Corporate China
PUBLISHED : Monday, 28 October, 2013, 6:21pm
UPDATED : Monday, 04 November, 2013, 12:39pm

Weibo: Huawei-Lenovo, Alibaba-Baidu in new courtships?

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

China's microblogging sphere is buzzing with a series of new posts that hint at a couple of budding friendships in the nation's tech realm, one between smartphone aspirants Huawei and Lenovo (0992.HK) and the other between e-commerce titan Alibaba and online search leader Baidu (Nasdaq: BIDU). Of course it's quite possible that the tweeting is just casual conversation by company executives on their Weibo accounts. But both instances also hint at the potential for future tie-ups that could help these all four of these companies attain their different strategic aims.

Both Huawei and Lenovo are trying desperately to build up their smartphone business, and each has scored significant success in their home China market where their names are well known and their low-priced models have been well received. But neither has made much impact in the global market, meaning perhaps we could see a future global pairing similar to the mega merger more than a decade ago that saw Sony (6758.HK) and Ericsson (Stockholm: ERICb) combine their cellphone businesses.

Meantime, Alibaba's potential new Baidu tie-up could come in the social networking (SNS) realm, where Alibaba is desperately trying to make up ground on Tencent's red-hot mobile instant messaging WeChat service. Baidu hasn't done very much in the SNS arena to date, although in August it purchased a controlling stake in Nuomi, the group buying business of the Facebook-like (Nasdaq: FB) Renren (NYSE: RENN), and could use that as a base for future tie-ups.

Let's start this round-up of the latest chatter from tech executives on Sina (Nasdaq: SINA) Weibo with a look at the first hint of a potential romance between Lenovo and Huawei. Both companies have become dominant forces in the China smartphone market, which will overtake the US this year to become the world's largest. But each has had more difficulty on the global stage, where their brands are less well known and their sales channels less developed.

In a noteworthy post on his blog, Lenovo product director Zhao Xiaozhu comments on a new global ad campaign for one of rival Huawei's new smartphone models, posting a photo of a Huawei billboard in Italy and commenting on how sharp the campaign looks. Huawei mobile executive Yu Chengdong also trumpets the new Italy campaign on his own Weibo account, which doesn't really come as any surprise. But the fact that a Lenovo executive like Zhao would help to promote a rival product on her account does seem a little strange. That leads me to my earlier guess that perhaps some kind of budding romance might be brewing between these two smartphone aspirants.

From that pair, let's move on to Baidu and Alibaba, where my latest guesswork of a budding new SNS tie-up centers on a Weibo post from Yue Guofeng, general manager of Baidu's wireless business division. In this case the message is also quite simple, with Yue expressing his support for some functions on Alibaba's recently launched Laiwang mobile instant messaging service, which is meant to rival Tencent's WeChat.

Alibaba launched Laiwang in August, but last week the service splashed back into the headlines on reports that Alibaba was requiring all employees to sign up at least 100 of their friends to the service or risk losing their annual bonuses. Baidu and Alibaba are two of China's top three Internet companies, with Tencent as the third. While Baidu and Alibaba have no strong historic ties, I could easily see the pair joining forces in a bid to counter Tencent and WeChat, which now has more than 300 million users. Accordingly, I wouldn't be surprised to see Baidu boost its ties with Alibaba to help promote Laiwang. Such a tie-up could start with a marketing partnership, but that could easily grow into an eventual equity tie-up if the partnership proved successful.

To read more commentaries from Doug Young, visit youngchinabiz.com

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