Thursday, July 30, 2009

NucTech, Namibia and State Procurement

The corruption scandal in Namibia involving NucTech (link), a firm spun-off from Tsinghua and run by Hu Jintao's son (Hu Haifeng) until he was promoted to head Tsinghua Holdings last May, reminds me of my visit to NucTech a number of years ago when it still had Tsinghua attached to its name. The company seemed to be reliant on state procurement rather than leveraging any internal capabilities just like many other xiaoban qiye (school-run enterprises). The ongoing probe by the EU to look into allegations that NucTech used soft loans from the Chinese government to win customers in the EU (link) suggests that state backing is still critical to its business.

Globalfoundries as an Emerging Competitor?

The announcement that ST will sign on as Globalfoundries' first major outside (i.e. non-AMD) customer (link) could be seen as a sign that the Big Four pureplays (TSMC, UMC, SMIC and Chartered) are headed towards an even more competitive foundry market. The speculation that ST is turning to Globalfoundries because ST was disappointed with TSMC's problems with 40nm technology reinforces the image of Globalfoundries as a serious competitor. I suspect the hype around the ST signing will prove to be just that and Globalfoundries will remain more of a niche player.

Monday, July 13, 2009

Tencent's Search Engine as Competition Policy?

Rumors are floating about that Tencent and Alibaba will release their own search engines. More intriguing still, according to the Marbridge Daily, Tencent's search engine has significant government support because the government wants a domestic competitor to Baidu. My guess is that the government's concern has to do with the lack of competition in this market rather than any dissatisfaction with Baidu's ability to keep the foreigners, well really just Google, at bay.

Friday, July 10, 2009

Lenovo Reinforces Rural Position

Lenovo's new "1+N+N" strategy of having county-level stores, plus township-level retailers and village-based "convenience windows" appears to be a bid to retain its strong hold over channels in rural China. Whether this market will be a base upon which Lenovo can leverage to compete in urban China and abroad or is the beginning of a long slow retreat to the periphery of the PC market to be seen.