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