Tesla Still Missing A Savior In China

Whitney Tilson’s email to investors discussing how the Chinese market is unlikely to be the savior for Tesla Inc (NASDAQ:TSLA) after Carrefour packs its bags in China.

My main thought as I read this article in today’s Wall Street Journal, After Struggling to Deliver in China, Carrefour Packs Its Bags, is how extremely unlikely it is that the Chinese market will be the savior for Tesla. Excerpt:

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Q1 hedge fund letters, conference, scoops etc

Carrefour, one of Europe’s largest grocery retailers, is unloading most of its operations in China, where big-box retailers are struggling to keep up with nimble delivery providers that are winning over shoppers.

The move also marks the latest retreat by a Western company in China in the face of stiff competition from homegrown rivals.

Carrefour is selling an 80% stake in its China business, including more than 200 stores, to Nanjing-based retailer Suning.com Co. for about $700 million. The French company, once a dominant force in many Chinese cities, saw its sales in the market fall 5.9% to €4.1 billion ($4.67 billion) last year.

Western companies, lured by a once surging Chinese economy, often find the country brutally competitive and fraught with regulatory hurdles. McDonald’s Corp., Hewlett-Packard Co. and Uber Technologies Inc. are among those that have pulled back or changed strategy in recent years.

While Tesla is the rare company that isn’t being forced to do a joint venture with a local partner, there’s little doubt in my mind that even if Tesla is able to compete straight up with the nearly 500 local electric vehicle companies, it won’t matter. Even if the Trump administration forces the Chinese to make some concessions to get the tariffs reduced/lifted, it’s still a totally rigged market.

I think the most likely outcome is that the Chinese will simply steal Tesla’s technology and certainly never allow the company to ever make a meaningful profit…


After Struggling to Deliver in China, Carrefour Packs Its Bags

French company is pulling back as local upstarts seize on the trend toward delivering items directly to customers’ homes

Shoppers leaving a Carrefour store in Beijing in 2011. Photo: Frederic j. brown/Agence France-Presse/Getty Images

BEIJING— Carrefour SA, CRRFY -3.93% one of Europe’s largest grocery retailers, is unloading most of its operations in China, where big-box retailers are struggling to keep up with nimble delivery providers that are winning over shoppers.

The move also marks the latest retreat by a Western company in China in the face of stiff competition from homegrown rivals.

Carrefour is selling an 80% stake in its China business, including more than 200 stores, to Nanjing-based retailer Suning.com Co. 002024 -1.65% for about $700 million. The French company, once a dominant force in many Chinese cities, saw its sales in the market fall 5.9% to €4.1 billion ($4.67 billion) last year.

Carrefour

Read the full article here by Julie Wernau, The Wall Street Journal



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Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver