Five big surprises for China in 2015
Wanda is already the largest commercial developer in China. And CEO Wang Jianlin is China’s richest person, more or less. But in the last two years, they have been making large moves into entertainment and other asset-light industries. They bought AMC and are now the largest owner of movie theatres in the US and China.
Going after a major Hollywood studio is logical. And they have been circling for a while. And keep in mind, Japanese Sony bought Columbia Pictures in a similar move in the late 1980’s. Wanda can afford it and could easily end up as one of the major players in Hollywood. Current likely candidates are Lionsgate and MGM.
American Tesla and Japanese Nissan lead in electric cars (not hybrids) by market share and technology. But winning in electric cars will require advanced Western technology, the US market and the China market. You can’t win without China (given its population and pollution problems).
But Chinese Wanxiang is advancing rapidly. While Tesla has struggled to grow in China, Wanxiang is making quick progress buying Western companies with electric car technology. In 2014, they purchased Fisker Auto out of US bankruptcy court. They previously bought battery-maker A123.
The potential surprise here is Wanxiang rocketing up in China sales. They now have the operating platform and complete working models. They could leap-frog Tesla in sales and become the largest electric car company in China. That would likely make them the leader globally.
There is a lot of capital, expertise and government support now going into modernizing the Chinese healthcare sector. But the industry is more known for its impressive and long-standing stagnation than it’s development.
2015 could be a break-out year for healthcare. Mostly likely in medical devices, where there are already companies like Mindray. The other possibility is in certain direct-to-consumer products and services such as dental, cosmetic surgery, day clinics and day surgery. Chinese diagnostic center iKang, which just went public on the NASDAQ, is a good example of a rapidly growing direct-to-consumer specialty services.
People think significant healthcare development is a given. I think it would be a big surprise.
Xiaomi basically took out Apple in the Chinese mass market with low prices. As manufacturing costs fell, they offered Apple-like smartphones at a much cheaper price. Plus they did some great marketing.
However, Xiaomi has the same weakness as Apple in China. They haven’t locked their customers into their eco-system and that makes them vulnerable to a lower cost manufacturer. And the price of smartphone manufacturing keeps falling. A lower price smartphone manufacturer could do to XIaomi what Xiaomi did to Apple.
Last year, apartment prices fell across China and most real estate developers slowed down and scaled back. And most banks basically held their breath hoping any defaults would be relatively small, which they were. This muddling through process will likely continue in 2015 as the over-supply is cleaned up.
However, I think there is also a solid chance a major real estate developer or sizeable bank will go bust. Not a really big ones. But maybe a city bank in a second tier city. Or a major real estate developer in a region like Dalian or Inner Mongolia. I think we could see some isolated but large bankruptcies. And I would expect the large banks or larger developers to buy them up, possibly with state support.
Those are my five long-shot predictions. We shall see. Best of fortune for 2015.
