15,800 yuan per square meter on Tuesday. The homes immediately sold out.

Zhejiang Guanghong Real Estate Development Co announced a 4,000 yuan cut in a project on Friday, prompting angry homeowners to topple a model

Alibaba invests in online education service

Alibaba Group announced Monday that it has invested nearly $100 million in online education service TutorGroup, with two partners, Singapore investment company Temasek and Shanghai-based Qiming Venture Partners.

According to a statement sent to the Global Times, TutorGroup plans to use the funding to further growth across the Asian market, and also expand its market share in the America.

TutorGroup won a $15 million investment from Qiming Venture and CyberAgent in April 2012.

Founded in 2004, Shanghai-based TutorGroup, with more than 2,000 teachers in 60 cities across 30 countries and regions, provides real-time interactive language learning.

The company estimates the adult English language-learning market in the Chinese mainland is growing fast at 25 percent annually, and the market size will reach over $21 billion by 2016.

In the mainland alone, TutorGroup expects sales to see a triple-digit annual growth rate in the coming few years.

Last year, Alibaba launched online education platform Taobao Classmate, and this investment is regarded as another step for the e-commerce firm to explore the online education market.

Chinese private and online education has been growing in recent years with a wave of startups receiving significant financing.

In December 2012, online English training service 51Talk raised $12 million in financing from funds backed by a domestic Internet company Xiaomi.

Mismatch showed in job supply, demand

Employment seekers at job fairs want positions that aren’t available

Job seekers and potential employers left Beijing’s job fairs disappointed this weekend, as the available positions didn’t match what the prospective employees were looking for.

The four major career fairs marked the launch of the first job-searching season of 2014, as migrant workers flock to or soon will return to cities after Spring Festival, and millions of college students look for employment before they graduate in the summer.

One disappointed recruiter was Bu Chenyu, investment manager of financial firm Hua Yi Gold (Beijing) International Management Co.

Bu said he had 15 employees handing out fliers with job descriptions at the job fair at the National Agriculture Exhibition Center, but the outcome “failed to meet my expectations”.

“Most job hunters shopped around at different booths and had little patience to know more about our company or were inclined to leave a resume,” Bu said.

Bu’s company was seeking 100 investment consultants and five investment managers, offering generous benefits that include several subsidized trips home and abroad a year. But the company received only about 50 resumes, and more than half the job seekers are soon-to-be college graduates with little work experience, he said.

“I noticed that almost all companies attending the fair needed to hire sales personnel, which intensified the competition,” he said.

Also hunting for employees in the crowds on Sunday morning was Zhao Can, a recruitment agent from Future PI, a company in Beijing that provides business management services. Zhao’s company was paid to hire 36 employees for a building material manufacturer.

“I start a conversation with people I feel are suitable for our jobs and ask them what they expect of their future employers,” he said. He added he believes more recruiters than job seekers were at the fair.

Yu Hongxing, an administrative chief from Baigao Education, a training institution in architectural industry, said most job seekers came to the fair with a wait-and-see attitude even though the company offered an annual salary of 1 million yuan ($164,800) for senior sales managers.

“Most of our job vacancies are related to investment and sales, but we found out that many job hunters are not interested in such challenging jobs, but prefer office work like administration, which we don’t need,” he said.

Some job seekers also noticed the mismatch in what they want to do and the positions that were available.

Zhao Liyuan, a senior from Xingtai, Hebei province, who is majoring in communication technology, came to the job fair at about 8:30 am on Sunday before the fair opened.

However, after carefully reading the brochure that listed all the job vacancies at the fair, the 22-year-old Zhao realized that there weren’t any jobs that would enable him to become a communication technician, the position for which he has trained for three years.

Companies attending the two-day fair planned to hire 20,000 workers for 8,000 positions, according to the fair organizer, Chaoyang district’s human resources service center.

Wang Guangzhou, a researcher at the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences, said the discrepancy between jobs wanted and offered shows that China’s labor market will have a labor shortage and structural imbalance in the long run.

“China’s working-age population reached a turning point in 2012 and began an accelerated decline,” he said.

“However, our education system has failed to adjust accordingly with the demographic change. Our students trained in colleges cannot meet the demand of the market, and it is hard for them to find jobs they like.”

He said it will take time for China to upgrade its economy and reform the educational system to relieve the labor shortage.

Lenovo reports quarterly revenue tops $10b

It’s the first time the PC vendor has broken through the milestone

Lenovo Group Ltd on Thursday reported its quarterly revenue broke through the $10 billion barrier for the first time because of strong global demand.

Top executives also explained to shareholders how they are going to maximize profit gains from the recent acquisitions that cost Lenovo more than $5 billion.

The world’s largest personal computer vendor said the revenue in its third fiscal quarter that ended on Dec 31, 2013, stood at $10.8 billion, a jump of 15 percent year-on-year.

Earnings also surged 30 percent compared with a year ago to $265 million.

Yang Yuanqing, chairman and chief executive officer of Lenovo, said business in PC-plus areas, including smartphones, tablets and servers, was driving profit growth.

“The Motorola (Inc) and IBM (Corp) server acquisitions are a perfect fit with our PC-plus strategy,” said Yang.

He also tried to calm investors who were questioning the company’s profitability after spending $3 billion to acquire the money-bleeding Motorola Mobility from Google Inc. Motorola Mobility makes Android smartphones and Bluetooth accessories. Yang said the business will quickly begin contributing to the company’s performance.

But Yang was hesitant to estimate his company’s earnings prospects, saying the two acquisitions are still awaiting approval from the United States government. Consequently, the effect on short-term earnings are difficult to predict.

“Buying Motorola is a quicker way for Lenovo to access the premium smartphone market with a leading Android offering than trying to do it with its existing design teams and brand reach,” said Frank Gillett, vice-president and principal analyst at Forrester Research.

“Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass, makes a lot of sense,” added Gillett.

Sun Qi, vice-president of industry consultancy Sino-Market Research Ltd, also believes the Motorola unit will extend the Chinese company’s performance in global markets.

Lenovo was the second-largest smartphone maker in China last year with more than 40 million shipments, according to Sun.

Lenovo’s quick move into portable device markets has given the company an upper hand in future competition, analysts said.

In the past quarter, Lenovo’s revenue surged in Europe, the Middle East and the Americas. Sales outside China contributed more than 60 percent in revenue, according to its financial report.

“Lenovo was early to embrace Android as a tablet operating system while the likes of HP (Hewlett-Packard Co) and Dell (Inc) waited for Windows 8 and prioritized margins over volume,” said James Wang, an analyst at Canalys.

“Lenovo’s strategy has paid off, not only in its home market but worldwide. Lenovo still has the potential to grow its global notebook shipments and has emerged as a challenger in the tablet space,” added Wang.

The analyst said Lenovo shipped three times as many tablets worldwide in the past quarter as HP and Dell combined.

Lenovo CEO Yang said earlier the company will challenge Samsung Electronics Co and Apple Inc globally, using a bigger product spectrum and more affordable prices.

Will LinkedIn make it in China?

Professional networking site LinkedIn Corp appears to be making preparations to start operations in China, the country with the world’s largest Internet population.

The California-based firm has made some major moves recently that have been seen as steps towards officially expanding its service into China. The company announcedit has hired Derek Shen, founder of Nuomi.com, a Chinese website similar to Groupon, to head its Chinese operations. It also started to integrate with China’s popular mobile messaging app WeChat weeks ago.

“We believe LinkedIn is uniquely positioned to penetrate the Chinese market and could serve as one of the few sites to have a meaningful presence in both the People’s Republic of China and many Western markets,” said Blake Harper, an analyst with Wunderlich Securities.

Harper expects the company’s expansion into China to move slowly and methodically.

“We expect the company to continue to take it slow with its Chinese development efforts and any impact to the member or corporate customer base is likely longer term,” he said.

Founded in 2003, LinkedIn has grown to be the world’s largest professional network on the Internet with more than 200 million members. While LinkedIn has no Chinese-language site yet, it does have 4 million registered users from the country.

China is home to 618 million Internet users and 500 million mobile web users as of the end of last year. However, China is proving to be a tough nut to crack for some of the world’s biggest web players.

“eBay, Yahoo!, and Google have essentially failed in China and Amazon is facing stiff competition as the Chinese appear to have a preference for local, home based companies,” said Victor Anthony, an analyst with Topeka Capital Markets.

LinkedIn would be entering a market as similar local websites are racing to take advantage of the heated job-recruitment market. For instance, 51job.com, China’s leading online recruitment company, claimed it had more than 73 million registered users in 2013. Other popular Chinese recruiting agencies including zhaopin.com and chinahr.com also hold a significant share of the market.

Will LinkedIn be the one that succeeds? Anthony said that remains to be seen and much depends on whether or not a Chinese upstart enters the market with a similar and compelling offering.

“My understating is that there aren’t any compelling offerings in China today,” he said. “In that case, if past trends are consistent, then LinkedIn may face a similar difficult hurdle as its US Internet counterparts before it. If no one comes along with a serious and compelling offering, then LinkedIn has a strong chance of succeeding.”

Anthony said based on what he has seen over the past 12 years following the Internet media space and watching US based Internet companies enter China, he does believe that competition will follow LinkedIn.

“LinkedIn’s hurdle is to convince Chinese citizens – and the Chinese government – that it offers a premium solution in the professional development and recruitment space and that it is not just another US company asking Chinese citizens and corporations to open up their wallets,” Anthony said. “A healthy relationship with the Chinese government would also of course help.”