In the news: Lenovo gets acquisitive, JD.com files for US IPO and Li enacts state secrecy laws

Lenovo buys Google's Motorola Mobility
This acquisition would be China's largest tech deal to date. After its announcement last week to buy IBM's low-end server business for $2.3 billion, Lenovo made its second major US deal as it agreed to buy Google's Motorola handset division for $2.91 billion. Google is pulling back from making consumer mobile devices and will focus on software, while Lenovo wants to compete with Apple and Samsung in the aggressive US mobile market. Google will keep the majority of Motorola's mobile patents. The deal is subject to approval by both US and Chinese authorities.

Sources:
Reuters
Market Watch (The Wall Street Journal)
The Motley Fool

Why would the world's largest maker of PCs want to buy the low-margin IBM servers and stagnant Motorola handset business? Simple; the PC industry is shrinking. Entering new markets is the only way Lenovo can sustain revenue growth. These deals are tickets to the huge enterprise technology and smart phone manufacturing markets. Success in China is already in the bag; Lenovo needs a mobile acquisition to accelerate its growth in the West. Risks are inevitable (corporate culture clash, low short-term margins) but investors appear confident in Lenovo's experience and ability to transform businesses.

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Largest Chinese internet IPO?
JD.com, China's second biggest e-commerce company, filed to raise $1.5 billion in a US IPO, reflecting the boom in China's online retail market. Going public this year would make it the biggest offering since Facebook. But the recent SEC ban on the Chinese accounting affiliates has put a halt to Chinese IPOs in the US. JD.com's offering remains contingent on the final ruling.

Source:
China Daily

This is said to be JD.com's attempt to stay ahead of its rival and market leader Alibaba, who hasn't yet announced US IPO plans (bankers predict an Alibaba IPO could raise up to $15 billion). All internet retailers in China live in Alibaba's shadow, including Wal-Mart and Amazon. While the rest rely on external logistics, JD.com tries to differentiate by operating its own network of couriers and warehouses. A recent revenue surge triggered the company's plans for expansion. Although the company is eager to list, it is audited by one of the Big Four. Hopes are high for a successful appeal, but the chances are low. The IPO may have to wait…

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More 'transparency' for state secrets
Premier Li has signed an enforcement regulation on the state secrecy law to boost transparency. This comes into force on March 1 and consists of 45 articles that define secrecy levels and authority limits, as well as clarifying time limits and conditions for declassification. Specific rules on state secret carriers (facilities to receive and transmit state secrets) and signs that label such carriers and equipment are included. Units and administrative departments have been asked to report any leakages to the secrecy department as well as regularly educate their officials and punish those who fail to perform their duties.

Sources:
China Daily
Reuters

Notorious for its vague yet strict state secrecy laws, China appears to be giving into national (and international) demands of making information more public. However, while the new rules above have been presented as a move towards increased government transparency, they actually offer no explanation on what types of information are no longer considered “secrets”. These are merely guidelines for the officials. The public will have to wait for more information.

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