Corporate China
PUBLISHED : Tuesday, 05 August, 2014, 4:17pm
UPDATED : Tuesday, 05 August, 2014, 4:18pm

Weibo: Qihoo, The9 at play; Lenovo defends McDonald's

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.”
 

Top executives from software security maker Qihoo 360 (NYSE: QIHU) and struggling game operator The9 (Nasdaq: NCTY) were getting chummy in the blogosphere last week, filling the airwaves with chatter as they prepared to announce a new alliance at the country's top gaming trade show in Shanghai. Meantime, executives from PC giant Lenovo (0992.HK) took time out from their usual tech and marketing chatter to make some low-key criticism against the government, including a microblog post in defense of the beleaguered McDonald's (NYSE: MCD) as it grapples with one of its worst-ever food safety scandals in China.

These two sets of posts don't really share any common themes, as one involves a new alliance while the other criticizes the government for responsibility in the food safety scandal involving a major meat supplier to not only McDonald's, but also KFC (NYSE: YUM) and Starbucks (Nasdaq: SBUX). But they do reflect the fact that the microblogging airwaves often go quiet during the summer holiday months, and only major events like the ChinaJoy gaming trade show in Shanghai and the scandal involving McDonald's can get executives buzzing during this period.

I was slightly surprised to find myself cheering for this new alliance between Qihoo and The9, mostly because I've grown tired of watching the "big 3" of Tencent (0700.HK), Alibaba and Baidu (Nasdaq: BIDU) slowly take control over everything on the Chinese Internet. I'm not usually a big fan of Qihoo due to its frequently unethical business practices, but in this case it was nice to see a major second-tier player make a play at the gaming space now dominated by Tencent.

I'm also cheering just slightly for a comeback by The9, which was once a Chinese online gaming superstar but fell into obscurity a few years ago after losing the license for its top money-earning game. Investors weren't too impressed by the new alliance, bidding down The9 stock by nearly 17 per cent in the two days after the announcement on the sidelines of ChinaJoy. Of course it's worth noting that Wall Street had one of its worst days of the year last week, though that sell-off was far smaller than The9's drop.

The9's Chairman Zhu Jun didn't seem to notice the sell-off, at least not on his microblog, probably because he's grown accustomed to such turbulence for his company's moribund shares. Instead, he posted a message about his visit to Shanghai's historic Bund, including some night shots from the area, on the eve of his company's big announcement

Meantime, a number of Qihoo's top executives also made posts on their way to ChinaJoy, led by the company's controversial founder Zhou Hongyi. In two of his posts, Zhou notes how he's come to the show many times in the past, but how this is the first time he's visited and been entertained by the hordes of avid gamers at the show's main hall open to the public. I've visited that same hall in the past, and am always amazed by the droves of people dressed up as characters from their favorite games.

Away from the fun and games, meanwhile, Lenovo vice president Wei Jianglei was sounding a more philosophical note on his microblog in voicing his sympathies for McDonald's, as it grapples with the scandal involving Husi, one of its oldest and largest meat suppliers. Wei comments that government inspectors -- and not McDonald's -- should bear much of the responsibility for the scandal, which saw Husi sell products that were past their expiration date.  

Wei was also critical of the unfair treatment McDonald's has received in the case, which has become a media free-for-all due to its involvement of some of the biggest western restaurant chains. In this instance I have to express some admiration for Wei for his somewhat contrarian view, which could earn him criticism from fellow Chinese. China's media are famous for this kind of herd mentality, and his point that government inspectors should also bear some responsibility is also quite valid.

A quieter and more low-key government criticism came in a separate post from fellow Lenovo executive, senior vice president Qiao Jian, who made some comments on the state of living conditions in China's countryside. Qiao remarked how her husband returned to his rural hometown for a recent class reunion, and noted that living conditions there were largely unchanged from 30 years ago despite the rise in income levels.  

Kudos to Qiao for focusing on an issue that often gets overlooked in the China economic miracle story, and also to Lenovo executives in general for their frankness in raising awareness of topics that others might prefer to ignore. It's this kind of attitude that shows how Lenovo truly is an independent-thinking company, setting itself apart from the many major state-run firms that make up most of its major peers.

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

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