🚗 Can Xpeng be Asia's next electric car wunderkind?
Together in electric dreams ~
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🇨🇳 Chinese EV Maker Xpeng Motors Plans to Raise US$1.1 Billion in U.S. IPO
Vroom vroom! The electric vehicle (EV) race is heating up as China’s XPeng Motors seeks to raise up to US$1.1 billion through an initial public offering (IPO) in New York.
Here’s a rundown of the details:
The automaker has filed to sell 85 million American Depositary Shares (ADS), with each representing two ordinary shares in the company.
It’s pricing the stock between US$11 and US$13 per share.
At the top of the range, it would be valued at US$9.17 billion.
Who’s Xpeng?
Xpeng or Xiaopeng Motors is a Chinese EV-manufacturer — founded in 2014 and headquartered in Guangzhou. The company has 2 models: Xpeng G3 (an SUV launched in 2018) and Xpeng P7 (a sedan first delivered to customers June of this year).
The automaker’s current backers include a slew of heavy-hitters such as Alibaba, Xiaomi, and Sequoia Capital.
Xpeng’s road to IPO hasn’t been an easy one…
Besides the looming US-China tension, Xpeng also has to deal with:
The increased scrutiny on Chinese companies thanks to the Luckin Coffee scandal where the China-based startup admitted to inflating sales numbers. Ultimately, the company was delisted from the Nasdaq and both its CEO and CFO fired.
A series of vehicle fires involving Tesla, Li Auto, and Xpeng which sparked concerns about quality.
What does that mean for Xpeng?
Likely, not much… at least for now. After all, its rivals — Tesla Inc, Nio Inc, and Li Auto — are all relatively unaffected.
In fact, both Tesla Inc and Nio Inc have seen their share prices surged in recent months. Meanwhile, Li Auto, Xpeng’s Chinese competitor, raised US$1.09 billion in its IPO on Nasdaq just last July.
Plus, Xpeng has also revealed that its existing investors had already expressed interest in buying the ADSs offered — Alibaba (US$200 million), Coatue (US$100 million), Xiaomi (US$50 million), and Qatar Investment Authority (US$50 million). With these numbers, Xpeng looks set to join their competitors in electric dreams.
🇹🇼 Unexpected Outcome: The Coronavirus Pandemic Causes Spike in Bicycle Sales
As if 2020 isn’t weird enough, we now have ourselves an international bike shortage. And, according to the world’s largest bike maker, Giant, the supply is going to remain as tight as our waistband after a pizza dinner for some time.
With gyms shut down and people wary of public transportations, many have turned to the two-wheeler. And with this boom, bicycle manufacturers around the world are scrambling — and struggling — to meet the increased demand:
A retailer in Washington D.C. sold all of its entry-level bikes by the end of April and has seen an unprecedented number of pre-orders.
One of China’s biggest bicycle factory towns was brought back to life by the spike in demand.
According to the market-research firm NPD Group, U.S. bicycle sales (including indoor bikes, helmets, and accessories) hit US$1 billion in April. That’s up 75% from last year.
And, John Burke, the CEO of Trek Bicycle Corp. (the second-largest bike-maker in the world), seems to think that the bike boom will last for a couple of years. As he puts it, “this is not a blip.”
However, Bonnie Tu, Giant’s chairwoman, is far more cautious in her outlook and has no plan to “blindly” invest in new manufacturing capacity.
And, she may very well be right. One only has to look at the 2018 - 2019 investment bust of bike-sharing start-ups and its impact on the various towns across China.
But, if you’re tempted to dismiss Giant’s approach as playing it too safe, it’s worth remembering that this is a company that has taken bold strategic moves in its effort to navigate the US-China trade war.
A Taiwanese company with manufacturing facilities in various countries, Giant once moved its manufacturing for the American market from China to Taiwan in a bid to avoid added tariffs.
Then, when the U.S. temporarily lifted the tariffs on strategically unimportant Chinese-made goods (including bikes), Giant ramped up its production in China to cater to the bike boom.
Now that the tariff pause is coming to an end, Giant is thinking of returning to its home base for its manufacturing. Smart move, considering that the U.S. is introducing tons of regulations for Chinese companies and those that deal with them. By returning to its root and positioning itself as a Taiwanese company, Giant escapes the noose.
No one has a crystal ball, not even me. For now, however, analysts are siding with Tu and warning that the increased demand is likely temporary. As Tu puts it, “Every boom ends someday… It’s just a question of whether it ends quickly or slowly.”
🌍 eCommerce Boom: Asian Transshipment and Middleman Platforms Finally Have Their Day In The Sun
A pandemic is no match for our need to buy everything. With shopping trips — especially cross-border ones — put on hold indefinitely, the demand for transshipment services is at an all-time high as shoppers turn to online shopping.
While brands and retailers emphasize online sales to combat the slump caused by the pandemic, international shipping remains as inscrutable as ever. Just like tax season, it’s expensive, it’s troublesome, and it’s filled with (often unpleasant) surprises.
Well aware of the pain points, cross-border transshipment and middleman platforms are stepping in and making it that much easier to shop online.
Who Are Some of the Players?
For starters, there’s Buyandship. The Hong Kong-based company has more than 750,000 users across Asia and operates warehouses in the U.S., Italy, Japan, Australia, and Mainland China.
For the most part, the company caters to consumers in Asia. Once a customer purchases an item from a foreign website, the parcel is sent to a storage facility before being reshipped to the buyer’s location.
According to Buyandship, its business grew threefold in Q1 of 2020 compared with Q4 of 2019. While the boom was driven by coronavirus-related purchases, buyers are loyal to the site as they can also compare different retail prices of products on various websites.
Then, there’s SF Express — the second largest courier in China that provides both domestic and international express delivery. The logistic giant has expanded its transshipment platform, SF Buy.
Meanwhile, the Tokyo-based Beenos operates a “proxy purchasing” platform named Buyee. As many online retailers in Japan don’t serve overseas customers, the company collaborates with over 2,200 Japanese eCommerce websites to allow overseas shoppers to purchase from these websites through its platform.
Blink if you agree that these businesses are the heroes we need right now.
🍿 The Bite-sized Pieces 🍿
South Korean food companies experienced record-high sales amidst the COVID-19 pandemic as demands for their ready-made products skyrocketed in both the domestic and overseas markets. Is it really any wonder that we’re all finding joy in mandu and bulgogi during this difficult time?
Alibaba posts a 124% gain in quarterly profit but its biggest contributor to growth in June was actually its brick-and-mortar businesses rather than eCommerce. Time to head back to the ‘physical world’, Alibaba?
Taiwan is set to bar two of China’s most popular streaming services — iQiyi and Tencent’s WeTV — to close legal loopholes. Bid adieu to your favorite shows with a binge session… or two.
Grab and Unilever have announced a wide-ranging partnership in Southeast Asia to protect its drivers and riders as well as boost the livelihood of small business owners. The partnership involves — amongst other things — equipping Grab’s partners (a.k.a drivers and riders) with Unilever’s hygiene products and helping mom-and-pop shops list Unilever’s products on GrabMart.
South Korean investors are investing in Chinese stocks in record numbers as they seek to avoid stringent rules and taxes on local stocks. Perhaps a Tencent or JD.com with primarily South Korean investors are in the card?
🛍️ #Add2Cart #NotSponsored 🛍️
mori is the creator of what I would call the perfect blend of organisation + feminine chic - a pursebook. Yes, now you can proudly bring your notebook out without feeling like you’re heading for yet another (traumatic) quantum physics lecture. Get a degree they said! Anyway, what we really love about this business is its social mission to help those in need. #DYK each pursebook is lovingly handcrafted by mothers in Philippines for sustainable livelihood. Well, well, well, it looks like I just completed my X’mas shopping in advance.
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