Tag: alibaba

Posted on by

The race to be China’s top fintech platform: Ant vs Tencent

As Ant Group seizes the world’s attention with its record initial public offering, which was abruptly called off by Beijing, investors and analysts are revisiting the fintech interests of Tencent, Ant’s arch rival in China.

It’s somewhat complicated to do this, not least because they are sprawled across a number of Tencent properties and, unlike Ant, don’t go by a single brand or operational structure — at least, not one that is obvious to the outside world.

However, when you tease out Tencent’s fintech activity across its wider footprint — from direct operations like WeChat Pay through to its sizeable strategic investments and third-party marketplaces — you have something comparable in size to Ant, and in some services even bigger.

Hidden business

Ant refuted the comparison with Tencent or anyone else. In a reply to China’s securities regulator in September, the Jack Ma-controlled, Alibaba-backed fintech giant said it is “not comparable” to WeChat Pay, the fintech tool inside WeChat, Tencent’s flagship messenger.

“In the space of digital payments and merchant service, there are many players around the world, including Tencent’s WeChat Pay. But the payments services offered by these companies are different from our digital payments and merchant services. They are not comparable. In terms of digital finance, our way of working with and serving financial institutions, as well as our revenue model, are novel and do not have a counterpart,” the company noted in a somewhat hubristic reply.

There’s no denying that Ant is a pioneer in expanding financial inclusion in China, where millions remain outside the formal banking system. But Tencent has played catch-up in digital finance and made major headway, especially in electronic payments.

Both companies ventured into fintech by first offering consumers a way to pay digitally, though the brands “Alipay” and “WeChat Pay” fail to reflect the breadth of services touted by the platforms today. Alipay, Ant’s flagship app, is now a comprehensive marketplace selling Ant’s in-house products and myriad third-party ones like micro-loans and insurance. The app, like WeChat Pay, also facilitates a growing list of public services, letting users see their taxes, pay utility bills, book a hospital visit and more.

Screenshots of the Alipay app. Source: iOS App Store 

Tencent, on the other hand, embeds its financial services inside the payment features of WeChat (WeChat Pay) and the giant’s other popular chat app, QQ. It has thus been historically difficult to make out how much Tencent earns from fintech, something the giant doesn’t disclose in its earnings reports. This is reflective of Tencent’s “horse racing” internal competition, in which departments and teams often rival fiercely against each other rather than actively collaborate.

Screenshots of WeChat Pay inside Tencent’s WeChat messenger

As such, we have pulled together estimates of Tencent’s fintech businesses ourselves using a mix of quarterly reports and third-party research — a mark of how un-transparent some of this really is — but it begs some interesting questions. Will (should?) Tencent at some point follow in Alibaba’s footsteps to bring its own fintech operations under one umbrella?

User number

In terms of user size, the rivals are going neck and neck.

The Alipay app recorded 711 monthly active users and 80 million monthly merchants in June. Among its 1 billion annual users, 729 million had transacted in at least one “financial service” through the platform. As in the PayPal-eBay relationship, Alipay benefits tremendously by being the default payments processor for Alibaba marketplaces like Taobao.

As of 2019, more than 800 million users and 50 million merchants used WeChat to pay monthly, a big chunk of the 1.2 billion active user base of the messenger. It’s unclear how many people tried Tencent’s other fintech products, though the firm did say about 200 million people used its wealth management service in 2019.

Revenue

Ant reported a total of 121 billion yuan or $17 billion in revenue last year, nearly doubling its sum from 2017 and putting it on par with PayPal at $17.8 billion.

In 2019, Tencent generated 101 billion yuan of revenue from its “fintech and business services. The segment mainly consisted of fintech and cloud products, industry analysts told TechCrunch. With its cloud unit finishing the year at 17 billion yuan in revenue, we can venture to estimate that Tencent’s fintech products earned roughly or no more than 84 billion yuan ($12 billion), from the period — paled by Ant’s figure, but not bad for a relative latecomer.

The sheer size of the fintech giants has made them highly attractive targets of regulation. Increasingly, Ant is downplaying its “financial” angle and billing itself as a “technology” ally for traditional institutions rather than a challenger. These days, Alipay relies less on selling proprietary financial products and bills itself as an intermediary helping state banks, wealth managers and insurers to reach customers. In return for facilitating the process, Ant charges administrative fees from transactions on the platform.

Now, let’s turn to the rivals’ four main business focuses: payments, microloans, wealth management and insurance.

Ant vs. Tencent’s fintech businesses. Sources for the figures are companies’ quarterly reports, third-party research and TechCrunch estimates.

Digital payments

In the year ended June, Alipay processed a whopping 118 trillion yuan in payment transactions in China. That’s about $17 trillion and dwarfs the $172 billion that PayPal handled in 2019.

Tencent doesn’t disclose its payments transaction volume, but data from third-party research firms offer a hint of its scale. The industry consensus is that the two collectively control over 90% of China’s trillion-dollar electronic payments market where Alipay enjoys a slight lead.

Alipay processed 55.4% of China’s third-party payments transactions in the first quarter of 2020, according to market research firm iResearch, while another researcher Analysys said the firm’s share was 48.44% in the period. In comparison, Tenpay (the brand assigned to the company-wide infrastructure that powers WeChat Pay and the less-significant QQ Wallet, yet another name to confuse people) trailed behind at 38.8%, per iResearch data, and 34% according to Analysys.

At the end of the day, the two services have distinct user scenarios. The fact that WeChat Pay lies inside a messenger makes it a tool for social, often small, payments, such as splitting bills and exchanging lucky money, a custom in China. Alipay, on the other hand, is associated with online shopping.

That’s changing as Tencent tries to increase its ticket size through alliances. It’s tied WeChat Pay to portfolio e-commerce companies like JD.com, Pinduoduo and Meituan — all Alibaba’s competitors.

Third-party payments were once an incredibly profitable business. Platforms used to be able to hold customer reserve funds from which they generated handsome interests. That lucrative scheme came to a stop when Chinese regulators demanded non-bank payments providers to place 100% of customer deposit funds under a centralized, interest-free account last year. What’s left for payment processors to earn are limited fees charged from merchants.

Payments still account for the bulk of Ant’s revenues — 43%, or a total of 51.9 billion yuan ($7.6 billion) in 2019, but the percentage was down from 55% in 2017, a sign of the giant’s diversifying business.

Microlending

Ant has become the go-to lender for shoppers and small businesses in a country where millions aren’t qualified for bank-issued credit cards. The firm had worked with about 100 banks, doling out 1.7 trillion yuan ($250 billion) of consumer loans and 400 billion yuan ($58 billion) of small business loans in the year ended June. That amounted to 41.9 billion yuan or 34.7% of Ant’s annual revenue.

The size of Tencent’s loan business is harder to gauge. What we do know is that Weilidai, the microloan product sold through WeChat, had issued an aggregate of 3.7 trillion yuan ($540 billion) to 28 million customers between its launch in 2015 and 2019, according to a report from WeBank, the Tencent-backed private bank that provides the WeChat-based loan.

Wealth management

As of June, Ant had 4.1 trillion yuan ($600 billion) assets under management, making it one of the world’s biggest money-market funds. Working with 170 partner asset managers, the segment brought in about 17 billion yuan or 14% of total revenue in 2019.

Tencent said its wealth management platform accumulated assets of over 600 billion yuan in 2018 and grew by 50% year-over-year in 2019. That should put its AUM in 2019 at around 900 billion yuan ($131 billion).

Insurance

Last but not least, both giants have made big pushes into consumer insurance. Besides featuring third-party plans, Alipay introduced a new way to insure customers: mutual aid. The novel scheme, which is not regulated as an insurance product in China, is free to sign up and does not charge any premium or upfront payment. Users pay small monthly fees that are pooled to pay for claims of critical illnesses.

Insurance premiums and mutual aid contributions on Ant’s platform reached 52 billion yuan, or $7.6 billion, in the year ended June. Working with about 90 partner insurers in China, the segment contributed nearly 9 billion yuan, or 7.4%, of the firm’s annual revenue. More than 570 million Alipay users participated in at least one insurance program in the year ended June.

Tencent, on the other hand, taps partners in its relatively uncharted territory. Its insurance strategy includes in-house platform WeSure that works like a middleman between insurers and consumers, and Tencent-backed Waterdrop, which provides both traditional insurances and a rival to Ant’s mutual aid product Xianghubao.

In the first half of 2020, WeSure, Tencent’s main insurance operation that sells through WeChat, paid out a total of 290 million yuan ($42.4 million), it announced. The unit does not disclose its amount of premiums or revenues, but we can find clues in other figures. Twenty-five million people used WeShare services in 2019 and the average premium amount per user was over 1,000 yuan ($151). That is, WeShare generated no more than 25 billion yuan, or $3.78 billion, in premium that year because the user figure also accounts for a good number of premium-free users.

*

Moving forward, it remains unclear whether Tencent will restructure its fintech operations in a more cohesive and collaborative way. As they expand, will investors and regulators demand that? And what opportunities are there for others to compete in a space dominated by two huge players?

One thing is for sure: Tencent will need to tread more carefully on regulatory issues. Ant’s achievement is a win for entrepreneurs looking to “disrupt” China’s financial sector, but its halted IPO, which is tied to regulatory issues and reportedly Jack Ma’s hubris, also sounds an alarm to contenders that policymaking in China can be capricious.

Read More

Posted on by

Kneron launches its new AI chip to challenge Google and others

Fresh off a $40 million Series A round, edge AI specialist Kneron today announced the launch of its newest custom chip, the Kneron KL 720 SoC.

With funding from the likes of Alibaba, Sequoia, Horizons Ventures, Qualcomm and SparkLabs Taipei (as well as a few undisclosed backers), it’s worth taking the company’s efforts seriously, and Kneron has no qualms about comparing its chips to those of Intel and Google, for example. It argues that its KL 720 is twice as energy efficient as Intel’s latest Movidius chips and four times more efficient than Google’s Coral Edge TPU at running the MobileNetV2 image recognition benchmark.

Compared to its previous generation of chips, this updated version can process 4K still images and videos at a 1080P resolution. It also features a number of new audio recognition breakthroughs for the company, which Kneron says will allow devices that use its chips to bypass the standard wake words on other chips and have immediate conversations with the device.

Image Credits: Kneron

Overall, Kneron promises 1.5 TOPS in performance from its SoC, which uses an Arm Cortex M4 as its main control unit. The average power consumption for the full package is around 1.2W.

“KL720 combines power with unmatched energy-efficiency and Kneron’s industry-leading AI algorithms to enable a new era for smart devices,” said Kneron founder and CEO Albert Liu. “Its low cost enables even more devices to take advantage of the benefits of edge AI, protecting user privacy, to an extent competitors can’t match. Combined with our existing KL520, we are proud to offer the most comprehensive suite of AI chips and software for devices on the market.”

With KNEO, the company also offers an interesting networking solution for devices that are powered by its chips. With this, developers can create their own private networks and connect multiple sensors without having to route data to the cloud. That network uses blockchain technology to secure the data and in a bit of a twist, Kneron hopes to create a marketplace that will allow consumers to exchange or sell their data to buyers.

For now, though, the company seems to be more focused on the core hardware. That’s also an area where we’ve seen the competition heat up, with other well-funded startups like Hailo also recently launching their latest chips.

Read More

Posted on by

China’s EV startup Xpeng pulls in $500 million Series C+

Xpeng, an electric vehicle startup run by former Alibaba executive He Xiaopeng, said Monday it has raised around $500 million in a Series C+ round to further develop models tailored to China’s tech-savvy middle-class consumers.

The announcement followed its Series C round of $400 million closed last November. A source told TechCrunch that the company’s valuation at the time had exceeded the 25 billion yuan ($3.57 billion) round raised in August 2018.

The new proceeds bring the five-year-old Chinese startup’s to-date fundings announced to $1.7 billion.

Investors in the latest round include Hong Kong-based private equity firm Aspex Management; the storied American tech hedge fund Coatue Management; China’s top private equity fund Hillhouse Capital; and Sequoia Capital China. The other existing big-name backers are Foxconn, Xiaomi, GGV Capital, Morningside Venture Capital, IDG Capital, and Primavera Capital.

Despite the sizable round, Xpeng is headed for a slew of challenges. Electric vehicle sales in China have shrunk in the wake of reduced government subsidies set in motion last year, and the COVID-19 pandemic is expected to further dampen demand as the economy weakens.

Xpeng’s Chinese rival Byton, which counts heavyweights backers like Tencent, FAW Group, and Foxconn, is already showing signs of strain as it furloughed about half of its 450 North America-based staff citing coronavirus impact. In June, the company put the brakes on production for internal reorganization.

Xpeng’s other competitors seem to have proven more resilient. In April, Nasdaq-listed Nio secured a $1 billion investment for its Chinese entity, while Li Auto ventured to file for a U.S. public listing in July.

Xpeng claims it has so far been able to withstand coronavirus challenges. In May, the company obtained a production license for its fully-owned car plant in a city near its Guangzhou headquarters, signaling its reduced dependence on manufacturing partner Haima Automobile.

Read More

Posted on by

Jack Ma’s fintech giant tops 1.3 billion users globally

The speculation that Alibaba’s fintech affiliate Ant Group will go public has been swirling around for years. New details came to light recently. Reuters reported last week that the fintech giant could float as soon as this year in an initial public offering that values it at $200 billion. As a private firm, details of the payments and financial services firm remain sparse, but a new filing by Alibaba, which holds a 33% stake in Ant, provides a rare glimpse into its performance.

Alipay, the brand of Ant’s consumer finance app, claims to earmark 1.3 billion annual active users as of March. The majority of its users came from China, while the rest were brought by its nine e-wallet partners in India, Thailand, South Korea, the Philippines, Bangladesh, Hong Kong, Malaysia, Indonesia, and Pakistan.

In recent years Ant has been striving to scale back its reliance on in-house financial products in response to Beijing’s tightening grip on China’s fledgling fintech industry. Tencent, Alibaba’s nemesis, is considered a lot more reserved in the financial space but its WeChat Pay app has been slowly eating away at Alipay’s share of the payments market.

In a symbolic move in May, the Alibaba affiliate changed its name from Ant Financial to Ant Group. Even prior to that, Ant had been actively publicizing itself as a “technology” company that offers payments gateways and sells digital infrastructure to banks, insurance groups, and other traditional financial institutions — rather than being a direct competitor to them. On the Alipay app, users can browse and access a raft of third-party financial services including wealth management, microloans, and insurance.

As of March, Ant’s wealth management unit facilitated 4 trillion yuan ($570 billion) of assets under management for its partners offering money market funds, fixed income products, and equity investment services. During the same period, total insurance premiums facilitated by Ant more than doubled from the year before.

In June, Ant’s new boss Hu Xiaoming set the goal for the firm to generate 80% of total revenues from technology service fees, up from about 50% in 2019. He anticipated the monetary contribution of Ant’s own proprietary financial services to shrink as a result.

Ant grew out of Alipay, the payments service launched by Alibaba as an escrow service to ensure trust between e-commerce buyers and sellers. In 2011, Alibaba spun off Ant, allegedly to comply with local regulations governing third-party payments services. Ant has since taken on several rounds of equity financing. Today, Alibaba founder Jack Ma still controls a majority of Ant’s voting interests.

Read More

Posted on by

Daily Crunch: SoftBank founder leaves Alibaba board

SoftBank and Alibaba seem to be pulling apart, Amazon launches a no-code app builder and a new congressional bill takes a different approach to online protections.

Here’s your Daily Crunch for June 25, 2020.

1. Masayoshi Son resigns from board of Alibaba; defends SoftBank Group’s investment strategy

SoftBank Group founder Masayoshi Son said he’s leaving the board of Jack Ma’s Chinese e-commerce giant Alibaba Group, a month after Ma left the board of SoftBank.

Son said he sees the move as “graduating” from the board of his most successful investment to date. He then swiftly moved to defend the Japanese group’s investment strategy, which has become the subject of scrutiny and public mockery.

2. AWS launches Amazon Honeycode, a no-code mobile and web app builder

Honeycode is supposed to make it easy for anyone to build their own applications using a web-based, drag-and-drop builder.

3. PACT Act takes on internet platform content rules with ‘a scalpel rather than a jackhammer’

The PACT Act is a new bipartisan effort to reform Section 230, the crucial liability shield that enables internet platforms to exist, approaching the law’s shortcomings “with a scalpel rather than a jackhammer,” said Senator Brian Schatz (D-HI). It’s being proposed as an alternative to the EARN IT Act and President Trump’s executive order attacking Section 230.

4. SevenRooms raises $50M to double down on reservations, ordering and other tools for hospitality businesses

SevenRooms serves restaurants, hotels and other venues, although food service establishments account for about 95% of its business. Another new opportunity has emerged as shops and other in-person venues are looking at reservations to help with social distancing.

5. 5 VCs agree: COVID-19 reshaped adtech and martech

We last surveyed VCs about their advertising and marketing investment strategies back in January in a completely different world, before the coronavirus pandemic began to wreak havoc on the global economy. To find out how the landscape looks now, we’ve compiled updated answers from two investors who participated in the previous survey and brought in three new perspectives. (Extra Crunch membership required.)

6. New York City could have an e-scooter pilot program by March

The New York City Council is expected to vote on a bill that will require the New York Department of Transportation to create a pilot program for the operation of shared electric scooters in the city.

7. NASA seeks crowdsourced help designing a better moon toilet

The competition seeks “innovative designs for fully capable, low-mass toilets that can be used both in space and on the Moon.” It’s not the first time that NASA has enlisted the power of the crowd, and HeroX’s crowdsourcing platform, to come up with innovative technology around human waste management.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

Read More

Posted on by

China Roundup: Alibaba to add 5,000 staff to cloud unit

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, we have updates from Alibaba’s rapidly growing cloud computing unit, Apple’s controversial decision to remove two podcast apps from its Chinese App Store, and more.

China tech abroad

TikTok’s besieged rival

Zynn, a TikTok rival that had rocketed to the top of the download charts a few weeks since its launch in May, was removed from Google Play this week over plagiarism. Developed by Kuaishou, the nemesis of TikTok’s Chinese sister Douyin, Zynn is another made-in-China app that has recently taken the international market by storm.

In a statement (in Chinese) this week, Kuaishou said the removal was triggered by one complaint about a user-generated video that had stolen content from another platform. As venture capitalist Turner Novak observed, much of Zynn’s early content seemed to be ripped from TikTok.

The main driver of the app’s rise, however, is its reward system; it essentially pays users to use and promote its app, a strategy that has proven popular among China’s rural and small-town populations. Nasdaq-listed content aggregator Qutoutiao has used the same tactic to grow.

Whether this pay-to-use strategy is sustainable is yet to be seen. Zynn is apparently making efforts to retain users through other means, claiming it’s in talks with “celebrity-level” creators to enrich its content.

Alibaba hunts for global influencers to sell more

Influencers are in high demand these days. After proving the strategy of driving e-commerce sales through influencer live promotion, Alibaba decided it wanted to bring the model to overseas markets. As such, it put out a notice to recruit as many as 100,000 content creators who would help the Chinese giant promote products sold on its international marketplace, AliExpress.

Data center in Tibet to connect China to South Asia

Many may know that China has turned one of its poorest provinces Guizhou into a pivotal tech hub that’s home to many cloud services, including that of Apple China. Now China is morphing Tibet into another cloud computing center. One main project is a 645,000-square-meter data facility that will facilitate data exchange between China and South Asia.

China tech at home

Dingtalk as an OS

At its annual summit this week, Alibaba Cloud reiterated its latest strategy to “integrate cloud into Dingtalk (in Chinese),” its work collaboration app that’s analogous to Slack.

The slogan suggests the strategic role Alibaba wants Dingtalk to play: an operating system built on Alibaba Cloud, the world’s third-largest infrastructure as a service behind Amazon and Microsoft. It’s a relationship that echoes the one between Microsoft 365 and Azure, as president of Alibaba Cloud Zhang Jianfeng previously suggested in an interview (in Chinese).

Dingtalk, built initially for enterprise communication, has blossomed into an all-in-one platform with a myriad of third-party applications tailored to work, education and government services. For instance, the Ministry of Education can easily survey students and parents through Dingtalk. The app is now serving 15 million organizations and 300 million individual users.

On top of Dingtalk integration, Alibaba Cloud said it will hire up to 5,000 engineers this financial year to fuel growth in areas including network, databases and artificial intelligence. The recruitment came after Alibaba committed in April to spend 200 billion yuan ($28 billion) over the next three years to build more data infrastructure amid increased demand for services like video conferencing and live streaming as businesses adapt to the COVID-19 pandemic.

Apple bans podcast apps

Just as podcasts are gaining ground in China, two foreign podcast apps that appeal to independent content creators were banned from the Apple App Store. The move echoed Apple’s crackdown on Chinese-language podcasts on its own podcast platform last year this time.

Investor’s favorite app is back

Speaking of app removal, this week, many venture capitalists and product managers in China are celebrating the return of Jike (即刻). The social media app, which has a loyal following within the Chinese tech circle, was removed nearly a year ago from app stores for unspecified reasons, but many speculated it was due to censorship.

The app is a kind of a hybrid of Reddit and Twitter, allowing users to discover content and connect based on interests and topics. Many VCs and internet firm employees use it to trade gossip and share hot takes. Its death and life are a reminder of the immense regulatory uncertainty facing tech companies operating in China.

Sought-after Hong Kong listings

Two of the largest U.S.-traded Chinese companies are floating their shares in Hong Kong for secondary listings amid fraying ties between Beijing and Washington. NetEase, the second-biggest gaming company in the world after Tencent, jumped 6% from its offer price to HK$130 on the first day of trading this week. JD.com, the Alibaba archrival, has reportedly priced its offering at HK$226 a share.

Chip company Eswin raised $283 million

Eswin, a semiconductor company founded by the boss of Chinese display technology giant BOE Technology, has completed a sizable funding round as the Chinese government encourages domestic chip production.

Read More

Posted on by

China Roundup: SoftBank leads Didi’s $500M round and Meituan crosses $100B valuation

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. Last week, we had a barrage of news ranging from SoftBank’s latest bet on China’s autonomous driving sector to Chinese apps making waves in the U.S. (not TikTok).

China tech abroad

The other Chinese apps trending in America

TikTok isn’t the only app with a Chinese background that’s making waves in the U.S. A brand new short-video app called Zynn has been topping the iOS chart in America since May 26, just weeks after its debut. Zynn’s maker is no stranger to Chinese users: it was developed by short-video platform Kuaishou, the nemesis of Douyin, TikTok’s Chinese sister.

The killer feature behind Zynn’s rise is an incentive system that pays people small amounts of cash to sign up, watch videos or invite others to join, a common user acquisition tactic in the Chinese internet industry.

The other app that’s been trending in the U.S. for a while is News Break, a hyper-local news app founded by China’s media veteran Jeff Zheng, with teams in China and the U.S. It announced a heavy-hitting move last week as it onboards Harry Shum, former boss of Microsoft AI and Research Group, as its board chairman.

Alibaba looks for overseas influencers

The Chinese e-commerce giant is searching for live-streaming hosts in Europe and other overseas countries to market its products on AliExpress, its marketplace for consumers outside China. Live-streaming dancing and singing is nothing new, but the model of selling through live videos, during which consumers can interact with a salesperson or session host, has gained major ground in China as shops remained shut for weeks during the coronavirus outbreak.

In Q1 2020, China recorded more than 4 million e-commerce live-streaming sessions across various platforms, including Alibaba. Now the Chinese giant wants to replicate its success abroad, pledging that the new business model can create up to 100,000 new jobs for content creators around the world.

Oppo in Germany

Oppo announced last week its new European headquarters in Düsseldorf, Germany, a sign that the Chinese smartphone maker has gotten more serious on the continent. The move came weeks after it signed a distribution deal with Vodafone to sell its phones in seven European countries. Oppo was also one of the first manufacturers to launch a 5G commercial phone in Europe.

Chinese tech stocks return

We speculated last week that Hong Kong might become an increasingly appealing destination for U.S.-listed Chinese tech companies, many of which will be feeling the heat of tightening accounting rules targeting foreign companies. Two firms have already taken action. JD.com and NetEase, two of China’s biggest internet firms, have won approvals to list in Hong Kong, Bloomberg reported, citing sources.

China tech back home

SoftBank doubles down on Didi

Massive losses in SoftBank’s first Vision Fund didn’t seem to deter the Japanese startup benefactor from placing bold bets. China’s ride-hailing giant Didi has completed an outsized investment of over $500 million in its new autonomous driving subsidiary. The financing led by SoftBank marked the single-largest fundraising round in China’s autonomous driving sector.

The capital will give Didi a huge boost in the race to win the autonomous driving race, where it is a relative latecomer. It’s competing with deep-pocketed players that are aggressively testing across the world, including the likes of Alibaba, Tencent and Baidu, and startups such as Momenta, NIO and Pony.ai.

Marriage of e-commerce and live streaming

Speaking of live-streaming e-commerce, two of China’s biggest internet companies have teamed up to exploit the new business model. JD, the online retailer that is Alibaba’s long-time archrival, has signed a strategic partnership with Kuaishou — yes, the maker of Zynn and TikTok’s rival in China.

The collaboration is part of a rising trend in the Chinese internet, where short video apps and e-commerce platforms pally up to explore new monetization avenues. The thinking goes that video platforms can leverage the trust that influencers instill in their audience to tout products.

Meituan hit record valuation

Despite reporting an unprofitable first quarter, Meituan, a leader in China’s food delivery sector, saw its shares reach a record high last week to bring its valuation to over $100 billion.

Notion got banned in China, briefly

Notion, the fast-growing work collaboration tool that recently hit a $2 billion valuation and has attracted a loyal following in China, was briefly banned in China last week. It’s still investigating the cause of the ban, but the timing noticeably coincided with China’s annual parliament meeting, which began last week after a two-month delay due to COVID-19. Internet regulation and censorship normally toughen around key political meetings in the country.

Read More

Posted on by

China Roundup: A blow to US-listed Chinese firms and TikTok’s new global face

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. It’s been a tumultuous week for Chinese tech firms abroad: Huawei’s mounting pressure from the U.S., a big blow to U.S.-listed Chinese firms, and TikTok’s high-profile new boss.

China tech abroad

Further decoupling

Over the years, American investors have been pumping billions of dollars into Chinese firms listed in the U.S., from giants like Alibaba and Baidu to emerging players like Pinduoduo and Bilibili. That could change soon with the Holding Foreign Companies Accountable Act, a new bill passed this week with bipartisan support to tighten accounting standards on foreign companies, with the obvious target being China.

“For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards, and this bill makes commonsense changes to level the playing field and give investors the transparency they need to make informed decisions,” said Senator Chris Van Hollen who introduced the legislation.

Here’s what the legislation is about:

1) Foreign companies that are out of compliance with the Public Company Accounting Oversight Board for three years in a row will be delisted from U.S. stock exchanges.

PCAOB, which was set up in 2002 as a private-sector nonprofit corporation overseen by the SEC, is meant to inspect audits of foreign firms listed in the U.S. to prevent fraud and wrongdoing.

The rule has not sat well with foreign accounting firms and their local regulators, so over time PCAOB has negotiated multiple agreements with foreign counterparts that allowed it to perform audit inspections. China is one of the few countries that has not been cooperating with the PCAOB.

2) The bill will also require public companies in the U.S. to disclose whether they are owned or controlled by a foreign government, including China’s communist government.

The question now is whether we will see Chinese companies give in to the new rules or relocate to bourses outside the U.S.

The Chinese firms still have a three-year window to figure things out, but they are getting more scrutiny already. Most recently, Nasdaq announced to delist Luckin, the Chinese coffee challenger that admitted to fabricating $310 million in sales.

Those that do choose to leave the U.S. will probably find a warmer welcome in Hong Kong, attracting investors closer to home who are more acquainted with their businesses. Alibaba, for instance, already completed a secondary listing in Hong Kong last year as the city began letting investors buy dual-class shares, a condition that initially prompted many Chinese internet firms to go public in the U.S.

TikTok gets a talent boost 

The long-awaited announcement is here: TikTok has picked its new chief executive, and taking the helm is Disney’s former head of video streaming, Kevin Mayer.

It’s understandable that TikTok would want a global face for its fast-growing global app, which has come under scrutiny from foreign governments over concerns of its data practices and Beijing’s possible influence.

Curiously, Mayer will also take on the role of the chief operating officer of parent company ByteDance . A closer look at the company announcement reveals nuances in the appointment: Kelly Zhang and Lidong Zhang will continue to lead ByteDance China as its chief executive officer and chairman respectively, reporting directly to ByteDance’s founder and global CEO Yiming Zhang, as industry analyst Matthew Brennan acutely pointed out. That means ByteDance’s China businesses Douyin and Today’s Headlines, the cash cows of the firm, will remain within the purview of the two Chinese executives, not Mayer.

Huawei in limbo following more chip curbs

Huawei is in limbo after the U.S. slapped more curbs on the Chinese telecoms equipment giant, restricting its ability to procure chips from foreign foundries that use American technologies. The company called the rule “arbitrary and pernicious,” while it admitted that the attack would impact its business.

Vodafone to help Oppo expand in Europe 

As Huawei faces pressure abroad due to the Android ban, other Chinese phone makers have been steadily making headway across the world. One of them is Oppo, which just announced a partnership with Vodafone to bring its smartphones to the mobile carrier’s European markets.

All of China’s top AI firms now on U.S. entity list 

The U.S. has extended sanctions to more Chinese tech firms to include CloudWalk, which focuses on developing facial recognition technology. This means all of the “four dragons of computer vision” in China, as the local tech circle collectively calls CloudWalk, SenseTime, Megvii and Yitu, have landed on the U.S. entity list.

China tech back home

China’s new trillion-dollar plan to seize the tech crown (Bloomberg)

China has a new master plan to invest $1.4 trillion in everything from AI to 5G in what it dubs the “new infrastructure” initiative.

Fitbit rival Amazfit works on a reusable mask

The smartwatch maker is eyeing a transparent, self-disinfecting mask, becoming the latest Chinese tech firm to jump on the bandwagon to develop virus-fighting tech.

ByteDance moves into venture capital investment

The TikTok parent bankrolled financial AI startup Lingxi with $6.2 million, marking one of its first investments for purely monetary returns rather than for an immediate strategic purpose.

Bilibili is the new Youtube of China

The once-obscure video site for anime fans is now in the mainstream with a whopping 172 million monthly user base.

Xiaomi’s investment powerhouse reaches 300 companies 

It’s part of the smartphone giant’s plan to conquer the world of smart home devices and wearables.

Alibaba pumps $1.4 billion into content and services for IoT

Like Amazon, Alibaba has a big ambition in the internet of things.

Read More

Posted on by

With 170M users, Bilibili is the nearest thing China has to Youtube

Bilibili, a Chinese video streaming website that was once regarded as a haven for youth subculture, has been steadily making its way into the mainstream as users age up and content diversifies. The NASDAQ-traded company recorded a 70% year-over-year growth to reach 172 million monthly active users by the first quarter, placing it in the same rank as video services operated by Tencent and Baidu’s iQiyi.

Daily time spent per user soared to a record of 87 minutes, which is likely linked to the extended stay-at-home order imposed on students during COVID-19.

In the same period, Tencent Video reported 112 million subscribers, while iQiyi commanded 118.9 million, almost all of whom are paying. Bilibili, by contrast, saw only about 8% of its MAU paying.

Bilibili’s growth engine is fundamentally different from the two giants though. While Tencent Video and iQiyi bet on Netflix -style, professionally produced programs, Bilibili relies on a wide array of user-generated content in the style of Youtube. The number of monthly creators grew 146% to 1.8 million, who collectively submitted 4.9 million pieces per month. Among its top creators is, lo and behold, the Communist Youth League of China.

The site also has an unconventional way of monetizing its audience. It doubles as a mobile gaming platform — to be expected given its young user base — and earned half of its revenue from video games in Q1. Other avenues of revenue generation come from virtual item sales during live broadcasting, advertising, and sales from content creators who operate online shops via Bilibili.

Despite healthy user growth, Bilibili widened net loss to 538.6 million yuan or US$76.1 million in the first quarter, a steep increase from 195.6 million yuan from the year before. It cites COVID-19 in causing delays in merchandise deliveries through its platform.

Nonetheless, the company bolstered its cash reserve to 10 billion yuan or $1.14 billion after Sony’s outsized $400 million strategic investment, which would explore synergies in animation and games between the partners. The online entertainment upstart is among a small crop of companies that have attracted financing from both Alibaba and Tencent, which are long-time archrivals.

“In Q1, we still generate positive operating cash flow, and our actual cash burn in Q1 was 200 million yuan, which is much less than loss in our P&L,” Bilibili chief financial officer Fan Xin asserted during the company earnings call.

The article was updated on May 19, 2020 to reflect a corrected statement from Bilibili on the company’s cash reserve.

Read More

Posted on by

Masa Son unveils a $41 Billion asset sale to silence his critics

Masayoshi Son is making his biggest play yet to silence doubters. On Monday, the Japanese billionaire unveiled an unprecedented $41 billion plan to sell off assets and shore up SoftBank Group Corp.’s crumbling market value in the face of the coronavirus pandemic.SoftBank aims to sell assets to raise as …

Read More