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Huawei Mate 70 series set to launch with breakthrough features and HarmonyOS NEXT: What to expect from Q4’s most anticipated flagship

Evan Huang and TechNode Staff — Wed, 06 Nov 2024 03:13:33 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang.

Huawei, a leading Chinese hardware manufacturer, made a notable return to the spotlight last year with its high-end Mate 60 series. Recently, rumors and leaks about the upcoming Huawei Mate 70 series have sparked significant consumer interest and anticipation in China. Reportedly, this new device is set to launch in mid-November. Given the information leaked so far, what key features can we expect?

Latest leaks and highlights

Recent leaks suggest that the Huawei Mate 70 series will, like last year, include four main versions: the Standard, Pro, Pro+, and the RS Ultimate Design. The Pro version is expected to be the highlight, offering a premium entry-level experience. Early glimpses of the Mate 70 Pro reveal a design that pays homage to the Mate 50 series, with a unified back color scheme and a triple-punch display on the front, likely enhanced by a quad-curved micro-edge design.

The new Kirin chipset is expected to deliver significant advancements in processing technology and performance. The Pro version will feature a BOE-supplied 2K display, approximately 6.8 inches in size, with 2160Hz PWM dimming and a 120Hz refresh rate. It will also be equipped with next-generation KUNLUN GLASS and reinforced with Xuanwu architecture, greatly improving resistance to drops, compression, and impact. Water resistance may also be upgraded to IP69 standards, adding further durability.

Popular blogger @厂长是关同学 shared a post on the Chinese social platform Weibo earlier in October saying, “If the rumors hold, the new Kirin chipset in the Huawei Mate 70 series will cost around RMB 1,100-1,300, marking a substantial investment. Other components—such as the screen, CMOS sensor, and power management chip—are also expected to be on the higher end of the price spectrum. Despite an estimated production cost nearly 30% above Apple’s 16 series, the Mate 70 series price won’t surpass Apple’s. The launch is slated for mid-next month (data for reference only).”

Additionally, blogger @智慧皮卡丘 leaked that the Huawei Mate 70 also features a flat-edge frame and side fingerprint power button, and the new Kirin chipset will be standard, along with 3D facial recognition. Although the battery capacity is thought to not exceed 6,000mAh, power optimization is still expected to be high. Regarding imaging, the main camera is expected to utilize the OV50K large sensor from China’s OmniVision.

HarmonyOS boosts Huawei’s hardware experience

On October 22, Huawei officially launched HarmonyOS NEXT, marking the third major mobile operating system globally alongside Apple’s iOS and Android. Unlike previous HarmonyOS versions, which relied on AOSP open-source code and compatibility with Android apps, HarmonyOS NEXT is entirely self-developed, bringing significant improvements in system smoothness, performance, and security, while enabling the Chinese tech giant to have full control over the OS.

Huawei Mate70 series will be the first device to come with HarmonyOS NEXT pre-installed in the third quarter. Credit: Huawei

At the launch event, Richard Yu, Executive Director and Chairman of the Board of Directors of Huawei’s Consumer BG, announced that HarmonyOS NEXT 5.0 delivers a 30% increase in smoothness, an additional 56 minutes of battery life, triple the connection speed, four times the device connectivity, and a 20% reduction in power consumption. Currently, there are over 15,000 native HarmonyOS apps and service modules, with updates being released almost daily. HarmonyOS has seen widespread adoption, with over 38 million enterprise applications in use nationwide in China and thousands of internal applications for businesses and government agencies going live.

HarmonyOS NEXT facilitates seamless connectivity across multiple devices, including smartphones, tablets, and in-car systems. Utilizing a new distributed soft bus, it achieves three times faster cross-device connections with lower power consumption, supporting simultaneous connections with up to four devices for features like cross-device scanning, photo library sharing, and clipboard sharing. These advancements are expected to drive Huawei hardware sales.

In conclusion

In summary, the Huawei Mate 70 series stands as the most eagerly awaited flagship phone of Q4 in China. From its design and internal configurations to advancements in imaging technology and its operating system, the device promises significant upgrades and breakthroughs. Particularly notable is the HarmonyOS NEXT, signaling a bold move toward ecosystem integration. Though Huawei has yet to reveal the full details of the new device, the hints so far are already building excitement.

Undercurrents in Double 11: What’s changed and what’s not

Evan Huang and TechNode Staff — Tue, 05 Nov 2024 08:39:14 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang.

As autumn unfolds, the Chinese internet is abuzz with anticipation for the year’s biggest shopping event—Double Eleven. Unlike in the past, this year’s shopping festival launched long before November, as a way for major e-commerce platforms to extend their presale periods. In fact, the constant stream of discounts and sales throughout the year has made consumers less enthusiastic about Double Eleven deals, challenging merchants to draw in shoppers with more than just price cuts.

This may be why e-commerce leaders Taobao and JD.com kicked off their presales on October 14, while platforms Douyin, Kuaishou, Xiaohongshu, and Pinduoduo launched theirs on October 8, 10, 12, and 14, respectively. Meanwhile, competition among platforms for Double Eleven traffic has intensified, with each platform ramping up efforts to engage consumers and maximize gross merchandise value (GMV) while building long-term loyalty.

Taobao and Tmall “break down walls” with JD

Long-time e-commerce rival group Taobao and Tmall and JD have taken an unexpected step this year, putting aside their differences to “break down walls” to expand the market while seeking to enhance consumer satisfaction. On October 16, JD Logistics announced a partnership with Taobao Group, marking a major shift in China’s e-commerce landscape. Through this collaboration, JD Logistics will be fully integrated into the Taobao and Tmall platforms, allowing merchants to select JD Logistics as their service provider. JD’s comprehensive supply chain solutions, including JD Express, will now be available to Taobao and Tmall merchants, covering warehousing, courier services, and transportation across the supply chain.

On October 28, further reports revealed that Cainiao, Alibaba’s logistics arm, will integrate itself with JD’s third-party platform. This integration means JD’s third-party merchants can choose between Cainiao Express and Cainiao’s large-goods services. With the systemic integration already in place, some Taobao and Tmall merchants have opted for JD Logistics, and consumers can now track their packages via the Taobao and Tmall apps.

This alliance could be significant, especially given JD Logistics’ impressive growth. According to its semi-annual report, revenue from JD Logistics’ external customers reached RMB 59.9 billion—an 11.2% increase year-over-year—accounting for nearly 70% of its total revenue.

Dependence on top streamers remains unchanged

Top streamers remain invaluable to e-commerce platforms, driving substantial consumer engagement despite pervasive controversies.

Douyin’s pre-Double Eleven report, released on October 18, highlighted the momentum of live-streaming e-commerce. Between October 8 and 17, 52 brands exceeded 100 million yuan in sales, while 323 live-streaming rooms surpassed RMB 10 million in revenue. Live-stream products reached users over 200 billion times during this period.

This surge is backed by the latest data from the Chinese Academy of Metrology Science, showing that live-streaming e-commerce penetration in China rose from 4.9% in 2019 to 30.4% in 2022, and further to 37.8% in 2023, marking 24.3% year-on-year growth.

AI Reshapes the e-commerce shopping experience

With the rise of generative AI, many labor-intensive marketing tasks, like creating product images and descriptions, sales, and software engineering work, can be automated, leading to significant cost savings. Alibaba, for example, has embedded AI across Taobao and Tmall, transforming its e-commerce business by enhancing the shopping experience and boosting merchants’ efficiency. Through AI-driven personalized recommendations, smart customer service, and logistics optimization, Alibaba has streamlined operations. One key feature, the “site-wide promotion” tool, leverages a “paid-free linkage” mechanism, where AI identifies user intent and applies precise tags, delivering more predictable ROI for merchants. During this year’s June 18 shopping festival, over 1.5 million products saw a 65% increase in GMV within seven days of investment due to this promotion.

JD has also upped its AI solutions portfolio. In March 2024, it introduced AI tools that can cut merchant operating costs by as much as 50%, accelerating product listings and creating realistic virtual digital influencers who host 24/7 live streams. Most recently, on October 14, JD launched a “Double 11” campaign featuring free trials of AI tools for brand merchants, promising to enhance video content production and support various marketing needs, including image and video content creation, product recommendations, and short-form drama content.

AI’s appeal is resonating with consumers as well, especially younger generations. Bain’s survey of over 3,000 Chinese consumers revealed that while 12% of consumers overall used generative AI tools in the past six months, that figure reached 23% for Gen Z users. The most popular AI features across demographics include visual search (using images instead of text), intelligent customer service bots, voice search, and smart shopping assistants, all of which are helping to redefine the consumer experience in China’s dynamic retail landscape.

Conclusion

Behind this year’s shopping extravaganza, e-commerce giants are entering the competition with a more collaborative approach, while the live-streaming arena continues to heat up as consumers hunt down the best deals. Despite the Double Eleven shopping frenzy, the influence of AI in this sector extends far beyond any single event. With enthusiasm for large promotional events gradually cooling, consumers are approaching purchases with greater rationality, looking not just for deep discounts but also for quality and service.

To adapt, e-commerce platforms must move beyond a singular focus on sales volume, shifting toward enhancing user experience and building long-term value. For manufacturers, this means pivoting from a reliance on short-term sales growth to a strategy that emphasizes lasting engagement. AI technology is at the heart of this transformation, serving not only to improve service quality but also to boost user engagement. As AI evolves from a support tool into a strategic asset, it is poised to become a core competitive advantage in e-commerce.

Melodio app – tested: A new world of AI-created music

TechNode Staff — Mon, 07 Oct 2024 07:37:58 +0000

Note: The article was first published on TechNode China written by Steven Lee and translated by Zinan Zhang.

Kunlun Tech recently launched Melodio, which claims to be the world’s first AI-generated music streaming platform. On Melodio, you can input prompts based on your current mood, and the system will continuously generate customized music to match the specified style. So, how does the experience of the Melodio app hold up? Let’s dive in.

User interface

Melodio’s interface design is simple and intuitive, with the main functions easy to navigate and smooth overall operation. The home screen is the music player, where the background’s wave visualization changes color, making the listening experience more immersive. At the bottom is a music description panel, and when swiping to the far right card, you’ll find the lyrics. On the far left is a music discovery area, where you can easily find music to listen to. The top-left corner houses the “My” section, where you can browse your saved and favorite tracks anytime. The app doesn’t offer settings or other similar options, making it extremely minimalist.

User experience

All you need to do is enter keywords into the search bar, and the app’s AI will quickly generate a song that matches the description.

It’s worth noting that while it supports Chinese-language prompts, we could only hear music when using individual Chinese words in testing. When we inputted combined Chinese descriptive phrases, the system didn’t respond. For example, entering “hard rock, Linkin Park style” in Chinese resulted in no output.

We then tried using simple English descriptions, such as “happy” and “Winter Cabin Escape with Metal Essentials,” both successfully generated music that fitted the described atmosphere.

It’s important to mention that, in some cases, the AI-generated music may sound repetitive or disconnected, which can slightly affect the listening experience.

Conclusion

Overall, Melodio is a promising AI music app. If you’re a music lover or want to experience AI’s new approach to music creation, Melodio is worth a try. However, its current features are still somewhat incomplete, and we hope to see improvements in the future.

Pros:

• Listen to any style of music you want

Cons:

• Interface does not yet support Chinese

• Poor recognition of Chinese descriptions

Tested: Zhumengdao: putting on a mini-play with AI

TechNode Staff — Sat, 05 Oct 2024 05:36:00 +0000

Note: The article was first published on TechNode China written by Steven Lee and translated by Zinan Zhang.

The name Zhumengdao evokes a sense of wonder and fantasy upon hearing it. As the name suggests, the app has a rich character setting and immersive interactive experiences.

According to the official introduction, the “Dream Companion” feature in the Zhumengdao App is not just a simple virtual character, but a character created by the user with a unique identity, personality, and interests to act as the user’s virtual reading partner. This feature gives the user-created dream character a high degree of openness, allowing the user to customize a unique identity based on their likes, interests, and imagination.

There are many roles, settings, and scenarios to choose from. Credit: Zhumengdao

The fun of conversations

The biggest highlight of Zhumengdao lies in its ability to allow users to engage in deep conversations with AI virtual characters. Taking the “Coaxing simulator” as an example to try out the dialog, you just need to appease the character. Every response from the simulator will count towards their “Forgiveness Value”, and you will pass the test once you reach a value of 100.

However, appeasing the character is not an easy task. Credit: Zhumengdao

In addition, you can invite two characters other than yourself to chat and set the relationship between the characters. You must manually trigger the character to speak to chat in the chatroom. You can watch them interact without saying a word or join in to create endless possibilities through all sorts of combinations.

Mini-play

The mini-play feature adds more backstory and personality traits to the virtual characters. Through reading mini-plays, you can gain a deeper understanding of these characters. Taking the “Mid-Autumn Bunny Lantern” experience as an example, the mini-play scenarios in the app immerse you into the story with the option of autoplay, and the addition of background music enhances the overall experience.

It is just like the interactive novel. Credit: Zhumengdao

Dream collection

Every conversation you have with a virtual character can be saved and turned into a precious memory. You can revisit these dream scenarios anytime to relieve those beautiful moments. In the “Chat” and “Activity” pages you can browse the chat history and dream history records.

You can check the chat records anytime. Credit: Zhumengdao

Looking forward to more possibilities

Of course, there is still room for improvement in Zhumengdao. For example, some of the virtual characters’ dialogue is still relatively fixed, lacking the element of randomness and flexibility. Additionally, Zhumengdao has the potential to add a wider variety of virtual characters to satisfy different requirements of different users.

Conclusion

Zhumengdao is a highly promising AI interactive product. It offers users a platform to engage in deep exchanges with virtual characters, enriching our social experiences. When you do not feel like reading novels or scrolling through short videos, you can try interacting with the virtual characters on Zhumengdao.

Highlights

– Wide selection of virtual characters

– Great mini-play experiences

Shortcomings

– Some virtual characters’ dialogue modes lack flexibility

The Path to Globalization of China’s Automotive Industry [2024]

Bill RUSSO, Benjamin FAN and Lorenzo SONG — Wed, 11 Sep 2024 08:00:58 +0000

Note: The article was first published on Automobility Ltd written by Bill Russo, Benjamin Fan, and Lorenzo Song.

Opening Comments from Bill Russo:

In early 2009, shortly after resigning from my position as head of Chrysler’s business in North East Asia, I founded an Asia-based consultancy called Synergistics Limited. It was my way of staying close to the market where I had invested 5 years of my career, and which that same year had become the world’s largest automotive market measured by both sales and production. At that time, it had become quite apparent that China had emerged as the front line in the battle for dominance of the 21st century automotive industry.

To gather my thoughts on where things were likely headed, I wrote an article in 2009 titled The Path to Globalization of China’s Automotive Industry where I predicted the emergence of Chinese brands as global players, and described a plausible path for this to occur. China surpassed Japan in 2023 to become the world’s largest exporter of vehicles, and surpassing this milestone represents an appropriate time to revisit this topic.

Where We Stand in 2024

China has emerged as a transformative force in the global auto industry, having been the world’s largest market for production and sales of automobiles since 2009
New Energy Vehicles now represent more than one-third of all vehicles sold in China, and Chinese companies have 80% of this segment.
Over 60% of new energy vehicles and 70% of EV batteries are made in China
Chinese brands now have 63% share of domestic passenger vehicle sales, up 27% since 2020.
A recent slowdown in domestic sales has forced automakers in China to prioritize exports in order to improve the utilization of their installed capacities. As a result, 20% of the vehicles produced in China are exported and it is the largest car export nation in the world.
With the world’s largest population, mobility demand in China is served by an increasingly diverse set of solution providers, including internet-backed Smart EV players, the equivalent of which do not exist outside of China.
With the world’s largest digital economy, new players are emerging on the Chinese competitive landscape that view the car as a smart device. This has a direct impact on the product configuration with cars incorporating internet-era features to provide rich digital experiences.
Facing rising geopolitical tensions and trade barriers, leading Chinese brands will likely accelerate the move from made-in-China exports to globalizing their production and supply footprint.

The Center of Gravity in the Global Auto Industry Moves East

While internal combustion engine (ICE) powered automobiles were invented in Germany in the mid-1880s, mass commercialization of automobiles emerged a few decades later in the early 20th century United States. Henry Ford, Alfred Sloan and Walter P. Chrysler led the Big 3 US automakers from an initially fragmented startup landscape. By 1950, the United States produced over three quarters of all the cars in the world, and Detroit was the epicenter of the global automotive industry (see Figure 1).

Figure 1 | Global Vehicle Production by Country Since 1950 Credit: OICA, Automobility analysis

After World War II, Germany and Japan emerged as automobile production hubs, initially to serve their domestic markets. However, momentum decidedly shifted over to East Asia in the latter part of the 20th century as oil supply shocks rocked the global economy. As a result, consumer preferences around the world shifted toward makers of small, affordable and more fuel-efficient cars produced by Japanese and later Korean automakers.

Toyota and its lean production system with emphasis on quality, continuous improvement and supply chain management posed an existential challenge to the historical dominance of the US automakers. By 1990, Japan surpassed the United States to become the world’s largest car producing nation.

Over the next decade the US temporarily regained its position as the world’s largest car producing nation as German, Japanese and Korean automakers shifted from an export-oriented model to a more globalized production and supply footprint.

In the 21st century, China became the growth engine for the world’s automakers, contributing nearly all of the growth in automotive industry production and sales volumes since 2000. Global carmakers flocked to China to sell their products to a large and growing population of consumers, while simultaneously leveraging scale and cost advantages to increase their unit margins. Today, nearly one-third of all cars produced in the world are made in China.

However, global new car sales demand has not kept pace with the growth in production capacity. Global sales of new vehicles peaked in 2017 at 96.1 million units (See Figure 2). Sales in China in 2017 also peaked at ~30 million units, representing just over 30% of the world’s demand for new vehicles.

Figure 2 | Global Vehicle Sales Since 2005 Credit: OICA, Automobility analysis

Peak Sales and the Rise of New Energy Vehicles

The China automobile market has changed dramatically since 2017, with new car sales declining ~2% on a compound annual basis (see Figure 3). Over this period, demand has also shifted in favor of New Energy Vehicles, which have risen by ~48% on a compound annual basis. Clearly, there has been a dramatic reversal of growth along with a shift in consumer preference.

Figure 3 | China Vehicle Sales Since 2014 Credit: CAAM, Automobility analysis

Domestic sales of ICE powered vehicles have fallen by nearly 11 million units while sales of New Energy Vehicles have risen by 7.5 million units over this period (see Figure 4). Faced with this sudden domestic sales slowdown and shift in consumer preference, carmakers are turning to exports as a way to recapture growth. Exports have risen from 1.1 to 4.9 million units over this period. More that three-quarters of these exports are the pure gasoline powered vehicles that are no longer the first choice preference of Chinese consumers.

Figure 4 | Peak-to-Peak comparison of Vehicle Shipments (2017 vs. 2023) Credit: CAAM, Automobility analysis

Three Waves of Automobility Disruption

China’s emergence as the leading global automobile market is not just a story of growth and scale leading to eventual globalization. While this pattern has happened in the past with German, Japanese and Korean carmakers, mobility problems are solved in a different way in China and often involves a different landscape of solution providers.In the late 20th century, Japanese and later the Korean carmakers gained relevance by building cars more efficiently with improved quality control and efficient supply chain management. Led by developments in China, the global industry now is experiencing a more fundamental shift, where the industry business model is being transformed by technology.

While electrification is perhaps the most clear discontinuity when viewed through the lens of the traditional industry, there is a far more transformative force being exerted by China’s internet economy as it enters into the business of serving mobility demand.We are at the early stage of mobility revolution sparked by entrance of internet and communications technology (ICT) players in the mobility sector. The internet population in China reached nearly a billion users by the end of 2020, providing a huge market for services-oriented demand aggregation. Virtually all of China’s population is served by mobile internet platforms that provide services that involve people or goods movement – and the internet economy is actively investing to optimize the economics of services that invoke some form of mobility.

Entrepreneurial private enterprises have emerged from the digital economy to invest in mobility innovation. As a result, the information and internet technology revolution that started in the late 20th century is now acting as an accelerating force for mobility innovation. The creation and commercialization of the consumer-oriented internet has transformed devices we interact with daily into service-oriented, software-defined platforms.

Digital platform players including China’s internet giants (Baidu, Alibaba and Tencent) and smart device makers (Huawei and Xiaomi) are investing heavily to create smart solutions that unlock new recurring revenue streams linked to mobility, energy and other online and offline services.

China’s digital economy is setting the pace for an entirely new services-centric business model where “new game” commercial opportunities are created. This “new game” is highly embedded in the digital ecosystem and will change the car from a device monetized primarily when sold to a device monetized in multiple ways over its productive life cycle. New Game players often emerge from digital ecosystems and have experience monetizing other software-defined smart devices, and are highly efficient aggregators of services that are accessed through smart devices.

The disruptive forces that are emanating from China and its automotive industry are not merely driving a shift in propulsion technology. Public sector support combined with private sector entrepreneurship and the massive scale of internet economy are disrupting the traditional automotive industry and reshaping the sector in three waves (see Figure 5). The three waves of “automobility” disruption are enabled by technology and are making mobility solutions more affordable and accessible.

Figure 5 | Three Waves and Timeline of Automobility Disruption: [Shared, Connected, Electric and Autonomous Mobility] Credit: Automobility Ltd

The 3 waves of this “Automobility Revolution”form the underlying thesis of our company since we were founded in 2017. This thesis has proven to be an accurate prediction of how the business model is transformed by technology – which is manifesting far faster in China than elsewhere.

We live in an era where big data is used to provide personalized services that are often accessed through a smart device, powered by the mobile internet. These smart device technologies are now being incorporated into the devices that transport people and goods, which will revolutionize the business of how these mobility devices are monetized. This began in with app-based on-demand mobility solutions, which scaled rapidly in China in the Automobility 1.0 era.

Mobility services provide access to daily life needs and conveniences, linking us between the places we live, work and play. Multi-modal traffic systems, parking infrastructure, charging stations, public services have all become available through on-demand platforms, bringing investments from the internet giants and device players.

China’s auto sector has fully embraced the “Smart EV” or “Intelligent Connected Vehicle (ICV)” in the Automobility 2.0 era. As a result, we are witnessing a rapid acceleration of the commercialization of new energy vehicle (NEV) propulsion technology and advanced driver assistance systems (ADAS), making mobility safer, more economical and partially freeing the driver from the mundane task of actuating the vehicle.

This will lead to the Automobility 3.0 autonomous mobility on demand (AMOD) era, where people (robo-taxi) and goods (robo-delivery) movements are automated. Of course, driver-actuated mobility will co-exist with such devices, but the overall economic advantages of smart, autonomous vehicles will spark large-scale commercial deployment.

With its large and commercially aggressive digital economy, China is effectively transforming the traditional product-centric automotive industry business into a services-centric Internet of Mobility (IoM) business model.

When the vehicle is conceptualized as a smart device, it collects information on the users, the vehicle, and its surroundings. All the data generated from the vehicle and users can be uploaded to the cloud for analytics to better provide data-enabled services to users in vehicles (see Figure 6).

Figure 6 | Internet of Mobility Data Monetization Credit: Automobility Ltd

By configuring vehicles to be smart and interconnected, China is leading the way toward integrating Smart EVs into broader ecosystems, such as energy management. This integration not only serves as a model for global markets but also underscores the potential for Smart EVs to play a crucial role in the sustainable management of urban energy systems. This development is further described in our article “From Smart EV to Smart Grid: Building the Internet of Energy Ecosystem”.

How IoM Impacts Product Configurations: Smart EV/ICV Case Examples

This “Internet of Mobility” revolution is happening faster in China and at an unprecedented scale, guided by supportive government policies and backed by investments from the world’s largest digital economy.

With the rise of the mobile internet, smart devices have become a de-facto way for the more than 1 billion internet users in China to conveniently access services where mobility is required – these include ride hailing, e-commerce, and food delivery (see Figure 7).

Figure 7 | Scale of Mobile Internet User Penetration Credit: CNNIC, Automobility analysis

As key stakeholders in the mobility value chain, internet companies exert a transformative force on the traditional automotive value chain. Internet-backed mobility players place user-centric mobility services – not just product hardware sales and service – at the center of their value chain (see Figure 8), while prioritizing the monetization of services that can be delivered through their app-enabled digital ecosystems.

Figure 8 | User vs. Vehicle Centric Business Model Credit: Automobility Ltd

This places higher emphasis on configuring the vehicle with internet-era features which optimize the ability for an Intelligent Connected Vehicle (ICV) to aggregate vehicle and user data in order to unlock new recurring revenue streams (see Figure 9).

Figure 9 | Intelligent Connected Vehicle Data Aggregation Credit: Desktop research, Automobility analysis

Backed by the world’s largest digital economy, Chinese car makers are redefining premium as vehicles designed to deliver upgraded in-cabin user centric experiences, often leveraging internet-era features and technology. By doing this, they are able to generate recurring after sales revenues linked to their digital ecosystem. Several of China’s digital natives are also building the operating systems for the Intelligent Connected Vehicle (ICV). Examples include Huawei’s Harmony OS, Xiaomi’s MiOS, Alibaba’s AliOS, etc.

Consequently, features that unlock unique digital experience for all occupants – have become essential among Chinese consumers. While still important, driving experience is no longer the main purchase criteria. Brands that are late to recognize the importance of digital experience are left with a much weaker market position compared with a few years ago.

Figure 10 provides examples of how several internet-backed Smart EV players are influencing product configurations, and in the process are able to command pricing power based on their ability to deliver a differentiated in-cabin digital experience.

Figure 10 | Chinese Smart EV Brands Case Examples Credit: Desktop research, Automobility analysis

Figure 11 provides an example of how legacy automakers like BYD and its family of brands can also embrace this trend, incorporating unique in-cabin designs that provide their customers a differentiated experience of mobility.

Figure 11 | BYD Brand Portfolio Case Examples Credit: Desktop research, Automobility analysis

What Happens in China WILL NOT Stay in China

Unlike Las Vegas, what happens in China will not stay in China. At least not as it pertains to the Future of Mobility. In fact, Made-in-China is already going global in a big way.

China’s domestic automotive market peaked in 2017, in part resulting from the diversity of mobility solutions that now compete with new car sales. This includes growth sales of previously owned vehicles that offer an affordable alternative to purchasing a new car. In addition, the wide embrace of on-demand mobility solutions offers an affordable alternative to car ownership for urban commuters.

Although there has been a small domestic sales recovery since 2020, we do not expect a big expansion of demand for new cars in the coming years. Rapid growth in NEV demand since 2020 has placed considerable pressure on companies producing gasoline powered vehicles, exposing a severe capacity overhang in China.

As a result, local and foreign carmakers in China are faced with a choice: find markets outside of China to buy these vehicles or close factories that are no longer needed to serve the domestic market. Most carmakers have chosen to aggressively expand exports since 2020 (see Figure 12).

Figure 12 | Top Automotive Export Countries, 2019-2023 Credit: Desktop research, Automobility analysis

As noted earlier, more than three-quarters of these exports are pure gasoline powered vehicles that are no longer preferred by Chinese consumers. While Chinese consumers have shifted in their buying preferences toward Smart EV/ICV configurations, the same cannot be said for consumers in the rest of the world, where gasoline powered vehicles with limited digital content still prevail. This provides an opportunity to reallocate these capacities to the global markets.

Chinese companies will now encounter the risks that highlighted in the 2009 edition of The Path to Globalization of China’s Automotive Industry. However, the world of 2024 has been transformed by the mobile internet, and Chinese companies are far more evolved and capable players in this new “Internet of Mobility” game.

The “Two Worlds” Scenario

Going forward, we see the auto industry moving toward a “Two Worlds” scenario by 2030 (see Figure 13). Carmakers from developed (W2) regions like US, EU, Japan and Korea remain committed to their traditional product, technology and business model preferences and only change incrementally.

However, another world (W1) has emerged, led by China. In this world, mobility problems are solved with shared, connected, electric and intelligent solutions. These solutions are delivered affordably by leveraging efficient and highly scaled supply chains.

We believe Emerging Markets (W3) in regions like Southeast Asia, Central and South Asia, Middle East, Africa and Latin America will gravitate toward affordable solutions that leading Chinese carmakers can offer. The rapid growth in demand for Chinese cars in W3 regions offers evidence that this is already happening.

Figure 13 | 2030 Mobility: Two Worlds Scenario Credit: Automobility analysis

There is strong evidence that Chinese carmakers can gain acceptance in the W2 regions as well. However, protectionist tariffs have been erected in the US and EU, forcing Chinese carmakers to expand beyond “Made-in-China” even faster.

The Path to Globalization – 2024 Edition

Faced with a slowing domestic market and overcapacity, Chinese carmakers are going global rapidly by leveraging exports. In 2024 through July, about 1 of every 5 Made-in-China cars were exported to many destinations (see Figure 14).

Figure 14 | Top 10 Made-in-China Vehicle Export Destinations [January – July 2024] Credit: General Administration Of Customs, CPCA, Automobility analysis

While exporting vehicles is a way to get started in the global markets, it is not the most efficient business model. Tariff and trade barriers place significant additional costs on top, forcing companies to consider regionalizing their production and eventually their supply chains in order to navigate these challenges.

As regional demand expands, the business model evolves to toward knock-down (KD) assembly of parts sourced from the home country. As volume expands further, fully functional assembly of parts sourced in the regional markets eventually supplants the centralized Made-in-China export model. Ultimately global companies act locally in putting a “glocalized” hybrid ecosystem together (see Figure 15). This path is similar to what other global automakers like Volkswagen, Toyota, Hyundai and others have achieved.

Figure 15 | The Path to Globalization Credit: Expert interviews, Automobility analysis

Building robust regional supply chains and forming partnerships with distributors will become essential as companies seek to establish their footprint in the overseas markets.

Several Chinese carmakers (led by Chery, Great Wall, Geely and SAIC) have been investing to build capacities in overseas market even before the rise of China’s New Energy Vehicles (see Figure 16).

Recently BYD, the number 1 EV maker in China, has made a significant shift to regionalize their production in Thailand, Hungary, Turkey, Brazil and Mexico.

Figure 16 | The Expanding Global Footprint of Chinese Carmakers Credit: Autoupdate, Gasgoo, Automobility analysis

While tariff protections are a means of slowing the export of Made-in-China cars, they also encourage the carmakers to move more quickly to globalize their production and supply footprint.

Closing Comments from Bill Russo:

My 2009 paper was a thought experiment on what it would take for Chinese carmakers to emerge on the global stage.

In 2024, China makes nearly one third of all cars in the world, nearly two thirds of all electric vehicles, and 70 percent of EV batteries. The globalization of Chinese carmakers is a fact and it is a game-changer on many levels.

With a domestic market that is not providing an opportunity for growth, automakers in China have prioritized exports in order to improve the utilization of their installed capacities. As a result, 20% of the vehicles produced in China are exported and it has quickly become the largest car export nation in the world.

At the same time, demand for New Energy Vehicles has expanded rapidly and now represents more than one-third of all vehicles sold in China, and Chinese companies have ~80% of this segment.

The unique capability for Chinese carmakers to offer affordable technology-enabled solutions has resulted in a complete realignment of the competitive landscape, where Chinese brands now have 63% share of domestic passenger vehicle sales, up 27% since 2020.

With the world’s largest digital economy, new players are emerging on the Chinese competitive landscape that view the car as a smart device. This has a direct impact on the product configuration with cars incorporating internet-era features to provide rich digital experiences.

Facing rising geopolitical tensions and trade barriers, leading Chinese brands will likely pivot from Made-in-China exports to globalizing their production and supply footprint.

Global automakers are now faced with the challenge of how to cope with the rise of Chinese companies both in China as well as in the markets around the world. We believe that Chinese companies may struggle in their efforts to go global, but several will ultimately prevail to become global leaders.

The time to act is now for global carmakers, suppliers, and dealers to leverage their global presence and capabilities by engaging with the leaders emerging from China via M&A, strategic partnership, joint R&D, and joint ventures.

Going global together with the new players emerging from China may be the best way forward. The alternative of retreating from China cannot prevent the Chinese from going global on their own.

TechNode BUZZ episode #1: China’s Auto Industry: The Race to a Sustainable Future

TechNode Staff and Zinan Zhang — Fri, 06 Sep 2024 07:25:40 +0000

In a groundbreaking shift, China’s automotive sector has evolved from a conventional manufacturing hub to a digital innovation pioneer. This transformation is redefining vehicle design, manufacturing processes, and their seamless integration into the expanding digital ecosystem. At the premiere TechNode BUZZ event on September 4th, Bill Russo, Founder & CEO of Automobility Ltd., shared his expert insights into China’s EV industry. Dive into the keynote address by Bill Russo through our featured video.

Key Highlights:

“China has now 32% of the world’s automobile production coming from virtually nothing in 1990. So that’s what’s happened in those 40 years is China has become one-third of every car made in the world with the capacity to produce half of the cars in the world.”

“This is what Henry Ford taught us over 100 years ago. If you can scale and mass produce the car, you can make it affordable. If you can scale and mass produce the EV, you can make it affordable. Nowhere else does that happen other than here.”

“Their DNA is the car isn’t just an analog device driven by a driver. I don’t just sell to the driver. I sell to every set of eyeballs in that car. And it’s a data aggregator at scale. I can collect information about the movement, I can stream information, can create a moving living experience. The car becomes a living space, not just a conveyance device, right? That’s what the Internet economy is trying to do.”

Discover More by Watching Our Video!

Conclusion:

China’s automotive industry stands at the cutting edge of a digital revolution, reimagining the future of mobility. The convergence of EV technology, smart devices, and digital services is revolutionizing vehicle production and usage in China and setting a precedent for global industry transformation. As the world increasingly adopts sustainable and interconnected transportation solutions, China’s pioneering role is poised to significantly influence the trajectory of automotive technology and consumer experiences worldwide.

Dive into Dialogue: TechNode BUZZ Awaits You

Zinan Zhang — Thu, 29 Aug 2024 06:42:58 +0000

Are you ready to jumpstart your morning with a jolt of innovation? TechNode is thrilled to introduce our brand-new event series: TechNode BUZZ!

What’s It All About?

Imagine immersing yourself in the latest tech trends, surrounded by a community of passionate individuals who live and breathe technology. Our first meetup is set for September 4, 2024 (Wednesday), from 8:00 to 9:00 AM. We will kick off this exciting journey at our new TechNode office, Room 401, Building T, 1618 Yishan Road, Xuhui District, Shanghai.

Why Should You Care?

This isn’t just another gathering. It’s a carefully curated space designed for meaningful conversations and knowledge exchange. We’re keeping the guest list intimate, with only 20 to 30 of the brightest minds, to ensure that every interaction is impactful and enriching.

What’s on the Agenda for the First TechNode BUZZ?

7:55-8:00 AM: Doors open. Arrive early to grab the best seat and connect with fellow tech enthusiasts.
8:00-8:10 AM: Welcome session led by our team.
8:10-8:25 AM: TechNode reporter Jill Shen will break down last month’s most significant tech stories in the EV sector—consider it your go-to guide for staying informed.
8:25-8:55 AM: Get ready for a deep dive into our theme discussion. We’re honored to have Bill Russo, Founder & CEO of Automobility Ltd., as our special guest. He’ll be sharing insights on “China’s Auto Industry: The Race to a Sustainable Future,” along with highlights from his new book, The Race to a Sustainable Future.
After 9:00 AM: The floor opens for networking. This is your chance to exchange ideas, share stories, and perhaps even a few business cards.

What’s the BUZZ About?

Our focus is on the Chinese tech landscape, delivering insights that truly matter. Whether you’re looking to stay ahead of the curve or simply enjoy a spirited tech debate, this is the community for you.

We believe that technology is an ever-evolving conversation. By hosting these meetups monthly, we aim to keep the dialogue fresh, relevant, and continually progressing.

How Do I Join the Fun?

Keep an eye on our website and social media channels for registration details, or simply click here or scan the QR code to secure your spot! Space is limited, so be sure to book early before all spots are filled.

Don’t just read about tech—experience it, discuss it, and be a part of it. We’ll see you there with a steaming cup of inspiration!

Tested: Baidu’s Wen Xiao Yan AI digital human social messaging app

TechNode Staff — Thu, 01 Aug 2024 08:04:08 +0000

Note: The article was first published on TechNode China written by Steven Lee and translated by Zinan Zhang.

Baidu recently launched an AI digital human social app called Wen Xiao Yan, which is based on the ERNIE Bot. It is an AI application service for “real-time communication, interaction, and establishing emotional connections” with AI virtual characters. According to the official statement, Wen Xiao Yan uses a simulated digital human as an “AI social object” with a vivid personality, making interactions “more realistic.”

TechNode has trialed the app; the below is our review.

Interface and features

The interface of the app is straightforward, mainly divided into two sections: “Chat” and “Discover”. Users can swipe up and down in the “Discover” section to find their favorite digital human chat partners. Each digital human has its own avatar, nickname, and profile, and users can choose according to their interests and hobbies. You can enter the chat interface after clicking on the digital human’s avatar.

Wen Xiao Yan App’s screenshot Credit: Wen Xiao Yan App

The app provides a variety of digital humans for users to interact with, and their nicknames are mostly named in the form of profession, personality or characteristics with names such as “an uncle who loves fishing,” “a psychological counselor,” “a love strategist,” “a fitness coach,” “a TV drama fan,” and so on.

It is currently unclear whether new digital humans will be periodically added for users to experience.

Wen Xiao Yan App’s screenshot Credit: Wen Xiao Yan App

In the chat interface, users can interact with the digital humans in three forms: text, voice, and pictures. The digital human will reply in the form of voice and text. The expressions and demeanor of these digital humans are a bit “unnatural” however, for example occasionally shaking their heads left and right, which is a bit scary.

User experience

We asked the series of questions in the app and the digital humans all gave relatively satisfactory answers. However, when uploading a picture and asking which channels the item can be purchased via, the digital human only replied with generic rhetoric and did not provide a purchase link or product example (in contrast, uploading a picture of an object on Taobao can directly open a product link with an item of the same or similar appearance).

When the digital human reads its answers, their mouth shape does not correspond strictly to the words being spoken, and it feels very abrupt when you look closely.

The feeling of communicating with a digital human in the chat interface is still quite different from making a video call with a real person at this stage.

Credit: Wen Xiao Yan App

Similarly, the answers provided by the digital human are sometimes too mechanical, lack flexibility, and the voice sounds very “robotic.”

Summary

At present, Wen Xiao Yan is an AI digital human app worth experiencing for a few minutes. It can meet a small part of your social needs. The advantages include a fresh and fun experience, with the AI acting as a life assistant similar to a real person, providing helpful interactions.

However, there are also disadvantages: it can become boring once the initial novelty wears off, the expressions and demeanor of the digital human can feel unnatural, and there is no support for creating a personalized digital human.

Landing AI | In the AI era, where is venture capital headed?

Evan Huang and TechNode Staff — Mon, 22 Jul 2024 08:33:31 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang.

In the dynamic AI era, venture capital is increasingly attuned to the transformative potential of this technology. As generative AI advances in creating text, images, and videos, a plethora of opportunities and challenges are emerging. This article explores the pivotal role of the Scaling Law, the emergence of super apps, and the promising future of AI-driven innovations. Highlighting insights from industry leaders, it underscores the potential for AI to revolutionize various sectors and entrepreneurial ventures, providing valuable directions for future venture capital investments.

The utility of the Scaling Law

The training and inference stages of large models demand substantial computational resources. The Scaling Law suggests that significant advancements in intelligence are achieved through consistent investment in vast amounts of data and powerful computing, provided the algorithmic architecture remains stable.

OpenAI, a strong proponent of the Scaling Law, has showcased the potential of generative AI across various fields by leveraging transformer architecture, extensive training data, and considerable computational resources.

Recently, Kevin Scott, Microsoft CTO, mentioned in an interview with Pat Grady and Bill Coughran of Sequoia Capital that they have yet to observe diminishing returns from scaling. He announced that the next generation of OpenAI models would soon be available, offering cheaper, more powerful solutions capable of tackling more complex problems. “This is the story with each generation of models as we scale up,” he remarked.

On May 18, Yang Zhilin, founder of Moonshot AI, discussed the computational aspects of the Scaling Law. He noted that initial improvements in model performance are driven by enhanced computational power and efficiency. However, further advancements require increased computational investment and ensuring that this investment effectively translates into intelligence. “This involves two issues: sustaining computational investment and maximizing the intelligence output of each computation unit,” he explained.

On May 18, Yang Zhilin, founder of Moonshot AI, discussed the computational aspects of the Scaling Law. Credit: Moonshot Ai

In an interview with TechNode, Wu Yunsheng, vice-president of Tencent Cloud, shared his perspective. “Currently, there are different viewpoints, including realistic and idealistic views. Some believe the Scaling Law has reached a plateau, where continued investment yields diminishing returns. Others argue it is still in a phase of rapid development.” He emphasized that the Scaling Law remains significant, citing rapid progress in multimodal research over the past year. “In this field, various capabilities improve significantly with added data or computing power. We will continue to explore and observe its development and changes across different scenarios and technologies,” he added.

The super app is on the way

As of March 28, 2024, there are 117 large models registered with the Cyberspace Administration of China, including Baidu’s ERNIE Bot, Alibaba’s Tongyi Qianwen, and the open-source ChatGLM. The rapid development of AI large models is becoming a key driver of innovation and breakthroughs in super applications.

As these large model technologies mature and improve, they are gradually permeating various industries, sparking a range of entrepreneurial opportunities. From healthcare to fintech, from smart manufacturing to cultural creativity, the application potential of AI is limitless.

Zhou Zhifeng, Managing Partner of Qiming Venture Partners, pointed out at the World Artificial Intelligence Conference in Shanghai that compared to the timeline of application deployment during the internet wave, he predicts that the explosion of applications in the current AI wave will occur significantly earlier. Currently, generative AI is gaining substantial user favor in three “C fields” — Copilot, Creativity, and Companionship — showing a development trajectory similar to internet applications and transitioning from efficiency-enhancing applications to those aimed at providing enjoyment. He noted that the internet reduced the marginal cost of information distribution to almost zero, while the core of generative AI is to reduce the marginal cost of digital content creation to nearly zero, indicating that AI technology is bound to release enormous value.

When discussing the future of AI-driven super apps, Zhang Fan, COO of Zhipu AI, expressed optimism, arguing that although creating super apps is not easy, the AI era will see many unimaginable applications emerge. This process requires advancements in computing power, networks, hardware levels, and user habits, following the principle of gradual development from small-scale applications. Zhang emphasizes that by embracing and utilizing existing AI technologies to gradually transform current applications and products, the future will undoubtedly usher in super apps in the AI era.

Regarding the challenges of implementing generative AI applications, Zhou Zhifeng believes that reducing the cost of model usage necessary for the widespread adoption of generative AI, improving the effectiveness of large models, and enhancing user retention rates of generative AI applications are crucial. Since the growth period from zero to one for generative AI application companies is longer than in other fields, they need to overcome both TPF (Technology-Product Fit) and PMF (Product-Market Fit) challenges simultaneously. Therefore, the founding team needs greater patience, determination, and understanding of the technology, the product, and the world.

Embodied intelligence, infinite imagination

There were 45 intelligent robots, including 25 humanoid robots, showcased at WAIC this year. Credit: Evan Huang

There were 45 intelligent robots, including 25 humanoid robots, showcased at WAIC this year. A video of a humanoid robot walking on the Great Wall was repeatedly played at the event. The humanoid robot L2 in the video has successfully conquered the steep slopes of the famous structure, achieving steady walking on it.

At the recent Huawei Developer Conference 2024, Zhang Ping’an, Executive Director and CEO of Huawei Cloud, unveiled the Pangu Model 5.0. During the introduction of the Pangu model for embodied AI, he showcased the broad potential of the KUAVO humanoid robot, equipped with the Pangu model, in both industrial and household scenarios, attracting widespread attention.

Chen Jianyu, an assistant professor at Tsinghua University and founder of the humanoid robot company Robot Era, believes that humanoid robots will be the ultimate form of general-purpose robots. This is not only because the pure humanoid form with two legs and two arms is more compatible with existing environments, but also because it’s easier to transfer training data from the human world. Technically, an end-to-end integration of the brain and cerebellum will be a crucial research direction in the future. Using human language as the interface between the brain and cerebellum is limited, and it is better to borrow from the end-to-end joint training process of autonomous driving, where physical layer data is directly fed back to the text and image models, significantly enhancing overall model performance.

Last week, Tencent, in collaboration with Shanghai Jiao Tong University, released the Top Ten Trends of Large Models 2024: Entering the Era of ‘Machine External Brain’ report, which pointed out that the combination of robot technology and large models provides a “body” for the machine’s external brain. In the future, humanoid robots will not only be able to perform physical tasks but also interact with humans more naturally and intuitively, endowing physical products with intelligent “brains”.

The report states that the development of humanoid robots relies on two major technical pillars: motion control and task training. The application of large models has greatly improved the robots’ learning efficiency and ability to execute complex tasks. The integration of these technologies not only drives technological innovation in humanoid robots but also opens possibilities for their widespread deployment in practical applications. This also heralds a future of human-machine symbiosis, where humanoid robots will play increasingly important roles in various industries, from household services to high-risk industrial operations, showcasing their efficiency and safety. Through continuous technological innovation and application expansion, humanoid robots will play a key role in improving the quality of life and work efficiency, further integrating into human daily life as indispensable assistants and the ultimate carriers of artificial intelligence.

Conclusion

In conclusion, the era of AI is not just a technological revolution but a transformative force that is redefining the landscape of innovation and investment. As we look to the future, the challenges of implementing generative AI applications remain significant. The need to reduce costs, improve effectiveness, and enhance user retention rates is crucial for the widespread adoption of these technologies. However, the potential rewards are immense, offering a glimpse into a world where AI is not just a tool but an integral part of our daily lives, from household services to high-risk industrial operations.

In summary, the dynamic AI era presents a wealth of opportunities for venture capital and entrepreneurial ventures. As we continue to explore and invest in AI-driven innovations, the future holds huge promise for transforming industries, enhancing human-machine interactions, and ultimately, improving the quality of life for all.

BEYOND Expo 2025: Unveiling Possibilities – Asia’s Premier Tech Expo Announcing 2025 Dates in Macao

TechNode Staff — Wed, 17 Jul 2024 10:00:00 +0000

Credit: BEYOND Expo

In 2024, BEYOND Expo centered on the theme “Embracing the Uncertainties,” guiding attendees to explore unknown territories in technology and other areas. BEYOND Expo encouraged participants to take proactive actions, through continuous innovation, creative thinking, and exploration of new paths to face unknown challenges and turn potential risks into opportunities for progress and growth.

Building on this concept, the BEYOND Expo Organizing Committee is pleased to announce that BEYOND Expo 2025 will be held from May 21 to 24, 2025, at the Venetian Macao Cotai Expo in Macao, under the theme “Unveiling Possibilities”. The event aims to transform uncertainties into infinite possibilities and opportunities, offering participants an unprecedented experience:

Three Major Independent Exhibition Areas: ConsumerTech, ClimateTech, and Healthcare
Opening/Closing Ceremonies and Industry Summits: Key events include the ConsumerTech Summit, ClimateTech Summit, Healthcare Summit, and Global Investment Summit. Additionally, the event will expand its global perspective by providing opportunities for international market exploration, with forums such as the Asia-Latam Tech Forum, Asia-Euro Tech Forum, and Middle East Tech Forum, as well as specialized summits such as the BEYOND Wealth Summit, SheTech Summit, and Founder Forum.
FUND AT FIRST PITCH: A platform for efficient connection between global capital and outstanding startups.
BEYOND Awards: Prestigious technology awards across four categories, highlighting future-leading innovations.
TFC (The Fun Continues) Series Activities: A blend of technology, culture, and sports for a celebratory experience.

BEYOND Expo will provide a venue for participants to exchange ideas, build connections, and discover new opportunities. BEYOND Expo 2025 anticipates attracting over 1,200 exhibiting companies, more than 30,000 technology innovation enthusiasts, 300 global top innovation leaders, 300 global media representatives, and numerous international innovators. BEYOND Expo encourages participants to go beyond tradition, explore the unknown, and use technological innovation to address global challenges, promoting sustainable social and economic development.

BEYOND Expo cordially invites all innovative companies, startups, and individuals to join BEYOND Expo 2025 to explore the limitless possibilities of technology and create a better future together.

Reserve Early Bird booth for BEYOND Expo 2025 here
To register Super Early Bird passes for BEYOND Expo 2025, click here
For business collaboration, contact: BD@beyondexpo.com

Further Details about BEYOND Expo 2025:

Over the past four years, BEYOND Expo has focused on three sub-brands: ConsumerTech, ClimateTech, and Healthcare. BEYOND Expo 2024 set new records with over 820 participating companies, 40% of which were international exhibitors. The event saw more than 20,000 attendees, with over 35% being international visitors and over 30% being women. More than 160 forums were held, featuring over 250 speakers, half of whom were from overseas. Additionally, 200 media outlets from around the world participated, achieving comprehensive internationalization.

Three Core Exhibition Areas: Experiencing Cutting-Edge Technology and Innovation

BEYOND Expo 2025 will continue to focus on the three sub-brands. The event is expected to attract over 1,200 technology companies from around the globe, with international companies making up 40% of exhibitors. Participants will have the chance to experience the latest technological products up close, from smart wearables and medical health innovations to sustainable energy solutions. The exhibition areas at BEYOND Expo 2025 will serve as a springboard for companies to expand into global markets, seizing globalization opportunities and enhancing their brand influence worldwide.

Credit: BEYOND Expo

Opening and Closing Ceremonies, on top of BEYOND’s legendary Summits

The opening ceremony, featuring distinguished guests and deep industry insights, is a major event in the tech world. BEYOND Expo 2025, themed “What’s Next,” will gather influential industry leaders to analyze how technology drives industry transformation and innovation. The closing ceremony, a grand event blending technology, culture, sports, and entertainment, will include the FUND AT FIRST PITCH finals, the BEYOND AWARDS ceremony, and keynote talks. The four major summits include the ConsumerTech Summit, ClimateTech Summit, Healthcare Summit, and Global Investment Summit, designed to provoke insightful discussions and catalyze groundbreaking innovations.

Credit: BEYOND Expo

Series of Multidimensional Summit Forums Covering Different Regions and Themes

Within the wider series of forums, the Asia-Latam Tech Forum, Asia-Euro Tech Forum, and ORIGIN: Asia Tech Forum will spotlight regional tech ecosystems. BEYOND SheTech will showcase global female innovation power, while the BEYOND Wealth Summit will delve into cutting-edge trends in global wealth management. The Founder Forum will feature narratives from Asian tech entrepreneurs, offering participants opportunities to broaden their global perspectives and explore international markets.

FUND AT FIRST PITCH: Igniting Innovation Passion, Efficient Capital and Startup Matching

FUND AT FIRST PITCH is a professional platform designed for entrepreneurs and investors, providing an efficient and strategic communication bridge. Entrepreneurs can showcase their business plans, technological advantages, and market potential, while investors can discover emerging market investment opportunities. BEYOND Expo 2024’s FUND AT FIRST PITCH attracted over 150 companies and 100 investment institutions, resulting in over 50 successful matches. BEYOND Expo 2025 aims to expand this platform’s scale and influence, attracting more enterprises and investors.

BEYOND Awards: Pinnacle of Technological Innovation, Leading Future Forces

The BEYOND Awards feature four major honors: ConsumerTech Innovation Award, ClimateTech Innovation Award, Healthcare Innovation Award, and Impact Award. These awards, evaluated by the BEYOND Awards Committee, recognize global innovation technologies and companies across multiple dimensions. The award ceremony will take place at the closing ceremony, celebrating the achievements of the winners and showcasing the unlimited potential of technological innovation.

The Fun Continues: A Symphony of Technology, Culture, and Sports

BEYOND Expo 2025 is not just a tech feast but a celebration of the fusion of technology and culture. In BEYOND Expo 2024, participants enjoyed a variety of activities, including food market, yoga session, gala dinner, charity poker night, pool party, NBA 3V3 tournament, and more. BEYOND Expo 2025 will bring even more innovative parties and activities, allowing participants to experience the unique charm of Macao while enjoying an international carnival.

Credit: BEYOND Expo

As a key hub for Asian technological innovation, BEYOND Expo 2025 aims to drive regional cooperation and mutual benefit. Leveraging Macao’s geographical advantages and cultural appeal, BEYOND Expo 2025 will connect innovative forces from different countries and regions, providing a platform to explore the unlimited potential of Asian technological innovation and achieve broader influence.

See you in Macao in May 2025!

For more information about BEYOND Expo 2025, please visit www.beyondexpo.com.

NextChina: The future of humanoid robots with Unitree Robotics co-founder Chen Li

TechNode Staff — Tue, 09 Apr 2024 01:39:14 +0000

About Unitree

Unitree Robotics is a world-renowned robotics company, focusing on the independent research, production, and sales of high-performance quadruped/humanoid robots and dexterous robotic arms. It has been invited to participate in the 2021 CCTV Spring Festival Gala, the 2022 Winter Olympics opening ceremony, and the 2023 Super Bowl, and has been reported by authoritative media such as CCTV News Broadcast and BBC. It is the world’s first company to publicly retail high-performance quadruped robots and the earliest to achieve industry landing.

Note: The article was first published on TechNode China written by Penghui Li and translated by Zinan Zhang.

The global humanoid robot market is expected to reach a peak of $154 billion by 2035. Much like the emergence of generative AI, this rise of robots – not to mention the combination of these two fields – may well pose several questions and spark considerable debate beyond mere tech circles.

Unitree Robotics, which started with quadruped robots and quickly became a global leader in the humanoid robot industry through its general humanoid robot H1, undoubtedly has plenty to say on this.

Here, Chen Li, co-founder of Unitree Robotics, offers a range of insights into the rapidly developing robotics industry.

Chen Li, co-founder of Unitree Robotics, offers a range of insights into the rapidly developing robotics industry. Credit: Unitree Robotics

1. How has the explosive growth in generative AI impacted the robotics field?

Unitree’s development of humanoid robots can be seen as seizing the opportunity. General artificial intelligence (AGI) has made significant progress and breakthroughs. AGI now needs the most suitable carrier to take it forward, and general robots are bound to be one of the future development directions, with humanoid robots being the most straightforward candidate to become general robots. Therefore, we firmly believe that once general artificial intelligence and general humanoid robots are combined, robots can truly enter daily life in the future.

Unitree’s humanoid robot H1 currently sets the world speed record for a full-size humanoid robot at 3.3 meters per second. Credit: Unitree Robotics

2. What are the biggest challenges in the development of quadruped and biped robots?

Hardware reliability, self-developed complete machines, motion control, sensors of quadruped or humanoid robots, and how to integrate the data obtained from sensors into motion control — such as combining perception and terrain to dynamically adjust leg height in real-time, and then swiftly and stably traversing unstructured terrain… these are all challenges.

As Unitree has a good relevant accumulation of knowledge in quadruped robots, our progress in humanoid robots is relatively faster than others. We started the project on February 23 [2023], and then on August 15, we developed and released the humanoid robot (H1), which took about half a year.

We can make humanoid robots at any time because the core components of Unitree’’s quadruped robots are self-developed. Transferring the relevant technology of quadruped robots to humanoid robots is relatively straightforward for Unitree.

The joint motors, electronic control technology, control algorithms, and other aspects of our humanoid robots are inherited from Unitree’s previous accumulated technology in quadruped robots. Then, in terms of control algorithms, we also draw from the control technology of quadruped robots, using model predictive control.

3. How is Unitree responding to the increasingly complex and dynamic external environment?

The biggest difference between Unitree now and before is the areas we are currently focusing on. Robotics has always been our focus, and it remains our most important direction. However, at the same time, we are also paying more attention to directions related to general artificial intelligence models, considering how to integrate these latest artificial intelligence technologies with robotics to take robot functionality to the next level more effectively. To face a more complex and dynamic external environment, what Unitree needs to do is to keep doing its current job first, and then, driven by research and development, to deliver excellent products and serve our customers well.

4. Some experts have suggested that with the gradual heating up of the robotics race in recent years, the year 2024 will be the “inaugural year” for the robotics industry, especially humanoid robots. How do you view this statement?

If we look solely from the perspective of societal attention to the product, the year 2024 is indeed the inaugural year of the robotics industry. However, 20 or 30 years ago, humanoid robots had already appeared overseas — including in Japan and the United States. We need to look at it from two perspectives.

Of course, I prefer to say that 2024 could be the Year of Humanoid Robots. But this milestone is not policy-driven. In 2023, there were significant breakthroughs and developments in large-scale models and AGI. General artificial intelligence could be applied in various scenarios in the future. In such a scenario, general artificial intelligence would require a carrier. Based on this, humanoid robots have started to gain traction.

Then, what are the necessary conditions for the emergence of the Year of Quadruped and Humanoid Robots? I think, on the one hand, it is the empowerment of AI, and on the other hand, it is the stability, reliability, cost-effectiveness, consistency in production, and the maturity of software and hardware technologies of the products themselves.

5. Unitree also has several quadruped robot products listed on e-commerce platforms such as Taobao, making futuristic products accessible. Could you discuss some observations you have on the domestic quadruped robot market?

Yes, we have listed some quadruped robots on e-commerce platforms, and people can find two consumer-grade quadruped robot products, Go2 AIR and Go2 Pro. Whether it’s in terms of product performance, cost-effectiveness, reliability, or playability, I believe the features and functionalities of Go2 are very relevant to daily life.

Unitree’s Go2 robot. Credit: Unitree Robotics

Currently, the consumer-grade quadruped robot market hasn’t fully opened up for several reasons. The first reason is the price, which is still relatively high. With leading companies like Unitree, our current market price for products is around RMB 10,000. However, there is hope to lower the price to a few thousand yuan in the future.

The second reason is interaction. When facing individual consumers, we need to consider how to make quadruped robots have more functions to increase user stickiness. This is something Unitree has been investing in for the long term. If it’s just a remote-controlled robot or robot dog, consumers may lose interest after playing with it for a few days. So we need to give the robot dog more features — such as interaction, interactive AI dialogue, etc. Only in this way can we turn the robot dog into a true electronic pet.

6. Apart from the price difference, what are the most obvious distinctions between Unitree’s consumer-grade and industry-grade robot products?

The most obvious distinction between our consumer-grade and industry-grade robots lies in their performance or functionality. For example, the Go2 AIR and Pro versions of our quadruped robots are consumer-grade. In comparison to our industry-grade B2 robot, the difference lies in their functionality — such as payload capacity. The B2 can handle up to 50 kilograms, while the Go2 AIR is approximately five to eight kilograms, resulting in a significant gap.

Unitree’s industry-grade B2 robot. Credit: Unitree Robotics

The second difference lies in the protection level. The highest protection level for the B2 can reach IP68, which is the highest level of waterproof and dustproof protection, allowing it to be immersed in water for a long time. However, the Go2 is not waterproof. The third difference is in their mobility or obstacle traversal capabilities. Due to the smaller size of the Go2, compared to the B2, their leg lengths differ, affecting their obstacle traversal performance. For example, the B2 can climb up to 1.2 meters of stairs, while the Go2 can currently only climb 16 centimeters, which is a significant difference.

The fourth difference lies in their battery life. The Go2, with its long-life battery version, can walk continuously for about two hours. However, the B2 can walk continuously for over five hours. Of course, there are also other differences in software and hardware, so the distinction is quite significant.

In terms of application scenarios, consumer-grade robots mainly lean toward home use, including performances, interactive entertainment, and family companionship. The industry-grade B2 is geared towards work. For example, it can be used for inspections, patrols, emergencies, and rescues in industries such as energy, electricity, oil, chemicals, and coal, as well as for police, firefighting, and various arduous, labor-intensive, dangerous, and repetitive tasks that can be replaced by industry-grade robots.

7. What are some unexpected use cases that you’ve come across for these products?

Since many of our Unitree employees have backgrounds in robotics or artificial intelligence, users come from various industries and often propose application scenarios based on the characteristics of our robots, many of which we hadn’t previously considered. I think this is a very positive thing — it broadens Unitree’s product capabilities, and we also work closely with users to develop solutions for these scenarios.

For example, the application of robot dogs in firefighting emergencies is something we hadn’t thought of before. This scenario was suggested by firefighting and rescue personnel. They mentioned that these robot dogs are quite capable — they can climb stairs, traverse mountains, and handle rugged terrain without much difficulty. In their firefighting emergency scenarios, which often involve high-rise rescues — such as in many of China’s tall buildings — when a fire breaks out, elevators are typically shut down, leaving only staircases. However, entering from the staircase can be quite dangerous for firefighters. In such situations, they proposed the idea of sending in robot dogs first to gather relevant data using various sensors. After assessing the situation, firefighters could then proceed with the rescue operation, thereby reducing casualties.

8. Unitree has expanded its business into the fitness equipment field based on its robotics technology. What made you leap into that sector?

Unitree’s fitness pump. CreditL Unitree Robotics

The idea of the fitness pump product was conceived in 2018, but at that time, most of our time and resources were dedicated to robotics, so we didn’t pursue it actively until recent years. We’ve always been contemplating whether we could utilize these related technologies to create new products that cater to a broader consumer base. This idea has always been there, so we decided to develop the fitness pump.

Unitree’s core competitiveness lies in the complete self-research and development of our products. The core components and motion control algorithms are all developed in-house. This is our most fundamental competitive advantage.

9. You initially launched the fitness pump on Amazon and Unitree’s overseas business accounts for about 50% of its total revenue. What factors contributed to your confidence in going global?

Yes, around 50% of our business comes from overseas. I think there are several reasons. Firstly, before starting this venture, I worked in a hard-tech company handling overseas markets. So, I had some insights and perspectives on overseas markets. Secondly, products like robots or humanoid robot products, especially consumer-level robot dogs, have a broader customer base overseas. Especially in developed countries like the United States and Europe, purchasing power is stronger and profits are better. Thirdly, some of our research clients purchase our robots for secondary development. Many of these research clients are from universities, and many of these universities are in Europe and the United States. Of course, many excellent schools in China are also developing projects very well based on our robot dogs or humanoid robots.

As for the inspiration these successes brought to Unitree’s progress in the domestic market, I think firstly, on the market side, it is crucial to prioritize the market, to quickly prepare and promote the market. Then, the sales business should follow up quickly, distribute goods rapidly, and provide excellent customer service, allowing customers to receive our products as soon as possible. Thirdly, service must keep up — both pre-delivery and post-delivery technical support are crucial tasks, where they continuously provide pre-sale, during-sale, and after-sale training and support to customers. Once such a chain is formed, whether in the domestic or overseas market, companies will have a very solid development foundation.

10. What challenges did you face when going into foreign markets?

It is not easy to expand into overseas markets – there are marketing expenses and communication costs on the business end, and you have to deal with time zone differences and cultural aspects. As for the right choices made by Unitree, I believe the first one is the first-mover advantage. During the initial phase of establishing brand influence, it’s crucial to act swiftly with strategies tailored to robot dogs or humanoid robot products. For customers, it’s challenging to judge product functionalities without physically interacting with them. In such cases, it’s essential to rapidly launch the product and then establish brand or product awareness in the minds of consumers. Additionally, it’s not enough just to launch; there must be subsequent promotions. For example, our product was featured in the 2023 Super Bowl in the United States, and various influencers both domestically and internationally reviewed our robot dogs. These efforts greatly benefitted Unitree’s brand promotion.

The most challenging aspect, I believe lies in the gap that exists between marketing promotions and subsequent customer engagement during business transactions. There may be disparities in product performance, pricing, and applicable scenarios, which require continuous customer nurturing and communication to manage their expectations effectively.

Another challenge might be localization. Currently, Unitree doesn’t have a dedicated overseas team for localization; instead, it’s managed through business trips abroad. Additionally, in terms of team building, I believe that selecting suitable individuals is paramount. A suitable colleague can be more valuable than having 10 or even 20 employees with average abilities.

11. In a recent B2 round of financing totaling nearly 1 billion yuan completed by Unitree, you mentioned that in the coming years, the company will continue to break through technology barriers and promote the integration of AI with general-purpose robots. How should we understand the integration of “AI+ general-purpose robots”?

At the beginning of our entrepreneurship journey, Unitree was a relatively traditional robotics company, but now we are gradually transforming into a company that integrates “AI+ general-purpose robots”. In between, we have done a lot of strategic thinking. Taking the household scenario as an example, it was quite challenging for robots to enter households, especially general-purpose ones. There are already some robots in households, such as vacuum robots. However, overall, their functionality is relatively limited, either serving specific purposes or performing single functions. In the future, we hope to create general-purpose household robots that can assist homeowners in various tasks such as washing dishes, cleaning floors, making beds, and cooking.

To accomplish these diverse tasks, single-function robots are insufficient; they must be empowered with general artificial intelligence. This empowerment can be done through end-to-end approaches, cloud-based methods, or training methods. The approach is not limited, but I believe the only viable path is to establish a “strong bond” between general artificial intelligence and robots so that robots can enter millions of households.

12. What can you tell us about Unitree’s future plans?

We firmly believe that innovation is the cornerstone of enterprise development. Unitree continuously enriches its product line, improves product performance, and continues to advance the construction and improvement of existing production lines. We deeply cultivated the quadruped robot track in both the B2B and B2C markets, and through a multidimensional growth journey, we have expanded from quadruped robots to the intelligent fitness track and then to the general humanoid robot track, making people’s work and life more convenient, comfortable, and efficient.

Unitree has always believed in becoming a leader in a segmented industry, driving the entire industry and high-quality development of the Chinese economy. We look forward to embarking on a new journey of “technology changing the world” together with everyone, using the power of the collective.

Semicon China: an expert’s takeaways

Stewart Randall — Sun, 07 Apr 2024 02:02:16 +0000

Semicon is a series of exhibitions run by SEMI and focused on semiconductor manufacturing. It has everything, from materials to equipment to fabrication. I say series of events because virtually every region in the semiconductor ecosystem gets one – Semicon China, Semicon Europa, Semicon India, Semicon SEA, Semicon Japan, Semicon Korea, Semicon West (USA), and of course Semicon Taiwan, all throughout the year.

The show this year

Chen Nanxiang, the Chairman of both Yangtze Memory Technologies Corp (YMTC) and the China Semiconductor Industry Association (CSIA) said in the opening keynote, “China’s semiconductor market belongs to the world, while the world’s semiconductor market also belongs to Chinese companies”. He and the China Electronics Chamber of Commerce’s Wang Ning also praised Nvidia’s progress, highlighting generative AI as a key growth driver for the industry, and were very bullish on the industry’s goals to become a $1 trillion market by 2030. Working together globally is key to reaching these goals, they said. This was a very positive and inclusive message, one that representatives of SEMI shared (albeit via video as none seemed to be present in person), but seemed at odds with the language coming from Beijing, which recently banned Intel and AMD chips from government computers, and from Washington, which continues to restrict semiconductor technology exports to China.

I have been attending Semicon China and Semicon Taiwan for several years. Semicon Taiwan last September felt like the largest show I’d ever been to, but Semicon China felt larger again, albeit simultaneously less international. It has grown every year I have attended and this time was no different. Over 35,000 visitors, 1,000-plus exhibitors, and still a number of foreign firms taking up some of the largest booths. Japanese firms were especially present, with the likes of Sumitomo, Canon, Tokyo Electron, Disco, and many more having the largest booths at the show. Korea, Taiwan, and Europe both had a large showing, with Korea and Taiwan having their own pavilions.

When speaking with exhibitors though, not everything was as rosy. Exhibitors at the Korean pavilion did admit the Chinese market was tough for them right now, but did not want to go into details. Surprisingly, despite this, they claimed Semicon China was the only Semicon where they planned on having a specific Korean pavilion this year. Such a decision can be interpreted in several ways, either negative or positive. Another Chinese exhibitor working for an outsourced semiconductor assembly and test (OSAT) vendor admitted that the entire industry was witnessing involution. Like other industries in China, too many players had entered, no one had any clear differentiation, and decent margins were rare.

There was also a clear lack of US companies, just 22 in total, and no household names such as AMAT or LAM. This may not be surprising, but compared to other foreign countries it did feel strange. Cadence’s CEO did appear in person, however, and gave a very informative speech about how AI is driving Cadence’s product development and industry growth.

Power electronics and compound semiconductors were another key theme of the show, having a large area set out just for compound semiconductor companies and also a two-day conference. China now accounts for around 40% of the global power semiconductor market, driven in part by explosive EV sales growth over the past few years. In 2023, BYD Semi overtook Infineon in the Chinese market, and now five of the top ten companies in China are domestic. BorgWarner and Hitachi are no longer in the top ten within China.

Conclusions

The current state of affairs is somewhat contradictory. On one hand, Semicon China and Beijing seem to be welcoming foreign semiconductor companies with open arms. On the other they are pushing companies, especially SOEs, to buy made in China technologies and products. They complain about being blocked from foreign technology, but then proceed to block themselves even further. The conference remarks were very positive, but on the ground, many booths were still pushing the made in China message.

Despite all of this, China remains the largest semiconductor market in the world, and foreign firms, whether they like it or not, need to find ways to tackle it. Chinese firms themselves are facing intense competition domestically so are looking to expand into foreign markets where they hope to find better margins. My impression though is that many foreign semiconductor companies have significant technological advantages over their Chinese competitors and being present in China helps them not only keep an eye on competitor progress but also take away some revenue from these firms that could be spent on R&D to catch up from a technical perspective, or be spent on foreign market expansion.

China may not be the easiest market, but the size and scope of Semicon China, despite everything, shows that there are ways to deal with it.

Apple’s retail store in Shanghai’s Jing’an District is about to open

Evan Huang — Tue, 19 Mar 2024 02:50:51 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang.

Apple’s retail store in Shanghai’s Jing ‘an District is about to open. Credit: Evan Huang

The Apple store in Jing’an district is still designed by the renowned British architectural firm Foster+Partners, which previously designed Apple’s new headquarters in California and created many innovative stores for Apple, such as the floating sphere in Singapore (Apple Marina Bay Sands), the Italian flagship store with a water curtain, and the bamboo-surrounded flagship store in Macao.

As the eighth Apple retail store in Shanghai, the opening of this store signifies that there are 57 Apple Store retail stores in Greater China. The opening of Apple Jing’an district store undoubtedly injects new vitality into Apple’s retail business in China.

The inspiration for the logo of this new store comes from the city flower of Shanghai, the magnolia, symbolizing the city’s innovation and pioneering spirit. Credit: Evan Huang

The inspiration for the logo of this new store comes from the city flower of Shanghai, the magnolia, symbolizing the city’s innovation and pioneering spirit. The opening of this new store further solidifies Shanghai’s position as an important market for Apple’s retail business. Since the opening of the Pudong distric store in Shanghai in 2010, Apple’s retail business has made significant progress in Shanghai. Over the past 14 years, the seven retail stores in Shanghai have served over 160 million customers, and the online store has also attracted a large number of visitors.

Apple has had a 31-year development journey in China, achieving significant success in the Chinese market and establishing deep connections with local communities. The Apple Jing’an district store is no exception. Previously, Apple has been inviting local artists, musicians, and creative individuals to participate in activities, showcasing and teaching their creative processes, further enriching the shopping experience for customers. The Apple store in Jing’an district will continue this tradition of engaging with the local community.

The Apple store in Jing’an district will continue this tradition of engaging with the local community. Credit: Evan Huang

This new Apple store has over 150 well-trained employees, including hearing-impaired individuals, musical theater actors (part-time), retired university professors, and etc. In addition to Mandarin Chinese, the team is proficient in English, Japanese, Korean, German, Spanish, and Malay for communicating with customers. Employees can also speak 25 dialects, providing personalized service to Chinese customers from all over the country. Additionally, nearly one-third of the team members are from Shanghai, providing them with a deep understanding of the city and its residents.

Additionally, nearly one-third of the team members are from Shanghai, providing them with a deep understanding of the city and its residents. Credit: Evan Huang

On March 12th, Apple announced on its official website that it would expand its application research laboratory in China to support product manufacturing. Apple stated that it would enhance the capabilities of its research center in Shanghai to provide support for reliability, quality, and material analysis for all product lines. Later this year, Apple will also open a new application research laboratory in Shenzhen.

In fact, despite the increasingly competition in the Chinese market, Apple still believes that this market holds significant opportunities worth cultivating, which is also the signal conveyed by this new store.

Web Summit Panel with Matrix Partners China and Alibaba Hong Kong Entrepreneurs Funding: insights on China’s tech growth from past to future

TechNode Staff and Zinan Zhang — Wed, 06 Mar 2024 03:49:38 +0000

During the Web Summit in Doha, Dr. Gang Lu explores the factors driving China’s rapid tech industry growth in the past decade with Harry Man, Partner at Matrix Partners China, and Cindy Chow, Executive Director & CEO at Alibaba Hong Kong Entrepreneurs Funding. Their thought-provoking discussion centered on “The Industries Driving China’s Growth”.

This brief synopsis encapsulates the key insights and standout moments from their dialogue. The full video interview is readily accessible below. The conversation also delves into the trend of Chinese companies going overseas, the challenges for business models in China, and other tech-related questions.

Panel Insights Summarize

Dr. Gang Lu: Can you share with us what you think of the past 10 to 15 years? What kind of key factor drove China’s tech industry so fast?

Harry Man: First of all, people are getting richer to understand they have a lot of money that they can spend. Then, the internet penetration has been up to scale that everybody will get access to fast internet and the third thing is the creation and the penetration of smartphones. These three things create the golden 10 years that we’ve been experiencing from 2008 to 2018. China is very lucky to be in the market. We are rich enough. We have spare time. We can spend and then have the right engineers in the market to create all these apps that create the entire market booming.

Cindy Chow: We also see a similar trend. The takeoff is initially very slow but with the efforts from VC and also the efforts from the government inputting in a lot of money to kick start the ecosystem, we see the growth is gaining a lot of steam in the last few years.

Dr. Gang Lu: If you look at the next 10 to 15 years, do you think there will be a lot of changes in China?

Harry Man: I think one of the most important things is the economy is changing and growing and the needs for the government and the entrepreneurs at the same time for the users and users have been changing moving alone with the growth of the economy. I wouldn’t always say that geopolitical is putting a stop or a barrier sometimes it is encouraging and giving out new opportunities to entrepreneurs to start their businesses and to be a little bit more active. Now, the world has been changing. Chinese national strategy is mainly encouraging a lot of deep tech and AI because we want an ecosystem to be self-sufficient.

Cindy Chow: The industries we see a shift and then geographically we also see a shift that used to be in Beijing, or Shanghai Yangtze River Region. But I’m pretty confident with the prospect of the Greater Bay Area which is close to Hong Kong.

Dr. Gang Lu: We see more and more Chinese companies, especially tech companies, they are going out of China. Do you think that will be the new opportunities for investors?

Harry Man: This could be the next wave of potential Chinese companies to go overseas. Nowadays, things have been changed. Many of these companies wanted to start fresh to be international from day one. There are a lot of deep tech companies going overseas as well.

Cindy Chow: We have a term called sea turtle, Chinese some who study or live abroad and then return to China to start their own business. But right now we are seeing that sea turtle who used to have relocated back to China trying to go overseas.

Dr. Gang Lu: We always see we invest in a Chinese company to help them to go overseas. But do you think that’s another trend we invest in overseas startups and then bring them to China?

Cindy Chow: I guess that’s possible and perhaps the Greater Bay Area could be one of the opportunities.

Dr. Gang Lu: Which particular sector of AI are you looking at and the most interested in right now?
Harry Man: The business model of OpenAI does not work in China and enterprise services are tough. On the other hand, there is another angle that works in China which is using the fundamental foundation models to create use cases and applications in the Chinese market.

Exploring China’s evolving role in advanced packaging

Stewart Randall — Fri, 01 Mar 2024 03:04:46 +0000

Traditionally, packaging has been considered a low-end non-critical part of a semiconductor’s design. In the past, it wasn’t overly complicated and keeping it low-cost was key. This led to the growth of back-end packaging plants across Asia. Most large packaging companies are either Mainland Chinese, Taiwanese, or American, and have operations throughout Asia.

But moving towards ever smaller process nodes is increasingly expensive and difficult, so new ways are being developed to continue performance increases year-on-year. Since China has faced certain restrictions on the tools and equipment it can import it has even more reason to place extra focus on methods to improve chip performance without moving to ever smaller process nodes.

What is packaging?

Put simply, a package is a container that holds a semiconductor die. It protects the die, can help dissipate heat, and connects the chip to a printed circuit board (PCB) or other chips. Packaging work is often done through a separate vendor known as an outsourced semiconductor assembly and test (OSAT), although many leading foundries like TSMC are now expanding their packaging capabilities.

Advanced packaging comes in many flavours. It is a general term used to describe many new techniques: 2.5D/3D, fan-out wafer-level packaging, chip scale package, antenna-in-package, and system-in-package, among others. Often the goal is to be able to stack, for example, two 7nm chips to reach the performance of a 3nm chip.

How does China stack up?

When looking at the industry as a whole, Mainland China has around 38% of the global packaging market, the only part of the semiconductor value chain that it leads in, and three of the top ten companies globally. Taiwan has six companies, and the US has one. Mainland China’s leading company JCET has an 11.3% market share and locations in China, Singapore, and Korea. Other Chinese players include TFME and Huatian.

The world’s largest and second largest OSATs, Taiwan’s ASE and the US’s Amkor, are heavily involved in advanced packaging, but as mentioned previously, it isn’t just OSATs involved in packaging, foundries like Intel, TSMC, and Samsung are also more and more involved.

As mentioned, JCET is China’s largest packaging firm. Its HQ is in Wuxi, which has the most packaging plants out of any city in China, and is in Jiangsu Province, which has more than any other province. TFME’s HQ is also in this province, as are plants from major international players such as ASE and Amkor.

JCET’s focus for the past few years and into the future is on nothing but advanced packaging. It often emphasizes that China’s green energy development in areas like electric vehicles and solar power creates opportunities for advanced packaging, as it can be used to ensure the reliable performance of the wide-bandgap semiconductors used in these applications. As well as help improve signal transmission in wireless technologies such as 5G and WiFi.

On the government funding front, in the summer of 2023, the National Natural Science Foundation announced a plan to fund 10-20 small scale research projects focused on chiplets and advanced packaging; committing RMB 800,000 per project, about $110,000, and 7-10 larger projects, committing RMB 3,000,000 each. Resulting in a funding package of around $4m-$6.4m over the next four years. Perhaps this isn’t a lot of money compared to what we hear the Chinese government investing elsewhere. But this isn’t research that requires buying billions of dollars worth of semiconductor manufacturing equipment. These are focused research projects on key aspects of advanced packaging like 2.5D/3D technology, interconnect architecture and optical technologies, and bonding. The final goal of this research is to help improve chip performance by one to two times and create internationally recognized research teams. It is likely breakthroughs from such research can be moved into firms like JCET with relative ease given the strong connections between government, universities, and industry.

Such research is also important to China from a patent perspective. As of 2021, Korea, Taiwan, and the US all led Mainland China when it came to advanced packaging patent applications globally, but China is not standing still, and is now ahead of Japan by quite some margin. It does still have work to do though as even within Mainland China, Taiwanese firms hold more patents than Mainland Chinese, 34% to 23%, and even US firms have 16%.

Despite this industry facing no US restrictions yet, Chinese design firms are still concerned. It has been reported that Chinese design firms are looking to use packaging plants in Southeast Asia, such as ASE’s plant in Malaysia out of concern for future restrictions Chinese packaging suppliers may face. Chinese packaging companies should do more to set up and invest in plants in Southeast Asia as part of their strategy. There will be little use in having the latest advanced packaging lines if even Chinese design firms fear using them.

Conclusions

While I find it unlikely Chinese OSATs and foundries will be cut off from imported equipment as it is much easier to replace locally than front-end lithography equipment. It is still telling that the very thought of this as a possibility has led to Chinese design firms choosing factories based in Malaysia rather than back home in China. As SEA nations fight for semiconductor investment from foreign firms this could be something they can play on. They are attracting not just investment from the likes of Samsung, Intel, and Amkor, but also Chinese packaging firms.

With regard to advanced packaging itself, I see no reason why China cannot be on a par with the rest of the world, however, does being on a par really help? Advanced packaging can, in some cases, get more performance from a chip without having to go to a lower process node, but if your competitors have access to both the latest process nodes and advanced packaging, then one is still playing catch up. Advanced packaging helps Mainland China stay within touching distance, and does provide it with part of the semiconductor value chain where it can say it is at the forefront with peers in Taiwan and the US, but it is not going to provide China with a way out of the lithography bind it finds itself in. Maybe that isn’t the goal though. Sure, as AI applications get ever more taxing it helps to have ever more powerful chips, but if one can achieve the same as your competitors albeit by taking up more physical area and more power, does that matter from a national security perspective as long as the result is the same?

Hong Kong’s innovation scene in 2024: Where are we headed?

TechNode Staff — Mon, 08 Jan 2024 02:55:51 +0000

The article was first published on LinkedIn written by Jimmy NG and edited by Jake Newby and Zinan Zhang.

Insider

Jimmy NG is the Senior Investment Manager at Gobi Partners GBA.

TechNode Insider is an open platform for subject experts to discuss China tech with TechNode’s audience.

2023 was a tough year for early-stage founders and VC funds around the globe, and Hong Kong was no exception. Hong Kong has been in an even trickier position than other cities, given its highly outward-facing economy and connectivity with China, meaning it was naturally impacted by the sentiment of global investment around China turning so sharply after the huge bull runs in the country for the past 20-plus years. While the fundamentals of Hong Kong have shaken and shifted, 2023 was a year where much of the foundational work of building an innovation scene was done.

Here are my two cents on what to expect in Hong Kong for 2024 in the early-stage startup scene, organized by opportunities and challenges:

Opportunities

1. RAISe+ Scheme – first batch of innovative university startups to be unveiled

A HK government-led program with an allocation of HKD 10 billion, the RAISe+ scheme will, on a matching basis, fund 100 high-potential research teams in eight universities. Each team can get up to HKD 100 million in non-dilutive funding. This is the biggest funding scheme available for university-originated startups in HK. The scheme was a core focus for many knowledge transfer offices in HK universities in 2023, where professors and their fellow researchers/project leads were busy writing proposals, while university staff jiggled with all the letters of intent from investors/industry partners and requirements set forth by the Innovation and Technology Commission. The first batch of recipients is expected to be announced within Q1 2024 after screening.

We met some of these projects with interesting underlying IPs. How the universities, professors, project leads, and investors handle the rest of the difficult parts of starting a venture – hiring, fundraising, productization, fundraising, and more – is the next set of questions to be answered.

2. HK remains the go-to hub for Greater Bay Area (GBA) startups going global

We spent quite some time in 2023 meeting China-based early-stage startups related to advanced manufacturing (semiconductors, new materials, ESG materials), industry 4.0 (robotics, automation, innovations in traditional industries), and cross-border e-commerce. Chinese founders shared their firsthand experience facing the lowered spending power of local corporates and consumers. As a result, many of them have taken their products abroad, selling at a higher price point than what they could ask for in China. Over time, China has built up top-of-class manufacturing and operating know-how and trained skilled labor that is irreplaceable by other geographies.

China startups that possess unique R&D and manufacturing know-how and operate in non-sensitive industries will still utilize Hong Kong as the hub for initial funding and landing their first batch of overseas customers.

3. Lots of dry powder waiting to deploy in HK

In 2023, local and global GPs secured fresh funding to be deployed specifically to companies with a Hong Kong nexus, thanks to the setup of the Hong Kong Growth Portfolio. Last year, many of them were setting up their teams and understanding the ecosystem in HK. On the other side, CVCs and universities are increasingly active in either direct investment or fund investment in HK as well. There is pressure to deploy for these investors, which should help to drive more deal activity in 2024.

Having said all this, the HK startup ecosystem is faced with the following fundamental challenges.

Challenges

1. Opex – cost of operating, and funding gap between Seed to Series B

While GPs are loaded with cash, there is a lack of startups with a valuation range of $200 million – $500 million that can digest a round of $20 million – $100 million in HK. On the other side, there has been a funding gap that remains unfilled for startups looking for Series A/+ lead investors.

Rent and labor costs continue to be the two biggest headaches for HK-based startups.

2. Talent — lack of startup operators, and operator-turned-founders

While there has been strong growth in the number of startups in HK over the past decade, the ecosystem of operators who are willing to take the risk and be the first 10 employees of a fresh HK startup is still nascent. We are still building the flywheel where early employees of successful startups become founders or operators for another early-stage venture. Not to mention the challenge of the tech brain drain in the city since 2020.

3. Exit pathway – billion-dollar question for both VC and startups

With many corporates cutting their spending, the incentive for larger players to acquire startups has decreased, especially when M&A activity is already low in the region. Coupled with a stagnant IPO market, HK startups are faced with an even tougher market compared to other comparable startups in other regions.

Decade of innovation: Pete Lau reflects on OnePlus’s tenth anniversary

Evan Huang, TechNode Staff and Zinan Zhang — Fri, 08 Dec 2023 08:50:40 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang and Jake Newby.

On Dec. 5, 2023, Pete Lau, the founder of OnePlus (now Senior Vice President at Oppo), held a press conference to mark the Chinese mobile phone brand’s tenth anniversary where he answered a series of screened questions from netizens, posted on the social media platform Weibo. These questions led Lau to offer a retrospective on OnePlus’s entrepreneurial history, discuss its brand positioning, and evaluate some of its classic products from the last decade.

On Dec. 5, 2023, Pete Lau, the founder of OnePlus (now Senior Vice President at Oppo), held a press conference to mark the Chinese mobile phone brand’s tenth anniversary. Credit: OnePlus Weibo Account

OnePlus was founded on Dec. 17, 2013, and released its first product, the OnePlus One, in Beijing five months later. Time magazine later praised the phone as a “Phone of Dreams” in an article that made OnePlus the first Chinese smartphone brand to be reviewed by the outlet. Yet in recent years the brand has struggled to differentiate itself from Oppo, with whom it shares a large amount of investment, leading to several restructurings in the relationship between the two firms.

Understandably, the tenth anniversary milestone found Lau in a reflective mood, but he also laid out some of his ambitions for the brand’s future and repeatedly emphasized that OnePlus’ has its place in a crowded mobile phone market.

Material innovation

One area in which Lau feels the brand has excelled – and differentiated itself – in the last ten years is in the materials it has used.

As early as 2014, with the OnePlus One, OnePlus introduced two innovative materials: “baby skin” and bamboo. The baby skin white variant, featured a three-layer evenly brushed back cover, with a delicate and smooth texture due to its spray-on material extracted from natural cashew nuts that didn’t retain sweat stains. The bamboo version, using the grass as its back cover material, provided a warm and smooth feel.

With the OnePlus 3 series protective cases, OnePlus introduced another new material: ebony wood. This is a scarce wood with a tight structure, hardness, and corrosion resistance, showcasing distinct wood grains.

With the OnePlus 5T, OnePlus once again challenged traditional material usage and craftsmanship modes, using a new spray-on material and process on the white back cover. Through four new high-precision spray processes, sandstone white and metal materials were organically fused to provide outstanding tactility.

AG glass, widely used in current phones, gained its popularity from OnePlus. On the OnePlus 6T, AG etching was used to create AG glass, providing an impressive matte feel. Today, OnePlus has adopted the fifth-generation AG glass technology, achieving a haze of the glass surface to 72%, and delivering a matte texture resistant to fingerprints and sweat stains.

OnePlus’ pursuit of material innovation extends beyond this. In the spring of this year, OnePlus launched the OnePlus 11 Jupiter Rock Limited Edition, using 3D microcrystalline rock, a material that has never been used before in the industry.

OS issues: From independence to adoption

OnePlus phones were originally equipped with an in-house developed operating system, HydrogenOS. HydrogenOS was known for its simplicity. The “smoothness” of HydrogenOS was highly praised by many early users and was considered a competitive advantage for OnePlus.

As other domestic smartphone systems became more localized, however, HydrogenOS, which leant more towards Android systems, began to see that competitive advantage significantly reduced.

ColorOS, developed by Oppo, is a more comprehensive operating system compared to HydrogenOS, offering rich and stable functionality. Therefore, with the OnePlus 9 series in 2021, OnePlus directly adopted ColorOS, aiming to gradually replace its HydrogenOS with a higher caliber system. On Nov. 13, Oppo announced that ColorOS’s global monthly active users exceeded 600 million.

The recently released OnePlus 12 comes equipped with ColorOS 14, debuting the all-new AndesGPT model and integrating deeply with the PANTANAL system to break down barriers between data and services.

OnePlus and Oppo integration

Due to Pete Lau’s connections with Oppo, OnePlus has always had a close relationship with the mobile phone giant. In 2021, OnePlus and Oppo fully integrated, with the former becoming an independent sub-brand under Oppo.

Lau has always been keen to emphasize that OnePlus and Oppo are two completely independent companies, with overlapping relationships only in terms of investment. However, OnePlus has benefited from the support and resources provided by Oppo in areas such as product development, technology, supply chain, and channels. To seize new opportunities and promote the healthy and long-term growth of OnePlus, collaboration with Oppo is needed to enhance the former company’s brand strength, while also bringing positive synergies to both sides, Lau said.

In recent years, OnePlus has opened up a new Ace series product line, as part of an attempt to differentiate its brand from Oppo. The Ace series is intended to enable more people to gain access to what Lau terms “premium flagship” products but with lower price points.

After the release of the Ace series, OnePlus achieved a year-on-year growth of 9.6% in total domestic sales in the third quarter of last year, with a month-on-month growth of 44.3%. In the first half of 2023, OnePlus’ smartphone sales increased by 335% year-on-year, making it the fastest-growing mobile phone brand in the industry during the same period. Therefore, Lau jokingly remarked that competitors should be grateful that OnePlus has yet to venture into products priced below RMB 2,000.

Thinking globally

At the OnePlus tenth anniversary event, Lau repeatedly emphasized the mantra of “making good products”. Yet he also stressed that for OnePlus, this philosophy doesn’t mean that they excessively emphasize the differences between countries. Whether in design style or product experience, there is no deliberate effort to create different products based on regional distinctions. He believes that “internationalization is a false proposition.” Truly good products are universal and have no borders, he said – as long as the product is good enough, it will be accepted by users both domestically and internationally.

Looking back over the past decade, Lau admitted that OnePlus has many dreams yet to be realized. In the future, Lau said, the company will continue to persist in making good products, continually pursue higher performance, and bring users more quality products and experiences.

Unlocking the future tech in China! “NextChina”: stories on China’s most promising tech stars

TechNode Staff and Zinan Zhang — Tue, 05 Dec 2023 02:48:25 +0000

TechNode, as the first independent English-language media focusing on China’s technology and innovation, has become an important window into China’s technology in the international technology arena over the past decade. TechNode’s reader base has expanded to 150 countries worldwide, and its independent and fair reporting is quoted by many international media including Fortune, The Economist, etc. Through media, events, and other channels, it has brought many Chinese technology companies and innovations into the global view.

Some international media quoted articles from TechNode.

Over the past 15 years, the world and China’s technology sector have greatly changed. Chinese technology sector has made a complete change from the copy to China model, to the unique innovation model and the rapid development of technological capabilities in certain areas. From BAT being in the spotlight to the global blossoming of big Chinese companies, tech unicorns, and startups, more and more Chinese innovations urgently needed to be recognized and acknowledged by the world.

Therefore, TechNode will launch “NextChina”, a series of interviews focusing on the latest industry tracks and the most promising innovative companies, with its resources in English and Chinese as well as its global media partners, aiming to promote more outstanding Chinese companies to the international stage.

The first series: Rise of Robotics

Exploring one of today’s trending subjects, robotics takes the forefront in our coverage. Currently, robotic technology is gaining prominence across various sectors, including industry, healthcare, services, households, etc. Beyond being the future of technology, robotics has seamlessly integrated into everyday life. Our focus will be on showcasing the stories and innovative spirit of the most promising companies in China’s robotics sector.

Stay tuned in early January for ‘NextChina’ to explore the tech insights in China! If your company is interested in being part of this series interview, or if you have a recommendation for a company, don’t hesitate to contact us at zinan.zhang@technode.com

Don’t miss this valuable opportunity to show your company’s power in the world!

Deciphering Douyin users: who’s really using China’s TikTok sibling?

Xiaoyan CHEN — Wed, 22 Nov 2023 01:55:21 +0000

The huge growth of Douyin (TikTok’s China sibling) has led to an increasing number of advertisers using the platform to launch their marketing campaigns.

Insider

Xiaoyan CHEN is the founder of RougeLink, an agency offering high-performance e-commerce tactics based on data-driven technologies and livestreaming. She has profound knowledge of e-commerce and digital marketing of the Chinese consumer market, as well as the market trend and new media trend.

TechNode Insider is an open platform for subject experts to discuss China tech with TechNode’s audience.

However, although Douyin has more than 809 million users, advertisers have to take the profile of these users into account to successfully reach their target audience and launch effective campaigns.

Age distribution

According to official data released by Douyin, the age distribution of the ByteDance-developed app’s users is relatively wide, mainly focusing on the 18-35 age group. Within this group, the proportion of users aged 18-24 is the highest, accounting for 35%; the proportion of users aged 25-30 is 27%, and the proportion of users aged 31-35 is about 16%.

The data shows that TikTok’s China sibling is most popular among those born in the 1990s and the first decade of this century, often referred to in China as the ‘post-90s’ and ‘post-00s’ generations. The Post-00s and Post-90s have a longer average daily usage time and high user stickiness. Compared to the Post-90s, the Post-00s are more prominent as “digital natives”, with 173 hours of monthly per capita use of the internet, much more than the 159 hours of the overall population in China, and with a higher activity rate throughout the day than the overall user base, with 30.9% of the user base still active after midnight. Furthermore, some younger individuals only use Douyin when it comes to entertainment, rejecting rivals such as Xiaohongshu.

If your target audience is a young consumer group such as Generation Z or Millennials, Douyin could be a highly useful vehicle for your marketing.

Gender

The male-to-female ratio of Douyin users is about 4:6, which is a significant increase in the proportion of male users compared to the previous 3:7. But there are still more female active users. Beauty and other industries mainly targeting female users tend to put a lot of resources into marketing Douyin for this reason.

Geographical distribution

Douyin users are mainly concentrated in first and second-tier cities in China, such as Beijing, Shanghai, Guangzhou, and Shenzhen. Among them, Beijing, Shanghai, and Guangzhou have the highest proportion of users compared to other first and second-tier cities in China, with 7.9%, 6.7%, and 6.3% respectively.

Crowd classification

Douyin categorizes its users into eight strategic groups according to their city level, age, consumption power, life stage, and other indicators: Gen-Z, refined mothers, new white-collar workers, urban blue-collar workers, small-town youths, senior middle-class, urban silver-haired people, and middle-aged/old people in small towns.

Generation Z: Generation Z refers to the new generation of young people born into a world of online technology, mainly in third-tier cities and above. China’s Generation Z has been brought up in a world vastly different from that of their parents and grandparents and has a more confident culture, which allows them to pursue higher spiritual needs such as socialization, respect, and self fulfillment. China’s Gen-Z internet population is around 342 million.

Delicate Moms: Compared with the previous generation of mothers, new generations of mothers have unique values and self-consciousness. In addition to meeting their children’s developmental needs, they also pay attention to their children’s education at an early age. Living fast-paced urban lives, they are more enthusiastic about online shopping, attaching particular importance to the health and safety of products, and are also very inclined to buy high-quality milk powder and complementary food products originating from overseas. Their online consumption power is very strong, and in addition to buying just-demanding products on big FMCG platforms more frequently, they are also very concerned about new products with high value and convenience.

New white-collar: Mainly refers to the high-income group aged 25-35, living in first- and second-tier cities, with a young mindset, financial independence, and strong consumption ability. Different from the previous generation, new white collars are more willing to try new things, pay attention to product quality, have higher acceptance of new brands, and love to pay for self-improvement. They are the main force in the consumption of fitness and knowledge products.

Urban blue-collar: More than 50% of urban blue-collar workers are aged 31-40, and more than 70% of them have children. The consumption concept of this generation of blue-collar workers has changed drastically compared to their forebears. They pursue high-frequency and high-quality shopping experiences, pay attention to the quality of goods, and are willing to pay for a high-quality state of life, having a greater demand for non-rigid material goods such as sculpture ornaments, fine dining, and medical beauty and skincare.

Small-town youths: This group mainly resides in fourth-tier cities and is aged 24-40 years old. Small-town youths do not have a high consumption level, but are good at online shopping, keen on promotions, and focus on quality. Small-town youths prefer health care and pets, and they are incredibly fond of cost-effective goods.

Small-town middle-aged and elderly people: This mainly refers to middle-aged and elderly users living in fourth-tier cities; their consumption habits are more arbitrary, and often focus on cost-effectiveness. They attach importance to socializing with acquaintances and have high social needs.

Senior middle class: This group is focused on 35-50 year olds living in third-tier cities and above. The senior middle class has a high consumption level, focuses on quality experience, and pursues luxury.

Silver-haired people: The silver-haired people in urban areas have sufficient income such as a pension. They represent the “second spring of Internet consumption”. According to CNNIC data, those over 50 accounted for 26.3% of the total number of Internet users in Dec. 2020. These users are more inclined to new ways of spending their retirement, taking after the lifestyle of silver-haired influencers on China’s answer to TikTok, and are willing to boldly try new things. They are enthusiastic about novelty products and trying trendy tools, such as using live streaming to talk with young people.

Conclusion

The users of Douyin are mainly young women in first- and second-tier cities. The male user segment is growing fast, however, and the ratio of male and female users on the app is likely to become more balanced in the coming years. In addition, although the proportion of people under 35 years old accounts for nearly 75% of users, the middle-aged and older-aged group is still an indispensable part of the platform that can not be ignored. With a high consumption level, strong consumption ability, and increasing use of the Internet, these groups have great potential.

The wide array of categories and content found on China’s TikTok sibling means that it is important to have precise positioning and targeted content for any marketing strategy. But for those who get it right and who understand the platform’s vast user base, the pay-off could be enormous.

This article was provided to TechNode by Xiaoyan Chen, founder of RougeLink, an agency offering high-performance e-commerce tactics based on data-driven technologies and livestreaming.

Temu takes legal action against scam sites to safeguard consumers

Cafe Fan — Fri, 10 Nov 2023 06:42:15 +0000

Temu, the e-commerce platform celebrated for its cut-rate prices, has launched a legal offensive against fraudsters who masquerade as the company. These imposters lure customers into downloading bogus apps that infest devices with malware and pilfer personal data, according to lawsuits filed in the US in the past two weeks.

Boston-based Temu, operating under its legal name Whaleco, has filed suit against seven websites accused of deceptively prompting visitors to download a counterfeit app. The aim, the lawsuit claims, is to snatch personal details from Whaleco’s clients, slip malware onto their devices, or hack into them. This legal move, initiated on November 7 in a U.S. court, comes on the heels of Temu’s earlier legal action against twenty websites for trademark violation and orchestrating internet phishing scams to defraud consumers.

“Fraudsters are posing as Temu on fake apps and websites to scam consumers. This not only damages our reputation but also hurts consumers who were deceived into believing they were engaging with genuine Temu platforms,” said a Temu spokesman.” We will take swift legal action to defend our rights and shield our customers from such malicious and unlawful activities.”

In the year since Temu launched in the US, it has soared in popularity, propelled in part by its “Shop Like A Billionaire” Super Bowl commercial. Now, the e-commerce contender has broadened its reach, serving customers in 48 countries, from the UK to Malaysia.

Sensor Tower data reveals that Temu broke into the global top 10 most downloaded apps list in the second quarter of 2023, surpassing both its rival Shein and the American titan Amazon in downloads. Further, a data.ai analysis reported by CNBC shows that Temu has outstripped Shein in Japan and South Korea, clinching the top spot in shopping app rankings over an extended stretch.

Wendy Chen, a GAM Investments senior investment analyst, points to Temu’s innovative “fully entrusted business model” as the engine of its meteoric rise. This model blends direct retail sales with a marketplace for third-party vendors, drawing on the strengths of both. Temu streamlines its operations by sourcing directly from manufacturers, who are tasked merely with shipping to Temu’s global warehouses. The company then takes the reins, overseeing customer acquisition, pricing, logistics, and customer service.

This strategy affords Temu the quality control, timely delivery, and customer satisfaction of a first-party model, while it still benefits from the extensive selection and scalability of a third-party model. By connecting factories directly with consumers, Temu not only slashes middlemen expenses but also sidesteps the hazards of overstocking, Chen explains.

According to a recent report by Chinese tech media outlet 36 Kr, the US market, the first destination Temu entered, currently contributes 60% of the platform’s overall sales. The same report stated that the platform’s third quarter sales surpassed $5 billion, and the extraordinary pace of growth may allow Temu to exceed its annual GMV target of $15 billion this year.

“We are in a cost-of-living crisis and people are looking for anything to save a bit of money,” Miya Knights, the publisher of Retail Technology magazine, told the Guardian. “Everyone likes a bargain and Temu ticks those boxes.”

To be sure, Temu’s popularity has come at a price, with a small group of scammers capitalizing on the company’s reputation to launch phishing schemes and install malware, according to its lawsuit. Critics have also accused Temu of intrusive data practices, allegations that Temu has sought to dispel by prominently listing the permissions that it seeks from users.

In its latest lawsuit, Temu accuses websites such as Dltemuapp.com and temudl.net of mimicking Temu’s domain name and describes them as primarily designed to lure consumers into making purchases or to mislead unsuspecting consumers.

“Bogus websites like these serve as a platform for various cybercrimes. They could be used to extract sensitive and financial information from duped consumers. They could be used to install malware on people’s sites (and/or those of their employers) to steal information or install viruses and serve as leverage for large ransoms,” Temu said in its lawsuit.

“In any of these scenarios, the results would be devastating—and the harm irreparable–to (Temu) and the public alike,” according to the lawsuit.

Meanwhile, Temu has intensified efforts to warn consumers about fake Temu promotions and scams. The company has also advised users of the importance of downloading the official Temu app from the Apple Store and Google Play Store, which have stringent vetting controls.

Italian vending machine company Rhea partners with Chinese robo-delivery firm Neolix to debut self-driving coffee vehicle

TechNode Staff — Fri, 03 Nov 2023 08:36:15 +0000

Rhea Vendors Group, an Italian manufacturer of tailor-made coffee and vending machines, today unveiled its Barista On-Demand vehicle in collaboration with Chinese robo-delivery firm Neolix. Showcased at the China International Import Expo (CIIE) in Shanghai, the new product combines a vending machine with self-driving tech as China’s coffee market expands rapidly.

The vehicle “transforms the typical coffee consumption from a go-to-shop activity into shop-come-to-customers,” a press release accompanying the launch said Featuring a Rhea BL Doppio & Cup coffee machine, the vehicle allows users to order coffee with one click on a mobile application, with their desired drink delivered by the unmanned coffee vehicle, the companies said. Rhea and Neolix want to “ensure a vision for a more automated and sustainable future,” the press release added. The vehicle is powered by renewable energy sources.

Rhea Vendors Group, founded in 1960, is one of the largest producers of customized vending machines in the world. Beijing-headquartered Neolix describes itself as “the world’s leading autonomous vehicle maker that specializes in Robo-Delivery” and has collaborated on automated delivery vehicles for the likes of JD and FedEx, deploying over 1,000 vehicles worldwide in more than 12 countries.

“In today’s rapidly advancing world, we see the pace of daily routines accelerate at an unprecedented rate, calling for adaptive solutions to meet instant demand. This project responds to the shift and offers a new perspective on smart mobility in new retail. Instead of people moving to access coffee services, we can leverage our technology to mobilize coffee shops to reach consumers,” said Yu Enyuan, founder and CEO of Neolix Technologies. “Having been at the forefront of global mobility solutions, our aim isn’t merely to enhance mobility but also empower traditional sectors, ensuring, for example, that coffee lovers receive a frictionless experience on the go.”

The Chinese coffee market holds great potential, as coffee consumption is growing at a rate of more than 30 percent per year, according to Rhea and Neolix.

“We are very proud of our collaboration with Neolix. The birth of Barista On-Demand is a symbolic outcome of Italian and Chinese business cooperation towards innovation and a new way of experiencing hospitality. Together, we harness Italy’s design legacy and our 60 years of coffee expertise, with Chinese tech advances to stay ahead of the age and provide a seamless coffee experience to our customers all over the world,” Andrea Pozzolini, CEO of Rhea Vendors Group, said. “The unmanned coffee vehicle showcases Rhea’s unwavering commitment to pioneering innovative solutions in the vending world. We’ll initiate this groundbreaking venture in its birthplace, already ready to understand that the coffee machine is only one part of the broader consumer experience.”

This article is provided by Rhea Vendors Group and NEOLIX.

Influential bloggers lose anonymity on China’s social platforms

Cheyenne Dong — Wed, 01 Nov 2023 09:38:44 +0000

China’s most populated social media platforms on Tuesday announced they will soon remove anonymity for content creators that have over 500,000 followers, confirming rumors that stirred up heated debate over personal privacy in recent weeks.

Why it matters: The new policy will force bloggers with large fan bases to disclose their real names to the public on social media, in a change to the rules that will likely further deter discussion online in China, especially when it comes to finance news and current affairs.

Details: At least seven social platforms serving hundreds of thousands of users daily issued statements urging influencers to reveal their real identities. These included X-like platform Weibo, messaging app WeChat, video sites Douyin, Kuaishou, and Bilibili, as well as lifestyle-sharing app Xiaohongshu and search giant Baidu.

Weibo has outlined plans to first require creators specializing in content related to social affairs, finance, and legal matters, with more than 1 million followers to post using their real names, before extending the rule to bloggers in other fields.
Influencers who refuse to show their real names may be limited by account traffic and revenue, according to Weibo and WeChat.
WeChat said the move will enhance the credibility of top “self-media” accounts, while Weibo said that as these influencers have a far greater impact on public opinion than ordinary users, requiring real name identification will encourage them to “take on responsibilities that align with the influence of their words.”
In recent years, China has strengthened the management of social media accounts run by individuals or organizations independent of state-control. Many of those accounts have amassed sizable fanbases.
Short video apps Kuaishou, and TikTok’s Chinese sibling Douyin, were among the platforms that published simultaneous statements. Accounts with over 500,000 followers will be the first affected by real-name ID disclosure requirements. Kuaishou added that accounts mainly sharing personal daily life stories will be exempt.

Context: On Oct.21, users noticed that Weibo’s CEO Wang Gaofei gave his real name on his social media page, a move later confirmed by the executive who said he had decided to first test the policy on his own account.

A year ago, China asked that posts mentioning Russia’s invasion of Ukraine showed the location of the poster, in response to an incident in which a social media user faked his whereabouts, causing a stir in overseas media. Shortly after, the practice of displaying IP addresses was extended to individual users of Weibo and those of other social media platforms.

Huawei looks to trademark “Far Ahead” to capitalize on post-US restrictions sentiment

Jessie Wu — Tue, 31 Oct 2023 09:26:25 +0000

Chinese telecom giant Huawei has applied to register the trademark Far Ahead in the fields of transportation tools and scientific instruments, according to China’s trademark platform Tianyancha. “Far ahead” became a trending term on the Chinese internet after the surprise early release of Huawei’s Mate 60 series of smartphones in August, which came with advanced chipsets despite the Chinese tech company being a major target of US sanctions. The trademark is currently pending review.

Why it matters: Having seen its tech capabilities limited by US chip sanctions, Huawei has ridden a wave of nationalist approval in China following the release of its Mate 60 line, which came equipped with a better chip and higher processor power than many industry observers had thought possible.

Details: Yu Chengdong, CEO of Consumer Business at Huawei, has repeatedly used the phrase “far ahead” to describe the tech gap between Huawei and its competitors during product launches. Huawei fans often use the phrase as a rallying call on social media. Huawei’s detractors have also utilized this term to satirize the company’s advertising and messaging.

Huawei’s use of the term “far ahead” first came at the launch event of its Mate 40 smartphone in 2020, according to local media outlet ThePaper. During a presentation of the Mate 40’s features, Yu used the phrase 14 times. Last year, Yu again used “far ahead” to describe the advanced satellite messaging function of the Huawei Mate 50 series, further boosting the popularity of the phrase in China.
In August 2023, Huawei launched the Mate 60 Pro series, featuring the self-developed Kirin 9000s chip, manufactured in China by Semiconductor Manufacturing International Corp (SMIC). Related short videos with the tag “Far Ahead” went viral on the Chinese internet. For instance, videos on Douyin (the Chinese version of TikTok) with this tag have gained 960 million views.
Huawei reportedly plans to ship between 60 to 70 million smartphones in 2024. Sources have told local media outlets that Huawei has placed sufficient orders from its supply chain to guarantee the fulfillment of this shipment goal for the year 2024.
On Oct. 27, Huawei released details of its sales performance for the first three quarters of 2023. During this period, the firm achieved sales revenues of RMB 456.6 billion ($62.39 billion), representing a year-on-year increase of 2.4%, with a net profit margin of 16%. Huawei stated that these results were in line with expectations, though the company did not disclose specific figures for its various business streams during the period.

Context: Thanks to the newly launched Mate 60 series, Huawei’s domestic shipments in the third quarter increased by 37% compared to the same period last year, according to market research firm Counterpoint. Huawei’s share of China’s smartphone market has risen to 14%, making it the fifth largest company in the sector.

On Monday, Huawei announced that downloads of its HarmonyOS 4, which was unveiled in August, had topped 100 million. One of the key updates in HarmonyOS 4 is the ability to customize the home screen, allowing users to change system fonts, colors, clock styles, and widgets according to their preferences.

CHINABANG Awards 2023: Nominations for China’s Overseas New Power List and Discover China’s Pioneering Innovators on the Global Stage

TechNode Staff — Fri, 27 Oct 2023 03:18:37 +0000

Since its inception in 2011, the CHINABANG Awards has been dedicated to identifying and nurturing the power of innovation in China. Over the last decade, we have witnessed many innovative enterprises such as DiDi, Momo, DJI, Mobvoi, Ele. me, WeChat, and the Little Red Book evolved from humble beginnings to iconic symbols of China’s innovation landscape. At the same time, we have uncovered many exceptional individuals, most of whom have ascended to become highly regarded trailblazers in their respective industries.

Now, the CHINABANG Awards 2023 is officially underway! Since its inaugural launch in 2011, the list has undergone more than ten years of refinement and enhancement, marked by the continuous evolution of our selection process. This year, we have made another breakthrough by setting up the CHINABANG Awards -China’s Overseas New Power List. The list is dedicated to recognizing overseas innovation teams with strong ties to China, identifying the most promising and valuable overseas projects, and striving to create the most open and credible annual overseas accolade in the industry.

The CHINABANG Awards China’s Overseas New Power List aspires to spotlight innovative companies that have achieved breakthroughs in international emerging markets, as well as the innovative organizations and individuals who have played a pivotal role in bolstering China’s global influence. We will recognize companies that continue to explore overseas markets, exporting China’s technological prowess and influence, as well as pioneering entities contributing to the sustainable development of local business ecosystems during the process of localization. Above all, we will acknowledge Chinese overseas entrepreneurs, innovators, and entrepreneurial teams who have exhibited unwavering dedication to innovation throughout their journeys.

China’s Overseas New Power: 4 Awards Categories

Overseas Technology Company of the Year:

Aims to discover and recognize Chinese technology companies that have taken root and grown in overseas markets. These companies have not only achieved remarkable results in the international market but also successfully integrated into the local business ecosystem during the localization process, winning international recognition for China’s technological and innovative strength.

Overseas Investment Organization of the Year:

Aims to select investment institutions that are keen on identifying opportunities in overseas investment markets. They search for booming emerging markets in China and around the world, providing financial support and strategic guidance to innovative companies, and driving the expansion and growth of Chinese companies globally.

Overseas Service Organization of the Year:

Aims to identify and recognize service providers that can help Chinese enterprises with different needs and in different fields to realize cost reduction and efficiency, and to make goods available globally. Whether it’s in the areas of overseas brand creation, logistics management, payment systems, marketing strategies, or SaaS, these service organizations provide critical support to Chinese companies to help them become more competitive in the international market.

Overseas Pioneer of the Year:

Aims to reward the pioneers who are the first to step out of their comfort zone and expand overseas in the wave of Chinese enterprises going overseas. Their courage to take risks, innovate, and break the limitations of national borders has set a good image for Chinese innovators internationally, as well as a role model for other innovative entrepreneurs.

Award Description: Overseas Technology Company of the Year, Overseas Investment Organization of the Year, and Overseas Service Organization of the Year are enterprise awards. Overseas Pioneer of the Year is an individual award. All awards must be nominated and declared independently through the official nomination channel.

Eligibility of Enterprises Nomination

The applicant must be a legally registered company or a legal organization.
Must be a Chinese technology brand with at least 1 year of overseas business operation.
The submitted product/project/solution must be first marketed/published after December 1, 2022, or must be expected to be marketed before December 1, 2023, and the relevant intellectual property rights have been acquired.
The applicant must submit product images in .jpg format and less than 10 MB. In the case of intangible products, the applicant may submit screenshots or diagrams.

All nomination information must be submitted by 23:59 on December 31, 2023. Please complete as much information as possible for the subsequent selection, list announcement, and potential media coverage.

Description of Enterprise Selection Process

Nomination: Enterprises may nominate themselves by scanning the QR code below or clicking on the Link to access the official website’s exclusive nomination portal for submitting information.

Nomination deadline: 12/31/2023

Scan the QR code for nomination.

Second Round: Select the list of enterprises/organizations/individuals who qualify for the final round.

Final Selection: The overseas lists of the year will be selected.

Selection Calendar

September – December 2023: Self-nominations;
December 31, 2023: Nominations closed;
January 2024 – Judge’s Second Road and Final Selection.

Award Entitlement

Brand Promotion

CHINABANG Awards is a brand that has accumulated prestige over more than a decade in the tech industry. Award-winning individuals and companies will receive the official certification and trophy from CHINABANG Awards.

**International Stage (*within 1 year of official award announcement)**

Award-winning individuals and companies will be recommended for inclusion in the BEYOND Awards shortlist, with the chance to secure a complimentary exhibition booth and on-stage presentation opportunity at the BEYOND International Tech Innovation Expo, where they can showcase the latest technologies and trends across various industries.
Award-winning individuals/companies will also be recommended for inclusion in the shortlist for the Origin Innovation Awards, hosted by TNGlobal. They will receive exclusive invitations to speak at the Origin Summit, becoming featured speakers at the event.
Award-winning individuals and companies will have the opportunity to participate in the “出海时刻” (Overseas Moment) dialogue program, a media brand created and produced by Dynamic Tech, where they can discuss industry development trends and share insights into the challenges and opportunities of expanding businesses internationally.

**Media Exposure (*within 1 year of official award announcement)**

For finalists and winners, we will conduct an extensive promotion on Technode’s English and Chinese media platforms, while national and international media networks will provide ongoing coverage. For award-winning individuals and companies, we offer the reward of five free featured interviews or press releases.

**Resource Sharing (*within 1 year of official award announcement)**

Through the specialized communication platform established by CHINABANG, connecting businesses, organizations, capital, and media, award-winning enterprises will enjoy convenient resource matching and sharing services.

*More benefits will be continuously updated on the official website.

In this era filled with opportunities and challenges, we look forward to exploring, recognizing, and promoting China’s overseas innovation forces alongside you. CHINABANG China’s Overseas New Power is not just an awards event; it is also an industry celebration. We cordially invite outstanding innovative companies, investment firms, experts, scholars, and media friends to join us in witnessing the brilliant moments of Chinese innovation!

About TNGlobal

TNGlobal, formerly known as TechNode Global, is a pan-Asian tech platform that delivers premium tech news, industry insights, events, and tailored marketing solutions to startups, VCs, corporates, and other industry pioneers. TNGlobal facilitates cross-border collaboration and business through its extensive network, strategic partnerships, events, and resources, bridging the gap between China and the broader Asian tech ecosystem market. The flagship events of TNGlobal include the ORIGIN Summit and the ORIGIN Innovation Awards. TNGlobal is also one of the key organizers of BEYOND Expo, Asia’s leading technology and innovation expo. TNGlobal is an overseas company of TechNode, China’s leading innovation and entrepreneurship platform.

Learn more about TNGlobal: https://technode.global

About BEYOND Expo

Established in 2020, BEYOND Expo has already successfully organized three editions, making it one of the largest and most influential international technology expos in Asia. Over the past three editions, BEYOND Expo has showcased numerous valuable technological breakthroughs and innovations, attracting over 70,000 participants, hosting more than 1,400 exhibitors, inviting over 600 business innovation leaders as conference speakers, and simultaneously holding more than 300 industry forums and over 500 networking events. This extensive track record highlights its success as an international technology exchange platform.

Themed “Embracing the Uncertainties”, BEYOND Exp 2024 is scheduled to take place from May 23rd to May 25th, 2024, at the Venetian Macao’s Cotai Expo. The event will continue to gather the latest achievements and innovative thinking from the global technology sector, providing an unprecedented technological extravaganza for industry businesses and technology enthusiasts.

Learn more about BEYOND Expo: https://beyondexpo.com

Who has the right to offer the lowest price? JD hit by brand bust-up over Singles’ Day price cuts

Cheyenne Dong — Thu, 26 Oct 2023 10:04:05 +0000

Chinese kitchen appliances brand Hauswirt said on Monday that it had sent a legal letter to JD after the retailer lowered the price of one of Hauswirt’s ovens “without authorization” amid intense online battles over price in the run-up to Singles’ Day. Hauswirt claims the reduction led to a dent in the company’s profits.

Why it matters: Competition over low prices in a bid to attract consumers has intensified as China’s biggest shopping extravaganza kicks off, with this case suggesting an increasingly dysfunctional and imbalanced e-commerce ecosystem.

While JD’s staff have claimed that the platform subsidized the oven in question to sell it below its normal price, Hangzhou-based Hauswirt has stated that they are the ones who actually incurred the loss.

Details: Hauswirt’s home beginner oven normally retails for RMB 699 ($95.50), but this week consumers can get it on JD for RMB 319.50, a discount of more than 50%.

Top livestreaming influencer Li Jiaqi was also caught up in the fiasco after a WeChat screenshot, believed to have been posted by a member of JD’s sales staff, showed he had received a legal letter from Hauswirt.
The poster said the appliance brand had filed a complaint against him due to the sale price of the oven on JD being lower than the price the controversial livestream star advertised during his broadcasts, thus breaching Hauswirt’s lowest-price agreement with Li.
The oven was set to be marketed on Li’s Taobao Live livestream on Oct. 26, according to a teaser on his official WeChat account earlier today. The post did not reveal the item’s exact price.
Local media outlet Jiemian cited Li Jiaqi’s agency MeiOne as saying they didn’t sign a so-called minimum price agreement with Hauswirt and that “pricing of livestreamed goods rests with the brand.” However, it is not known whether MeiOne will still require other brands they cooperate with to promise the lowest price for their products in return for exposure on Li’s livestreams, a practice they have reportedly pursued in the past.
As the high-profile spat continued, Hauswirt commented with three demands on JD’s official Weibo social media account on Tuesday, asking the e-commerce giant to withdraw the sale of the oven at half price, requesting that it exclude the brand’s entire product line from JD’s regular coupon offers, and urging JD to conduct an “internal review” to “rectify any unreasonable behavior.”
At time of writing, the oven is currently being sold at RMB 699 on JD. JD did not respond to TechNode’s requests for comment.

Context: The conflict over pricing control between e-commerce channels is growing more prominent in China’s latest online price war. On the one hand, online retailers are pursuing low prices amid a less-than-stellar consumer recovery, but on the other, this is adding pressure to merchants that have set up online stores on multiple platforms.

During 2021’s Singles’ Day festival, some users found that the same L’Oréal face mask product they bought via the country’s hottest livestreamers, Li Jiaqi and Viya, was more expensive than the cosmetics brand’s own livestream days later, which led the duo to publicly accuse L’Oréal of failing to deliver on its promise to offer them the lowest prices.

US tells Nvidia to immediately cease AI chip exports to China

Jessie Wu — Thu, 26 Oct 2023 09:52:33 +0000

On Tuesday, US chip giant Nvidia revealed that the US government has instructed it to immediately halt the export of certain high-end artificial intelligence chips to China, as regulators have expedited the enforcement of new restrictions, which were originally scheduled to take effect from Nov. 16.

Why it matters: The US withdrew Nvidia’s 30-day exemption period for chip exports to China on Oct. 23, implementing the new regulation 24 days earlier than expected. Currently, Chinese customers, such as Tencent and ByteDance, can no longer obtain any AI-related products from Nvidia.

Details: The US government notified Nvidia of the immediate implementation of export restrictions on AI chips starting Oct. 23, as per Nvidia’s announcement to the US Securities and Exchange Commission. The affected products include five GPUs (graphics processing units): A100, A800, H100, H800, and L40S.

On Oct. 17, the US Department of Commerce announced a series of new restrictions on chip exports, addressing loopholes identified after the US imposed export limitations on chips last October. These new regulations broaden the definition of advanced AI chips and impose additional licensing requirements on chip products destined for over 40 countries and regions, aiming to prevent resale to China. According to the regulations, the new restrictions will take effect from Nov. 16.
Following the implementation of the new regulations, Nvidia must cease shipping A800 and H800 chips to China unless it has express permission from the US government. A800 and H800 chips are alternative solutions Nvidia offered in place of the originally prohibited A100 and H100 chips, following the initial AI chip export restrictions imposed by the US last October. The Nvidia L40S, an advanced GPU for data centers, will also be affected by the new restrictions.
Due to the widespread global demand for these products, the sudden acceleration of US restrictions is not expected to have a short-term impact on the company’s financial performance, Nvidia said in its announcement.
However, Nvidia CEO Jensen Huang earlier stated that the new ban is expected to significantly impact Nvidia’s sales in the Chinese market, though he added that the company remains committed to complying with US regulations.
Several AI industry professionals in China have voiced concerns and doubts over the new measures, according to a report by local media outlet TMTPost. They worry about the potential impact of the new restrictions on the future training of large-scale AI models in China, which could result in a tech gap compared to US-based AI companies like OpenAI.

Context: In August, Nvidia reported a fourfold increase in its Data Center revenue over the last two years, establishing itself as a leader in AI chips with a market share of over 70%. Nvidia’s stock continues to rise, as the company achieved a market cap of $1 trillion earlier in 2023.

The data center sector comprises processors such as central processing units (CPUs), data processing units (DPUs), and graphic processing units (GPUs). GPUs are favored for AI applications due to their ability to handle multiple tasks simultaneously.

Singles’ Day 2023: Retailers pursue low price strategies in hopes of consumers opening wallets

Cheyenne Dong — Tue, 24 Oct 2023 09:53:26 +0000

Chinese e-commerce platforms are racing to give consumers attractive deals during this year’s Singles’ Day festival, though the country’s biggest online shopping bonanza has slowly lost its luster as the pushing of low prices has become a standard marketing strategy throughout the year for platforms facing challenges in reviving consumer sentiment.

Why it matters: Emerging retailers such as Douyin and Kuaishou, along with established rivals Alibaba and JD, are turning to direct discounts for shoppers as the 11.11 pre-sale period kicks off because they continue to count on the mega event to encourage consumers to open up their wallets and submit their data, especially in the face of China’s uneven economic recovery.

Details: The Singles’ Day festival is now in its 15th year after it was first co-opted by Alibaba in 2009, who turned an organic, low-key celebration of singledom into a major consumerist event.

While “low prices” remains a common advertising term for retail platforms, JD has taken a different approach during this year’s Singles’ Day by skipping the pre-sales period. In the past, this has been the standard way for major Chinese online retailers to record enormous sales sums on November 11th itself and allows consumers to pay an advance deposit for products to secure discounts.
Alibaba is betting big on its premium program 88VIP, providing members with sizable coupons worth a total of RMB 20 billion ($2.74 billion), as the group fills with loyal consumers with high spending ability.
“We have a desire to return to our original intention of making Singles’ Day a joyful event for consumers,” said Trudy Dai, chief executive of Taobao and Tmall Group. The well-established Chinese e-commerce platform is introducing various entertainment shows and activities, including live music and cross-talk performances during the weeks-long event, to “create a more immersive shopping experience.”
JD is once again offering a discount of RMB 50 for every RMB 299 spent, whereas Tmall is providing a similar deal for every RMB 300 spent. Alibaba also said its Tmall and Taobao site will grant a 15% price reduction in addition to the standard discount coupons. E-commerce upstart Douyin, TikTok’s sibling platform, has also adopted a similar strategy, emphasizing its commitment to giving “real price discounts.”
Kuaishou was the first mainstream site to begin sales for this year’s Singles’ Day festival, commencing pre-sales on Oct. 18. The short video platform had previously announced that it would invest RMB 2 billion in cash subsidies. Apple’s iPhone 15 Pro, for example, can be purchased for a final price of RMB 8,009 if shoppers pay an RMB 100 deposit.

Context: In the third quarter, China’s economic growth outpaced expectations, indicating that a series of recent policy measures are aiding the initial recovery of the world’s second-largest economy. Retail sales increased by 5.5% last month, beating expectations and also surpassing the 4.6% growth recorded in August.

NIO considering buying production facilities from partner JAC: report

Jill Shen — Mon, 23 Oct 2023 10:01:21 +0000

NIO may consider bidding for two manufacturing plants in the eastern Chinese city of Hefei put up for sale by partner Anhui Jianghuai Automobile Group Co (JAC) on Oct. 20, reportedly in an effort to exercise more control over its production process.

Why it matters: Acquiring existing plants is one of the easiest ways for electric vehicle companies to obtain a production license in China, as NIO rival Li Auto did previously. The move could be a big positive for NIO in improving operational efficiency over the long term, a person with knowledge of the matter told the Chinese financial media outlet National Business Daily (NBD) on Oct. 20.

In 2020, Xpeng Motors, another competitor to NIO, announced that it had obtained a production license for its fully-owned factory in the southern Chinese city of Zhaoqing. This achievement followed years of collaboration with Haima Automobile, a former partner of Japan’s Mazda, to manufacture EVs, Reuters reported.

Details: State-owned JAC said on Oct. 20 that it plans to look for buyers publicly for part of its assets under its third factory and its Xinqiao plant for a combined value of approximately RMB 4.5 billion ($610 million).

This would represent a premium of nearly 6.8% to its book value and include some inventory, equipment, construction, and land use rights that belong to its passenger vehicle subsidiary, according to a regulatory filing (in Chinese).
The two factories that JAC referred to were in fact the two advanced manufacturing bases established by the automaker for EV production with NIO, according to the person who spoke with NBD and noted the latter’s likely intention to reach a deal.
A NIO spokesperson neither confirmed nor denied the news when contacted by TechNode on Monday, saying that the company will share more details on relevant matters “when the time is right” and that the decision by its partner has no impact on NIO’s production and operations.

Context: JAC, also a manufacturing partner for Volkswagen in China, completed construction of the so-called first advanced manufacturing base, or the F1 plant, with NIO in the Shushan district of Hefei in late 2017. The facility, which had an initial annual production capacity of 120,000 vehicles, was built after the two companies reached an outsourcing agreement in mid-2016.

New York- and Hong Kong-listed NIO and JAC began operating their second facility, or the F2 plant, in the Xinqiao Science and Technology Innovation Demonstration Zone in the city last September.
The annual capacity of each of the F1 and the F2 plants can be increased to 300,000 vehicles, and the agreements for manufacturing in the two plants are set to expire in May 2024 and September 2025 respectively, according to NIO’s annual report.

Oppo launches the Find N3, a foldable smartphone with flagship imaging capabilities

Jessie Wu — Fri, 20 Oct 2023 09:55:04 +0000

Chinese phone maker Oppo released its new generation foldable the Find N3 on Thursday, combining a lightweight folding design with flagship imaging capabilities for the first time.

Why it matters: Foldable phones may offer flexible displays and portability, but their camera performance has long been a concern for customers comparing them to conventional models. The Oppo Find N3 has ushered in a “new era of foldable imaging”, the company claimed at the launch event.

Details: The camera setup on the Oppo Find N3 features Hasselblad branding and is looking to set a new standard in the foldable category.

On the rear, it incorporates Sony’s cutting-edge 48MP LYTIA-T808 pixel-stacked sensor, which is a 1/1.43″ unit equipped with dual-layer transistor technology. Essentially, this sensor boasts a redesigned pixel architecture that enhances light sensitivity, leading to better image quality.
On the front, the Find N3 offers two selfie cameras: a 20MP camera inside and a remarkable 32MP camera on the cover screen. The device also includes a 48MP 1/2″ sensor paired with a 14mm f/2.2 ultrawide lens with autofocus. In terms of the zoom camera, it features a 64MP 1/2″ sensor with a 3x 70mm f/2.6 stabilized periscope lens, enabling hybrid zoom capabilities of up to 6x or 145mm.
Under the hood, the Oppo Find N3 operates on the cutting-edge Snapdragon 8 Gen 2 flagship processor, coupled with a substantial 16GB of LPDDR5X RAM and 512GB of storage. It packs a 4,805mAh battery that supports 67W fast charging, achieving a full charge in 42 minutes, according to Oppo.
The model follows the trend of compact, wide book-style foldable smartphones. On its exterior, it features a 6.31-inch AMOLED display with a resolution of 2484×1116 pixels and a variable refresh rate ranging from 10 to 120 Hz. The screen adopts a 20:9 aspect ratio and delivers a peak brightness of up to 2,800 nits. When unfolded, the Find N3 reveals a larger 7.82-inch display with a resolution of 2440×2268 pixels and a dynamic refresh rate varying from 1 to 120 Hz, along with the same maximum brightness level.
The Find N3 boasts another distinctive feature in its self-developed Flexion Hinge. This hinge has undergone extensive testing of 1,000,000 folds, the company says, demonstrating the enduring durability and reliability of the foldable hinge over an extended period.
The standard model of 12GB+512GB storage is priced at RMB 9,999 ($1,366), while the premium edition of 16GB+1TB is priced at RMB 12,999 ($1,776). It comes in four colors: red, black, gold, and green.

Contexts: In the second quarter of 2023, the global market for foldable smartphones witnessed a 10% year-on-year increase, reaching a total of 2.1 million units, as reported by Counterpoint. This growth stands in sharp contrast to the overall global smartphone market, which experienced a significant 9% year-on-year decline in shipments during the same period.

Notably, the Chinese foldable smartphone market saw an impressive surge of 64% year-on-year, totaling 1.2 million units. As a result, China now dominates the global foldable smartphone market, holding a substantial 58.6% share.
On August 29, Oppo unveiled the Find N3 Flip in China, marking it as the world’s first clamshell foldable smartphone, equipped with a trio of cameras on its cover.

Baidu claims latest version of ERNIE AI model is on a par with GPT-4

Cheyenne Dong — Wed, 18 Oct 2023 08:58:35 +0000

Baidu released the latest version of its AI foundation model ERNIE on Tuesday at the Baidu World 2023 conference, a mere four months after the previous release. At the launch, the tech giant claimed the capabilities of ERNIE 4.0 were as advanced as OpenAI’s GPT-4 model.

Why it matters: Baidu has emerged as one of China’s fastest companies in leveraging AI models to transform existing products, ensuring its prominence in the competitive space.

Details: Co-founder and CEO Robin Li showed off ERNIE 4.0 during a one-hour presentation, showcasing the model’s ability to generate advertising posters and marketing videos in real time. Li also asked it to write a martial arts novel based on prompts, underscoring the enhanced memory capabilities of the iterated model.

Baidu did not disclose the number of parameters used to train the updated model at the event, merely saying that ERNIE 4.0 saw “similar improvements” in understanding and prompting capabilities, but without specifying whether this was compared to the previous iteration or to some other standard. The company said that enhancements in memory and reasoning are twice and three times that of understanding, respectively, but again didn’t clarify to what they were comparing the new model.
The search giant has embedded AI capabilities into its flagship products including search and maps, introducing new upgrades in recent months. Li laid out his vision for Baidu, aiming to leverage AI-driven thinking to create native apps tailored for the AI era. He singled out Baidu Wenku, an online interactive document-sharing platform, as a product that has undergone radical transformation, evolving into a “productivity tool” that assists users in content creation.
Baidu failed to launch new official plug-ins for its chatbot service ERNIE Bot this time, but the company mentioned that around 27,000 developers have applied to join the firm’s plug-in ecosystem platform since it was unveiled last month. The company first incorporated plug-in functionality into the ChatGPT-like service when it upgraded ERNIE to version 3.5 in June, and then added three more plug-ins two months later.

Context: Rebuilding applications with large language models has been embraced by tech giants from Microsoft to Baidu and Alibaba. Robin Li sees the AI model as an opportunity to overhaul all of Baidu’s products, aligning with the vision of Daniel Zhang, former chairman and chief executive of Alibaba, who also stated that all Alibaba products would undergo a comprehensive upgrade through integration into its AI model.

ERNIE Bot, powered by Baidu’s foundation model, was made fully accessible to the public on August 31, and has amassed a user base of 45 million, according to the company’s announcements on Tuesday.

The changing face of MNCs in China: Chinese local for global

Min Zhou — Mon, 16 Oct 2023 10:46:30 +0000

Insider

Dr. Min Zhou is the CEO of CM Venture Capital, a China-based investment company which partners multinationals to help them invest in next-gen technologies. She is also on the Board of Directors for tech startups such as Averatek, Cambridge Touch Tech, Econic, Thingple, Global Power Tech and more.

TechNode Insider is an open platform for subject experts to discuss China tech with TechNode’s audience.

Recently, on 7 Sep 2023, Phoenix Contact celebrated its centenary globally, and its 30th anniversary in Nanjing, China.

The multinational company is headquartered in Germany and is a manufacturer of industrial automation, interconnection, and interface solutions. It is a lead investor in Thingple digital transformation solutions, investing in more than 20 Chinese companies similar to Thingple Inc. and building an ecosystem of partners. Its Chinese headquarters boasts over 2,500 local staff with 30 billion RMB in annual revenue.

Credit: Thingple

Phoenix Contact’s first 30 years in China is a picture-perfect example of how MNCs prospered in China under its early reforms. The opening up of China invited the world to come and make the best use of its resources, its people, and its potential. China quickly became the world’s factory, a manufacturing base for nearly every useful, functional product the West created (the screen on which you’re reading this article now is likely made in China).

Yet the truth is, that MNCs such as Phoenix Contact have seen slowing revenue growth in recent years. Local Chinese companies with similar offerings, highly competitive prices, and comparable quality have been stepping in, eating into what was once considered markets with no peers. So what will the next 30 years look like for companies such as Phoenix Contact?

Global brands for Chinese markets

For many MNCs, the China business journey started in the 1990s with a ‘global for local’ strategy, which was to produce and sell Western products in China, taking advantage of its low-cost production and rapidly growing consumer market. Foreign brands held a special place in the hearts of domestic consumers and commanded premium prices. Whether it was consumer electronics, cars, or FMCG items, it was an opportunity to experience what the rest of the world was having. Back then, a long line of MNCs ventured into China, pouring billions into its economy and reaping profits.

As the years rolled by into the last decade or so, the Chinese market and its consumers matured and evolved. Consumers have become more worldly, more connected with global trends, and in many cases, have become more demanding. There has also been a notable rise in nationalist sentiment and the repositioning of ‘Made in China’ as a source of pride. Local manufacturers have picked up years of experience and lessons and applied them in their businesses and products. The level of innovation and quality has quickly caught up with the West. With a more sophisticated market, the ‘global for local’ strategy for MNCs in China was replaced with a ‘local for local’ strategy.

As Investopedia notes: “As of 2021, China has the second-largest economy in the world with a GDP of $17.7 trillion, behind the United States GDP of $22.9 trillion. If the economy were represented in purchasing power parity (PPP), China would edge out America as the largest economy with a purchasing power of more than $27.3 trillion.”

Global brands localizing for Chinese markets

The ‘local for local’ strategy calls for greater product customization since domestic competition is fervent – as in Phoenix Contact’s case. As China’s supply chain becomes more sophisticated and complete, product development and supply chains have been shifted to China, in addition to manufacturing and sales. Relying on local talents for product development helps shorten product development cycles, allowing rapid responses to the market. Local supply chain partners helped to reduce costs, making products even more competitive. With the ‘local for local’ strategy, MNCs today – hanging on the hope that their foreign brand value holds a premium – are exposed to never-ending price wars, cutting profit margins thin.

Yet most MNCs working with the ‘local for local’ strategy continue to keep their core technology research, branding, and strategy outside of China. This approach is mired in the traditional smile chart, where the market believes China’s strength lies only in low-cost manufacturing. That’s no longer the case.

Chinese brands for global markets

In the last 30 years, MNCs possessed strong positions in technology, product, quality, brand, and pricing, while Chinese companies held the lower end of the market with copycats. Over time, Chinese companies also started innovating, becoming increasingly competitive in mid- to high-end markets locally, and overseas.

Today, there are many examples of Chinese brands claiming significant overseas market share with breakthroughs in innovation and quality, not just cost. Chinese brands are seeing success in consumer electronics (Huawei, Vivo, Xiaomi), new energy vehicles (BYD, Nio, Xpeng), and even FMCGs such as affordable fashion (Shein) and consumables (Luckin Coffee).

As mentioned in Harvard Business Review’s article on China’s New Innovation Advantage, “To understand what’s powering the global rise of Chinese companies, we need to recognize that China now has at its disposal a resource that no other country has: a vast population that has lived through unprecedented amounts of change and, consequently, has developed an astonishing propensity for adopting and adapting to innovations, at a speed and scale that is unmatched elsewhere on earth.”

There is a well-known Chinese phrase: 三十年河东三十年河西 (30 years a river flows east, 30 years a river flows west). This translates to how fortunes can change course over time, emphasizing a cyclical or impermanence of life. It suggests success and failure can alternate, and one should remain adaptable and not be overly complacent.

Credit: Thingple

Well, now that the first 30 years have passed for Phoenix Contact – and many other MNCs from that era – what will the next 30 look like? How can MNCs today continue to grow in a disruptive Chinese market?

With the evolution of the industry, ability, talent, innovation, and even demands, here are four key suggestions for MNCs with a Chinese footprint to tackle the next three decades:

1. Replace the mindset ‘local for local’ with ‘local for global’

‘Local for local’ implies that local talents and local supply chains are only good enough for the Chinese domestic market, which implies low- to medium-quality use cases. ‘Local for global’ means treating domestic vendors as partners, leveraging innovation and product development capabilities for global markets. MNCs need to integrate the teams and make decisions by looking at and comparing strengths on a global scale.

2. Always include the Chinese market in global strategies

“When China sneezes, the world catches a cold” is a well-known adage to abide by. As China is now the world’s second-largest economy, global strategies must integrate what’s happening in the Chinese market. No ‘global strategy’ can succeed without considering strategic input from China

3. Chinese innovation is influencing global tech

Increasingly, high-quality use cases are growing in China. China is a leader in many fields today, such as internet and mobile applications, EVs and electrification, solar and wind, and digitization and IoT. These high-quality examples foster many advanced technologies and products, with innovations that can be applied to the global market. Many Chinese-innovated technologies are patented and leased to well-known multinational brands such as Apple, Samsung, VW, Audi, and more.

4. Co-create, not compete

Make a bigger pie instead of trying to cut it up. Rather than fighting in the same, limited market, it’s better to collaborate and co-create. Geo-political tensions and supply chain security issues are forcing continents to build independent manufacturing capacities, with little concern for demand. When manufacturing has over-capacity and margins are slashed, this inevitably creates a negative spiral. It’s more important than ever to co-create new applications and new products for new industries so that the added manufacturing capacity can be profitably and sensibly utilized.

In the 1997 book ‘The Innovator’s Dilemma’, author Clayton Christensen explains how even the most successful companies today can still lose their market leadership or even fail, as unexpected competitors step in and take over market share. The term ‘disruptive technologies’ was first mentioned, which is a disruptive innovation that potentially creates a new market and value network that will disrupt an existing market and replace existing products.

Which is what is happening right now with the Chinese marketplace and industry. Large, firm-footed MNCs such as Phoenix Contact are feeling the tremors, but there is a great opportunity to resolve the competition and build market share. The rise of Chinese innovation and its intentions to succeed cannot be ignored, and the best strategy forward is to embrace its progress to help achieve its ambitions – and yours.

Unlocking the Future of Digital in China: DIGITAL+ SUMMIT 2023

TechNode Staff — Mon, 16 Oct 2023 01:27:33 +0000

The first installment of an annual digital summit for China-focused marketing, retail, and technology leaders is coming soon. DIGITAL+ SUMMIT 2023 is dedicated to fostering consumer centricity, implementing emerging technologies, and envisioning the future of retail.

Credit: Digital+ Summit

Main Themes of the Event

The Digital+ Summit 2023 will focus on three major themes: developing customer centricity, implementing emerging technologies, and foresighting the future of retail.

Developing customer centricity: Track the evolution of Chinese consumers and craft seamless journeys from discovery to repeat purchase.

Implementing emerging technologies: Unleash the potential of AI, XR, and OMO for enhanced customer value in marketing and retail.

Foresighting the future of retail: Shape the retail horizon, navigate the future of social commerce, and prepare for what’s next.

The summit offers diverse elements, including keynote speeches, panel discussions, technology showcases, networking opportunities, and book signings by esteemed speakers and intellectuals.

Who Should Attend?

The DIGITAL+ SUMMIT 2023 is tailored for China-focused digital leaders, with a primary focus on B2C spaces and sessions directed at B2B cases too.

This event is a must-attend if you are:

Brand marketing and commercial teams: This is your chance to explore topics relevant to marketing, retail, e-commerce, CRM performance, consumer insights, and digital strategy.

Tech giants and social media platform teams: connect with brands, and fellow experts, and participate in collaborative learning experiences.

Consultancy and agency leaders: gain valuable insights and networking opportunities to enhance your consultancy or agency services.

Learn – Play – Apply Format

We believe that we learn better when we are engaged. Our keynotes are short and dynamic, with plenty of opportunities for breaks, games, and showcases. We aim to ensure that you leave the summit feeling energized and empowered to make real changes.

Credit: DIgital+ Summit

What to Expect

Feel the inspiration: Immerse yourself in a dynamic digital community and dive into inspiration, creativity, excitement, and motivation.

Think with vision: Empower yourself with thought-provoking discussions, and cutting-edge insights and foster strategic visions of digital China.

Do with innovation: Equip yourself with practical tips, bold innovations, and forward-thinking solutions to create transformative outcomes right away.

Pre-Summit Online Sessions

We’re bringing a few pre-summit sessions right to your screens on Monday and Tuesday next week. Join these free online sessions on 16-17 October, hosted by top experts. Dive into the latest actionable insights on Chinese consumers, platforms, marketing, and sales. Online sessions are free of charge, delivered live via Zoom, and participation is limited to 100 registered guests. Sign up now to secure your spot.

Don’t miss this opportunity to engage with the best minds in digital marketing, retail, and technology. Sign up for the DIGITAL+ SUMMIT 2023 and the pre-summit sessions today at www.chinadigitalsummit.com/online. The future of digital is here – be a part of shaping it.

GAC’s $75 million investment in Didi set to boost EV sales, autonomous driving: expert

Jill Shen — Fri, 13 Oct 2023 10:48:28 +0000

Chinese carmaker Guangzhou Automobile Group (GAC) is strengthening its alliance with ride-hailing platform Didi, investing up to $75 million into the latter’s autonomous driving unit. The move is expected to help GAC enhance its self-driving technological capabilities and sustain its sound growth momentum in the Chinese electric vehicle segment, according to an industry veteran.

The deal, nearly clinched over three years ago, has recently been revived by the two companies as the impact from Beijing’s extended crackdown on Didi has waned, a person with direct knowledge of the matter told TechNode on Friday. It also comes against the backdrop of Didi’s renewed efforts to solidify its position as China’s biggest ride-hailing service with new incentives, putting smaller rivals under pressure.

Self-driving push: Autonomous driving has proven to be among the most capital-intensive startup businesses on the current tech landscape, and the extended collaboration with Didi would allow GAC to share its costs and risks of making robocars, said Liu Guanghao, partner at Shanghai-based venture capital firm Befor Capital.

The first robotaxi jointly developed by GAC and Didi is slated to join Didi’s ride-hailing network for commercial operation in 2025, the companies said earlier this year. GAC’s EV arm, Aion, announced a partnership with Didi back in May 2021 to develop a mass-produced car with Level 4 autonomous capabilities, indicating that the car can pilot itself without a human driver most of the time.
Didi will also jointly test and operate autonomous vehicles for ride-hailing with OnTime, a mobility platform launched by GAC with partners in 2019, as disclosed by an anonymous source. OnTime, primarily active in the southern Chinese province of Guangdong where its parent company is headquartered, has been testing AVs with Toyota-backed Pony.ai, as well as Nissan-supported WeRide.

EV sales boost: The investment would also help GAC’s core carmaking business achieve sustained growth, especially in the Chinese commercial fleet segment, where its EV brand Aion has established a significant presence over the years, according to Liu. “Carmakers need more sales in order to survive in this highly competitive market,” he said.

Aion ranked second in sales among all-electric vehicles for ride-hailing, with approximately 49,000 units sold from January to October 2022, which accounted for 29% of its total sales, according to figures compiled by Shanghai-based consultancy LandRoads (in Chinese). BYD was the top-selling brand in the field, with sales of 35,000 more units during the same period, although this accounted for only 14% of its total volume.
GAC told investors last March that shipments of its Aion EVs for ride-hailing services only accounted for 12% of its total sales. The automaker, also a manufacturing partner for Toyota and Honda in China, reported sales of nearly 360,000 Aion EVs from January to September and is hoping to achieve 500,000 units for this year, which could almost double the number it sold in 2022.

Context: GAC Capital, a wholly-owned subsidiary of the automaker, as well as state-owned Guangzhou Development District Investment Group, will invest the same amount of up to $149 million totally in Didi’s self-driving unit. GAC is set to inject no more than $75 million in the funding round, according to a Friday announcement (in Chinese).

OnTime is currently pursuing a public listing on the Hong Kong stock exchange, four years after it was launched by GAC along with a group of investors including Didi and Chinese gaming giant Tencent in mid-2019. It completed roughly 60 million rides last year and has operated in 21 domestic cities in the country’s Greater Bay area as of June.
GAC declined to comment when contacted by TechNode on Friday. Didi did not respond to TechNode’s request for comment.

Chinese Vivo employee arrested in India

Jessie Wu — Thu, 12 Oct 2023 09:47:23 +0000

The Indian financial enforcement agency Enforcement Directorate (ED) has arrested four executives involved in the smartphone industry, including a Chinese citizen working at Vivo India, on charges related to illegal remittances, Reuters reported on Tuesday.

Why it matters: Since the border conflict between China and India in June 2020, Indian authorities have increasingly targeted Chinese companies, particularly smartphone manufacturers. The recent arrests, coupled with previous actions such as surprise raids and freezing of funds, indicate a gradual escalation of restrictions on Chinese businesses in India.

Details: Vivo responded to the arrests by expressing deep concern and stating that it will take all available legal measures to address the matter, according to the report. The company said in a statement on Tuesday that it firmly abides by the law at all times.

Earlier on the same day, two sources told Reuters that four employees from Vivo had been arrested. However, during a court hearing, it was revealed that only one Vivo employee, identified as Guanwen Kuang, a Chinese national, had been arrested. Additional information regarding the investigation remains unclear. The ED’s counsel, Manish Jain, requested a ten-day custody period for the arrested individuals, but the judge granted only three days.
On Wednesday, the foreign ministry of China stated that it was closely monitoring the alleged money laundering case involving Vivo in India, Reuters reported. The ministry also expressed China’s hope for India to provide a fair, transparent, and unbiased business environment for Chinese companies.
On July 5, 2022, the Indian ED announced in a statement that it had conducted surprise inspections at Vivo India, covering 23 affiliated companies and 48 business locations. During the search operation, employees of Vivo India, including some Chinese citizens, did not cooperate with the search procedure and attempted to remove the digital devices found by the search team, according to the ED.
In the statement, the ED mentioned a company related to Vivo India called GPICPL (Grand Prospects International Communication Pvt. Ltd.), which was registered and established in India in 2014 by three Chinese citizens named Zhengshen Ou, Bin Lou, and Zhang Jie. The ED accuses the shareholders of GPICPL of using forged identification documents and addresses during the establishment of the company. After its establishment, Bin Lou registered approximately 18 companies across various states in India, it is claimed.
GPICPL allegedly transferred a significant amount of funds to Vivo India, according to ED. Vivo India then allegedly transferred approximately 50% of its local sales revenue ($7.87 billion) to overseas destinations, primarily mainland China. The ED states that these transfers were made to create substantial losses for the registered company of Vivo India, in order to avoid taxation in India.
The ED accuses Vivo of violating India’s Prevention of Money Laundering Act (PMLA). As a result, the authority has frozen 119 bank accounts belonging to Vivo in India, with a total value of approximately RMB 390 million ($53 million).
On July 13, 2022, the Delhi High Court in India allowed the unfreezing of Vivo’s bank accounts, provided that Vivo provided a guarantee of RMB 800 million ($110 million) to the banks, according to Icsmart. The court also instructed Vivo to maintain a balance of 2.5 billion rupees ($30 million) in the accounts.

Context: In July 2023, the Indian government requested Chinese mobile phone manufacturers to induct Indian equity partners in their local operations. The companies, including Xiaomi, Oppo, and Vivo, have also been asked to appoint Indian executives in key roles such as chief executive officer, chief operating officer, chief financial officer, and chief technical officer.

In July 2023, the Indian Ministry of Finance told the Indian parliament that major Chinese smartphone manufacturers, such as Xiaomi, Vivo, and Oppo, had evaded tariffs and illegally transferred at least 80 billion rupees ($980 million) out of India.

Bilibili aims to double its daily active users as time for profit promise looms: report

Cheyenne Dong — Wed, 11 Oct 2023 10:57:48 +0000

Chinese video streaming platform Bilibili has proposed the goal of doubling its current daily active users (DAU), according to local media outlet LatePost. The target was discussed during a mid-year internal meeting, although the company did not specify a clear timeframe for its achievement.

Why it matters: User growth is crucial for content-based Bilibili as an increase in this figure could boost the firm’s advertising revenue and push to create new content, with the company aiming to achieve profitability by 2024.

In the second quarter, Bilibili’s average DAU reached 96.5 million, marking a 15% year-on-year growth and an increase of 2.8 million compared to the previous quarter. However, its MAU has declined for two consecutive quarters. Despite this challenge, the company successfully reduced its losses by 51% year-on-year during this period, bringing them down to RMB 964 million.

Details: Increasing the supply of high-quality content, and expanding the scenarios available for Bilibili users are the platform’s core strategies for doubling its DAUs, LatePost reported.

The first strategy aligns with a recent remark made by the company’s chief operating officer Li Ni, during the ANIME MADE BY BILIBILI 2023-2024 event. She emphasized that Bilibili’s investment in original content will “not decrease but only increase” over the next three years.
Before directing investors to focus on the DAU to MAU ratio in 2022, CEO Chen Rui expressed his confidence during the earnings call over the Q4 2020 financial report that Bilibili could achieve 400 million monthly active users by the end of 2023. The figure exceeded 300 million in the second quarter of the previous year, and reached 324 million in the second quarter of this year.

Context: Bilibili, a long-form video platform primarily favored by Gen Z users, currently offers a wide range of content genres, including anime, TV shows, variety shows, documentaries, and live streaming. Notably, in response to the growing impact of short video platforms, Bilibili has bet big on shorter vertical videos over the past year, aiming to attract new audiences.

Story Mode, the short video format on the platform, coupled with Bilibili’s pursuit of profitability has led to reduced incentives for content creators who regularly produce long videos with substantial influence on the platform. Several creators publicly announced this April that they would temporarily suspend content updates.
The Chinese animated series Yao-Chinese Folktales, a collaboration between Bilibili and the Shanghai Animation Film Studio, went live on Jan.1 this year and has already accumulated over 290 million views on Bilibili. The company has announced the commencement of production for the second season of the animation.

China’s Didi sets new target for ride-hailing as crackdown ends: report

Jill Shen — Tue, 10 Oct 2023 10:00:28 +0000

China’s Didi has recently set new growth targets in the three years to 2025, with new incentives for drivers and riders, in its latest move to recapture lost market share in the country’s ride-hailing sector, LatePost reported Monday.

Why it matters: The move comes after Didi received a permit in January to resume new user registration and downloads through Chinese app stores for its ride-hailing service, marking an official end to a long-running regulatory crackdown on the company.

The development also puts competitors such as Meituan and Alibaba’s Amap under pressure, although industry insiders warn of a bumpy road ahead for Didi in the face of softening market demand due to weakening economic conditions, according to the report.

Details: Didi recently informed investors that it is aiming for a 45% year-on-year growth in daily orders in 2023 and expects to keep the pace between 10% and 15% over the next two years, individuals familiar with the matter told Chinese media outlet LatePost.

This implies that the company is expected to complete more than 29 million rides per day for the full year, rebounding from its lowest point of around 20 million last January, and increasing the number to nearly 40 million by the end of 2025.
The annual target for this year is achievable, according to company insiders, with Didi starting from a low base in 2022 when major Chinese cities were repeatedly placed under Covid-19 lockdowns, dealing a blow to the country’s ride-hailing sector.
The company delivered roughly 28.2 million rides per day on average in the first quarter of 2023, representing a 42% growth from a year ago, and increased its average number of daily rides to 29.4 million in the second quarter, according to its filings.
However, Didi’s ambitious objectives for 2024 and 2025 may face significant hurdles amid shrinking demand. By the end of 2022, ride-hailing app users in China totaled 437 million, down around 15.5 million on the total from the year before, according to figures compiled by the China Internet Network Information Center.
China’s biggest ride-hailing platform has increased its efforts to subsidize drivers and riders in recent months. A source estimated that the overall amount of subsidies could reach RMB 26.6 billion ($3.6 billion) this year, which would be equivalent to 14.8% of its total revenue at home, surpassing its previous level of 14%.
Didi did not respond to TechNode’s request for comment.

Context: Didi has been scaling back its efforts in developing cash-bleeding, emerging new businesses, and refocusing on its core business over the last two years after the Chinese government launched a cybersecurity probe into the company in July 2021.

Chengxin Youxuan, Didi’s community group-buy grocery unit, reportedly shut down more than 60% of its service locations shortly after the probe began, only a year after the launch of the service.
The company announced the sale of its smart electric vehicle business to Xpeng Motors in August. It had previously launched an all-electric hatchback for ride-hailing with BYD in November 2020.
Chinese authorities announced a RMB 8.02 billion fine for Didi last July, closing its 18-month crackdown on the mobility giant, which was initiated following its mega public listing in New York in June 2021.
Didi had previously set big targets back in 2020. Notably, it had set its sights on overall daily orders surpassing 100 million globally for the next three years, with its four-wheel businesses in China, including ride-hailing and private chauffeurs, intended to account for half of this figure.

Huawei patents mobile phone microscope camera that can detect bacteria

Jessie Wu — Mon, 09 Oct 2023 09:15:20 +0000

Huawei has obtained a smartphone microscope-camera technology patent, with the lens magnifying the photographed object from 20 to 400 times by a minimum distance of approximately 5 millimeters and the phone able to analyze the image for bacteria, according to a recently published report by the United States Patent and Trademark Office (USPTO).

Why it matters: As competition in the phone market continues to intensify, Huawei has been striving to capture the attention and loyalty of consumers by introducing new features, and will be hoping that its microscope-camera can give it a competitive edge.

Details: At present, Huawei has not announced whether the microscope-camera patented technology will be used in the next generation of its flagship phones, but the patent has already provided details of the microscope lens and how it could be used.

The advanced feature utilizes two cameras: one regular camera for capturing images and another micro-camera for analyzing hygiene. In the provided screenshot, the phone captures an image that includes an apple and a hand. When put into micro mode, the phone will use voice, text, or other prompts to describe the health status of the object and provide suggestions for maintaining hygiene.

Huawei’s patent also outlined several use cases for the micro-camera, including food safety assurance, kitchen utensil maintenance, personal hygiene assessment, children’s toys inspections, and pet hygiene monitoring. For example, users could utilize the micro-camera at home to detect bacteria on a vegetable’s surface or to monitor the cleanliness of kitchen utensils and appliances, such as coffee machines and microwaves.
Huawei submitted this camera patent application in 2021, according to the USPTO file. The patent description specifically highlights the identification of bacterial quantities in captured images and the provision of hygiene recommendations as particular concerns, especially as the patent was filed during the height of the Covid-19 pandemic.
In 2021, Oppo introduced the Find X3 Pro, which is capable of magnifying subjects by a maximum of 60 times. But such a function is limited to macro photography instead of microscopic images.

Context: Over 350 companies have obtained licenses for Huawei’s patents through patent pools. Under these licenses, Huawei’s licensing revenue amounted to $560 million in 2022.

In September, Huawei and Xiaomi announced a global patent cross-licensing agreement that covers multiple communications technologies including 5G.
In August, Huawei launched the Mate 60 series with satellite call technology, which allows users to make or receive calls without the use of traditional terrestrial signals.

Baidu’s vice president to take over the company’s smart speaker spin-off

Cheyenne Dong — Sun, 08 Oct 2023 10:05:05 +0000

Baidu on Saturday appointed its chief information officer Li Ying to lead the company’s AI speaker subsidiary, Xiaodu Technology, after the sudden resignation of former chief executive Jing Kun.

Why it matters: As the Vice President of Baidu, Li’s taking over as the top executive of Xiaodu may signify the strengthening of the company’s ERNIE Bot support for various artificial intelligence product lines under Xiaodu, with the tech giant betting big on its subsidiary’s potential for transformation in the AI field.

Details: Officially launched in 2015 as a smart life business group under Baidu, Xiaodu was spun off from the search giant in 2020.

Xiaodu’s former CEO Jing Kun recently resigned for personal reasons, according to local media outlet Caixin. The report also noted that Jing was originally scheduled to give a speech entitled “The era of large models, Xiaodu reshaping smartliving” at Baidu’s annual event, Baidu World 2023, on Oct. 17.
His successor, Li Ying, joined Baidu in 2004. The long-term Baidu employee has been involved in various businesses within the company, including natural language processing, complex search, and Baidu Maps, publicly available information shows. Li will report directly to Baidu’s chairman Robin Li.
Before her new appointment, Li also led the rebuild of Baidu-developed instant messaging software product Infoflow based on the firm’s ChatGPT-like AI model, according to tech outlet 36Kr. The software is capable of performing AI-driven tasks such as meeting summary generation and intelligent coding after integrating Baidu’s ERNIE Bot.

Context: In May, Xiaodu teased its first smartphone, Qinghe, which is intended as a child-focused smartphone and features English-speaking and location tracking functions. Although the independent Baidu subsidiary stated on its official WeChat public account in February that Xiaodu-created devices would integrate all the capabilities of ERNIE Bot, Qinghe ultimately utilized “a large AI model for studying” developed by the company itself.

In January, Xiaodu completed a Series B+ financing round participated in by the Chinese state-backed enterprise restructuring fund, with the company’s valuation reaching RMB 35.5 billion ($4.9 billion).
More than 40 million households already use Xiaodu’s products, including speakers, televisions, as well as other smart home appliances, according to the company.

Google Play’s Purnima Mehta: After four years of change, Chinese app developers aspire to reach a global audience

TechNode Staff — Sun, 08 Oct 2023 08:28:59 +0000

Note: The article was first published on TechNode China written by Penghui Li and translated by Zinan Zhang and Jake Newby.

After the era of going global, China’s overseas expansion through mobile applications is entering a new period of development.

Take the gaming sector as an example. According to data previously released by Adjust, in 2022, the total overseas revenue of Chinese games reached $17.3 billion, which is equivalent to 60% of the country’s domestic gaming revenue, and saw Chinese firms capture a 15% share of the global mobile gaming market, which is valued at $110 billion. Furthermore, Adjust also points out that there is still significant room for growth in the overseas revenue of Chinese games, with the projection that this figure will increase to $26.5 billion by 2026. Correspondingly, nearly 80% of Chinese app developers have plans to go global.

It is not difficult to observe that although the growth rate of the mobile application market has begun to fall back to the pre-epidemic level gradually and domestic competition is increasing, both enterprises and individual developers are increasingly considering the overseas market as a necessary option.

Purnima Mehta, Global Vice President of Google Play. Credit: TN Global

Recently, at the 2023 Google Developers Conference, TNGlobal had the honor of having a conversation with Purnima Mehta, the Global Vice President of Partnerships at Google Play, about the recent changes in the overseas expansion of Chinese developers and the prospects of this new wave of Chinese developers going global.

Mehta was last in China four years ago. Based on her experiences in engaging with Chinese developers during this period, she noted a significant change at the developer level. Previously, Chinese developers focused on the Chinese market and gradually expanded globally. However, Chinese developers are now starting with a global perspective. She notes that Chinese developers are more ambitious, with many aiming to reach a global audience, even small companies.

Google Play announces awards at the end of each year, selected based on different local markets. Notably, 48 Chinese applications received Best of Play awards from 23 markets and regions at the end of 2022. According to Mehta, “This shows that Chinese developers truly understand the demands of different local markets.”

Mehta also pointed out several factors behind Chinese developers achieving such broad success in overseas markets. Firstly, the size of the Chinese domestic market is immense, so Chinese developers are accustomed to working in a market on a very large scale. Secondly, China has long emphasized overseas markets. Therefore, developers naturally have a global mindset. Thirdly, there are abundant resources. She mentioned that China has a vast talent pool, capable of building large teams.

“I’ve seen a statistic that there are 110 million developers in China with significant development capabilities. So it’s hard to imagine the scale of developer teams and talent, as well as their testing capabilities,” Mehta told us. “The export-oriented mindset and the enormous market size lead Chinese developers to consider that their applications should be adaptable to various devices from the design stage. Unlike other markets, where the audience may be smaller and limited to specific types of devices, Chinese developers do not face such constraints. Additionally, China has a strong developer community that helps each other. Many people have undergone significant training, and this community fosters a great development atmosphere.”

With the mobile app global expansion track becoming increasingly competitive, the challenges in this field are also getting tougher. Regarding this, Mehta offered several suggestions. Firstly, in any industry, you must learn from the best in that industry. All Google and Android tools are open. So, you should not attempt shortcuts or rush to market your app; instead, focus on quality. The competition in this market is fierce, so you must learn from the best.

Secondly, you must understand what users need and what kind of value proposition you can provide. If your app is just like the others on the market, it’s hard to be successful. Therefore, while you need to learn from the best, you must also have your unique qualities.

“Thirdly, always remember to prioritize user trust and security. Once trust is lost, users are lost. Also, every time someone asks ‘what is it,’ I like to emphasize ‘how it’s done.’ I think you should consider yourself a user and use all these apps. So, start by being a user yourself, download as many apps as possible, and try them out. This is the easiest and simplest way to judge what is good and what is not. In China, there is a fantastic developer community. We have a very active group called the Google Developer Community, so Chinese developers should participate in these communities to exchange and learn. There is a lot of content available, and all the tools are free. So, you must try, test, and experience.”

How China’s company management practices are transforming business leadership

Ashley Dudarenok — Wed, 27 Sep 2023 08:25:18 +0000

Maverick management and leadership styles have emerged in China as a result of the country’s hypercompetitive market, rapid industrial and digital transition, enormous consumer base, massive labour force, advanced manufacturing infrastructure, and ability to adapt to practical and economic difficulties.

Insider

Ashley Galina Dudarenok is the founder of Alarice and a China marketing expert.

TechNode Insider is an open platform for subject experts to discuss China tech with TechNode’s audience.

China’s situation and strong desire to improve its business, economy, industry, and digital skills put it in a position where digitally enhanced directed autonomy (DEDA) could grow, resulting in some fascinating management structures.

As management changes, worker freedom becomes more of a focus. Some Western companies have given workers more freedom and less control, but this way of doing things often doesn’t take into account the role that technology and digital platforms can play and can lose sight of business goals and metrics.

DEDA gives employees more freedom through digital platforms that let them organise themselves around business targets without direct help from managers. It gives front-line employees direct access to a company’s resources and capabilities, changes based on the situation, keeps an eye on how much freedom employees have, and has clear, measurable goals.

Haier’s Rendanheyi model

Haier, a Chinese refrigerator company, began in the 1920s as a Qingdao factory. It became a state-owned enterprise in 1949, but faced debts and poor management. Zhang Ruimin, an assistant city manager, took over in 1984 and focused on product quality. After partnering with Liebherr, Haier became profitable and globally known, with Zhang as chair and CEO.

Haier’s Rendanheyi, developed under Zhang, integrates producer and customer goals, promoting agility, entrepreneurship, creativity, and innovation. The company consists of self-managed micro-enterprises, each acting as a startup with access to company resources. Teams pursue defined business goals based on customer needs or market gaps. Single-threaded leadership is used in these micro-enterprises, reducing bureaucracy and administrative distraction. Such an approach has been used at Amazon for some time.

Decentralized leadership in Haier emphasizes coaching over commanding, affecting compensation and hiring protocols. After Haier acquired GE Appliances in 2016, Chief Technology Officer Kevin Nolan was promoted to CEO, focusing on products rather than profits. Haier also changed its hiring process to attract entrepreneurial people.

The company’s latest update is ecosystem micro-communities (EMs), which are groups of small business units that use contracts to determine rights and responsibilities. An example of this is two Haier refrigerator sales micro-enterprises in different cities forming an EM, offering zero-defect, zero-delay products. They agreed to jointly earn 140,000 RMB for meeting their goal plus a 20% profit boost, and 230,000 RMB for exceeding it by 30%. They ended up exceeding by 30% and got their larger incentive.

The digital middle

Companies in the West have traditionally had a middle management layer that connects top decision-makers and other departments, facilitating access to major corporate assets like archives, databases, warehouses, and logistics.

However, in some companies in China, this middle layer has been replaced by digital platforms that provide more open access to corporate resources and tight monitoring of project progress for smaller teams. The structure consists of customer and partnership interfaces on the front end and assets like databases, warehouses, and manufacturing plants on the back end.

Alibaba has honed its middle by focusing on its digital middle office, zhongtai, led by the group CTO. This platform is maintained and developed by cross-functional teams, catering to over two million merchants across hundreds of businesses. It is linked to other Alibaba tools such as Alipay, Alibaba Cloud, Cainiao, and project management service DingTalk, enhancing its flexibility and agility.

Ping An’s difficult transition

Ping An, founded in 1988, was the most valuable insurance group globally in 2020. The company transformed from a financial services firm to a technology ecosystem, incubating 11 affiliates across five verticals with cloud-based IT systems. The market value of Ping An has increased by over 400% since 2013.

The founder and chairman, Peter Ma, saw the rise of technology and tech companies like Alibaba and Tencent, and the increasing assessment of corporations on a wider range of assets, including data and intellectual property.

In 2013, Ping An moved 80% of its proprietary IT systems to the cloud when few other corporations were doing so, with MIT graduate Jessica Tan managing the transition. The company implemented advanced data analytics across businesses through its own cloud. It took time and was painful but ultimately paid off in the long run.

Ping An also took an ecosystem and incubator approach, focusing on efficiency and market trends. OneConnect, a fintech spin-off, served all of China’s major banks and more than half of China’s insurance companies, and was valued at $7 billion in 2019. Ping An incubated 11 affiliates like OneConnect by sharing talent and experts, incentivizing entrepreneurship, courting third-party investment, and enabling autonomy and entity-specific KPIs.

Applications by Western brands

Western companies have successfully implemented management approaches that emphasize teamwork, focused goals, and team incentives. Continental Airlines, for instance, offered employees a $60 monthly bonus if their scheduling performance ranked among the top five US airlines. Bayer, a German pharmaceutical company, implemented incentives in China that combined money and social rewards, with staff sending thank you messages on their digital platform. These programs can help increase team unity and focus, ultimately improving the company’s bottom line.

New corporate management paradigms emerging from China demonstrate the power of customer focus, an entrepreneurial approach, digitization, data-driven decision-making, open innovation, employee-centricity, and experimentation.

Ashley Dudarenok is the author of Innovation Factory: China’s Digital Playbook For Global Brands.

E-sports makes debut at the Asian Games 2023 in Hangzhou, China

Jessie Wu — Thu, 21 Sep 2023 09:27:59 +0000

The Asian Games 2023 will take place in Hangzhou, China, from September 23 to October 8. Esports (online gaming), included as an official event of the Asian Games for the first time, will offer seven gold medals across seven gaming titles.

Why it matters: The 19th Asian Games have introduced Esports as a medal event, giving global recognition to this emerging form of sport alongside more familiar physical activities. In recent years, Esports has gained significant popularity worldwide, demanding a comparable level of skill, strategy, and dedication to traditional sports.

Details: Over 15 days of competition, the Hangzhou Asian Games will award a total of 481 gold medals, including seven gold medals for Esports.

A total of 45 countries have registered for the Asian Games 2023, with 31 countries and regions participating in Esports, according to Tencent Games. Over 500 Esport athletes will compete for gold medals at the Hangzhou Esports Center. Completed in 2022, the Hangzhou Esports Center covers an area of 80,000 square meters, and can accommodate up to 5,000 spectators. It was designed specifically for the Asian Games Esports events and resembles a sci-fi spaceship when viewed from above.
The Esports lineup comprises: League of Legends, DOTA 2, Honor of Kings (also known as Arena of Valor), PUBG, FIFA Online 4, Street Fighter V, and Dream Three Kingdoms 2. Of these, two gaming titles were developed by Chinese game developers. Honor of Kings was developed by Timi Studio Group (a subsidiary of Tencent Games), while Dream Three Kingdoms 2 was published by Hangzhou Electronic Soul Network Technology.
League of Legends, DOTA 2, and Honor of Kings belong to the multiplayer online battle arena (MOBA) game genre. They involve two teams competing against each other to destroy an enemy base while defending their own base. MOBA games combine elements of strategy, teamwork, and individual skill, offering a wide range of heroes, each with unique abilities.
PUBG, which stands for Player Unknown’s Battlegrounds, is an online multiplayer battle royale game. Players are dropped onto a remote island along with 99 other players, where they must scavenge for weapons, armor, and supplies while eliminating other players. The ultimate goal is to be the last player or team standing. The game features a shrinking play zone that forces players into closer and more intense encounters as play progresses.
FIFA Online 4 is a free-to-play online football simulation game, belonging to the popular FIFA series. Players can create and manage their own virtual football teams, compete against other players in online matches, and participate in various game modes, including league play, tournaments, and more. The game includes a wide range of real-life football players, teams, and leagues from around the world.
Street Fighter V features a roster of diverse characters, each with their own unique fighting styles and special moves. Players engage in one-on-one battles, utilizing a combination of punches, kicks, and special abilities to defeat their opponents. Success hinges on precise timing, strategy, and the execution of combo moves to outmaneuver opponents.
Dream Three Kingdoms 2 is a strategy game set in ancient China. It challenges players to navigate the intricacies of diplomacy, warfare, and resource management to build their kingdoms and defeat their rivals.

Context: Originally scheduled to take place in 2022, the 19th Asian Games were delayed until this month due to COVID-19 travel restrictions.

Vivo’s sub-brand iQOO has been chosen as the official Esports gaming phone provider, which means that all contests at the international event will use their flagship smartphones.

Huawei’s 5G chip: Is it that surprising?

Stewart Randall — Thu, 21 Sep 2023 07:37:53 +0000

Well, it’s here. In June, the rumors were there’d be a 5G Huawei phone towards the end of the year. It hit the shelves two or three months earlier than expected.

In my previous article, I argued that Huawei’s handset would be more of a domestic play, and I stand by that argument. While I did argue Huawei and SMIC creating a 7nm chip was no surprise, what has been produced has nevertheless surprised some, including myself.

So what is good about this chip? How will Huawei and SMIC progress from here? And what does it mean for others in the industry?

The positives

Let’s start with the positives from a Chinese point of view. Although not 100% confirmed, as we are not sure who else could possibly fabricate this chip for Huawei, SMIC has seemingly produced a true 7nm density chip without EUV. (Some still speculate that SMIC isn’t responsible.) Despite what many believe this was always possible – TSMC did it back in 2018 and SMIC did it by itself earlier in 2023 with a bitcoin mining chip. So no surprises here. When it comes to using DUV equipment to create 7nm density designs SMIC now seems to be on a par with the rest of the world. What the yield looks like is unknown, I can’t believe it is as low as 10%, and also it cannot be as good as an EUV process. I can only speculate that it is good enough and will improve as SMIC gets more customers for this process. With government subsidies, the economics of low yields mean less to SMIC than they might to other foundries.

The other positive is its RF front-end. While Huawei was always a leading modem designer, it previously relied on US suppliers like Skyworks and Qorvo for the RF front-end. This is no longer the case with the Kirin 9000S. It’s impressive that a completely self-developed front-end works at 5G speeds, even if the OS still says 4G.

The negatives

Nevertheless, there are a few negatives. Despite the rhetoric, this is not a completely indigenous Chinese chip. It is based on Arm IP, it uses SK Hynix memory, it was presumably designed somehow using US EDA tools (I would like to know if it wasn’t), and the fabrication process used foreign equipment from the likes of ASML, AMAT, LAM, TEL, KLA, etc.

Sanctions to date haven’t stopped China’s equipment imports. In fact, they are higher than ever on this front rather than finding ways around sanctions. China hasn’t really needed to do anything. The equipment that can be used for 28nm can be repurposed for 7nm, and perhaps 5nm in a couple of years. While this is a positive for China, it does mean that it is still reliant; products from the likes of SMEE are still far behind. SMIC is keeping quiet. It won’t want to have any stricter sanctions placed on it, but really, the only way to truly stop it would be to limit or ban all sales into China for all such equipment. This is unlikely to happen.

The use of SK Hynix memory is also interesting. This must have come from old stockpiles as SK Hynix was not aware of any recent sales to sanctioned Huawei. This answers the question as to whether domestic DRAM or NAND is ready for such applications yet, and it seems the answer is no, as Huawei opted for SK Hynix memory which was first announced in 2020. We don’t know how much is stockpiled, so it could be possible that future versions of the chip will be forced to change to domestic suppliers.

The fallout

The popular opinion in Chinese society is that China has broken US sanctions, Huawei and SMIC have saved China, and the Huawei phone deserves all the praise it can get. In one sense this is true. It performs like a leading edge chip from a couple of years ago and is easily good enough for any application today. I myself use a phone more than two years old.

There are others outside of China that completely dismiss this chip as a low-yield propaganda project. The likes of MediaTek announced its own equivalent chip using TSMC’s 3nm process almost at the same time as Huawei’s announcement. Huawei itself used to use TSMC’s 5nm process before sanctions, so in fact, sanctions have caused Huawei to go backward.

The truth is in between of course. This is a serious chip, but not surprising. We know 7nm chips can be created using multi-patterning on the ASML 1980i series of DUV lithography machines, and this unsurprisingly is what SMIC has done. We know Huawei subsidiary HiSilicon is great at designing handset chips, and this is what they’ve done extremely well here.

Threats and restrictions remain, however, sanctions could get tighter. SMIC could be punished for supplying Huawei.; it does have a considerable foreign business that could be threatened for example. Could Huawei itself be sued in any way for using SK Hynix chips or perhaps illegally using US tools? If SMIC produced a chip where its customer could not prove it was using properly licensed tools, this could also be an issue for SMIC. I know from my own experience that not having a proper license for EDA tools in China can be quite common. This in turn could restrict any sales outside of China. Even if all this is fine, selling outside of China will still be difficult. This is an expensive $1,000 phone with no Google services installed and a chip performing to the standards of two years ago. The average consumer is not going to want to install Google services manually themselves, let alone fork out $1,000 for doing so. Patriotic marketing does not translate outside of China.

Finally, this new device may mean hard times in the Chinese market for Huawei’s competitors and other chip companies. As Huawei’s sales dropped in recent years, Oppo, Vivo, Xiaomi, and Apple, all took a piece of the pie. This in turn led to more sales for Qualcomm and MediaTek who supply these other handset companies. Will Huawei’s sales rise to eat into that of other Chinese handset companies or Apple’s? If Apple sales in China remain strong then Huawei’s phone will only serve to take market share away from other Chinese brands and hurt Qualcomm and MediaTek as well in the process.

Honor launches handbag-style foldable phone the V Purse

Jessie Wu — Wed, 20 Sep 2023 09:37:22 +0000

Chinese phone maker Honor on Tuesday released its Honor V Purse, a smartphone designed to resemble a handbag. Using optimized hinges and batteries, the new Honor V Purse is the slimmest foldable phone on the market, with a body measuring 8.6mm in its folded state and 4.3m when unfolded.

Why it matters: Three years on from its forced split with Huawei, Honor continues to try and establish its own brand identity and differentiate itself from other Chinese smartphone makers. Meanwhile, the competition for foldable smartphones is steadily increasing as more manufacturers enter this niche market; in recent weeks, major Chinese players Oppo and Huawei have introduced their own foldable devices, namely the Oppo Find N3 Flip and the Huawei Mate X5. Honor’s “handbag” design may help it stand out in an increasingly competitive market.

Details: While the Honor V Purse’s design is certainly eye-catching, its record-breakingly thin body has meant compromises have been made on performance.

The V Purse is powered by the Snapdragon 778G. Qualcomm released this mid-range chipset in May 2021 and updated it to the Snapdragon 7s Gen 2 on Monday. The phone’s use of an older generation of chips means that the V Purse is unlikely to be the first choice of those seeking high-performance gaming capabilities.
In its folded state, the phone measures 156.5 x 74.7 x 8.6mm and weighs 214g. For comparison, the iPhone 15 Pro Max is 159.9 x 76.7 x 8.3mm and 221g.
The device offers a 7.71-inch 2K OLED display with a peak brightness of 1,600 nits, 2,160Hz high frequency PWM dimming, and a 90Hz refresh rate. The silicon-carbon batteries provide a capacity of 4,500mAh, which can last for around eight hours of regular usage.
Designed to be worn like a handbag, the phone comes with a strap or chain and can be customized with different wallpapers on its outer screen. Honor is also selling a leather phone case to complete the purse feel.
The V Purse comes in three color options: gold, blue, and black. The 16GB RAM smartphone provides two storage variants, 256GB and 512GB, which are priced at RMB 5,999 ($822) and RMB 6,999 ($959) respectively.
At the product launch, Honor’s CEO Zhao Ming presented a set of data for foldable phones showing that global shipments of the devices exceeded nine million units in 2021, accounting for 4% of the high-end phone market. Shipments of foldable phones are predicted to exceed 100 million units in 2027, and make up 39% of high-end phone sales by that time, according to the data presented by Zhao.
Zhao also refuted recent reports that Honor is set to return to the Huawei fold. Zhao labeled Honor’s former parent company “a respected competitor” and said that competition between the two brands was a positive for the industry.

Context: In August, market intelligence firm IDC released a report that indicates the foldable phone market in China has experienced rapid growth, albeit from a low base. In the first half of 2023, 2.27 million foldable phones were shipped, a year-on-year increase of 102%.

In the second quarter of 2023, the shipment of foldable phones in China reached 1.26 million units, an increase of 173% year-on-year. The leading five brands were Huawei (with a 43% market share), Vivo (19.7%), Oppo (15.9%), Samsung (8.9%), and Honor (7.2%).

Alibaba to inject $2 billion into its Turkish unit as it doubles down on overseas plans

Cheyenne Dong — Tue, 19 Sep 2023 09:42:44 +0000

Alibaba is to boost its e-commerce business outside China with a $2 billion investment in its Turkish unit Trendyol, Reuters reported, quoting a statement from Trendyol on Monday.

Why it matters: Alibaba’s decision to increase investment in Trendyol comes after the Turkish platform made an operating profit for the first time in the second quarter. The tech giant’s expansion into the Middle Eastern country, one that often serves as a bridge between Europe and Asia, will bolster its global business efforts.

Details: The financial commitment was made during a meeting between Michael Evans, president of Alibaba, and Turkish President Tayyip Erdogan. While details were not disclosed, the investment is expected to materialize “in the near future,” said Evans.

Trendyol said in the announcement that the Chinese e-commerce giant intends to establish a data and logistics center in Ankara, the capital of Turkey, and an export operations center at Istanbul airport.
Alibaba acquired major shares in Trendyol via a $728 million deal in 2018, and has invested a total of $1.4 billion in Turkey to date, according to Evans. Over the past five years, Trendyol, as the country’s largest e-commerce marketplace, saw its customers rise nearly threefold to 30 million. The platform boasts around 250,000 sellers, offering over 200 million items.
Beyond its business focus on Turkey’s domestic market, the online marketplace made efforts to expand into Azerbaijan in May, a year after Trendyol’s entry into Germany. The platform is also gearing up for launches in the Netherlands, Luxembourg, and the UK soon, according to a report by Turkish media outlet Daily Sabah.

Context: In 2022, the size of the Turkish e-commerce market grew 110%, rising from 382 billion Lira in 2021 to 801 billion Lira last year, according to research conducted by the Turkish E-Commerce Association (ETİD). E-commerce accounted for a 16.5% share of the retail sector in 2022, in contrast to China’s more than 31%.

Chinese battery maker Gotion begins production at first EU factory

Jill Shen — Mon, 18 Sep 2023 10:00:37 +0000

Chinese electric vehicle battery maker Gotion High-Tech announced on Sept. 16 that it has begun production at its first European plant in Gottingen, Germany, and expects to begin supplying local markets next month. The move represents a major overseas market milestone for the firm, which counts Volkswagen as its largest shareholder with a 24.77% stake.

Why it matters: The move has made Gotion the second Chinese battery supplier after CATL to set up an overseas production base in Europe, which could help strengthen the development of a local battery supply chain on the continent.

European legislators recently passed new rules that would require businesses to label the carbon footprints of their batteries and use a minimum amount of recycled raw materials eight years after the law comes into effect, Reuters reported.

Details: Gotion has operationalized its first production line at the Gottingen factory and received a large number of orders from local clients, with plans to begin supplying local markets in October, Peter Willemsen, chief operating officer of Gotion Global said in a statement. The Chinese enterprise took over the plant from German auto supplier Bosch in 2021.

Gotion will mass produce battery packs for both commercial and passenger vehicles, as well as those for energy storage in the new facility, which will have an annual capacity of 5 gigawatt hours (GWh) by mid-2024. It aims for a total capacity for batteries equivalent to 20 GWh when construction is completed, which is anticipated by 2025.
The Chinese battery maker also announced battery development and supply partnerships with European enterprises including German chemical giant BASF and Swiss engineering company ABB on Sept. 16. The plant will serve as a regional research and development center and a logistics hub at a projected annual output value of €2 billion once it comes into full operation.

Context: The world’s ninth largest battery maker by shipments, Gotion is already facilitating the establishment of a battery plant scheduled for operation in 2025 with Volkswagen in Salzgitter, a city close to Wolfsburg where its major shareholder is headquartered.

Gotion also plans to build a $6.3 billion factory in Morocco and is considering setting up a joint facility for making battery cells at an annual capacity of 40 GWh with Slovakian battery startup InoBat in the eastern European country. Construction of two US factories in Illinois and Michigan is also in the pipeline.
Rival CATL initiated efforts to build its first European plant in Thuringia, Germany in 2018 and kicked off production last December. Another battery giant, BYD, is mulling local production of EV batteries in Hungary, while Great Wall Motor-backed SVolt recently announced ambitious European expansion plans.

Huawei enters phone sales war with Oppo and Xiaomi after weeks of limelight-stealing marketing moves

Jessie Wu — Fri, 15 Sep 2023 09:57:25 +0000

Chinese telecoms giant Huawei is set to complete a month of high-profile statement-making moves with its autumn product launch on September 25, with the company confirming the event on Chinese microblogging platform Weibo on Thursday. The date marks the anniversary of the return to China of Sabrina Meng (Meng Wanzhou), Huawei’s chief financial officer, who was under house arrest in Canada for three years due to an extradition request from the US, where she faced fraud charges.

The announcement comes after Huawei’s much-hyped surprise launch of pre-sales for its Mate 60 Pro phone, during the visit to China of US Secretary of Commerce Gina Raimondo. The phone features a self-developed Kirin 9000S chip that uses 7nm technology despite US sanctions aimed at limiting China’s chip-developing capabilities.

Why it matters: Huawei is hoping to re-establish itself in the mobile phone market after three years of US restrictions. The autumn launch also pits the company against two major Chinese phone manufacturers, Xiaomi and Oppo.

Details: The launch of the new Mate series means that Huawei, Oppo, and Xiaomi have now all updated their flagship phones ahead of November 11, a major shopping festival in China.

Oppo launched its latest foldable offering the Find N3 Flip on August 29, the day Huawei started pre-sales of its Mate 60 Pro without warning. The following day, trending topics on Weibo were dominated by discussion around whether the Huawei Mate 60 Pro was 5G-capable or not. Huawei unveiled the Mate 60 Pro+ and Mate X5 foldable on September 8, coinciding with the official sales release of the Oppo Find N3 Flip.
Some industry analysts have speculated that Huawei picked these dates for maximum marketing value. It was not the first time that Huawei appears to have picked a strategic date. On August 23, several industry sources said Huawei planned to hold a product launch event on September 12, the same day as Apple’s latest product launch.
Huawei may have invested heavily in promoting its brand and products on Weibo over the last two weeks. Various hashtags related to Huawei products have featured prominently on the platform’s trending topic list, for instance #HuaweiMate60 (1.5 billions views and 238,000 discussions), #HuaweiMatex5 (600 million views and 40,000 discussions), and #HuaweiProductLaunch (200 million views and 29,000 discussions). Discussion figures are a combination of posts, likes, comments, and forwards.
Xiaomi has been discreetly preparing to release its annual flagship Xiaomi 14 series at the same time. The device will be the first Android phone powered by Snapdragon 8 Gen 3 on the global market. On Wednesday, sources told IThome that Xiaomi will release its Xiaomi 14 series in early November, with products positioned in a similar manner to the iPhone 15 Pro/Pro Max. Orders placed with online and physical stores have increased by 60% compared with the same period last year, the IThome report added.
There has been no official announcement regarding products Huawei will showcase at its upcoming launch event, though there has been speculation that the firm may introduce the Mate 60 series and Mate X5 foldable. The centerpiece of the event will be the unveiling of the Kirin 9000S 5G processor, according to local media outlet IThome.

Contexts: Huawei has enjoyed a wave of nationalistic support in China, with backing for its new products from numerous official channels and state media accounts on social media.

On Tuesday, Martin Yang, an analyst from US-based financial firm Oppenheimer, said that Huawei’s new flagship phones may lead to a decrease in iPhone shipments in 2024 by 10 million units.
On Thursday, Huawei increased its 2023 mobile phone shipment target to at least 40 million units, according to industry sources.

How digital payments are unlocking growth for future commerce

TechNode Staff — Wed, 13 Sep 2023 05:45:40 +0000

In an era marked by unprecedented digital transformation, digital payment tools have emerged as indispensable enablers of commerce in both the online and offline realms. The future of payment is the future of commerce.

Over the past years, digital payment tools have revolutionized the way consumers and businesses engage in the online sphere, with this transformation not only offering customers flexibility but also encouraging repeat business and fostering brand loyalty.

At the 2023 INCLUSION Conference on the Bund, Douglas Feagin, head of Alipay+ cross-border mobile payment services and senior vice president of Ant Group; Tim Huang, head of corporate banking greater China, JP Morgan; and Shaozhang Ding, vice president of digital sales DFS Group, joined Roberto Chade, CEO, and co-founder of Dotz, to discuss how digital tools are unlocking growth for future commerce.

Credit: INCLUSION Conference

How are digital payments evolving?

Digital payment methods have come a long way, and their evolution is nothing short of revolutionary. Take Alipay in China, which currently serves over 1 billion consumers through its comprehensive lifestyle services app.

Alipay’s success has also inspired similar innovations worldwide, as many countries have embraced new forms of digital payments.

One exciting development is Alipay+, which offers payment and marketing solutions for digital consumers and digitally enabled merchants to reach a total of 1.4 billion consumers globally.

An example that Feagin provided during the discussion was that of Alipay+ D-store, which was unveiled last year and is currently mainly used in the food and beverage sector, offering a one-stop solution that companies can use to quickly and affordably build digital stores across multiple platforms.

Digital wallets have become a bridge, enabling not just payments but also offering marketing tools and enhanced consumer engagement.

In the global travel retail industry, represented at this discussion by DFS Group, Alipay+ has assumed a pivotal role in engaging upper-funnel customers and creating international experiences.

Similarly, companies like Dotz in Brazil are establishing digital payments as a “second currency” in the country, while they also collect data through their loyalty program and gain deep insights into consumer behavior and preferences.

Digitalization has been further accelerated in many countries over the past years as customers worldwide increasingly demand the convenience of mobile payments and digital services. This shift has fueled the adoption of advanced digital solutions and provided fertile ground for further innovation.

The evolution of digital payment methods, exemplified by platforms like Alipay and its global counterparts, is reshaping the way businesses engage with consumers, expand their reach, and secure transactions in an increasingly digitized world.

Misconceptions exist

However, misconceptions about digital payments persist, from consumer behavior to organizational readiness, as highlighted by the four speakers during the discussion.

Despite the abundance of data and readily available technology, many companies struggle to harness them effectively in personalized communication.

“Data is everywhere. Technology is available. But at the end of the day, we as consumers keep receiving magnified information communication from different companies that drive payments and consumer behavior,” said Chade, adding that this could be greatly improved if companies engaged in personalized communication and messaging.

From the organizational perspective, Ding stressed that digital transformation is an ongoing journey rather than a one-time event. “We need a lot of coaching, inspiration, education, and sometimes a baby step to help employees adapt to digital changes,” he said.

Like Ant Group’s expansion and investments in digital wallets around the world, Feagin said it reminds him of the significance of recognizing that not all countries are like China, where digital enablement is widespread.

“Many of these countries are at a much earlier stage of development, so they don’t have that kind of embedded infrastructure.” Therefore, when seeking global expansion, companies need to be aware that countries at different stages of digital development require tailored approaches.

For instance, “beginning with simple peer-to-peer transactions, such as mobile phone top-ups and ride-hailing, can gradually lead to more complex use cases like online cross-border transactions,” said Feagin, adding that building comfort and confidence domestically is the stepping stone to international markets.

What will the future of digital payments look like?

The future of digital payments is poised to bring exciting possibilities, although predicting precisely how these tools will reshape the merchant-consumer landscape in five or ten years is a challenging task, given the rapid pace of change in the digital landscape. However, some key trends are emerging.

“Consumers of the future are likely to adopt a hybrid approach, combining online and offline experiences,” according to Chade.

He emphasized that this combination could offer the “best of both worlds,” where consumers enjoy personalized promotions online, transition seamlessly to the in-store experience, and make digital payments. But he said that he hadn’t seen many companies doing that yet.

Huang shared similar thoughts with Chade during the discussion. “I think it’s more important is, people want to buy things with experience. As they enjoy, they experience something, there’s always an impulse buy moment. You need to capture as a merchant.”

For travel retail, where decision-making often happens well in advance, connecting with customers before their journey will be crucial.

“Travelers do very extensive research against their travel and also want to leverage all the information sources that would help them understand where they shop and what they should shop,” said Ding, adding that it’s “quite important” for them to connect the upper funnel customers before they travel.

Meanwhile, the influence of social media on consumer behavior will continue to play a significant role in shaping the digital landscape.

While a lot of social media influences the things that people are already doing to follow the same pattern, leveraging more sophisticated forms of AI will help companies understand consumers on a deeper level and deliver products and experiences that align with their lifestyles and preferences.

The path forward is not without challenges, and collaboration among digital players and businesses will be essential. As the digital payment landscape continues to evolve, Ant Group and its partners look forward to innovating and driving this transformation to create a more interconnected and prosperous future.

This article was supported by Ant Group. We believe in transparency in our publishing and monetization model. Read more here.

TSMC cooperates with Broadcom and Nvidia to develop advanced silicon photonics technology: report

Jessie Wu — Tue, 12 Sep 2023 10:15:05 +0000

TSMC is working with Broadcom and Nvidia to develop silicon photonics and co-packaged optics (CPO), after the AI craze has lifted demand for data transmission, local media outlet Economic Daily News exclusively reported on Monday. The company has already formed an R&D team of over 200 employees to target emerging opportunities in high-speed computing chips based on silicon photonics technology, with production expected to start as early as the second half of next year. TSMC declined to comment on this matter.

Why it matters: The semiconductor industry has been under pressure to achieve faster data transmission speeds with zero signal delay, as AI applications flood most tech fields. This means that the traditional method of using electricity as a signal transmission medium is no longer sufficient. The cutting edge technology of silicon photonics works by converting electricity into light, significantly improving data transmission speeds.

Details: TSMC asserts that silicon photonics represents a new era for semiconductors. Douglas Yu, vice president of TSMC, stated that two key problems, energy efficiency and AI computing power, can be solved if TSMC succeeds in developing an applicable silicon photonics integration system in the upcoming years.

SEMICON Taiwan 2023 held its grand exhibition in Taipei from September 6 to September 8, with TSMC and Advanced Semiconductor Engineering (ASE) addressing topics related to silicon photonics. Intel, Nvidia, Broadcom, and other leading semiconductor companies have all successively launched development programs for silicon photonics and co-packaged optical components, according to Economic Daily News. The overall market is projected to grow from as soon as 2024.
TSMC is partnering with Broadcom, Nvidia, and other major customers to develop new products related to silicon photons and co-packaged optical components, citing sources familiar with the matter. These will include chip processes from45 nm to 7 nm, and are expected to enter mass production in 2025.
TSMC has assembled a team of 200 R&D employees to target silicon photonics, aiming to introduce the new technology into CPU, GPU, and other computing processes in the future. Due to faster transmission speeds enabled by light, the computing power of these new products will be several times greater than existing computing processors.
With rapid advancements in transmission speeds, managing power loss and heat dissipation become the next big issues. A solution proposed by the semiconductor industry involves integrating silicon photonics components and application-specific integrated circuits (ASIC) into a single module through co-packaged optics (CPO) technology, a method both Microsoft and Meta have adopted in their new-generation network architecture.

Context：Silicon photonics is the study and application of photonic systems, which use silicon as an optical medium. Silicon photonics technology was introduced by Intel in 2010, with the challenge being the conversion from traditional electricity. Due to its relatively high cost, it is currently limited to data centers and server markets.

China’s top influencer Li Jiaqi hit by controversy ahead of China’s biggest shopping festival

Cheyenne Dong — Tue, 12 Sep 2023 09:41:48 +0000

China’s top livestreaming influencer Li Jiaqi has angered part of his fanbase after losing his temper with a consumer who questioned a product’s high price during a recent live broadcast. Li asked the viewer of the sales pitch to question if they had worked hard enough to afford the item, rather than niggle about the cost.

Why it matters: The social media uproar about Li’s remark comes a year after the influencer returned to the public eye following an unexplained three-month absence for livestreaming platforms. The incident also comes less than two months before China’s largest annual shopping extravaganza, Singles Day, where domestic and international brands do their utmost to leverage the huge following top influencers like Li enjoy, in order to expand sales.

Details: Li was forced to apologize twice as his remarks created a PR storm, as the popular celebrity lost nearly a million followers in a day on the Twitter-like social media site Weibo, even though this number represents less than 5% of his total fans on the platform.

On Monday night, Li apologized during his livestream a few hours after issuing a written apology. He cried, acknowledging that his inappropriate remarks were “disrespectful” to others and that everyone had the right to express their opinions about products marketed on livestreams.
The controversial eyebrow pencil from Chinese cosmetics brand Florasis was priced at RMB 79 ($11) during Li’s livestream that day. After seeing a comment saying “Florasis products are getting more expensive,” Li responded “How could that be expensive? Domestic brands are struggling.” A clip of the comments spread widely on Chinese social media.
Established in early 2017, Florasis positions itself as a brand combining “Chinese trends” and “Eastern makeup,” and is a top brand promoted by Li Jiaqi in his online live room. In 2018, Li earned the nickname ‘Lipstick King’ for his performance testing various lipstick colors, making him the most popular salesperson online during China’s live e-commerce boom.
Li first promoted Florasis goods in March 2019, with the brand collaborating closely with him ever since. The cosmetic maker’s gross merchandise volume (GMV) increased 5.4 times between 2019 and 2021, reaching total sales of RMB 5.4 billion RMB in 2021.
Top domestic cosmetics brands that frequently collaborate with Li, including Florasis and Perfect Diary, told local media outlet Caixin that Li’s contribution to their income was less than 5%. Florasis has yet to issue an official response to Li’s outburst.

Context: Chinese netizens’ dissatisfaction with Li is largely due to their belief that his comments made a mockery of low-income groups, as consumers are particularly sensitive to prices amid domestic economic sluggishness. His first apology was also widely viewed as insincere and failing to grasp the source of many users’ anger.

Li earned RMB 1.855 billion ($2.5 billion) in 2021, according to a September 11 report by Chinese news outlet Shanghai Securities News.

Correction: An earlier version of the article miscalculated the income of Li Jiaqi which is RMB 1.855 billion rather than the RMB 18.553 billion as mentioned.

Practitioners from Malaysia, Bangladesh, and Nigeria discuss digital economic development for underserved communities at Shanghai’s INCLUSION Conference

TechNode Staff — Tue, 12 Sep 2023 03:00:00 +0000

With the theme of “Technology for a Sustainable Future,” the INCLUSION Conference on the Bund was held in Shanghai from September 7 to 9, bringing together global experts, scholars, and entrepreneurs to explore technological developments in economic industries.

On September 8, one of the events organizing committee members, Ant Group invited three overseas guests from the 10×1000 Tech for Inclusion program to the C3 Forum to share their views on the theme, “Building an inclusive digital economy with the new generation of innovators”: Nuraizah Shamsul Baharin (managing director of MADcash in Malaysia), Anbar Nawar (product manager at bKash in Bangladesh), and Opeyemi Praise (senior product manager at Sterling Bank in Nigeria).

Underserved communities often face unique challenges when accessing and harnessing digital technologies. However, opportunities can emerge from developing the digital economy in these communities. The three guests individually presented insights into their local markets and the varied challenges involved in developing the digital economy.

10×1000 Tech for Inclusion Program Initiated by Ant Group and IFC

Before the panel discussion, the host briefly introduced the 10×1000 Tech for Inclusion Program, an initiative aimed at promoting tech inclusion and bridging the digital divide in underserved communities.

The program focuses on providing support and resources to empower individuals and communities to fully participate in the digital economy. Its mission is to nurture and inspire at least 1,000 emerging talents and tech leaders each year for the next ten years. Currently, the program connects more than 5,000 individual talents in the global digital community, representing 96 countries and regions.

Empowering women to build their own businesses in Malaysia

Fintech, short for financial technology, refers to the use of technology and innovation to provide financial services and solutions. It encompasses a broad spectrum of digital tools, applications, and platforms designed to enhance and streamline various aspects of financial activities, including banking, payments, investments, lending, and insurance.

MADCash in Malaysia is a financial service provider that offers a range of cash loan options to individuals in Malaysia, with a particular focus on underprivileged groups including women with limited educational backgrounds. MADCash offers personal loans with flexible repayment options, aiming to provide a hassle-free loan application process with minimal documentation requirements and fast approval times.

MADCash stands for “multiply, assist, donate cash”, Nuraizah Shamsul Baharin, the managing director of MADCash explained at the panel. “We provide small funds for female entrepreneurs in our country who do not have access to credit. They cannot get loans since they are high risks for traditional banks, but we can help them build their small business,” she said.

In many developed countries and regions, resources related to education and employment are not equally accessible to women. Therefore, women face more obstacles in building their own startups, as most traditional banks often decline their loans for investments, due to factors such as credit history, educational background, and employment experiences. MADCash looks to offer one model for bypassing these traditional barriers.

Fostering trust in the digital economy for local customers in Bangladesh

bKash is a mobile financial service in Bangladesh, offering a diverse range of financial services, including money transfers, bill payments, mobile top-ups, and more, through a mobile app or USSD code. bKash has played a significant role in promoting financial inclusion in Bangladesh, especially among the unbanked population. One of the key advantages of bKash is its convenience. Users can easily send and receive money, pay bills, and make purchases using their mobile phones, without the need for a traditional bank account.

However, a key challenge lies in ensuring trust and security in digital technology. Like any digital financial service, there is always a risk of fraud and unauthorized access to personal information. It is crucial for both bKash and its users to prioritize security measures and educate customers about safe usage practices.

“First of all, what we really struggle with is the dependency on cash. There is a huge difference between cities and semi-urban or rural areas,” Anbar Nawar, product manager at bKash, explained “People don’t have access to a lot of technological knowledge, so they are more prone to using cash, even if we provide them with enough awareness about our apps, and our services. No matter how easy that is, they feel more comfortable with cash.”

In addition to trust issues, Anbar also elaborated on other challenges, including employment difficulties for technological talents in Bangladesh, huge differences between urban and rural areas, and the need for financial-related education for local people.

Emerging markets and opportunities in Nigeria

Sterling Bank is a leading financial institution in Nigeria, offering a wide range of financial services to individuals, businesses, and institutions. It provides various financial services, including personal banking, corporate banking, asset management, treasury services, and electronic banking solutions.

Similar to many banks in Nigeria, Sterling Bank has embraced digital banking to provide its customers with convenient and efficient banking services. This consists of internet banking, mobile banking, and other digital channels for transactions and account management.

“Last year, the total electronic transactions reached $1.7 trillion in Nigeria. It is projected to grow by 30% this year, at least, Opeyemi Praise, senior product manager at Sterling Bank, told the conference. “The internet penetration is 95% in our country. The challenge is that we need to advocate for overseas investors to localize their digital products for the local market.”

Another key challenge that Praise mentioned was the need for educational training in financial and technological fields for the younger generations in Nigeria. Young people under the age of 30 comprise more than 70 percent of Nigeria’s population, he added, indicating enormous potential in the digital economy for this African country.

This article was supported by Ant Group. We believe in transparency in our publishing and monetization model. Read more here.

Ant Group expands from payment to SME digitalization services in international operation

TechNode Staff — Mon, 11 Sep 2023 02:00:00 +0000

In a world of widespread economic uncertainty throughout most of 2023, small- and medium-sized enterprises (SMEs) are looking for new technological solutions to accelerate their businesses in a volatile period following the sudden impact of the COVID-19 pandemic.

A senior executive at China’s Ant Group expected digitalization driven by innovative technologies to become a key factor during the post-pandemic recovery, especially the prosperity of SMEs, while also reducing financial exclusion and enhancing data security.

Speaking during a panel discussion at this year’s INCLUSION·Conference on the Bund in Shanghai, Yang Peng, President of the International Business Group at Ant Group, said that digital transformation could help deepen SME merchants’ ties to consumers, and drive commerce with more growth tools. He also called for more collaborations among organizations to unleash the full potential of the digital economy.

Credit: INCLUSION Conference

Fragmented payment landscape

As the pandemic fueled a surge in online shopping and digital payments worldwide, almost all economies of the world have adopted payment innovations, significantly accelerating the development of e-wallets, bank apps, and super apps with a pay button.

However, technologies and support systems behind payment methods are not coordinated. In some countries, there are dozens of payment logos covering up a tiny cashier space. Because of this fragmented landscape, businesses, especially SMEs, face an incredibly complicated payment management situation.

“SMEs do need a helping hand on the payment side,” said Yang. “They should primarily focus on their businesses and services to serve their customers without spending too much resources on payment.

In 2016, Ant Group initiated efforts to develop Alipay+, a suite of cross-border digital payment and marketing solutions. According to Yang, today Alipay+ connects over 20 payment apps from Thailand to Italy, allowing consumers to use their familiar e-wallets wherever they go. This also allows merchants to focus on improving their products and fine-tuning their services, without the need to handle the maze of payment routes.

SMEs go digital

Payment is the end of a positive consumer journey but also could be the beginning of many new ones. According to Yang, digitalization solutions derived from digital payment can do more to help businesses and the economy, and “many SMEs are hungry for growth and want to harvest the benefit from digitalization”.

Ant Group is expanding SMEs’ access to more digital technologies, which reduces the barriers to market entry and enables them to operate more efficiently, saving them both time and resources. In November 2022, the Chinese fintech giant further strengthened these efforts with the launch of its Alipay+ D-store solution, enabling SMEs to build their all-in-one store across platforms and connect with different payment channels in just a few minutes using a suite of toolkits.

In Southeast Asia, with a large infrastructure deficit, there is still very limited access to digital and financial services for SMEs. Still, the demand is booming. According to Timothy Utama, Information Technology Director at Bank Mandiri, Indonesia’s state-controlled lender, Indonesia is not as big as China, but there is a lot of water in between which becomes a demographic challenge for financial services.

“We have 3.6 million SMEs in Thailand, which accounts for roughly 44% of the country’s GDP. This can really be a contributing factor if you can make a change,” echoed Monsinee Nakapanant, Co-President of Thailand’s online payment provider Ascend Money.

Privacy computing is a key

The wider adoption of digital technologies brings an increasing demand for data collaborations, which is, however, hindered by concerns such as data security, privacy, and confidentiality.

“We believe privacy-preserving computing (PPC) is a very powerful solution to address that issue of trust and efficiency,” said Yang, “PPC processes privacy data by encryption processing, multi-party computing, and other techniques. With PPC, Company A can share insights generated from its big data with Company B, without the need to provide the raw data to Company B. In other words, data becomes available for use but not visible, which mitigates the data privacy concern and meets regulatory requirements.”

Yang also sees the urgent need for increased collaboration among various stakeholders to promote the technology and build an ecosystem as it extends beyond the technology itself. He envisions a more connected digital economy in which each party can fully harness the potential of data in the next decade.

“In this new technological era, collaboration is the new way to compete,” said Utama at Bank Mandiri. “People usually say data is the new ore, but I would say show me the way to extract the ore. This is difficult to monetize. We learn from our partners, work with them, and move forward together as a win-win.”

The comments come a year after Ant Group announced the open source of its privacy-preserving computing framework last July, a project that would enable data analysis for different use cases without the need for decryption of original individual data. The company released an updated version in July this year to further address the pain points in data collaborations among parties.

Credit: INCLUSION Conference

Ensuring security with AI

The Asian tech and finance industry is also ramping up efforts to address some of the most pressing issues with new technologies, such as biometrics and artificial intelligence, as online fraud evolves in the region.

Ascend Money has been using biometrics and AI to detect suspicious transactions and prevent hackers’ invasions with the help of Ant Group. Southeast Asia’s second-biggest economy posted losses of $1 billion from online fraud and digital attacks last year, according to Nakapanant of Ascend Money.

Meanwhile, American Express enjoys the lowest fraud rates in the industry, as the world’s fourth largest credit card network rebuilt its platform entirely on an end-to-end, closed-loop, modern architecture. “That’s something you probably see as well on the Ant Group side,” Mohammed Badi, President of Global Network Services at American Express, said in the same panel discussion.

Ant Group reported last December that it sends over 500,000 alerts to users on average each day via its transaction fraud detection system, which can identify potential fraud in seconds and has been deployed on its Alipay app and partners’ platforms.

“You can’t have true innovation at scale if the platform is insecure and if you’re not compliant with the laws and regulations of the land,” Badi added.

This article was supported by Ant Group. We believe in transparency in our publishing and monetization model. Read more here.

LinkedIn to close China site amid ‘challenging operation environment’

Emma Lee — Fri, 15 Oct 2021 04:53:33 +0000

LinkedIn said Thursday it will shut down the localized version of its services in China later this year. The professional social network cited “a more challenging operating environment” and “greater compliance requirements” as reasons for the move.

The Microsoft-owned firm plans to launch InJobs, a new standalone job app in China, later this year. The new app won’t include social feeds or post sharing. It only serves as a job listing and application portal.

China is LinkedIn’s third-largest market, with 54 million users and behind the US and India, according to LinkedIn’s official statistics. LinkedIn’s withdrawal marks another significant retreat of US tech giants from China due to regulatory reasons and fierce local competition. Google left China more than a decade ago. Amazon ceased support for third-party merchants on its China site in 2019 after losing its market share to local competitors.

LinkedIn had previously tried to tap the Chinese market with fully localized service but to no avail. In 2015, the company rolled out a business social networking app called Chitu. The app failed to compete with local rivals like Maimai. LinkedIn shut down Chitu in 2019.

LinkedIn entered the Chinese market in 2014. Microsoft acquired the company in 2016.

ByteDance reportedly will roll out domestic music streaming app in 2021

Zhanhang Ye — Fri, 17 Sep 2021 09:28:24 +0000

Chinese tech giant ByteDance is developing a music streaming platform for the Chinese market and plans to launch the app later this year, Chinese media 36Kr reported (in Chinese) Thursday, citing sources with knowledge of the matter.

Why it matters: ByteDance is upping its ante in the domestic music market after antitrust regulators ramped up supervision of the increasingly centralized industry. Regulators began by ordering bellwether Tencent Music to give up its exclusive music deals in late July. The move will give other players more opportunities to obtain licenses from major music labels.

Details: Dubbed “Feiyue,” the streaming product is managed by teams from Douyin, ByteDance’s domestic short-video unit. It has now entered into “a key developing stage,” the report said.

ByteDance’s music business is led by Alex Zhu, a company vice president. The algorithm and marketing teams from Douyin have also played a role in supporting the operations.
A ByteDance spokesperson declined to comment on the report.

Context: ByteDance made a foray into the music arena back in 2019, when it tested a music streaming app named “Yinyuebang” among company employees. However, the program’s development was stalled by a severe shortage of music copyrights. Yinyuebang was ultimately shuttered in mid-2020, according to the 36Kr report.

China’s digital music market is dominated by tech heavyweights and is highly consolidated. In 2020, Tencent Music accounted for 73% of the market share, while NetEase’s Cloud Village accounted for 21%, according to Cloud Village’s IPO prospectus.

TikTok owner ByteDance to sell securities-related businesses: report

Zhanhang Ye — Thu, 02 Sep 2021 08:49:52 +0000

Chinese video giant ByteDance plans to sell its securities-related businesses at a price between RMB 500 million ($77.4 million) to RMB 1 billion, Chinese media LatePost reported Wednesday.

Why it matters: ByteDance’s ventures into the securities sector have received a lukewarm market response since the launch of the Dolphin Stock information platform in October 2017. According to the report, some analysts think ByteDance, owner of TikTok, is getting out of the sector in response to stepped-up regulatory pressure on private fintech services in China.

Details: A ByteDance spokesperson confirmed the plan with TechNode and said it is cutting back on financial services.

Since earlier this year, ByteDance has discussed a sale with several financial institutions, including CICC, Citic, Fosun Group, East Money, and Niuguwang. Two of the firms have submitted an investment proposal, the report said.
Besides Dolphin Stock, ByteDance’s main subsidiary up for sale is brokerage Squirrel Securities. ByteDance had been planning to launch a second brokerage, Stellar Securities.

Chinese securities regulator wants more blockchain tech, The9 enters NFTs: Blockheads

Zhanhang Ye — Tue, 31 Aug 2021 09:41:04 +0000

China’s securities regulator wants to see more blockchain technology in the country’s financial and securities sector. Standard Chartered launches a blockchain trading platform with Chinese fintech firm Linklogis. Shanghai-based crypto mining firm The9 to enter the non-fungible token (NFT) market.

Blockchain
headlines

The world of blockchain moves fast, and nowhere does it move faster than China. Here’s what you need to know about China’s block-world in the week of Aug. 25 to Aug. 31.

More blockchain-related moves

China’s main securities regulator wants more blockchain implementation in the country’s securities market. Jiang Dongxing, a deputy director of the China Securities Regulatory Commission, said he wants people to work together and use more blockchain technology, including using the technology in regulation and setting up an industry-wide consortium blockchain. (China Star Market, in Chinese)

Standard Chartered said on Monday that it has partnered with Chinese fintech firm Linklogis to launch a blockchain-powered trading platform called Olea, The Korea Herald reported. The platform aims to meet institutional investors’ demand for alternative assets investments. The two companies will form a joint venture in Singapore to run the platform. Amedia Ng, an official from Standard Chartered’s venture unit, will lead the platform as CEO. Letitia Chau, a vice-chairwoman from Linklogis, will assist as deputy CEO. (The Korea Herald)

Crypto and NFTs

On Monday, market regulators in Hong Kong warned the public of unauthorized collective investment schemes (CIS), including initial coin offerings. The city’s Securities and Futures Commission warned investors to stay “extremely careful” of unauthorized investment plans. The regulator also said promoting such investment plans without licenses from the Commission may count as a criminal offense. (Securities and Futures Commission of Hong Kong)

The9 Limited, a Shanghai-based, Nasdaq-listed crypto mining firm, will launch an NFT trading and community platform called NFTSTAR in the fourth quarter of this year, the company said in a Monday press release. The platform will feature artworks by global celebrities in various fields, including sports, entertainment, art, and other industries. The9’s wholly-owned subsidiary in Singapore will run the platform. Gagan Palrecha, former vice president of operations at Dapper Labs, will be the platform’s COO. (Coindesk)

Digital yuan transactions

China’s state-owned energy company China Energy completed the country’s first business-to-business digital yuan transaction on Aug. 20, according to Xinhua Finance. The transaction took place on an e-commerce platform run by a China Energy subsidiary and used smart contract technology, which boosted settlement efficiency, according to a manager who took part in the transaction. (MPaypass, in Chinese)

China Construction Bank revealed its latest progress in digital yuan applications in its semi-annual report released on Monday. As of June, the banking major has opened 8.42 million digital wallet accounts, 86% of which are for individuals, and the remainder for enterprises. The bank has transacted a total of RMB 18.9 billion ($2.9 billion) in digital yuan. The bank also piloted its digital currency service in cities like Shenzhen, Suzhou, and Xiong’an. (MyPaypass, in Chinese)

Bilibili becomes China’s third-largest long-form video site: report

Zhanhang Ye — Thu, 12 Aug 2021 10:33:23 +0000

Chinese video platform Bilibili hit a record of more than 65 million daily active users (DAUs), making it China’s third-largest long-form video site, following iQiyi and Tencent Video, Late Post reported (in Chinese) on Wednesday.

Why it matters: Despite slowing growth, the figure marks a milestone for Bilibili, which has surpassed Alibaba-owned Youku to take the third spot.

Details: Bilibili’s DAUs still lag behind short video platform rivals Douyin (TikTok’s Chinese version) and Kuaishou, which recorded 580 million in February and 295.3 million in the first quarter of this year, respectively.

Bilibili’s DAUs rose 8.1% from 60.1 million in the first quarter.
The report also revealed that the average amount of time users spend on Bilibili exceeds 80 minutes, trailing Douyin’s 100 minutes.

READ MORE: CHINA VOICES | ‘Bilibili is becoming Chinese YouTube’

Context: Founded in 2009, Bilibili initially attracted young Chinese internet users interested in animation, comics, and gaming. The company has since evolved into a mainstream video site as it diversified its content offerings and expanded its user base in recent years.

In 2020, the company set up a special department to expand its users base and scaled up investments in long-form video content, including TV shows, films, and documentaries.
The growth effort is partly driven by the company’s forecast of future trends. Bilibili’s CEO Chen Rui told Late Post in 2019 that he thinks Chinese content platforms with a market cap of less than $10 billion may face market elimination within the next three years. Bilibili was valued at $7 billion at the time. Now, the company is valued at more than $30 billion.

Chinese tech firms brace for impact from coronavirus

Emma Lee — Wed, 22 Jan 2020 05:14:29 +0000

Chinese technology majors are scrambling to prepare for a public health crisis stemming from a deadly strain of coronavirus that is beginning to spread across the country ahead of a major holiday travel season.

Why it matters: Fears about the outbreak are compounded by its timing just ahead of the Spring Festival holiday, when millions in Asia plan to travel. The impact on consumption levels is another concern, as many are expected to remain home to avoid crowded areas.

Spread of the virus has sparked panic for items such as protective masks and hand sanitizer, and driven up prices in brick-and-mortar shops and e-commerce platforms alike.

“While we seek to ensure quality supply at speed, JD is also rigorously regulating our third party platform to forbid unfair price hikes, with penalties to third party sellers if unfair price hikes are discovered.”

—a statement from JD.com on Wednesday

Details: The new coronavirus epidemic is pressuring share prices for major Chinese tech companies including Alibaba, JD, Baidu, and Ctrip, which all traded down on Tuesday. Share prices for Ctrip fell the most sharply, declining 10.3%.

In a Wednesday letter addressing merchants on its e-commerce marketplaces like Taobao and lifestyle services platform Ele.me, Alibaba called on vendors to maintain “stable” pricing of virus protective devices such as masks and disinfectant. The company said that it will offer subsidies for merchants in order to keep pricing down and maintain supply.
Inventory for virus protection masks were running low on mainstream Chinese e-commerce platforms such as Taobao, JD.com, and Pinduoduo. Some masks, including those rated N95 and recommended by manufacturer 3M, were sold out and are expected to be back in stock in early February, based on a TechNode reporter’s observations on Tuesday.
JD.com said that it is actively working to ensure adequate supply of face masks and other health protection products. Its efforts include sourcing, warehousing and delivery, and controlling sales to avoid consumer stockpiling.
Online travel platforms may be hit the hardest. Chinese online travel platforms including Trip.com, Alibaba-backed Fliggy, Qunar, and Mafengwo are waiving cancellation fees for trips to the central Chinese city of Wuhan.
Travel platforms are offering customers free cancellation on all hotels, car rentals, and tickets for tourist attractions in Wuhan until Jan. 31. The platforms are pledging to cover the cost if the hotels refuse to cancel.
The government is leveraging popular social media platforms like microblogging platform Weibo and short video apps Douyin and Kuaishou to educate the public about the new virus and disclosure information.

Context: The fallout from this new virus recalls for many impact from the severe acute respiratory syndrome (SARS) epidemic which originated in Asia in 2003 and spread throughout the world. More than 5,327 of the 8,098 global infections were in China, where nearly half the 774 deaths worldwide took place. The epidemic took an economic toll of RMB 93.3 billion ($13.5 billion), according to government data.

The current strain of coronavirus originated in the central Chinese city of Wuhan. There are more than 440 confirmed cases in China in Hubei province, Guangdong province, Beijing, Tianjin, and Shanghai, as well as abroad in Thailand, Japan and more. Nine death cases were recorded as of Wednesday early afternoon.
Concerns about the virus reached new heights Tuesday after China confirmed that the disease can be transmitted between humans.

5.23 Emerge Shanghai | Corporate Innovation Panel: Harnessing China speed

Suzanne Loo — Mon, 13 May 2019 10:08:06 +0000

Typically built around 1 or 2 successful business lines, corporations are increasingly finding themselves outpaced by more nimble and ambitious startups. While the early days of tech brought great strides for corporates in the shape of increased efficiency, technology is now enabling completely new competitors. Competitors who, if not defended against, could threaten the very survival of some of the biggest companies.

To fend them off, corporates are doing their best to learn “innovation” best practices: interdisciplinary product teams and rapid iteration with proofs-of-concept. What’s more, they’re even cultivating startups through accelerator and incubator programs. These startups not only allow for faster solutions but also helps corporates test new ideas without threatening core business lines.

At Emerge, our corporate innovation panel looks at what this increasingly common phenomenon looks like in the Chinese context. Our panel of experts and industry players will be exploring these key areas:

What Chinese startups can offer large corporates?
The unique challenges of working with Chinese startups
Best practices for working with startups
How corporate innovation is different in China compared to the West?

Click the links below for the previous preview of Emerge:

AI panel: Can China achieve ethical AI?

Digital marketing panel: Finding China’s Youth

Live recording of China Tech Investor podcast | The Slowing Economy: US vs China tech ecosystems

Blockchain dreams: Regulations and rewards

5.23 Emerge Shanghai | China Tech Investor live podcast recording

Suzanne Loo — Tue, 30 Apr 2019 11:45:06 +0000

Certain indicators in March are signaling glimmers of a recovering Chinese economy after several months of marked slowdown. A number of elements, the most notable being government intervention, exacerbated the effects of the slowdown on China’s tech companies. Halting video game licensing late last year throttled a major revenue stream for Tencent, one of the country’s biggest technology companies, while overall regulatory tightening has rolled across tech verticals from gaming and entertainment, fintech, online education platforms, and the rental economy.

News of a nearing trade deal with the US is lifting hopes for China’s economy, underscoring how very global the two economies have become. Yet China’s tech landscape remains distinctly separate: US technology companies that regularly dominate headlines have faced either direct or indirect hurdles to expanding into China, which has instead nurtured its own ecosystem that in turn has seen relatively few successes in expanding into overseas markets.

Join the discussion on May 23 at our Emerge tech conference as the hosts of TechNode’s China Tech Investor podcast, Elliott Zaagman and James Hull, record a live episode discussing the divergence between US and China tech ecosystems with special guest, Paul Mozur, who covers technology in Asia for The New York Times. What are the paths for tech companies looking to bridge the two ecosystems?

At Emerge, we will dive into emerging China tech trends such as AI, corporate innovation, blockchain, digital marketing, shift to enterprise, the slowing economy, and the expansion to Southeast Asia. We will be previewing other topics in the upcoming weeks so stay tuned.

Seats are limited so be sure to get your early bird tickets by May 5!

Check out the previous preview of Emerge panels here:

5.23 Emerge Shanghai | Panel: Can ethical AI actually exist in China?

5.23 Emerge Shanghai | Panel: Finding China’s Youth

Apple bets over 65% of iPhone XR inventory on Chinese market

Emma Lee — Tue, 23 Oct 2018 04:14:36 +0000

Weeks after opening pre-orders for its more expensive iPhone models, Apple finally began to take preorders for its latest midrange phone iPhone XR on October 20. To meet potential strong demand from Chinese users, the US smartphone giant has bet over 2 million (or 65%) of its first batch of 3 million iPhone XR handsets inventory on the Chinese market, local media reported citing people familiar with the matter.

Compared with iPhone XS and iPhone XS Max whose price is up to RMB 12,799, lots of analysts predict the iPhone XR will become the bestseller for the future two quarters with its more affordable price tag where users can start at RMB 6499. iPhone XR’s lower price range will bring down iPhone’s average pricing, but it may achieve high shipments by attracting users who want to seek replacements for their iPhone 6, iPhone 6s and iPhone 7, Robert Cihraf, an analyst from Guggenheim told local media. He expects iPhone XR shipment to account for 40% of iPhone shipments by Q4 this year, and 50% by Q1 next year.

Extra attention to the Chinese market in inventory arrangement, especially for the inexpensive iPhone XR, speaks to Apple’s plan to appeal to customers in China. The country is Apple’s most important emerging market but where the company has seen continuous declines.

Apple is smart in setting a mid-priced for iPhone XR, according to Bloomberg writer Tim Culpan. He explained that the RMB 7,000-ish price range would be attractive for Chinese users because it’s obviously a cheaper alternative. But more importantly, the price tag would also grant a decent spec phone so it would “give face” to the users, which is an important part for the argument to purchase an iPhone in China. The company is also catering to the need of Chinese users feature-wise with its long-overdue move into dual SIMs.

However, initial sales of iPhone XR, which recorded approximately 2 million units in the first three days, are weaker than expected. The US smartphone maker is facing increasing competition amid rising local competitors and a stagnating Chinese market.

Briefing: Chinese tech startups competing for AI superiority are hungry for talent

Jiefei Liu — Tue, 18 Sep 2018 08:00:50 +0000

Chinese firms are aggressive investors in AI and show a ‘thirst for talent’, says MIT-BCG report -SCMP

What happened: As Chinese companies are racing for artificial intelligence superiority across the globe, a joint study by Massachusetts Institute of Technology and Boston Consulting Group shows that there’s a lack of AI talents in China. The conclusion is drawn from a survey of over 3,000 participants in 126 countries and 300 executives from China. The report also shows that Chinese AI companies have a higher rate of managing corporate data centrally than their American and European counterparts.

Why it’s important: China’s AI investment is backed by the government’s “call for business to achieve leadership in AI.” It has appointed some domestic heavy hitters, Baidu, Alibaba, Tencent and iFlytek as “national champions” in AI innovations. The report also shows that Chinese AI startups are more focused on using AI to reduce cost than on improving revenue.

How much do Chinese netizens care about data privacy?

Emma Lee — Wed, 15 Aug 2018 10:10:58 +0000

China has long been considered as a place where online privacy is nearly nonexistent but various signs show that Chinese netizens’ awareness of privacy-related issues is increasing. Most talks on user privacy so far look at the concept broadly, however, with delving into specifics on how Chinese people approach the problem in practice and attitude.

Tencent’s research arm Penguin Intelligence released a report (in Chinese) to shed light on this complicated issue. Here is how Chinese netizens responded to the issue of data leaks:

35% of the 1,285 interviewed users show constant concerns over data leakage
a majority of 60.6% worries about the problem occasionally
4% don’t care about it at all

Data leaks by various sites and platforms proved to be the top source of users’ concerns, followed by malpractice of employees and hacker attacks.

To some extent, users’ concerns are not groundless given the past practices of Chinese tech giants. Baidu CEO Robin Li landed himself in hot water earlier this year for claims that Chinese internet users would trade privacy for convenience and efficiency. Other popular apps like Alipay and WeChat were also hit by similar public outcries for accessing user data without consent.

Chinese care more about data privacy than you think, but they still need better protection

Password complexity is another example that shows how much people care about their privacy. The report shows around half (50.8%) of the interviewed netizens use a few passwords for most of their accounts. Overall 14% of them go with the extreme practice of using the same password on every site or service they access.

Around 58.9% of the users would change their password if they discover that a platform is leaking data but only 41.1% would consider changing the password for platforms that use the same or a similar password.

China’s younger generations tend to have more trust in online platforms for hosting personal data. But a hard copy file is still the most trusted way of saving such data according to over 40% interviewees. The finding is not surprising considering that one Tencent Cloud user recently sued the company for $1.6 million for damage on file metadata caused by bugs in the firmware.

During mandatory site and app registrations, Chinese netizens tend to be cautious about giving out their real identity and information such as bank account, ID card, and address. They feel more secure in giving their birthday, gender, and the name of the province they live in.

If the option is provided, 88.1% of Chinese online users choose to log in via third-party accounts such as QQ, WeChat, and Weibo because of the extra layer of security protection. In other cases, they prefer mobile phone over email registration for a faster and more convenient service.

Deaths of two entrepreneurs reveal China’s intense work culture

Emma Lee — Fri, 10 Aug 2018 03:45:39 +0000

22楼跳下、猝然离世！又有两位创业者离开了我们-Sina Tech

What happened: Gan Lai, the founder and CEO of Falan Gaming, ended his life on August 8 by jumping from the 22nd floor after his third startup went bankrupt earlier this year. Meanwhile, Li Hua, founder of GooAnn and Aqniu, passed away on the same day. The sudden deaths of two entrepreneurs have sparked heated discussions about China’s work culture.

Why it’s important: The rise of China’s startup culture has attracted millions of visionaries to the start their own businesses. But being an entrepreneur isn’t easy. While trying to keep up with the intensely fast pace in China’s tech world, they are forced to work under extreme productivity practices like 996. The death of two entrepreneurs reveals the dark side of being entrepreneurs, who usually work in a high-pressure environment and literally working themselves to death. Sadly, Gan and Li aren’t the first of entrepreneurs to suffer a business-related death. Post-80’s entrepreneur Mao Kankan committed suicide in January this year. The CEO of well-known mobile healthcare startup Chunyu Doctor died of a heart attack on October 5th.

What China’s history of overseas tech IPOs says about the current wave

Emma Lee — Thu, 09 Aug 2018 06:42:32 +0000

Image credit:36Kr

China’s tech IPO craze is reaching a fever pitch. On July 12, the executives of a whopping eight Chinese companies that went public on the same day were forced to share their time of glory at the Hong Kong Stock Exchange due to a bell shortage. Compared with their foreign counterparts, this is even a bigger compromise for Chinese execs given their love for stage props. The US is seeing something similar: three Chinese tech firms including Pinduoduo went public in the US on July 26.

China’s IPO wave

Ever since last year, an increasing number of Chinese tech companies can be seen joining the IPO craze. A PwC China report shows that 23 Chinese companies, including China Reading, raised a total of $4.65 billion in H2 2017, making the country the largest global tech community in terms of the number and total value of IPOs. The tendency continues this year with a roster of big-name companies such as Xiaomi, iQiyi and Pinduoduo, and unicorns from various verticals such as Liepin, Inke, Baby Tree and 51 Credit Card.

Image credit: Tiger Brokers

As a part of this trend, Chinese companies are turning to stock markets in Hong Kong and the US over the mainland market, marking the fifth overseas listing rush.

In 2000, internet tycoons like Sohu, NetEase, and Sina forged their way into the US stock market. With respectable performance that bucked disappointing IPO offerings in the US market, the three news portals soon gained the attention of global investors. The term “China Concepts Stock” was popularized to refer to Chinese companies—or in a more narrow sense, Chinese tech companies listed abroad.

Chinese tech firms’ love for the overseas stock markets has gone through hot and cold periods since then depending on the tech trends of the time. Baidu and Ctrip went public in the US and Tencent in Hong Kong between 2003 and 2005, a period when China witnessed some of its tech powerhouses establishing their dominance. As the market grew, so did the number of unicorns from various verticals. Companies who listed from 2010 to 2012 include Youku (video streaming), YY (video streaming), and Qihoo (online security).

The blockbuster IPOs of Alibaba and JD made 2014 a year of e-commerce. Social is another theme of the year with the IPOs of Weibo and Momo, currently two of the country’s largest social networking platforms.

Appetites for overseas listing started to cool off at the beginning of 2015. Since then, nearly thirty US-listed tech stocks initiated privatization plans in search for a domestic re-listing, with big names among them such as Qihoo 360, Momo, Perfect World and Shanda Games. But the enthusiasm for privatization soon wore off as the government suspended the launch of both a register-based regulation system and the Strategic Emerging Board, a market dedicated for science and technology innovation enterprises. The two moves were expected to facilitate IPO of tech firms.

Overseas listing started to warm up again at the end of 2017. Similar to previous trends, the current IPOs reflect the keywords in China’s tech world – the “new economy” and consumption upgrading. China’s “new economy”, also known as the digital economy, totaled RMB 26 trillion ($4.28 trillion), representing around 32% of the national GDP in 2017.

“Each IPO wave consisted of companies with mixed qualities. Some companies went public for the funding they needed for long-term and sustainable development, but some are just following the trend to cash out,” according to Wang Shan, an analyst at online brokerage service Tiger Brokers.

Destination decisions

Chinese tech companies seeking to go public have a few options to choose from – China, Hong Kong and the US.

Most Chinese tech firms are under the VIE (variable interest entity), a structure that’s adopted by many tech startups to lure foreign investment. For them, this rules out the option of a local listing since China’s stock market only receives companies that are registered in the country. Of course, they still can go for a local IPO by removing the VIE structure, but the process is often costly and time-consuming.

What’s more, the threshold for domestic listing is high. For example, Chinese mainboards require listed companies to record sustained profitability, a condition most internet companies can’t meet in the first few years of operation.

In addition, China’s merit-based IPO regulation system is subject to strict rationing and control, with protracted periods before actually getting listed. This is a huge concern for tech firms, which would prefer quicker funding to adapt to the changing market. China’s market is also subjected to tight government regulation. The state has suspended IPO process nine times in history with suspension time varying from 3 to 14 months.

The Hong Kong Stock Exchange is a popular listing destination for Chinese tech startups thanks to similar culture, geographical adjacency, and a mature system. Thanks to a registration-based system, the listing time is shortened to around three months. But its market size is relatively small compared with the mainland and the US: only 1/30 of New York Exchange and 1/4 of NASDAQ, resulting in lower fundraising capacity and valuation. Over the past decade, traditional financing companies have been dominating Hong Kong, while internet and technology companies account for only 3% of its total size. The figure for Nasdaq and New York is 60% and 47%, respectively.

Chinese tech firms’ enthusiasm for Hong Kong rallied as the Hong Kong Stock Exchange shifted to a dual-class shares mechanism in April 2018, which allowed tech firms to have share classes with different voting rights. The absence of this system is one of the major reasons that barred the likes of Alibaba Group Holding Ltd. from considering the former British colony. Missing out on Alibaba was a big loss to Hong Kong market, not only because of the sheer size of the company but also because it would have made Hong Kong a more attractive destination for tech companies that might follow. Five years later, businesses are finally able to apply for listing under the dual-class share regime.

The US has the most mature stock market in the world, but for Chinese companies, it’s difficult to explain their product and business model to investors who have a different culture, and therefore make it hard to get the valuation they expected. The market has a higher entering requirement for Chinese tech firms in terms of language, information disclosure, investor relationship, and costs.

Big boy pipeline

Since Alibaba, not many China tech companies have made it to IPO but now, many are ready to take the leap.

A string of tech tycoons has raised an average of four to five rounds of financings by now. Companies like Xiaomi and Meituan have been basically backed by nearly every prominent private equity and it’s difficult for them to get funding in the primary market at their hefty valuations. An IPO could be the only channel for them for further funding. The massive IPO wave has, in turn, sparked rumors about the long-anticipated IPO of Ant Finance, Didi, and ByteDance.

Number of Chin’s unicorns by scale (Image credit: E-commerce Research Center)

China’s tech boom has been fostering a lengthening list of IPO candidates including super big titles as well as vertical unicorns. Three are 94 unicorns in China’s e-commerce-related industry with a combined valuation of $479.92 billion, according to a report from the E-commerce Research Center. Ant Financial tops the list with a $150 billion valuation, followed by Didi Chuxing ($56 billion), Meituan Dianping ($30 billion), JD Finance ($20 billion), Cainiao ($20 billion), Lufax ($18.5 billion).

The market morale is still high. More companies will flock to the Hong Kong market after August, followed by an IPO peak around September to November, Charles Li, executive director of the Hong Kong Stock Exchange, told local media.

CITIC Vice President of Large and Medium Corporation Simon Tseung echoed Li’s prediction. He told TechNode that the IPO craze is going to continue in the near future for both Hong Kong and the US in line with the rise Chinese tech unicorns.

Pinduoduo share tumbles amid counterfeit probe

Emma Lee — Thu, 02 Aug 2018 05:23:24 +0000

Pinduoduo Tumbles Below IPO Price Amid Fake Goods Probe– Caixin Global

What happened: In less than one week after its strong debut on Nasdaq, shares of Pinduoduo slumped more than 16 percent on August 1 to 18.68 apiece, falling below the offering price at $19 amid the rising concerns about counterfeit goods.

Why it’s important: The heat surround Chinese online bazaar Pinduoduo is taking a negative turn shortly after its blockbuster IPO and strong debut on Nasdaq last week. The company is in a whirlwind for selling fake goods on the platform which cater to the need of low-income users in rural China. Talks about the quick rise of IPO has sparked deeper thoughts on the widening inequality of wealth distribution in China.

China’s internet sector continues steady growth, new official figures show

Nicole Jao — Thu, 02 Aug 2018 04:12:06 +0000

With a fast-growing netizen population, China’s internet industry is one of the largest and most exciting in the world. China’s Ministry of Industry and Information Technology (MIIT) released new numbers (in Chinese) on the internet industry’s first half of the year performance on Monday. The official figures show the overall internet industry maintained steady growth, and business revenue as well as operating profit both posted positive growth. For mobile apps, MIIT noted that online gaming and video/music live streaming are the two categories that see brighter prospects.

Revenue of internet companies (limited to enterprises with revenue over RMB 3 million) in China tallied to RMB 417.1 billion during the first half of 2018—a 22.9% growth from the same period last year.

Internet businesses in Guangdong, Shanghai, and Beijing topped the charts in terms of growth of revenue, which posted a 27.8%, 22.2%, and 31.5%, respectively.

Revenue growth (%) of internet businesses in 2017 and 2018 (Image Credit: MIIT)

According to MIIT, the industry invested more heavily on innovation. During the first half of 2018, the industry invested RMB 28.2 billion in total into R&D efforts, a 17.1% increase from the previous year.

The mobile app market continued to expand. As of June, 4.21 million mobile apps were available for download in China—Chinese third-party app stores have 2.4 million apps available, and Apple app store (China) has over 1.81 million apps on the shelf.

Mobile apps across categories—gaming, utilities, social networking, and video/music—have been downloaded over 100 billion times. Gaming and utility apps, in particular, each saw over 200 billion downloads.

China mobile apps market size (Image Credit: MIIT)

Total revenue generated by the information services sector, which represented over 90% of the entire internet industry in China, was RMB 378.3 billion—over 23% growth from the previous year.

Revenue generated by ecommerce platforms increased by nearly 39% from 2017 with RMB 145.5 billion. Total revenue of online games (including web and mobile) also grew by over 23%.

China Internet Report 2018: Chinese internet giants are expanding and so is government regulation

Dianping apologizes for copying content from Xiaohongshu users without permission

Emma Lee — Tue, 31 Jul 2018 03:34:03 +0000

大众点评：侵权小红书内容已全部下线– Sina Tech

What happened: Dianping apologized on Monday after Alibaba-backed lifestyle platform Xiaohongshu accused the company of stealing some one million posts of content from the latter. The posts shared on Xiaohongshu were synced to Dianping without users’ permission. The platform removed the content and has come up with technical tools to stop plagiarism.

Why it’s important: Chinese netizens are increasingly concerned about their privacy being breached by internet giants. Several widely-discussed data sharing gaffes involve big titles like Tencent, Tencent and Alipay. Baidu CEO Robin Li said this March that Chinese consumers are willing to trade privacy for convenience and efficiency. The mindset, which may be shared by lots of tech giants, enraged Chinese users. Increasing data security consciousness among netizens force tech companies to trade the problem more seriously.

Cosmetic surgery app GengMei raises $50 million led by Meitu

Emma Lee — Mon, 30 Jul 2018 10:48:24 +0000

Gengmei, a social networking app that connects up people with an interest in plastic surgery, announced that it secured $50 million D1 round led by photo editing app Meitu.

Founded in 2013, Gengmei (更美, or More Beautiful in Chinese) is a medical beauty social and service platform for beauty seekers to ask questions from plastic surgeons and acquire quality cosmetic surgery advice. The app now offers a wide range of services from community management, e-commerce and financing support for users with an interest in plastic surgery, cosmetic dental procedure, eyelid surgery, and more.

The new funds will be invested in research and development of AI technology, recuitment as well as market and expansion, according to a company statement.

In addition to the cash, Meitu’s investment would create synergy between the two companies, which are focusing on a similar youth and female dominated user base. Based on Meitu’s image technologies and big data, Gengmei is planning to establish a platform which can give recommendations on aesthetic tips as well as the best clinics and surgeons for plastic surgery procedures.

The special obsession with appearances among China’s post-90 and post-00 generation contributed greatly to the success of selfie apps like Meitu. As the growing youth group becomes a major force in the consumer market, they want to be physically attractive not only in the virtual world but also the real world, through plastic surgeries.

The cosmetics surgery industry will face a rapid growth over the next ten years. Gengmei aims to serve as a bridge to connect the online and offline world of plastic surgery industry, according to company founder Liu Di.

Deloitte’s 2017 report shows that the size of China’s cosmetic surgery industry is going to jump from RMB 87 billion in 2015 to RMB 176 billion in 2017. The figure is expected to reach RMB 464 billion by 2020 with an annual growth rate of 40%.

In recent years, cosmetic surgery hospitals in China have mushroomed, along with platforms to promote these hospitals. As a top player in the field, Gengmei has attracted lots of funding from prominent investors such as Sequoia Capital, Tencent, Fosun, CITIC Construction and CHJ Group. Another cosmetic surgery app, Beijing-based SoYoung, received Series C funding from Tencent.

Tencent in need of new blockbusters as Honour of Kings mania fades

Emma Lee — Mon, 23 Jul 2018 11:13:50 +0000

Tencent’s mega-hit mobile game Honour of Kings is no doubt one of most successful games of the Chinese gaming giant. It still is one of the cash cows of Tecent. But as the craze surrounding the three-year-old game fades off, Tencent is in need of more new popular games to maintain its domination in China’s gaming industry.

App Store marketing service provider AppBi revealed in a recent report that Honour of Kings reached its peak with a profit growth rate of 29 percent in 2016. But its popularity started to drop with policy restrictions and growing competition. The heat surrounds Honour of Kings and the purchase of users declined gradually.

China’s mobile gaming industry is dominated by Tencent and NetEase. Among all games listed on “Top 20 Paid Games” from 2014 to 2018 Q1, Tencent constitutes 50% of the total, while Netease was the second with an 18 percent share.

In Q1 this year, Net Ease is catching up with its new game“决战！平安京” topping the fastest growing category. The best performing game by Tencent is QQ Speed, which recorded a $170 million or 19 percent YOY profit growth in Q1 this year. Compared to previous years where Tencent and Netease carved up most of the profits, several gaming startups become the budding publishers in China’s game arena.

Mobile revenue still relies heavily on the game industry. According to the recent report released by China Culture and Entertainment Industry Association (CCEA), more than 70% of APP income was generated by game players.

Since 2014, China experienced an explosive growth in the gaming market. AppBi research shows the total revenue had jumped almost four times from 2014 to 2017. In 2018 Q1, China mobile game revenue reached $2.3 billion, equivalent to the total in 2014.

AppBi studied every year’s Top 20 Games in Revenue in IOS store and found that most of the top publishers are either invested by Baidu, Tencent, and Alibaba, or BAT itself. Small startups are suffering increasing difficulty to survive or go independent.

From 2016-2018Q1, most of the Top 20 profitable games are well-established IP or Chinese fantasy category, which proven to be very popular among Chinese consumers. There was a significant lacking in originality and innovation.

With more players generated by games like the Honour of Kings, China mobile users are expected to exceed 550 million, according to CCEA. However, the game market still requires more originality, talents, and better data-driven marketing strategy, the company pointed.

Image credits:AppBi

Guangzhou court to streamline submission of evidence from WeChat, QQ

Nicole Jao — Fri, 20 Jul 2018 08:05:34 +0000

Nansha District People’s Court in Guangzhou will allow easier acceptance of electronic records from QQ, WeChat, Alipay, and other internet platforms to be used as key evidence in court, local media is reporting (in Chinese). The move makes the Nansha court the first in Guandong province to permit internet electronic records to be presented in court without notarization.

Deputy president of Nansha District People’s Court Li Sheng explained that the current regulations around electronic evidence from the internet are rather sporadic and unsystematic, adding to the difficulty of getting electronic records authenticated and notarized. This verification process is usually a costly, complicated, and time-consuming procedure. The court has proposed a regulation to make the acceptance of electronic evidence easier.

Legal disputes involving evidence of this nature are more common than ever. According to the court, commercial disputes in the first half of 2018 saw a 50% increase from the same period last year.

Different from the traditional paper documentation and physical evidence, digital evidence is harder to validate and can be tampered with and fabricated. In many cases, evidence in electronic format is considered invalid or deemed untrustworthy.

The proposed regulation aims to allow electronic evidence to be submitted with greater ease. Electronic records can now be presented as evidence if the court finds both parties’ chat records consistent and their identity (such as name, phone number) on their account checks out.

The new regulation applies to electronic data from “instant messages, email, QQ, WeChat, Alipay and other communication and payment software” in various formats including chat records, WeChat moments, and payment transaction records.

Digital records transmitted over the internet have started to replace audio and video recordings and other types traditional electronic evidence to become the most common format of evidence—WeChat, QQ, email, mobile payment, and instant messages are among the most popular types. Figures from the Nansha court show that digital records from WeChat are the most common, accounting for 65% of all cases involving electronic evidence. Records from email and instant messages account for 14% each, while records from Alipay and QQ amount to roughly 7%. With the rise of fintech platforms, as well as online credit and loan services, e-contracts have become an increasingly important form of evidence.

Hyperloop Transportation Technologies to build Hyperloop in Southwest China with local partner

Runhua Zhao — Thu, 19 Jul 2018 11:13:26 +0000

Hyperloop Transportation Technologies (HTT) will be building a hyperloop track in the city of Tongren in Guizhou province, the Chinese government has confirmed. The concept of a hyperloop is to bring the speed of an airplane to ground transportation.

HTT has ready signed a commercial contract with the Tongren Transportation & Tourism Investment Group of the People’s Republic of China. According to the agreement, as local media is reporting (in Chinese), the Tongren government and HTT will set up a joint-venture. The two parties agree to respectively offer 50% initial financing to launch to project. The joint-venture will also involve the construction of an industrial hyperloop research park.

Nevertheless, the ultimate goal of the building of the Hyperloop track and industrial park is the commercialization of related services. The contract shows that a track no more than 10 km will be built. The completion of the 10km trial will allow further track extension that will prepare for formal commercial events.

While the cooperation seems straightforward, what’s behind can be complicated.

From HTT’s side, the Chinese government’s generous financing in strategic technology projects, availability of trial venues, and firm top-down authoritarian decisions on tech projects provide convenient conditions for the company to fulfill the hyperloop dream.

Otherwise, hyperloop trials may go through more administrative obstacles in the US.

Additionally, China’s current leading position in high-speed rail may share tech insights to push the project forward.”China leads the world in the amount of high-speed rail constructed by far, and now they are looking for a more efficient high-speed solution in hyperloop,” Bibop Gresta, Chairman of HTT said in a statement.

From the perspective of the Chinese government, a trial project like this may be considered to be another Shenzhen, the frontier of China Reform and open policy initiated by Deng Xiaoping in the late 1970s. Initially a poor fishing town, Shenzhen was seen as a cheap trial venue where failure would cause no significant losses.

Tongren is located in Guizhou province and is surrounded by areas that are stricken with poverty. Though in the same province as Guiyang, China’s new data and tech center, the city still has little competitive power.

According to the contract, HTT will be responsible for providing technology, engineering expertise, and essential equipment. The deal also says the intellectual property of the Hyperloop project belongs to the joint-venture.

Corrected on July 19 to clarify that Hyperloop Transportation Technologies (HTT) is not an asset of Elon Musk’s.

China’s mobile economy grew by over 20% amid intensifying competition

Runhua Zhao — Thu, 19 Jul 2018 07:55:15 +0000

Driven by a growing number of mobile internet users, gross internet-based trading volume hit RMB 8.42 trillion ($ 1.25 trillion), a 22.2% increase compared to 2017, according to a report by QuestMobile.

The report (in Chinese) covers China’s mobile ecosystem for the first half of 2018 and focusses on topics including mobile economy business models, new retail, gaming for social needs, video streaming, and digital branding.

The overall number of mobile netizens is moving into a stable growth channel where the first half of this year saw the number of monthly active mobile netizens grow by 0.4%.

The mobile netizen user base is generating increasing commercial value as users are more open when incorporating the mobile ecosystem into their daily lives, particularly with regards to economic activity. The report shows during the first half of 2018, gross internet-based trading volume increased by 22.2% compared to the 2017 annual volume of RMB 6.89 trillion. The figure also contributes to 9.6% of gross GDP over the same period.

But the mobile netizens’ business game is not for all. The research also shows two trends that could intensify current competition in the field.

Trend 1: The rise of short videos

Tech giants are increasingly concerned as new social needs and business models, such as short video platforms, thrive.

The chart below suggests Tencent’s Apps’ saw s 6.6% drop in gross users’ usage time, while ByteDance saw a 6.2% increase. The mobile internet market suspects this is due to the aggressive performance of ByteDance’s video projects Douyin, Xigua (西瓜视频), and Huoshan (火山小视频).

The 5 Chinese internet giants’ gross app (own apps, affiliate apps, and stake-holding or invested apps) usage time compared in a chart. Yellow: Tencent; Orange: ByteDance; Blue: Baidu; Gray: Alibaba; Pink: Sina; Red: Others. (Image Credit: QuestMobile)

Short videos are demonstrating increasing power. The percentage of total mobile device usage time netizens spend watching short videos increased 340% from 2% in the first half of 2017 to 8.8% in the first half of 2018. Real-time communication, meanwhile, dropped from 36.0% to 30.2%, in the same period.

Nevertheless, as the chart below implies, the short video field is seeing tight centralization. Only Kuaishou and Douyin saw 100 million+ daily active user in the first half of the year.

Short video apps’ daily active user s (from June 2017 to June 2018). Yellow: Douyin (ByteDance); Orange: Kuaishou; Grey: Huoshan (ByteDance); Blue: Xigua (ByteDance); and Pink: Weishi (Tencent). (Image Credit: QuestMobile)

Trend 2: Selective app usage

It’s becoming harder for apps to win mobile netizens’ heart.

The report shows that 76.2% of mobile netizens have no more than 35 apps on their phones, while there are now more than 4.06 million apps available in Chinese mobile markets.

Chart 4: Number of apps a Chinese mobile netizen install and keep on their phones. 28.6% mobile netizens install and keep 26-35 apps. (Image Credit: QuestMobile)

For the second half of the year, the game will be no longer be about concepts, including pure model designs. Getting the designs to work and improving performance will be the key.

China may lead in technology, but not just yet

Chris Udemans — Wed, 11 Jul 2018 08:35:12 +0000

China has grand schemes for its technological development. In addition to the country’s AI plan, which the country hopes will make it a world leader in artificial intelligence by 2030, the “Made in China 2025” initiative highlights the nation’s development roadmap for next few years.

The program, which has drawn Donald Trump’s ire, aims to shift China’s economy to high tech industries, including robotics and chipmaking. But as the country moves towards more advanced manufacturing, it is thrust into a fierce contest of nations, one which developed countries are used to winning.

China began to ponder its over-reliance on foreign technology in 2013 when Edward Snowden exposed the clandestine relationship between the National Security Agency and American tech companies. Five years later, in 2018, this reliance was again called to attention after ZTE was temporarily sanctioned from sourcing components from American manufactures for violating a US export ban.

This competition with other nations and self-consciousness have led to the country taking great strides in its technological abilities in the past five years. But has it exceeded the abilities of its international rivals?

“I think we should make a distinction between technology and innovation,” Harry Hui, founding partner at ClearVue Partners, said at RISE in Hong Kong. “The US clearly does lead in this regard as far as technological innovation in the digital realm globally.”

He explains that within the Chinese market, domestic companies are seeing exponential growth in adoption. “They have this large domestic market base and access to vast amounts of data, and they can react so much quicker.”

In China, the failure of foreign tech companies has at times been attributed to protectionist policies that promote the development of local companies to the detriment of their international counterparts. There may be some truth to this, but these companies also try to enter the market while approaching it as an additional source of income, rather than their primary market, unlike their Chinese competitors.

The answer as to whether Chinese tech has overtaken that of the rest of the world is not a simple one and depends on which aspect the technology industry is being scrutinized.

“Yes and no,” Bessie Lee, founder of Withinlink, said when asked whether China is, in fact, more advanced. Lee explained that while the country may be technologically advanced, it lacks basic protections to keep its citizens safe from the technology that is being developed.

“In certain areas, China is doing really well, like mobile, e-commerce, and social,” she said. “But in other areas like users’ privacy protection, they’re not,” adding that technology can be used to best protect users’ privacy, but it is not being developed in China.

Chen Lei, CEO of Xunlei, believes that is not the regulation that governs the use of technology that is the problem, but more social issues that affect development. “There are way too many schemers and people who are not responsible with the technology that they are handling,” he said.

He believes that while China has been late in developing existing technologies, it will become a leader in current emerging technologies. “[China has] a lot of catching up to do. But in blockchain and artificial intelligence, I think China does have a big opportunity to overtake at the corner.”

The Chinese government has been actively pushing blockchain projects in the country. The technology was even written into the country’s 13th Five-Year Plan in 2016. China subsequently filed the world’s highest number of blockchain patents in 2017. It has been looking at solutions for blockchain-based identity, begun issuing blockchain-backed tax invoices, set up a system to monitor ex-prisoners, and created a number of research facilities.

China’s government is harnessing its data to make blockchain-based identity a reality

“I also see a lot of Chinese startups and entrepreneurs are really focused on the application of blockchain and the related technologies to change the world and benefit society,” said Chen.

He said that China allows for innovation by letting businesses grow and develop before trying to regulate them. “I think that has given Chinese companies plenty of time to develop the technology itself.”

Lee believes that while China may be lacking behind in technology like chipmaking now, in a few years that won’t be the case. “There is actually quite a lot of effort, investment, and devotion on the central government level into the areas where now on the surface it may look like China is lacking behind the US. Give them a couple of years and the game will turn,” she said.

“Chinese are going to take on the US market, but the US are not going to take on the Chinese market the way we do,” she commented.

China’s government is harnessing its data to make blockchain-based identity a reality

Masha Borak — Mon, 02 Jul 2018 07:28:46 +0000

Governments around the world are trying to find ways to improve public services with blockchain. According to a report from Deloitte—which is likely already outdated considering the fast development of the technology—more than a dozen countries around the world are running pilots.

China is one of them. The country’s effort to grab its position in the emerging technology has been an ongoing project: blockchain was written into the 13th Five-Year Plan in 2016. The effort is apparently paying off. During 2017, the country became the number one in the world for blockchain patents with its central bank, the People’s Bank of China (PBoC), topping the list, according to research by IPRdaily and incoPat. Building virtual identities for its citizens—the cornerstone of many other applications to come—has become a top focus.

Image credit: Deloitte

Social insurance is going blockchain

THEKEY, a blockchain startup specializing in government data commercialization under a company called E-BaoNet, is trying to put social insurance on the blockchain. The first step in accomplishing that is securing a robust ID verification system but the task is even more important considering it involves sensitive health information.

Government data is the basic or “the key” to any blockchain identity application—without it the application is useless. But collecting this data is not an easy feat. According to the company’s Chairwoman and CEO Catherine Li, the problem is that there is no central database. Only China’s Ministry of Human Resources and Social Security (MOHRSS) has 200 databases across the country.

The data also must be used under strict rules: it cannot be released to third parties or leave government custody. It also cannot be downloaded or seen by unauthorized persons, according to THEKEY.

“We have visited several countries and we realized that no government is happy to release government data since they are the owners,” Li told TechNode. “But right now the Chinese government is more open. We are trying to educate the government to release the data so it can better serve citizens in their daily lives. Of course, we have to make sure that data is secure.”

THEKEY’s core technology is Blockchain-based Dynamic Multidimensional Identification (BDMI) and it uses biometric data as its base—another area where the Chinese government has been making heavy investments. BDMI is meant to simplify often painful visits to the doctor in China involving queues and an unseemly amount of paperwork. Patients will download an application and scan their faces using machines available at hospitals or with apps on their phones.

Building an application that can undeniably verify a person’s identity is complex: the system relies on several steps to verify a user, including data from other sources such as telecommunication companies and location data. Individual users, service providers such as hospitals and insurance companies and the validator, which is THEKEY, are all connected through smart contracts and TKY Tokens.

“We set the laws, regulations, standard policies for different industries into the smart contract. This structure makes sure that government regulations will be strictly followed and government data privacy will be well protected,” said Li.

THEKEY Chairwoman and CEO Catherine Li (Image credit: TechNode/Masha Borak)

The project is still underway but THEKEY’s project team has already implemented an earlier ID verification system which not based on blockchain in 66 Chinese cities covering 210 million people. The company is also eyeing foreign markets in Southeast Asia.

Blockchain projects are multiplying in China

Social insurance is not the only blockchain use case that Chinese government is exploring. In March, the first central bank-backed blockchain platform in China, the Blockchain Registry Open Platform (BROP), was launched by Zhongchao Blockchain Research Institute, a company operating under the PBoC. The platform is another effort to cut through China’s bureaucracy, daunting both for local and foreign companies. It is an open platform for developing independent intellectual property rights based on blockchain providing digital credentials for enterprises, ownership registries and information on public services. As in the case of THEKEY, credible user identification will be important.

Blockchain-based ID is also going mobile. Tencent and China Unicom, a state-owned telecommunications operator, have launched the TUSI SIM card with new identity authentication standards for the Internet of Things (IoT) industry which among other things will be used in smart city applications.

Other blockchain use cases that are being trialed across China are blockchain-based tax invoice recently launched in the southern city of Guangzhou and supervision of ex-prisoners, parolees, and probationers which was rolled out in the same city in May. The project will use wearables to track ex-offenders and develop a credit evaluation system.

Local governments are also trialing blockchain solutions for renting property as in the case of Xiong An New Area, a city close to Beijing, where housing companies have teamed up with Alibaba and other partners. Tencent is building a blockchain-based logistics platform with the China Federation of Logistics and Purchasing which aims to solve a big headache for small and medium enterprises.

One of the questions that are drawing attention is whether China will one day issue its own digital currency. Although the government aversion towards cryptocurrencies is by now well known—ICOs have been banned since September 2017 while crypto to RMB exchange is now illegal—the Digital Currency Research Institute at PboC has filed 41 patents applications for commercial applications of blockchain and digital currency payments. According to former PBoC governor Zhou Xiaochuan, “it is safe to say that the digital currency is inevitable due to technology development.”

The Chinese government is also stepping up efforts to regulate blockchain with the Ministry of Industry and Information Technology publishing the “2018 China Blockchain Industry White Paper” (in Chinese) examining legal protection and efforts on establishing national standards for blockchain technology by the end of 2019.

The future of blockchain government

For governments, jumping on board the blockchain train makes sense. Governments are full of data which means there are many more blockchain applications waiting to be explored. With digitalization, electronic databases are constantly being updated with information on transactions, sales, fees, certificates, approvals, and much more.

According to Creus Moreira, founder and CEO of Swiss authentication company Wisekey, in the future, China will have to think of itself more as a platform competing against other platforms. Platforms should offer a range of products citizens can access.

“You have to have a very strong digital identity strategy in China,” Moreira said during this year’s GMIC in Beijing. “All the objects you produce and import need a digital identity. Then decentralized blockchain platforms to store the ID and that people can access. . . This will create a huge amount of data which can be mined with AI and improve the system.”

Virtual identities and governance: Danny Deng on China’s blockchain future

Some even believe that blockchain-based virtual identities will be crucial for the future of states. As Chairman of TaiCloud Danny Deng said in an earlier interview with TechNode, digital identities could present an opportunity for countries around the world to reposition themselves. Citizens will have a physical and a digital identity with the latter enabling a more flexible notion of citizenship. Estonia is an example in the making: the country launched a blockchain-based e-Residency program.

“All countries will compete with each other to attract the most talented people, best technology, and smartest capital. If you miss this chance, you may miss a hundred years,” said Deng.

This article was updated on July 4th, 2018 to clarify the rules by which government data can be used by companies.

China’s AIChain is decentralizing artificial intelligence

Masha Borak — Fri, 29 Jun 2018 05:14:03 +0000

Crypto is decentralizing, AI is centralizing, according to Peter Thiel. Although the venture capitalist has followed this remark with a somewhat strange ideological classification for these technologies, the premise rings true. Artificial intelligence advancement is now in the hands of huge companies such as Google, IBM, Microsoft and their Chinese counterparts.

Machine learning relies on data – the more the better – and platforms such as these have proven skilled in collecting it. They have used their competitive edge to make AI products better which draws in more users and more data – a great example of leveraging network effects. However, this has also created a problem for small actors that want to get in on the AI game.

“To create AI applications, developers need to write algorithms and use machine and deep learning but they also need images or videos to send this raw data into the algorithm’s function. This enables them to train the machine learning system to get results,” Clement Duan, founder of AIChain, told TechNode. “But, as we know now, those data resources are controlled by big companies like Alibaba or Google. It’s really hard for small and medium-sized companies to obtain data.”

AIChain is one of the companies trying to democratize AI with blockchain. Similar to SingularityNET, the China-born Singapore-based platform is trying to connect public users with AI resources. Founded by Duan, a former director of software development at the world’s largest bitcoin miner Bitmain, the company has so far drawn investment from Bitmain, INBlockchain, Viking Capital, China Galaxy Securities, and RadarWin.

How the world’s largest bitcoin miner is taking on AI’s most powerful players

According to Duan, big companies that hoard data is not only a problem for SMEs, online users also have very little control over their data. Take shopping as an example: big companies use buying records without our knowledge to make money.

AIChain aims to open data to small businesses and other users. It also aims to enable users to search AI resources modules on the blockchain and then use those modules to combine their own AI product or application.

“We want to reach a stage where everyone can share their resources on the blockchain and open to others. The public, the small businesses, and individual developers will get a chance to obtain data and AI resources and create their own AI product and application software which will improve their efficiency.”

Of course, as recent data privacy scandals such as Facebook’s have shown, sharing data is not easy. Users need to be willing to share their digital assets like images and videos, algorithm modules, and applications such as software or tools. Naturally, companies will worry about losing information and data resources, including private information.

“Why do these people want to share their resources on the blockchain to others? We give them a chance to benefit from their resources,” said Duan.

Image credit: AIChain

AIChain plans to solve the privacy issue with blockchain and DRM (digital rights management) technology. To use data, which is encrypted, watermarked, and fingerprinted, users have to pay a digital token to the owner of a particular resource which helps verify the buyer through blockchain transaction records.

Marketplaces such as AIChain are not the only example of marrying blockchain and AI. Projects such as DeepBrain Chain are trying to achieve similar democratization of resources as AIChain but instead of algorithms and data, the platform is focusing on distributing computing power.

Another area is supply chain management which is increasingly relying on automation through AI to boost efficiency and reduce costs. Chinese e-commerce giants such as JD and Alibaba are currently trialing blockchain to perfect their huge supply chains. The AI blockchain combo also has a bright future in market analysis and forecasting.

However, Duan thinks that blockchain is not a panacea—its good for recording short but important messages, for opening information to the public, and it is hard to hack. However, the transaction efficiency of blockchain is still very low and the technology has no function in protecting data content. If we want to benefit from blockchain, we will need to apply it to existing projects, said Duan. One example is using smart contracts to cut costs and improve efficiency for platforms which can help them get more users from the public.

“The year 2017 saw too many blockchain projects. Many projects might be useless or may disappear in 1-2 years. Blockchain tech has its limits too, it cannot do everything.”

9 of the world’s 12 most shipped smartphone brands are from China

Chris Udemans — Tue, 26 Jun 2018 10:46:28 +0000

Nine of the world’s twelve most shipped smartphone manufacturers are headquartered in China, according to semiconductor market research firm IC Insights.

The company recently updated its 2018 IC Market Drivers Report in which it documented the applications fueling demand for integrated circuits (ICs). According to the report, Apple and Samsung still dominate the market for high-end smartphones (over $200). The two companies combined shipped over 530 million smartphones in 2017, controlling 36% of the market share.

While these two companies controlled the high-end range, their shipments saw little growth. However, Huawei, OPPO, Vivo, and Xiaomi, coming in at third, fourth, fifth, and sixth on the list respectively, witnessed between a 10% and 73% increase in shipments.

Smartphone shipments by brand (Image Credit: IC Insights)

The combined shipments by OPPO and Vivo, both owned by BKK Electronics, fell short of Apple’s shipments by just 2.7 million units. Chinese companies on the list shipped a total of 626 million smartphones in 2017, an 11% increase compared to 2016. They also controlled 42% of global smartphone shipments.

Nonetheless, Lenovo, ZTE, TCL, Gionee, and LeEco/Coolpad saw their shipments drop by up to a quarter.

Growth in shipments from Chinese manufacturers is being driven by the international market, with total shipments increasing by 47% in 2017, according to market research firm Newzoo. The company claims that India is a significant driving force behind the increasing demand, with the usage of Chinese-made devices rising by 225% between 2016 and 2017, and accounting for 37% of all smartphones in the country at the end of 2017.

While global shipments of Chinese smartphones are on the rise, local shipments are down. According to Ministry of Industry and Information Technology (MIIT) data, domestic shipments slumped by over 16% in the first-quarter of 2018 to 39 million handsets. Technology market research firm Canalys documented a similar trend, saying that eight of the county’s ten major manufacturers experienced declines in shipments. The firm attributed the decrease to rampant imitation resulting from competition in the market.

Underground online sports lottery operators move to messaging apps after being shut down

Nicole Jao — Thu, 21 Jun 2018 07:57:14 +0000

Underground sports lottery operators are moving to social media amid the closure of numerous betting apps and a rise in traffic due to the 2018 FIFA World Cup.

Following the start of the event, online sports lottery platforms in China are flourishing. According to a Global Times report, four out of the top 10 free apps in China’s Apple App Store are sports lottery-related apps. The popularity, however, has drawn concerns over the legitimacy and problems of online sports betting and gambling platforms.

Sports lottery groups on WeChat raise concerns (Image Credit: Beijing Youth Daily)

Local media reports suggest that dozens of online sports lottery apps have been shut down this week for no apparent reason—some platforms claim to be upgrading their systems while others attribute their shuttering to the unprecedented number of site visits.

Dozens of sports lottery apps have reportedly suspended their services. (Image Credit Beijing Youth Daily)

Nonetheless, an increasing number of underground lottery operators are moving to social media and getting off the government’s radar, and rising along with it, are fraud, scams, and illegal activities.

Buying lottery tickets through WeChat, QQ or other social media platforms exposes users to even more risks—including data theft and scams. Unlike online platforms that automate the process from payment to cashing-out, players would need to manually add the lottery service operator on social media to transfer the funds via mobile payment apps like WeChat Pay or Alipay. There have been cases where users were defrauded into transferring more funds as “security deposits” when they tried to claim their prizes. There are reportedly WeChat groups that set the minimum bet to be RMB300 or higher and groups that accept as high as RMB 20,000 on a single bet.

Though sports lotteries are not illegal in China, players can be fined if caught betting with anyone other than the Chinese Sports Lottery and China Welfare Lottery—the only two authorized lottery operators in China. In May, the Ministries of Finance and Civil Affairs and the General Sports Administration examined lottery operations to ensure that operators were complying with the rules. According to the Global Times report, the General Administration of Sport also launched its own special lotteries around the same time in anticipation of the expected craze during the World Cup.

In response to the ongoing online sports gambling craze on WeChat messaging app, Tencent said it would continue to fight against all types of online gambling activities.

Live blog: Highlights from CES Asia

Emma Lee — Thu, 14 Jun 2018 03:26:25 +0000

CES Asia, one of the world’s largest trade shows, kicked off in Shanghai on June 13. Over 500 companies from around the world are taking part in the three-day show, generating buzzes in artificial intelligence, autonomous driving, electric vehicles, and more.

TechNode team is going to be live blogging from the event to bring the latest trends. Check back for regular updates!

5 crucial apps for living in China if you can’t read Chinese

James Deutsch — Sat, 09 Jun 2018 03:34:34 +0000

You’re staying in China, but there’s just one problem: you don’t speak any Chinese.

Don’t worry. China has become a lot more English-friendly in recent years and knowing Chinese is no longer crucial for getting around. Here are 5 apps that you can use to survive in China without knowing Chinese:

1) Communication: WeChat

In China, WeChat is used for everything – and we mean everything. Its a fantastic app for networking and communication, featuring easy-to-make group chats, custom chat stickers, and email integration. Its most useful feature, however, is WeChat Pay. This integrated wallet allows you to send money to your WeChat friends and can be used to pay for things with a simple QR code scan at pretty much every business you’ll find in China.

Get it from Apple’s App Store

Get it from the Google Play Store

Get it from Yingyongbao

2) Transportation: Mobike

China’s largest cities have been blessed with a convenience unlike any other: Mobike. These bright orange bikes with QR codes on their handlebars can be found on every curb in Chinese cities, and all that’s needed to rent one is the Mobike app. The app is available in English, but honestly, its interface is so simple you could get by using the Chinese version. You just scan the QR code on the bike, hop on, and start riding!

Just keep in mind some communities won’t let you bring your Mobike into their neighborhoods or parking lots. Once you’re done riding, just lock your bike at the nearest curb for someone else to use!

Get it from Apple’s App Store

Get it from the Google Play Store

Get it from Yingyongbao

3) Transportation: DiDi

While you can get a good workout biking everywhere, you may just want to catch a taxi instead. DiDi’s got your covered with a fully English app available alongside their Chinese one. Like Uber and Lyft, you can call a taxi through the app to pick you up anywhere. Just watch out for China’s traffic – the gridlocks that can form are legendary.

Get it from Apple’s App Store

Get it from the Google Play Store

Get it from Yingyongbao

4) Ordering Food: Jinshisong

While Chinese apps Ele.me and Baidu Waimai are popular apps for ordering food, they aren’t in English. Jinshisong, however, has an English client, so you can still order food delivered to you without any worry of a language barrier!

Get it from Apple’s App Store

Get it from the Google Play Store

Get it from Yingyongbao

5) Translation: Pleco

While you can survive in China knowing only English, there may come times you need to translate something. In emergencies like these, Pleco comes to the rescue! Pleco is one of the best Chinese-English dictionary apps you can find, but what makes it really stand out is its unique set of translation tools. Its Screen Reader, for example, allows you to translate text in any app you have open on your phone. It also has paid add-ons you can install into the app like the Optical Character Reader, which allows you to point your camera at any characters you see and Pleco will automatically translate them for you.

You can also use WeChat’s new feature for OCR translation.

Get it from Apple’s App Store

Get it from the Google Play Store

Get it from Yingyongbao

There you have it: five apps that are crucial for English speakers in China. If we missed your favorite app, let us know in the comments below!

How Chinese manufacturers’ interception of foreign IoT tech is a threat to our privacy

Masha Borak — Fri, 08 Jun 2018 10:15:05 +0000

The Internet of Things (IoT) is ushering in the world of connected devices. Set to become an industry worth $8.9 trillion by 2020, it is, however, one of the rockiest industries for startups entering the field, according to industry insiders. In the “factory of the world,” getting your product manufactured can sometimes also get it stolen.

“Usually, once the [intellectual property] infringement has occurred, there is little that can be done because usually, the Chinese company has managed to get the IP without violating any law,” Dan Harris, Managing Partner at international law firm Harris Bricken, told TechNode.

Voice assistants are one type of smart devices susceptible to privacy breaches. (Voicebox AI speaker. Image credit: Cheetah Mobile)

IP infringement is a problem plaguing China for decades. The issue has recently become one of the main points of the US-China trade tensions. Because they involve many different components—external and internal product design, firmware, software, and sensors—protecting IoT products legally can be complex.

“The problem with IoT is that a product developer is more dependent on a factory to produce the hardware, and costs are a big consideration which requires cooperation because you don’t want to build your own factory,” said Beijing-based software developer Horatio Martin.

Western-style agreements just don’t work

The problem is not only that Chinese manufacturers illegally copying IoT products. Many foreign companies, especially startups, practically give away their IP. According to Harris, foreign IoT companies are “relinquishing their intellectual property to Chinese companies more often, more wantonly, and more destructively than companies in any other industry.”

“The most common mistake we see is foreign companies that turn over their IP to a Chinese company without sufficient protections in place,” said Harris. “This usually occurs when the foreign company wants the Chinese company to help develop a product or manufacture a product.”

Protecting IP rights in the IoT industry is complex but Harris says that the legal framework is better than most realize.

“The legal framework is fine. The two biggest problems are foreign companies not operating within the framework and Chinese courts that are reluctant to get tough on infringement,” said Harris.

He advises companies to sign a China-centric contract with their manufacturer before revealing any IP or trade secrets. As Harris points out on his China Law Blog, companies will sometimes sign agreements with manufacturers both in Chinese and in English but the Chinese one will differ greatly from the English version. Worst of all, Chinese courts will usually only accept the Chinese version.

Technical piracy

Legal protection is just one part of the story—some companies don’t even manage to protect their products on the technical level. Zhai Jing, a self-employed developer of IoT products, says that some IP owners are not even aware of the need to encrypt their software which can be cloned cheap and easy. One example is MCUs or microcontrollers, small computers often embedded in IoT devices.

“IoT devices are commonly produced with MCUs. There is a black market providing a service to crack and copy them,” Zhai told TechNode.

Old microcontroller (Image credit: Flickr/Ioan Sameli)

Trade secret theft, piracy, reverse engineering, code tampering, and selling devices on the gray market or outside of the official distribution channel—these are not only attacks on companies’ IP, it can also put end users at risk of data theft and privacy breach.

By now, most of us have heard that intelligent devices such as Amazon’s Alexa can be hacked and used to record our conversations. Other connected devices, such as webcams, security cameras, high-tech baby monitors, smart TVs and even smart refrigerators can be also used to monitor us. This is the price of our new interconnected world: smart devices are in danger of bugs, leaks, and hacks.

However, not many consumers are aware that some of these weaknesses can stem from the manufacturing floors of Shenzhen. While many shoppers are more than happy to buy a knockoff Prada bag, a poorly executed IoT product may carry more risks. And the problem is likely to get bigger as more of our appliances get smarter.

“If the experience of off-shore manufacturing has taught the industry anything, it is that the process of protecting IP should not start when the final product hits the streets,” Martin Warmington, MicrochipDirect global sales manager, wrote for Electronic Sourcing Magazine. “Counterfeiting, reverse engineering, and IP theft can occur on the production line or within an insecure supply chain, making security critical throughout production.”

How IoT can protect itself

To avoid this, foreign IoT companies need to choose the manufacturers wisely, both Zhai and Harris agreed. One way to protect against ripoffs is to not tell the factory what the product is used for or simply lie about its usage, said Zhai. Another is to avoid giving away all the production to one factory and spread out the supply chain.

“That sounds easy in theory but there are still problems that can occur,” said Nick Dimitrijevic, Business Development Manager at Berkeley Sourcing Group, a company that helps hardware startups and established businesses to find manufacturers in China. “If these factories come into contact they could still rip you off.”

Dimitrijevic agrees that legal protection is important. For startups, losing an IP can be a matter of life and death. But he also says that it that can be very expensive for startups to get legal protection and sometimes not effective. A lot can be done before getting IP protection.

“From my perspective, some companies are at times too careful because they do not make enough products for legal protection to be viable for them—they have to strike some kind of balance,” Dimitrijevic told TechNode. “On the other hand, there are manufacturers which systems have great protection. Those are the ones that work with big companies like Apple and Nike. You literally cannot put a flash drive into their system let alone take something out.”

From smart appliances to smart monitoring and control kit, our houses are likely to get more intelligent in the near future. (Xiaomi’s smart home kit. Image credit: TechNode/Masha Borak)

One manufacturer TechNode talked to, who wished to stay anonymous, said that choosing the type of manufacturer can affect a company’s likelihood to be copied. Original Equipment Manufacturers (OEMs) are a type of manufacturer that usually focus on specific products and have R&D capabilities which mean copying a product will be easier for them. For Electronics Manufacturing Services (EMSs) such as Foxconn, copying might be harder.

Similarly, if an IoT company develops its firmware in cooperation with the manufacturer the risk of losing control over their products is greater. On the other hand, developing firmware independently is an effective way of securing the IP of an IoT product, Dimitrijevic explained.

IoT is far from the only industry affected by China’s poor IP protection but things are starting to change. In an earlier interview with TechNode Xiang Wang, China IP Practice Head at international law firm Orrick, said that improvements are coming from various levels: more patents filed by local companies, more IP-related lawsuits, as well as the country’s more important position globally as a key venue for patent litigation. The factory floors of China, however, remain a complex problem to solve.

“It’s not like China doesn’t want to regulate [IP theft], the problem is that there are hundreds of thousands of factories and you cannot control which factory makes what,” Dimitrijevic said. “The size of it all is too big prevent copying.”

Jack Ma goes all-in on smart logistics infrastructure network

Emma Lee — Mon, 04 Jun 2018 07:12:25 +0000

In a surprise appearance at last week’s Cainiao’s Global Smart Logistics Summit, Chinese tech tycoon Jack Ma announced that Cainiao Network, the logistics affiliate of Alibaba, is going to invest more than RMB 100 billion ($15 billion) to build the technical backbone for a smart logistics network aimed at improving delivery reach and efficiency. (Read our live blog of the event for a blow-by-blow of the speech).

To emphasize the company’s commitment, the Alibaba chairman added that “We will increase the investment to several hundreds of billions RMB if that’s not enough. Alibaba will bet a vast majority of our resources on it because we believe a better logistics infrastructure network could bring fundamental changes to the manufacturing industry.“

Thanks to the exponential growth of e-commerce industry, China’s logistics landscape has undergone massive changes in recent years. Ma noted that the industry started from zero parcels generated by e-commerce to now delivering 130 million parcels per day, while there are about 5 million people working at courier and food-delivery companies in the country, and seven delivery companies have gone public.

While the growth trajectory of the logistics industry shows no sign of slowing down, it is a no-brainer why the tech giant is taking huge bets on the logistics business. Cainiao wants to eventually ensure single-day delivery across China and 72-hour delivery worldwide. Here’s how they say they will meet that goal.

A smart network powered by cutting-edge technologies

Despite the surge, the logistics industry is labor-intensive, Ma pointed out. “This growth is rooted in the hands and on the shoulders of millions of deliverymen, but I believe it’s going to be driven by mental labor in the future.” A top exec from China’s top logistics company admitted at the event that their deliverymen don’t really benefit from company growth because their salary is still largely determined by how many parcels they can deliver.

As a technology-driven socialized logistics collaboration platform, Cainiao has been working on the application of cutting-edge technologies in the logistics industry since its establishment five years ago. In 2015, the company founded ET Lab, an R&D unit that focuses on the development of emerging technology and applications in logistics.

At last week’s event, the company showcased the first Cainiao Future Park, featuring intelligent management at a large scale. The Future Park has cutting-edge technologies, such as Long Range (LoRa)-IoT, edge computing and artificial intelligence, introduced the company. Sensors are installed in the Park’s infrastructure system and, through the LoRa network, meters that monitor the water, electricity, temperature and humidity conditions can report in real-time.

Of course, application of technologies goes far beyond large-scale management solutions. By using AI technologies, Cainiao has developed an agile automated warehouse system that enables a large number of robots to work collaboratively in warehouses, creating an efficient end-to-end warehouse automation solution.

Inside the smart warehouses, packages are processed on completely automated assembly lines equipped with robotic arms and over 500 AGV (Automatic Guided Vehicles) robots are on the floor for fast product pickup and delivery. The automation is expected to save warehouse staff some 50,000 steps per person per day.

If you can’t see anything, try QQ video instead.

Cainiao’s ET Lab has been tinkering with its driverless delivery vehicles over the past year. Zhang Chunhui, head of ET Lab told TechNode that the company is applying the technology in two different use cases: the autonomous driving trucks for long-distance delivery and driverless vans for intra-city delivery.

“We are developing highway autonomous driving truck fleet in partnership with FAW Group Corporation, a Chinese state-owned automotive manufacturing company. We call it ‘high-speed railway for trucks’, Zhang introduced.

For last-mile delivery, Cainiao’s ET Lab has two major products– “Little G” and “G Plus”. Equipped with a multi-sensor navigation system that includes 3DLidar, cameras and X-ray sensors, G Plus can achieve high-precision navigation through 3D modeling.

“Instead of laser radar, G Plus it uses MEMS (Micro-Electro-Mechanical Systems). It will cut almost two-thirds of the cost as compared with traditional solutions, facilitating the mass production of driverless vans,” he added. G Plus can go at a speed of 15 miles per hour. This speed makes sure it’s more efficient than human but won’t cause any security concerns in city, according to Zhang.

Little G is already being used on Alibaba’s campus. G Plus is currently in road tests and the plan is to come to commercialization end of this year.

While still at an early stage towards its full digitalization, the logistics industry has multiple options and paths to take. Compared with its competitor JD, which put bets on both driverless vans and drones, Alibaba put most of its resources on autonomous vehicles for last-mile delivery.

“We believe heavy unmanned aerial vehicles for large and long-distance cargo delivery will have better application prospects. Small drone for last-mile delivery still faces lots of problems, like security, regulation, and stability. But it’s a matter of choice based on the scenarios and the company’s current resources and research background,” said Zhang.

A connected network empowering partners

“This network was established by Cainiao, but it doesn’t belong to Cainiao. It belongs to all logistics companies. Logistics companies are Cainaio’s most important partners … we need to provide our partners with core technology and core products to make our logistics partners stronger,” Jack Ma noted at the speech.

Alibaba does not operate a self-owned logistics infrastructure but uses Cainiao to build a logistics network of delivery firms. Without direct competition, Cainiao is becoming increasingly integrated with logistics partners.

Last week, Alibaba Group and Cainiao Network joined a $1.38 million funding in China’s top express delivery company ZTO Express in exchange for an approximately 10% equity stake in the company. Under the agreement, Cainiao and ZTO will deepen collaboration from delivery and warehouse management to technology.

In the Future Park project, Cainiao only provides the overall intelligent solution to its warehouse partners, helping existing warehouses to upgrade their management systems and improve efficiencies. On top of that, it’s up to the warehouse operators to determine the scale and timeframe in adapting the solution.

“The openness of Cainiao’s services and solutions is determined by the Taobao ecosystem,” explained a Cainiao spokeswoman. JD operates its own marketplace and logistics infrastructure, so they can predict the growth trajectory and make corresponding warehouse upgrading plans. On the other hand, Alibaba’s marketplaces consist of millions of retailers. Orders could be very diverse and complex, and it is difficult for warehouses to meet the demands of e-commerce business that have peak and slow seasons, so it’s better to provide agile upgrading plans.

A global network links China and the rest of the world

Alibaba’s global vision is one of the key reasons for what the company has achieved so far and the mindset is shaping Cainiao’s future.

This network is not only national but also global. Cainiao’s global network will support 72-hour delivery across the world, starting from countries and regions involved in China’s Belt and Road Initiative.

“World trade will change because of logistics. Global trade will go from containers to packages, from trading between countries to trading between companies. All this change, we should be ready to prepare and fight today,” Jack Ma explained.

Blockchain conference in China gets Mao lookalike on stage and hilarity ensues

Emma Lee — Mon, 28 May 2018 07:54:28 +0000

It’s no secret that Chinese tech leaders have a thing for stage props, but obviously, some Chinese tech conferences have little sense of what’s in good taste and what’s not.

The organizer of blockchain conference Boao Block Chain Forum for Asia stirred a countrywide outcry after inviting an actor playing Chairman Mao to congratulate and wish the event success at the opening remark, (in Chinese).

In his speech, the typecast actor addressed in Mao’s signature Hunan accent, saying that “I sincerely wish this conference great success… and I want to thank you in the name of Mao Zedong.”

With this move, the organizer may have violated Chinese laws which prohibit the use of the images, calligraphy and any other form of representation of former national leaders in the promotion of commercial products or promotional activities. In a previous crackdown, images of Winnie the Pooh were blocked in China for its likeness with Chairman Xi Jinping,

The consequence of this hype is instant. A widely circulated photo shows that the name of the conference’s VIP dinner was removed from a poster, which could be seen as an urgent move by the sponsor to eliminate negative impact for supporting the conference.

“We are sorry for the negative impact our conference had on the public, and we will continue to execute the conference with high standards,” says the organizer in an official apology.

This is only one in a series of silly incidents that made recent headlines, such as cross-dressing cheerleader marketing their product at blockchain conference held at a Macau casino and attendees meditating at a Buddhism blockchain forum.

ZTE prepares to resume operations as US-China trade tension relaxed

Nicole Jao — Wed, 23 May 2018 10:13:50 +0000

As Washington and Beijing prepare to move forward with a deal that would lift the sales ban on ZTE, the Chinese telco has reportedly been busy getting ready to resume the operations that were ceased due to the ban.

The seven-year sales ban imposed by the US in April, which stopped US firms from supplying chips and components to ZTE, has forced the Chinese telco to halt some of its major business operations.

While the deal has not been finalized yet, ZTE is reportedly putting an action plan in place and making sure it is able to resume its business operations soon as the ban is lifted according to local media reports (in Chinese).

Now that the air has started to clear for ZTE, “all that’s left is the condition and the timing [of ZTE’s reprieve],” a ZTE employee said, quoted by Cailian Press (in Chinese). “Now compliance is the number one priority. After the ban is lifted, the company should be resuming its operations within hours,” the sources added.

Yesterday, Reuters reported that the reprieve for ZTE could include China removing tariffs on imported US agricultural products and pledging to purchase more farm goods.

With major operations shutting down and clients pulling out of deals, ZTE is reportedly seeing at least RMB 20 billion ($3.1 billion) in losses from the sales ban.

Venture capital firm GGV raises 1.5 billion in new RMB fund

Nicole Jao — Thu, 03 May 2018 11:33:19 +0000

GGV Capital has raised close to RMB 1.5 billion in its first RMB fund, the venture capital firm announced in a press release. The new RMB fund will focus on early stage and growth stage startups in areas including internet services, consumption upgrade, cutting edge technology, smart hardware, corporate services, and digital services.

Founded in 2000, the venture capital firm has invested in over 200 companies in the US and China including Alibaba, Airbnb, Xiaomi, Didi Chuxing, and Square. GGV operates in both China and the US with offices in Silicon Valley, Shanghai, and Beijing. GGV was one of the first venture capital firms in Silicon Valley to invest in Chinese companies. The firm currently manages 8 USD funds and one RMB fund. With the new RMB fund, the company manages over USD 4 billion worth of assets.

Xbox China general manager Xie Enwei resigns after 24-year tenure

Emma Lee — Thu, 26 Apr 2018 06:02:17 +0000

Xie Enwei, the general manager of Xbox China, is stepping down from his position after serving 24 years in Microsoft.

Microsoft’s response to media’s inquiries on this matter confirmed Xie’s resignation without giving reasons for his leave. “During the past 24 years, Xie worked with total devotion. We are thankful for all his work and hope he can achieve something even greater in the future,” said the company.

After joining Microsoft in 1994, Xie led the company’s tool and server team and marketing and operations unit. But he is more widely known as the head of Microsoft’s Xbox business in China.

In 2014, China finally dropped the decade-long ban on gaming consoles, where the government citing the “mental wellbeing of China’s youth” as the primary factor. The change opened big opportunities for foreign game console manufacturers to access the Chinese market, where their products were only available on the grey market.

Along with a group competitors from home and abroad, Microsoft is among the first companies to tap on the changing trend. The tech giant has established a joint venture with Shanghai-based media service BesTV New Media by investing $79 million in 2014. Xie Enwei was named as the general manager of Microsoft’s Xbox Department China as well as the head of the joint venture back then. The company’s flagship product Xbox One landed in the country in 2014.

Although Xbox received a lot of interest in the Chinese market, it didn’t do very well, mostly because it’s expensive and lots of games are still region locked. This combination enraged lots of Xbox fans; the company lost lots of customers to its competitor Sony’s PS4, which is region free in China even though it entered the Chinese market half a year later than Xbox.

Image Credit: VGChartz

In addition, Xbox is having a tough time globally. Globally, Xbox One has only sold 37.2 million units as of April 14 this year. The figure for PS4 is 78 million, more than double that for Xbox, according to data from business intelligence and research firm VGChartz.

Micro-shop Weidian rumored to be struggling amid staff exodus

Nicole Jao — Wed, 25 Apr 2018 09:15:28 +0000

Micro-shop Weidian (微店) is rumored to be going through some rough patches, according to a 36Kr report. Weidian is the biggest independent platform that helps merchants create WeChat shops for free.

“In the first half of 2017, Weidian still had over 1200 employees, but over the course of the following 6 months, more than 300 members of staff had left the company,” said a source close to the matter. The source also said that two founding partners have also left the company earlier this year. Weidian has not confirmed the report.

WeChat e-commerce ecosystem and social e-commerce are flourishing in China, but it is also an increasingly competitive space. As one of the early comers to the micro-shop scene, Weidian seems to be having some trouble keeping up with the pace of change.

(Screenshot of Weidian marketplace)

In 2013, a number of mobile shopping startups emerged to capitalize on the then-nascent market. Weidian was one of the first to make it big. The Weidian mobile shop marketplace app was launched by Beijing-based mobile shopping software Koudai Shopping (口袋购物) in early 2014.

The platform provides APIs for merchants and developers to build features for their mobile stores. It experienced explosive growth soon after its launch. In the first 9 months, it attracted over 12 million sellers and reportedly fetched 15 billion in sales. In 2014, Tencent led a $145 million funding round in Koudai Shopping.

But now the winds seem to be blowing in favor of Pinduoduo (拼多多), Yunji (云集), and other emerging e-commerce mini-programs that are innovating and creating new ways to drive traffic.

Y Combinator is officially coming to China

Nicole Jao — Wed, 25 Apr 2018 03:07:49 +0000

The Silicon Valley-based startup incubator, Y Combinator (YC) is officially coming to mainland China, our sister site has reported (in Chinese). The company has announced plans to enter China and welcomed startups in all phases to join their program whether it is concept stage, product testing phase or fast-growing stage.

Y Combinator said that they are looking forward to meeting and working with more Chinese entrepreneurs and announced the launch of their Startup School on May 19th at Beijing Tsinghua University.

Y Combinator launches Startup School in Beijing (Image Credit: Y Combinator WeChat post)

Participants of the program will have the chance to work with YC partners, president Sam Altman and founders of YC-invested US startups such as Airbnb and Stripe as well as China-born Raven Tech and Strikingly. Raven Tech, a Chinese AI startup, was acquired by Baidu in 2017.

Founded in 2005, Y Combinator has invested in over 1400 companies including a long list of high-profile firms like Airbnb, Dropbox, and Reddit.

Y Combinator-invested companies (Image Credit: Y Combinator)

YC co-founder Eric Migicovsky has been in close contact with Chinese entrepreneurs and investors recent years. The company revealed that following its first batch of Chinese entrepreneurs who graduated in 2013, they have been seeing more and more companies from China graduating from their program and finding success.

Chinese tech companies turn to games to get kids interested in STEM

Jiefei Liu — Wed, 25 Apr 2018 02:10:09 +0000

A character dressed in chainmail was pinned on the pebble-paved ground. To pass, it must avoid shells from left and right and outrun the monsters from behind. This is near the final level of the video game CodeCombat (极客战记 in Chinese). Jun Pan, a 12-year-old boy, was staring at the scene on a computer screen and ready for the challenge.

Instead of using arrow keys, the game requires players to write Python or JavaScrip to direct the character’s movements, so Pan run the 60 lines of codes he had written and his character started running zigzag. Then, he found the way out.

CodeCombat was first developed by the company of the same name, a startup educational gaming company in San Francisco, US and introduced to China by Nasdaq listed NetEase. It aims to teach students coding by having them play their game and supports Python, JavaScript, Lua, and CoffeeScript. Partnering with eight public middle schools, the game is officially one of the school students’ compulsory courses.

The game offers both free and paid packages: RMB 66 per month or RMB 648 for lifetime access. All players have access to main quests while paid users will have some extra quests and more characters to choose from as their avatars in the game.

(Screenshot of CodeCombat)

A teacherless solution

The State Council of China issued the Development Plan on the New Generation of Artificial Intelligence last July, urging educational institutes to train more experts. In January, the Ministry of Education added AI-related subjects, such as big data and data visualization to the existing high school computer science curriculum.

Despite the fanfare from officials to develop the industry, shortage in teaching resources and the fact that coding isn’t in China’s “gaokao” (高考, High School Entrance Examination)—the exam that will decide which university students can attend—are holding back adoption in China’s schools.

Liang Zhang, a postdoc in Information Education at East China Normal University, said there are only 2,000 information and technology teachers in Shanghai, including primary, junior, and junior high schools and only 20 percent of them hold a relevant degree. Compared with 1.4 million in-school students in 2016, according to data from the Ministry of Education, that means one teacher has to look after 680 students on average.

Zhang said if computer science is to be included in the middle or high school entrance exams—which seems likely considering the attention the state government has been given to—then how information and technology is taught at school should be adjusted. Games like CodeCombat can really help.

Learning by playing

“Our students really love the game and it is entertaining and educating at the same time,” said Suying Zhou, party secretary of Jianlan Middle School, one of the eight schools using the game. Pan has played the game for two years and he told TechNode that he’s ready to take the second level of the National Computer Rank Examination, which most students usually take in universities. He said the game gave him a basic understanding of computer science.

“The thing about CodeCombat is that schools won’t need teachers to teach coding. Students can learn themselves by playing the game. Learning by playing is a bit low efficient, but the game gives instant feedbacks through how the characters are moving, which will increase students’ engagement,” Kai Weng told TechNode. He holds a doctorate degree in computer science and teaches at Zhejiang University’s College of Computer Science and Technology in Hangzhou.

The career path for future computer science experts remains promising as the industry is expanding rapidly. “Companies ask me for talented graduates so they can recruit, but the fact is that I don’t have many because we don’t have enough graduates,” Weng said, “Our graduates receive the most handsome salary package across the university.”

(Screenshot of a Scratch project)

CodeCombat isn’t the first company trying to combine video games and coding. Neither is China the first to use video games in class. In 2002, MIT Media lab developed the first prototype of Scratch, a visual programming language, to help children ages 8 or up to develop computational thinking. Unlike CodeCombat, it uses drag-and-drop programming tools to build up algorithms and control characters.

As technology continues to shape the world and children are exposed to different forms of technology earlier and earlier, knowledge in computer science is vital. “It’s not like that we are trying to make every kid a future engineer,” said Shan Lin , vice president of RDFZ Xishan School, another of the eight public schools, “After learning computer science, we hope students not only be inspired by the learning process and continue to be curious about the word but be able to solve real-life problems and satisfy their curiosity themselves.”

China to start testing 5G in 16 major cities

Nicole Jao — Thu, 19 Apr 2018 03:32:26 +0000

Chinese regulators have given the green light to Chinese telecom operators to test 5G in major cities local media is reporting (in Chinese). State-run operators, also the largest three in China—China Unicom (中国联通), China Mobile (中国移动), China Telecom (中国电信)—will begin setting up 5G networks in 16 cities for testing. It is unclear when the tests will actually start.

China Unicom will begin testing 5G network in 16 cities including Beijing, Tianjin, Qingdao, Hangzhou, Nanjing, Wuhan, Guiyang, Chengdu, Shenzhen, Fuzhou, Zhengzhou, and Shenyang.

China Mobile will conduct external field test and set up more than a hundred 5G base stations in each of the following five cities: Hangzhou, Shanghai, Guangzhou, Suzhou, and Wuhan. The service operator will also conduct 5G network application demonstration in 12 cities including Beijing, Chengdu, and Shenzhen.

China Telecom will start testing in six cities including Xiong’an, Shenzhen, Shanghai, Suzhou, Chengdu, Lanzhou. The government is said to be pushing China Telecom to extend their testing operations to six more cities.

5G is instrumental to the development of many emerging technologies such as AR/VR, smart IoT, smart car. The US and China are vying to be the first to roll out 5G. Since the beginning of the year, China has begun downscaling its 2G services as telecom operators turn to more advanced 3G, 4G, and 5G technologies. Earlier this month China Unicom announced plans to shut down their 2G network.

JD expands its e-commerce empire to Spanish-speaking markets

Emma Lee — Tue, 17 Apr 2018 06:16:14 +0000

Richard Liu, the legendary founder and CEO of Chinese online retailer JD Group, made his latest appearance at Madrid, the capital of Spain, on April 16th to introduce the firm’s expansion plans to the Spanish-speaking market which boasts a 400 million population, local media is reporting.

JD has just opened its Spanish website Joybuy.es for beta testing on April 12th to target Spain and Latin America. JD.com will enter the Spanish market through investments in logistics, goods, and services to integrate JD’s capabilities in China’s commodity supply chain and provide quality products to Spanish customers.

For starters, JD will enter the market with 100,000 popular items in partnership with one thousand partners including smartphone maker Nubia, electronics manufacturer Rappo, robotic vacuum cleaner maker iLife, and more. As in China, logistics is the main selling point for JD’s services. The company promises a 2-3 day delivery for premium packages and 7-20 day delivery for economic packages in Spain. The firm is also planning to set up local warehouses within this year.

The Chinese e-commerce giant is serious about taking its services global. The current move comes two months after its launch in Europe. France is the first stop in JD’s ambitious plan in the region, where the company plans to spend at least one billion euros over the next two years.

On the other hand, JD’s aggressive globalization plan reveals how crowded China’s e-commerce market really is. The cutthroat battle in the domestic market is forcing Chinese e-commerce platforms, including top players like JD, to look for new opportunities elsewhere. JD’s rival Alibaba has launched its own globalization plans much earlier than JD.

Video platform Youku latest company to remove inappropriate content

Chris Udemans — Tue, 17 Apr 2018 04:35:52 +0000

On-demand video streaming service Youku is the latest to announce a self-imposed cleanup of its platform, saying it found a number of the movies it provides to be problematic, local media is reporting.

The company said that it is conducting a review and clean up operation targeting movies that deal with the distortion of historical figures, contain gang members as central characters, run counter to approved values, and excessively display the “dark side of human nature.”

The move follows a crackdown by the country’s media regulator, the State Administration of Radio and Television (SARFT), to clean up the internet. The SARFT has been placing increased pressure on technology companies to police the content on the web.

On April 13, Toutiao-backed Huoshan Short Video (火山小视频) temporarily shut one of its channels after being criticized by the regulator. On the same day, social networking platform Weibo announced plans to remove gay-themed content from its platform, later reversing its decision due to public outcry. It is interesting to note that Huoshan went back online with a new topic on the recommendation site called “Hello! New Age (你好！新时代)” focusing on “positive energy content.” Weibo introduced a similar section after it’s trending topics feature was temporarily shut down in February.

Huoshan and Weibo were not the only popular platforms hit by regulators last week. Watermelon Video (西瓜视频) barred mobile video uploads, live streams, and live comments, Tencent suspended short video playback within its messaging apps, Toutiao was instructed to permanently shut its Neihan Duanzi (内涵段子 “implied jokes”) app, numerous news services were suspended from Chinese app stores, and Toutiao temporary disabled live streaming and comments in its Douyin (抖音) app.

China’s latest data theft case shows tracking a mobile phone costs less than $2 a month

Chris Udemans — Tue, 17 Apr 2018 03:40:25 +0000

In a case worth over RMB 800 million, numerous members of a syndicate have been arrested for allegedly buying and selling personal data over the internet, local media is reporting.

The gang was able to obtain personal information by falsely identifying themselves and hacking targeted individuals. This information included mobile phone location and movement data, credit information, academic records, and phone call data.

According to the report, the group charged RMB 10 ($1.60) a month to track one mobile phone and RMB 1000 ($160) a month to track multiple targets.

The arrests form part of a bigger operation run by the Ministry of Public Security and the Public Security Department of Shandong Province. The investigation also focussed on individuals in Guangdong province, where the task force seized 90 mobile phones and arrested 41 people.

“I bought and sold delivery address and mobile phone owner information via the internet,” an arrestee surnamed Shi is quoted as saying. “From December 2017 to the time I was arrested, I sold more than 300 pieces of information and earned $17,800.”

This is just the latest in a number of cases relating to the trade of personal information online. In December 2017, Beijing police announced they had busted a group of hackers who collected over one million pieces of personal information by taking advantage of network operators’ vulnerabilities.

In June of the same year, 22 people were arrested for allegedly stealing and selling iPhone user data.

The privacy of user data has become a hot topic in China. Its discussion was reignited after Baidu CEO Robin Li said Chinese internet users “are not that sensitive about privacy”. The resulting backlash caused a reporter from the Beijing News to conduct a privacy test on some of the country’s most popular apps, finding that they did not adequately protect users’ data.

Li’s comments came shortly after Baidu was accused of illegally obtaining user data by the Jiangsu Consumer Council. The company responded saying they have addressed the council’s concerns.

On April 4, an exhibition containing the purchased personal information of over 300,000 individuals opened in Hebei province. The artist bought the data and displayed it hoping to highlight the ease with which personal information can be obtained online. The exhibition was shut down shortly after opening.

Huoshan latest video platform to clean up vulgar content

Eva Yoo — Fri, 13 Apr 2018 10:48:18 +0000

Huoshan (火山小视频), the short video platform backed by Toutiao, has temporarily shut down the city channel (同城频道) to clean up the vulgar content. It is still unclear how long the channel will be offline, Chinese media TechWeb is reporting.

A week ago China’s media regulator, the State Administration of Radio and Television and China Central Television criticized two short videos apps, Huoshan Short Video (火山小视频) and Kuaishou (快手), for displaying vulgar content. These apps disappeared in Android stores the following day but remain accessible in the Apple App Store.

Huoshan short video first page (l), live streaming cover image guideline (m), notice of Huoshan’s content cleaning up on its main page (r) (Image Credit: TechWeb)

Huoshan said that the current main page video page has undergone a comprehensive clean up, and will strictly follow the requirements from the regulatory authorities to further improve the standard during the rectification period, and conduct comprehensive cleaning up of existing and past contents on the platform.

At the same time, the Huoshan has now created a “Hello! New Age (你好！新时代)” topic on the recommendation site, focusing on “positive energy content” such as Chinese students wearing school uniform and doing sports together. It also features authorized content and positive energy video channel on the top.

Huoshan said that in the future, it will comprehensively increase the auditing standards, increase the intensity of content review, and check any suspected content. If there are any violations, it will shut down its uploading function and take permanent measures, and will not tolerate it.

On April 4, the State Cyber Information Office interviewed Kuaishou and the relevant person in charge of the Jinri Toutiao’s Huoshan and made serious crackdown, ordering a full clean up of its content. On April 6, the Huoshan short video announced that it will implement various management requirements one by one, in-depth self-inspection and self-correction, and establish correct values internally and externally. On April 7, Huoshan closed all accounts (in Chinese) of underage users.

Huoshan is one of the top four short video platforms, along with Kuaishou, Douyin, and Watermelon and was among the Spring Festival’s top 5 apps based.

Gionee headquarter to lay off half of its employees

Nicole Jao — Wed, 11 Apr 2018 05:03:08 +0000

Gionee, once one of China largest smartphone manufacturers, said it has begun laying off employees at its headquarter, according to NetEase reports (in Chinese). The Shenzhen-based company is reportedly cutting as much as 50% of jobs at its headquarter.

The job cut is merely a continuation of bad news from Gionee. Just last week, Gionee released a statement on its official Weibo account that it has begun laying off almost half of its workers at its main manufacturing plant in Dongguan.

A Gionee employee quoted by NetEase said that “this situation has been dragging on for too long without a clear explanation from the company. Some employees lost their patience and have decided to quit, others are still waiting for the severance plan to come out.”

A company response claimed that yesterday (April 10), the headquarters has started conducting exit interviews with employees and has proposed compensation plans.

There were blatant signs of what was coming for Gionee. Amid other rumors that the smartphone manufacturer was having difficulty in paying some of its suppliers and advertising partners, in January, a court in Dongguan issued an order to freeze 41.4% shares held by Gionee’s chairman Liu Li Rong for two years after Liu’s gambling debts rumors.

Founded in 2002, Gionee was the sixth best-selling smartphone brand in China. But China’s increasingly competitive and overcrowded smartphone sector is filled with deep-pocketed rivals like Huawei and Xiaomi, which have left many second and third-tier brands including Gionee embroiled in financial troubles. And what’s more, Chinese smartphone sales are showing signs of slowing down for the first time since 2009, making it more challenging for top-selling brands in the country, let alone smaller brands.

China’s top 6 angel investors

Emma Lee — Tue, 10 Apr 2018 09:07:27 +0000

With an increasingly tech-savvy population, maturing tech ecosystem and government support, it’s arguably the best timing to start a business in China. The startup craze fosters a growing appetite for venture capital firms in the country. Greater China attracted $65 billion, or 36 % of the total global venture capital in 2017, next only to US’s $76.4 billion, figures from data service Preqin show.

Even combining all these, getting your business from idea to minimum viable product is a daunting task. Getting the initial funds is perhaps the most important step when building a company from scratch. 3F (Friends, Family, and Fools) is usually the best chance for obtaining initial investment. But professional angel investors, who boast better understanding of the industry and entrepreneurship, are a better choice for long-term development.

However, angel investors can be a confusing crowd with different industry focus and style. For entrepreneurs who want to court their own angel, here’s a list of top angel investors in China.

Kaifu Lee

Image Credit: TechNode

As a veteran investor and startup guru, Kaifu Lee is probably one of the most prominent figures in China’s tech world. After getting a PhD in computer science in 1988, Lee worked as top management for Apple, Microsoft, and Google. His solid IT background and work experience with US’s top tech giants have gained him a respectable reputation not only in China but also in Silicon Valley.

He now serves as the founder and CEO of Sinovation Ventures, an accelerator/VC formerly known as Innovation Works. The firm is focused on areas including artificial intelligence (AI) and big data, content and entertainment, consumption upgrade, B2B trade and enterprise services, and education. With a preference for teams with strong technical backgrounds, Sinovation Ventures has recorded lots of successful cases in Wandoujia, Zhihu, and Meitu. The firm is planning to raise $500 million for a fourth fund.

Although bearing a scholarly manner, Lee was quite outspoken in giving his ideas on the latest tech trends and advice for young entrepreneurs. It’s worth noting that Lee is a firm believer in AI technology, so much so that he predicts that AI will be the future and has written a book to explain the benefits and challenges from AI.

In his personal life, Dr. Lee experienced a tough 2013, when he was struck by lymph cancer and forced to stop working. Luckily, he recovered 17 months later and came back to the limelight with his new book “Living Towards Death” to share his thoughts on life and death.

Xu Xiaoping (Bob Xu)

Image Credit: ZhenFund

Even before finding his identity as an angel investor, Bob Xu made himself a legend as one of the three co- founders of New Oriental Education & Technology Group, the largest provider of private educational services in China. The story of New Oriental has inspired a blockbuster movie called “American Dreams in China”, which pulled in a box office of RMB 537 million.

After stepping down from New Oriental in 2006, Bob Xu founded ZhenFund with his former partner Wang Qiang and Sequoia Capital to focus on investments in gaming, online education, e-commerce, and mobile internet. The fund plans to raise $190 million for a fifth venture fund within the year.

Founded in 2011, ZhenFund’s profile includes a series of successful projects like Jiayuan, Lightinthebox, Jumei, Red, Miya, 51Talk, Ehang, and Chumenwenwen.

Given his churlishness and outspoken temper, Xu’s incisive insights on the industry often made headlines of local media. Xu called fellow investors to fully embrace blockchain technology in an internal WeChat group. The leaked chat sparked heated discussions in the industry. While some agree with his proposition on blockchain technology, some accused him of trying to pump up the blockchain hype for financial gain.

Cai Wensheng (Mike Cai)

Image Credit: Baidu Image

Although never receiving a higher education, Cai built his reputation as a shrewd investor and industry insider.

Cai made a fortune from internet domain name investment and begin to set up his own startups. One of his most successful endeavors is web directory 265.com, a clone of Hao123.com which was acquired by Chinese search giant Baidu in 2004.

Gradually the young entrepreneur became a renowned angel investor. His portfolio companies include Chinese hit services Meitu (photo-centered startup), Baofeng (video player developer and video content provider), CNZZ (online data service), 58.com (classified site), Feiyu Technology (mobile and web game developer) and Flashget Downloads.

Cai is associated with many Fujian located tech companies and has developed a preference for grassroots entrepreneurs like himself. His investment focuses include entertainment and internet services.

Xue Manzi (Charles Xue)

Image Credit: China.com

Xue Manzi, the Chinese-American billionaire capitalist, is among the earliest and most active angel investors in China’s internet industry. As the co-founder of UT Starcom, Xue once worked as senior management of 8848 Electronic Commerce Network and ChinaEdu.net. His also the investor of PCPOP, auto vehicle portal Autohome and fintech platform Snowball.

Xue is investing through Manzi Fund focusing on areas including mobile internet, healthcare, fintech, education, entertainment. The RMB 500 million fund has invested in over 100 startups, mostly in the angel round. He’s also one of the earliest investors that are placing bets on blockchain technology.

In addition to being a prominent investor, the silver-haired Xue is quite a controversial figure. Born to a senior political family in China, Xue had a tough younger life during the Cultural Revolution and then finished his higher education in the US. Given his personal experience, he is a leading liberal commentator on the social media scene, where he usually posts poignant commentaries about the government. Xue was detained in Beijing for suspected involvement in prostitution in 2013.

Lei Jun

Image Credit: Xiaomi

More commonly known as the founder of smartphone maker Xiaomi, Lei Jun represents a new group of IT billionaires who are hunting for the next unicorns through angel investments.

Before founding Xiaomi, Lei Jun once worked as board chairman of UCWeb, the leading Chinese mobile browser acquired by Alibaba. He is the former executive director of Kingsoft and co-founder of Joyo.com which was sold to Amazon in 2004.

Lei is now investing through Shunwei Capital, an angel investment fund he co-founded with Tuck Lye Koh in 2011. As of November last year, Xiaomi and its Shunwei Capital (顺为资本) have invested $4 billion in 300 companies such as self-balancing scooter Ninebot, 17zuoye, video streaming service provider iQiyi, Renrenche, 51Talk, Aiyibang, Misfit, and Xiaomi’s real-time video call provider Agora.io.

Xiaomi’s phones are achieving huge success in India and Lei is planning to replicate China’s business model in India by investing $1 billion to 100 Indian startups.

Shen Nanpeng (Neil Shen)

Image Credit: Sequoia Capital

As the founding and managing partner of Sequoia Capital China, Shen Nanpeng has topped venture capital investor lists over the past few years. His most recent feat is to hit the top spot at Forbe’s Midas List for 2018.

After becoming a successful entrepreneur as the co-founder of Chinese travel site Ctrip, he is on the founding team of Sequoia Capital China, one the most active and influential VC firms in China. In addition to being an angel investor, Shen is also very active in later-stage investments. His successful investments include Meituan, Momo, Vipshop Holdings, Qihoo 360, AutoNavi Holdings and JD.

Where startups should start in China

Masha Borak — Mon, 09 Apr 2018 11:06:47 +0000

It has been 38 years since China began its reform and opening-up with the launch of Special Economic Zones (SEZs) and the promise of giving more room for foreign companies to grow. The economic policies system which made a fishing village such as Shenzhen into an innovation mega-hub is still in place and constantly evolving.

According to Rafael Jimenez Buendia, Business Development Advisor at the EU SME Center, this is because SEZs are actually working. He noted that there is a rise in EU companies seeking to establish themselves in SEZs, especially in the tourism sector.

Buendia spoke along with 11 other business experts at the EU Sino Round Table discussion co-organized by BenCham, the EU SME Center, ICI – Beijing B&R, and EU Sino Business Consulting, recently held in Beijing. However, according to VP of Galaxy Internet Capital Karen Guo who spoke with TechNode after the panel, foreign entrepreneurs should not take the market for granted.

“It is a huge, fast-growing, dynamic market, meanwhile also complicated with policies, different market practices,” said Guo.

When it comes to choosing where to settle in China, startups and SMEs do not consider only SEZs. Large, international cities such as Beijing, Shanghai, and Guangzhou, are still the top destinations for most foreign companies. They provide talent, English-speaking staff, and ecosystems for business growth, said Guo. One of China’s main hubs for entrepreneurship, Beijing’s Zhongguancun, has become increasingly competitive since companies there are surrounded by incubators, VCs, and big companies looking to buy out startups.

Yalin Chen, Managing Director for China at China Inroads noted that SEZs are specializing by choosing to support certain industries over others. Many SEZs are eager to welcome companies focusing on cutting-edge technologies. Another trend is that smaller cities in China are offering more incentives to attract startups and SMEs.

“Foreign entrepreneurs tend to be overwhelmed by the hospitality from the development zones and tech parks, especially those newly built and located in 2nd-tier or 3rd-tier cities,” Ho told TechNode after the panel. “One of the main reasons for the development zones to attract startups is due to the overall picture of China’s current economic re-structuring, with policies and incentives leaning towards encouraging innovation and entrepreneurship. International startups are certainly welcomed by nearly all the development zones.”

However, as some panelists have noted, sometimes these generous promises don’t last. In China, city, county, and provincial-level officials often get promotions after finishing certain projects. Unfortunately, for companies, this sometimes means that deals have to be renegotiated once the leadership has changed.

Not every area is suited for every business. Certain zones may offer good conditions in terms of subsidies or tax breaks but fail to provide the necessary ecosystem for the company to thrive.

“Specifically which city to choose, that depends on which area the startups are,” said Ho. “If they are working on software, internet, I would suggest Beijing, given most of the internet companies are here in Beijing. If the startups is about hardware, then for sure Shenzhen is the best choice, as the ecosystem, as well as supply chains, are all there.”

Most panelists agreed that talent attraction is one of the biggest challenges. And in attracting people, it’s not just the money that plays a role. Daniel Albrecht, Managing Counsel at Starke law firm, shared an anecdote from a trip to one Special Economic Zone.

“I asked my translator does she like working here and she said ‘No, it’s boring,’” said Albrecht adding that to attract workers, areas need to build up a business environment but also an environment that’s attractive for people.

China’s internet 53rd cheapest in the world

Chris Udemans — Fri, 30 Mar 2018 09:36:21 +0000

The cost of mobile data in China ranks 53rd in the world, with the country experiencing a decrease in data costs for six consecutive years, local media is reporting.

The National Development and Reform Commission today released its first report on consumer development in the country, documenting that the price of fixed-line broadband has also fallen during the same period.

According to the report, monthly revenue per user from fixed broadband dropped by 18% in 2017, while mobile data revenue decreased by almost 52%.

Chinese carriers impose additional fees on individuals using mobile services outside of the province in which their SIM card is registered. The report includes proposals to do away with these roaming fees, as well as expanding access to free internet in public areas.

According to the International Telecommunications Union (ITU), China’s mobile data and monthly broadband costs rank 53rd and 89th in the world (from low to high) respectively. While the cost of internet data is reportedly decreasing, the speed of the internet is increasing. China’s Broadband Alliance released a report last year claiming that fixed-line broadband speeds had risen for 11 consecutive quarters.

The report attributed the increase in speed to the government pushing improved internet infrastructure in the country, including increased bandwidth for international traffic. However, a study conducted by Cable.co.uk, China’s internet is ranked as the 134th fastest in the world, placing just behind Iran and in front of Mauritania.

Ant Financial, Didi and Xiaomi named top unicorns in China

Nicole Jao — Fri, 23 Mar 2018 06:49:33 +0000

China’s Ministry of Science and Technology has announced the 2017 China Unicorn Enterprise Development Report (in Chinese) and the Zhongguancun Unicorn Enterprise Development Report. 164 companies have made the top unicorn list, with a total valuation of $628.4 billion. Ant Financial took the crown with a valuation at $75 billion. Didi Chuxing and Xiaomi were placed second and third with $56 billion and $46 billion valuation, respectively. Other unicorns in the top ten are Alibaba Cloud, Meituan-Dianping, CATL (宁德时代), Jinri Toutiao, Cainiao, Lufax (陆金所), Jiedaibao, many of which had a big jump in valuation in the past year. iQiyi, Shenzhou Zhuanche, ofo, and many other big-name startups have also made the list.

To no surprise, most unicorns come one of the five categories: e-commerce, internet finance, health, culture and entertainment, and logistics. And over 84% of the unicorns come from Beijing, Shanghai, Hangzhou, and Shenzhen.

Alibaba invested in most unicorns in 2017 among Chinese tech behemoths with a total of 29 startups making the list, followed by Tencent (26), Xiaomi (12), Baidu (8) and JD.com (4).

Sequoia Capital invested in 35 unicorns last year thereby winning the title of 2017’s “Best unicorn investor.” IDG, Matrix Partners China, and Qiming Venture Partners have also invested in a number of unicorns.

There are also a couple of “former unicorns” who went public last year and have graduated from the list, including China’s first online-only insurer Zhong An Online Property and Casualty Insurance, China’s e-book seller Zhangyue, and financing and loan services Rong360.

Other honorable mentions are WeBank, Ping An Healthcare, and Technology—gearing up for an IPO this year—Koubei, JD Finance, Ele.me, and automakers including WM Motor and NIO are among those who have reached the $5 billion valuation mark.

Enjoy being slow: Why Chinese tech companies are embracing a slower culture

Emma Lee — Thu, 15 Mar 2018 10:16:25 +0000

In a movie with Chinese kungfu star Jet Li, Alibaba Group co-founder and executive chairman Jack Ma defeats eight celebrity martial artists in just 20 minutes. Not only does the mini-film try to portray Jack Ma’s unbeatable position in China’s tech industry, it also references the most commonly cited similarity between the tech industry and China’s ancient martial arts: “There is no impregnable defense, only speed defines the winner”.

If you have been tracking the developments in China tech, it’s hard to ignore this trend: the life cycle of emerging industries—an initial boom followed by the multiplication of competitors and finally market consolidation—is dramatically shortened while startups are forced to move faster in a bid to stay ahead. Apart from startups, other parties involved, investors and regulators, for instance, are also forced to keep up with the shift.

Not every company, however, follows these principles. In fact, lots of entrepreneurs believe in something that’s completely the opposite. Instead of aiming for a breakneck development, they prefer a slower—but more deliberate—path.

Such examples can be found in all the hidden tech giants like hipster social network Douban, social video sharing app Kuaishou and smartphone maker OnePlus. They might not be the names you would find in tech headlines every day, but you know they are the brands that influence the lives of a lot of people.

Side effects of moving fast

Of course, being fast has its benefits, but it also brings side effects that are likely to burn you out before the race is over. A “speed for speed’s sake” approach is taking Chinese tech companies to extremes. Sometimes the battle fosters unhealthy practices.

A report from Tencent Tech notes that 80 percent of the country’s startups are exaggerating their funding rounds to create hype, intimidate competitors, or force higher valuations for later rounds. There might be short-term gains, but it will hurt the company by putting it in a position where it is not able to achieve sustainable growth in the long-term.

Endless marketing campaigns and public spats are other trends fueled by the need for speed. Defining how fast a company can go, especially in comparison with their competitors, could be something really serious for Chinese companies. Back in 2016 when Didi and Uber are deeply entangled in the land grabbing battle, both companies were in disagreement about who owns what in the ride-hailing market. This fosters competition that leads to irrational spending in operation and marketing.

Slow companies become a nascent force in China

More and more companies take it as a compliment when people call them slow. Because lots of entrepreneurs have achieved great success by adopting this deliberated approach, sacrificing some speed for a healthier outlook in the long-term does make sense for them.

“We would test our product before launch three times or more, even if it involves only a small feature update,” said Chen Danian, founder and CEO of Wifi Master Key, the Wifi hotspot sharing app that claims over 900 million users globally as of June 2016.

“When users are using Wifi Master Key 3.0 version a while back, our team already had a much more sophisticated 4.0 version ready. We postponed its launch for a small connectivity problem that was discovered in testing because we want to make solid steps in our way forward,” Chen told local media when explaining how slow culture influences the company.

In addition to the dedication to polish products, another characteristic of the slow companies is that they choose to gain users through word-of-mouth rather than excessive marketing campaigns. This strategy might miss the chance to achieve user surge in short-term, it would build a group of dedicated core users with high user stickiness, which many sees as an advantage for future monetization.

For Xiao Yi, founder and CEO of online tourism site Qiongyou, being slow is more about keeping track of your original goal and team culture. “While most fast companies take user demands as their No.1 priority, Qiongyou adheres to a core value that emphasizes the demand of employees. Firstly, it’s because all our employees come from our users. Secondly, they are the force that drives the growth of this company. From the beginning of Qiongyou, I tried my best to talk with every employee before they are on board to make sure that we could build a solid team, where every member fully understands the company culture,” he said.

It’s not an easy thing to do

“It’s difficult for tech startups to slow down in China since the market is usually filled with hypes from your competitors,” said Xiao. Apart from fierce competitors, investors are often believed as a major reason that fuels the fast culture.

The Didi and Uber China merger came after reports of mounting pressure from investors who were concerned Uber was wasting money in a market it could not win. The same reasoning is also behind Didi’s merger with Kuaidi, and most recently, the long-rumored merger between ofo and Mobike.

“Backing slow companies is not a common strategy for investors because most of them have return deadlines. This is a practical problem. The growth timeline for slow companies is challenging for most funds,” Ken Xu, managing partner at Gobi Partners, told TechNode.

“But slow companies are still the choice for top or mature funds, who have enough patience to lay out in companies they see long-term potentials. Just as the old saying goes—time is the best friend of good companies. In most cases, moving slowly in early stage does not mean there’s no potential in the long-term. Sometimes, the returns of slow companies are really impressive. … Also, slow companies tend to pay more attention to social issues and user experiences. This perspective may help the investors to better understand the technologies and business models of these companies,” he added.

Fast vs slow: Finding the best pace for you

“There’s a prerequisite in determining which path to take. Startups fall into different types: those want to solve immediate social problems and those to create social values in the long-term, or both,” Andy Li CEO of fintech startup Silot told TechNode. “Moving fast might be a better choice for the first category, and slow would be optimal for the second group, which could take their time in constructing a distinctive style and system.”

Moving fast is obviously still the mainstream mindset in driving Chinese startups and it’s still going to be for the short-term. We do hope, however, that more companies choose a reasonable pace.

China’s tech firms are adapting to an increasingly IP sensitive environment

Emma Lee — Wed, 14 Mar 2018 02:15:21 +0000

Over the past few decades, China has been perceived as a land of copycats where local firms duplicate proven technologies and business models from the West without giving due credit. Counterfeit apparel, blatant technology infringements and pirated movies are still stereotypical portrayals of the state of intellectual property (IP) protection dynamics in the Middle Kingdom. Things, however, are starting to change.

The improvements in China’s IP protection environment can be seen on various levels: an increasing number of patents filed by local companies, IP-related lawsuits, as well as the country’s more important position globally as a key venue for patent litigation.

These shifts are of vital importance for Chinese tech firms. While IP is forming a more significant portion of their overall value, Chinese tech companies with long-term vision are adapting to these changes accordingly.

TechNode got a chance to talk with Xiang Wang, China IP Practice Head at international law firm Orrick, on a range of topics on recent development in Chinese patent laws and their implications for Chinese tech firms. As part of the team that helps China form IP policies, Wang has seen the changes since the very beginning.

Wakening IP awareness driven by decade-long government effort

Although these transitions are happening fast, they don’t come overnight and are the results of years of concerted efforts from the whole nation. China’s radical paradigm shift in IP industry is taking a top-down approach.

“The change really is from the central government of China,” said Wang. “The policy is that China is to become an IP exporting country. Based on that, China has over the years reshaped its laws and regulations to set up all kinds of educational programs, amended trademark law and patent law. Also, the government provides incentives including money for Chinese companies to file patents, especially internationally,” he noted.

Data shows that these supporting policies have incentivized Chinese companies to create and file for IP. Chinese companies filed more than 1 million patent applications in 2015, more than one third of the total number of patents filed globally. Now China is the world’s #1 patent and trademark country, filing more than the US and Japan.

“While Chinese invention patents are substantively examined, people may say many of Chinese utility model and design patents are ‘trash’, because these patents are not substantively examined by the patent office. However, many do not realize such patents can create a huge advantage when asserting them in Chinese courts for alleged infringement. The effort to invalidate such patents is tremendous,” Wang commented.

In addition to a complete legal system, several macro-level measures are boosting the change. The Chinese government has reshaped its judicial system to increase the damages awarded via Chinese courts, which in turn adds an incentive for companies to file lawsuits in China.

“There are some damages awards over 50 million RMB, some maybe even over hundreds of millions of RMB. Basically, litigation is a way to create a monetary reward for plaintiffs. Also, it’s a tool to legally deter competition. People realize it’s great to file patents, trademarks, sue competitors, and hopefully they will get big damages that would actually create a very competitive edge for plaintiffs,” said Wang.

In addition, the IP environment has been improving over the years. The judges are better equipped with IP and technology knowledge, so that helps the IP system as a whole.

IP and globalization

Facing a saturating market, Chinese tech firms—especially electronic device manufacturers—have embarked on the voyage of overseas expansion. While competing on the global level, IP is inevitably very important both as an offensive and defensive tactic.

Companies are increasingly looking at multiple jurisdictions on an international level, a landscape in which China is attaining a higher ranking. They feel they are being treated more fairly and it’s a market they can’t ignore.

“US and China are two key litigation venues when we want to sue a company. China is usually the place where the alleged infringer makes products and the US is usually the market where it sells the products, in addition to selling in China. What I want to do is to stamp out this infringer at its source—China–and also from its market, which is both China and the US, putting Europe aside, where the damage is much less,” said Wang, adding “We are seeing more and more Chinese companies using such strategies when going abroad to protect themselves along the way.”

The US market is still a hard nut to crack, so many Chinese companies use Southeast Asia as a launchpad. It’s not only because they have a huge user base that shares similar habits and cultures, but also because there’s an IP gray area. Xiaomi, Oppo, and Vivo are performing exceedingly well in theSoutheast Asian market, and Huawei sells in Southeast Asia, the Middle East, and Europe, where there are very few lawsuits.

“It’s a wise strategy since they can test these markets and make their product stronger. But it is just a matter of time [before they enter the US market]. Chinese companies can cross-license when they have acquired more IP. Now, there are a few options when they are sued in the US court: either to defend very hard to invalidate the patent, defend on non-infringement, or pay license fees. Better yet, if they have patents, they may cross license,” he explained.

More Chinese firms are fighting back rather than always being on the defensive. Chinese tech giants like Huawei, ZTE, and Xiaomi are becoming plaintiffs in litigation against foreign companies. Chinese companies have figured out what IP can do for them.

Many see this as a sign of China’s shift toward an IP powerhouse. Wang warns about being over-optimistic but he also agrees that China is moving in this direction. Although less than 5% of all IP cases filed in China each year involve foreign companies, they are receiving increasing attention from the public, according to Wang.

Local innovation and deep tech also drive the trend

Chinese companies are quickly catching up and even exceeding their foreign counterparts in several industries, like bike rental, mobile payment, and live streaming. They want to build up their unique selling proposition, and IP is an ideal tool for this goal.

Furthermore, the awareness of IP can be tracked to the inception of a company. In the past, IP was often not a top priority for startups, mostly because it would be too expensive a proposition for them to act on. But now deeper tech is gaining momentum.

“The strength of a company’s IP has always been a consideration in our pre-investment due diligence,” John Hsin from Huaxing Growth Capital told TechNode. “But it’s taken on greater significance as our investment portfolio has grown to include more companies in cutting-edge areas such as artificial intelligence, big data or biosciences that are commercializing technological innovations. For these companies, we take a harder look at their IP and give it more weight in our investment decisions.”

China’s continued IP challenges

Despite the huge number of IP filings, a large number of them are useless. “Because Chinese patents, especially utility model and design patents, are not substantively examined by the patent office,” Wang pointed out.

Sometimes, people use loopholes to take advantage of supporting policies. China has three patent models: invention patents, utility model patents, and design patents. Only invention patents are substantively examined by the patent office. Some Chinese companies file those patents just to get a patent number.

“We have seen situations where asserted utility model or design patent was a virtual copy of another US patent application. The patent office in China does not substantively examine them so you basically have filed a patent that’s no good. But such a patent would give them ‘patent power’, a significant benefit because they will be able to use the patent to file a lawsuit and/or apply for high-and new- tech company status, from which they will get tax benefits, tax subsidies, and hukou [residence permits for Chinese citizens] for employees,” Wang said. To make it worse, Chinese courts don’t penalize frivolous patents or just levy a small fine.

The more difficult obstacles, however, originate from a more basic level compared with the US litigation system. Whoever makes a claim in China bears the burden to prove, but often it’s difficult to find enough evidence with the single effort of one party. The United States’ discovery system creates a channel for litigants to see the facts of the case, according to Wang.

The second difference is that if a litigant in the US produces fake evidence, the opponent can file a summary judgment to penalize the litigant for producing falsified evidence. The litigant will likely lose the case by summary judgment. “If I prove you lied one time, then I assume you lie every time. But that’s not the case in China, the penalty against falsifying evidence is so low that people don’t take this seriously,” said Wang.

Through years of efforts, China’s copycat stereotype is vanishing as its IP legal system improves and public awareness of IP rights grows. Top Chinese smartphones makers are using IP more tactfully both as the attack and defense measures in their global expansion. Music streaming services are willing to invest big bucks in copyright, and then being able to seek settlement through more sophisticated measures of copyright swaps. Video streaming sites are building their own IP for self-generated content and reaching external partnerships at the same time. These developments should at least be seen as evidence to prove that the country is on the track to a mature IP environment suitable for the innovation it wants to foster.

Beijing to set up standard organ for blockchain and distributed ledger technologies

Emma Lee — Tue, 13 Mar 2018 08:23:53 +0000

China’s Ministry of Industry and Information Technology announced Monday its plans to set up a national committee for the standardization of blockchain and distributed ledger technologies.

The move comes against the backdrop of an increasingly standardized industry. International standardization entities, including the International Organization for Standardization (ISO), International Telecommunication Union (ITU), and World Wide Web Consortium (W3C) have pioneered this initiative. China is a participant in drafting the standards compiled by the blockchain arm of ISO, according to the announcement.

China has witnessed an impressive growth for the sector with a 30-fold increase in the total cryptocurrency market capitalization during the year. The enthusiasm of Chinese tech giants is evident in the increasing number of firms involved in the sector. Baidu, Xiaomi and NetEase all launched their crypto pet project. E-commerce giant JD launched AI Catapult Accelerator to focus on blockchain startups.

But there is always a tricky side of the boom—regulations. Chinese policymakers are eager to fuel wider adoption of blockchain technologies by setting up framework and standards.

But on the other hand, they are taking a very cautious and gradual approach to the goal to protect and educate investors amid the under-unregulated cryptocurrency ecosystem. Despite the rumors for a centralized digital currency, China’s central bank governor Zhou Xiaochuan said that the country, which still does not recognize Bitcoin as a legitimate payment method, is not in a hurry to issue its own digital currency .

Lies and statistics: How many of China’s women are actually in the tech sector?

Masha Borak — Thu, 08 Mar 2018 10:07:18 +0000

Editor’s note: The headline is a reference to Mark Twain’s oft-quoted display of disdain for statistics and figures.

Women in China’s tech and entrepreneurship have come under global attention during the past years for their (perceived) better position compared to some countries (the US). The divide was painfully visible during China’s ride-hailing war: on one hand were Uber’s scandals with treating women, on the other, was DiDi’s shining example with its president and COO, Jean Liu.

However, China has been long considered as a country of slightly dubious statistics. This year again for Women’s Day, Chinese state media reported that women account for 55% of entrepreneurs in the internet field, a statistic repeated since 2015. So far, however, nobody has been able to figure out what it actually means. Is it women that have founded a startup? Women who work for a tech company? Women who happened to open a shop on Taobao?

Other research has given vastly different results. According to one report by NetEase Cloud and IT Juzi, the number of female entrepreneurs is as low as 16%.

Gauging how many women are employed in China’s tech sector is even more difficult. To illuminate the situation, TechNode asked several of China’s biggest tech companies to share their statistics. Here are the numbers from the three that have responded:

Baidu has roughly 40,000 employees and 45% of them are female. Among all employees, over 50% of them are technology R&D focused. 34% of tech-specialized employees are female. 45% of Baidu’s female employees are on mid-senior management teams (senior manager level or/and above).
At DiDi, 40% of employees are female while women hold 20% of senior management positions.
Women account for 47% of Alibaba Group’s 50,000+ employees. One-third of Alibaba Group founders are women, one-third of partners are women and one-third of its senior management executives are women.

Not bad right? Well, until you see this picture:

Photo taken during the World Internet Conference at Wuzhen in 2017 of a dinner that gathered China’s top tech leaders.

This famous photo of China’s tech leaders at the World Internet Conference at Wuzhen shows the pinnacle of China’s tech power. This year, many of these men have been invited to China’s most important yearly political event, the Two Sessions of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC). Chinese politics is known for its minuscule number of women. Tech does not seem to be the force that will change this.

There is research that gives hope. Silicon Valley Bank has compared its 900 clients throughout UK, US, and China and found that women are better represented at senior levels in China than the two other countries. But statistics can be pliable.

Looking at other numbers, when it comes to women in board seats and CEO positions in China, the figures do not differ too much from the rest of the world. There are no specific stats for tech companies, but according to Deloitte’s research published in June 2017, Chinese women occupy just 10.7% of board seats in all companies. The world average is similarly poor—just 15%. Only 5.4% of China’s A-share listed company boards are chaired by women, while globally women hold only 4 percent of CEO and board chair positions.

Of course, there are plenty of notable exceptions that prove the rule within the tech field and not just DiDi’s Jean Liu. Baidu’s Ma Dongmin, Ant Financial’s Peng Lei, and Zhou Qunfei, founder of electronic component manufacturer Lens Technology, are among the 6 richest self-made Chinese women, according to this year’s Hurun research. There Sina’s IR director Cathy Peng, Baidu’s IR director Sharon Ng, Sohu’s CFO Joanna Lu, and Crip’s CEO Jane Sun.

The number of female players at the top, however, shouldn’t be a proxy for the bottom rungs.

China’s tech leaders have a thing for strange stage props

Masha Borak — Mon, 12 Feb 2018 06:13:20 +0000

Big, smooth, and with a lot of LED lights—Chinese tech leaders really seem to like to touch balls during opening ceremonies and other events. There’s nothing that screams “technology” more than a sphere full of laser lights.

Ball-grabbing during Baidu’s chess and card tournament in 2013 (Image credit: TechWeb)

Looking at a crystal ball during an event organized by ride-hailing giant DiDi in Dongbei in 2016 (Image credit: Sohu)

Alibaba’s rural Taobao project is a big fan of balls (Image credits: Hedong government official website, Henan government official website, Diyitui, Huidong)

Of course, big balls are not the only thing that gets touched while posing for photos. Some companies have experimented with cubes, helms, and other odd objects. Pouring sand over the company logo is another quirky trend in China’s professional events choreography.

Shiny cube worshippers at the opening ceremony of the “Entrepreneurship China 2015” competition and the completion ceremony of Guangzhou’s biotech park (Image credit: People’s Daily)

The three helmsmen: Tencent president Martin Lau, Sogou CEO Wang Xiaochuan and Sohu Group chairman Zhang Zhaoyang at Sougou’s press conference in 2013. (Image credit: iFeng News)

The latest fashion seems to be going towards more rectangular shapes. Both Didi and the new AI research lab led by Chinese venture capitalist Kai-fu Lee were so impressed by this shiny blue platform that they just decided to switch the name and recycle it. Honestly, we couldn’t think of a better way to describe artificial intelligence either. There’s nothing that represents robots better than the lack of creativity.

How to represent AI? Put something blue with a lot of squiggly lines. A no-brainer, right? DiDi’s Intelligent Transportation Summit 2017 (Image credit: Didi Chuxing)

Copycatting at the opening ceremony of the International Artificial Intelligence Research Center in Beijing led by Kai-fu Lee, 2017 (Image credit: Sohu)

Other than big balls, there is another trend that is hard to miss at company events—the high levels of testosterone. Despite the fact that Chinese women have a high level of participation in the workforce not many of them make it to senior positions. Although the numbers are better than in developed countries like the US, we have to wonder, what is stopping Chinese women from grabbing their chance in tech?

Power-hungry China beckons smart energy startups

Nicole Jao — Mon, 12 Feb 2018 01:53:23 +0000

China has undergone rapid development and seen tremendous economic growth in the past decade, but behind the country’s urbanization is increasing demand for scarce energy resources. This is forcing the power-thirsty country to rethink how energy is consumed and managed.

China is currently the top electricity user in the world and its rate of consumption is speeding up. According to official data, electricity consumption rose by 6.6% in 2017, faster than the 5% increase in 2016. World Resources Institute estimates that as Chinese cities continue to develop, energy used by buildings will increase by as much as 40% in the next 15 years.

Electricity consumption in 2016 (Source: Global Energy Statistical Yearbook 2017)

Globally, buildings use up about 70% of electricity and waste 60% of it—around $100 billion of electricity loss each year. That is a staggering amount of energy wasted through outdated and inefficient appliances and broken equipment. Not only a massive cost in financial terms, the environment is also paying a high price. According to China’s National Development and Reform Council (NDRC), more than 70% of China’s carbon emissions come from cities, and nearly one-third of that comes from powering the buildings sector.

The government has proposed ambitious plans to promote smarter energy use in urban cities, buildings, and factories—the 13th Five-Year Plan prioritizes building efficiency which requires 50% of all new urban buildings to be “certified green buildings”.

The country’s buildings sector is expected to continue to grow rapidly in the coming two decades. As urban cities expedite the transition to sustainable green buildings, more opportunities are opening up in the smart energy sector.

An IFC report suggests that following through on these commitments would grow the country’s green buildings sector from 5 to 28% by 2030, representing a $12.9 trillion investment opportunity.

Recognizing the potential in the smart energy sector, the government, capital markets, and industries are more open-minded to innovative energy solutions than before.

Reinventing urban cities in with technology

Large buildings and facilities play an increasingly prominent role in energy consumption, that is partly why the concept of smart city and smart manufacturing has gained so much attention in China in recent years. With the push from the government, more than 500 cities in China has set an agenda toward smart city transformation. And artificial intelligence (AI), internet of things (IoT), as well as big data applications are indispensable piece to the smart city puzzle, and perhaps, they also play a key role in decarbonizing China’s economy.

In 2016, the Hangzhou government teamed up with Alibaba and Foxconn and launched the City Brain project, which aims to help the urban cities “think” using AI and big data. Using Alibaba Cloud’s computing power and data-processing, City Brain is capable of performing real-time analysis of the city, automatically deploy public resources, and amend defects in city operations. Recently, Alibaba announced that it is taking City Brain overseas for the first time to launch in Malaysia’s capital, Kuala Lumpur.

US-based IoT startup set to green Chinese urban buildings and factories

What makes a building smart is the ability to “think.” US-based IoT startup Verdigris has worked out how to make concrete buildings come alive. The startup provides an AI-powered energy management platform capable of running energy consumption analysis on data pulled from smart sensors clamped onto electrical circuits on large facilities and buildings. The system sends real-time energy consumption data to the cloud, which can be accessed via web dashboards.

Real-time electricity consumption data via web dashboard (Image Credit: Verdigris)

While most buildings rely on occasional—as well as ineffective and time-consuming—walk-through energy usage audits, Verdigris utilizes wireless sensors and AI to monitor patterns and detect for anomalies 24/7.

IoT hardware set (Image Credit: Verdigris)

The startup is backed by Stanford StartX Fund, NASA, Jabil, and Founder.org Capital. Back home, Verdigris has already seen success in the hospitality, healthcare and manufacturing sectors. Their technology has implemented by hotel conglomerates including Hyatt and Intercontinental, and chip maker NVIDIA to reduce energy consumption. Their innovative technology has helped Jabil, the global manufacturing services company, to cut its energy use by over 50%.

Now the Silicon Valley startup is making its way to Asia. “We have a lot of inbound interest from the Chinese market,” Mark Chung, founder and CEO of Verdigris tells TechNode.

On his recent trips to Asia, Chung and his team started to “better understand how hungry the market was for a solution like ours and how much more impetus we needed to place on developing the right channel partners in China.”

Chung said they have already spoken to a number of large property holding companies in China who are quite eager to implement their technology. “The demand [in China] is really because the government puts a lot of pressure on these companies to really improve their energy efficiency,” Chung explained. And it’s not just the building sector. Industrial production and manufacturing, two notorious energy users, are also transitioning to efficiency and sustainability. For smart energy companies like Verdigris, “manufacturing is going to be a big area in China,” said Chung.

Entry hurdles

Even though the Chinese market is open to foreign technologies, Chung recalls when they started installing their systems in China, they almost immediately ran into the aversion “to data being exported out of the country,” as Chung puts it

The Chinese government began tightening its cybersecurity regulations last year to clamp down on companies that store Chinese user data overseas. Foreign tech companies, including Apple and Amazon, are coming up with solutions to comply with local laws as exporting user data out of the country is frowned upon. “It becomes really difficult to run US-based cloud services in China. There are a lot of regulatory challenges to overcome, and so solutions should be engineered to overcome those regulatory challenges.” Chung said they are still working on a long-term scalable solution that meets the regulatory requirements in China.

China is a massive but challenging market to navigate for startups in the smart energy space, even more so for those from overseas. But things are looking up. If China wants to transition into an energy sustainable economy, the private and public demand for smart energy will grow. Startups and companies looking to capitalize on the growing area of opportunity should bear in mind the problem-solving nature of technology and think about how the design and integration of intelligent systems fit into China’s rapidly transforming urban environment.

Chinese smartphone shipments slump 16.6% in Q1 2018

Emma Lee — Sun, 11 Feb 2018 10:21:44 +0000

After witnessing its first ever annual decline in shipment 2017, the Chinese smartphone market, once the world’s engine for smartphone growth, continues to slow down. The country’s smartphone shipment dwindled by a drastic 16.65％ to 39 million handsets (in Chinese) in the first quarter of 2018, according to a report released by the Ministry of Industry and Information Technology.

The plunge not only indicates weaker demand from the consumers but also languishing supply form smartphone makers. Only 51 new smartphones made their debut during the period, down 19% compared with a year before.

China’s smartphone shipment (Image credit:MIIT)

Chinese smartphone makers have a grip on the local market with the sales of over 33.49 million handsets or a predominant 85.7%. Of the total newly released devices, 45 were from Chinese smartphone makers, accounting for 88.2% of the total. But the overall drop affected everyone in the field, shipment from Chinese makers dipped 18% year-on-year.

Market share of smartphone between Chinese (85.7%) and overseas makers (14.3%) (Image credit:MIIT)

Android system still dominates China, representing a 92.9% of the smartphones shipped in the period.

As a satuating market slows down the growth, more Chinese smartphone makers are exploring opportunities in the overseas market. Leading players like Xiaomi, Vivo, and OPPO have seen momentum in South East Asian markets and Huawei in Europe, Latin America and the Middle East.

But these inroads are not without twists and turns. Xiaomi has been entangled in a series of patent litigations ever since its India expansion. Huawei, on the other hand, had their American dream fall apart after the failed deal with US telecom carrier AT&T.

Blockchain investment 2018: A who’s who of blockchain investors and startups in China

Emma Lee — Wed, 07 Feb 2018 08:37:23 +0000

Editor’s note: A version of this article by Zhang Lincheng originally appeared on our sister site, TechNode Chinese.

Blockchain technology has developed by leaps and bounds. But there’s something weird: primary market investors, those who have the keenest business sense, don’t seem very interested.

An executive at China Renaissance Group, a financial advisory firm, told TechNode that only blockchain-focused funds and some individual investors are betting on the sector now, whereas the majority of mainstream funds are still adopting a wait-and-see attitude.

So who is bucking the trend to become the first advocates of blockchain technology? TechNode tries to shed some light on the issue and here’s what we found.

Mainstream funds
Non-mainstream and individual investors
Notable blockchain startup investments

Mainstream funds

ZhenFund

ZhenFund is among the first mainstream funds to embrace blockchain technology. The direct pronouncement for the blockchain revolution made by ZhenFund founder and angel fund guru Bob Xu went viral and instilled great confidence in blockchain entrepreneurs.

Rather than only making predictions, ZhenFund joined the seven-digit RMB angel round of China’s digital currency trading platform and exchange Huobi as early as November 2013. The fund gradually established a footing in the sector over the past few years: investing in Bitcoin trading platform Maicoin in 2014, Bitcoin miner 21Inc in 2015 (the company rebranded as Earn.com, a social media company), and data trading platform GXS in 2017. The fund has backed three ICO projects: IOST, DATA (DAT), and Hydro so far this year.

It’s interesting to note that ZhenFund seems to underplay the blockchain concept and tries to avoid talking about the blockchain issue. In their year-end media gathering, a ZhenFund representative stated clearly “Don’t mention that word,” referring to blockchain.

China Growth Capital

China Growth Capital participated in the $28 million Series A round of Ripple in May 2015 and then invested in Bitcoin bank Circle, which shifted focus to a social payment business after giving up on Bitcoin business in 2016. The fund moved further into the industry by joining an RMB 28 million Pre-A round of Beijing-based Hoopox in September 2017. It reportedly invested in DATA as well.

Wu Haiyan, a managing partner at the fund, believes blockchain technology will lay the foundation for financial infrastructure in the long-run, but the current technology is far from maturity.

Probably due to the governmental ban on ICOs, China Growth Capital says they have ceased looking at tokens; blockchain technology is their future priority. Technological solutions and application scenarios are two foremost criteria for project selection.

IDG Capital

Along with China Growth Capital, Baidu, Everbright, and CICC, IDG Capital is one of the backers of blockchain financial startup Circle. Its other blockchain portfolios include Ripple, Koinify, and Coinbase.

Bringing blockchain technology to China is one of the initiatives for IDG Capital’s investment in Circle. The company is becoming less active in the sector, but a rumor has circulated that IDG Capital and Sequoia Capital are going to invest in miner maker Bitmain.

Sequoia Capital

In addition to the rumored investment in Bitmain, Sequoia Capital is also behind Huobi, plus US-based data storage solution provider Protocol and Filecoin.

Non-mainstream and individual investors

Compared with mainstream investment institutions, a group of new funds and individual investors are playing an increasingly active role in China’s blockchain funding.

Fenbushi Capital

It may sound new to outsiders, but Fenbushi Capital is already a big name in the blockchain investment sector as a top-10 most active investor in the vertical globally. The fund started to invest in cryptocurrencies in 2014 and then move to the fundamental technologies of blockchain. As of 2017, it invested in a combined 40 blockchain projects, such as ABRA, Circle, Symbiont, Juzhen Financials, and Bubi Chain.

It is the blockchain investment unit of Wanxiang Group, a Chinese multinational automotive components manufacturer, and is fully owned by Wanxiang’s vice board chairman Xiao Feng.

Li Xiaolai

Similar to Bob Xu, Li Xiaolai was first known to the public as an English prep teacher at China’s largest private educational service, New Oriental. He moved into Bitcoin mining and investment as early as 2011. By the end of 2013, Li held a six-figure sum of Bitcoins and was one of the largest Bitcoin holders in China.

After that, Li launched an ICO project named EOS and raised $185 million in five days (although this has been questioned by the public). PressOne, another ICO project Li initiated last July, sparked wider argument because there is only a-few-hundred-word introduction on the official website, not even a white paper.

Li reportedly raised over $82 million through the ICO as of last July, making a new record for China’s ICO industry.

Like many people who have obtained financial freedom, Li started to make inroads into the capital investment sector. He founded Bitcoin-focused fund BitFund and angel fund INBlockchain, both of which are quite active.

Li’s investment returns are very impressive. “We invested in over 30 blockchain projects over the past two years, including Qtum, VeChain, RadarWin, BigONE, BeX, PressONE, and EOS. Three of them achieved hundred times return, 18 recorded over 10 times return, only one booked a loss. The overall return is more than 10 times,” disclosed founding partner at INBlockchain Yi Lihua last July.

Charles Xue

The legendary angel investor entered the blockchain sector in 2014 with a Ripple purchase. He invested in several blockchain startups after attending a summit in August 2017, where he met tens of blockchain tech teams.

In total, Xue has invested more than 20 blockchain companies and his portfolio includes Bytom, Qtum, InkChain, Ripple, BeX, Dochain, Delphy, Primas, MLGB, Ownership, and 168coin

But Xue still warns about the risks of entering the industry because he thinks the current hype surrounding the blockchain industry is more severe than the dotcom bubble of the late-1990s. He’s giving tips on cryptocurrency and blockchain investment: This is not for the risk-averse investor. Don’t go with easy projects that are out of the world’s top-30 list. Don’t invest in teams without successful experience and/or endorsements.

Investors behind recent blockchain technology funding

Blockchain technology startups are becoming the new darling of investors, but it’s easy to find out that mainstream investors have yet to enter the arena. Here’s a list of blockchain startups’ funding status.

Guangzhou cracks down on “internet water army”, China’s version of fake followers

Emma Lee — Tue, 06 Feb 2018 05:16:49 +0000

After the Cybersecurity Law that came into effect in June of last year, Chinese authorities are paying more attention to—and publicizing their action against—rumors and fake news online. After three months of planning, the police of Guangzhou have recently cracked down on a “water army” (in Chinese), which involves 77 suspects and a sum of RMB 4 million ($635,000), the Southern Metropolis Daily has reported.

Commonly known as shuijun (水军 or water army), the paid posters are ready to flood blogs, forum, and chat groups for whoever is willing to pay for biased comments, rumors, gossip, and information or disinformation.

There seems to be plenty of demands for their services and an ecosystem surround the tide is forming. Low-end migrants, housewives, even students could constitute the basic level of the industrial chain. They send the paid-for content to various outlets for tens of cents to several RMB per post.

Compared with posting comments, deleting and screening contents that contain negative reviews involves higher-level access. In Guangzhou’s case, one suspect acts as an agent to connect clients and webmasters who have the right to wipe out negative posts. He gained an annual RMB 90,000 worth of commissions through this business.

Guangzhou’s latest move is among a larger scale crackdown launched by China’s public security authority. Since last May, the country has uncovered over 40 cases that involve hundreds of million RMB. Over 200 suspects are arrested and 5,000 spamming social media accounts were shut down.

Video: Bilibili’s dance cover stars

Timmy Shen — Wed, 31 Jan 2018 01:18:46 +0000

Bilibili, also known as “B Station” (b站 in Chinese), is the spiritual home for Chinese ACG (anime, comic, and games also known as 二次元 erciyuan) fans. Founded in 2009, the site quickly gained popularity over the years. As of July 2017, Bilibili has 150 million registered users and 100 million monthly active users.

Previously known as a place to watch (sometimes pirated) anime and discuss the latest in ACG, Bilibili has grown into a haven for erciyuan (or 2D in English, a reference to the “flat” nature of ACG) aficionados to create and share their own fan content.

We talked to two popular Bilibili stars, who upload “Zhaiwu” (宅舞, literally meaning “house dance”), or ACG dance covers. Their videos have drawn tens of thousands of views.

If you can’t see anything, try QQ video instead.

“Danmu” (弹幕, “bullet screen” in English or “danmaku” in Japanese), real-time comments that skim across and atop the streamed videos, are also very popular on Bilibili. With the feature, viewers are able to leave instant comments and even interact live with other viewers.

Beijing gets serious about cleaning up inappropriate videos targeting children

Emma Lee — Tue, 23 Jan 2018 10:27:29 +0000

Beijing’s culture regulator issued an urgent notice on Monday that requires video streaming sites to self-censor all kid-targeted videos such as animations and cosplay dramas in a bid to wipe out inappropriate contents, Tencent Tech has reported.

In addition, the regulator also put a ban on the development and production of relevant games and derivatives contents. Any game including kid-unfriendly contents would be suspended immediately.

Image credit: Baguafu

Children are falling easy prey of online inappropriate contents. Putting Frozen’s Elsa in their video, for example, to get it recognized as featuring that friendly critter, then having Elsa pregnant, having an injection or even sex. There’s also tutorials which teach kids to make fake poop with plasticine and glue.

Western video platform YouTube has had its own share scandals related to its lack of policing around inappropriate content aimed at children, including reference to sex, drugs, alcohol and more. To solve the problem, YouTube has eliminated over 50 channels and 150k videos from their site as of last November. Just as foreign video sites are taking tighter regulations, the same kid-focused videos are proliferating on Chinese mainstream video sites like Youku, iQiyi, Tencent Video and Sohu Video. In response to the public concerns, these sites are responding quickly by delisting these contents.

In an official statement made by Tencent Video, the firm says it has set up a dedicated team for the initiative. Over 121 accounts were suspended and 4000 relevant keywords blocked.

Maybe unbelievable to adults, but the influence of cartoons on children can be very huge and it may lead to tragedy if handled improperly. Pleasure Goat and Big Big Wolf (喜洋洋与灰太狼), one of China’s most popular homegrown animation titles, came under fire when two young boys were tied to a tree, placed on a bed of dried leaves and roasted “like lamb kebabs”, by their peer and alleged friend, in an apparent simulation of a scene in the animation.

China has over 170 million minors and the kids in first-tier cities spend an average of 3.5 hours on the internet.

Secondhand trading unicorn known for not vetting items promises to clean up

Eva Yoo — Mon, 22 Jan 2018 04:54:22 +0000

Secondhand trading unicorn Zhuanzhuan has responded to judicial investigations regarding their platform being used to buy and sell real and counterfeit invoices (发票). Recently, the court received a report from Zhuanzhuan (转转, meaning ‘pass on’ in Chinese) that, with a series of preventive measures added, the number of cases has dropped drastically, Chinese media Beijing Morning Newspaper is reporting.

Zhuanzhuan is the secondhand trading unit of Chinese Craigslist 58.com, used as a platform for buying and selling used phones, computers, as well as furniture, clothes, books, and vehicles.

Beijing special invoice for parking fees (Image Credit: Baidu)

Zhuanzhuan has known to be lack of vetting its listings. In 2017, one person with surname Zhou said that he sold his accumulated 543 Beijing special invoice for parking fees, at a price of RMB 200 on Zhuanzhuan app. After identification, above invoices are found to be real invoices. After the Haidian Court sentenced him to three months in prison for selling illegally the invoice, he was fined RMB 10,000.

In 2017, 26 out of 59 cases of the illegal sale of fake invoices that the Haidian Court saw originated from Zhuanzhuan.

58.com’s spinoff company Zhuanzhuan after receiving judicial advice said it has been reforming its platform. First of all, in the platform banned invoices and prescription drugs and other prohibited goods from the search function. It also added a quick entry for reporting of prohibited merchandise. After the rectification, the number of illegal sales of invoices handled by Haidian Courts involving transfer to the platform dropped drastically. At present, no new cases have been reported, the users cannot find any appropriate transaction information on the platform.

When a user searches “invoice” or “prescription” no results come out on Zhuanzhuan (Image Credit: Zhuanzhuan app screenshot)

This is not the first time Zhuanzhuan has been told clean up its platform. Last September, the secondhand trading platform sealed a deal with Foxconn and other tech giants to work on vetting secondhand phones exchanged over the platform.

China’s top 1000 apps reveal latest trends in mobile

Masha Borak — Wed, 17 Jan 2018 09:47:13 +0000

China’s mobile app industry was brewing in 2017, a new research from Jiguang Data released on Tuesday has shown (in Chinese). The report titled 2017 Mobile Internet Industry Inventory App List has brought insights into which of China’s top 1000 mobile apps caught users’ attention during this year. The list was compiled according to market penetration rates.

Here are some of the highlights from the report:

1. Among the top 1000 apps in 2017, 78% were on the list the previous year. Among the newcomers in 2017 were video apps Huoshan (火山小视频) and Tik Tok (a.k.a. Douyin, 抖音), mobile games Wildland Ops (荒野行动) and Tongzhou (同桌游戏), as well as 220 other apps. WeChat predictably topped the list in 2017.

Top 50 apps in China according to market penetration. (Image credit: JIguang Data)

2. In Q4 of 2017, the average mobile internet user had 40 apps installed on their phone. In December, each person downloaded 4.13 apps on average and removed 3.42 apps.

Above: The number of average apps installed on mobile phones in China. Below: The number of average app downloads (left) and removals (right) in December 2017 (Image credit: Jiguang Data)

3. The average mobile internet user spent 4.2 hours a day using apps each day. Social network apps took more than 2.5 hours, while users watched video close to 30 minutes a day, spent 12 minutes getting news and information, 11 minutes to do their shopping, and around 10 minutes playing games.

Time spent on apps from top to bottom: social, video, news, shopping, gaming, music, travel, reading, financial, lifestyle (Image credit: Jiguan Data)

4. The favorite app for men was dating app turned live streaming platform Momo (陌陌), while women’s favorite app was photo editing app MeituPic (美图秀秀).

Age was a deciding factor in app preferences too. Users under 15 years of age (middle school and primary school) used apps that help with homework and so did users between the ages of 36 to 45, their parents. Those in the 16 to 25 age bracket preferred playing mobile games such as Honor of Kings.

Location also mattered. Users in 1st tier cities downloaded mobility apps such as DiDi, ofo, and Mobike, while 3rd tier cities saw an increase in P2P financial service apps usage.

Top apps according to gender, age, and location of users. (Image credit: Jiguang Data)

5. Bike rental app ofo, shopping platform Pinduoduo (拼多多), and Minecraft’s app saw the highest increase in market penetration compared to the previous year reaching up to 1000% year on year growth. Mobike and social app Paipai (派派) saw a 400% growth.

Apps with highest YoY market penetration growth (Image credit: Jiguang Data)

6. ByteDance’s music video and social platform Tik Tok increased the number of their daily active users (DAU) by more than 1000 times. The rise was impressive considering Toutiao’s parent company launched the app in September 2017. It then proceeded to purchase its global rival Musical.ly in October 2017.

Among other stars in terms of DAU were Tencent’s office tool TIM and video app Huoshan.

Top Chinese apps according to DAU (Image credit: Jiguang Data)

7. The biggest loss in market penetration and DAU was recorded by China selfie champion Meitu‘s BeautyCam (美颜相机) caused by the rise of FaceU and Line’s selfie app B612.

8. The top 3 mobile games in terms of market penetration all belonged to Tencent: the massively popular Honor of Kings, Happyxiaoxiaole ( 开心消消乐), and card game Landlord War (欢乐斗地主).

China railway site sees 5.93 billion clicks per hour as busiest travel season starts

Nicole Jao — Tue, 16 Jan 2018 09:56:52 +0000

China’s Chunyun (春运)—the busiest travel period in China before and after Spring Festival—sees hundreds of millions of people return home to reunite with their families, a daunting task for the country’s transport systems and travel booking sites.

The official website of China Railway Corporation, 12306, is one of the world’s busiest website during this time of year. According to Xinhua, as of Monday morning, since the train tickets have gone on sale over 10.5 million users have booked their tickets on the site with more than 23.45 million tickets sold.

“The average page views for 12306 is 55.67 billion views per day and 81.34 billion views per day during the peak period. The highest clicks per hour is 5.93 billion, with an average of 1.648 million clicks per second,” said Zhu Jian Sheng, the associate director of the Institute of Computing Technologies at China Academy of Railway Sciences.

According to Zhu, the website is stable on both desktop and mobile even at peak periods: the site sold more than 10.2 million train tickets on a single day last Thursday (Jan 11th). It is said that 12306 expanded its online ticketing capacity from 10 million tickets to 15 million tickets per day just before the arrival of Chunyun. The site also upgraded its mobile app platform to increase the stability and user experience. This year, new features are added: users can not only pay for their tickets via WeChat Pay, but also have the option to use WeChat messaging to book tickets, select seats (if the seats are available), and other new features.

Ctrip, China’s major travel booking site, is also seeing overwhelming traffic. The company said, its call center handles approximately two hundred thousand calls per day. At peak period, it has over 8000 customer service representatives per day taking calls.

This year, “post-90s” generation is said to be the main driving force of ticket sales. According to data from 12306, the demographic accounted for 47.8% of train ticket sales—an 11% increase from last year. Ctrip’s data also reflect a similar trend, showing over 50% of ticket sales coming from “post-90s” generation.

Is Google Maps coming back to China?

Nicole Jao — Tue, 16 Jan 2018 05:57:59 +0000

Alphabet Inc’s Google is now easier to access in China after eight years, according to Nikkei. This is said to be Google’s latest attempt at making its way back into the country.

While the US tech giant’s flagship search engine is still inaccessible in the country, users have discovered mobile apps with map functions based on Google data have become accessible in recent days. But users who try to access the app’s navigation features are automatically redirected to AutoNavi, a mapping app operated by Alibaba.

This comes shortly after the news that the US-based tech giant joined an investment in Chushou, a Chinese live-stream mobile game platform, which suggests the company is making new inroads in the Chinese market.

“There have been no changes to Google Maps in China,” said Taj Meadows, head of Google’s policy communications in Asia Pacific, according to Nikkei. Although Google Maps have been accessible on the desktop for years, the map service does not have an official presence in Android or iOS app stores in China, Meadows added.

Google closed down its Chinese search engine over the government censorship requirements, most of its popular services have not been available in China since 2010. The timing of the increasing availability of Google’s services and its presence suggests a shift in policy in China. Although under President Xi Jinping the government intensified its cybersecurity regulations that came into effect in June 2017, the country is also keen to develop artificial intelligence (AI) technologies and autonomous vehicle—an area Google leads. This may force Google to put aside past grudges and the government to soften its stance towards the tech giant to collaborate on AI development. Last month, Google announced the launch of its new Beijing AI research center.

How proptech is transforming traditional housing market: Q&A with JLL APAC COO

Emma Lee — Mon, 15 Jan 2018 02:11:35 +0000

The evolution of technology is turning it from the unusual to ubiquitous, so much so that there’s hardly an industry that doesn’t feel the disruption. While some sectors, such as finance, are embracing these changes quickly, some long-established fields are moving slower, but the degree at which they are reinvented by the new innovations is not a bit less.

Property technology (proptech)—a sector that combines technology and real estate industry—is on the rise in recent years, especially in the Asia Pacific region. 179 proptech start-ups in Asia Pacific have raised funding since 2013, accounting for almost $4.8 billion of the $7.8 billion that has been invested globally since 2013, according to a research by global real estate services firm JLL.

Like in most of the industries, China—which witnessed robust growth in merging internet and information technologies with conventional industries through the government-backed “Internet Plus” initiative—has formed an impressive force in the rise of the proptech trend. The report shows that mainland China saw a total of $2.82 billion of proptech investments, excluding HK’s investment of US$202 million.

Albert Ovidi, APAC COO of JLL (Image credit: JLL)

TechNode got a chance to talk with Albert Ovidi, APAC COO of JLL, a leading professional services firm that specializes in real estate and investment management, to shed lights on the reasons behind this surge as well as the current and future landscape of proptech in China and Asia Pacific region in general.

The Asia Pacific region is taking a big chunk of the global proptech financing, why is proptech taking off in Asia and China specifically?

Why proptech is thriving in Asia and particularly China can be explained by a few factors, such as rapid urbanization and the boom of megacities.

Asia Pacific is home to largest emerging markets like China; 40 out of 47 cities with the fastest population growth rate are in Asia whereas 20 of them are in China alone. This will result in a wider pool of users with diversified needs, where technology comes in handy.

From a social perspective, the rise of the middle class and millennial generation are reaching prime spending stages and their consumption habits tend to lean towards collaborative and flexible spaces, which presents opportunities for proptech start-ups to offer new products and solutions.

It is crucial to note that proptech in Asia Pacific is also accelerated by the technological sophistication of these consumers. Asia accounts for 50% of the total internet users globally and tops the world in the growth of smartphone traffic. With the rise of millennials and their growing tech-savviness, it will boost user preference for technology.

Finally, the support from government and authorities is a good indicator of proptech advancement in Asia Pacific. Asian countries and China, in particular, are showing their support for new technologies and business models.

Blockchain technology is penetrating lots of industries, and property industry is no exception. But the high risk and lack of regulations always made it a controversial topic when comes to application, what do you think are the biggest obstacles in applying it to real estate sector and how to solve them?

Blockchain offers a means to improve transparency and has the potential to improve liquidity as well as access to investment markets for both institutional and retail investors. As the costs associated with trading real estate are much higher than other asset classes, the difference between buyer and seller pricing expectations vary.

Usually, these transactions are carried out via face-to-face interactions with various other parties such as lawyers, bankers, and brokers. One way blockchain-enabled smart contracts could reduce the costs and friction involved with all parties would be to automatically trigger the transfer of money or assets once conditions in the encoded contracts are met. Another way blockchain can facilitate transactions would be to tokenize buildings by dividing ownership of asset into multiple shares.

Barriers to commercial real estate investment could also be reduced, allowing for greater participation among retail investors. However, there will be challenges to regulate and govern the trading of these tokens. More research is required to study the effects of tokenization on asset management, and how tokenized assets will be valued.

The property industry is quickly adapting to the hottest emerging technologies, from VR/AR to blockchain. What do you think are the next technologies that are going have a great impact on the industry?

Aside from blockchain, there are several other technologies that could reshape the real estate industry in Asia Pacific. Artificial Intelligence could transform property in a number of ways, such as machine learning in search engines that could address a customer’s needs and adapt with their changing preferences; image recognition that enables customers to classify, tag and organise images of properties in real-time; and chatbots that help automate real estate processes such as appointment bookings or information provision. Another new technology is 3D printing, which could transform the commercial real estate market considerably, especially in the Project Development vertical as it enables construction activities to be faster, of a higher quality and at lower costs.

Considering other tools like virtual reality, drones, predictive analytics, etc. I expect that the real estate industry will be transformed tremendously within the foreseeable future.

Chinese proptech firms like Lianjia are receiving massive funds at high valuations. Do you think there’s bubble in China’s proptech sector?

The valuation of a startup is made based on the expectations of investors of the company’s future growth. A company’s future growth is indeed decided by its market current potential situation (i.e real estate’s rising price) but those are only among numerous other factors that decide a firm’s growth.

Even if market potential is the only factor affecting investor decisions in valuations, the rising prices of property in a market does not necessarily point to a bubble. In China, high valuations (2012-2017) are mainly based on the valuations of other existing unicorns, which have already received high funding. In fact, China presents a highly dynamic proptech landscape due to its large market size, ability to scale quickly, and diverse population of tech-savvy users.

JLL’s latest report shows that most of China’s funding flowing into brokerage and leasing vertical. Does this mean China’s proptech industry is still in Proptech 1.0 phase? What’s the future landscape of proptech in China?

Our report has pointed out that brokerage and leasing is the most mature of all verticals, primarily because they are focused on the residential market driven by the country’s strong desire for home ownership. While millennials’ home ownership remains rare around the world, up to 70% of Chinese millennials have their own house. Up to 94%of them plan to buy property within the next five years, which is significantly higher than other developed markets.

Chinese consumers have also become highly tech-savvy since the rise of WeChat and grown accustomed to the use of the internet to make purchases. We see China’s proptech industry also moving towards the Property Management vertical, especially in smart home fixtures and controls. Another strong growth sector lies in investment and financing, where online funding platforms like Duocaitou, Huifenqi.com, and WeLend are gaining momentum in China.

How is the trend impacting different countries in the region?

Across the Asia Pacific region, India is another high-performing market for proptech. India tops the list with the most start-ups, largely dominated by the brokerage and leasing vertical brought by the growth of the Indian middle-income population. Elsewhere, Southeast Asia’s proptech sector is much younger and yet to get the volumes of a China or India, with Singapore’s supportive start-up ecosystem as the leader of the pack. The existing internet user base in SEA is expected to grow from 260 million to 480 million by 2020 so there is a high chance that consumers will continue to be more tech-enabled.

Elsewhere, the use of technology in real estate has been increasing in Japan, driven by the government’s focus on entrepreneurship. The Japanese government is even planning to use blockchain technology to underpin their property registries to prevent tampering. A bullish property market coupled with tech savviness will make Japan’s proptech scene very promising in the coming years.

Lastly, Australasia’s start-up scene mainly lies in brokerage and leasing, as well as property management. Australia’s strong demand for home ownership and government’s support towards fintech offer a catalyst for proptech start-ups, and the number of deals in the Investment and Financing vertical is expected to grow as a result.

High potential areas and where the ‘unicorns’ may be found. Can you name China startups that have the potentials to join unicorn club?

We believe the highest potential for new unicorns is likely to be in the brokerage and leasing vertical. Property management may follow thanks to acceleration in smart cities initiatives and also increasingly high expectations of better living conditions. There are a number of Chinese proptech companies that have already reached unicorn status, including Homelink or Lianjia.com, Fagdd.com, Tujia.com and Aiwujiwu.

Technologies are becoming ubiquitous and shaking traditional industries like real estate, how do you see this trend?

With rapid urbanisation, the emergence of the middle class and millennials, and improved user digital sophistication, technology is certainly going to change several industries. Corporates are also starting to recognise the opportunity to gain efficiencies in their business lines and maximise their reach with technology, so we believe that start-ups too will begin seeing a growing market for their products and more interest from these corporates.

In real estate, we foresee that this will result in new partnerships and perhaps some important new players in the region. Not to be ignored, the power of blockchain also expands into the commercial real estate market. It could improve the property search process, accelerate pre-sale due-diligence, ease leasing and subsequent property and cash flow management and finally empower informed decision-making. As a hotspot for blockchain, Asia Pacific could soon expand this technology’s application into various industries including real estate, specifically the commercial sector.

Top 3 Chinese tech fails of 2017

Masha Borak — Mon, 08 Jan 2018 10:40:12 +0000

The year 2017 was great for many tech firms in China. Tencent briefly outdid Facebook in market valuation reaching a $500 billion valuation mark. Toutiao shot up from obscurity on the international scene with its parent Bytedance buying Musical.ly. Alibaba spread its wings further into Asia, Didi started its global expansion, Huawei overtook Apple as the second largest smartphone seller.

There were those who did not have such a good year. Many companies that jumped on China’s sizzling “sharing economy” trend folded in a matter of months. Fintech companies were hit by regulatory constrictions with e-commerce and financial platform Qbao found itself accused of running a Ponzi scheme.

And then there were those who just wish 2017 never happened. Here are the top tech fails in China for 2017.

1. LeEco

Image credit: Sohu News

We could say that LeEco has had a rollercoaster year… if that rollercoaster suddenly fell apart in the middle of the ride and all the passengers started jumping out in panic. LeEco’s early signs of trouble started in October 2016 when it started running out of cash, partly because of its hyped-up overseas expansion. As one of LeEco’s previous employees explained, the company failed on multiple fronts of its quest for globalization. But the troubles likely began earlier with the company shuffling funds between subsidiaries to cover losses and present itself in a good light.

In between, there was a series of dramatic twists, including the troubles of ride-hailing company Yidao which was relying on LeEco’s financial support to subsidize rides. In October, LeEco’s listed arm changed its name to New Le Shi to distance itself from its founder Jia Yueting. Meanwhile, the panel who approved the listing in the first place was put under investigation.

The latest news from YT Jia, who has been blacklisted in China, is that he has refused to come back to Beijing to deal with debts sending his wife and brother instead. Interestingly enough, in a social media post explaining his decision not to come to Beijing, Jia has blamed his financial woes on a bank that has sued LeEco for being “just two weeks late on an RMB 30 million interest payment.” Jia has also transferred controlling shares of Faraday Future to his nephew Jiawei Wang in order to keep the company from potential legal action.

2. Bluegogo

Bike rental hit China 2017 with a bang. Suddenly, China’s entire urban population became hipster overnight with colorful gearless bicycles becoming a popular mode of transportation. But the autumn saw the death of many bike rental companies, including Bluegogo.

The company made its name on the international scene after its failed attempt to expand overseas at the beginning of 2017. Since then, the company was followed by a string of bad luck resulting in Bluegogo’s users worrying over lost deposits, its workers worrying over their jobs and, finally, the sale of the company to ride-hailing giant Didi.

Bluegogo wasn’t the only one that bit the dust—at least six other bike rental businesses shuttered during the big bike rental explosion. While China’s two biggest players in the field ofo and Mobike occupied the 1st tier of the bike rental market according to user numbers, Bluegogo belonged to the 2nd tier of Chinese bike rental companies. Along with Coolqi, which has suffered a nearly identical fate as Bluegogo, other members of the tier were Youon and Hello Bike.

Unlike their failed competitors, this duo decided to overcome difficulties by merging. The tactic seems to have worked: Hello Bike just announced a round of financing worth RMB 1 billion. This may be the reason why ofo and Mobike, are under pressure to join forces.

3. Bitcoin exchanges

Chinese regulators have watched bitcoin and other cryptocurrencies explode in the country with the kind of enthusiasm reserved for emails from Nigerian princes. The People’s Bank of China (PBOC) started cracking down on cryptocurrency as early as January 2017 when it started investigations into China’s three largest exchanges: OKCoin, Huobi, and BTCC. This continued in February when the exchanges were forced to freeze bitcoin withdrawal for four months.

In September, initial coin offerings (ICO) became the next victim of regulation after a spike in scammy ICO schemes that would put Ponzi to shame. Bitcoin exchanges got their final verdict the same month when they were forced to close shop. In response, many Chinese traders have resorted to peer-to-peer exchanges on the private over-the-counter market but they too have recently met with a crackdown. PBOC’s latest move was to dampen incentives for bitcoin mining this week although the practice has not yet been banned.

The future of cryptocurrencies in China is not completely bleak, however. Cryptocurrency trade has earned a reputation of an element of instability and a tool for siphoning off money out of the country but the PBOC it also recognizes its potential. The central bank has already tested its own digital notes exchange platform while blockchain has become a fixture in the government’s development plans.

OKCoin, Huobi, and BTCC have moved trading to their international divisions with Huobi announcing it will expand its cryptocurrency exchange business with the help of Japanese financial institution SBI Group. BTCC’s CEO and co-founder Bobby Lee has recently stated that it’s only a matter of time before China lifts its crypto exchange ban. Maybe not such a bad year after all?

Five most highly-anticipated Chinese tech IPOs for 2018

Emma Lee — Mon, 08 Jan 2018 01:46:05 +0000

After a slow start, Chinese tech firm sped up its IPO rush in the latter half of 2017, marked by hefty IPOs like the ones from China Literature, ZhongAn, Qudian, and Sogou.

The past year also witnessed strong performances from some of China’s top listed tech giants. Tencent joined the half-a-trillion-dollar club last November, while Alibaba is expected to smash the same milestone in no time. The relentless growth continues, setting the stage for Chinese unicorns who are ready to ring the opening bell in the new year ahead with fiercer competition between Hong Kong and New York expected.

Generally, rumors circle around the possibility of a company’s IPO launch before it actually happens. Here’s a list of some of the most widely speculated IPO launches we may see in 2018.

Ant Financial

Despite several delays, Ant Financial remains one of the most hotly anticipated listing candidates from China. The reason is simple. As the most valuable unlisted asset of Alibaba Group, the sheer size of this offering would make it incredibly interesting. Ant Financial’s most recent $4.5 billion monster round was received at an over $60 billion valuation in April 2016.

Ant Financial, the operator of China’s most popular mobile payment tool Alipay and other financial services, was founded in December 2014 when it was spun out of Alibaba before the latter’s record IPO in September 2014.

The company has been on the rumored IPO list for years and is said to be considering both Hong Kong and New York, two of the hottest listing destinations for Chinese tech firms.

Xiaomi

Despite the struggles in late 2016 and early 2017, Chinese smartphone manufacturer Xiaomi is made an epic comeback last year through the combined forces of new flagship model launch, diversified distribution channels and dividends from early investments in overseas markets, especially the Indian one.

The firm broke its annual revenue target by as much as 18 percent, topping the annual revenue goal of about $15 billion. The net profit was estimated to be at least $1 billion in 2017, and profit for 2018 is expected to reach about $2 billion.

It seems good timing for an IPO as the firm’s performance is back on track for robust growth. Bankers estimate that Xiaomi’s IPO could value the company at up to $100 billion.

Tencent Music

Tencent Music, the music streaming and downloading service, is expected to be the latest addition to Tencent’s recent efforts to get its affiliates listed.

In addition to social networking and gaming, Chinese tech behemoth Tencent has been able to dominate yet another sector in its home market—music streaming. Through a merger between its flagship music streamer QQ Music and competitor China Music Corporation (CMC) in July 2017, the firm’s new music unit Tencent Music and Entertainment Group (TME) managed to control a whopping 75% of the market by combining the shares of Kuwo and KuGou—formerly owned by CMC—and QQ Music, according to a report by the Data Center of China internet (DCCI). To consolidate its foothold in domestic or even the global market, the music group has just reached an equity swap agreement Spotify ahead of the rumored IPO.

Before the merger, Tencent affiliate CMC reportedly planned for an independent listing in 2016. Sources with knowledge of the matter disclosed that the IPO would range between $300 to 600 million back then. The IPO size for the new firm is expected to be much bigger than that, somewhere around $1 billion IPO at $10 billion valuation as Bloomberg has predicted.

Tencent is also planning an IPO for its mobile healthcare arm WeDoctor Group, a platform that includes various medical-related services from online diagnosis and medical tips to rating hospitals and doctors.

iQiyi

Baidu has envisioned an IPO for its YouTube-style video streaming service iQiyi for a long time. In May 2014 CEO Yu Gong told Bloomberg that the company planned to IPO within the next three years. The latest update comes from an anonymous source who hinted that the IPO would come as soon as in 2018, valuing the streaming video service at more than $8 billion.

The heated competition is turning video streaming into a capital heavy sector. In a battle against Alibaba-backed Youku and Tencent’s Tencent Video, iQiyi needs more quality content, both self-generated content and exclusive partnerships, to sustain its lead among online video platforms.

The site has raised $1.53 billion from the sale of convertible notes to investors include Hillhouse Capital, Boyu Capital, Run Liang Tai Fund, IDG Capital, Everbright-IDG Industrial Fund, and Sequoia Capital.

Lufax

Lufax, one of China’s largest peer-to-peer lenders and online wealth managers, is reportedly geared up for a Hong Kong initial public offering. The firm, valued at $18.5 billion in its last fundraising round in January 2016, could be raising $3 billion-$5 billion in the IPO as early as the first half of 2018, the report pointed out.

While the IPO rush of Chinese fintech firms is gaining attention from the capital market, it’s normal that Lufax, a top player in the sector, would follow the suit. Lufax’s initial offering has been highly watched by bankers since last year. But the lack of clear regulations on online wealth management has held back its IPO, FT pointed out. Regulatory issues also attribute to the delay of Ant Financial’s IPO.

Image credits: Ant Financial, Xiaomi, Tencent, iQiyi, Lufax

4 take aways from 34 new Chinese unicorns in 2017: IT Juzi report

Eva Yoo — Thu, 04 Jan 2018 03:12:40 +0000

A “unicorn” refers to those companies less than 10 years old and valued at $1 billion or more. There were 34 Chinese new unicorn companies in 2017 that match these conditions, according to a new report released by Chinese startup database IT Juzi (IT桔子).

In the first half of 2017, rental economy startups gained prominence with bike rentals, power bank rentals, and got pretty silly with umbrellas, basketballs, and even blowup dolls. In the second half of the year, new retail projects such as unmanned convenience stores and unmanned shelves began to emerge. AI, on the other hand, has become a consistent investment-attracting sector throughout 2017 with Chinese startups’ overall valuation 2-4 times higher than that of the United States.

It’s interesting to note that more than 60% of the companies have direct or indirect equity shares ownership from BAT (Baidu, Alibaba, Tencent). Tencent’s investment activity in the early-stage investment rounds (angel round and series A) reached 42%, exceeding that of most early-stage investment institutions.

Here are four takeaways from the report:

1. Cultural entertainment, business services, and vehicle sectors were top 3 industries

The new unicorns hail from 11 vertical industries. Among them, the cultural entertainment and business services industry both had seven companies.

The cultural entertainment industry ranks the same as the 2016 rankings, with the number of unicorn companies still in the top spot. Culture and entertainment industry covers short video, content business, as well as education: Kuaishou (快手), Yidian Zixun (一点资讯, meaning “a little information”), Kuaikan Manhua (快看漫画, meaning “quick comic”), Dragonfly FM (蜻蜓FM), Luoji Siwei (罗辑思维, meaning “logical thinking”), and Zhihu (知乎).

The ranking of business services industry has greatly increased compared with that of 2016, since most of the companies in AI belong to business services. Artificial intelligence has spawned a wave of companies such as Shang Tang Technology (商汤科技), Kuang Shi Technology (旷视科技), and Mobvoi (出门问问 in Chinese, meaning “going out to ask questions”).

In 2017, unicorn companies related to the concept of “rental economy” included bike rental service Mobike, and ofo, short-term house rental service Xiaozhu 小猪短租, and UrWork (优客工场).

2. 56% of unicorns are born in Beijing

2017 new born unicorns were still highly concentrated in five provinces, just like 2016. Beijing has 19 unicorn companies, accounting for the highest proportion of 56%, up from 42% in 2016. Beijing’s unicorn company were generally from “content industry” and “artificial intelligence” sector.

Among the five newcomer unicorns in Shanghai, two were in the medical and health field, namely United Imaging (联影医疗) and Mingma Technology (明码科技).

Among the four newcomers in Guangdong, three are in the financial sector, namely trading platform for Hong Kong stocks and US stocks Futu5 (富途证券), the comprehensive banking service providing platform TDW (团贷网) and Feidee (随手记), an internet finance management company.

Among the four newly-promoted unicorn companies in Zhejiang Province, two are located in the field of enterprise services, namely, DT Dream (数梦工场) and Hangzhou-based Tongdun Technology (同盾科技), an intelligent risk management service provider.

3. More than half of the company’s largest single financing in the $100-200 million range

Statistics show that $100-200 million of financing often leads to becoming a unicorn company, so the range of the largest single financing accounted for the highest proportion. In particular, some unicorn companies in 2017 have shown a very strong money-raising capacity, exemplified by Mobike and ofo under the “bicycle rental” concept.

Companies with a single financing amount of more than $200 million accounted for 38% of the total, and the largest single financing amount of more than $300 million also exceeded 20%.

From unicorn’s round of financing, the C round (11 companies, accounting for 32%) is the highest, followed by the D (8 companies, accounting for 23%). In addition, 15% of companies grew into unicorns in Series A. These companies were either from a large company splitting their business, such as 58Tongcheng’s Zhuanzhuan and NetEase spin-off company Netease Cloud Music; or was funded by a giant company or a state-owned company, such as Alibaba investment in Cambricon (寒武纪) and DT Dream (数梦工场), and Liangyu Medical (联影医疗) backed by a state-owned capital.

4. Unicorn can be born in 17 months if shortest, in 105 months if the longest

From the founding date of IT Orange’s 2017 Unicorn List, from the date of the establishment of these companies to the latest round of financing to help them enter the $ 1 billion, the fastest is the Cambricon (寒武纪). It took only 17 months to go through the angel round, Pre-A round and A round of three financing, valuation reached $1 billion.

In addition, two companies that entered the “Unicorn Club” within two years were Mobike and Zhuanzhuan. On the other hand, it took 105 months for Shanghai-based company Chubao (触宝科技) to grow into a unicorn.

The time spent for a startup to grow into a unicorn is mainly concentrated to 2-6 years, accounting for 76%. Startups that took a very short time to grow into unicorns were mostly riding on the main business trend or were spinoff companies of large companies.

The 4 policies that most affected China’s internet in 2017

Rita Liao — Sat, 30 Dec 2017 01:19:37 +0000

2017 has been an exhilarating year for China, which saw an army of entrepreneurs turn the country into a world leader in fintech, gaming, and the sharing economy. 2017 has also been a tumultuous year for the middle kingdom, where a government newly attuned to the power, and threat of the internet sent shockwaves through a range of tech sectors. To reflect on the past year, TechNode have identified a list of government moves in 2017 that have left lasting impact over the country’s internet space.

1. ICO ban

In September, China’s central bank declared initial coin offerings (ICO) illegal and called time on all fundraising activities involving virtual coins.

The ICO market allows startups to skip banks and traditional fundraising channels by selling digital tokens publicly. While the ICO uptrend is global, reports show that the demand has been predominant in Asia, especially China. In a country where investment opportunities are slim, ICOs took off at a breakneck speed for it provided an alternative investment and funding channel. About 70% of bitcoin miners are based in China, according to a survey (in Chinese) conducted by China’s state broadcaster CCTV.

The ICO ban was part of the Chinese government’s move to curb risks in the country’s fast-growing fintech systems, including the similarly rampant micro-lending online business (which has also faced crackdown in the past few months). The booming ICO market was “disrupting the socioeconomic order and creating a greater risk danger,” says the National Internet Finance Association of China.

The ban, however, has not stopped earnest Chinese investors from buying into ICO deals. According to the Financial Times, over-the-counter bitcoin sales rose from 5% before the ban to over 20% in November. Many Chinese ICO investors have subsequently relocated offshore to continue their businesses.

2. Centralized mobile payment

In August, China’s central bank took aim at mobile payments oligopolies with a clearing mandate: By next June, online payment companies must re-route all transactions through a newly established centralized clearinghouse.

This will force mobile payment groups to share proprietary transaction data with commercial banks and enable the central bank to monitor online payments directly without requesting data from processors.

Cashless has become a new fashion in China. In 2016, China consumers spent an estimated $5.5 trillion through mobile payment platforms—most of which via Alipay and WeChat—about 50 times more than their American counterparts, according to a report by China Tech Insights. Growing internet penetration, affordable smartphones, and relatively cheap data have made mobile payment the answer to daily consumption in China.

The meteoric rise of third-party payment, however, makes traditional financial institutions wary. When a user makes a purchase through Alipay or WeChat, banks do not obtain payment details such as the merchant’s name and location. Online and mobile payments are a valuable source of data for things like targeted advertising as well as credit scoring, a newly minted system in China.

3. Cybersecurity law

In June, China ushered in a tough new cybersecurity law intended to tighten control over the speech and thought of its citizens and restrict global businesses operating in China. Previously, the Chinese government has focused its censorship strategy on maintaining the Great Firewall, an infrastructure restricting access to external sites unsavory by Beijing. Over the past two years, the focus has been to legalize content control and state access to private data, and June saw these efforts come to their full fruition.

Speech

Under the new cybersecurity law, any online information deemed damaging to the Communist party is illegal. To further discipline what netizens say online, the Cyberspace Administration of China issued new regulations in September over the country’s instant messaging apps, making group chat owners accountable for what is said in their space. Real-name registration for online platforms—a policy first introduced in 2014—was also enforced to its greatest extent this year.

Data

The law has also sent a chill through foreign companies as it requires all companies to store data collected in China onshore and allows data surveillance by China’s security apparatus. The law also asks foreign companies to offer IaaS (Infrastructure as a Service, a form of cloud computing that provides virtualized computing resources over the internet) in partnership with Chinese enterprises. China is too large a market to ignore, and foreign players who choose the stay have bent to Beijing’s behest. In June, Apple moved its China data to a state-owned company in the Guizhou hinterland and in November, Amazon sold part of its operating assets to a local Chinese partner.

Content

The popularity of new media forms, insiders suggest, challenges state-owned outlets who were once the centralized pipeline for news and information, and thus inevitably leads to state control. In September, China placed “maximum fines” on some of the country’s largest social media operators—Baidu’s online forum Tieba, Sina’s Twitter-like Weibo, partly owned by Alibaba, and Tencent’s WeChat—over failing to police content on their platforms under the new cybersecurity law.

The constant drip of media regulation has also worried the country’s content creators. In July alone, media watchdogs closed down several celebrity gossip sites, restricted the types of videos netizens can post, and suspended several online streaming services all on the grounds of “inappropriate content.”

In response to heightened censorship, tech companies hire human “auditors” to filter content deemed illicit by the government. The popular news aggregator Toutiao, which prides itself on its AI-driven recommendation algorithms, reportedly hires thousands of human censors. Chinese copycats of the hit survival game PlayerUnknown’s Battlegrounds went as far as modifying the games by adding core socialist elements like military drills.

VPN

China has long vowed to ban virtual private networks (VPNs), the technology that allows people inside mainland China to bypass the Great Firewall, but 2017 is by far the roughest year for the country’s VPN users. In January, the Ministry of Industry and Information Technology ruled that only authorized VPNs could be used in China, making most existing VPN services in China illegal. In July, netizens bemoaned Apple’s decision to remove VPN apps from its China App Store.

Control of information is not new in China, but Xi’s call for tightened ideological control has extended the government’s hand to the internet, an arena that was once more permissive. The sweeping cybersecurity measures rained down on China’s tech industry in the months leading to the country’s top-level party reshuffle in October, and many reckon they are here to stay.

“China stands ready to develop new rules and systems of internet governance to serve all parties and counteract current imbalances,” so said Wang Huning, the ideological mastermind behind the Chinese communist party, at the country’s top-level cybersecurity forum in October.

4. The visible hand

Beijing has planned to take 1% stake in Tencent, Sina Weibo, and Alibaba’s Youku Tudou, which will allow it to appoint government officials to the companies’ boards, according to the Wall Street Journal. The stake would also make it easier to enforce the new cybersecurity law, for it would allow easier state access to data from these private entities.

At another level, the government is one of the biggest clients for these large tech firms, who are helping to build grand-scale public projects ranging from public transportation, which intends to make life more convenient for the people, to a nation-wide surveillance system, which gives the authority an omnipresent grip over its 1.4 billion people.

TechNode’s top 5 blockchain and bitcoin stories of 2017

Eva Yoo — Fri, 29 Dec 2017 01:09:34 +0000

When the blockchain era arrives, all transactions will be transparent and decentralized. China, a country with a centralized authority issued an ICO ban in September, seeing how crypto frenzy led $394 million to be contributed towards ICOs in the period from January to June 2017. However, it’s interesting to see how blockchain technology, a decentralized database, is actively making its moves in China, and has attracted international cryptocurrency gurus and blockchain startups to the country.

This year, we talked about the present, past and future of cryptocurrency and blockchain. We have observed some ridiculous ideas trying to raise funding using ICO, how US and Chinese multinational corporates are trying to tackle food safety using blockchain and learned about blockchain’s future at the blockchain side stage at TechCrunch Shanghai 2017. In short, Bitcoin is here to stay; Crypto is as much about ideology as it is about making money; We need to be patient. As we will continue to write about blockchain as stories unfold, we gathered up the most popular blockchain and bitcoin stories of 2017.

1. NEO—China’s Ethereum—is building a smart economy on blockchain

Dubbed the Ethereum of China, NEO has one of China’s most successful cryptocurrencies and is also China’s first open source blockchain. Much like Ethereum, NEO uses a general purpose blockchain and runs smart contracts on it.

NEO has been developing actual products based on the blockchain. The company is betting on what they call the “Smart Economy” which involves creating standards for digital assets, smart contracts, and blockchain-based digital identity systems.

2. Qtum says the trend is building a new business model on top of blockchain

In China, building a new business model based on blockchain has become a trend.

Qtum (pronounced Quantum) is now becoming a toolset and a platform for companies to build their business on top of blockchain. The Shanghai-based blockchain company has their own cryptocurrency called Qtum, which now ranks in the top 20 on CryptoCurrencies Market Capitalization index and provides a blockchain application platform to execute “smart contracts” with a proof-of-stake consensus mechanism.

3. Crypto startup Zeus Exchange uses Chinese tech to transform shares via blockchain

It will soon be possible to buy shares anonymously and securely anywhere in the world via cryptocurrency. And for smaller investors, shares of shares will be available, all for almost no transaction fees.

Russian startup Zeus Exchange, has registered in Singapore and become licensed in Cyprus to trade shares using the smart asset blockchain—the world’s first—developed by Singapore-based foundation, NEM. The not-for-profit foundation is developing its systems in China. The framework that Zeus Exchange will use could be particularly successful in China due to it allowing access to exchanges all around the world via Cyprus. Plus anonymously, and at small scale.

4. Blockchain is shaking up O2O in China and turning cryptocurrency into Pokémon Go

VeChain, a blockchain firm with offices in Shanghai, Singapore, and Paris, sees the technology as a “trust machine.” It assigns each item with a unique ID which is registered to VeChain’s blockchain allowing it to be authenticated and traced to its origin—an important task considering how many fake products there are on the Chinese market.

Beijing-based LoMoStar is building an O2O ecosystem by putting cryptocurrency in red envelopes, also known as “hongbao.” The company’s LoMoCoin (LMC) token can be exchanged for real value (either fiat money, bitcoin, or other cryptocurrencies) and it enables marketing and advertising in the LoMoStar ecosystem, according to its CEO, Xiong Lijian. It’s like the Pokémon Go app but with cryptocurrency gift cards.

5. Central bank says all ICOs illegal

The People’s Bank of China has said that initial coin offerings (ICOs) and any related fundraising activities are illegal. The regulator said in its notice that all activity must stop. The bank has conducted investigations into the practice and found it to disturb financial order.

Top 5 massive Chinese fundings in 2017–and the companies behind them

Emma Lee — Mon, 25 Dec 2017 01:28:58 +0000

After the capital winter of 2016, tech startup deal activity in China turned strong again in 2017 but in a more rational way.

This year’s list of top funding rounds in China features quite a few familiar names. It’s fair that more established companies would get the largest funding rounds but there seems to be excessive attention to such companies, whereby a small portion of leading startups end up getting more money while the majority remain in a funding shortage, as explained by Li Jingwang, CEO of Chinese tech startup database IT Juzi. So much so that tech behemoths like Didi, ofo, and Mobike managed to raise two or more billion-level rounds in the span of one year in a more risk-averse funding environment.

Sector-wise, the sharing economy, artificial intelligence, and video were some of the hottest verticals in China. Check five of China’s largest tech firm investments for this year.

Didi Chuxing—$5.5 billion + $4 billion

After topping last year’s list with a $7.3 billion round, Chinese ride-hailing giant Didi Chuxing is still the most sought after Chinese tech startup this year. Following a $5.5 billion round in April, the firm announced another $4 billion plus equity funding in December.

If 2016 was when the firm started to dip its toes in overseas markets, 2017 is the year when Didi put its globalization plans in execution. In March, the firm launched its office outside of China, dubbed Didi Labs, in Mountain View, California. After extending to Europe and Africa, it’s pushing harder in the US through a partnership with Lyft. The firm’s international approach was also demonstrated by the launch of a more expat-friendly version in the domestic market and new support for Apple Pay.

Diversification of product lines is another major aspect of Didi’s ecosystem development strategy. Investments in ofo and their partnership made it easy for Didi to embed ofo’s bike rental service to its main app. Food delivery and payments are some of the other projects on its plate.

iQiyi—$1.53 billion

iQiyi, the YouTube-style service backed by Baidu raised $1.53 billion from the sale of convertible notes to investors. Investors in the round include Hillhouse Capital, Boyu Capital, Run Liang Tai Fund, IDG Capital, Everbright-IDG Industrial Fund, and Sequoia Capital. Baidu also invested $300 million into the service. One company representative told TechCrunch that the monster round would likely be spent on acquiring content.

In a market where content is the king, video streaming websites are investing heavily in quality content, both self-generated content and exclusive partnerships with other platforms.

Ofo—$450 million + $700 million vs Mobike— Billion dollar-level funding

Image credit: ofo

For Chinese bike rental firms, funding size should not be measured by single rounds but by the total amount raised over a certain period of time. So we put ofo and Mobike, two leaders in the sector, together due to the nature of the fundings, and also the similarity of their business.

Soon after nabbing a $450 million D round in March, bike rental platform ofo completed a series E financing round of more than $700 million on July 6th led by Chinese e-commerce giant Alibaba, Hony Capital, and CITICPE. In the middle of these two rounds, the company received another nine-digit dollar funding in April. Ofo’s business surpassed the $1 billion valuation mark earlier this year when it announced its $450 million Series D round in February. It is aiming to raise new funds at a valuation of about $3 billion, Bloomberg reported this July.

Ofo’s arch-foe Mobike is no less capable of sweeping up capital, although the firm didn’t specify its funding sizes for each round. Over the past year, Mobike has announced four financing rounds: nine-digit dollar fund in January and February, $600 million E round in July and an undisclosed amount in November. Wall Street Journal reported that the firm’s $600 million round was raised at $3 billion valuation.

The bike rental battle in China is going feverish pitch as competitions expand beyond the national boundary. On the other hand, the industry is witnessing its first group of casualties. There’s a rumor about a possible merger between ofo and Mobike, two top players in the field, but both of the companies say it’s not an option despite pressure from investors.

Koubei—$1.1 billion

Koubei, an Alibaba affiliate company focused on enabling local commerce, closed a $1.1 billion financing round in January this year from investors include Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital. It is interesting to note that the current round marks the first money from external investors.

Koubei is a joint venture founded in 2015 by Alibaba and its mobile payment affiliate Ant Financial to tap into China’s rising O2O initiative. B oth put RMB 3 billion (worth around $480 million at the time) into Koubei when it was created. The idea behind it is to generate business for local retailers by bringing them online, while also offering new commerce opportunities for consumers.

The service fights fierce competition from domestic competitors like Meituan-Dianping, Ele.me, etc.

Toutiao—$1 billion

Toutiao Founder & CEO Zhang Yiming Speaking at TechCrunch Beijing (Image credit: TechNode)

Chinese news reading app Toutiao secured $ 1 billion in a series D round financing in April from investors including returning backer Sequoia Capital and CCB International, the investment arm of China Construction Bank. Reuters reported this August that the firm is planning to raise another $2 billion at a valuation of over $20 billion.

A relatively young startup, Toutiao has grown quickly in the past few years, widely considered as a competent candidate to replace the countries tech incumbents of BAT. Flush with cash, the firm is making investments of its own, such as Flipgram, Musical.ly, and more.

Despite the growth, it has a controversial reputation since its boom. People’s Daily, the official newspaper of Chinese Communist Party, name-checked Toutiao in an op-ed denouncing algorithm-driven news distribution platforms for the echo chamber they potentially create.

China’s going to take a bigger chunk of world’s $110b app economy in 2018: report

Emma Lee — Wed, 20 Dec 2017 07:35:55 +0000

In the past decade, the whole world has witnessed how mobile phones and smart devices have revolutionized the way people live and think. As the iPhone, the forerunner of this evolution turned 10 in 2017, Apple’s App Store and competing platform Android Market are celebrating their tenth anniversaries in 2018.

The decade-long development has brought the app economy to maturity in a number of ways and the sheer number of apps is perhaps the most impressive aspect. App analytics firm App Annie pointed out in its latest report that the iOS App Store and Google Play had more than 2 million and 3.5 million apps available respectively as of the end of October 2017. Also, the growth shows no sign of slowing with iOS App Store and Google Play seeing 50,000 and 150,000 new apps in October this year. Maturation also takes the form of longer user engagement time, larger in-app consumption and wider industry coverage, the report pointed out.

The continued evolution of markets across the globe has led to the continued growth of app monetization. App Annie forecasts that worldwide consumer spending across all mobile app stores will grow approximately 30% year on year to exceed $110 billion in 2018.

Developing countries are forming a stronger force in boosting this new growth. China will continue to be a key market for app store consumer spend in 2018, growing at a rate that will “significantly outpace the rest of the world,” the report says. While China, a top market for iOS App Store consumer spend, will become a major driver for growth in the iOS system, spending on Android phones will be driven by emerging markets led by India and Brazil.

China is one step ahead of global tech trends

China has been commonly stereotyped as a follower in innovation, where local entrepreneurs copy technologies or business models already proven to be successful in overseas markets. But that’s no longer the case. In its detailed post, App Annie made 10 app economy predictions for the coming year. China has been playing a leading role in a number of these new trends.

While VR boom is slowing, AR is taking a significant step forward toward joining the mainstream. China powerhouses Alibaba, Baidu and Tencent are all engaged in the initiative. Inspired by Pokémon Go, early last year Alipay released its location-based Augmented Reality (AR) hongbao campaign, allowing users to hide and collect hongbao (red envelopes tradtionally containing money) in real locations by scanning objects using their smartphone cameras. Alibaba’s most recent partnership with Starbuck is making the latter’s stores more interactive with AR technologies.

“In the past, it has been easy to segment retailers between bricks-and-clicks and digital-first. However, these lines are becoming increasingly blurred by acquisitions, partnerships and innovation. These activities are impacting all dimensions of the shopper journey, including in-store, in-home and delivery,” says the report.

App Annie expects these changes will cause consumers to change their shopping habits in 2018, which will in turn begin to redefine the relationship between and even the very nature of existing retail channels (e.g., mobile apps, web, brick-and-mortar). Blurring between the online and offline worlds is already in full swing in China, and we have a dedicated term for it: “new retail“.

The report also pointed out that cash registers’ longstanding role in the checkout and payment process will be reduced, or in some cases replaced, by mobile. For many consumers, mobile will be a core part of the shopping experience regardless of the channel they choose. China’s ubiquitous mobile payment solutions and the rise of unmanned stores all point to this prediction coming true here.

VR eye-tracking, blockchain money remittance, conversational AI startups win K-Global Demo Day

Eva Yoo — Wed, 20 Dec 2017 02:43:34 +0000

The three winners of K-Global Demo Day were VR eye-tracking startup Visual Camp, conversational AI startup MrS.ai and blockchain money remittance startup Moin. K-Global demo day is part of the South Korean government’s effort to foster interaction between South Korean startups and Chinese startups.

On the day itself, December 12, five Chinese startups and 10 Korean startups climbed on stage at Shanghai’s Jin Jiang Hotel to pitch to five judges including Strikingly CEO David Chen, partner at NIO Capital Junyi Zhang, Vice President of Sky9 Capital (云九资本), Fred Young and Professor and Adviser to International BU, III. C. Jimmy Shih. The event was hosted by K-ICT Born2Global Centre, a startup incubator operated by South Korea’s Ministry of Science and ICT (MSIT) and organized by Shanghai-based startup accelerator XNODE.

“There are two startups winning second place. Moin, the first one, is using an emerging technology that could disrupt the current system. Although China has a very strict law on financial matters, she is accepting new technology until proved otherwise. The next one, MrS.ai, uses a natural language technology specializing in Mandarin, that could better fit to the Chinese market,” Professor and Adviser to International BU, III. C. Jimmy Shih commented on each company as he announced the winners of the demo day. “The first place goes to VisualCamp whose technology will be a strike to most mobile commerce in the future.”

“There were also high tech companies like Moin that focus on blockchain tech and building channels to transfer money. The bitcoin price has exceeded $10,000, but is really hard to work on it in China. Korea is special market, and has the potential for its bitcoin market to be the largest in the world,” Vice President of Sky9 Capital, Fred Young commented. Sky9 Capital runs a US dollar fund in China focusing on early stage internet companies and innovative companies in consumer and technology sectors, and has offices in Beijing, Shanghai, Shenzhen and Silicon Valley.

“As for AI, it’s hard to handle Mandarin in AI, since it’s a much more complicated language. So MrS.ai has a very unique competitiveness and has the chance to win in the market. For Chinese startups, the AI market is large and a lot of companies and brands need AI services.”

Here is our overview of the top three companies.

VisualCamp

VisualCamp’s eye tracking technology is 1ms latency, making the eye tracking speed 5 times faster than its competitors (Image Credit: VisualCamp’s demo video)

Eye tracking is crucial to both virtual (VR) and augmented reality (AR) technology-based verticals such as games, e-commerce, content, and social media. US eye tracking technology player Eye Tribe was acquired by Facebook, Eyefluence was acquired by Google in 2016, and SMI was acquired by Apple in 2017. South Korean startup VisualCamp is a VR eye-tracking technology provider and their technology is currently mounted on Samsung Electronics’ all-in-one-type Exynos VR HMD (head-mounted display). As VR HMD is moving from PC connected, mobile connected, then to all-in-on device, keeping low CPU occupation rate becomes important. On Exynos 8890, their technology takes less than 4% of CPU occupation rate. Compared to their competitors in the same arena, their solution run on all three HMDs including desktop, mobile and all-in-one, and runs on five operating systems, including Android, Windows, Linux, Linux Arm and Mac OS. Based on the eyeball and gaze data, the Seoul-based company also analyzes user intention.

MrS.ai

Conversational AI, such as Siri and Cortana are now becoming a trend for brands and companies. These companies believe that future service delivery should be interactive and personalized for consumers, and are actively searching for localized professional solutions that provide in-depth AI technology while truly understand quality services, to help them innovate next-gen service experience.

MrS.ai develops Conversational AI solution for the service industry, designing virtual AI agents for multinational corporates to deliver professional-level services via conversation in Chinese. The virtual agents it designs can handle complicated consumer requests in Chinese with in-depth personalization, using technologies like service-sector-specialized SLU, the dynamic representation of professional knowledge and multi-task management, etc., aiming to disrupt the current use of AI in services. Visa China will launch a new AI-based concierge service in China in January 2018, powered by MrS.ai. At the same time, this Chinese AI company, with a clear business need and tech focus on services, is now working with international airlines, prestige hotel groups, and luxury brands in hospitality and mobility, to provide conversation-based services.

Moin

Moin’s Android app (Image Credit: Moin)

Moin is using blockchain technology to help its users transfer money to overseas countries. Targeting expat workers and students studying abroad, their remittance solution optimizes the process to make it cheaper, and faster, lowering the traditional remittance time by 90%. Their iOS app and website also offer realtime remittance fee comparison with four big commercial banks. For security, Moin follows KYC and AML protocols, and their security will be endorsed by a license issued this month by the South Korean government. During the Q&A, the company confirmed that they are not doing ICO of tokens and are focusing on their service provision. Established in March 2016, the Seoul-based company has raised $2.5 million in funding.

Blockchain is sensitive issue around the world, with some governments wanting to keep the regulation under the radar. However, blockchain is legal in South Korea, and a handful of Korean startups waded into this booming sector this year.

Shanghai K-Pitch demo day (Image Credit: TechNode)

Comments and advice to other startups at the demo day

“There were a lot excellent entrepreneurs from China and Korea with good global perspective. For example, we can see that the iSharingsoft app is useful for a family that has a child,” Vice President of Sky9 Capital, Fred Young commented.

iSharingsoft is a real-time locator service allowing family members and close friends to privately share their location and communicate with each other.

“They were amazing and their products are impacting daily life. iSharingsoft, LIMA and Monit are very interesting,” Junyi Zhang, partner at NIO Capital told TechNode.

LIMA allows brands and companies to advertise their products inside famous web-novels and webtoons utilizing machine learning technology, and Monit is a smart baby-monitoring service, sensing diaper changes and environmental conditions and provides mobile notifications to parents.

“Some of the startups need bigger investors and industry players to help them expand to China. For example, LIMA needs a content company or platform to expand in China. iSharingsoft has been downloaded 300,000 times, that’s not bad. But China is already dominated by WeChat and Baidu Map, and they will have a hard time expanding in China. They really need partners to help them.”

Apple Watch Series 3 eligible for refund in China due to LTE setbacks

Emma Lee — Tue, 19 Dec 2017 04:24:13 +0000

When Apple released its Series 3 model this September, the cellular capabilities were the biggest selling point for the smart watch. It still is in most of the world–except China.

As furious early adopters are growing impatient after three months of waiting, Apple decided that Apple Watch Series 3 owners in China could return the product, unrestricted by the 14-day return policy.

After brief availability through telecom carrier China Unicom, owners of the new model found that cellular connectivity was cut off abruptly without a timeframe for comeback. The suspension of this feature last for a couple of months and there’s no sign that the ban will be lifted any time soon.

Chinese Carrier Information for Apple Watch Series 3

At the very beginning of Series 3’s release, Unicom specified the following: “Cellular service available only for mobile lines opened in Guangdong, Henan, Hunan, Shanghai, and Tianjin.” Apple updated the page with reference to support later in 2017 after the September 28 ban. Now, all Chinese carriers — China Mobile, China Telecom, and China Unicom, show the support is coming in 2018, Apple Watch Series 3 cellular support site shows.

Now, Apple Watch Series 3 with LTE, which priced at RMB3188, is now no different to a more affordable Apple Watch Series 3 with GPS (RMB 2588).

The ban is essentially caused by the new technology that Apple uses in the Series 3 called an eSIM, a tiny chip that allows users to subscribe to any carrier they choose, and thus loosing the government’s ability in tracking the users.

Here’s how Chinese VCs are adapting to the ever-changing startup scene

Emma Lee — Fri, 15 Dec 2017 06:13:24 +0000

China presents a fascinating nation for tech entrepreneurs. The speed at which China’s technology grows and transforms is perhaps the most important aspect in defining what’s happening in the country’s startup industry: The Middle Kingdom is now the second largest arena for entrepreneurship with one startup is set up every seven minutes.

To highlight the changes, virtually every very period of the past few years has its own theme: smart hardware for 2013-2014, cross-border e-commerce and ride-hailing for 2015, VR and bike sharing for 2016-2017, and unmanned store and new retail for 2017. In China’s tech market, the only thing permanent is change itself.

China’s tech companies pivot and change at an amazing speed to catch up with the market evolutions. Venture capital—those firms financiers behind the scenes—are also experiencing its own paradigm shifts.

Chinese VC is more about RMB than dollar now

“There’s been quite a lot of changes over the past decade. China used to be a predominantly US dollar market. Although dollars is still very active here, it’s more RMB than dollars now.” said Jeff Chi, Vice Chairman of Vickers Ventures, at a panel held on Chinaccelerator Demo Day.

We saw budding signs of this trend as early as 2010, but this year has recorded the full transition of this phenomenon. A total of 3,418 VC funds were established in the first eleven months of 2017, raising a combined RMB 1.61 trillion funding ($243 billion), according to data from research institute Zero2IPO. Of the total, a 95% or 3,339 VCs—managing RMB 1.5 trillion worth of capital—are RMB funds, as compared to 79 USD funds which manage the equivalent of RMB 100 billion.

State-backed entities play an important role in this shift, the firm notes. Overall 439 state-backed funds with a capital size of RMB 756.8 billion were founded in the first three quarters of this year. The state VC coffers topped $336.4 billion as of the end of 2015.

“Also, the flavor has kept changing,” Jeff noted. “The market in 2005 and 2006 were predominantly USD because US IPOs was the only avenue for exits. As domestic IPO opens, the local RMB exchanges has become more dominant and that’s why the past few years has seen privatization of US listed Chinese companies and seek for a relisting here. The interesting thing in the last six months is that we see a reheating of the US IPO market happening. So we live in an interesting time.”

Globalizing and diversifying venture models

The intensifying favor of VCs towards RMB does not necessarily underline their exclusive preferences for local companies. In fact, it’s quite the opposite. More Chinese VC firms are developing a global or focus, partially in line with the globalization strategies of domestic firms.

Chinese tech giants BAT, the once startup steamrollers, are playing an active role in driving this trend by investing in a massive line of rising verticals across the world. For example, Alibaba has invested a total $21 billion in M&A in the past two years, of which overseas market and O2O are the two top fields in this effort, Alibaba Vice President Joseph Tsai disclosed at an investor conference held in mid-2017.

Compared to tech startups, however, the VC business model hasn’t changed that much, but that doesn’t means VCs are not trying their best to reinvent themselves.

“Ventures has been around for quit long now, we have been talking about the new business ideas that would be considerable replacing the venture model, and incubators and accelerators come to the scene. But if you drill down deeper, it’s still a model that works, the cost and production for investors show it is still a viable model,” said Jeff.

Despite the hiccups in China, the recent rise of ICOs is providing a new way of fundraising for startups worldwide, but it will remain an interesting alternative rather than a mainstream funding channel in the long run. “I don’t think ICOs will replace venture capital; it will just play a different role. If you are a company going for ICO or an investor planning an ICO, I recommend being cautious because there’s very few regulation to protect this,” said Jeff.

Melody Zhang from Artesiann Capital Management echoed Jeff’s opinion. “ICO has lowered the barrier for very early-stage investments from incubators and it will be an interesting alternative for fundraising,” she said.

Melody Zhang, Nicholas Ducray, Jeff Chi, William Bao Bean (L-R) image credit: TechNode

Deep technology is sexy again

The time and age for the “me-too” concept where we copy US companies, innovate behind similar concepts and create a Chinese version is gone. “Companies and investors are shifting to a strategy that is going deeper and deeper into tech. Technology as a competitive advantage and having very deep technologies is becoming increasingly important,” Jeff pointed out.

The government has recognized this. As of June 31st, 2017, Chinese AI companies received RMB 63.5 billion or 33.18% of the world’s AI funding. President Xi Jinping has said that China not only tries and aspires to be, but will be a globally AI country by 2020. The government have very bold ambitions for technology, which is well reflected in its rising presence in the VC arena.

“As a firm, we soon move away from consumer industry where you focus on acquiring user cheaply. The cost for user acquisition is increasing. . . therefore we take technology as a competitive advantage. There’s really the way that you upgrade yourself,” Jeff said.

“There’s a few barriers, one is you have to understand the technology, you need people onboard to have a deeper understanding of the technology before, rather than someone who just got a general understanding of how the market goes. Invite some PhDs and researchers on the team. Also, technology is a global phenomenon, you can’t just say that I have this best technology because we are in China. You need to have a view point as to how similar technologies are developing across the world.”

The team is still the top

The team is what every investor talks about when being asked to give a recipe for their successful investments. Panelists at the discussion gave their own definitions of an amazing team.

“[An awesome team] combines a lot of things. Integrity, capability, passion, drive are some of the major attributes that we look for. But a lot of this is about being able to connect. You are going to be partner with this guy for the next five years. If we don’t like each other that would be an disaster. Is there a chance to have a decent conversation and messages across each other, is there a level of mutual trust, the likability and whether can we connect and work together are the most crucial matters,” according to Jeff.

Nicholas Ducray from Cathay Capital cites Pinduoduo, a social e-commerce platform which creates WeChat Groups to buy goods at discounts, as an example. “There are two co-founders of the team. One is from the mobile game company and the second is from a Taobao Partner company. What’s amazing is that they come across the idea by merging what they are good at together.”

We tried Starbucks Roastery’s AR game, and this is what we think

Eva Yoo — Wed, 13 Dec 2017 01:52:29 +0000

The practice of drinking tea has a long history in China, having originated there during the Tang Dynasty. But in 2017, the practice of drinking coffee could be adding a new chapter to its history in China.

For those living in Shanghai, last week’s WeChat Moments were filled with Shanghai locals posting pictures and selfies in the new Starbucks Reserve Roastery, which opened its doors on December 6th. It’s world’s biggest Starbucks, but other than that, it offers many things and features that you aren’t able to taste, see or experience in an ordinary Starbucks in other Chinese cities.

Stereotypically, tech entrepreneurs love and appreciate good coffee. We even evaluated Shanghai-based co-working spaces based on their coffee environments. There are many things we’d like to talk about in terms of this branch’s new menu–wine, craft beers, chocolates, bakery products (pastry, pizza), freshly roasted coffee and so many items that go over RMB 50 or even RMB 150–not to mention the entire coffee roasting process, coffee library and coffee brewing process. But we’ll focus solely on how techie was Starbucks in Shanghai, the city burgeoning with New Retail sites and a top destination for VR arcades.

Make sure you do these three things. Firstly, take your time. You need more than an hour to explore this Starbucks. Lining up in front of the Starbucks entrance itself takes more than 30 minutes. The security guards on the doors will allow only 15 people to enter at a time. Secondly, your budget should be more than RMB 5o, because a lot of the drinks are over RMB 50, and bakery items are over RMB 20. Thirdly, you need a fully-charged phone. You might have to play with your phone to wait 30 minutes to enter Starbucks, and playing Augmented Reality game consumes a lot of battery.

1. Starbuck’s AR game

Now you’re in. Firstly, you cannot miss the AR game in the new Starbucks. To enjoy the AR game:

Connect to Starbucks Roastery wifi

2. Download Taobao (Starbuck uses Taobao’s AR scanner)

3. Scan the QR code on the Starbucks Roastery guide

4. Be patient when loading

5. Start scanning coffee roasting machines and flasks in Starbucks!

Starbucks Roastery AR game (Image Credit: TechNode)

The AR game involves scanning over a dozen coffee machines and coffee brewers in Starbucks. You can first see the map on the app, and select “AR scanner” at the top, then tap the image below to get a hint of exactly where you should go and scan the object or place.

After pointing the camera on the object, the loading process takes about 2~3 seconds. In my experience, some of them work well and are impressive, but it takes a lot of patience to scan it right and some of them just doesn’t work well. After scanning two coffee machines on the first floor, and frustrated to see the AR scanner failing to capture the third coffee flask, I asked the staff to scan it for me, but still no use.

After scanning, an interactive image of the copper cask being filled up with freshly roasted coffee appears, and the copper cask, placed in the middle of the new Starbucks is actually the easiest to scan. As I scanned the copper cask, I could see animated images showing how coffee beans are roasted, and when I tapped “More information,” I was led to another page explaining how the copper cask works in detail. Using the AR function to explore the coffee roasting process was quite impressive and educational.

2. Apply for an electric invoice

Starbucks Roastery provides electric invoices (Image Credit: TechNode)

Other technology attempts in the new Starbucks include giving phone notifications when your coffee is ready, (if you have paid through either Alipay or WeChatPay) and offering options to apply for electric invoices (fapiao), a very useful function for those who work for China-based companies and want the company to reimburse your invoice. After paying for your drink, tap “Apply for electric invoice (申请电子发票)” at the bottom, and fill in your company name (invoice title, 发票抬头), tax code (税号), and your email address. The electric invoice will then be sent to your email, and you can browse them on your mobile too.

3. Don’t line up, just grab a member of staff to place an order

Staff can receive your order on their Windows Surface tablets (Image Credit: TechNode)

At West Nanjing Rd’s Starbucks, you don’t have to line up to place an order. You can simply collar a member of staff wandering around with a Windows Surface tablet. They will hand you the paper menu and you can place an order and pay using your mobile phone’s mobile payment options (WeChat Pay, Alipay) or swipe a card. If you want to pay by cash, then you need to go to the cashier to place an order. After placing the order, the app will tell you the name of the nearest spot to pick up your drink.

Considering Alibaba’s technology that it has developed, especially its cashier-less cafe showcased at the Taobao Maker festival, the new Starbucks could have explored even more new functions, such as Alipay’s facial recognition and the unmanned payment options that are currently used in some of its Hema stores (盒马鲜生). But Starbucks played it safe this time, only implementing AR experience at its first Roastery in China.

There was less focus on coffee technology. While Starbucks offers options to its customers to make coffee much stronger or lighter by adding more or fewer shots, this could have been done digitally. For example, you could imagine Starbucks coffee machines connecting directly to user’s Starbucks membership card apps, and records users’ coffee preferences.

The most populous city in China with 34.0 million people and the biggest city in the world by population, Shanghai is surely an optimal destination multinational companies and brands to set up pilot projects. 13 of the total 20 Hema stores, Alibaba’s new retail store concept, are operating in Shanghai, Alibaba’s Single’s day flagship stores were launched in Shanghai, and China’s first Disneyland opened here in 2016.

Starbuck Roastery Chinese address: 上海市南京西路789号（近石门一路）
English address: 789 West Nanjing Rd (Near No.1 Shimen Rd) Shanghai. Take subway lines 2, 12, 13 and get off at West Nanjing Rd station exit 11 (only line 13 will allow you to get off at exit 11) and you’ll see Starbucks on your right.

Baidu’s new diagnosis service makes sure your site works perfectly in China

Emma Lee — Tue, 12 Dec 2017 04:57:34 +0000

Youku instead of YouTube, WeChat rather than Twitter, Baidu over Google. These are just a few of the tips for any foreign website aiming for a Chinese audience. To give a more holistic view for those who are hoping to bypass the “Great Firewall”, Chinese search giant Baidu is rolling out a new service in Japan which offers website operators a pre-evaluation to determine whether their site is optimized to run in China, Japanese media Nikkei Asian Review is reporting.

Obviously, the huge market and economy behind the “wall” are the biggest drivers for this launch. “The service is aimed at companies and local governments looking to take advantage of the sharp increase in Chinese visitors to Japan amid Beijing’s tightening internet censorship,” the report pointed out.

Baidu is offering the service with LXR, a Tokyo-based maker of Chinese-language sites. Beyond recommendations on shifting to local accessible services, the troubleshooting report addresses a range of problems, from failure to display content properly, slow downloads, improperly displayed fonts and difficulties in showing messages from social media sites. The search giant also helps customers create effective Chinese-language websites.

Although similar services already exist, this is the first time for a Chinese tech giant, which has close relations with the state and complies with government internet control, to launch this kind of diagnosis service. It is still not clear whether the company will make it available globally.

How Shenzhen is challenging Silicon Valley

Guest Editor — Mon, 11 Dec 2017 07:18:19 +0000

Editor’s note: Just four decades ago Shenzhen was a poor fishing village. Today, the south Chinese city is home to up to 20 million people and some of the world’s leading technology companies and most innovative tech startups. A new e-book by freelancing China correspondent Johan Nylander, titled “Shenzhen Superstars — How China’s smartest city is challenging Silicon Valley”, explains why the world better listen up.

Below is an excerpt from the introduction to the book.

When Silicon Valley veteran Scotty Allen first came to the southern Chinese city of Shenzhen a few years ago as part of an organized tour for American tech geeks, and witnessed the city’s noisy hardware and electronics markets, its buzzing tech startup scene and countless glittering skyscrapers, his spontaneous reaction was not: “Wow, this is cool.” It was: “Wow, we are fucked”.

That was in 2015, and it was a visit that turned out to be a life-changing experience. He realized that something unique was happening in this Chinese city – a city that he, along with most of his colleagues and friends in the US, was not aware of. To put it starkly, he knew that China was about to outsmart the West in terms of technology.

“Coming to Shenzhen is like visiting the future. But it’s this crazy Blade Runner-esque future”, says Allen, his bearded, somewhat wild-looking face beaming with a broad smile. “There’s this incredible energy here. There’s a sort of feeling that like all boats are rising. People are just really smart and really innovative and really creative.”

We meet in a coffee shop in the downtown area. It’s Tuesday evening, and outside on the noisy street puddles reflect the light from small noodle bars’ neon signage. Well-dressed office workers and young students hasten for the metro station, their faces illuminated by the screens on their mobile phones, to which their eyes are glued. A garbage man is swiping up electronic waste from the sidewalk, and I can see an old woman dismantling an air conditioner for scrap parts. Some buildings are modern and futuristic while others look ready to be torn down. Small hole-in-the-wall shops display everything from mobile phones and mini-drones to pets and handbags. The subtropical summer heat is sticky.

Thirty-eight-year-old Allen is originally from southern California and calls himself a software engineer by training and an entrepreneur by personality. He spent several years as a software engineer at Google, specializing in search infrastructure and user experience, then bounced around at a number of prominent startups in the Valley, and started his own big-data firm, Appmonsta. He, however, was still struggling to find his place and meaning in the corporate environment. “We were writing a whole bunch of code and sold contracts to Fortune 500 companies and did large-scale enterprise sales. And I hated it”, he tells me. “So I fired myself.”

He ended up in Shenzhen via the above-mentioned hacker trip to China, which was organized by a friend he’d met through the Noisebridge hackerspace in San Francisco. Some two dozens tech enthusiasts participated in that trip, which also took in Hong Kong, Shanghai, and Beijing. In Shenzhen, the group visited several open-source hardware companies (including Seeed Studio and Dangerous Prototypes) and hackerspaces (Chaihuo Makerspace and SZDIY), and they were also shown around town by local tech buffs.

What made the most profound impression on Allen was the city’s exhilaratingly buzzy, noisy Huaqiangbei electronics market. The largest hub in the world for electronic components, it offers everything from circuit boards to LED lights, drones, and computer-controlled cutting machines – all at remarkably low prices. Tech Radar once called Shenzhen “the global gadget capital”, and I’m pretty sure they were referring to the Mecca that is Huaqiangbei. The area is basically a one-mile strip with ten-story buildings on both sides of the boulevard filled to the brim with electrical stuff, both legal and illegal. It’s any tech nerd’s candy store.

Scotty Allen was sold.

“I came to Shenzhen and totally fell in love with it. When we were done in Beijing I immediately bought a train ticket back here to Shenzhen. And I’ve been coming and going ever since,” he says.

Today, Allen has become a specialist on the southern Chinese city’s electronics-manufacturing scene – the industrial markets, factories and back alleys where the world’s electronics are made. You might actually already have heard about him. Allen is that guy who built his own iPhone from the ground up by using only recycled and spare parts that he found at the local electronics markets. The project whetted his appetite and on his Youtube channel Strange Parts you can watch even geekier DIY adventures from the streets of Shenzhen.

“This is unique. I think this is one of the first places where it really feels like just about anything is possible.”

However, if Scotty Allen had stood in the same place and said the things he told me for this book 40 years ago, people would probably have laughed and written him off as the local fool.

The transformation Shenzhen has undergone is unique – truly unique – in history. Our remarkable story starts in a backwater area, populated by subsistence fishermen and rice farmers, on the border of Hong Kong, then still a British colony, by the Pearl River Delta in south China. Its population was poor and uneducated.

Today, according to official government numbers, 12 million people call Shenzhen home. Local officials often claim the real number is in fact over 20 million.

It has the fourth largest local economy in the country. Its Nanshan district, home to about 125 listed firms with a combined market value of nearly $400bn, has a higher income per person than Hong Kong. Almost half of China’s international patent applications are filed by Shenzhen companies, according to the Economist. In fact, firms in Shenzhen file more international patents – which are mostly of a higher quality than other Chinese ones – than companies in either France or Britain.

No other city better symbolizes the rise of modern China. And no other city challenges Silicon Valley more aggressively as the global hub for innovation and technology startups. In many ways, the Chinese city has already outsmarted the Valley – especially in hardware.

“In terms of hardware plus software innovation, Shenzhen is ahead of the curve,” Jeffrey Towson, a private equity investor and Peking University professor, says in an interview for the book.

“Silicon Valley innovates mostly in software. But China can do both and they tend to be better in smart devices, drones and other combinations of manufacturing and software.”

The e-book “Shenzhen Superstars” is written for anyone who wants to be part of this raging growth story – no matter if you’re a tech buff, investor or just someone curious about knowing what’s driving the future.

For Scotty Allen, however, what’s important is not whether Shenzhen or Silicon Valley is ahead of which. It’s more about both are doing great, and rather exist in symbiosis, than as rivals, of each other. He no longer sees it as the US versus China, but rather a situation where all advances together, he explains. He does, however, encourage more Westerners to come to Shenzhen and experience the amazing development and opportunities.

“Shenzhen has an energy of growth – the same energy I felt when I first came to Silicon Valley ten years ago,” he says. “And it’s not just in technology. It’s this idea that whoever you are, whatever you’re into, you can come to China, and especially Shenzhen, and do it!”

Johan Nylander is an award-winning author and freelance China and Asia correspondent. He is frequently published by CNN, Forbes and Sweden’s leading business daily Dagens Industri. “Shenzhen Superstars – – How China’s smartest city is challenging Silicon Valley” is the first in a series of short Kindle e-books. Download on Amazon. Sign up to get notified of the next book.

Lanhu is a collaboration platform for Chinese product design teams

Eva Yoo — Thu, 07 Dec 2017 08:28:19 +0000

There are less focus on designers and designing tool startups in China, but there are about 17 million designers in China and 28% of them are product designers, and it’s a huge market itself.

So when you see all those Chinese startups, have you ever wondered how those Chinese designers actually made that product? While Facebook, Google, and many others are inaccesible in China, designing products like Photoshop and Sketch are widely in use. Of course, there needs to be Chinese interpretation of these foreign designing tools, and that’s where Lanhu, a Beijing-based startup comes in.

“Lanhu (蓝湖) means Blue Lake in Chinese. By using our product, we wanted our users to relax,” the co-founder and product manager of Lanhu, Zhu Feng told TechNode.

Lanhu is an online product design team collaboration platform for UI designers, product managers, and engineers. The problem that they found in the working process was when designer and developers communicate and collaborate.

“We had inner need to collaborate between developers and designers, and we created the first version of Lanhu. Then other companies started using it, and slowly it went viral and started to spread out with word of mouth. It was December 2016 that we decided to wholly focus on Lanhu,” Zhu Feng said.

For example, when a developer sends a file and or an image to the designer, the designer has to accept it, download it, and there can be miscommunication about which one is the final version. Even using email and WeChat, the team has to download files on their computer. Lack of an efficient collaboration mechanism may lead to tremendous waste of resources at work, and Lanhu provides an interface where all members can access the file and edit it together, just like Google Docs. The way the tool works is similar to Western players like prototyping tool Invision and Zeplin, a collaboration app for UI designers and frontend developers.

“After designers finish editing an image, they have to process it. So after using Sketch and Photoshop to edit pictures, designers manually mark all that elements, and Lanhu helps them mark the elements automatically,” Feng noted.

The Beijing-based company officially launched China’s first professional product design collaboration platform “Lanhu” on November 1, 2017. Lanhu’s free version is B2C, and there’s business version, where the company gives more data security for businesses to keep their private resources and have privacy settings.

“Today, there are a large number of internet companies. In the fierce market competition, product iteration speed is the magic weapon for internet companies to stand out from the crowd,” Yanghui Ren, founder and CEO of Lanhu remarked. “Lanhu’s goal is to become the Microsoft’s Office of the internet age, to establish collaboration standard among individuals, departments, and companies.”

As of November 1, 2017, the collaboration tool startup iterates 52 product versions, modifying 641 requirements; has 230,000 registered users, of which 85% are designers, product managers accounting 6%, engineers accounting for 9%; and average daily usage time of 100 minutes.

“In the future, Lanhu will be carrying more scenarios for more roles to provide intelligent services to reduce duplication of roles between individuals, departments, and companies. By enhancing the docking efficiency, we’ll build a truly intelligent product design collaboration platform,” Zhu Feng said. “Lanhu aim to have 1 million users next year.”

6 things we learned today about Ford’s plan for electric vehicles and the China market

Eva Yoo — Tue, 05 Dec 2017 10:37:44 +0000

Ford outlined the next phase of its China expansion strategy today, focusing on SUVs, electric and connected vehicles, a streamlined business structure and closer connections to Chinese customers. Jim Hackett, CEO of Ford Motor Co mentioned that the speed of decision making is much faster in China than the US, and said Peter Fleet, Group Vice President & President, Ford Asia Pacific and Jason Luo, Chairman and CEO, Ford China are now fully in charge of China market.

“The evidence is that [our] Chinese organization is run in China,” Hackett said at the press conference held in Shanghai.

“China is not only the largest car market in the world, it’s also at the heart of electric vehicle and SUV growth and the mobility movement,” said Bill Ford, Executive Chairman of Ford.

Here are six things that we learned about Ford’s plan to bring more smart vehicles into China by 2025.

1. All new cars will be internet-connected by 2019

By 2019, 100% Ford and Lincoln badged vehicles in China will be connected (Image Credit: TechNode)

By the end of 2019, 100 percent of new Ford and Lincoln-branded vehicles in China will be connected through either embedded modems or plug-in devices. Ford’s company leaders also said they are working on broader infrastructure opportunities to improve future mobility experiences. Ford’s investment in electrified vehicles is to date $4.5 billion.

2. Ford will introduce more than 50 new vehicles in China by 2025

Ford is introducing more than 50 new vehicles in China by 2025, including eight all-new SUVs and at least 15 electrified vehicles from Ford and Lincoln (Image Credit: TechNode)

Ford plans to offer more than 50 new Ford and Lincoln vehicles in China by 2025, and at least 15 new electrified vehicles from Ford and Lincoln. And the new Zotye-Ford joint venture will deliver a separate range of affordable all-electric under a new brand, pending regulatory approvals.

Ford said that they will contain structural cost in the region throughout 2018 to grow its China revenue by 50 percent by 2025 versus 2017.

3. Ford continues working with Baidu on autonomous vehicle development

Ford continues working with Baidu on autonomous vehicle development (Image Credit: TechNode)

Ford is one of the founding members of the Board of Baidu’s Project Apollo, building on the agreement signed earlier this year.

In 2014, Ford developed a China market-targeted SmartDeviceLink, an open-source voice commander, together with leading Chinese mapping service providers Baidu and AutoNavi. Last year August, Ford and Baidu jointly invested $150 million in Velodyne LiDAR, a company that makes sensors for autonomous cars’ mapping, localization, object identification, and collision avoidance.

The Apollo Open Platform accelerates the development, testing and deployment of autonomous vehicles. The TechNode team actually had a chance to try out their autonomous cars in this July, when Baidu released their autonomous driving ecosystem Apollo 1.0 with their 50 partners, including Ford.

Ford’s participation supports the company’s robotics and artificial intelligence research efforts and provides an opportunity to contribute to a platform that will be key to developing autonomous vehicles in China.

“We are responding to the rapid pace of change by delivering increased connectivity and working to improve and simplify mobility for everyone,” Hackett said. “This builds on our commitment to deliver smart vehicles for a smart world, helping people around the world move more safely, confidently and freely.”

4. Ford puts importance on SUVs in China

Ford is introducing more than 50 new vehicles in China by 2025, including eight all-new SUVs from Ford and Lincoln (Image Credit: TechNode)

Starting in 2019, the company plans to locally assemble five more vehicles in China for Chinese customers including a Lincoln premium SUV and the company’s first global all-electric small SUV. The expanded product portfolio reflects an even stronger emphasis on SUVs. As Chinese families start to have two children after putting down one-child-policy last year, SUVs will be a more attractive option for Chinese consumers.

“From luxury Lincolns to Ford cars and SUVs, to an all-new electric vehicle brand, we will meet the growing desire and need in China for great new energy vehicles,” said Jason Luo, chairman and CEO of Ford China.

Ford said Lincoln, Ford’s luxury brand in China, will maintain its separate dealer network to offer its one-size-fits-one customer experience.

5. Ford is strengthening ties with its joint venture partners Changan and Jiangling in 2018

By 2020, Ford will have locally produced powertrain (Image Credit: TechNode)

Ford is strengthening ties with its joint venture partners Changan and Jiangling in 2018, establishing one distribution services division responsible for the marketing, sales, and services associated with all Ford vehicles sold in China.

“Now is the time to deepen the partnerships we have with Changan and Jiangling Group and present one Ford brand in China,” Fleet said. “The new distribution services division will enable us to offer an enhanced experience for our customers and more closely connect with our dealers and the community.”

“All of the actions outlined today reflect an unprecedented commitment to focus on the needs of consumers in China through a more fit and streamlined Ford,” he added. “They are proof of our dedication to grow our business in China.”

6. Ford wants to cater to Chinese consumer’s taste

From 2019, 5 vehicles to be assembled in China including Lincoln premium SUV and First all-electric SUV (Image Credit: TechNode)

In 2019, the company will start producing five additional Ford and Lincoln models in China to further tailor vehicles to more closely meet the needs of Chinese customers.

“Some of our most advanced manufacturing and innovation facilities are here in China,” said Fleet. “Producing more vehicles for China locally allows us to improve the benefits for our customers, our partners, and our bottom line.”

Ford last month opened the Nanjing Test Center, which includes close to 80 different types of real road surface conditions, a three-kilometer test track and a sophisticated emissions testing facility, to speed development of new products, services, and technologies to meet the unique driving requirements of Chinese customers. Jason mentioned that there are 2,000 engineers working in Nanjing.

The company also launched Quick Lane, its customer service provider in Nanjing and Chongqing this month, offering routine vehicle maintenance and light repair services. Ford plans to open 100 new outlets next year.

Exclusive: Pictures from World Internet Conference suggest WeWork, URWork on an “ice-breaking tour”

Emma Lee — Tue, 05 Dec 2017 06:33:31 +0000

Like its previous versions, the ongoing World Internet Conference in Wuzhen has attracted the biggest names in China’s tech industry. Official meetings and keynotes aside, more casual business dinners, which gather China’s, or even the world’s richest technology tycoons, offered precious opportunities for them to get connected and share insights. It’s in China after all, where a banquet is crucial in the deal-making process.

While some banquets shed light on the alliance between local tech giants, others may be more intriguing and will invoke different interpretations from lookers. The following picture, which was taken this Monday at Wuzhen, falls in the second category. It depicted perfect table harmony between WeWork execs—co-founder Adam Neumann and vice chairman Michael Gross—and URwork founder Mao Daqing.

After all the disputes between WeWork and URWork, in which the former filed a litigation against its Chinese rival for trademark infringement and unfair competition, it may be hard to believe that the men behind the two rivals would be dining at the same table and sharing a toast.

The picture would easily send us to different speculations from a more friendly settlement about the litigation, or even possible cooperation between the two top shared space and community managers in the world. A recent visit from Adam Neumann and Michael Gross to URWork drew the two firms to more friendly terms.

But it seems too hasty to jump to any conclusions like that. “It’s just a casual meeting between the founders, who know each other, working in the same industry and happen to attend the same occasion. That’s all. There’s no further business indications,” URWork’s spokeswoman told TechNode. WeWork China declined to comment.

WeWork execs visiting URWork with Mao Daqing (People who took these pictures asked to stay anonymous)

China is the most heated battlefield for co-working operators in the past year. After quick expansion, all the competitors in this industry are trying to differentiate in different markets and sectors.

URWork stays focused where co-working first boomed—internet plus and pan-internet companies and is trying to make forays into lower-tier cities, said company CSO Zhang Peng at TechCrunch Shanghai. On the other hand, WeWork is betting on widespread adoption of new workplace models across industries and companies of all sizes to bring diversity to the community. Tier-one and tier-two cities are still its main focus, WeWork managing director Christian Lee told TechNode.

Four cornerstones for China’s 2nd-hand goods exchange unicorn

Emma Lee — Tue, 28 Nov 2017 10:51:58 +0000

China’s shopping extravaganza Singles’ Day finished two weeks ago, but the aftermath of the 24-hour madness is going to span a whole year. Idle Fish, more commonly known by its Chinese name Xianyu (闲鱼), is helping China’s online consumers to cash in their second-hand or idle items online, not only for alieving financial pressure but also for the joy of getting connected with new friends.

Born out of China’s e-commerce giant Alibaba, the three-year-old company is now a top second-hand trading platform. It now claims 200 million users and 16 million active users—on par with the active users of China’s largest online marketplace Taobao. Although the low-profile company has never made it public, local media reported two years ago that its valuation hit $3 billion then.

Idle Fish is often referred to as a second-hand goods exchange platform. Instead of second-hand or used goods, which may invoke negative feelings, especially in China, Idle Fish, as well as its users, tend to shift to a more neutral term—idle items—to emphasize the values in these goods.

What’s more, second-hand goods wouldn’t be a term big enough to cover it all. “Idle goods is a broader concept that not only cover used stuff that still has value but also brand new items that are valued by the owners, such as an ill-chosen gift from friends,” Chen said.

Vern Chen, founder of Idle Fish, gave the secret recipe to their success at TechCrunch Shanghai 2017 this Monday. “Since the very beginning of our entrepreneurial journey, the team has laid out four principles that are defining what Idle Fish is about. We are improving the product based on these cornerstones,” said Chen.

1. Mobility-first platform. Compared with PC, a dominating portion of our energy and resources are invested in the development of Xianyu mobile app. “This largely determined by the nature of our service. Idle item sharing is highly dependent on cameras, which is a crucial part of displaying the goods,” said Chen. Of course, the choice is greatly facilitated by the popularity of smartphone and thus the mobility trend in China.

Also, this is a “have-to” decision, according to him, “…because we had but around 20 members of staff in the early days and was beyond our capability to develop both the mobile and desktop sites. Luckily, the users have been quite supportive of this option and we won’t launch PC platform, at least in the short term,” Chen added.

2. Easy to get started. “Idle sharing is for everyone. We are trying to lower the threshold for entry. Every adult user with a Taobao or Alipay account can log in and start to share their goods.”

3. Communication. Compared to Taobao or Tmall where people purchase goods from small retailers, trust is an even a bigger issue among Idle Fish users and this kind of trust is built through detailed communication before or even after the actual purchase. There are 510,000 Fish Ponds, free-flow fish trading units on the platform based either on geographical location or interest. “Around 41% of Idle Fish users would chat or leave messages to others.”

4. Easy transaction. “Facilitating the transaction process is a top priority for us,” said Chen. The reason behind this is straightforward because the final transaction is where all the communication goes toward and you don’t want technical problems to mess it up.

To some extent, Idle Fish fully meets the qualifications for a “sharing economy” business in its truest sense, where the value of idle resources can be rediscovered by those who need it, rather than the “rental economy“ in which case new products are being created to cater for a certain demand. Started as a consumer-targeted model, the app is now expanding to public idle resources from enterprises and judicial sales, for instance.

Jianpu becomes the 4th Chinese fintech company to list on NYSE in H2 2017

Eva Yoo — Fri, 17 Nov 2017 07:11:57 +0000

China’s fintech company Jianpu listed on NYSE on November 16th, with issuance code JT, our sister site TechNode China is reporting. Jianpu’s initial public offering price was $8 per ADS, lower than the previously identified range of $8.50 to $10.50 issue price.

Jianpu’s NYSE listing marks as the fourth Chinese internet finance company to go public in the United States in the second half of the year, following the steps of Chinese microlender Qudian, Hexindai, and PPDAI. Local media cast a shade on Qudian’s US IPO, because of Qudian’s sustainability. Student micro-loan was at its peak when Qudian grew, and the company claimed that now they suspended the service as the state has issued a ban on online loans in November 2015.

Jianpu (简普科技), a wholly-owned subsidiary of Rong360, is registered in the Cayman Islands and Rong 360 is the Variable Interest Entity (VIE) of Jianpu. With its latest monthly active user base of 95.8 million, Jianpu has reached more than 2,500 financial institutions and has provided 170,000 financial products covering more than 350 cities nationwide.

On October 20, Rong360 filed an IPO application with the Securities and Exchange Commission (SEC) under the name of “Jianpu Technology” with the planned financing of up to $200 million.

“Establishing such an independent internet financial search service platform using the Internet search method, to quickly and efficiently match users and financial products, is very valuable, I’m very optimistic about this platform business, because it’s very scarce to see a company that brings this value,” said Mi Qun, founding partner at Lightspeed China Partners, one of the earliest investors of JianPu and its parent company Rong 360 remarked.

Jianpu’s CEO Xie Daqing, Lightspeed China Partners founder partner Mi Qun

Established in 2011, Jianpu’s parent company Rong360 is a Chinese search and recommendation service for online financial products. The company has since completed four financing rounds, with its latest funding round being a $160 million Series D in 2015. By 2015, the company claimed that it includes some 170,000 financial products, of which over 70,000 are loans products. While Rong360 itself has a loan business, its listed company Jianpu does not provide loan service.

Jianpu said it will continue to focus on the independent open financial search and recommendation platform in the future, working on system integration and big data risk management to provide more in-depth solutions. In addition, the company mentioned that it will also broaden the coverage of financial products categories, such as insurance and wealth management products, so as to attract more users and increase user activity.

Rong360 (Jianpu) is backed by Lightspeed China Partners, a China-based venture capital fund focused on early investments in China’s Internet sector. A number of startups were backed by Lightspeed China Partners including, PPDAI, Junsheng Wanhe (merged with Qihoo 360), Dazhong Dianping, Tujia, Fangduoduo, Pinduoduo, Xingren Doctor, and eCheng.

UK wants more Chinese grads to stay and work in tech

Eva Yoo — Wed, 15 Nov 2017 02:50:33 +0000

The UK remains one of Chinese students’ top three destinations for studying abroad, with 58,810 Chinese undergraduates studying in Britain in 2014. However, even if Chinese students want to stay in the UK to get a job they will have difficulty applying for a visa. Russ Shaw, the founder of Global Tech Advocates and Tech London Advocates says that the UK is now trying to “brain gain” these Chinese students, by providing Tier 2 visas to them.

Currently, most Chinese students go back home after graduating university in the UK. After studying at the University of Surrey in the UK, April Lin, a Chinese student also came back to Shanghai to start her career.

“I considered working in the UK for a little bit. I don’t know how hard it is to get a working visa there, but I do know it can be difficult,” April says. “In my opinion, more Chinese student-friendly policies, such as visa policies or policies related to a student’s well-being, would make more Chinese students stay in the UK and start their career.”

Neo Wang, another Chinese student also came back to Shanghai after getting a Master’s in computer science at Oxford University in 2014.

“After graduation, Chinese students should immediately go back to their country. This makes it hard for students to find a job there. To apply for a job before graduation is really tough. Before graduation, students are busy preparing for the final year project, and it’s hard for them to send out CVs and applications to companies,” Neo Wang says. “Maybe if the visa application was easier, it would make Chinese students stay in the UK longer after graduation. Three years ago, the UK helped students trying to find job stay in the UK for 2 years, however, they changed the policy.”

58,810 Chinese undergraduates started studying in Britain in 2014 (Image Credit: Pexels)

Some Chinese students go on to start their business in the UK, but the situation is not straightforward for that either. While doing the undergraduate program at Liverpool, Neo Wang started an SNS service, Timeet, in 2013 with Chinese friends in the UK.

“We tried to fundraise for our company in the UK at that time, but it was very hard. We reached out to the UK government, but what the government offered to us was not very favorable,” he told TechNode

Neo Wang and his friends decided to come back to China to raise funding. They could easily raise funding in China, as a Chinese VC invested in his company.

Tech London Advocates, a private sector-led coalition of over 5,000 expert individuals from the tech sector, is working with the UK government to make it easier for Chinese students to stay in the UK for longer periods and start their business. This is one example of governments trying to keep Chinese talents, as they see many Chinese students want to become entrepreneurs after graduating university in the UK.

“I say, when you finish (your degree), don’t go back to China. We’d like you to stay. That will help us build the relationship between UK and China,” Russ Shaw, the founder of Global Tech Advocates and Tech London Advocates told TechNode. “Chinese students are going to go back to China to build their business because they know China. We have an opportunity to change that because there are so many Chinese students in the UK.”

Chinese students in the UK

“One of the things Tech London Advocates is working on with the British government is, how do we make it easier for people to receive Tier 2 visas,” the former Vice President of Skype, remarked, “so that it gets easier to set up businesses, and work in local companies.”

Tier 1 visas cover technician and entrepreneur visas for those who are setting up their business and looking to invest in the UK. So, it’s straightforward to get a Tier 1 visa.

“The issue that we are facing is how to make it easier for people like that to get a Tier 2 visa and to allow incubators, accelerators, and VC firms to sponsor Tier 2 visas. There are a lot of ministers I have spoken to who are very interested in that,” Russ says.

Three years ago, Russ introduced 10 startups to the Immigration Minister, so that founders from overseas, including Turkey, US, Europe, and China could tell him the challenges and issues they had to get the Tier 2 visa. The Immigration Minister heard directly from startups creating world-class businesses about how hard it is to get the visa here in the UK.

“The good news is that the government is listening. The opportunity is that, as the UK prepares to leave the EU and we won’t have freedom of movement without EU, we rethink the entire immigration system. We need to keep attracting skilled talent to the sector, and we need it to come from everywhere,” Russ says.

AI talents in the UK

In the country where Alan Turing first developed artificial intelligence, the UK has seen many bright talents in AI. LinkedIn is seeing a dramatic increase in job postings with good AI skills and data analytics in London. According to The Top Skills of 2016 on LinkedIn, United Kingdom has top skills in statistical analysis and data mining. Google’s acquisition of London-based DeepMind in 2014 served as an important catalyst to attract many startups to move to the UK. Now the AI brain power in the UK is drawing more Chinese companies, as they are interested in getting more AI scientists from the UK.

“Alibaba is investing AI in London. They’ve got 120 people in London. Alipay and the Alibaba Cloud division are very big in London. Chinese investors are coming to London to look at companies,” Russ says.

“Top universities in the UK really understand AI, and they have many AI genius. But there is a larger market in China a lot of companies need someone who understands AI. In the UK, they already have good AI people, but they have very small market compared to China. In China, the market is huge, but there are not enough people to do AI,” Neo Wang told TechNode.

Shanghai Tech Advocates launch event (Image Credit: Shanghai Tech Advocates)

Russ says there needs to be more collaboration between China and the UK. As part of their effort to create more alliances, the Tech Shanghai Advocates Launch Event was held in Shanghai hosted by the Global Tech Advocates and Cocoon Networks on October 26, 2017. This is the first event of Global Tech Advocates (GTA), a non-profit international elite organization founded in 2015, in China. With the official launch of the Tech Shanghai Advocates, the event announced the five technology working groups that will foster development: artificial intelligence, medical and biological, green technology, financial technology and big data.

“GTA is building a platform that can connect to the world. Technology-related industry advocates in different regions can create a unique and advanced international technology network. We are committed to building a global science and technology, entrepreneurship and investment ecosystem, to promote the exchange of ideas and cooperation between members, and continuously improve this ecological circle and sustainable development,” Russ said at the event.

Alibaba records RMB 168.2 Billion in Singles’ Day Sales

Eva Yoo — Sat, 11 Nov 2017 15:31:19 +0000

On this year’s Singles’ day, Alibaba’s total GMV exceeded RMB 168.2 billion (more than $25.3 billion), and a whopping 812 million delivery orders were made, with 90% of the GMV coming from mobile. During the 24 hours, 1.48 billion payment transactions were processed, with a 41% YoY growth.

“On November 11, 167 merchants surpassed RMB 100 million in sales, 17 merchants surpassed RMB 500 million in sales, and 6 merchants surpassed RMB 1 billion in sales,” Daniel Zhang, CEO of Alibaba Group remarked.

While this year’s sale day smashed last year’s records, now the new goal for Alibaba is globalization. This year’s sales event showed clearly how Alibaba’s shopping festival is gradually converging China and the rest of the world. Alibaba reported that 225 countries and regions with completed transactions.

Here are some of the highlights:

Top 5 countries selling cross-border to China by GMV were Japan, United States, Australia, Germany, and South Korea.
Top 5 imported brands bought by Chinese consumers by GMV were Swisse, Aptamil (爱他美), Kao / Merries (花王／妙而舒), Moony and Bio Island.
Top 5 countries/regions buying cross-border from China by GMV were Russia, Hong Kong, United States, Taiwan and Australia.
Top 5 export product categories from China by GMV were mobile phones, wool coats, knitted sweaters, dresses, and sweaters.

Alibaba’s online finance arm, Ant Financial announced that Alipay processed around 256,000 payment transactions per second at its peak within the first 10 minutes of the shopping festival. This was made possible by Ant Financial’s proprietary finance-grade distributed relational database, OceanBase, which processed 42 million requests per second at its peak. The company also reported that a total of 1.48 billion transactions were processed by Alipay in the entire 24 hours and Alipay processed 100 million transactions in the first 7 minutes 23 seconds of the shopping festival.

WeWork is going to move even faster in China in 2018: Q&A with WeWork Asia Managing Director

Emma Lee — Thu, 09 Nov 2017 09:03:14 +0000

It’s no secret that WeWork, the world’s largest community company, has been aggressive in its China push. After the initial effort to launch its first space in Shanghai in June last year, the company is getting more serious and dedicated to its China expansion.

What the company has accomplished so far is pretty impressive. “We have been in this market for 16 months with 9 locations across Beijing, Shanghai, and Hong Kong in operation. We just announced another 4 newly added locations to be open in early 2018, adding the total locations of WeWork in China to 13. The average occupancy rate is as high as 90%,” WeWork Asia Managing Director Christian Lee told TechNode. This would make China the second largest country for WeWork in terms of number of locations operated, next only to its homeland in the US, where WeWork has been operating for 7 years.

But it seems that this is nothing near what the company has planned for the emerging market. The already-loaded company received another $500 million investment from existing backers of SoftBank and Hony Capital in July this year. To emphasize their dedication to market, WeWork has made it clear that this hefty round is only for its China business.

Adjustment in management structure was also made accordingly through the establishment of a standalone WeWork China unit. Christian Lee, previously CFO of the firm, relocated to the regional headquarter in Shanghai to oversee Asia operation. He was followed by Alan Ai, who resumes his role as WeWork Greater China General Manager this October after serving as Vice President of Marketing for Shanghai Disney Resort.

“We are working on some more initiatives for China market, 2018 will be a big year for WeWork China,” said Christian. Christian first came to China in 1995 as a foreign language student in Nankai University. More than two decades later, the new vigorous country has a lot more to offer for global citizens like him.

Last week, we caught up with him at WeWork’s whimsical opium factory turned space in downtown Shanghai to discuss WeWork’s China and Asia plans, their newly launched enterprise-faced services, how to build an innovative community here, workplace technology, and more. What follows are the highlights of our conversation.

Image credit: WeWork

Why China and what new opportunities does WeWork see here?

We look around the world and China is obviously the center of a lot of changes that are going on globally right now. So for a company like WeWork, whose mission is helping to connect people, helping companies innovate and expand globally, it’s critical for us to have a meaningful presence in China.

The fast developing economy, people’s passion, the government’s call for mass entrepreneurship, and the 420 million millennial population, all of these exciting facts makes China an important market for us.

Also, we see lots of great innovative companies come into being from this country, Alibaba, Tencent, JD, ofo, Weibo, etc. Clearly, they are going to be global players in the near future. At the same time, it’s a place where a lot of people want to come, learn and invest. So we can both help Chinese companies grow and expand internationally, not just in space but also through community and ecosystems exists around the world, and of course to provide the access to China for foreign companies who want to be part of this amazing growth story in China.

For all the foreign companies coming to a new market, localization is the first priority. But it’s a big term. How do you approach the problem especially when it comes to Asia, a region with diversified user groups and cultures?

We really start by finding an amazing local team and an amazing building. When you look into each of the regions, you will see a very local management team of WeWork, who runs the market, sales, digital and real estate. They are all top talents who have grown up, lived and worked in China, with deep knowledge and expertise of what it means to take a global brand and localize it in China. Over 80% of WeWork members are Chinese locals.

Obviously, the first thing we do is to open buildings and those buildings have to reflect the local design aesthetics. It’s not only about designing a beautiful space, it’s also about being highly functional. WeWork has incredibly deep data analytics on how people use space. We take all that global information and learning about finding, designing and running spaces, then put it back to our real estate and design team. We study what will make people more efficient, what working styles are the best in China, then we use it as tips for design the spaces here. In China, that means bigger conference rooms, more tea, different types of event, and more.

All of these things go to localize, it’s not just one answer, but the combination of team, design, building, functionality of the spaces and digital products.

What’s the plan for China and the whole Asia market?

WeWork is going to open three to five new cities in 2018 in China. We are looking at cities like Shenzhen, Chengdu, Guangzhou and Hangzhou. In addition, four new locations in Shanghai and Beijing are to open in early 2018.

WeWork is renting out buildings faster in China than almost anywhere else in the world. One of the interesting things about China is that once Chinese consumers experience something and realize the value of a product, the adoption rates are incredibly fast, you see companies and individuals really able to make decisions very quickly and move at a pace that’s unparalleled in the rest world. That gives us a lot of confidence in expanding even faster in China.

For the Asia market, WeWork just acquired SpaceMob for Southeast Asia expansion. We are also opening in India (Bangalore and Mumbai) and will have two locations in Singapore and Japan.

Image credit: WeWork

Shared spaces first boomed among freelancers, entrepreneurs and tech startups, but now it’s becoming mainstream with more big corporates moving in. How do you see this trend? How do you combine teams of different size and cultures to fit into one community?

For SME and startups, they want inspiring work environments, like-minded communities for great ideas, resources sharing, collaboration with others and growing their business; for enterprise members, they look a place where could help keep their team innovate, to attract and retain young talents. It is this mix of diverse membership that makes our community full of energy. We will definitely keep this diversity.

We just launched enterprise member solutions on Oct 24th, offering “Off-the-Shelf” and “Powered-by-We” services to our members. With these services, we bring our community, technology, services, spaces to your buildings, make your company tap in our international network immediately.

The good news is that we don’t have to force certain behaviors when it comes to integrating them into the community. The way we design this space is to bring people together. It causes people to come in and contact with each other and have a conversation. We are bringing people together not only over work stuff but over cultural and social things as well. When such social bonds are created it would also help the business models. It happens organically but there’s a lot of decisions and things we have done to create an environment to foster that.

Technology is taking control of our lives, what’s WeWork’s progress in workplace technology?

Technology is pervasive in the way people work now. There’s positive things as well as negative things about that. But it results in certain behaviors. Because we are on the mobile platforms that means you are working 24/7 even when you go home. By definition, personal and work have been blended and I believe that’s particularly true in China. That means the type of work environment you need for the future is a place like WeWork where you have a mixture of dedicated office spaces, social environments where you can sit with your colleagues.

We also think technology can really dehumanize people, there’s a tremendous amount of value in bringing people together. If you don’t have this physical interaction it’s really difficult to get things done and related to people to find ways to collaborate and understand what’s going on in the broader world.

All that being said, technology also has a huge impact for the positive. We certainly use technology as a tool to enhance our community. For instance, we have an app for members to post recruitment information, book conference room, post for potential business cooperation, register for event, provide feedback to our community teams, etc. In China, we are trying to melt our system into WeChat and Alipay, since we know these two platforms are almost dominating every aspects of people’s lives.

It’s one of the ways we design our space. For the building itself, we definitely are using lots of industry-leading technologies like BIM, data collection and analysis (for member behavior), 3D laser scanning of the whole building for a rendering so we can do the design, architect, and get an estimation of the materials we need, etc.

WeWork has more than 400 people team for R&D, including design, globally, we try to build a space that can communicate with our members. As said, we don’t just provide spaces, we provide the community, the energy and inspiring mind for our members. All technologies and design stuff are all applied to serve one purpose, that is to connect real people in real life, to humanize people’s way of life and work.

The past, present and future of the world largest shopping spree

Emma Lee — Wed, 08 Nov 2017 03:24:49 +0000

This is just a small part of our coverage of the world’s largest consumption orgy that is Singles Day. Stay tuned the rest of the week as we prepare for the extravaganza at 11:59 pm, November 10.

It’s that time of the year again. Chinese hand-choppers, online shopping addicts who promise to chop off a hand if they continue to buy things they don’t need, are stuck even tighter to their smartphone, fishing for their favorite goods day and night until their shopping carts are full. People talk about the tricks in getting the most coupons form online retailers. Everyone is lurching around, waiting for the clock to strike zero o’clock on November 11 so that they can throw money at their screens.

The past decade has witnessed the most vigorous development of e-commerce in China and Singles’ Day is no doubt a phenomenon that crowns the milestones of each year. While we are approaching the 9^th anniversary of the extravaganza, it’s time to look into the past, present and future of Singles’ Day.

World’s largest shopping festival in nine years

Singles’ Day first originated among China’s young people as something like an anti-Valentines Day, when bachelors or bachelorettes could use as an excuse to get together and have their own funs. Seeing the rise of dedicated shopping days globally, Chinese e-commerce giant swooped in quickly in 2009 to rebrand it into China’s, and now the world’s largest shopping festival.

To put the sheer size of Singles’ Day into perspective for those living outside China: Prime Day, the member-only event of Alibaba’s US counterpart Amazon, recorded sales of $1 billion this year. Black Friday’s sales hit $3.34 billion in 2016, while Cyber Monday booked a record-breaking $3.45 billion.

Image credit: Carvaka

However, these numbers are nothing compared to the size of Singles’ Day, which hit $17.8 billion sales (GMV) in a single day on November 11^th last year. The same number would equal the annual e-commerce sales Spain in 2016. The combined revenue of Amazon Prime day, Black Friday and Cyber Monday only equals 43% of Singles’ Day revenue.

Image credit: Carvaka

What’s more impressive is that it’s only the spending tally on Alibaba’s marketplaces. Alibaba is the trendsetter for Singles’ Day, but the Chinese e-commerce juggernaut is far from being the single power behind the shopping festival culture in China. Other e-commerce competitors like JD have joined to take a piece of the pie.

What to expect this year?

Singles’ Day is continuously breaking its own records since its inception. “Each year, while we celebrate another record-breaking 11.11 after the 24-hour shopping spree, we are also beset by the problem of how to outperform ourselves and deliver greater experiences next year,” Daniel Zhang, Alibaba Group CEO said at the launch event of this year’s Singles’ Day.

This is perhaps the same question that lingers in the minds of millions of customers, sellers and investors. After accomplishing an “impossible mission” of $17.9 billion sales in 2016, what is Alibaba’s goal for this year, and more importantly, how it’s going to realize it?

Alibaba Group CEO Daniel Zhang speaking at launch event for Singles’ Day 2017 (image credit: Alibaba)

Even larger scale spree in partnership with global brands and supply chains

Singles’ Day, now officially dubbed the 11.11 Global Shopping Festival, has evolved from a 24-hour online sale into a 24-day festival season celebrated both online and offline. Consumers around the world will enjoy promotions and offers from more than 140,000 brands and 15 million product listings.

For Chinese consumers, who are increasingly aspiring for quality products and a wider range of choice, more than 60,000 international brands will be available to them across the Alibaba marketplaces. Participating brands include Adidas, Bose, La Mer, L’Oréal, Mac, Mattel, Mondelez, Nike, P&G, Shiseido, Siemens, Unilever, Uniqlo, Wyeth, Zara, and more.

In addition, to bring overseas quality brands to local customers, Alibaba is also pioneering a new initiative to lead the globalization of 100 Chinese brands, with a focus on the Southeast Asian markets at the initial stage.

Free shipping will be introduced to ten countries during this year’s Festival to extend the global reach, mainly through its logistics affiliate Cainiao.

Online shopping spree to offline carnival

In the wake of the heat surrounding “New Retail“, a term founder Jack Ma coined to depict the increasingly blurring boundaries between the online and offline shopping worlds, Alibaba is trying to turn Singles’ Day from an online shopping spree to an offline festival.

Alibaba will collaborate with 52 shopping malls to set up 60 New Retail-powered Pop-up Stores across 12 cities in China. Consumers can visit a pop-up store of a cosmetics brand, for example, to experience an augmented reality (AR) lipstick trial. Based on LBS technologies, an AR game on Mobile Taobao App called Catch the Cat will drive online traffic to offline locations. Consumers will use their mobile device to catch the virtual Tmall Cat mascot at a number of retail partner locations to win special perks, discounts, and coupons for use at online and offline stores.

Nearly 100,000 stores available in 31 provinces and 334 cities throughout China will also be converted into “smart stores” to bring a range of New Retail experiences such as facial recognition payment and scan-and-deliver O2O shopping. New Retail will also be rolled out for community stores such as Rural Taobao service centers and neighborhood convenience stores.

Consumer Engagement and Retail as Entertainment

After years of efforts, Alibaba is a powerhouse not only in e-commerce but also in China’s entertainment sector as well. The company is now leveraging its media and entertainment assets to drive online consumption.

Chris Tung, Alibaba Group’s Chief Marketing Officer, said, “Alibaba Group’s 2017 11.11 Global Shopping Festival brings consumers around the world a step closer to realizing the aspirational life where entertainment and retail become one.”

27 global brands have joined with Alibaba to produce the 4-hour Tmall Collection See Now, Buy Now Fashion Show on October 31. Viewers become consumers on the spot and immediately buy what they see in the fashion show, regardless of which platform they choose.  Introduced in 2016, this year’s fashion show features major brands under fashion conglomerates such as LVMH, SMCP and Estée Lauder.

Directed by Hollywood producer David Hill, the 11.11 Countdown Gala Celebration will feature top-tier singers and movie stars like Pharrell Williams and Jet Li. Additionally, the buzz surrounding the gala piled up since it also features the movie Gong Shou Dao, starring Jack Ma, the legendary Chinese entrepreneur behind Alibaba Group, and Jet Li.

Last but not the least, it is the red envelopes. It might not be the latest innovation when it comes to marketing in China, it’s the most effective one. More than RMB250 million will be shared among Chinese consumers through various interactive games. One of which shoppers can invite friends to form special teams, and once their team’s purchases reach a certain amount collectively, all team members will be able to get discounts and coupons.

Today’s record, tomorrow’s new norm

The skyrocketing sales tend to draw all of our attention, but it’s also important to remain conscious of the fact that Singles’ Day is kind of a “nodal point” economy, where all the consumption powers of shoppers is unleashed during a 24-hour period. The impact before and after the shopping spree should not be overlooked because many would now save their purchases for Singles’ Day to get a better discount. Also, people’s consumption demand may be reasonably decreased after the shopping tally.

“The peak traffic of Singles’ Day in each year will turn into that for a normal day years later,” Tmall World director Hu Yuling citing Alibaba’s Jack Ma. “We use Singles’ Day as a continuous incentive to boost the consumption demand as well as for the construction of infrastructures,” Hu explained.

The firm has done lots of efforts to change customers’ consumption habits, to change Singles’ Day from a 24-hour big shopping spree to an all-year-round new normal. “We have launched Tmall Supermarket, where users can make daily purchases for their groceries. Monthly or weekly small-scale promotion events are also held to create a new normal for online shopping,” she said.

Southeast Asia is a blue ocean for Chinese gaming firms: report

Emma Lee — Tue, 07 Nov 2017 06:15:08 +0000

Like the mobile payment industry, China’s gaming market is a highly cleaned-up field, where Tencent and NetEase take a dominating 70% of the market. Instead of diving into the competitive market, increasing domestic internet companies are turning their sights to Southeast Asia (SEA), a relatively untapped region that not only shares a similar culture with China but also has more relaxed control from the governments.

A recent report from market research firm Niko Partners further demonstrates the potential of this area by giving impressive projections for the market size. The combined PC online and mobile games revenue in SEA is projected to reach $2.2 billion in 2017, rising to $4.4 billion by 2021, the report pointed out. This forecast has been revised upward from last year, based on the strength of e-sports and new hit international games entering the SEA market.

The number of PC online and mobile gamers in SEA is projected to reach 300 million by the end of 2017, rising to more than 400 million by 2021.

Image credit: Niko Partners

Like elsewhere in the world, mobile games are recording a strong uptick in revenue, expecting to surpass PC games revenue in 2018. However, mobile games revenue is additive, not cannibalizing, PC games usage, the report added.

In the wake of globalization initiative of Chinese tech giants, several domestic companies have been accelerating their layout in the SEA region, including Alibaba Games, Perfect World, LineKong, and more.

Tencent has already established a foothold in the region with investment in Sea Limited, (formerly known as Garena) a leader in SEA for PC and mobile games operations and distribution. The company went public on last month in the US, raising $884 million in the IPO.

“E-sports has had a huge impact on the Southeast Asia region and is the primary driver for the explosive growth in PC online games. The heavy growth of the MOBA genre is a major contributor to mobile e-sports as well,” said Lisa Cosmas Hanson, managing partner of Niko Partners.

Beijing district suspends new recruitment for innovation spaces due to taxation issues

Emma Lee — Thu, 02 Nov 2017 05:41:45 +0000

China has shown unreserved support for innovation and entrepreneurship in the past few years. But it turns out that these support offers are good only under certain conditions and complying with the taxation laws of the country.

The industry and commerce regulator of Beijing Chaoyang District issued a notice yesterday to suspend its affiliated shared space innovation centers and incubators, which offer workplaces for small and medium-sized firms, from making new project recruitments, local media is reporting (in Chinese).

This notice was extended because some of the companies being included in the program failed to adapt to the unified taxation system, which is required by the regulator. The present notice takes effect as from today.

As of present, however, there are no signs that other administrative regions are following suit. A representative from Haidian, another Beijing district home to lots of shared working centers, told local media that they don’t have plans to make similar adjustments.

Among a series of preferential policies and financial supports, entrepreneurship in China has grown at an exponential rate in the past decade. The government sees innovation as a new engine for growth as evidenced by the government venture capital fund worth ($6.5 billion) to support start-ups in emerging industries.

Slush Panel: Connecting startup communities and ecosystems

Eva Yoo — Mon, 30 Oct 2017 03:11:15 +0000

Why do we attend so many business events and meet-ups? While the idea of a startup might be based on beginning a business online and hoping to see exponential growth by attracting millions of internet users to their product, we know that it’s human-to-human connections that actually make things happen and these are done offline. So why do we need to make connections, and how do we make meaningful connections? At Slush Shanghai 2017, held on October 13th, panelists from China and Hong Kong gathered to share their experience on connecting startup ecosystems.

The panelists were:

Eric L. Schmidt, co-founder and CEO at EventBank, who hails from US and founded China Entrepreneurs in 2003, a network of more than 20,000 business professionals in China
Carman Chan, managing partner at Click Ventures, who originates from Hong Kong and founded Click Ventures in 2015
Tony Verb, co-founder and managing partner at GreaterBay Ventures & Advisors, was born in Hungary and is currently based in Hong Kong helping the integration of different cities in Guangdong province and innovative companies to succeed across Asia

Started in Finland in 2008,the startup conference Slush attracted 3,000 attendees at Slush Shanghai 2017. Here’s an edited transcript of the panel on connecting startup ecosystems.

Why do we need to make connections? What’s the best outcome of such connections?

Eric: The first thing about connecting ecosystems is they need to grow the business and make revenue. In order to grow the business, rather than raising capital, finding new clients or working out how to get into new markets, they need new access to the market and having connections is most important to that.

Tony: Defining the term “ecosystem” is important. When you break it down and if we are a bit abstract, all human beings are separate ecosystems. What happens if two human beings connect in an open-minded and meaningful way? A baby is born. It might sound funny, but it’s an important analogy. When two companies meet, new solutions, new value, and money will be ultimately created between them. The same thing happens but on a higher level. If we are talking about startup ecosystems and cities, the same magic happens with the right people, right companies, right governments connecting in a dedicated and an open-minded way.

Carman, you have portfolio companies in US, China, Hong Kong, and South Korea. How do you connect these startups?

Carman: Portfolio companies need to expand to overseas markets and ecosystem connections are important for that. Startups need to expand to different cities within the first 1-3 years, and some startups get international clients from day one. But when they expand to a different city, they need to hire local employees and make a different team to solve the problem.

I connect the portfolio companies that have synergy together. I have a US portfolio company that does influential marketing in many countries except China. I have another influential network company in China in my portfolio, so I connected them to create international network. Another way, we have a company from Hong Kong that’s having difficulty hiring a local developer in Hong Kong, so they expanded to Taiwan to find the developer there. I had six portfolio companies who just expanded to Taiwan, so I connected them to share the information.

Eric, back in 2003, how did you connect Chinese and non-Chinese communties?

Eric: The challenge we saw early on was that the foreign community in China was not connected. In Beijing, there really wasn’t any ecosystem at all, until 2005 or 2006 when China saw a huge growth of people wanting to be an entrepreneur. Ten years ago, when we wanted to do an event in Shanghai, there really wasn’t any ecosystem, no incubator nor accelerator. There was nothing. But then, the investors were all traveling to Beijing weekly, and there was a push by the government to encourage the growth of the ecosystem to create more jobs for young people.

Eva Yoo, Eric L. Schmidt, Carman Chan, and Tony Verb (Image Credit: Slush)

Tony, you have connected to governments in Nairobi and Bahrain. How do you do this?

Tony: As all governments are different in nature, you should connect to them in different ways. Let’s define the term “connection” first. It always happens between human beings. Every single good connection needs relevance and synergy between human beings. We need to create value for governments, local institutions, and citizens. Then, a government will be interested in a proposition, and then internalize the given value for their companies, and citizens—the society. To open a project or apply for government grants or any kind of support, you will need to build personal relationships with them. Only with a conversation can things start happening informally or formally between individuals, companies, and even governments.

Carman: We are also well connected to government, and we are approached by different countries, like South Korea, Taiwan, Canada, Israel, and France. A lot of startups expand globally within the very early stage, within the first 1-2 years. And the governments are in competition to find and attract the best talent and startups to their country. So they are trying to provide resources. They set up certain departments, and handle the work permits, and provide supporting grants for startups expanding to their countries. So you have to look for what kind of support they can provide you before you expand to overseas countries. Many years ago, only big companies could expand to other countries. Now startups can go to different countries and get support from the government.

Eric: Companies need to scale to succeed. So, unless they are in the US or in China, they can’t really approach $100 million in one single market. Let’s take a startup in Hong Kong or Singapore for example, they immediately have to cross borders to get to $100 million. One of the major challenges in Asia is that government to government interaction is not enough. China’s cybersecurity creates challenges for organizations going into China, and Chinese companies expanding to Asia. It’s doubling their costs. Same goes for Malaysian companies going to Indonesia. There are challenges because governments are not connecting the ecosystems, that are trying to align with those regulations. The governments actually create more challenges for these startups.

Tony: The government has such power and such a toolbox in their hands to help and block the ecosystems to connect properly. They have such a responsibility to be connected and connect.

What are the elements to make meaningful connections? Time, money?

Carman: Sincerity is important. Recently, I was interviewed by LinkedIn about how to get connected globally. This is a hot topic because its possible to go global now with very little resources. Everybody is much more internationally connected than ten years ago. There is competition for attention from your network. My suggestion is that you need to be sincere. This is the most important thing to win more attention from your network. Everybody makes more than 1,000 connections, and if you are not sincere, people won’t remember you.

Tony: My keyword is “trust”. No trust without sincerity. Trust comes with time. Trust comes from sincerity. It’s also the relevance. you need to be relevant in the relationship.

How would you advise a person who just arrived in China and wants to start a startup?

Eric: Going to any market, you have to first learn about the market. If you haven’t figured out the landscape, you can’t go to a new market. That homework should be done first and really evaluate the strategy. You need a partner, a reseller, and a market strategy. You cannot expect that the cashflow will be positive overnight so you need to be patient and invest for the long term. You have to know that if you’re moving from a smaller market to a bigger market, there are a lot of challenges.

Carman: I have more than 1,000 invitations in the queue all the time and a lot of people sending me a message. Usually, they do research before they contact me. They know who is active and who is doing what in the market. When they contact me they introduce who they are, what they have done, why they want to connect to me. Do the homework, before you connect, then connect with some people first. I’ve seen few people being successful just by doing that. One kid from the US created a first venture fund to invest in university students. In the first year, he connected with 100 universities in the US. In the second year, he connected investors and active people in Hong Kong. You always have a good idea, so do your homework. It’s about conversion rate. If you send out 100 messages, and you have 5 replies, it’s 5% conversion. It’s already a very good start.

Why the retail sector in India is surpassing China

Guest Editor — Sat, 28 Oct 2017 02:48:46 +0000

Editor’s note: This was written by Kayla Matthews, a freelance writer focusing on technology and online media. You can find more of her work on VentureBeat, MakeUseOf, Motherboard and Gear Diary.

India’s retail sector is continuing its strong strides, recently surpassing China with an anticipated growth of $1.3 trillion by 2020.

Investments in India from large, recognizable brands like Amazon, IKEA, and Gap have combined with an embrace of technology from India’s government to result in the growth. Amazon, for example, recently acquired a 5% stake in Shoppers Stop, an Indian fashion retailer. Adidas India also intends to open 30 to 40 flagship stores by 2020 across Mumbai, Delhi, and Bengaluru.

In addition to prominent investments from companies with significant technological infrastructure, notably Amazon—which accounts for more than 60.5% of online sales growth—India has cemented a role as an emerging internet superpower, especially in regard to mobile growth. International commercial interest and internet-based growth are several reasons the retail sector in India is surpassing China.

India: The Next Tech Superpower?

Before 2016, internet costs in India were high to the point of being inaccessible for many.

However, the rise of mobile network operator Reliance Jio Infocomm Limited, as well as their joint effort with Google to manufacture affordable 4G handsets, has opened the internet to India more freely than ever.

A Jio promotional offer that started in 2016, offering users free voice calls and data, extended into 2017, pushing Jio’s subscriber base to more than 100 million. The promotion has prompted other providers to lower their pricing to compete.

Previously, India’s telecom sector experienced dominance from private players like Airtel, Vodafone, and Idea, with India’s government having little influence on the pricing or policies of internet access.

Many of these companies, such as Vodafone, are in debt, passing that on to customers with increased fees. Jio’s significant rise has been a game-changer for India’s internet accessibility.

India’s emergence as one of the most affordable countries for mobile data leads experts to believe India’s rise as the next tech superpower is imminent. Each month, Indian citizens consume 1.3 billion GB of wireless data and make $359 million in mobile payments. Since the Reliance Jio launch, the average data cost is Rs 21 per GB, which converts to about $0.32 USD, an affordable price that makes India’s internet growth sustainable.

China’s Grip on Digital Transactions

Although India’s strong mobile data accessibility has helped lead the country to surpass China in the retail sector, China remains at the forefront of digital transactions, having experienced a stable growth of 36% from 2016 to 2020, while India is anticipated to grow at an average of 26.2 percent during the same time. Chinese consumers have been more receptive to mobile payments in general, with projections for 2020 putting the percentage of Chinese smartphone users adopting mobile payments above 50 percent.

Regardless of China’s grip on digital transactions, the Indian government is aware of lagging behind in this regard, with several important governmental pushes to become the first digital, cashless society. India Stack is the name for the nation’s lofty ideal of building a unified software platform to create a digital revolution for Indian citizens.

India’s Prime Minister Narendra Modi has pushed to ban 85 percent of the currency in circulation, stating the demonetization will help boost the economy and halt financial corruption. However, many Indian citizens have had difficulty obtaining their cash as a result, with banks experiencing long lines and running out of smaller bills upon the announcement.

Despite those early flaws, India’s push for demonetization signals an embrace of digital payment methods that will smooth the path for the country’s continuing drive to become the next tech superpower.

Additionally, there are fears among international businesses that the Chinese government is becoming hostile toward foreign firms operating in China, prompting companies like Seagate and Panasonic to cease operations there. Recently, China increased the income tax on foreign investments from 15 percent to 25 percent.

Amid such moves from China, India finds itself in an opportune situation for continued growth in the retail sector.

Three lessons learned from Udacity’s initial China failures

Emma Lee — Fri, 27 Oct 2017 07:03:12 +0000

Cracking into the alluring but formidable Chinese market has never been easy. Despite great successes elsewhere, a number of the world’s most powerful tech giants including Google and Uber have fallen out of favor in China. Various reasons contribute to their fiascos, but there’s one common factor behind them: the failure to realize how different China can be.

Udacity, the US online education company that provides nanodegree courses including topics such as tech entrepreneurship, full stack development, and data analysis, is among the foreign tech firms that are geared up for China expansion.

After more than a year of effort, the Udacity team has gone through the initial doubts and pains in penetrating China and started to record an uptick in performance. It’s still too early to say that they are proving successful here, but what they have experienced could provide some useful lessons for those aiming for the same thing.

Foreign tech giants failed to realize how different China can be, or rather, they are unwilling or reluctant to do so, especially at the initial stage of tapping into China when still pre-occupied with the glories of their overseas success.

In 2015, Udacity raised a $105 million D Round at a valuation $1 billion as the first online education unicorn in the US. With abundant capital, they naturally spread out to the global market with new teams in China, India, London, and Brazil.

Udacity China team when they first launching in China last April

“We had high hopes when we launched our Chinese site in April last year because we have this Silicon Valley content. Content from Google, Amazon, Facebook, from the inventors a lot of technologies that we use today, even from the inventors of the database, the programing language that programmers are using. But in the first six months of our operations in China, we had no business,” Udacity China head Robert Hsiung said at NewCo Shanghai, a company tour event held by Chinaccelerator.

Around October last year, the team decided that it’s time to break things. “Everything that we do in the US, we just threw it out of the window and started from zero,” said Hsiung.

Payment habits are different here, adapt accordingly

First and foremost, it is important that you don’t overlook the different payment options and habits of Chinese customers, whether you are a startup trying to explore Chinese market or simply doing business with Chinese companies. It would be a shame if users are attracted by the service but didn’t make a purchase due to terrible purchase experiences.

“The most important change we made is the way we price the products,” Hsiung introduced. The way Udacity used to price the product in China or the way it priced in the US is based on subscriptions, which is very common in the West.

“But in China, no one pays for a subscription, everything is pre-paid here, your phone bill, electricity bill, because the system is not designed to deduct automatically from your credit card or your bank account,” he said. “The culture here is about pre-paying for everything, so we switched to a prepaid model. That was a big plus, enabling us to drive a lot of conversions.”

People consume content differently

“We got a lot of feedback that our courses are a bit too long,” said Hsiung. The complaints are not that surprising since Udacity’s courses originally take six to eight months, 10 hours a week of self-propelled learning to complete.

This is really tough to get through, even for US students who have grown in an education system that advocates self-learning and self-improvement. To some extent, their Chinese counterparts are less tenacious in self-motivated study: teachers and parents have played too important a role in monitoring the progress of their studies since early on.

“We cut the courses into two, enabling us to actually lower the price point and shorten the time to completion. Since October of last year, our revenue has grown by 8X,” he said.

Udacity China head Robert Hsiung pitching to NewCo attendees

Start from the basics

Localization is a big, big term, but comes down to the basics of execution.

In the case of Udacity, language localization is both basic and critical since there’s lot of translation to be done for their video courses. “When we launched in April last year, we made a huge mistake by giving all our content to one translation agency. We found that what they do is basically to put it into Google Translate and send it back to us. We received lots of complaints from the students,” said Hsiung.

Now, the team has set up a full-time localization division that manages volunteers and translation agencies to ensure the highest-quality translations. The team now only has to do text translation of video subtitles and written content. “As of July this year, we have seven locally-translated courses and this number is going to reach seventeen by the end of December.”

Now operating in China for more than one year, the Udacity China team is proud to see that a lot of innovations thriving here in China are actually impacting the rest of the world.

“Our US platform is shifting to the same way we are structuring our packages, they also offer pay by installments, where students can buy our courses in more affordable ways. They are also adopting the way we use WeChat to bring students together to learn together and help each other.

“The biggest thing we have learned about being in China is that things that work in the US don’t necessarily work here. For any startup, you really have to continually innovate and really empower your team to innovate,” he added.

Airbnb’s China head Ge Hong leaves after four-month tenure

Emma Lee — Tue, 24 Oct 2017 05:22:21 +0000

US home rental giant Airbnb announced today that its China head Ge Hong is leaving the company. The firm didn’t disclose the reasons for his departure. The company’s co-founder and chief strategy officer Nathan Blecharczyk is going to take his place.

Ge Hong (L) VS Nathan Blecharczyk (R)

Ge was appointed as vice president and China head of Airbnb this April. Along with his appointment comes an adjustment to the company’s business strategy, which places increasing focus on Chinese market. Several moves were taken to localize their services from announcing a Chinese name, expand its Beijing tech team to cooperation with Alipay.

Before Ge’s appointment Airbnb’s progress in Chinese market has been relatively slow. Entering China in August 2015, the position for a China head was kept vacant for around two years. It is a little bit surprising that the firm should make a such a huge shift in senior management in just four months, especially for a market it’s placing more importance.

The adjustment in management is sure to impact the home rental giant’s competition with rising domestic rivals, such as Tujia and Xiaozhu. At present, Airbnb China has over 120k homes listed on its platform. More than 2.5 million customers are using their services, up 287% YOY.

China Tech Talk 24: The water we swim in

John Artman — Mon, 23 Oct 2017 08:55:33 +0000

The first reference episode for China Tech Talk delves into the broader conditions enabling China speed, including:

Economic growth and habituated pace of change
Generational differences in user habits
Super apps
Values that don’t include net neutrality or the open web
The phone as life’s control center

Download this episode

Links

Matthew Brennan: 2017 WeChat User Behavior Report
Masha Borak: China’s tech giants are increasingly blurring the boundaries between sectors: McKinsey report
Sean Konieczny: 9/9/6 – Does The New Chinese Startup Work Practice Help Or Hurt Productivity?
How to leave an iTunes review

Hosts

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Collapse of square dancing apps show it’s still too early to cash in on Chinese dama

Emma Lee — Mon, 23 Oct 2017 08:02:14 +0000

Group-purchasing, ride-hailing, VR/AR, shared spaces, bike-rental… New trends or verticals continue to emerge in China’s tech world. Some will blossom, some will perish, but everything could happen really fast. Unfortunately, startups that are targeting at China’s “dama” (大妈) fall in the second category. Only three or four firms are still in the business while a majority of their peers either shift focus or collapsed, local media reported.

The apps for square dancing, the unarguably favorite pastime of Chinese dama, began to flourish in 2015. Over the past two years, over 60 startups entered this field. At its peak, apps that boast hundreds of thousands of downloads like Tangdou, Jiuai (就爱) and 99广场舞 began to emerge. Most adopt various means to commercialize the business, from ads, travel, e-commerce to offline events. The live streaming boom also penetrated square dancing app sector, but it’s difficult to keep the users due to sophisticated operations.

A CNNIC report shows that Chinese netizens aged above 60 years totaled 36 million, accounting for 4.8% of China’s 751 million internet users.

Despite the great target user base, square dancing apps still find that a huge portion of their audience is still out of reach for generating revenues. First, it’s hard to encourage a usually suspicious older generation to spend online. In addition, the penetration of online or mobile payment among Chinese seniors is not high although the situation is gradually changing with extensive promotions from Alipay and WeChat Pay.

Top 15 apps you need for living in China

Masha Borak — Fri, 20 Oct 2017 07:04:36 +0000

Say goodbye to Facebook, Twitter, and Instagram and welcome your new favorite apps. Here is everything you will need to navigate your China life.

1. Communication: WeChat (微信)

The app to rule them all, WeChat is the very definition of indispensable in China. This is where you will connect with your friends, communicate with your boss (forget emails), make business deals, flirt, and much more. Just don’t expect too much privacy!

WeChat also makes shopping easier. Its wallet function, WeChat Pay, is so widespread that many are already speculating that China could go completely cashless. You can even use it to pay your bus fare or while traveling abroad.

Unfortunately, the mini apps WeChat are so well known for do not work so well in the English version, but the app has other great features, including a myriad of subscription accounts to keep you updated on events and news. Go forth into the world and scan those QR codes!

Available in English

On Apple

On Android

2. Takeout delivery: Ele.me (饿了么) / Baidu Waimai (百度外卖)

We’ve got your communication needs settled, now it’s time for some food. Food delivery in China is an impressively dynamic and tech-driven industry which means that users have a variety of choices. Both Baidu Waimai and Ele.me also offer supermarket delivery (京东到家 is great for that, too)—you will never have to leave your home again!

English-friendly alternative: Jinshisong (锦食送) app, also known as JSS.

On Apple: Ele.me, Baidu Waimai

On Android: Ele.me, Baidu Waimai

3. Calling a car: DiDi (滴滴出行)

Your plan for staying home forever failed? Worry not, DiDi has your back. The ride-hailing app that swallowed Uber China offers regular taxis, a private car service called Premier, and the Express option for carpooling.

Available in English

On Apple

On Android

4. Renting a bike: ofo (小黄车) / Mobike (摩拜单车)

mobike ofo bike-rental china

So you tried to get a taxi and got stuck in one of those traffic jams of epic proportions for which Chinese cities are known. Enter bike rental apps. Mobike and ofo are the biggest players on the market but there are many other options such as Bluegogo and these dazzling golden bikes equipped with phone charging.

Ofo’s partnership with DiDi means that users can also search for bikes using DiDi’s app. Mobike has a similar deal with a ride-hailing company called Shouqi (首汽租车) but the cities covered by the partnership is still limited. The company also has a mini app integrated with WeChat’s wallet.

Available in English

On Apple: ofo, Mobike

On Android: ofo, Mobike

5. Paying for stuff: Alipay (支付宝)

To use all of most of these great apps, you will need to set up your Alipay wallet. The difference between Alipay and its arch-nemesis WeChat Pay is that the former one is a standalone app. Among other features, Alipay offers bill payments, hospital registration, and even international money transfers. Unfortunately, the last option is available only to Chinese nationals or foreigners with a Chinese green card.

Alipay also comes with integrated services like Taobao, Airbnb, and Uber and right now it is testing its own mini-apps.

Available in English

On Apple

On Android

Go to the next page for more indispensable apps!

The New China Cultural Revolution: How micro-influencers can deliver better ROI than big KOLs

Guest Editor — Tue, 17 Oct 2017 10:53:20 +0000

Editor’s note: This was contributed by Miranda Tan CEO and founder of Robin8 , China’s leading influencer marketplace powered by big data and AI. Robin8 has profiled over 30 million influencers across 12 social platforms in China. Robin8 helps brands find the best influencers for their campaign and provides end-to-end performance attribution.

As media results become more decentralized, every person becomes a source of traffic. Brands generally devote a significant portion of their online marketing budget to traditional KOLs (Key Opinion Leaders) – that is, the social media celebrity with hundreds of thousands or millions of followers. But research from social scientists and an analysis of the actual ROI on completed campaigns in China shows that brands might get a better ROI by including micro-influencers in their spending.

The idea that a smaller network might be better dates from long before social media. It started with Dunbar’s number. That’s the theory that says our brains can’t maintain more than about 150 stable relationships, with influence declining as the number of relationships grew. Social scientist Robin Dunbar wanted to test whether or not online social networks shattered this limit, so that individuals could maintain more relationships by using social networks.

Last year, Dunbar published the results of two studies showing that the size and range of online social networks is similar to that of offline face-to-face networks. Dunbar says, ‘This suggests that, as originally proposed by the social brain hypothesis, there is a cognitive constraint on the size of social networks that even the communication advantages of online media are unable to overcome. In practical terms, it may reflect the fact that real (as opposed to casual) relationships require at least occasional interaction to maintain them.”

Image credit: Wikicommons

Close Relationships Convert Better

Once you compare Dunbar’s hypothesis to your own personal experience, it’s easy to understand why the closer your relationship is with a social media contact, the more likely you are to be influenced by their opinions and recommendations. WeChat is one of the hottest platforms for micro-influencer marketing.

On platforms like Baidu, where paid listings fill the first page, most users just skip over them without even reading the headline. But on WeChat, where recommendations come from people we have a closer relationship with, we’re more likely to pay attention to the links, recommendations, and reviews. And on Taobao, where e-commerce influencers convert directly to sales, the impact can be even bigger.

It’s natural for traditional marketers to want to quickly reach as many people as possible. But real-time campaign tracking on WeChat, Weibo, Zhihu, Taobao, and other Chinese social media platforms shows how more limited, targeted action can deliver better results.

Who to Target

If you’re considering a social media influencer campaign, the first step is to match a brand with a KOL or micro-influencer. It’s important for a brand to have a natural connection to the topics that each influencer talks about naturally, as well as the products and information their friends and followers are searching for.

Here’s an overview of the kinds of influencers your brand can work with, along with the basics on how to chose among them.

Of course, there are other groups who can help you build your brand on Chinese social media, including (newspapers, magazines, journalists, etc.) best reached through traditional public relations, creative professionals (photographers, artists, designers, craftspeople, etc.) who might use your products in their projects, and (of course) your company’s employees and “super fans” – those who live, breathe, and gladly share positive news and ideas about your products.

Chinese Consumers Respond to Their Own “Tribe”

Going back to social scientist Robin Dunbar’s theory, it’s obvious why smart marketers are getting such good results with micro-influencers. Dunbar says that the inner circles of an individual’s relationships constitute their tribe and that humans are still tribal beings at hearts.

What he means is that the 150 contacts someone is closest two are the most likely to be influenced, and that influence declines rapidly beyond a certain point. The exception appears to be A-list KOLS — celebrities, whose fans will often buy a product their idol has endorsed even though they have only a tenuous connection to the celebrity.

But relying on celebrities to promote your brand in the Chinese market is no more cost-effective than harnessing the power of dozens, or even hundreds, of micro-influencers who can deliver as many sales as the celebrity at a lower cost-per-conversion.

Analysts are seeing a bit of a backlash as some celebrities have gone overboard with their product promotions. Many of the traditional KOLs are excellent resources for brands, but savvy marketers are increasingly seeing better results from campaigns that spread the budget over more micro-influencers rather than concentrating on just a few individuals.

Image credit: Robin8

To do this, marketers are turning the power of the individual by using tools, including big data and AI, that can profile and rank all social media users, match potential influencers with brands based on an analysis of the influencer’s content and audience, and provide real-time tracking once campaigns are underway.

Ofo releases National Holiday cycling report: Lhasa shows highest increase in usage

Eva Yoo — Mon, 09 Oct 2017 08:12:36 +0000

On October 8th, bike rental startup ofo released “2017 National Day Holiday Travel Data Report.” According to the report, the capital of the Tibet Autonomous Region, Lhasa showed the highest increase of ofo usage during National Day, Chinese media Sohu is reporting.

Data show that ofo enjoyed a significant increase in cycling trips on October 1st, the National Day. After showing a slight slowdown on October 4th, the Mid-Autumn Festival day, the number of trips rose again on October 5th. During the holiday, the time of using bicycle rental service was smoothly spread out, without showing morning or evening peaks. The first batch of bike travel showed a 1-hour delay (compared to before the holiday) and daytime travel concentration was greater than usual.

The average number of bicycle rental services used by active users was increased by 15.4%, reducing the urban traffic jam in Chinese cities.

During the holidays, bicycle rental users were mainly young and male. Male users accounted for 57%, while female users accounted for 43%. The proportion of young user groups aged 18 to 25 and 25 to 30 accounting for 55% of all users.

In addition, the average bike riding speed reduced from the normal 2.12 m/s to 2.0 m/s, showing a 5.5% overall speed reduction; bike riding distance increased from 1.56 km to 1.69 km, an 83% increase. The report concluded that the rides were probably more recreational and less urgent than during non-holiday periods.

Bicycle rental users were mainly concentrated in the shopping district, scenic spots, and transportation hub. When it comes to bike travel purposes, leisure and entertainment in shopping area accounted for 40.1%, scenic travel accounted for more than 34.5%.

The hottest shopping district in China during National holiday was Beijing Wangfujing (Image Credit: ofo)

The top 10 shopping districts in China during the National Day included Beijing Wangfujing, Shanghai People’s Square, Chengdu Chunxi Road, Beijing Xidan, and Shanghai Huaihai Road.

The top 10 cities in National Day were: Beijing, Shanghai, Chengdu, Tianjin, Shenzhen, Guangzhou, Xi’an, Wuhan, Hangzhou, and Nanjing. The Top 10 attractions were: Hangzhou West Lake, Beijing Tiananmen Square, Shanghai Bund, Beijing the Forbidden City, Chengdu wide alley (宽窄巷子), Beijing Summer Palace, Nanjing Sun Yat-sen, Xiamen Gulangyu, Xi’an Big Wild Goose Pagoda, Shanghai Oriental Pearl Tower.

The top city that showed the highest increase in ofo cycling travel were Lhasa (Image Credit: ofo)

The top 10 cities that showed the highest increase in ofo usage on National Day were Lhasa, Suzhou, Yantai, Yangzhou, Datong, Zhuhai, Guilin, Xinzhou, Leshan, and Shantou. Among them, Lhasa rose the highest, reaching usage number of nearly 3.5 times a day.

ofo has been actively promoting its trips by giving out red packet (hongbao) rides and free rides. Due to these efforts, the average utilization rate of shared bicycles reportedly increased by 11.6%, preventing cumulative travel carbon emissions by more than 78,000 tons. Among them, Beijing was the top city with the most bicycle rental service usage.

WeChat travel report shows Hong Kong top destination for mainland tourists

Eva Yoo — Mon, 09 Oct 2017 04:56:34 +0000

Chinese people enjoyed eight days long holiday, from October 1st to 8th, as its National Day (国庆节) and Mid-Autumn Festival (中秋节) fall on the same week this year. WeChat issued a National Day big data report on October 8th, announcing that Hong Kong became the top destination for outbound Chinese tourists on National Day, our sister media TechNode China is reporting.

Not surprisingly, the largest number of Chinese outbound tourists were coming from first tier cities Shanghai, Beijing, Shenzhen, and Guangzhou. Second and third tier cities followed, including Hangzhou, Nanjing, and Chengdu. The fastest growing outbound travel city was Chongzuo City in Guangxi province, showing the outbound travel growth rate as high as 338%.

Most of the mainland’s outbound tourists chose the closer travel destinations like Southeast Asia, East Asia (South Korea and Japan), Hong Kong, Macao and Taiwan regions.

Hong Kong was the top destination for outbound tourists, followed by Macau and Bangkok (Image Credit: WeChat)

Here are the highlights of the report:

Hong Kong was the top single destination for outbound tourists, followed by Macao, Bangkok, Phuket, Tokyo, Taiwan, Singapore, Bali, Seoul, and Osaka.
Southeast Asia received the most Chinese tourists followed by East Asia (South Korea and Japan), Hong Kong, Macao and Taiwan regions, North America, and Europe.
52% of outbound tourists’ expenditure was made in duty-free shops. It’s interesting to note that expenditures made in duty-free shops and drug stores exceeded 60% of the total expenditure.

52% of people spent money at duty free shops (Image Credit: WeChat)

The largest number of people departed the country on October 1st. More than 600,000 people departed the country, far higher than other smaller holidays.
Post 90s generation visited Hong Kong, US, and Japan the most, while post 80s generation visited Hong Kong, Thailand, and Japan the most. Post 70s generation visited Hong Kong, US, and Macao the most.
WeChat payment was used the most in Hong Kong, followed by Thailand, South Korea, Japan, Australia, and Taiwan.
6.3 billion Red packets (hongbao) were sent and received on Mid-Autumn festival.
Most WeChat calls were made between post-60s generation and post-90s generation. The longest average phone call was 750 seconds when post-60s generation called 90s generation, followed by 610 seconds when post-90s generation called post-60s generation.

O2O is awesome: Being a tech blogger in Shanghai

Eva Yoo — Tue, 03 Oct 2017 01:35:09 +0000

Editor’s note: This was produced in partnership with Start Alliance, a business network between the most vibrant startup hubs around the globe. Start Alliance supports startups to adapt business models to international requirements and accelerates corporate innovations. Partner cities are Berlin, New York, Paris, Tel Aviv, and Shanghai.

I have worked in four startup cities: Silicon Valley, Tel Aviv, Seoul, and Shanghai. If you ask me, which city I liked the most, I can tell you for sure, Shanghai is my favorite startup city. For me, Shanghai is a land of freedom, free from cash, free from the thing you own owning you, free to try out something new, and free to join any community.

When I first arrived in China in January 2015, I saw how I could pay for all my meals, snacks, and even my electricity and water bills using Alipay. It was a mind-blowing experience. I’m from South Korea, notorious for long online payment process. This made me largely depend on brick-and-mortar stores even just before coming to China. Since then, China is, what I call, the “IT heaven.” Now I feel most home in China since I have all the mobile payments and Mobike here.

Yes, in China, you cannot access Google nor Facebook. Many chatting apps like Whatsapp, KakaoTalk, and LINE are blocked in China, so you will have to use Chinese replacement of these apps. Thankfully, Chinese apps have matured enough to fill in all the empty spots, and some are doing better than foreign ones. The title of a Forbes article published in August 2016 was “It’s time for Facebook to copy WeChat.” Silicon Valley startup Whale even got the idea for their product from Chinese knowledge sharing startup Fenda.

If you want to find out Chinese innovation for yourself, then come to China. Don’t sign up for roaming on your phone in your country, and instead, buy a SIM card in China to get a Chinese phone number. Then take your phone and passport, go to the Chinese local bank to open your
Chinese bank account. With your new bank account, set up your Alipay or WeChat payment, which will make your China experience like Alice in Wonderland.

As an expat tech blogger, the cool thing is that you get to actually experience the startups that I write about. Here I will share with you some startups that make life here so fruitful and interesting: Living (Ziroom), transportation (Mobike, ofo), work (WeChat), hobby (Alipay), workout (Keep) and food (Dazhong Dianping).

Living: Ziroom

My room that I rented using Ziroom (Image Credit: TechNode)

Ziroom is a startup under the Chinese big real estate group Lianjia. You can browse their website or app to search the location you want to live in, and the number of people you want to live with. The good thing is that they have a custom design, and all the interior of the house is done neatly and all clean, to meet the young generation’s taste. When you enter the house to check your room, you will find that it’s not so different from the picture you saw on the website.

When you choose to rent out a room and live with other housemates, you have your own room, and live with other people, and share the common area with your housemates. A cleaning lady comes every 2 weeks to your house to clean the common area, so you don’t have to quarrel with your housemates about who will do the cleaning. Back in Tel Aviv, I had to move house four times in 7 months and had to depend on a secret Tel Aviv Facebook group to post my house, which made me suffer a lot. Ziroom’s staff, who always dress professionally, manage your complaints through WeChat and tries to solve the problems of apartment living, from broken appliances to housemate issues. When you leave the house, they will take care of your empty room, so you don’t have to a replacement to sublet or take over your lease.

Transportation: Mobike and ofo

Mobike really changed how I live. Now I barely ride a bus or metro, instead, I ride Mobike. It helped me realize how beautiful the French concession is, and the beauty of small alleys and trees filling up Shanghai’s antique atmosphere. It also changed my fashion, from dresses to comfortable pants. Every morning, I go ‘hunting’ for a Mobike around my spot and find a Mobike that is clean and has the right height seat for myself. The best thing about Mobike is that you can drop the bike anywhere, and you can pick it up anywhere, wherever you are. As a humble business development manager for a startup in Silicon Valley back in 2014, I still remember having to walk on a sizzling highway on a scorching hot day in San Jose, to get to one place to another.

Mobike is actually changing Chinese cities. According to Mobike’s white paper released this May, survey respondents reported a 55% decline in usage of private car services since the introduction of bike-sharing. Mobike’s competitor Ofo is yellow bikes and come out with bigger sizes which might be much more optimal for German riders.

Work: WeChat

There are all sorts of WeChat groups that make your life in China fruitful, both business and hobby. (Image Credit: TechNode)

Working is largely done on WeChat. In fact, 83% respondents now use WeChat for work, according to 2017 WeChat user report. Firstly, you don’t need a business card in China. When you meet someone, you just show them your QR code, or you scan their QR code. You get to see his/her WeChat Moments, where you get a clue of what this person does and like. Sometimes they link their LinkedIn account to their WeChat profile so you can add them directly. Secondly, my company’s teamwork is done through WeChat. We have three WeChat groups: one with all the former-TechNode members including the people who used to work for TechNode, one with all the TechNode Chinese and English reporters, and one with only TechNode English reporters. Our English reporters do weekly meetings through WeChat call, connecting all the writers based in different cities like Shanghai, Beijing, Shenzhen and other places if someone is on a business trip. We also share interesting, noteworthy articles in the group, and sort out our tasks.

As a reporter, I do my interviews over WeChat and find sources through the group chats I’m in. It’s also very useful when I go on a business trip to an unfamiliar city. I ask in a group, if somebody is based in Shenzhen for example, and that person invites me to a WeChat group full of 500 people in Shenzhen, where I can ask the group members for the connection I’m looking for.

According to the 2017 WeChat report, the top 2 reasons to join a group chat of more than 100 people were for corporate internal communications and for professional networking. So if you’re thinking of starting your business in China, I advise you to ask someone to invite you to join a WeChat group related to your interest. There are so many WeChat groups where people share their ideas and meet up offline. For example, I run a WeChat group called Masumo for Korean business people in Shanghai (Masumo is a shortened word for “gathering every last Wednesday of the month” in Korean). I share what I found as an interesting tech trend during the month, and two more people volunteer to give a speech.

WeChat works like a one-stop platform for us to share information both online and offline. There are a lot of business-related WeChat groups, but also hobby groups, such as podcast discussions and book discussions. In Silicon Valley or Israel, I used Meetup.com to find these offline communities and used Facebook to find these offline communities in Seoul. WeChat, primarily an online chatting room, gives people a much more open environment to talk about your interests.

You can make amazing things happen through these WeChat groups. The best experience I had in Shanghai was caroling around the city, two weeks before the Christmas. The organizer, Jenny Tang, simply gathered up volunteers in a WeChat group. For most of us, it was the first time we had ever or practiced together. With Santa hats, we went out into the busy streets and subway and suddenly burst into singing. Passersby paused, smiled at us, chanted, cheered, and applauded. They also scanned our WeChat group QR code and sent us photos and videos.

Hobby: Alipay

I paid for the 10 oil painting classes directly to my teacher Una using Alipay. (Image Credit: TechNode)

My hobby in Shanghai is traveling. I purchase train and flight tickets on Alipay, and book accommodation on Airbnb, linked to Alipay. Previously, I had to wander through Skyscanner to compare the flight fares and go through many steps to make the payment using my bank cards or to make a money transfer at an ATM around my house. Using Alipay, I can book flights in less than three minutes on my phone.

Alipay also makes it easy to transfer money to my friends or merchants. Many cases, it’s a friends gathering and one of the friends pays for the meal, and we transfer money to that person using Alipay. I used to go to oil painting classes, and I paid the 10 class fee directly to my teacher Una Deng. Running a small business and getting mobile payment is this easy in China. Even a small fruit shop on the outskirts of Shanghai, or on a mountaintop, can receive payments via Alipay.

Workout: Keep

Now the app Keep replaces personal trainers (Image Credit: TechNode)

Keep helps you shed some extra weight. Last year, I found out that I spent more than 26,900 RMB ($4,000) in the gym membership and five months training session with a personal trainer. It did help me lose weight and gain muscle, but I couldn’t believe I spent so much money.

This year, instead of registering for a personal trainer, I rely solely on Keep. I first set out a 4-week-long plan that I wanted to gain muscle and shed extra weight. Then I chose the level I wanted. Then everyday, Keep sends me 2-3 exercise videos that count the number of your movements and motivates you to do more. I bought a yoga mat, and dumbbell and my room became my gym. After each session they let you take a photo with a day number and post it on the timeline so that you feel a sense of achievement and be proud of yourself.

When I go to the gym, I now see more people exercising by themselves with a yoga mat using Keep. Yes, this app is replacing personal trainers. I measured Inbody on this July, and checked my muscles and body fat, and could see that my body fat reduced and muscles increased. It’s great that you don’t have to spend money, and an application helps to you achieve this result. Keep is also the company that Apple CEO Tim Cook visited when he visited China.

Food: Dazhong Dianping

This hair salon in Shanghai run by post-90 generation went viral on Dazhong Dianping (Image Credit: TechNode)

Dazhong Dianping allows me to find the best restaurants around my home and anywhere I go for the first time. It’s like Yelp in China. This is also how a tiny brick-and-mortar store can attract customers. Once I wanted to perm my hair and found a five-starred hair salon around my house. It was run by post-90 generation (those born after the 1990s), and all the hairdressers were in their twenties. They told me that they used to work at a bigger hair salon as an apprentice, and decided to start a business on their own. They were really skilled in styling, and their best part was that after the customer’s hair is neatly done, they take professional pictures of customers using Chinese popular photo filtering app like Meitu. They also had a special light and wallpaper inside the hair salon. This is very smart because Asian women like to take pictures of their new hairstyle and post on their social network. This way, they went viral on Dazhong Dianping and attracted a lot of customers without spending any money on marketing. Customer like me became a regular. Even though I don’t live near there any longer, I still travel to come to this hair salon. Dazhong Dianping really works on top of word of mouth, as you can see.

I recommended all these apps to my friends who visited China for a short period. They were lazy to try out these Chinese apps, but one particular app captivated them. Whenever they had free time, they would open the app and giggle. It’s, Tantan, which is like a Chinese version of Tinder, letting you find a romantic partner around you. If you’re looking for a Chinese girlfriend or boyfriend, or just to practice your Chinese, it’s a good option.

So this is how cool Shanghai is. You can see how these apps are a huge part of my life. Using these apps, Chinese people are setting up their business, earning money, and building up their reputation. Shanghai has sharing culture. We share houses, offices, bikes, information, and connections. Many things here are so affordable, shareable, and help you live a healthy and smart life.

China’s tech giants are increasingly blurring the boundaries between sectors: McKinsey report

Masha Borak — Mon, 02 Oct 2017 06:35:27 +0000

“Ecosystem” is a word that gets thrown a lot in the tech industry but there is a definition of this buzzword which is actually worth your attention. Digital ecosystems, or business ecosystems, are a model in which traditional industry boundaries are radically reordered, where sectors that once seemed disconnected fit together seamlessly and where users, their data, and businesses are part of a large co-dependent machine, according to a McKinsey analysis titled “Competing in a world of sectors without borders.” The report shows how China’s tech giants are developing this model and setting an example for global players.

The term business ecosystem was coined by James F. Moore who studied the co-evolution of social and economic systems. It is now widely adopted in tech companies but it is quietly seeping into other areas.

The model is a good reference for China’s digital landscape. Consider Alibaba—it can be defined as a retailer and a financial company. It has cloud technology, logistics, entertainment, healthcare, and even maps. It’s O2O, B2B, B2C, C2C and probably every other acronym you could think of.

Alibaba, of course, is not the only example, other companies in China such as Tencent and Baidu, and even insurance company PingAn are building their own ecosystems. PingAn has moved on from insurance to financial services to AI development, and it has also created the PingAn Good Doctor app that connects patients with doctors.

China’s tech giants owe their turbo-charged rise to unique regulatory, demographic, and developmental conditions. They were founded at a time when the efficiency of the traditional industries was low: e-commerce gained massive user number because classical retail was underdeveloped; delivery companies expanded because of the unreliability of China Post; healthcare apps gained momentum because of the inefficiencies of the healthcare system; mobile payments took the population by storm because plastic never had time to gain traction.

By not being defined or constrained by a single industry, Chinese tech companies have accelerated the blurring of the borders between areas such as these. Much like WeChat which has become “the everything app” by joining social media, content, shopping, and more, these companies are trying to become “the everything company,” simultaneously competing in multiple sectors.

Screenshot from McKinsey Quarterly 2017.

Emerging markets like China are a good starting point for developing cross-industry ecosystems because businesses and expectations are not as defined as they are in more developed countries. But similar paths are being taken around the world. Japan’s Rakuten Ichiba has online stores, runs Viber, offers e-money, credit cards, and even travel. Amazon has launched Amazon Go store, acquired Whole Foods, and is providing vehicle searches in Europe. Telecommunication companies Telstra and Telus are combining tech and healthcare. Ford is redefining itself as a mobility company, not just a car-maker.

With the help of AI and big data, these companies are creating ecosystems that enable users to access all kinds of products and services through a single gateway.

“Ecosystem orchestrators use data to connect the dots—by, for example, linking all possible producers with all possible customers, and, increasingly, by predicting the needs of customers before they are articulated,” the report explains. “The more a company knows about its customers, the better able it is to offer a truly integrated, end-to-end digital experience.”

Companies like these may seem like outliers today, but they are already changing the face of the economy. McKinsey recently asked 300 CEOs worldwide in 37 sectors about advanced data analytics. It turned out that one-third of them have considered cross-sector dynamics while many of them stated that they worry that companies from other industries have clearer insight into their customers.

The new model is threatening to sweep the floor under certain (not all) traditional industries—soon they will have to face competition from companies and industries that they previously never considered rivals. In the future, companies will define their business models not by how they play against traditional industry peers but by how they can stand against ecosystems.

Mckinsey Quarterly 2017

The report suggests that within about a decade 12 large ecosystems will emerge in retail and institutional spaces. It advises companies to follow data insights, build emotional ties with customers because they will bring more customers, and diversify company partnerships. It also warns that for many companies the attempt at creating an ecosystem has been a costly failure. But the report does not mention how the economy will look like when these massive, multi-industry ecosystems rise. What will the era of digital ecosystems and tech-based conglomerates bring us as consumers?

For now, it is hard to predict outcomes. It is quite certain that ecosystems will offer more convenience and better solutions, but it is also imaginable that they will bring us more walled gardens, more antitrust lawsuits such as the one Google faced in the EU, and even bigger data privacy concerns.

As outbound tourism grows, China’s giants are following along to fuel their global expansion

Emma Lee — Sun, 01 Oct 2017 02:56:34 +0000

Not long ago, taking vacations away from home was only eligible for a small group of wealthy people in China. But now, thanks to the country’s quick economic growth as well as the stable rise of average incomes, this is no longer the case. China’s tourism industry has witnessed unprecedented development in recent years. The country’s tourism market is worth RMB 4.69 trillion ($705 billion) in 2016, a 13.6% rise from RMB 4.13 billion in 2015 (in Chinese).

While inbound travel still accounts for a major part of the market, the outbound tourism industry has experienced exponential growth. And the momentum continues. China is now the number one source market in the world since 2012, following a trend of double-digit growth in tourism expenditure every year since 2004. Mastercard’s Future of Outbound Travel report indicated an average growth of 8.5% each year between 2016 and 2021.

Market share of inbound (59%) and outbound (41%) tourism during October 1st holiday. (Image credit: Ctrip)

The quick boom of China’s tourism industry in market size is surely impressive. But when observing from another angle, the impact of this trend on China’s tech world is hardly less significant, not only on online tourism platforms but also on China’s globalizing tech startups in general.

Domestic internet giants following the footsteps of Chinese tourists

For Chinese internet giants who are facing a saturating market and tightening competition from local peers, globalization is becoming their top priority to maintain sustainable growth in the long run. China’s tech-savvy and globe-trotting consumers are serving as their best entry point to overseas markets.

Alipay and WeChat Pay—both of which are targeting primarily at Chinese outbound tourists when going global—are great examples of this. With a clear customer profile, the partners they are looking at skew toward those more commonly visited by tourists, such as airports duty-free shops, scenic spots, restaurants, and convenience stores.

Alipay is now being accepted in more than 120k offline stores in 26 countries across Southeast Asia, Europe, North America, and East Asia, while WeChat Pay now available in 15 countries and regions for payments in 12 currencies. Reasonably, the markets they are tapping now and the resources they are putting in each market are highly in line with the popular outbound travel destinations.

Likewise, Chinese outbound tourists are also the ready users for ofo and Mobike—two top Chinese bike rental companies entangled in an escalating globalization war—simply because it’s easier to gain access to a group who is more familiar with bike rental service. The same logic also works for other Chinese companies looking for the foreign market, such as O2O and power bank rental firms.

Changes and recent trends of China’s outbound tourism

Given that China’s tourists have become a crucial link that drives the internalization plan of Chinese tech internet giants, habits and preference changes are of increasing value for China’s tech world. China Tourism Academy and Chinese online travel agent Ctrip have jointly released a report on the tourism for the October 1 holiday, shedding light on the trends and changes in this sector.

The first half of 2017 registered 62.03 million outbound visits, up 5% from last year, the report noted. Following a decade of rapid expansion, China’s outbound tourism market is entering a new normal of steady, slow-to-moderate growth. The middle class that makes up the mainstay of outbound tourism is shifting from shopping spree to in-depth travel in its overseas consumption pattern.

Market share of escorted tours (44%), self-guided tours (11%) and custom tours (45%) in outbound tourism market. (Image credit: Ctrip)

With the arrival of the era of rational consumption, shopping budget that used to claim half of the spending made by outbound travelers will further go down, curbing the increase in China outbound travel spending. This type of travel has entered a stage of “consumption upgrading.” When it comes to spending on accommodation, catering, shopping, and recreation, outbound travelers prefer self-guided tours to get the most out of each destination.

Even when traveling abroad, customers bring their own consumption habits. While O2O services, mobile payment, smart transportation solutions have become so ubiquitous in China, they have yet to become mainstream in some overseas markets. This opens plenty of opportunities for Chinese companies that want to fill in the gap.

China’s super app WeChat is also benefiting from the trend in its somewhat bumpy globalization path. Most Chinese outbound travelers would choose escorted tours due to the language barrier and unfamiliarity with the destination. Ctrip’s report shows during this year’s national holiday half of outbound travelers will choose escorted tours and another half self-guided tours. Thanks to the tour guide services offered by Ctrip and other large travel agencies via WeChat app, outbound travelers are able to consult about destinations, translation, recreation and other information via WeChat groups.

They can also find fellow travelers in the chat groups, or book one-day tour and vehicle use. If Chinese tourists encounter any difficulty when traveling abroad, they may ask for help through Ctrip’s global SOS system, thus substantially improving their sense of security during self-guided tours.

Shifts in popular tourism destinations

The growth in outbound travel from China benefited many destinations in Asia and the Pacific, most notably Thailand, Japan, Singapore, South Korea, Malaysia, and the US.

The report points out that major destinations for outbound tourism have witnessed sharp changes in their popularity this year. Compared with last year’s most popular destinations—Thailand, South Korea and Japan, this year Thailand, Japan, and Singapore will attract the most Chinese tourists, with South Korea to host much fewer Chinese travelers and disappear from the top 20 list due to the political disputes between the two countries. Australia surpassed the Maldives to take 10th place thanks to its loosened visa policies. Philippines, Malaysia, Vietnam, and other Southeast Asian countries are receiving more travelers from China.

Europe suffered the sharpest decline in its attraction to Chinese tourists in the first half of 2016, but regained its lead in inbound tourism growth later in the year. According to the report, in the first half of 2017 trips to Europe made by Chinese people increased 65% year on year. The total number of trips to the continent for the whole year is estimated to reach 5.5 million, closely behind Southeast Asia and East Asia.

Popular destinations for Chinese outbound tourists during October 1st holiday: Southeast Asia & South Asia (46%), Hong Kong & Macau & Taiwan (13%), Middle East & Africa (6%), Japan & South Korea (12%), Australia (5%), Europe (11%), America (7%) (Image credit: Ctrip)

October 1st is the longest holiday in China, during which the country will see a spike in tourists. The data from this period reflects the most typical traveling model of Chinese people. The traveling demand for this year is further boosted by the fact that National Holiday will coincide with the Mid-Autumn Festival, which means one can take a 9-day vacation with 1 days’ leave—a big driver for long-distance trips.

The report also pointed out that stronger RMB against USD and other favorable factors have encouraged much more Chinese to book trips to long-distance destinations, such as the US, France & Italy & Switzerland, Spain, Austria, Australia, Middle East & Africa (Turkey, Egypt, Morocco, and Kenya).

Compared with outbound travel, domestic travel has been greater in size and growth rate for the first several months of this year. China National Tourism Administration’s data shows domestic travel grows at 13.5% a year, twice as fast as the outbound variety and 40 times as bigger in size too. Chinese people take more than 3 domestic trips a year on average. In the first half of this year, the Chinese made 2.5 billion domestic trips, continuing to be the biggest number in the world.

According to the report, mainland China travelers are increasingly drawn to destinations with more accessibility, higher security and stability, and greater hospitality.

Why Chinese are starting to pay for software

Eva Yoo — Tue, 26 Sep 2017 08:21:20 +0000

Chinese have become notorious for pirating software: in 2015, 70 percent of software installed on computers in China was not properly licensed, followed by Russia and India, according to a study last year by BSA, a trade association of software vendors. Now, however, the situation is changing.

Chinese people have developed a paying habit for content published by KOLs. Top content writer on Dedao earns $3 million in annual revenue with its close to 100,000 subscribers. And other Chinese platforms like Zhihu and Weibo have created ways for its KOLs to monetize their fan base. WeChat has introduced a tipping function to its WeChat service account, with 22% of the users tipping more than RMB 10 ($1.45) every month (in Chinese).

Tipping culture even has a history in China. In ancient China, audiences would give gifts or cash to performers, which partly explains why tipping artists and content creators is popular in China.

To find out if this is also true for software, we interviewed three software companies in China: Mockingbot, Strikingly, and Teambition.

“Five years ago, domestic users really didn’t have the habit to pay for online services. The online payment environment was also very immature,” CEO of Mockingbot, Zhang Yuanyi told TechNode. Mockingbot is a Beijing-based prototyping tool company.

When the first version of the Mockingbot came out in 2012, it was targeting overseas users, who are relatively used to paying in a freemium model. However, the China market environment has gone through a big change since then: the payment infrastructure.

“I think you can say Chinese users are paying more. But it’s not because they are developing a paying habit for software they didn’t pay for before. It’s that the consumer base and the infrastructure changed enough that allow them to do so now,” David Chen, CEO of Strikingly told TechNode.

China’s mobile payment system is developed and widespread now. Thanks to WeChat and Alipay’s online and offline promotion in 2014, many Chinese users started to try out mobile payments. In three years, China is now going cashless, with 84% respondents in a report saying they feel comfortable without carrying cash around because they can use mobile payment.

For Chinese consumers, they gradually started to value the time and efficiency in exchange for money.

“Chinese people haven’t been paying for efficiency improvement tools as much in the past, given that the labor cost is just way cheaper here, so the need for boosting efficiency is not that strong, and hence if you all of a sudden ask them to pay for something they haven’t paid for in the past, it will be hard,” Chen says. “But the newer generation has been taught and trained to care about efficiency, and they are becoming more of the purchaser in the economy now, and as a result, they can put a price on efficiency. That’s why they are paying for software that can help now.”

Earlier trials to make Chinese people pay online was done by Chinese video sites. QQ Video, Youku, and Tudou started to charge its viewers as they started to purchase licenses to show the content in China.

“A number of domestic video sites started charging users in 2013. Afterwards, they gradually realized that online services are actually valuable, and some online services are worth paying for,” Zhang says. “The pricing of our product is just one-fifth or one-tenth of our competitors, but still we achieved this revenue. As long as your product is good enough to really help users to solve their pain point, the user is willing to pay for your product.”

How do you make enterprises pay for your product?

Teambition is another Shanghai-based company providing team collaboration tool for different types of industries. Individual users can try out their website and app for free, then they can use the enterprise version if they want additional functions. This freemium model has become like a norm for many software companies in China.

According to Teambition CEO Qi Junyuan’s data, there are more than 3 million users on Teambition in many diverse sectors including TMT, advertising, education, professional services and other 38 industries. Among them, there are more than 4,000 enterprise version users including Huawei, TCL, and OPPO.

So how do you guide enterprises to pay for office software? Qi shared why Chinese enterprises pay for their software to our sister media TechNode China.

“The advantage of collaborative teamwork tool is that everyone in the department understands how it works,” Qi Junyuan said. “The marketing department is not interested how I can find the product department, or the product department is not interested how I can find the HR department. People can find the contacts of other departments within Teambition, and this forms economies of scale.”

“The second point is that SaaS software’s price is still much lower than the traditional enterprise software.” Qi Junyuan explained. For an enterprise to buy software, one needs review, ask for approval, and make layers of application for money. The whole transaction process is particularly long, but the process to purchase SaaS software is particularly shorter. “Our annual subscription fee for the most basic enterprise version is tens of thousands of RMB, I believe that an enterprise has this budget.”

“Third, the enterprise will always pay for business services that help them achieve high priority. For them, the high priority is always achieving their goal,” Qi Junyuan said. So Teambition will tell the customer, “We are here, not to help you solve a particular problem, but to help you achieve your goal.”

We asked: why do you pay for software?

TechNode asked some Chinese business people why they pay for software. One reason for buying licensed software is to avoid malware, as frequent software piracy of Chinese people leads to ransomware attack. According to New York Times, computers at more than 29,000 organizations had been infected reciting Chinese security company Qihoo 360’s report.

“If people can access pirated software, they will still choose it, but when people know the pirated software will damage their device, or the content cannot be well protected, they will choose the original one and pay for it; more and more people are aware that software is not free,” a Chinese businessman who refused to reveal his name told TechNode.

Another reason is the boom of Chinese mobile games, attracting gamers to make in-app purchases. In fact, China ranks #1 in total game revenue, recording $27.5 billion in 2017, according to Newzoo’s Global Games Market Report. The revenue bonanza here mostly comes from Tencent, with its revenue of RMB 12.9 billion generated from online games in the first quarter of 2017.

“I cannot represent everyone, but at least for me, I started buying authentic games from Steam, PS4 store and other copyrighted platforms instead of downloading pirated software anymore. The awareness of using authentic software only gained momentum in China in the past couple of years. Even five years ago, pirated software was still everywhere,” an avid gamer told TechNode.

“I paid for some games, especially football and baseball related, also Japanese and French dictionaries. We didn’t pay for music content before but we are paying for them now. We also pay for good apps. The key should be the content, not the app itself,” Carman Deng, senior vice president of HSBC told TechNode.

UrWork inks joint venture partnership with co-working peer Fountown

Emma Lee — Tue, 26 Sep 2017 04:00:54 +0000

Consolidation in China’s shared space industry continues as Chinese co-working unicorn UrWork today announced its strategic joint venture partnership with its Shanghai rival Fountown to extend their footprint into Asia and to reinforce community support.

The partnership between the two companies takes the form of an equity-swap, which will see both parties co-operating with each other on locations, membership system, vertical integration of resources across the value chain, as well as the export of technology, management, and expertise, according to a company statement. The announcement did not specify details of the deal.

Fountown, founded on 20 April 2015, is one of the top players in China’s shared space vertical with operations in 25 locations, supplying 20,000 workstations in Shanghai, Beijing, and Chengdu. The current partnership would effectively combine the strength between Fountown and UrWork, which now operates 100 locations in 30 cities in China with total aggregated space of 300,000 sq.m.

China’s co-working industry is developing at an exponential rate and the partnership is largely motivated by better service, a network of scale and enhanced competitiveness. “It’s a win-win partnership that will coerce the industry to strive for high operational standards, prevent malicious competition and tap the shared strengths of Fountown and UrWork to improve the overall operational effectiveness and standard,” said Mao Daqing, founder and CEO of UrWork.

This is not the first time for UrWork to strike a cooperation deal with a competitor. The firm merged with rival New Space in May. New Space itself merged with AA Accelerator back in 2015. The same principle guides URwork’s globalization strategy: In August, it formed a JV partnership with Serendipity Labs Coworking as the first step of the US roll-out and made a strategic investment in Indonesia’s leading co-working space provider Rework to strengthen their SEA network.

Chinese are getting tech savvy at a younger age

Eva Yoo — Mon, 25 Sep 2017 05:58:46 +0000

Chinese children go online at increasingly younger ages, Guangzhou Daily is reporting.

According to a survey released at the Guangdong Internet Security for Children Forum on September 23, 2017, some children use social media as early as 3 years old, go online shopping at 7, and surpass their parents level of internet skills by the age of 14. The survey shows over 23% of preschool children (aged 3 to 6) go online for more than half an hour per day.

Chinese children consume and publish information at the very young age. Among the 7-year-old children surveyed, over 60% of them have downloaded games, videos or music on their own; 8.5% of them have shopped online; around 15% of them have posted pictures, videos or words on the internet; and 4.7% of them even claim to have fans.

Social media influences Chinese children at younger ages, too. Some children start to use QQ or WeChat, at the age of 3. Around 10% of 7-year-old children use QQ or WeChat, while over 70% of children aged 12 use social media.

The Chinese younger generation loves QQ, as a new report published by QuestMobile shows that QQ remains the top app for post-00’s generation (in Chinese). According to the report, the post-00 generation love spending time on instant messaging (89%), followed by online video (88.4%), online music (75.5%), e-commerce (71.8%), Weibo (66.4%), K12 (47.9%), and map navigation (46.3%). K12 here means that Chinese children do their homework with the help of internet platforms like Zuoyebang.

It’s interesting to see Tencent is largely dominating the apps that post-00 generations use. The top 10 apps chosen by post 00 generation were QQ, iQiyi, QQ Music, Taobao, Weibo, Zuoyebang, Baidu Map, Honour of Kings, Tencent News, and Meitu. Four apps are Tencent owned (QQ, QQ Music, Honour of Kings, Tencent News), three apps are Baidu backed (iQiyi, Zuoyebang, Baidu map), and two apps are Alibaba backed (Taobao, Weibo).

Chinese post-00 generation’s top 10 apps (Image Credit: QuestMobile)

“At the age of 14, children surpass their parents in key digital skills, which shows those ‘digital natives’ (children born after 2000) have advantages in employing internet tools,” said Zhang Haibo, from the authority that conducted the survey. “This poses a great challenge to traditional methods of education as well as cybersecurity.”

So why do Chinese children go online from so young age? It turns out that most children are getting attached to mobile devices in replacement of their busy parents. The children in the survey said they wanted to be accompanied by their parents rather than to play online games. “I’m really in sports, but no one plays with me,” said one boy surveyed,”so I can only play with my cellphone at home.” Given, however, Chinese media’s moralistic bias, we at TechNode take this explanation with a grain of salt.

China Business Cast 70: The fast and the slow—China vs the West

Guest Editor — Thu, 21 Sep 2017 03:06:25 +0000

Editor’s note: This originally appeared on the China Business Cast. China Business Cast is a podcast featuring experienced entrepreneurs and business people making things happen in China. If you want to learn from on the ground accounts of how business actually gets done in China, this is the program for you.

It’s “Rosh Hashanah”, the Jewish New Year celebration. Happy New Year to all our listeners! Things in China are changing so fast and the way things that we expect in the West to work are already way beyond that point in China. This is a special format we haven’t done in a long time. We would love to get your feedback.

Listen to the episode here or subscribe.

EPISODE CONTENT:

Bike Sharing: In China, a new company does bike sharing every month. In the West, this does not exist, or if it does, there’s only very little in selected cities.
Messaging: WhatsApp vs. WeChat
Delivery: The standard now in China is same-day delivery. In the West, Amazon Prime is presented as the most advanced and this is a one to two days delivery.
Sending Packages: No more going to the post office. In China, someone comes to your house, picks up the package, and ships it. You give the postman the address and pay him.
Payments: In China, there is no need to carry a wallet anymore as payments anywhere can do through WeChat or Alipay using your phone. In the West, payment options are still cash or credit card.
TechCrunch Perspective: In TechCrunch, other foreign people express why they like China so much as it’s all fast-paced.

Episode Mentions:

TechNode does not necessarily endorse the commentary made in this program.

Four ways Chinese product designers are different from US

Eva Yoo — Wed, 20 Sep 2017 05:50:15 +0000

For a foreigner first entering Chinese websites, or a Chinese app, the first experience can be pretty overwhelming. Taobao, 58.com and Dazhong Dianping provide so many buttons of categories and promotions on one page, as Chinese people prefer this user interface. It’s not only the design of the Chinese app or website, but also workflow and working style of Chinese designers and tools, platforms that they use creates the difference. For foreign startups looking to find Chinese designers, they should first understand these differences before they scan job applicant’s skill sets.

According to the 2015 London Consulting Report, there are 17 million designers in China. Along with the rise of China’s app, website, and digital products, product designers have been increasing steadily in the market, and now accounts for about 30% of the entire designer workforce. The report says product designer is the most promising sector in design.

To assist these increasing designers to develop apps, prototyping tools (原型工具) help startups to design but also manage different versions. We interviewed the CEO of Chinese prototyping tool Mockingbot, Zhang Yuanyi to discuss the difference between Chinese designers and overseas designers.

Beijing-based Mockingbot has observed their user cases since their first product release for international users in 2012, followed by their domestic product launch in 2014. Among Mockingbot’s total users of 600,000, overseas users currently account for about 10%. Interestingly, Mockingbot’s overseas customers are mainly concentrated in BRICS countries: Brazil, Russia, India, China, and South Africa. Indian users currently account for more than 50% of our overseas users, Zhang says. According to him, Mockingbot’s users are 50% product manager, 20% designers, 10% entrepreneurs, 10% small design and developer outsourcing team, and 10% students.

Mockingbot, having both Chinese users and outside of China users, gave a view of how Chinese product designers are different from US product designers.

Mockingbot team (Image Credit: Mockingbot)

1. China’s app development workflow is product manager-centric

In a previous interview with TechNode, Mockingbot pointed out that the workflow is product manager-centric in China, while the workflow is designer-centric in Europe and the United States.

Zhang believes this difference is actually decided by the product. As an example, he compared Paypal and Alipay. Paypal’s function so simple and straightforward, but Alipay is rather complex.

“Foreign product logic is relatively clearcut and simple, so you can ask UI, UX designer and functional designer to take over the task. But in China, because of the complexity of the product, a person can not take all the work. It needs to be broken down into tasks, which required a position like a product manager who is responsible for product interaction and business logic behind,” Zhang said.

Hao Jie, Senior Designer at Mockingbot, told TechNode what China’s product manager is responsible for.

“Product manager needs to follow up with their boss, designer, developer and participate and control all these stages: product architecture, planning, demand, design, project and management and much more. This leads to the uniqueness of this career,” Hao Jie said. “But in recent years, more and more large companies adopt project manager-centric workflow.”

2. Chinese people prefer using Sketch over Photoshop

While Photoshop still dominates the market with 57% market share, Sketch is catching up. 2015 data on Avocode shows that Chinese users prefer using Sketch to Photoshop. Now more and more people use vector design tool Sketch, which offers a bunch of plugins as well as its own API. Using Sketch, the designer doesn’t have to think about screen densities to make the image bigger or smaller.

“People around me, including myself are already loyal users of Sketch,” Hao Jie said.

According to Zhang, about 25% of Mockingbot users use Sketch. Sketch plugin is one of the popular plugins provided through Mockingbot, and Sketch plugin usage is about 5% among all Mockingbot users.

3. Chinese designers aren’t remote workers yet

“Working remotely” trend has been popular in foreign countries for many years, the concept took off with the book Remote: Office not required published in 2013. However, Zhang Yuanyi sees that because of the differences between domestic and foreign environment, remote work is not very suitable for China market to achieve its biggest output.

“City development the US is more balanced, so the talents are also relatively scattered, but in China, most of the talent, especially internet talent are concentrated in Beijing, Shanghai, Guangzhou and Shenzhen. Remote work can lose the advantage of efficiency,” he said.

For example, let’s say you’re considering about hiring a person with capacity of 100 in US. But he and the CEO are based in the different city. Assuming that remote working efficiency is 10% lower than working in the same office, his output will be 90. This is still more cost-effective than hiring a person with a capacity of 80 and working in the same office. But in China, remote workers in lower-tier cities have a capacity of 80, and coupled with the loss of communication efficiency, it really is better to look for a capacity 90 who can work in the same city.

4. WeChat service account and WeChat mini program are on the rise

While developing an app is still norm outside of China, WeChat service account and WeChat mini program have supplemented or replaced mobile apps in China. According to Q2 2017, WeChat mini program monitoring data released by Aladdin, there are now 10,000 WeChat mini program developers and over ten million users using WeChat mini programs (in Chinese). Aladdin founder Shi Wenlu mentioned that there are now over 25 million WeChat service account in the market.

Zhang Yuanyi believes that WeChat’s service account and mini programs are more of an opportunity for them, helping them to broaden the audience and usage of their products.

“Not long after WeChat introduced mini program, we added mini program-related templates to Mockingbot, and this template and our previous WeChat public account template has been the most used among all the Mockingbot templates,” Zhang said.

Why more trains may lead to more unicorns in China

Guest Editor — Tue, 19 Sep 2017 09:01:59 +0000

Editor’s note: This was contributed by Hans Tung in collaboration with Zara Zhang. Hans Tung is a Managing Partner at GGV Capital. A five-time Forbes Midas Lister, he has been a US/China investor for more than a decade. Zara Zhang is an analyst at GGV Capital. She has written for The Information, The Harvard Crimson, Harvard Magazine, among other publications.

When I saw the Tokyo subway map during my first trip to Japan in 2008, I was filled with optimism for China’s tech sector. Why?

History has taught us that explosive growth in transportation systems is often followed by periods of economic boom. During the American Civil War, the number of miles of railroad track in the US more than doubled, which ultimately helped to fuel the dramatic expansion of the steel and iron industries. The resultant post-war economic boom helped to transform the US from an agricultural to an industrial society.

Similarly, in Japan, the Meiji era saw the construction of the country’s first railways, which further expanded after World War II, culminating in the birth of the Shinkansen in the 1960s. Thanks to the improved flow of goods and people across the country, a “national market” that connected various regions emerged, propelling Japan into Asia’s first modernized state.

In China today, we are witnessing a transportation revolution. Since 1999, railway transportation has enjoyed powerful growth thanks to massive infrastructure investments by the government. China now has the world’s longest mileage of high-speed rail – 20,000 km (12,500 miles) and counting. In comparison, Japan has around 1,700 miles, and the US has 500 miles. If New York and Boston were Chinese cities, a trip between them would only take an hour and a half (instead of 4-5 hours as it is now). Imagine how much more these two cities could collaborate as a result.

Concurrent with the growth in intercity railway is the expansion of subway systems within Chinese mega-cities. The graph below shows Beijing’s subway map in 2005 and 2015. The dramatic increase in density is remarkable and reminds us of what Tokyo was able to achieve years ago.

When Chinese tourists visit Japan, they often feel like they are experiencing a future version of China. Indeed, Chinese metropolises like Shanghai increasingly resemble Tokyo, with a dense subway system, ubiquitous vending machines and convenience stores, bustling department store basement food halls – a well-oiled urban machine characterized by automation, efficiency, and an enormous amount of commercial activity.

However, Chinese cities need to accommodate a much larger population than its counterparts in Japan and elsewhere. Beijing already has 20 million people, and more are flocking in every day in search of economic opportunities. It is plagued by perennial problems like health-threatening air pollution, exasperating traffic jams, and subway trains bursting at their seams. The city has already done a lot to combat traffic congestion, for example using an odd-even license plate-number based driving limit within the Fifth Ring Road on weekdays. But its traffic jams still put Los Angeles to shame. What will Beijing be like in ten years?

One thing is clear: China cannot follow the American route to urbanization. Beijing already has 5 million private cars on the road, and anyone who has been in a car in Beijing can agree that the city does not have enough bandwidth to support these cars (the average commute in Beijing takes 54 minutes). Around 20% of people living in Beijing own cars, compared to 75% of Americans. If everyone in Beijing consumes like Americans, there will be three times more cars on Beijing’s roads – a transportation nightmare.

China would be much better off if it adapts Japan’s path and focuses on building smart, public transportation solutions. Beijing’s public transportation system has come a long way since a decade ago – its subway system now supports 10 million rides per day – but it will need even more high-speed rail and subway lines. This is why smart, creative transportation companies like Didi Chuxing (a GGV portfolio company), ofo, Mobike, and Hellobike (a GGV portfolio company) can thrive in China.

But the opportunities created by China’s transportation revolution are not limited to ride-sharing and bike-sharing. It has also given birth to innovative companies aiming to improve urban logistics. For example, GGV’s China-based managing partner Jixun Foo invested in Ymm56.com, which is akin to a Didi for trucks. It is a mobile transportation platform that allows tracking of cargo, trucks, and transactions. Chinese people’s enthusiastic adoption of e-commerce has also given rise to an immense demand for package delivery services, and all the major logistical companies handling such deliveries – such as SF Express (Shunfeng) and YTO Express (Yuantong) – have gone public in recent years.

In a 2011 report, McKinsey divided China into 22 “city clusters”: groups of cities that are developing around one or two large hub cities. These are economic powerhouses whose GDPs are comparable to entire nations’. Already, the GDP of Guangdong province – home to megacities like Shenzhen and Guangzhou – rivals that of Australia, and is on track to match the state of New York.

Source: McKinsey Quarterly’s Winning the $30 trillion decathlon: Going for gold in emerging markets

Thanks to the ubiquitous high-speed railways, these clusters are no longer isolated markets – we have witnessed the birth of “one national market” as goods, ideas and talents in one part of the country can quickly spread to the rest of the nation.

At GGV, we actively work with US companies to explore the Chinese market through these clusters, following similar strategies adopted by local e-commerce companies that we invested in, such as Alibaba and Xiaohongshu (Red). We look forward to partnering with global-minded entrepreneurs worldwide to tap into the unprecedented opportunities created by China’s transportation revolution.

Updated: WeChat’s privacy policy update draws attention to information shared with the government

Emma Lee — Tue, 19 Sep 2017 07:56:32 +0000

To some extent, WeChat users were already aware of the possibility that the Chinese government was able to read their private information and messages, but it is still striking when WeChat prompted us to reexamine the privacy policy as the Tencent-owned messaging app detailed in its English policy all the user information it collects as well as its readiness to share this data with the government.

WeChat’s latest update greeted users with a new terms of use and privacy policy, which users must agree to if they want to use the app. WeChat acknowledges that it collects a wide range of personal information such as name, phone number, email address, credit card info, ID as well as the data you made available to the platform like location, chat logs data, and other shared information.

What caught so many people’s eye is the amount of information they share with the government to comply with “applicable laws or regulations.” According to the English policy, WeChat can disclose users’ personal information:

in order to comply with applicable laws or regulations;
in order to comply with a court order, subpoena or other legal processes;
in response to a request by a government authority, law enforcement agency or similar body (whether situated in your jurisdiction or elsewhere);
where we believe it is reasonably necessary to comply with applicable laws or regulations;

Interestingly, there seems to be an obvious difference in the company’s attitude when compared with the current update for Weixin (the mainland China version of the app) and a previous version for WeChat (the global version of the app) users updated in 2015.

Different from the full compliance in providing data for “applicable law and regulations,” there’s little mention of sharing data with government bodies. Instead of blocking WeChat users from using the app, Weixin’s new privacy policy update says (our translation): “Unless it’s required by relevant laws, your objection in providing this information will block the feature concerned, but will not influence the usage of other features.”

The new Chinese privacy policy has evoked a series of outcry from Chinese users who rushed to WeChat on various app stores with furious comments.

“It’s already hardly bearable to collect our personal information. Now WeChat is going too far, even asking for smartphone contact list before logging into the app. Who do you think you are to ask everything about your users, the state secrecy administration?” commented a user under the pseudo name of “M梅梅”.

“User privacy and data protection are not just regulatory obligation but also a key part of the user experience. Weixin (the original Chinese version) has recently updated its privacy policy to reflect the enhancement of user privacy and data protection laws in China,” a Tencent spokesperson told TechNode. “Unfortunately, this fundamentally pro-privacy update was misinterpreted as an admission that we send all user data to the Chinese government. This is not and has never been the case.”

“In case of criminal investigations, we will provide certain information to law enforcement agencies when legally compelled to do so, which is in line with international practices,” they added, emphasizing that information on their servers are encrypted.

“More generally, we would like to emphasize the following points: 1. Protection of user data is a core value of the Weixin/ WeChat team and the updated privacy policy was part of an effort to improve upon this core value. 2. The updated privacy policy applies to Weixin users who have registered in China. 3. Reflecting different regulatory requirements, such as GJDPR, and a different privacy policy applies to users of WeChat (basically non-China users). This policy is reviewed and satisfied by TRUSTe on an ongoing basis,” they said.

Update 21 September 2017, 3 pm: The original article implied that the sharing of personal information with governmental bodies was new. This implication was incorrect; in fact, this part of the privacy policy was included in the 2015 WeChat (global version) Privacy Policy update. We have changed this and provided more detail on the new Chinese policy. We will update again once we get Tencent’s reponse.

Update 29 September 2017, 10am: Included Tencent’s response.

China eases curbs on in-flight electronics usage

Emma Lee — Tue, 19 Sep 2017 04:28:12 +0000

Passengers may soon expect less boring trips when they are traveling by air in China. In the latest revision to its aviation regulations, China’s aviation authority is easing the rules on using electronics during flights, paving the way for wider in-flight connectivity, our sister site TechNode Chinese is reporting. The new rules will come into effect in October this year.

The new revision has lifted the decade-long complete ban on in-flight portable electronics, giving individual airlines the right to determine the management policies for devices such as smartphones, tablets, and laptops. In addition, the regulator also issued corresponding assessment and approval process where airlines can apply for offering this service.

Apart from the mobile devices mentioned above, existing rules also ban passengers from using intercoms, remote-control toys and other devices with remote-control or radio transmitting equipment.

This move comes after relaxing aviation policies towards portable electronics around the world. US and EU aviation regulatory bodies have pioneered this initiative as early as 2013. As an initial step, the new regulation will boost the development in-flight Wifi services among Chinese airlines, local media reports, citing a spokesman from Shanghai-based Spring Airline.

The announcement of this news is one of those “dream come true” for millions of flyers in China, the world’s second-largest air-travel market. Data from China’s National Statistics Bureau shows that over 490 million passengers traveled by air last year, while over 9.23 million flights have been taken by Chinese airlines only.

Asia Hardware Battle final goes to Fifish P4!

Eva Yoo — Mon, 18 Sep 2017 10:00:16 +0000

The winner of Asia Hardware Battle in 2017 was underwater drone Fifish P4 developed by a female CEO who is passionate about diving. Asia Hardware Battle was held in Shanghai on September 16th hosted by TechNode, with Shanghai Yangpu District People’s Government support.

In previous Asia Hardware Battle held in Chengdu, we had 10 finalists, but this time, more than 300 hardware teams from ten cities in eight countries applied for the competition, namely Beijing, Shanghai, and Shenzhen in mainland China, Hong Kong and Taiwan and overseas countries, including South Korea, Japan, Singapore, and Thailand. This year’s battle had a total of 15 finalist teams on the stage, attended by leading domestic venture capital, media, and domestic and foreign guests.

“I enjoyed a lot yesterday. Good point is that the final startups were very international. When judges chose the winners, the three winners and close runner-ups are all coming from different regions, I thought it was very interesting,” Nobuaki Kitagawa, managing director of CyberAgent Ventures told TechNode.

“Overall, the startups were solving very practical problems. Some of them could be commercialized in the near future, and I felt that the overall technology of startup was developing towards IoT and big data. Chinese startups were concentrated in bigger scale fields such as logistics and VR, while Korean startups concentrated on niche areas such as beauty and environment. I thought that three Korean startups were excellent in terms of skill, detail, and design even though they were not included in the rankings,” Woody Han, CEO of China Lab, a Korean media focused on China market told TechNode.

Here are the list of top 3 winning startups of Asia Startup Battle:

1. Fifish / Shenzhen, China

Fifish P4 allows divers to take photos and videos easily under the sea. Users can see real-time video shot by the machine underwater, let it automatically follow the diver or remote control it to go anywhere. The most unique feature of Fifish P4 is that it can support both wired and wireless control.

The machine has integrated with high precision depth sensor and posture sensor, with a single click of a button, the machine can hover at any depth and location with high precision and great stability. Also, it has a few interfaces where people can easily attach multiple sensors to expand the machines’ functionality.

Zhang Chong, CEO of Fifish (Image Credit: TechNode)

CEO of Fifish, Zhang Chong who is also a PADI (Professional Association of Diving Instructors), claims that the camera has advantage comparing with other underwater robots in the current market. The professional camera is designed with an ultra-wide-angle of 162 FOV, 4K high-definition video, and 20MP, combining lighting with 4000 lumens, which guarantees stable footage. The team won CES innovation award in 2017.

2. Youibot / Shenzhen, China

Youibot (Image Credit: Youyibot)

Youibot is an autonomous inspection mobile robot equipped with indoor and outdoor robot navigation system to ensure safety. The company has researched and developed autonomous mobile robot platform independently, based on the latest generation of laser radar and visual real-time SLAM map creation and navigation technology.

CEO of Youibot, Zhang Zhaohui says its bus tire inspection robot can achieve high-frequency night patrol inspection. Using self-positioning navigation in parking lots, it can identify vehicles, do the autonomous inspection, and report problematic vehicles.

The robot meets the inspection requirements through collaboration robotic arm with 6 DOF and free expansion module. Through the intelligent background monitoring system, the robot can also generate monitoring report with image analysis.

3. QT Medical / Taiwan

QTMedical’s product (Image Credit: QTMedical)

According to WHO, Cardiovascular diseases (CVDs) are the number 1 cause of death globally, representing 31% of all global deaths. Of these deaths, an estimated 7.4 million were due to coronary heart disease and 6.7 million were due to stroke. For better cardiac care and remote monitoring of elderly people and patients with chronicle heart disease, QT Medical is developing medical grade 12-lead electrocardiogram (ECG) devices and services for home use.

Dedicated to making 12-lead ECG available to everyone at anytime and anywhere, the team will be launching three products in 2018: QT ECG, QT Pro, and QT Mini. QT ECG is compact 12-lead ECG for patients to use at home. QT Pro is 12-lead ECG for hospital use. QT Mini is medical grade wearable ECG for the consumer market. Founded in 2013, the team has 16 employees in Taiwan and LA offices, led by founder Dr. Chang, a cardiologist and professor at UCLA.

Other 12 finalists

Renogy / Suzhou, China: RENOGY develops solar energy products, including solar panels, solar kits for home use.

Pium / South Korea: Pium is a smart scent diffuser providing aromatherapy allowing its user to sleep, rest, and concentrate better. It follows user’s daily routine and automatically provides appropriate scents.

Artificial Anything / Thailand: Rinn is a smart cup that tells you how much water you drank during the day.

Nature / Japan: Nature’s Remo is a smart controller for room air conditioners and automates wall mount AC use for to save energy and reduce electricity bills.

uHoo / Hong Kong: uHoo’s indoor air toxin sensor monitors building’s temperature, OM2.5, TVOCS, analyze them, and gives personalized insights.

Clef Technologies / Singapore: Clef Technologies have built the device that detects water leaks. The founder claims that it ensures 98% accuracy and is easy to install, and avoids contamination.

Zhen Robotics (真机智能) / Beijing, China: Zhen Robotics makes robots that deliver parcels. The robot can run 8 hours after charging 4 hours.

Aira Lab / Malaysia: Aira Lab allows robots to connect through a platform where users can program it on the go, control it through apps, and able to share it with others.

Line Dock / Shenzhen, China: Line Dock provides up to 100W of USB-C charging on the go while adapting its power supply to user’s device.

Shado / Singapore: SHADO builds Autonomous Fleet Own Vehicles to solve the inefficiency of Freights and Logistical sector for both Sea & Airports.

Lululab / South Korea: Lumini is a personalized beauty IoT device that analyzes the user’s skin and recommends the best skin products and services for each user.

Ecubelabs / South Korea: Ecube Labs provides a solar-powered trash bin ‘Clean Cube’ that compresses trash and holds up to eight times more trash than ordinary bins do, which reduces the operating cost of trash collection vehicles.

Investing in China, Korea, and Southeast Asia: Q&A with CyberAgent Ventures Managing Director Nobuaki Kitagawa

Eva Yoo — Mon, 18 Sep 2017 09:15:08 +0000

Overseas expansion is not only important for startups, but also for VCs. CyberAgent Ventures is a venture capital firm that does early-stage investments focusing on consumer internet startups in China, South Korea, and Southeast Asia, among which six companies successfully completed IPO.

Japan-based CyberAgent Ventures had zero investment outside Japan when Nobuaki Kitagawa joined in 2006, and now with Nobuaki in charge of China, South East Asia, and South Korea markets, CyberAgent has made 150 investments with setting up 8 offices throughout Asia, including Jakarta Indonesia, Ho Chi Minh Vietnam and Bangkok Thailand run by head of each country operation.

CyberAgent Ventures was founded in 2006 and is run by two managing partners Nobuaki Kitagawa and Hirofumi Kondo in Tokyo. All of their funds are in USD with separate funds for China, South East Asia, and South Korea. With about 150 million USD assets under management, 50% of the fund is invested in Japan and about 30% is invested in China, and less than 20% is invested in South East Asia and South Korea.

Some of the standout companies of CyberAgent’s portfolio are:

invested in Tudou in 2007. Founded in 2005, video sharing website Tudou merged with Youku in 2012.
invested in Kakao’s series A in 2011. South Korea-based Kakao has instant messaging app KakaoTalk and merged with Daum in May 2014.
invested series A in Tokopedia, Indonesian e-commerce startup in 2011. Tokopedia was invested by SoftBank in 2014 and got $1.1 billion investment from Alibaba this month.

We sat with Nobuaki Kitagawa Managing Director of CyberAgent Ventures to ask the future trend of startups and get some insights from his previous investments.

Nobuaki Kitagawa Managing Director of CyberAgent Ventures (Image Credit: CyberAgent Ventures)

Are Chinese startups open to receiving USD investment from overseas VC?

Most of the startups are looking for a going global eventually. That’s why they take USD investment. We have various networks across Asia, and that’s our unique point as an investor. If they want to expand to other Asian countries, this network will be useful for them.

For Chinese startups in the market, receiving RMB investment is much easier. It depends on their focus: stay in the domestic market or expand outside of China. Chinese companies have a unique structure for going IPO in the US market. They either eventually exchange USD investment into RMB in China or they keep USD investment in preparation for outside use.

What are some of the areas in tech that your funds are focusing on right now?

Almost all of our investment is in the consumer internet sector, and we will keep this strategy. In China, we are focusing on IoT and hardware related companies. The key is not only the hardware but the data behind the hardware. More data becomes the real body of the service and can make meaningful service applications. If you manufacture an item, the cost is the key. Manufacturing is the biggest advantage of China. That’s why hardware and IoT services China has the most advantage.

Rental economy service, say the next of Ofo, Mobike should come out, and it will have big potential. If there’s any rental service hardware that collects the data, that startup should have very interesting opportunities ahead.

Can you share your failure stories?

We have a lot. We invested in about 150 startups so far, among them successful ones are only 25~30 startups (20%) and the rest of them all failed. We want to have more successful investment, but we need to take a risk.

In terms of sector, any VC can determine what’s going to come in the next five years: IoT, VR, AI, and cryptocurrency. It’s not hard to determine. What’s hard to determine is to find the best player in the sector. Still, there is no clear way to make the right decision in the category. Judging a company, management team, and people is not based on a mathematical formula. You can’t have 100% correct answers. Every year, we invest about 5-6 companies in overseas and we know still, 3 or 4 companies will fail.

After the “capital winter” in China, has investment behavior changed in your firm?

Compared with the US or Southeast Asia, I don’t think China suffered from a capital winter. Because still there are active VC investors with more and more angel investors in the market. In terms of early-stage investments, Alibaba and Tencent are aggressive in investing in startups.

How competitive is the environment between VCs in China right now?

China has the highest competition with the biggest number of VCs and startups. It’s the highest return and highest risk. That’s why we are doing it here in China because we cannot expect a return on investment in other parts of the world that is as big as China. It’s good dynamic and strategy to have business portfolio comprising of China and Southeast Asia, that way we take a big risk and have a big return in China and take a middle risk and have a middle return in Southeast Asia.

Current hi-tech trends in mind, what do you think will be the biggest winner within five years?

The biggest winner within five years will be IoT in our perspective. To talk about other countries, Japan is focused in fintech right now and it has the biggest opportunity in the market. Japan’s banking industry is old and conservative, and there will be innovation in Japan’s finance market. Southeast Asia is five or ten years ago of China, we are still looking at sectors like e-commerce, O2O, content, games, online payment.

China’s game developers take the stage at Steve Jobs Theater

Emma Lee — Wed, 13 Sep 2017 04:05:18 +0000

The long-awaited Apple event has come to an end, offering the world some pretty cool tech. But while most of the world is still savoring Apple’s latest hardware updates, we can’t overlook the increasingly important roles that Chinese gaming companies are playing in Apple’s—or even the world’s—content ecosystem.

Even a company as great as Apple can’t do it all and can only focus on the things it’s good at. Therefore, it’s a common practice for Apple to invite content partners to demo their products at the mega launch event and share their experiences about how Apple’s latest software and hardware updates can enable greater user experiences.

At today’s release, two gaming companies were honored to pitch onstage at Steve Jobs Theater. They are either coming from China or founded by Chinese entrepreneurs. Here’s a quick wrap-up of their demos.

Sky by Thatgamecompany

Jenova Chen pitching Sky at Apple event (Image credit: Apple)

Thatgamecompany’s newly launched title Sky is a romantic social adventure game, which features its signature artistic designs that could be commonly found in previous works. Light and dark are important themes of the game. Playing as children of the light, the player’s goal is to bring light to where it is needed the most while flying above the clouds to explore the wonders of the mysterious world, introduced Jenova Chen, the company’s CEO. With the aim to be easy for casual players to pick up, the control is simple and intuitive. Social is another important factor in the title, allowing up to eight players from the world to play together.

Thatgamecompany should be a fairly familiar name to hard-core indie game players. The studio is engaged in creating video games that provoke emotional responses from players. Its video games include the award-winning Flash title Flow, Flower, and Journey. Originally coming from Shanghai and now working in the US, the company’s co-founder and creative director Jenova Chen tries to make games that tap into feelings that are universal and independent of culture.

The Machines – by Directive Games

Directive Game CEO Atli Mar pitching The Machines at Apple event (Image credit: Apple)

Shanghai-based VR/AR game developer Directive Games demoed The Machines, one of the world’s first competitive multiplayer games designed to be played entirely in augmented reality, at Apple’s iPhone keynote today. In the game, players can battle their friends in real time, playing the rebels against the dominators. The gamers are able to play in any new angle and to point-and-shoot an iPhone to create the battlefield. Sound added another layer to the immersive experience. As players leaned into the battle, the volume would increase.

With core-team from Ice Land, Directive Games is now headquartered in Shanghai with offices in Reykjavík and Hong Kong. The firm was being recruited in Vive X, HTC VIVE VR accelerator program last year. TechNode got a chance to talk with the team on VR landscape early this year.

Gaming from China

Witnessing Chinese game companies forming a rising force in the world is, by all means, an exciting phenomenon for us who are following local tech scene, but it’s not quite a surprise: the country has already overtaken the US as the gaming capital of the world in terms of market size. The 600 million Chinese gamers have contributed $24.6 billion of the industry’s $101.1 billion global market value in 2016, just ahead of the US’s $24.1 billion, a report from venture capital firm Atomico shows.

Where there’s high demand for gaming content, there will be more quality content providers and a mature ecosystem surrounding the industry. In Directive Game’s case, the fact that an Icelandic team moved all the way around to set up a company in China speaks to the traction that China has gotten for gaming companies, especially in the VR/AR field.

Apart from gaming startups, Tencent has already marked a milestone for China’s gaming developers with its mega-hit Honour of Kings. The title has become the world’s top grossing game earlier this year.

Chinese cryptocurrency exchanges increase supervision in wake of tightening regulations

Emma Lee — Wed, 06 Sep 2017 04:33:27 +0000

China’s recent ban on initial coin offering (ICO), a cross-between crowdfunding and initial public offering, has forced local cryptocurrency exchanges into stricter self-scrutiny about their supervision mechanisms.

After months of breakneck development, the ICO sector received a severe blow this Monday when Chinese authorities announced a ban on all related fundraising activities, citing possible financial scam and massive fraud. In addition, all completed ICOs must liquidate and refund investors, according to the rule.

Of the total 60 platforms that have held token offering-related activities inside China, over half have launched the liquidation process or suspended the ICO services upon the news, local media reported. However, the ICO ban seems to be just a beginning for another wave of stricter regulations from Beijing, which reportedly intends to further regulate the crypto economy.

Quickly translating the signal, leading Chinese cryptocurrency exchanges are raising their own risk supervision standards in line with the tightening governmental curbs.

Huobi, a leading digital currency trading platform in China, strengthened risk warning system for users’ BTC withdrawal request. On September 2nd, the exchange raised its trading fee in a bit to curb speculative short-term trading. Another crypto exchange Yunbi released a public letter outlining its reinforced self-disciplinary practices.

Open Letter from Yunbi in Chinese

Early warning signs about governmental crackdown started weeks before. Shanghai regulator halted a block chain business event at the end of August, sparking speculations of a wider curb on the industry back then.

Although the regulation does not directly name any cryptocurrency, the valuation of bitcoin, the most common digital currency used in an ICO, fell in response to the news. Data from SOSOBTC shows that values for 520 out of 580 digital currencies trading on the market are plunging.

Analyse Asia 204: Myth Busters, the China Edition with John Artman

Guest Editor — Tue, 05 Sep 2017 03:59:28 +0000

Editor’s note: This originally appeared on Analyse Asia, a weekly podcast hosted by Bernard Leong, dedicated to dissecting the pulse of business, technology, and media in Asia. The podcast features guests from Asia’s vibrant tech community.

John Artman, editor in chief for Technode and host of China Tech Talk podcast joined us to debunk the narratives on China that has been propagated from different parts of the world. We began with his story and how he came to China. In our discussion, we dissect the different myths about the Chinese government, media censorship, lack of innovation, efficiency and last but not least, education.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with time-stamps included):

John Artman (@knowsnothing, LinkedIn), Editor in Chief from Technode and Host of China Tech Talk (Apple Podcasts) [0:38]
- How did you start your career? [1:56]
- When did you move from the US to China [6:39]
- In your career journey, what are the interesting lessons you can share with my audience? [7:17]
Myth Busters, the China Edition [8:43]
- Myth 1: China is a communist country and only cares about itself. [8:43]
  - What’s does China government care about people? [11:54]
  - With the “One Belt One Road” initiative how does China’s new silk road dreams signify its shift from a regional to a global power? [14:30]
- Myth 2: Censorship is everywhere & the Chinese government controls everything [17:58]
  - Recently, the Chinese government has pressured Apple to cave on VPN apps in China’s iTunes app store, are they increasing their footprint in censorship? [20:24]
- Myth 3: There is no innovation in China. [23:35]
  - What are the interesting innovations which the US media seem to miss by propagating the narrative that China only copies and clones? (Wechat, Fintech, AI, Qtum, Alibaba)
  - Changing narrative from Silicon Valley in how they looked at China tech startups
- Myth 4: China is better at “getting things done” [31:17]
- Myth 5: China has better STEM education [35:00]
Closing [41:04]
- Do you have any recommendations (podcast, books or movies) for my audience?
  - Noah Yuval Hanari, “Homo Deus” and “Sapiens“
  - Cal Newport, “Deep Work”
  - Henry Kissinger, “On China“
- BL’s recommendation: Henry Kissinger, “World Order“
- How should my audience find John Artman?

TechNode does not necessarily endorse the commentary made in this program.

Apple’s new China head, Isabel Ge Mahe, is officially on board

Emma Lee — Mon, 04 Sep 2017 03:09:49 +0000

Whith the next iPhone event is fast approaching, Apple has recorded a major change in China, a market of increasing importance for the smartphone maker. In the latest update of its website, the company has added Isabel Ge Mahe to the management team as Vice President and Managing Director of Greater China.

Apple announced Ge Mahe’s appointment back in July but did not disclose the specific date when she would assume the role. The July announcement pointed out that Ge Mahe will report directly to CEO Tim Cook and COO Jeff Williams. Along with the update on Apple’s site, the company told TechNode that Isabel Ge Mahe has already relocated to Shanghai and started working with the local team.

In its most recent move to fit adapt to the Chinese market, Apple allowed WeChat Pay for making payments on its App Store and Apple Music last week.

Born in Shenyang, Liaoning, and fluent in Mandarin, Isabel earned bachelor’s and master’s degrees in Electrical Engineering from Simon Fraser University in British Columbia. She holds an MBA from the University of California, Berkeley. Isabel has led Apple’s wireless technologies software engineering teams for nine years, focusing on the development of cellular, Wi-Fi, Bluetooth, NFC, location and motion technologies for nearly every Apple product. She has also overseen the engineering teams developing Apple Pay, HomeKit, and CarPlay.

With fresh funding, Hatchery is ready to satisfy China’s westernizing taste buds

Emma Lee — Thu, 31 Aug 2017 03:43:15 +0000

Beijing-based culinary incubator Hatchery has closed an investment from co-working and lifestyle amenities space 5Lmeet at a post-money valuation of RMB 60 million ($9 million USD) to support China growth plans.

The current RMB 3 million round from 5Lmeet is expected to be followed by another RMB 5 million to boost the next 18 months of growth, including expansion into Shanghai, company co-founder and CEO Stewart Johnson told TechNode.

The investment commits Hatchery to launching new food concepts in at least two of 5Lmeet’s upcoming developments in Beijing, one targeting October 2017 in Guomao and one in early 2018 in southern Beijing, according to the firm. Hatchery Shanghai headquarters will open in Q1 2018.

5Lmeet, a sister company of co-working unicorn URWork headed by property entrepreneur Mao Daqing, has taken a strategic position in Hatchery following the success of the first incubator partnership in 5Lmeet’s Dongsi location.

“Hatchery is excited by the prospects of the growing 5Lmeet strategic partnership. 5Lmeet has a pipeline of co-living developments planned in Beijing over the next 18 months, and after being incubated by our HatchTrack process, entrepreneurs now have the opportunity to launch their own food concepts in one of 5Lmeet’s innovative lifestyle destinations through our partnership,” explained Stew Johnson.

5Lmeet, valued at over RMB 3.6 billion coming out of its recent funding round, has an extensive pipeline of co-working properties in Beijing for redevelopment over the next twelve months.

China Internet Report 2017

Guest Editor — Tue, 29 Aug 2017 03:57:51 +0000

Editor’s note: This is reposted with permission from Edith Yeung, a General Partner at 500 Mobile Collective Microfund primarily focusing on investing in mobile, VR, AR, IoT, and consumer internet startups. It originally appeared on her website.

Last month, my brother and I were hanging out in Tuanjiehu district in Beijing where our grandfather used to live. After finished paying up for our lunch bill using WeChat Pay (the owner convinced us not to use credit card as it would cost him high fees), I called a Didi (Uber of China) and headed to our friend’s house to watch various live streaming shows on YY and 6.cn (founded by my brother). After a few hours of socializing, we decided to head home by grabbing a couple of ofo bikes we found on the street.

As I was biking my yellow bike across town, I realized how much Chinese lives have changed by all the ‘Made-in-China’ innovations: from messaging, mobile payment, bike sharing to live streaming. I am truly inspired by the new generation of Chinese innovations, entrepreneurs, and energy. And this is why I decided to write this China internet report.

This report hopefully serves as a guide for you (investors, founders, and executives) of China internet landscape and trends. Drawing from my own experience, hundreds of hours of research and interviews with entrepreneurs and investors friends, I am honored to present this report of China innovations.

China no longer needs to “borrow ideas” from America but can create new innovations of her own.

Hope you enjoy reading it as much I enjoyed writing it.

Special thanks to everyone who helped and contributed to report: Wai Lin Liao, Bonnie Cheung, Chris McCann, Jane Wu, Xu Tao, Peng Ong, Jianfeng Lu, Tony Zhao Bin, Alan Chan, Greg Kidd, Dave McClure, Xiaolong Yang, and the 500 Team.

Understanding China’s millennials: the rise of digital native consumption

Timmy Shen — Mon, 28 Aug 2017 04:15:12 +0000

There are about 200 million Chinese between the age of 15 and 24, accounting for about 15% of the population. As digital natives, those born after 1990 and especially those born after 2000 have grown up with internet and have formed a unique shopping habits online.

QuestMobile, a Chinese data research firm, recently released a report on the rising consumption power of the country’s post-00s generation (in Chinese), which refers to those who were born in the 2000s. They are now between 10 and 17 years old. With the first batch of these teenagers heading to college, retailers must be more aware of the potential business opportunities brought by catering to the young Chinese. Here are some highlights from the report.

Growing number of young mobile users

China has over 1 billion mobile devices, and the post-00s generation has 8.1% of them, meaning there are about 85 million devices being used by these tweens and teenagers. The 10-17 age group accounted for 7.5% of the entire mobile population in March 2016 and gradually increased to 8.1% by June 2017.

However, their time spent on mobiles is less than the national average by three hours a month, given that classes and homework still occupy most of their time.

In terms of market penetration rate based on business type, messaging apps, video streaming, and music streaming apps are the most common on young users’ phones. It’s also worth noting that apps for K-12 education (kindergarten through to grade 12, the final year of high school), gaming, and camera apps are also popular among the young cohort.

The post-00s generation spends the most mobile time on messaging apps, clocking up 61.3 hours a month, nearly 1.6 times the average.

Education apps prevailing among young Chinese

Chinese teenagers spend 24.2 minutes per day on online education apps, with Baidu-backed Zuoyebang (作业帮, literally “homework help”) topping the chart with a 19.7% penetration rate. Xiaoyuansouti (小猿搜题, literally “a little ape searching for exam questions”), another top K-12 app, came in second in market penetration with 10.3% penetration rate.

The online education sector has also been benefiting from live streaming, which has transformed how the nation’s K-12 students receive their after-school tutoring.

We should also keep our eye on apps that help students pick their college majors, such as EWT360 (开学e网通). Although the app only came in at number 10 on the market penetration chart, it is likely to become more popular and come in handy when these teenagers are preparing for the gaokao, China’s college entrance examination.

Social networking apps still dominate the market

Teenagers have a strong need for mobile social networking. The data shows that the group opens these apps nearly 42 times a day, with usage totaling about 140 minutes per day.

The top three social networking apps all hold penetration rates of over 50%, with WeChat topping the chart with 81.5%, followed by QQ and Weibo.

It’s worth noting that the apps for fans of celebrities are something that young Chinese are also after. IDOL (爱豆), an app catering to fans that provides news, videos, and live streaming of the idols’ activities, has won over teenagers with its TGI (Target Group Index) exceeding 400 where 100 is the average.

Video streaming shows a niche market on the rise

While iQiyi, Tencent, and Youku remain the top three go-to platforms for videos, Bilibili, a spiritual home for Chinese fans of ACG (anime, comics and games—a sort of subculture in East Asia), sees a 16.1% penetration rate. The Chinese teenagers’ love for Bilibili, more widely known as “B Station” (B站 in Chinese), shows that the businesses surrounding the underground anime fan culture have huge potential to thrive.

Also, the post-00s are showing their consumption leanings toward short videos, with Douyin, Meipai, and Miaopai coming in the top 10 for penetration rate. This shows that personalized and fragmented content is catching their eye.

Aside from the post-00s generation, the post-95s (1995) are another group that can bring in huge sums of revenue. China Tech Insights (CTI) along with Penguin Intelligence, backed by Tencent, earlier this month released a consumer report on the portraits of the post-95s.

It suggests that the young cohort, who are between 18 and 22 years of age, will become a major consumption power in the next five to 10 years when they enter the job market.

In comparison with previous generations, the post-95s generation was raised in a more affluent era. From 1995 to 1999, when the post-95s were born, the nation’s per capita disposable income surpassed RMB 5,000, which is seven times that of post-80s and twice that of post-90s incomes, according to the report.

New video ads strategy

As the post-95s pay more attention to films and TV shows where their favorite stars appear, they are more likely to skip over video content that they’re not interested in, the CTI report shows.

This can make product placement even harder, but leads to a new pattern of advertising—powered by big data and floating layer technology, a new technology for advertising that could place ads in sections that are most frequently watched.

Preference for online banking over traditional

As digital natives, the post-95s generation prefers to manage their finances online. Fintech products cater more and more to the new generation’s taste, as they are used to online shopping and making online payments, the CTI report says.

“They are more emotional (in terms of buying) and less concerned with being frugal,” wrote Jeffrey Towson, a private equity investor and Peking University professor, on his blog. “They buy clothes and furniture based on how it makes them feel—and how they want to see themselves,” he wrote.

Indeed, the shopping pattern of China’s millennials is a lot different than the previous generations’. “They are really confident about their own financial futures,” suggested Towson in his blog post.

Taobao, China’s dominant online marketplace run by Alibaba, retrieved data from its site and in May released a data report on the “empty nest youth,” referring to those who are single, living alone, and between the age of 20 to 39.

Young Taobao shoppers are most active around 10 p.m. (Image credit: Taobao)

The report shows that these youngsters mostly live in Shenzhen, Beijing, Guangzhou, and Shanghai. They love to shop online late at night, mostly around 10 pm and are willing to spend nearly RMB 5,000 annually on Taobao, which is pretty much the amount they earn a month, according to the report.

All these various reports are showing something in common, something obvious yet essential to run businesses tailored to China’s millennials—you have to go online.

For Chinese tech firms, company values are increasingly important, but tough to get right

Guest Editor — Fri, 25 Aug 2017 07:06:23 +0000

Editor’s note: This was contributed by Elliott Zaagman a trainer, coach, and change management consultant who specializes in aiding Chinese companies as they globalize. To contact him, check him out on LinkedIn, or add ezaagman on WeChat.

What is your company? What do they believe in? What do they stand for? And why should anyone care?

Values are the source code, the DNA, that lies at the heart of any organization. It is values, more than anything else, which dictate the culture of a company; it is the culture which dictates the products and services which they offer; it is ultimately those products and services which define a brand. While many companies have been able to stumble upon one or two good ideas and then fade away, it is the ones with clear, consistent values which stand the test of time and build trust with their employees and customers.

Working in China, I have found that organizational values are really difficult to talk about. In researching this piece, I posted on Wechat, asking for good examples of Chinese organizations who have clear values and have achieved success from executing them. I received 30 responses (nearly all recommending either Alibaba, Lenovo, or Huawei), but in each case, when I followed up, it was very hard to get people to articulate what those values were, or how they impacted the behavior of the employees and the work the company does.

This is the best-case-scenario. My Wechat is filled with young, urban professionals, many of whom work in HR or PR for Chinese tech firms or global MNCs. In the past, when conducting corporate training for more traditional firms, when I would ask participants about how they would define their company’s values, the room would often grow silent and I could sense that it usually made the leaders there uncomfortable. At other times, when I’ve asked people about what their company’s values are, they most often do one of two things: One is that they say something like “we are a top-ten company in China,” or “we want to be number one in x market.” That tells me absolutely nothing about what is important to your company, aside from that you associate your values with your status. Another common response is, “we are passionate and work hard,” which also tells me pretty much nothing.

So why is it so hard to find employees in China who can clearly express their company’s values? I asked 6 different Chinese professionals and received answers that fell along similar themes.

Misconceptions

One was just a simple misconception about what company values are. Many of the Chinese professionals I spoke to seemed to have a misconception of what values even were, seeing them as some sort of idealistic, pie-in-the-sky concept. “Becoming successful in business in China is so cutthroat and competitive, you can’t have values and be successful,” one business journalist told me. This idea of values misses the very definition of what values are. Values are not something you have more or less of. Some people and organizations have productive and helpful values while others have corrupt and destructive ones, but everyone has values. Saying that a company or individual has “no values” is like saying that a person has no DNA.

Power structures

Another common theme was navigating power structures. “In China, both the risks and rewards of complying with powerful individuals in the government are higher than in most other countries,” a Chinese leader of an MNC told me. “If a company is seen a principled, then they may also be seen as less reliable to bend to the demands of government officials in power.”

Just money and power

Another Chinese businessperson offered me a much more cynical explanation of Chinese business culture, which I should preface by saying that I do not personally agree with. “In China, might makes right, and money gets things done. Beyond that, it doesn’t matter. It’s just carrots and sticks: what can you force people to do, and what can you pay people to do. That’s it.”

Communication styles

A theme that made a lot of sense to me was simply about eastern vs western communication style. “Communication in the East is generally much more implicit, while that of the West is much more explicit. In the West, there seems to be a need to say everything out loud, but in the East, we are usually much more comfortable with things that are unsaid, but just must be seen and felt,” a Chinese citizen living in Canada explained to me.

The corporate culture “Ponzi scheme” vs “value investment”

Regardless of the reason, when a company lacks a clear sense of values around what they are and what they do, as both an employer and a consumer brand, they end up creating what I like to call a “corporate culture Ponzi scheme:” In this situation, the selling point for the company becomes “buy our products/work for us, because we’re a successful company.”

OK… why are you a successful company? “Because we make a lot of money.”

OK… why do you make a lot of money? “Because we’re a successful company.”

I experienced this recently when I spoke with a communications professional from a Chinese company that has recently received a lot of attention for its rapid expansion. We spoke in English and language was not an issue. When I asked her “how would you describe your company’s brand?” She responded, “we are a top-X company in China.”

“Anything else?” I asked…. Silence.

In contrast to the corporate culture ponzi scheme is the corporate culture “value investment.” In finance, the value investor looks for well-managed companies with proven business models. This approach does not look solely at the hype around a company or the performance of a few good quarters, but what is behind the performance, the foundational systems of the company and its place in the market which enable that success.

A ponzi scheme, both cultural and financial, works on the image of success, without enabling a system to support it, while a cultural and financial value investment builds it from the inside-out. In other words, values create value.

Values in the globalization process

If domestically, company values are important, internationally they are essential. In our own countries, even if we don’t realize it, we have a system of pre-conceived assumptions and values which govern our behavior. Often, we do not even consider how our values impact us. They are so deeply sewn within our way of thinking and behavior that we do not even recognize their existence.

When companies expand abroad, the values and assumptions of the culture of origin can easily clash with those of overseas employees and consumers. Without careful introspection towards one’s own values and curiosity towards that of those whom they are trying to attract, you are setting yourself up for unnecessary conflict.

Increasingly, at least in the area of consumer goods and services, the best companies achieve success by obsessively focusing on the customer. Amazon famously leaves an open chair at the head of the table in all of its executive meetings, meant to signify and emphasize the most important person at the company: the customer. For knowledge-based fields where success depends increasingly on the engagement of the employees, HR departments achieve success by obsessively focusing on the worker.

For global companies, this means expressing and acting in consistency with a value set that is globally resonant, bigger than simply the company’s culture of origin. Mark Zuckerberg expressed this well when discussing Facebook’s globalization, saying, “I don’t want Facebook to be an American company. I don’t want it to be this company that just spreads American values all across the world… My views on this is that you want to be really culturally sensitive and understand the way that people actually think.”

Their successes and challenges at this approach can be seen in Facebook’s handling of the Thai market over this past year. When their beloved king passed away last October, Facebook removed all advertisements from its Thai page, following a local custom of removing advertisements during a period of mourning. Facebook famously faced a more complicated quandary this past May, when the Thai government pressured them to remove a popular video that was deemed offensive to the current leaders. Forced to choose between their values of free speech and sensitivity towards local law and customs, they opted with the later, and removed the video.

Creating a values source code

While far from easy, establishing and behaving according to a set of values that are globally resonant is key in creating a foundational “source code” for an international organization. It doesn’t have to be complicated or overly idealistic, in fact, it’s often more effective if it is simple and practical. For example, Lenovo’s foundational principle of “We do what we say, we own what we do” is simple and straightforward, but also clearly lays out the principles of clear communication and responsibility that drive the company’s culture.

What I also like about Lenovo’s “Do what we say, own what we do” principle is that it is action-oriented, not just abstract terms. Many companies will have values like “excellence,” “honesty,” or “innovation,” but until those values are manifested in clear behavior, they are hollow, and confusing across cultures, as concepts like “honesty,” for example, may look very different in, for example, the direct, low-context communication style of Denmark vs the indirect, high-context style of Japan.

Aside from Lenovo, a company that definitely seems to have a strong foundation for the values of a global organization is Alibaba. A few months ago, I saw a friend from my childhood, who as far as I know had never been to China, share a video on Facebook of Jack Ma speaking publicly about his string of failures before finally creating one of the world’s most successful companies. One thing that makes Ma so globally resonant is his ability to speak in English, but also his tendency to consistently convey what is at the core of his company: an ethic of entrepreneurship. What I personally really like about this is that it is really easy to buy into, regardless of where you are from. It resonates with me, as I think about my father and grandfather, each who were small business owners, but I know it is also meaningful for people running their own businesses in Africa, Latin America, or India.

That ethic was displayed when Alibaba rang the opening bell at the New York Stock Exchange the day of their IPO. With Ma were eight small entrepreneurs, ranging from a Chinese bracelet seller to an American cherry farmer. Alibaba was making a bold and clear statement: “We started because of a small entrepreneur. We grew because of small entrepreneurs, and we will continue to be successful because we believe in the values of entrepreneurship.”

Don’t kill the sacred cows

“Ugly Americans” and “ugly Chinese”

When I was 20 years old, I went on a trip to Europe with a program from my university. Aside from a few vacations to Canada and the Caribbean, this was my first time outside of the United States. Before leaving, I remember the professor saying to us “whatever you do, don’t be an ‘ugly American.’” The term originated post-World War 2, when the rest of the world was recovering from the conflict, and the US was at a high-point of its economic and political dominance. “Ugly Americans” were Americans who went abroad, drunk on their newfound power and relative wealth, who displayed loud, arrogant, demeaning, thoughtless, ignorant, and ethnocentric behavior. My professor was encouraging us to be aware of this negative stereotype and to behave ourselves with courtesy and thoughtfulness when abroad.

These days, Chinese tourists have begun getting a similar reputation. Perhaps most famously and egregiously was the 2013 case of the Chinese teenager to etched graffiti into artwork in an ancient Egyptian temple:

In spring of last year, there was public outcry in Japan after photos circulated of Chinese tourists, climbing over Japan’s emblematic cherry trees with selfie sticks in hand, damaging the trees. Many began suggesting that Chinese-only zones would be required to minimize the destruction. In response to what they saw as rude behavior, the governments of Hokkaido (Japan) and Thailand, as well as China’s official news Xinhua News Agency, have issued guides for Chinese tourists, aimed at improving their behavior overseas.

I’ve experienced this anecdotally as well. While travelling on holiday to Sri Lanka, Thailand, Malaysia, Indonesia, and other countries, when I tell people there that I live in China, it is frequently followed by them telling stories of Chinese tourists stealing endangered coral from the ocean, damaging the natural environment, or speaking rudely to locals. While some of this can be remedied through “tourist etiquette guides,” a lot of it just comes from how people view the purpose of the travel experience. If you view it with curiosity, and see it as a learning opportunity to experience a different part of the world, you tend to be a well-behaved tourist. If you view is as a consumer, who paid for an international vacation and are trying to simply “get the most you can” out of it, you’re generally going to behave pretty poorly.

I should also clarify that in my own personal experience, the vast majority of Chinese tourists I’ve met are kind, polite, and respectful people, and I often travel abroad with Chinese friends. But in the court of public opinion, a few bad apples can ruin the entire barrel.

The “ugly” company

In the worst cases of rude tourists overseas, they are usually violating sacred institutions in a foreign country, many that they are simply unaware exist. Whether it be historical monuments, political entities, or religion, the worst violations come when someone “kills a sacred cow.” When foreign companies came into China decades ago, many suffered when they failed to respect certain Chinese political institutions. While those institutions are different from country to country, failure to respect them will certainly cripple a company.

The key point is to understand what those sacred institutions are in each market, and where the red lines are. In Thailand, it tends to be Buddhism and the royal family, as Facebook learned. In Brazil, the institutions of family, a liberation theology-focused Catholic church, and labor unions have created a work-life balance focus that has clashed with the ways that Chinese companies tend to operate.

In many countries, a free media is a far more established institution than it is in China. Because of this, traditional media tactics in China can backfire abroad. “In China, we would often buy media coverage, and that was an effective approach. But abroad, if you try to do that, people will view you as corrupt, and that approach will backfire,” said a Chinese PR professional who now lives abroad.

In the West in particular, a strict legal system is an institution that is central to their way of life. When Chinese companies attempt to deal with Western laws the way that they deal with Chinese laws, it both can bring upon unwanted legal scrutiny, but can also be seen as asking local legal professionals to forego the ethics of their profession. “I had to resign, I had no other choice. If I had gone through with what they were asking me to do, no local firm would ever hire me again. My reputation would be destroyed,” said a former legal executive for a Chinese firm in the US, who spoke on a condition of anonymity.

What’s the deal with Huawei?

In the seven years that I have spent working in China and for Chinese companies, I have heard complaints about one company far more than any other. From dozens of current and former employees who I have spoken to, both Chinese and foreign, people complain about Huawei with a passion and vigor that is absolutely unrivaled. People who I’ve spoken to complain about the ruthlessness that is necessary to climb the ranks at the company and the paranoia that permeates the company. In a piece that I wrote looking at the Glassdoor.com reviews of Chinese tech companies, Huawei received consistently low and disgruntled reviews the likes of which I rarely saw at other companies, with accusations of racism, failure to recognize local laws, lack of advancement opportunities for non-Chinese staff, and a LOT of comments like “lack of respect for human beings.” They also seem to do pretty poorly with PR abroad, gaining a reputation as a secretive organization with numerous embarrassing moments in handling foreign media.

So, my question for a long time has been why, when they seem to completely screw up so terribly when it comes to managing a global workforce and handling overseas media, are they succeeding as one of the top, maybe even the top Chinese company internationally? My conclusion is also has to do with values. Huawei has what may be the clearest set of values in the Chinese business world: They focus on the customer, and demand that their employees do whatever it takes to meet the customer’s demands, faster and cheaper than their competitors.

This means often neglecting the people-oriented aspects of a business. “Huawei’s HR is not really a professional HR department,” a long-time HR consultant said to me. “Their HR is just an arm of operations. Huawei exists to serve the company’s results and profit-oriented focus, so yeah, of course they treat people poorly, but they really don’t give a shit.”

This has been reflected in the conversations I have had with current and former Huawei employees who have spent a lot of time with the company. Many of them are openly hostile to attitudes of cultural sensitivity, with one of them referring to it as a “distraction.” Another described the idea of cultural inclusivity in global organizations as a “Western myth.”

In this way, I am conflicted. Would I personally want to work for Huawei? Absolutely not. But I definitely respect them. They know that they are, they get their projects done, they serve their customers. They’re consistent in that approach, both inside and out, and it’s served them well.

Final thoughts

Be mindful and deeply introspective about what your values are. Not what you say they are but what they actually What is important to your management? What traits cause someone to be a “culture fit,” and why?
Define your values in behavioral terms. Values like “innovation,” “honesty,” and “execution” mean different things to different people, but when you specify behavioral expectations, there is much less room for interpretation.
Create a value set that is globally resonant. People naturally tend to divide themselves based on their nations and cultures of origin. In a global company, this can be toxic. This can be improved by emphasizing inclusive values that can be understood and bought into globally.
Don’t do business like an ugly tourist. Before entering a market, have some interest and curiosity about the consumers and employees you are trying to attract. Be willing to learn, not simply to control.
Avoid the “corporate culture Ponzi scheme.” Believe in something beyond your status in the market, or how much money you bring in. Stand for something consistently, even if it is something simple. Remember: values create

China Mobile takes 80% of all net profit in China’s telecom market

Eva Yoo — Fri, 25 Aug 2017 04:38:39 +0000

China’s three major telecom operators have released 2017 interim results report on the first half of this year on August 23rd. They recorded an average daily net profit of about 429 million RMB ($64.3 million), which China Mobile accounted for 80% of them, Chinese media iFeng is reporting (in Chinese).

In terms of 4G development, China Mobile (中国移动) outshines the market in both the number of users and the net increase of the users. In the fixed-line broadband, China Telecom (中国电信) still triumphs over the two players, but China Mobile is growing its users base with fierce momentum.

Net profit of China’s telecom operators on H1 2017 (Image Credit: cqtimes)

In terms of net profit, China Mobile is far ahead of the others: China Mobile recorded a net profit of 62.7 billion RMB, an increase of 3.5%, 4 times bigger than the combined net profit of China Telecom and China Unicom (中国联通). China Mobile’s profitability is 5 times that of China Telecom and 26 times that of China Unicom. This means that China Mobile daily earn 348 million in less than a week, and what China Mobile earned in 7 days equals to what China Unicom earned in six months.

China’s telecom operator’s 4G market share in H1 2017 (Image Credit: cqtimes)

From the 4G market share, China Mobile is still the largest, with its 4G users reaching 594 million, while China Unicom and China Telecom only take 23.4% and 25.6%, respectively, of the market. From the growth point of view, China Telecom’s 4G users are the fastest growing, with its total number of users has outnumbering that of China Unicom.

China’s telecom operators’ cable broadband subscribers in H1 2017 (Image Credit: cqtimes)

In the fixed-line broadband development, China Telecom still maintains to be the Big Brother. In the first half of this year, China Telecom’s cable broadband subscribers reached 128 million, a year-on-year increase of 4.98 million, of which fiber-optic broadband (FTTH) subscribers reached 117 million, a net increase of 11.24 million over the end of last year. China Mobile is the second biggest player, with its mobile fixed-line customers showing a net increase of 15.42 million, reaching 93.04 million users, is expected that its cable broadband customers will exceed 100 million by the end of this year.

In 5G development, the three major telecom operators are launching field experiment and putting R&D efforts. China Unicom said in the interim report, that the company is launching 5G network field test in cities, and is jointly developing 5G applications and solutions with its partners. China Mobile launched a 5G field experiment this year and said it will start the construction of mobile networking, to speed up the SDN and Network Function Virtualization (NFV) to bring the next generation of cloud network transformation in 346 cities in China. China Telecom announced that the company 5G network field test in 6 cities.

China Unicom is falling behind in almost all the race: net profit, 4G development, and fixed-line broadband development. As Chinese tech giants Alibaba, Baidu, Tencent, JD acquired shares in China Unicom and has been cooperating with BAT since October last year, we’ll have to observe how China Unicom further develops.

Chinese tech stocks are hitting new highs—here’s why

Guest Editor — Fri, 25 Aug 2017 04:03:41 +0000

Editor’s note: This was written by Kayla Matthews, a freelance writer focusing on technology and online media. You can find more of her work on VentureBeat, MakeUseOf, Motherboard and Gear Diary.

US stocks—especially tech—have been climbing this year. Facebook, Amazon, Netflix and Google’s parent company, Alphabet, or (FANG), have dominated the US stock market recently.

In fact, American stocks, in general, have been exceeding goals for years. Despite gains like these across various US industries, another country’s stocks—China’s—have surpassed even the some of the biggest in the US tech scene, leaving many wondering what’s behind the surge in the Chinese stock market.

China’s tech stocks growing rapidly

The S&P 500 Tech Index is up by an impressive 23 percent this year, but the MSCI China Information Technology Index more than doubled that gain with an increase of 56 percent.

According to a recent comparison of US and Chinese markets, the three stocks with the most year-to-date growth were Chinese. Momo, a messaging app, saw a nearly 150 percent increase since the beginning of 2017 and over 200 percent growth over the last twelve months.

JD.com saw an 87.1 percent increase in 2017 and over 100 percent growth over the past twelve months. Alibaba, a rival of JD.com’s and a larger company, had growth of nearly 80 percent since the start of this year. Alibaba’s market cap is far behind Amazon’s, however. Alibaba’s is approximately $400 billion while Amazon’s is $478 billion.

For year-to-date percent growth, social media giant Facebook and video streaming service Netflix took the fourth and fifth spots, respectively. Two more Chinese companies, NetEase and Baidu, landed the sixth and seventh largest increases with Apple, Amazon and Alphabet, the parent company of Google, rounding out the list.

Reasons behind the surge

Analysts attribute this immense growth largely to a growing Chinese economy and an increasing popularity of online shopping, which is more popular in China than perhaps anywhere else in the world.

Online sales of physical goods in China grew by 28.6 percent in the first half of 2016 to RMB 2.37 trillion ($350 billion). E-commerce now accounts for 13.8 percent of total retail sales in China. For comparison, US e-commerce sales grew by 14.7 percent to a total of $105.7 billion in the first quarter of this year. They make up 8.5 percent of all of the country’s retail sales.

One potential reason why Chinese tech stocks have outperformed their US counterparts is that Chinese tech companies tend to diversify more than US ones. China-based companies that started out in social media have begun to expand into advertising, like US companies, but also into more diverse areas such as finance and logistics. This diversification provides additional certainty to investors.

This surge in Chinese stock has spawned increased interest from the international community in Chinese tech companies, boosting their status even further. Investors around the world are looking to get in on the next big global tech company as early as they can.

Where is this heading?

These changes in China’s stock market, and increased interest from traders around the world, have led investors to change how they approach Chinese stocks. The volume of options, which provide the right but not the obligation to purchase or sell stock, increased for five of the country’s most important tech stocks. Over the course of about a month, average daily options volume for JD.com increased from 25,606 to a whopping 41,632.

One thing that may be holding the Chinese market back is its reputation for being rather unstable, due mostly to government actions such as regulation changes and investigations into company practices. For example, the State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT) said it would take down the video services of the social media company Weibo in June due to improper licensing. After that news broke, the company’s stock fell by around six percent.

The market’s success demonstrates that China’s efforts to create more consistency in its markets have paid off. The outlook has changed dramatically since 2015 when it switched out its regulator. It has since interfered substantially less in the operation of the market. The result has been more stability.

This could inspire China to continue with this strategy in a bid for even more growth. There have been rumblings, however, that China might turn away from this tactic. Chinese President Xi Jinping recently said that regulators should increase their oversight. This resulted in a dip in Chinese stocks. It remains to be seen how much regulation the government will seek to impose on the market.

Alibaba’s AI-powered speaker hits the shelves

Eva Yoo — Fri, 11 Aug 2017 08:54:15 +0000

Alibaba’s first consumer targeted artificial intelligence speaker Tmall Genie X1 was unveiled on August 8th, the same day as the “88 Member Day” (and WeChat’s Cashless day) where Alibaba invited its dedicated 10,000 shoppers to a music concert hall in Shanghai. Pictures of Tmall Genie X1 were shown on the giant screen and the MC started a conversation with the artificial intelligence speaker.

“I can be your personal trainer when you are working out and your assistant at a gathering. If you bought a present, I can also track the package for you. There are many things that I can do,” Tmall Genie X1 tells the MC on the stage with a friendly voice.

Last month, Alibaba’s Artificial Intelligence Lab released its first beta version and on August 8th, Alibaba officially put its artificial intelligence on the shelves. Priced at 499 RMB, Genie X1 is now available on Tmall, with the sales figure reaching over 12,000 units in two days with a 4.8-star rating.

The release of Tmall Genie is Alibaba’s attempt to allow its users to purchase items on Alibaba’s retail platforms including Taobao and Tmall directly with their voice. When users place an order, Tmall Genie can recommend personalized shopping items on their platforms.

Tmall Genie X1 is the very first voice-controlled smart device produced by Alibaba AI Labs.

Alibaba’s AI push

Alibaba AI Labs, established in 2016, is leading the development of Alibaba’s consumer AI products and is very confident about the growth potential of China’s voice-assistant market.

“As mobile phone usage continues to grow, the next entry point for the internet may well be voice. We want to invest in speech cognition and deep learning technologies so as to keep enriching the features of Tmall Genie,” Lijuan Chen, Head of Alibaba AI Labs told TechNode.

The brain of Genie X1 is called AliGenie, which Alibaba says is the first generation of human-computer interaction system for the Chinese language.

AliGenie runs on the cloud and understands user commands in Mandarin. It has functions such as smart home devices control, voice shopping, bill-payment, food delivery and music streaming.

Tmall Genie X1 (Image Credit: Alibaba)

Currently, Alibaba’s voice assistant comes with AliGenie built in but it can also charge your phone and even help you find it when you misplace it. For food delivery, users can tell Genie X1, “make the same takeaway order as I did last time” or directly say which dishes they want to have. According to Alibaba, more services such as flight and movie ticket booking as well as hotel room reservation are in the pipeline.

In the future, Alibaba AI Labs plans to partner with more third-party service providers such as IoT and content service providers. They mentioned a possible partnership with home device manufacturers and brands to develop a smart home environment where smart devices can be connected with and activated by AliGenie.

TechNode asked Lijuan Chen, Head of Alibaba A.I. Labs how their Genie is better than other competitors like Tencent’s AI assistant Dingdang and Baidu acquired Alexa-like service Raven Tech. Lijuan did not address the competition, but rather gave the advantage of their product:

“We use cutting-edge deep learning technologies in Tmall Genie, which enable the device to provide personalized recommendations throughout our retail platforms that suit the best interest of consumers. AliGenie is an open platform, so that it can be connected with various hardware and software service providers and keep fine-tuning to meet the growing demands of consumers.”

Dianrong snags $220m Series D to further tap China’s $16t internet finance market

Emma Lee — Wed, 02 Aug 2017 10:11:20 +0000

Chinese P2P lending platform Dianrong today announced their Series D worth $220 million. This latest funding was led by GIC Private Limited, Singapore’s sovereign wealth fund, along with CMIG Leasing, Simone Investment Managers, and other institutional and individual investors.

The new proceeds will be used for improving risk management, R&D and automation, M&A opportunities and international expansion plans with local partners.

Soul Htite, founder and CEO of Dianrong, said, “The addition of these distinguished global investors not only validates our past successes but reinforces our commitment to ‘The New Finance,’ which applies fintech to deliver greater financial freedom to Chinese families and small businesses. This latest capital injection will help us expand and accelerate these efforts and further drive sustainable and profitable business growth.”

The current round added new ammunition to Dianrong, one of the most heavy-loaded fintech startups in China. In the most recent Series C round completed in 2015, Dianrong received $207 million from Standard Chartered Private Equity, China Fintech Fund, Tiger Global Management, etc. Investors of earlier rounds include Sun Hung Kai & Co. Limited, ZJ Capital, Northern Light.

The change in status of Dianrong’s investors shows that China’s internet finance industry, boasting a market size of $16 trillion as the world’s largest, is gaining more attention from the market. Starting from VCs and PEs in early rounds, Dianrong’s latest investors include banks, financial institutions and large investment institutions from public capital markets. The trend underlines that the huge potential of interest finance industry is alluring mainstream investors, Soul pointed out.

In response to inquires on IPO plans, Kevin Guo, founder and co-CEO of Dianrong answered that the current round has loaded the company with abundant cash, so they don’t have a specific IPO timetable for the time being.

Dianrong recently announced the acquisition of the asset-generation operations of Quark Finance, which tripled the company’s local footprint across China. Earlier this year, Dianrong also launched Chained Finance, the first-ever blockchain platform for supply-chain finance developed in partnership with FnConn, a subsidiary of Foxconn Technology Group.

Qtum says the trend is building a new business model on top of blockchain

Eva Yoo — Tue, 01 Aug 2017 02:24:23 +0000

In a country of centralized authority, a decentralized database is booming. In China, the trend is now building a new business model on top of the blockchain. Blockchain technology is a chain of blocks that each contains data, acting as a way to record what time the data was inserted into it. The cool thing about blockchain is that it’s decentralized, which allows for transactions to occur between parties without the need for a 3rd-party to establish trust.

In the global blockchain landscape, we are now seeing a Ukrainian blockchain-based Wifi router, energy projects in Eastern Europe, decentralized computing, storage, and VPN networks. In China, Qtum (pronounced Quantum) is now becoming a toolset and a platform for companies to build their business on top of the blockchain.

“Now you can build any business on top of the blockchain without intermediary costs and without friction.” Patrick Dai, co-founder and CEO of Qtum (量子链 in Chinese, meaning quantum chain) told TechNode.

The Shanghai-based blockchain company has their own cryptocurrency called Qtum, which now ranks in the top 20 on CryptoCurrencies Market Capitalization index and provides a blockchain application platform to execute “smart contracts” with a proof-of-stake consensus mechanism. This means that people can facilitate, execute and enforce the negotiation or performance of an agreement, such as a contract, using blockchain technology. The advantage of the Qtum is that it utilizes the core technology from both Bitcoin and Ethereum.

“Blockchain in China is hot these days. Currently, 7 companies are building a business on top of Qtum,” Patrick says.

These seven companies include a Singapore-based blockchain company that announced their first Initial Coin Offering (ICO) on top of Qtum. Energo, uses blockchain technology and smart meters to connect energy producers and consumers in microgrids with traditional electricity users to achieve point-to-point energy trading and energy supply. Other projects building on top of Qtum include Bodhi, a decentralized prediction market, and Vevue, a platform for monetizing digital content.

“Many of these blockchain companies are registered in Singapore, but they are focusing on the Chinese market,” John Scianna, Marketing Director at Qtum told TechNode.

Blockchain trends in China

The Chinese government is also showing positive reactions to this trend of blockchain development, pushing forward the development of blockchain in the coming three years, as blockchain is mentioned in China’s five-year plan (2016-2020) as one of the most promising technologies. The People’s Bank of China (PBoC) is doing research on blockchain technology and completed a successful trial run of self-developed digital currency that uses a limited implementation of blockchain technology.

Patrick also mentioned that authorities will seek to clarify regulations for blockchain projects this year and provide some guidance to help develop the industry.

“The regulation will come for sure and it’s good for the industry. Without regulation, it’s the wild west and it’s not good for the people and for their security,” Patrick said. “It’s a new way for people to collaborate and to build a reward structure to change the idea of VCs and crowdfunding.”

Qtum, as a platform provider for “smart contracts”, is at an early stage to get more adoption in the main society, and Patrick mentioned that the team will slowly build up trust on their blockchain platform.

“We are building trust, not by people, but by blockchain in a decentralized way,” Patrick remarked. “If the blockchain-based smart contracts become popular, the government will make smart contracts legally binding later on.”

Qtum from a consumer product perspective

Patrick Dai, CEO and co-founder at Qtum (Image Credit: Qtum)

Patrick Dai, CEO of Qtum was chosen as one of Forbes magazine’s “30 Under 30“, 300 people in Greater China under the age of 30. Forbes China recognized him for his accomplishments in the category of consumer technology. Is blockchain really considered to be a consumer technology? Patrick sees that a consumer product depends on the matter of trust.

“If you see P2P technology as a business model, you aren’t relying on the middleman. Using blockchain, you don’t need escrow, because blockchain is the escrow. The blockchain is offering trust on top of it,” Patrick explains.

An escrow service is someone that holds users’ money when users make a deal to assure their promise. So the blockchain technology can replace the people who do this service. For example, using blockchain, people can make a blockchain-powered application as a counterparty and automate this on blockchain through their computer.

“Each smart contract is a virtual escrow, and this lowers the cost for both parties. The blockchain smart contract program doesn’t sleep,” he said. “You can create 1,000 virtual small escrows this way. It’s like people because they perform the same service.”

Patrick gave an example: China’s biggest real estate company Lianjia has 10,000 people in charge of contract signature and approval, repeating the same process every day for apartment owners, renters, and buyers.

“You don’t need those people. All you need to do is to sign the contract directly, and it’s effective immediately. You can trust each other,” he says. “Blockchain will become the basic architecture and infrastructure like TC/IP protocol. Just like you have a browser as a gateway to the internet, you need a gateway to the blockchain. Qtum is this gateway. Blockchain is the value, like a piece of the house or like a dollar.”

Because of the blockchain, current business models will change, new business models will emerge, and some people will lose their jobs. Patrick says, in some ways, it improves the society.

“Those people who lost their jobs because of changing business models can do other stuff, and it could increase the efficiency of whole society. You don’t need to waste human capital on repetitive tasks,” Patrick said.

China’s underground anime fan culture is changing how brands market in China

Emma Lee — Wed, 26 Jul 2017 09:19:25 +0000

Some Chinese tech firms get all the attention. BATJ, Xiaomi, ofo, and all the “sharing economy” startups have dominated headlines over the past few years. However, there is another group of companies who choose to keep a relatively low profile but are nonetheless an important part of China’s ever-growing tech landscape.

Bilibili might be a lesser-known name for those who are not interested in the ACG (animation, comics, and games around IP such as One Piece and Fate/stay Night) culture or live outside of China, but its impact on the Middle Kingdom is obvious: total monthly active users on par with Pinterest coupled with especially young demographics on their way to commanding more mainstream influence in a matter of years.

Bilibili, more widely known as “B Station” (b站 in Chinese), is the spiritual home for Chinese ACG fans. Founded by Xu Yi in 2009, the site models itself on the early days of Japanese ACG video portal Niconico with its integration of danmu (弹幕, “bullet screen” in English or “danmaku” in Japanese), a feature that allows viewers to plaster the screen with instant comments that move from left to right.

The rise of B Station finds its root in the spread of “2D culture” in China, characterized by fans who develop a strong attachment to 2D characters in cartoons, tradable cards, comics, games, and youth novels. In 2015, iResearch estimated that this community reached as high as 219 million people.

Influenced by this underground trend, China’s mainstream culture is embracing a more open attitude towards content generated by 2D fans. The concept–people freely entertaining each other as an anonymous collective, akin to 9GAG–is gradually being adopted by broader society, for example, an autotuned remix of a Lei Jun’s speech and other memes created on B Station that have gone viral.

The mainstreaming of 2D culture underlines a great demographic shift as China’s post-80 and post-90 groups–both highly-educated digital natives–are coming of age, giving the marginalized ACG culture a demographic dividend. According to data from the company, the average user age is 17 years old, of which 75% were under the age of 24.

While China millennial are growing into independent consumers, they are bringing their tastes and wallets with them. And it’s no surprise that the latest fads among Chinese youths are already changing the way brands behave.

Among a hall full of teenage elves and fantasy warriors at Bilibili World last week, we found booths for a roster of international brands from KFC, Nike, Maybelline to Kotex. However, these outlets are somewhat different from what you could find in downtown shopping malls.

In the Nike demo zone, cartoon characters replace NBA stars to show off Nike sneakers. Feminine hygiene brand Kotex turns its booth into a Japanese-style temple where visitors can wish for good luck during periods or whatever they want. (We are still wondering why this booth was so popular with the boys).

KFC continues its partnership with Bilibili after a joint live-stream marketing company last year when two anime-styled girls competed to eat 50 pieces of fried chicken. Over 200,000 users watched them in real time.

The brands are still finding their approaches in marketing to this special group. “On the first day of the show, Maybelline’s booth is basically a typical representation of their department store versions. They become more popular in the following shift when helping cosplayers freshen up their makeup,” said Yang Liang, Bilibili’s marketing and PR head.

What we see at Bilibli World is just a part of China’s efforts in co-opting manga and animation as marketing tools. Xiaomi launched a limited edition of its Redmi Note 4 dedicated virtual idol Hatsune Miku, complete with accessories adorned with Miku’s color scheme. Alibaba’s e-commerce website Tmall was heavily decorated with manga-style artwork to help boost sales in the lead-up to the Chinese New Year in 2016.

Even government entities are opting in in an attempt to reach the young demographic. China’s Central Communist Youth League established its presence on Bilibili to better propagate its message. Chinese Ministry of Foreign Affairs even uses cartoon figures to add flavor to their public WeChat account posts.

China online retail sees rapid growth in the first half of 2017

Eva Yoo — Mon, 24 Jul 2017 09:49:32 +0000

In June 2017, the total retail sales of consumer goods in China reached RMB 3.9 trillion ($440 billion), up by 11.0% year-on-year, China Internet Watch is reporting. That is approximately the same amount Greece was loaned over a five year period for its bailout ($440 billion), meaning the amount of money Chinese consumer spent on consumer goods for one month equals what Greece spent in five years.

From January to June 2017, the total retail sales of consumer goods reached 17.2 trillion RMB ($2.5 trillion), up by 10.4% year-on-year. In the first six months of 2017, China’s national online retail sales of goods and services was 3.1 trillion yuan, an increase of 33.4% year-on-year and accounting for over 18% of total retail sales.

As Chinese consumers’ spending largely depends on mobile payments, a total of $3 trillion in transactions using AliPay and WeChat Pay was recorded in 2016. The online retail sales of physical goods were 2.3 trillion yuan, an increase of 28.6%, accounting for 13.8% of the total retail sales of consumer goods.

This indicates a huge market for luxury brands and consumer facing startups to open online retail market and adopt mobile payment options.

Monthly growth rate of total retail sales of consumer goods in China (Image Credit: China Internet Watch)

From January to June, the retail sales of consumer goods in China’s urban areas was 14.7 trillion RMB up by 10.1%, year-on-year; while that in rural areas was 2.4 trillion RMB, up by 12.3%, year-on-year.

China now sees a new stream of unmanned stores started out by both early stage startup and internet giant. China’s unmanned convenience store BingoBox received RMB 100 million ($14 million) in a Series A from GGV Capital, with its plans to reach 5,000 stores by the end of this year. Alibaba also featured its cashier-less concept shop in July, powered by its face recognition technology.

CareMind wants to make sure that plastic surgery patients get the care they need

Eva Yoo — Wed, 19 Jul 2017 08:19:09 +0000

China’s cosmetic surgery industry to double in market size by 2019, reaching RMB 800 billion ($116.3 billion), making it the third largest in the world behind the US and Brazil, according to China Association of Plastics and Aesthetics‘s report released in 2015.

The problem is that not many hospitals care about the after care element of plastic surgery. The recovery process after surgery is important, because the patients might have negative side effects, and some do suffer from anxiety. Aiming to fill this niche market, Korean startup CareMind provides recovery assistance service after the plastic surgery by connecting doctors to the patients.

Cosmetic surgery is a huge market in South Korea and China. South Korea, the so-called mecca of cosmetic surgery, enjoyed a boom in Chinese tourists heading to Korea for surgery in 2014. At its peak, Yoonje Shin, CEO and founder of CareMind, used to work as a broker to connect Chinese customers to Korean cosmetic surgery hospitals. Now that this boom to go Korea has cooled, in part due to the MERS outbreak in 2015 and worsening political ties, the number of Chinese tourists visiting Korea has since dwindled.

“For patients, it’s not a choice, they all have to go through this process,” Yoonje told TechNode. “After the surgery, doctors just ask the patients to wait a certain amount of time. Plastic surgery can have negative side effects, and the patients want to check if they are recovering well.”

In recent years, cosmetic surgery hospitals in China have mushroomed, along with platforms to promote these hospitals. Guangdong-based Gengmei (更美, more beautiful), a cosmetic surgery app, has more than 15 million users in major Chinese cities. Another cosmetic surgery app, Beijing-based SoYoung (新氧), received Series C funding from Tencent.

CMO of CareMind, Wen Tao pitching at the NEOPLY demo day (Image Credit: TechNode)

“The surgery reviews on these apps go over 100,000. Unlike Korean users, Chinese users share their plastic surgery experiences and also boast about their transformation process to others on these apps,” he said.

CareMind’s business model charges hospitals an annual RMB 2,400 for providing their solution to patients. The solution includes a checklist of actions the patients need to take every day, a chat room with the doctor so that customers can ask questions and doctors can answer them, and Care Diary, where users can take pictures of their recovery process, and note their changes. The company incentivizes the users by giving a monetary gift—hongbao (红包, red envelope)—when they share. Checking the patient’s diary, the doctor can comment and leave medical advice for the patient. Getting the database of customers is another asset for the company. They are now targeting second-tier cities in China, and plan to expand to first-tier cities.

CareMind pitched at the NEOPLY demoday on July 14th in at Chuangyebang in Shanghai. Other fresh-born startups from the demoday include Sodatransfer, a mobile money transferring service with minimal fees, and Wizpace, a Pinterest-like job searching platform for designers. INI Studio, a children’s educational video creator, posted 35 videos on iQiyi and Youku and got 1.3 million views in total, with its highest view of 300,000.

Apple may stop taxing in-app tipping in China

Emma Lee — Wed, 19 Jul 2017 07:56:54 +0000

Apple is planning to remove its controversial App Store policy of taking a 30 percent cut on tipping from users to content creators in China, local media The Paper is reporting (in Chinese), citing several sources they identified as execs at Chinese internet firms. Several game developers also got wind of Apple’s plan to change its tipping policies, the report noted.

By classifying tipping or donation as a form of in-app purchase, the US company demanded app makers earlier this year to disable the tipping function per its new App Store rules, allowing Apple to take a 30% cut.

The Paper made public an unconfirmed new App Store policy that people who want to make donations to others without making in-app purchase should meet the following requirements: a) the donation decision is made by the donor; b) the donor will be charged 100% for tipping; c) the tipping is not exchange for any digital content or services. Under the new policy, the tipping will be treated as a means of personal donation.

Since the boom of live streaming, virtual gifting has become a popular form through which users interact and show their gratitude to performers writers, developers and other content providers who give out stuff for free.

Apple’s move of taking a sizable portion of the donations has upset the country, where industry insiders called it an “Apple Tax”. For many, turning a means of expressing personal appreciation into a revenue source is not only unjustified but also reflects the company’s failure to fully understand the Chinese market.

To some extent, this is understandable given that there’s no tipping service in American live streaming apps like Facebook Live and Periscope. Facebook, however, does allow broadcasters to show ads in their streams and to keep 55 percent of the revenue.

After slowing market growth over the past few months, Apple has made several major moves to reinvigorate its Chinese business, including the largest promotion campaign for Apple Pay China-wide yesterday, it named a new China head today.

We have reached out to Apple for comment and will update when we get a response.

Apple names new China head to bolster slowing China growth

Emma Lee — Wed, 19 Jul 2017 06:18:31 +0000

Amid slowing growth in China, Apple is creating a new head position for its Chinese team to invigorate the Chinese business. The global smartphone giant announced today the appointment Isabel Ge Mahe, formerly vice president of Wireless Technologies, as vice president and managing director of Greater China.

Isabel will report directly to CEO Tim Cook and COO Jeff Williams. She will assume her new role later this summer and will be based in Shanghai, the firm says.

“Apple is strongly committed to invest and grow in China, and we are thrilled that Isabel will be bringing her experience and leadership to our China team,” said Tim Cook, Apple’s CEO. “She has dedicated a great deal of her time in recent years to delivering innovation for the benefit of Apple customers in China, and we look forward to making even greater contributions under her leadership.”

This appointment comes when the global tech giant is gradually losing ground to local smartphone manufacturers like Huawei, VIVO, and OPPO. Apple’s Q1 report revealed that its revenue from China, which lost its status as Apple’s second-largest market to Europe last year, slumped by 14 percent year on year, compared with a 1 percent drop globally.

Apple’s decline as a foreign smartphone maker in China isn’t a single case. Something very similar happened to Samsung, only it’s worse for them. A report from Counterpoint shows that Samsung’s smartphone sales in China dropped around 60 percent in Q1 this year. Samsung Note 7’s battery failure and the company’s belated recall plan in China play no small part to the shattering of the Samsung brand.

The rise of local smartphone brands also plagued the foreign competitors. In 2016, a total of 559.7 million mobile phones were shipped in China, of which local smartphone makers account for a dominating 497.8 million or 88.9% of the total shipments.

China denies banning personal VPNs, users still not in the clear

Masha Borak — Thu, 13 Jul 2017 05:09:33 +0000

Chinese authorities have stated that personal VPNs (Virtual Private Networks) will not be banned (in Chinese), but Facebook and Instagram addicts may not be safe yet.

After news broke out that state-run telecommunications carriers—including China Mobile, China Unicom, and China Telecom—will block individuals from accessing VPNs by February 2018, the Ministry of Industry and Information Technology (MIIT) responded yesterday saying that reports from foreign media are untrue.

The Ministry stated that it has not banned personal VPN use and explained that the notice—which was issued in January this year—concerns cross-border business activities and does not include domestic and foreign enterprises as well as the majority of users.

However, MIIT added that the targets of the notice are businesses and individuals that lease international lines or use VPNs to provide cross-border telecommunication services without the approval of the relevant telecommunications departments and without the qualifications for managing international telecommunication services. This opens many questions about which companies will receive permission to operate VPNs and how these approvals will be granted.

This recent rebuttal echoes the January directive, which basically says that only authorized VPNs can be used in China, making most VPN services illegal. The regulations issued in January by the MIIT are aimed at barring illegal activities and “purifying cyberspace”.

So far, no VPN service has gained official permission to operate in China. In fact, the opposite is true: one of China‘s most popular VPN service providers, Green VPN, was ordered to cease operations in June 2017.

China Tech Talk 11: [Interview] Bringing your apps to China with Shlomo Freund and Michael Michelini

John Artman — Fri, 07 Jul 2017 09:16:29 +0000

This week John and Matt talk with Shlomo Freund and Michael Michelini, hosts of the China Business Cast, about bringing your app to China, including:

Why games are difficult to bring to China
How app markets monetize
Why there is no paid app category in China’s app stores
How to tell if your app will be successful

Links

Hosts

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

China Tech Talk is a TechNode x ChinaChannel co-production.

Bike rental startup ofo announces $700 m series E funding led by Alibaba

Eva Yoo — Thu, 06 Jul 2017 02:33:50 +0000

Bike rental platform ofo announced the completion of more than $700 million series E financing on July 6th. The current round of financing was jointly led by Chinese eCommerce giant Alibaba, Hony Capital and CITICPE, followed by existing investors Didi Chuxing and DST, with China eCapital as the financial adviser of the current financing.

Alibaba investment in ofo is quite worthy of attention. Prior to the new funding round, ofo had already struck a strategic cooperation deal on April 22nd with Sesame Credit, the social credit scoring system developed by Ant Financial, allowing Shanghai ofo users with a Sesame Credit score of 650 or higher to register on the app without making the RMB 99 deposit. This is considered an important sign of Alibaba’s entry into ofo.

Ofo’s founder and CEO Dai Wei said: “Ofo is committed to providing users with convenient, efficient, green and healthy travel services to the world. In the future, we will further promote the user experience upgrade, accelerate the strategic layout at home and abroad.”

Alibaba as the leading investor in the current round was very optimistic about the future development prospects of ofo. Alibaba Group Executive Vice Chairman Cai Chongxin said: “Ofo redefines the short-distance travel so that more people can join the low-carbon life, and deliver a real positive value to the community. We are delighted to be working with ofo to unlock the industry’s greater potential.”

[Podcast] China Business Cast 64: Balancing WeChat and websites for your marketing strategy

Guest Editor — Wed, 05 Jul 2017 06:53:03 +0000

Matt Brennan and John Artman are the hosts of the China Tech Talk podcast (CTT).

Listen to the episode here or subscribe.

EPISODE CONTENT:

Posting new content – is it done in the website first, or on WeChat?
Matt and John talk about the differences of the contents they publish on their website and on their WeChat Official Accounts
Question: What content is working in WeChat today?
WeChat SEO – Can people find your content after publishing it like in Google search?
Strategies for balancing WeChat and websites
Conferences in China
How to succeed and maximize your time at a conference in China
China Tech Talk (CTT) podcast update
How people can find Matt and John online

Episode Mentions:

Intro

http://tc.technode.com – Techcrunch in China
https://www.globalfromasia.com/events – Mike’s Global From Asia events

Interview

TechNode does not necessarily endorse the commentary made in this program.

China’s consumption upgrade is creating demand for better sleep

Emma Lee — Fri, 30 Jun 2017 08:31:53 +0000

To be successful in the tech market, or any market, being at the right place at the right time is essential. This concerns not only the startup team but also the potential customers and the market situation. There are two paths you can take on the way to find the right alignment of all these factors: sticking with one place long enough until the right time arrives, or figuring out the next place that the right time will most likely be.

Sleepace, a Shenzhen-based startup for sleep quality monitoring, chose the first path. In 2014 when TechNode first talked with company CEO and founder David Huang, the startup had just launched their medical-grade sleep tracker RestOn for people with sleep problems. This was after they had tried (failed) to target the pre-mature infant and geriatric verticals

“Sleepace have developed sleep trackers for babies and elderlies in 2013,” Huang says. “We still think they are good products, but it’s difficult to get accepted by the market back then when the customers has yet to know the concept of sleep tech.”

But what seemed almost impossible back then is now gaining momentum against the backdrop of different user habits and market landscape.

A more sleep quality aware China

38 percent of Chinese suffer from sleeping disorders, but Chinese people don’t think its a big problem until recently, but that is gradually changing.

A consumption upgrade is driving China’s economy, mainly propelled by more affluent Chinese people who are seeking healthier lifestyles, Huang told TechNode. Along with this trend, Chinese users are paying more attention to their sleep quality. The combined effect of changing customer habits, the popularity of smart hardware as well as an evolution in technology is pushing the market forward.

The huge market potential has attracted a roster of big names to the sector, Huang noted. Samsung has invested in EarlySense, whose contact-free monitoring solution powers Sumsung’s SleepSense. Apple bought Beddit and Nokia acquired health and fitness focused gadget maker Withings.

Apart from internet giants, traditional mattress makers, like Simmons are also laying out in the sector with launch of mattresses with sleep monitoring features. Sleeping quality service is forming a trillion RMB market in China, according to Huang.

Varied product line for diversified user groups

“People from different ages and gender groups may attribute their sleeping problems to different factors. Everything from environmental, physical or physiological factors may lead to sleeping disorders to different extents. So we decided to go in different verticals again in a bid to solve sleeping problems more specifically,” Huang explained.

Over years of development, Sleepace has diversified its product line. Its consumer-focused products now fall into two categories. Sleep monitoring and tracking products include RestOn, Sleep Dot, a mini smart sleep gadget, and smart pillow.

The sleep facilitation category mainly consists of Nox, a smart light/speaker that helps users to fall asleep by using its light and sound programs. In addition to app control, you can control various functions of this device by using hand gestures. Nox now offers different versions for kids and women offering custom contents from the Sleepace as well as content partner Ximalaya, an audio streaming service.

Enterprise-facing businesses offer bedding solutions for hotels and nursery homes.

Sleepace’s smart devices are now on sale in over 30 countries. “We have registered over 1 million users from around the world. In 2016, around 60 percent came from China and 40 percent from North America and Europe. This year the market share is expected to be half and half,” Huang told us. “Most of our Chinese users are people aged between 30 to 50, while overseas customers tend to be older.”

The company is expected to record profits this year, mainly from sales of hardware, Huang disclosed.

Ensuring long-term engagement

Smart hardware, particularly fitness wearables, fail to keep the interest of users for more than a few months. Huang acknowledged that Sleepace is facing the same problem.

“Unless it’s computer or smartphone, every product will face this problem. We try to attract and keep users by providing premium content and services, including courses on meditation, yoga, and more.” said Huang.

Sleepace just received RMB 50 million (~$7.37 million) Series B Plus led by Xingwang Investment and followed by Ximalaya FM. The financing comes after an RMB 40 million Series B from Luolai Home Textile, a leading home textile product brand in China, and JD.com

Mobike co-founder: “Profit is not the most important goal for us for now”

Eva Yoo — Fri, 30 Jun 2017 03:31:35 +0000

At the Summer Davos Forum in Dalian, Hu Weiwei, co-founder and president of Mobike, took to the stage (in Chinese), dispelling rumors of a merger with ofo and explaining that they are not yet seeking profitability.

Consolidation in the bike rental industry

Hu Weiwei said that the biggest beneficiaries of the Didi and Uber war were mobile payment companies since people had to use mobile payments to call a car. She remarked that the bike rental industry is different from the ride-hailing industry; Didi connects the drivers with the passengers while Mobike connects the object with the people.

“This business is really about density and operational efficiency. If we and the other bike sharing companies do not match in this respect, it doesn’t make sense,” she said.

Founder and present of Mobike, Hu Weiwei (Image Credit: Tech QQ)

Expansion over profits

Hu Weiwei said: “If we want to make money now, we can, but making money is not our first goal.”

Hu Weiwei then talked about how bike rental is actually the first step to develop their IoT platform.”Profit is not the most important goal for us for now. We are focused on market expansion,” she remarked.

Global ambitions

Hu Weiwei said that Mobike is now prepared to expand to Japan, the UK, and the U.S., and is now in cooperation with the U.S. company, Dow Chemical to make better tires for Mobike. Launched in April last year, Mobike has entered the 130 cities in the world in 14 months, with 20 million people riding its bikes.

Dealing with local governments

For Mobike to enter many cities, many challenges are inevitable, including negotiating with the local governments. However, Hu emphasized that they are not aggressive when talking with local governments.

“Generally a local government that has self-built public bicycle system does not want to accept us, and local government with no public bicycle is still very willing to accept us,” Hu said.

Judging Chinese tech companies by their Glassdoor reviews, part 2

Guest Editor — Wed, 28 Jun 2017 08:49:23 +0000

This is the second in a two-part series measuring how Chinese companies perform on Western HR website, Glassdoor. The first part looks at Alibaba, Tencent, Baidu, and Huawei. This part looks at Lenovo, Cheetah Mobile, ZTE, and LeEco.

If you don’t spend much time on the English-language internet, Glassdoor may be a new name to you. As one of the most popular HR-related sites, it is a go-to source for job listings, news, and most famously, its employer reviews section. These reviews provide current and former employees a platform to give a 1-5 star rating for a company, with sections for “pros,” “cons,” and “advice to management.” For many job-seekers, checking out a company’s Glassdoor page is essential before accepting a job offer.

For those interested in working for Chinese tech companies, this can be a helpful resource to better understand what to expect from each company. For the companies themselves, it can provide valuable feedback for how to improve their practices for attracting and retaining both foreign talent overseas and globally-oriented talent in China.

In this second article, we look at 4 more top Chinese tech companies: Lenovo, Cheetah Mobile, ZTE, and LeEco. Part 1 covered Alibaba, Tencent, Baidu, Huawei. In order to better ensure that the reviews are statistically representative, only companies with at least 30 reviews have been taken into consideration. Furthermore, while all companies will inevitably have a few disgruntled employees who may have had negative experiences for their own personal reasons, this article attempts to look at broader trends in the employee reviews, in order to provide a clearer picture of the general culture, atmosphere, and tendencies of each company represented.

Lenovo

With a large international presence, particularly in the US, Lenovo has nearly 1,000 reviews. With a rating of 3.3, they are far from perfect, but it is interesting to see the nature of the feedback about the company, particularly in comparison to Huawei. Their rating of 3.3 stars is actually the highest of any company in this article that has a majority of non-Chinese reviewers. When results were filtered to only include offices outside of China, the star rating stayed roughly the same, which was a stark contrast to many of the other companies, whose outside-of-China scores were noticeably lower. Many of the respondents reported having worked for Lenovo for over five, or even ten years, and even the negative reviews tend to express some feelings of affection towards the company, praising its people, management, and culture. What is also worth noting is what is not mentioned. While Huawei’s reviews are filled with complaints about discrimination, language issues, cultural insensitivity and even ethical violations, these sorts of grievances were noticeably rare in Lenovo’s reviews.

What is also worth praising is that for seemingly all of its reviews, positive or negative, a Lenovo global talent acquisition specialist gave a detailed, thoughtful response. Kudos to Lenovo’s HR for staying engaged with their employees and giving thought, attention, and energy to their employer branding. Judging from the reviews, it seems that through both their expansion strategy and HR initiatives they have done a commendable job at localizing in the US market.

On the not-so-positive side of things, the company’s less-than-stellar performance and downsizings in recent years seem to cause some reviewers to be concerned about the future of the company and question its priorities. Frustration with inefficient and lengthy processes were also a common complaint.

Cheetah Mobile

With only 33 reviews, Cheetah Mobile had the smallest data set to draw from, and it was quite interesting. Their positive reviews seemed a bit, well, over-the-top positive, and at the risk of editorializing, it seems a little… less-than-authentic. While it would be naïve not to assume that most companies do what they can to manipulate their Glassdoor scores, it’s impossible to ignore such an obvious red flag as the ones on Cheetah’s page.

The more negative reviews tell a very different story of the company, with complaints of language and cultural issues, poor interpersonal skills on the part of managers, and arrogance from the company’s leadership. As with just about every company profiled in this piece, work-life balance was also cited as a major issue.

ZTE

The trends on ZTE’s page look very similar to those on Huawei’s. Both had similar overall scores, with substantially lower scores when results were filtered for overseas results, (each company, for example, scored a 2.7 on their US reviews). In both cases, reviewers praised the companies for fair compensation and being a good place to gain early-career experience. The complaints were similar as well, largely focused on issues of local autonomy and culture. Looking at these reviews, a reasonable person could come to the conclusion that while ZTE and Huawei are interested in doing business internationally, they do not have the same ambitions for creating a global corporate culture.

The less positive reviews, many of which came from ZTE’s Texas office, seem to revolve around the cultural differences between US staff and the Chinese HQ. Reviewers complained about the lack of local staff, even after ZTE has been in the US market for over ten years. Other common complaints include language issues, unsatisfactory levels of autonomy, poor transparency, and even contempt for Americans in general.

LeEco

With an overall rating of 1.7, there is not much to say about LeEco’s Glassdoor page. With their well-documented rapid global expansion, cash crunch, and contraction, it is not surprising that many employees were left with a bad taste in their mouths. On the positive side, some reviewers did express positive experiences with LeEco’s collaborative team environment and opportunities to improve Chinese language and interpretation skills. But the more negative ones were far more numerous…

What’s an interesting point about the negative feedback that LeEco receives on its Glassdoor page is that the core issues that led to LeEco’s struggles (rapid overexpansion, poor financial management) were not anywhere near the most frequently mentioned complaints. Rather, the “cons” sections of LeEco reviews ran the gamut from dishonesty in the recruitment process, failure to localize to meet the needs of overseas markets, favoritism of Chinese employees and discrimination against non-Chinese ones, poor communication, nasty internal politics, and even racism, fraud, and corruption.

Final Thoughts

BAT were top performers, but also had relatively low numbers of reviews from those who were based outside of China. Also, while reports of unproductive internal politics and abusive managers are somewhat unavoidable, it may benefit the companies for their HR department to take these complaints seriously and evaluate how to address the root causes.
Work-life balance seems to be an issue for just about all of these companies. It may just be a necessary byproduct of working in the fast-changing world of a Chinese tech company, but if that is the case, companies may want to consider how to improve employees’ experiences while they are working those long hours.
For many of these companies, a lack of an inclusive culture for overseas staff is clearly an issue. These companies may want to establish talent development employees for some high-potential non-Chinese employees that include Chinese language lessons, cultural training, and opportunities for trust and relationship-building with the Chinese leaders of the company.
Of all the companies with significant overseas presences, Lenovo seemed to be the best at managing its non-Chinese staff (in the second part). This may be a result of the growth-by-acquisition strategy that they have taken over the last 15 years, but credit should also be given to Chairman and CEO Yang Yuanqing and Global HR SVP Gina Qiao, who have actively taken steps to implement inclusive practices, including mandating that the board of directors is no more than 50 percent Chinese, appointing a “CDO,” (chief diversity officer), and investing heavily in English language and cultural education programs.

Finally, one last note from me: While fairness and objectivity were aimed for in writing this piece, I recognize that it oversights are inevitable. I welcome any questions or concerns from those who may be impacted by this article.

Judging Chinese tech companies by their Glassdoor reviews, part 1

Guest Editor — Tue, 27 Jun 2017 08:13:22 +0000

This is the first part in a two-part series measuring how Chinese companies perform on Western HR website, Glassdoor. The first part looks at Alibaba, Tencent, Baidu, and Huawei. The second part looks at Lenovo, ZTE, Cheetah Mobile, and LeEco.

If you don’t spend much time on the English-language internet, Glassdoor may be a new name to you. As one of the most popular HR-related sites, it is a go-to source for job listings, news, and most famously, its employer reviews section. Glassdoor’s employee reviews provide current and former employees a platform to give a 1-5 star rating of a company, with sections for “pros,” “cons,” and “advice to management.” For many job-seekers, checking out a company’s Glassdoor page is essential before accepting a job offer.

For those interested in working for Chinese tech companies, this can be a helpful resource to better understand what to expect from each company. For the companies themselves, it can provide valuable feedback for how to improve their practices for attracting and retaining both foreign talent overseas and globally-oriented talent in China.

In this article, we look at 8 top Chinese tech companies: Alibaba, Tencent, Baidu, Huawei, Lenovo, Cheetah Mobile, ZTE, and LeEco. In order to better ensure that the reviews are statistically representative, only companies with at least 30 reviews have been taken into consideration. Furthermore, while all companies will inevitably have a few disgruntled employees who may have had negative experiences for their own personal reasons, this article attempts to look at broader trends in the employee reviews, in order to provide a clearer picture of the general culture, atmosphere, and tendencies of each company represented.

Alibaba Group

With a rating of 4.4/5, Alibaba had the best overall score of any of the companies examined. What may be most impressive for the Hangzhou-based tech giant is that with the exception of one 1-star review from 2014, none of its 149 reviews were less than 3 stars. Kudos to Alibaba for that.

Even Alibaba is not without its imperfections, however, and while many reviews spoke highly of the company’s compensation and working environment, work-life balance and high pressure were common complaints.

It should also be noted that the vast majority of Alibaba’s reviews were from employees who were located in China. Most were also quite limited in detail (as in the case of the ones above) and full of small “Chinglish” grammar mistakes, which likely indicates that most, if not all of the reviewers were native-born Chinese nationals.

Tencent

Tencent is another company with an overall positive rating and few negative reviews. Of their 213 reviews, the vast majority were 4 or 5 stars. As in the case with Alibaba, work-life balance was also identified as an issue, and some employees expressed an inability to handle their high-pressure environment. While few reviews criticized the company systems or leaders, there were many which complained about politics and lack of professionalism among mid-level managers.

One of the most notable positive highlights was how frequently Tencent’s HR and perks were praised, particularly from employees located in mainland China.

The company does seem to have had a bit of trouble translating their people-management success domestically to their Palo Alto, California office, however, as their score was only 3.2 stars when search results were filtered to select only US-based reviews. While the sample size of US reviews was quite small, complaints included language issues, a lack of autonomy, and an unspecific accusation of encouragement of illegal behavior.

Baidu

Like the other two BAT giants, Baidu’s scores were overall quite positive, with its 317 reviews dominated by 4 and 5-star ratings. While the trend of work-life balance complaints existed here as well, there seemed to be less of it for Baidu than for Alibaba and Tencent. Employees also seemed to value the creative environment there and the teams of talented individuals. Even when reviews were filtered for only US-based employees, the majority of reviews were positive, with an average score of 4.5 stars.

While reviewers often spoke highly of CEO Robin Li and the company in general, there were frequent complaints of internal company politics and a lack of respect for employees on the part of mid and senior-level management.

Huawei Technologies

With over 2,400 reviews, Huawei received the most reviews of any Chinese company looked at for this project, by far. The reviewers were also widely diverse in their cultural and national backgrounds, with all six continents represented. Throughout Huawei’s reviews, there was a glaringly clear trend that emerged: while they consistently received positive feedback in compensation, products, and as a place to gain early-career experience, they were resoundingly criticized for lack of professional HR practices, poor inclusion and autonomy for overseas employees, and even discrimination and questionable ethics.

On the positive side, Huawei seems to have a solid grasp on their task-oriented basics. Reviewers praised their customer-centricity, and their dedication to coming through on their promises, delivering good quality at low prices.

On the more critical side, in nearly every country where Huawei has a presence, reviewers reported a lack of transparency, inclusion, and diversity. There were numerous reports of racist, ageist, and sexist practices, indicative of an approach to HR that reviewers from many overseas offices saw as outdated, or even unethical. While Huawei certainly has a global presence, reading these reviews could cause someone to easily assume that localization in overseas markets is not very high on the priority list for them.

With Huawei’s tremendous success, it is difficult to be too critical. After all, this approach seems to be working for them quite well. However, it does not seem to be a place where non-Chinese staff can expect much career development.

Final Thoughts

BAT were top performers, but also had relatively low numbers of reviews from those who were based outside of China. Also, while reports of unproductive internal politics and abusive managers are somewhat unavoidable, it may benefit the companies for their HR department to take these complaints seriously and evaluate how to address the root causes.
Work-life balance seems to be an issue for just about all of these companies. It may just be a necessary byproduct of working in the fast-changing world of a Chinese tech company, but if that is the case, companies may want to consider how to improve employees’ experiences while they are working those long hours.
For many of these companies, a lack of an inclusive culture for overseas staff is clearly an issue. These companies may want to establish talent development employees for some high-potential non-Chinese employees that include Chinese language lessons, cultural training, and opportunities for trust and relationship-building with the Chinese leaders of the company.
Of all the companies with significant overseas presences, Lenovo seemed to be the best at managing its non-Chinese staff (in the second part). This may be a result of the growth-by-acquisition strategy that they have taken over the last 15 years, but credit should also be given to Chairman and CEO Yang Yuanqing and Global HR SVP Gina Qiao, who have actively taken steps to implement inclusive practices, including mandating that the board of directors is no more than 50 percent Chinese, appointing a “CDO,” (chief diversity officer), and investing heavily in English language and cultural education programs.

US firm says ofo leading bike rental race in China

Emma Lee — Tue, 27 Jun 2017 02:20:23 +0000

The public spat between Tencent’s CEO Pony Ma and GSR Ventures managing director Zhu Xiaohu over who is the most popular bike rental platform has added fuel to China’s already heated bike rental industry. The discussions between investment moguls make it difficult for onlookers to dig up into the correct figures in the burgeoning market. Even the companies themselves found this a challenging task.

7Park Data, a research firm based in New York, recently released its observation together with insights on China’s bike rental market. According to 7Park Data, ofo is leading the race with a 65% market share.

Modern bicycle sharing systems are effective and convenient in solving the “last kilometer” problem in urban China, which has witnessed a decade-long recession of bicycles as a means of transportation due to the popularity of private cars. The bike rental boom is reigniting users’ passions for bicycles while both companies claim to operate an average of 20 million daily rides. The report pointed out that riders are spending an average of around one hour on both ofo and Mobike as of May 2017 – up from an average of 25 minutes earlier this year.

Image credit: 7Park Data

Ofo is growing at a breakneck speed of 386% in weekly active users from Q4 2016 to Q1 2017, whereas Mobike is growing at a slower but still impressive 180% over the same period of time, the report shows.

Shanghai leads the world with 450,000 shared bicycles, nearly all of which began operating in 2016. Ofo and Mobike have each signed manufacturing deals in a battle for market share (reminiscent of the driver supply turf war between Uber and Didi Chuxing). Ofo owns a majority share in eight of China’s 14 Tier 1 provinces and municipalities with Mobike leading in the remaining six.

ofo/ Mobile market share in tier-one provinces (Image credit: 7Park Data)

Prospects outside of China

In addition to the local market,  both companies have begun to expand outside of China. Ofo began operating its service in Singapore in early 2017 as the first Chinese bike rental company to operate overseas in a bid to scale. The Beijing-based startup is now operating in five countries. In a similar initiative, Mobike is also tapping overseas markets in Singapore, UK and more recently Japan.

Localizing products for new markets is the most important thing to get right and bike rental is no exception.

“The dynamics which support the growth of bicycle [rental] are unique in different markets. The success of expansion into other markets will be in part based on these factors – including population density (i.e., high capacity utilization and high availability), economic factors, conducive environments for safe biking (i.e., physical layouts, base rates of crime, etc.), and state/government regulations that do not hinder growth,” 7Park Data’s director of insights, Brian Chaitoff, told TechNode. “As with ridesharing, access to capital for new entrants is critical to help foster and support growth in new markets.”

One closure, one acquisition

Although the two incumbents are still under the pressure to offer free rides in order to maintain market share, there are some early signs of market consolidation in the sector. Chongqing-based bike rental startup Wukong Bike announced that it is shuttering earlier this month. Shortly afterward, people with knowledge of the matter disclosed that Mobike has recently completed the acquisition of smaller player Unibike.

“As in ridesharing, we expect markets in the long-term to be winner-take-all. This is due, in part, to the benefits realized by riders by having one winner, such as greater access to bikes,” said Brain.

Live from TechCrunch – How can a foreign hardware company enter China?

Eva Yoo — Mon, 19 Jun 2017 11:06:13 +0000

https://v.qq.com/x/page/y0522n7mn71.html

Shenzhen, the Silicon Valley in China, is becoming a must-destination for the foreign hardware startups to start their business. On the other hand, Chinese startups are starting from Shenzhen and expanding to global markets, such as educational robot kit Makeblock, drone maker DJI, and smartphone manufacturer Huawei.

In the panel “Startup in Shenzhen”, Benjamin Joffe, Partner at HAX, the world’s most active early stage investor in hardware with over 200 startups, and Chad Xu, the managing director of Shenzhen Valley Ventures (SVV) discussed how Chinese startups can go global, and global startups can enter the Chinese market.

Eva Yoo: How do you position Shenzhen in the global hardware ecosystem?

Benjamin Joffe: I worked in China, Japan, Korea and Silicon Valley and know that each ecosystem has its own advantages and disadvantages. For example, Silicon Valley also has a lot of problems. Firstly, everything is expensive, it’s hard to hire and retain people, also there is no supply chain and little expertise about manufacturing. In the case of Shenzhen, the supply chain is amazing, but it might not be the place to find engineers, investors or customers. To find everything – engineers, manufacturing, investment, customers – you need to think very globally.

Eva Yoo: Many foreign hardware companies want to enter China. How do you advise them?

Chad Xu: First of all, you need to see if your product is innovative in technology. Secondly, you should see if you can put it into practice. Another point is that you need to deliver your product timely in China. If you are not moving fast enough to deliver, the production concept will eventually be copied by someone else.

Benjamin Joffe: For Chinese or non-Chinese enterprises, you have to consider the market fit. As an early stage foreign company, it is generally a distraction to try to enter China, unless you see a great fit, and if many local people confirm this. For instance, one of our startups from the UK named MilkSafe is developing a device to test breast milk and baby formula. It’s a great fit for China. There are not many examples of foreign hardware startups being successful here. Misfit, who worked with Xiaomi, is probably an exception.

Chad Xu: I advise foreign startups to find a Chinese partner to set up a locally operated company. For foreign startups, there are not many people who know the Chinese market. So first of all, they should have very good local partners to help them understand the local market and adapt to the market.

Eva Yoo: Do you think Chinese companies have a series of innovations? What is the innovation of Chinese companies in terms of technology?

Chad Xu: I think the innovative model between countries is different; some innovation, in fact, to solve a particular demand in a particular country. Here’s an example, air purification machines are sold in China, because the country has a very heavy air pollution problem in northern China. On the other hand, ofo and the Mobike’s model can be applied to the global market.

Benjamin Joffe: There are three innovative Chinese startups that I want to mention: Plecobot makes robots that clean windows of high-rises, replacing “spidermen” who risk their lives. The second is an industrial robot with computer vision named Elephant Robotics – much more versatile and affordable than traditional ones. Last is Sonicam, making 3D cameras with 3D sound using 64 tiny microphones. The founder used to work at Huawei for over a decade and invented over 100 patents before doing his own product.

This company helps luxury brand improve CRM with AI-powered chatbots

Eva Yoo — Fri, 16 Jun 2017 07:58:14 +0000

WeChat has over 800 million users, 83% of whom purchased products through the messaging platform in 2015. This number beats the 375 million users on China’s largest B2C marketplace Tmall. The difference between social commerce and commerce is the engagement, and that’s where social Customer Relation Management (CRM) is finding its time to shine.

Compared with other e-commerce platforms, a WeChat public account not only helps their users to purchase physical goods but also helps brand channels engage followers and interact with them.

“Many Chinese people now buy luxury items on WeChat, rather than using e-commerce platforms. This helps to build trustworthy social commerce, rather than a traditional retail market model,” Anthony Xu, CEO of OCheng told TechNode.

OCheng, a Chinese company that adapts machine learning uses chatbots to respond to the customers showcased their solution on Chinaccelerator batch 11 demo day.

Top luxury brands are finding it more and more difficult to manage over a million customers one by one. AI-powered chatbots are replacing membership cards that not only understand customer’s past purchases, but also engage them in conversation. An artificial intelligence-based chatbot can handle routine questions, send out personalized messages, and recommend products based on their purchase history.

OCheng’s solution for brands helped increase French cosmetic company Sephora‘s fanbase from 90,000 to 3 million in 2016. They looked at Sephora’s WeChat account and segmented based engagement. Targeting certain segments, they invited some to connect with the chatbot and engaged with them based on their purchase history.

Competitors do exist, including Social Touch (时趣) and Youzan, but Anthony says that their competitors focus on SMEs. The Shanghai-based company says they have a more scalable business model and adopt machine learning, which other companies lack.

Aiming to function as a social commerce for brands and the number 1 social CRM for luxury brands in China, OCheng has partnered with 15 lifestyle, fashion and cosmetic brands including Dunhill, HMC, Baby Bear, Sephora, Michael Kors. Now the company is handling 4 million followers with using their chatbot. Established in 2015, the company has since generated an average of RMB 4 million (US$ 586,000) in revenue per year.

Chinese company joining an international accelerator

OCheng is now working with dozens of global luxury brands, where the company needed the global expansion gateway.

“China-based accelerators can provide networks within China, but what I needed was hands-on mentorship from international mentors. Chinaccelerator had good global networks and provided partnership opportunities, and we needed just that,” Anthony says. “We want to approach more international brands and work with them to build a global social commerce platform.”

Luxury brands need innovation

“We have two strong points that other companies cannot replicate. Our technology base is strong and we’re using AI to do the CRM. We have experience in cosmetic and lifestyle brands, and have knowledge and connections,” Anthony says.

35-year-old Anthony previously worked at Alipay’s technology unit, and later worked in a digital marketing department at Yum! and Mary Kay. Leveraging his past experience and connections to start his digital marketing solution company, Anthony believes that OCheng is at the right place and time.

“Fashion, cosmetic and luxury brands need innovation; digital marketing is an important part of that. They want to work with startups to bring innovation within their companies. On the other hand, AI now is being applied to all industries,” Anthony remarks.

OCheng has two business models: software-as-a-service (SaaS) and premium customization services. The former is a 1 year subscription for brands and the latter provides a personalized model with systems integrations. They charge 10,000 ~20,000 RMB (US$1,465 ~ 2,930) a month for brands, based on the number of their followers and the functions they want to use.

Chinese e-commerce companies resort to quirky shopping festivals to reinvigorate retail

Emma Lee — Thu, 15 Jun 2017 07:01:18 +0000

China’s e-commerce boom over the past decade is gradually turning the Middle Kingdom into a country filled with people who identified themselves as “hand-choppers”. The term may sound coming from some thriller movie but relax, it just refers to online shopping addicts who promise to chop off a hand if they continue to buy things they don’t need.

Hand-choppers may laugh self-deprecatingly, but the underlying change in consumption habits in China is by no means that easy.

Singles’ Day: Where everything starts

Singles’ Day (光棍节) should actually be called “Double 11” (双十一) because that’s how Chinese people refer to the shopping festival. While couples celebrate and shop for each other on Valentine’s Day, the bachelors/bachelorettes liven up their lonely lives with shopping sprees on their own day.

Chinese e-commerce giant Alibaba first kicked off the festival ten years ago on its marketplace Taobao and then on Tmall. Since then, the event has evolved into a national consumption festival, smashing historical records year to year.

In 2016, retailers on Alibaba’s platforms recorded RMB 120.7 billion (around US$ 17.8 billion) worth of gross merchandise volume (GMV) in the 24-hour shopping festival, up 32% from US$ 14.3 billion one year earlier. These figures easily eclipsed the US$ 2.74 billion generated online during the Black Friday sales in the U.S. last year.

Although Alibaba launched Singles’ Day, the Chinese e-commerce juggernaut is far from being the single power behind the shopping festival culture in China. Every e-commerce platform in the country has joined in to take a piece of the pie.

Market share of different platforms during Double 11 2016 (Image credit: iiMedia)

In last year’s Singles’ Day, Alibaba’s retail marketplaces of Taobao and Tmall still accounted for 71.2 % percent of the country’s total sales, RMB 169.54 billion, according to a report from research institute iiMedia.

Alibaba’s top rival JD took 19.6%, while other e-commerce competitors Suning.com, Yihaodian and Vipshop taking smaller shares with single digits.

So important to its business, Alibaba even went so far as to trademark a number of related terms in 2014, including including 双十一 (double-eleven), 双十一狂欢节 (double-eleven carnival), and 双十一网购狂欢节 (double-eleven online shopping carnival), raising concerns that the company would use its ownership of the term to claim ownership of the holiday. However, this now seems more a defensive move as the company has not enforced its rights to these terms.

From monopoly to oligarchy

As China’s e-commerce platforms are jumping on the Singles Day bandwagon, more companies are trying to replicate this success by creating shopping festivals of their own.

Different from Singles Day, with its quirky, organic origin, most of the upcoming festivals are created as anniversary celebrations: JD’s 618 for June, 18th, Jumei’s 3.1 for March 1st, Suning.com’s 818 for August 18th, and Vipshop’s 128 (December, 8th). Even LeEco, not known for its e-commerce business, launched a shopping festival for their e-commerce arm LeMall.

With so many festivals available, China’s shopping obsessives don’t have to wait until November 11 to come around. Now they can take advantage of shopping festivals all year round.

Understandably, passion for a single event will ebb. Even Singles’ Day’s annual growth rate is slowing down. The YOY GMV growth rate of Single’s Day slumped from over 477 percent in 2011 to 32 percent last year.

Taobao and Tmall GMV from 2010 to 2016 (Image credit: iiMedia)

Among a series of shopping holidays, JD’s shopping festival 618 is becoming one of the largest in the country. For this year’s JD 618, the company eliminated JD from its title in an attempt to turn it into a national festival for everyone.

After years of development, the original draw of discounts has gradually losing charm to China’s affluence customers who values more in quality and brand of the products. Festivals that want to stand from the crowd has to address a combination of factors from branding, product quality, logistics, brand partnership, and more. This is also why Alibaba is turning what was once a one-day event into a weeks-long celebration with lead-up events from partner brands, technology roll-outs, and celebrity-filled countdown gala.

Tencent’s megahit Honour of Kings becomes world’s top grossing game

Emma Lee — Thu, 15 Jun 2017 04:23:28 +0000

Tencent Tech is reporting that blockbuster multiplayer online battle arena (MOBA) game Honour of Kings has overtaken Monster Strike this May to become the world’s highest-grossing (in Chinese) game across platforms, according to data released by App Annie.

Although Honour of Kings ranked the world’s highest grossing iOS game in March and April this year, this is the first time for it, or any Chinese gaming titles, to take the crown for iOS and Google Play, a special feat given Google’s weak presence in China.

App Annie ranking showing Honour of Kings as global #1 in revenue (Image credit: GameLook/Tencent)

Launched in November 2015 by Tencent’s Timi Studio, Honour of Kings is very similar to League of Legends, which sees players battle beasts in a fantasy landscape. Despite the similar visual style and gameplay mechanics, Tencent has managed to successfully localize to China with subtle changes in a mobile-first product strategy, local culture-based characters, and simpler controls.

Tencent’s 2016 annual report showed that the game had over 200 million registered users and over 50 million daily active users, roughly the total population of South Korea.

Tencent’s huge user base from WeChat and QQ, which have hundreds of millions of users in the country, has always been a huge resource to draw upon in terms of acquisition and promotion. Unsurprisingly, Honour of Kings growth is in part driven by WeChat and QQ users who made in-app purchases on game items.

The game has generated revenue of RMB 10.7 billion in Q4 last year. Local media reports that its DAU surged to 80 million during the Lunar New Year in February this year.

As the largest online game publisher in China, online gaming represents 47% of the internet behemoth’s 2016 revenue. The company is going further in the industry with a plan to build an e-sports-themed industrial park in Wuhu city.

Honour of Kings’ success comes while a series of Chinese game developers are gaining momentum. App Annie’s report shows that Chinese content producers snapped four places on the Top-10 grossing iOS app list for May. Tencent took the top place, followed by runner-up NetEase. CMGE and Longtu Game took the 8^th and 10^th spot respectively in the global market.

China’s cloud industry moving to new era with emergence of unicorns

Emma Lee — Mon, 12 Jun 2017 08:14:54 +0000

Just a few years ago, billion-level funding would be beyond the imagination of Chinese cloud computing companies. But now it is becoming more and more tangible as the market matures.

QingCloud, a leading player in the field, is announcing the largest ever funding in the industry so far. The cloud computing platform made it public that they have secured D round funding worth RMB 1.08 billion (around US$ 158 million). The current round adds to a US$ 2 million series A in 2012, a USD 20 million Series B in 2013 and USD 100 million in 2016. The company confirmed with TechNode that it has IPO plans, but declined to offer more details. The firm reportedly is removing their VIE structure to prepare for a local listing.

The massive round is from a consortium of investors, including China Merchants Securities International and China Merchants Zhiyuan Capital Investment (two wholly-owned subsidiaries of China’s top security trading and brokerage firm, China Merchants Securities), Riverhead Capital Investment Management, CICC Jiatai Fund and China Oceanwide Holdings Group. Existing investors of Lightspeed China Partners and Bluerun Ventures also participated.

QingCloud founding team (L-R): Spencer Lin, Richard Huang, Reno Gan (Image credit: QingCloud)

QingCloud’s funding isn’t a single case. It marks the latest in a series of venture investments in this sector, which has bumped several companies in the vertical to unicorn status recently.

Two companies in the arena received similar-sized backings in June alone. Cloud and big data solution provider Dt Dream received an RMB 750 million A round led by Alibaba and Everbright Industry Capital Management. Another Alibaba-backed cloud computing startup Cloudcare received nearly a 1 billion RMB C round led by FOSUN Group and Sequoia Capital China. Tencent-backed UCloud completed an RMB 960 million series D round earlier this year.

Among the companies that have landed billion-level RMB funding, Dt Dream is the only one that announced unicorn status with over US$ 1 billion valuation. This may shed light on the valuations of the other companies, which have received similar size or higher funding.

Behind the investment frenzy is the huge potential of this market. A report from research institute CCID shows that China’s cloud computing market surged 41.7% YOY to RMB 279.7 billion in 2016, forecasting that this figure would reach RMB570.64 billion by 2019 with an annual growth rate of over 20%.

The emergence of several unicorns over a relatively short period of time is signifying a deeper change in the market. In line with the second-half era proposition proposed by Meituan-Dianping CEO Wang Xing, the cloud computing startup pointed that China’s cloud computing market is also entering a special transition point for a new period. While cloud computing platforms only used by non-core businesses for financial clients like banks, insurance, and security companies in the first-half era, it will find wider application in the new era.

Co-founded by IBM alumni Richard Huang, Reno Gan, and Spencer Lin, the company launched the QingCloud platform in July 2013. They now operate 24 data centers, of which 10 are run independently and 14 through partnerships, providing services to over 70,000 enterprise services.

China’s tech industry must change how it manages people

Guest Editor — Mon, 12 Jun 2017 02:11:33 +0000

Editor’s note: This was contributed by Elliott Zaagman, a trainer, coach, and change management consultant who specializes in aiding Chinese companies as they globalize. He uses a comprehensive 4-dimensional model that enables organizations to take a holistic approach to global readiness, from the inside out. To contact him, check him out on LinkedIn, or scan the QR code at the bottom to connect with him on WeChat.

This is an exciting and fascinating time to be in China, especially in the internet and tech space. As the technical capabilities of internet giants in Beijing, Hangzhou, and Shenzhen now rival those of Silicon Valley’s major names, Chinese firms are playing less of a game of catch-up with the West, and are increasingly battling to see who can innovate faster. Many of these firms are also making substantial inroads into foreign markets, backed by strong government support through initiatives like the Belt and Road. Amidst these trends, the very foundations of businesses and economies in China and all over the world are being transformed through the advent of big data, analytics, and AI.

I believe one central competency will be a powerful determining factor in deciding which Chinese companies succeed and which ones fail: how they manage their people. However, at this point, it is a widespread opinion throughout the HR field that while financial and technological capabilities of Chinese internet and tech firms have grown rapidly over the past decade, progress in people management has struggled to keep pace.

“Chinese internet companies are developing very quickly, and it is very difficult to find creative and appropriate people management solutions to meet these companies’ needs,” a Chinese HR manager told me when conducting research for this piece.

China’s primary strength has long been its people. Whether or not that will continue to be the case hinges on how those people are utilized and empowered.

I believe there are three crucial areas of people management will make or break the success of Chinese businesses over the next decade: shifting from command and control to innovation and collaboration, managing globalization, and incorporating and using people data and analytics.

1. From command and control to innovation and collaboration

For much of the past few decades, blueprints for many aspects of business and economic development in China could be obtained by observing effective practices in more developed overseas markets. Models, practices, and strategies could be taken and implemented by experts and leaders in China. For many challenges, both the problems and the solutions were clear, and it was the job of leaders and managers to make their staff execute those solutions.

Now that many Chinese companies have succeeded to the point that they are now on the cutting edge of their fields, the challenges they face look very different. In many cases, the nature of the problems they face is not even entirely known, much less the solutions. In these cases, it is the role of leaders and managers not to make their people do something, but to inspire them to think in a different way. This approach to leadership is what Harvard Kennedy School professor Ronald Heifetz calls “Adaptive Leadership.”

This shift also necessitates entirely different psychological processes and systems of motivation than are more conventionally used. The rapidly expanding field of positive psychology is showing that while chronic exposure to high levels of stress deactivates the brain’s ability to think creatively, providing individuals with a sense of purpose, empowerment and an environment where they feel trusted maximizes productivity, collaboration, and innovation.

The stereotypical Silicon Valley office with bean bag chairs, bring-your-dog-to-work policies, and weekly town hall meetings is like this for a reason. The most innovative companies know that in order for their employees to think differently about the products they develop, management must think differently about their people. The most successful and innovative Chinese companies of the future will be the ones who can do this as well.

2. Globalization: Attracting, retaining, and empowering a diverse and talented workforce

Globalizing a company culture goes far beyond using more English at work, opening overseas offices, and hiring foreign talent, but requires a fundamental shift in the organization’s DNA. As former IMD business school professor and organizational guru Daniel Denison once told me, “When organizations successfully globalize, the biggest changes occur at the headquarters.”

This requires exhibiting cultural values that resonate with foreign staff, implementing logical, straightforward management systems, developing global executives with flexible leadership styles, and localizing to meet the needs of overseas markets.

While large Chinese firms have had success at attracting high-profile foreign talent in recent years, retention has proved to be a much bigger challenge.

“In most Chinese tech companies, the business leaders focus on recruitment rather than retention and people development…. They tend to exaggerate their company’s benefits when attracting talent, but have a very hard time keeping their promises,” says one Beijing-based HR professional who has spent time at Chinese internet firms as well as for a big-4 HR consulting firm.

When managing foreign talent, the most successful Chinese companies will be able to go beyond simply hiring talent from overseas, but integrating them into their work cultures and decision-making.

“Attracting [foreign staff] is easier now for [Chinese] companies as they have high growth potential and clear opportunities, but the organization must be ready to absorb them and accept that they may challenge some of the cultural norms,” writes Colin Giles, Executive Vice President of Huawei’s Consumer Business Group, in a recent piece published to Linkedin. “Chinese executives need to understand the challenge of true inclusion and proactively work to create an environment for integration in order to embrace the changes they need to make to become truly global.”

3. People Data and Analytics

Data and analytics seem to be transforming every aspect of the way business are done these days. For smart organizations, that includes HR and people management. No one does this more enthusiastically and effectively than Google, who employs a people analytics team of PhDs, technologists, and ex-consultants estimated to number in the dozens.

“All people decisions at Google should be based on data and analytics,” Prasad Setty, their VP of People Analytics, has famously said.

This trend is quickly becoming mainstream among the world’s biggest and most prominent companies. According to Deloitte’s 2017 Global Human Capital Trends report, 71 percent of companies surveyed now consider people analytics to be a high priority. For Chinese companies trying to compete globally, those who do not utilize these tools place themselves at a serious disadvantage.

Shifting to transparent data-based systems is also highly effective not just in increasing efficiency, but in creating an inclusive global workforce and culture. Data provides clear, universal benchmarks by which to make decisions and analyze performance. The fewer decisions that are made based on data, the higher likelihood there is that those decisions will be made based on bias, assumptions, or personal relationships, and when that happens, cultural rifts are likely to arise.

Final thoughts

These challenges are not unique to Chinese tech companies, but Chinese tech companies will struggle with them and solve them in uniquely Chinese ways. I personally will be keeping an eye out to see what innovative solutions Chinese organizations implement to overcome them and gain a competitive advantage in the coming years.

Live from CES Asia 2017 – 3 things Chinese tech firms must know before going global

Emma Lee — Fri, 09 Jun 2017 07:50:15 +0000

In a relatively short period of time, Chinese tech companies are becoming increasingly competitive. Moving further to the global market is the next step for nearly every Chinese tech firm. Although expanding globally can be exciting and exhilarating, there are challenges when it comes to the problems of how to make up the gap in culture, user behavior and more.

At CES Asia this week, a panel of investors, platforms, and startups shared their insights and roadblocks they have encountered in going overseas.

Find a local team, localize your story

Expanding beyond your home turf could be daunting in general, no matter if it’s a Chinese firm scrambling its way overseas, or vice versa. It’s all about how to finding the right local partner, establishing trust with them, and defining the responsibilities and authorization mechanisms, said Denise Peng, Venture Partner at GGV Capital.

Wang Mengqiu, founder and CEO of Zero Zero Robotics, echoed Denise’s point with his own experience in marketing. Selfie drone Hover Camera was featured in more than 2,000 media in one week after its launch in October last year. He attributes their success to the right marketing strategy, created by their local teams.

“A good product is, of course, the core to its success. But it’s important to have a local team who have a good understanding of the market to help out in how you tell your stories,” he said. “Some Chinese CEOs don’t feel comfortable talking with the media. But in countries like the US, storytelling is important to get public attention. Giving stats and dry data is not going to work.”

Marketing costs might be higher, but it’s more predictable

How to make your marketing investment more effective is an art. It is probably the most intriguing question for Chinese companies who just entered a new market.

Most Chinese firms are concerned that their overseas marketing costs may be high, which it is, but all of the panelists agreed that the marketing ROI is higher and more predictable thanks to more mature and standardized marketing industry.

“No matter if it’s Google or Facebook, the ROI is to some extend more predictable. On the contrary, how everything works out in China is more complicated because there are more middle links,” said Jason Wong CEO of Omnicharge.

“Google and Facebook are the two top marketing channels in the US, which account for a majority of the market. When you have covered these two channels, you are half way there. In China, it’s more complicated, there’s Baidu, Taobao, JD and a series of other channels. You have to work with every single of them,” he added.

From market differentiation to market unification

When talking about the relationship between Chinese and overseas markets, we always tend to put our focus on the differences between them. However, the globalization trend is bringing people around world closer and makes every part of the world more similar.

“The success of musical.ly in US market is evidence enough. Live-streaming as a new vertical first boomed in China and we have built a mature model up on it. But beyond the difference in different regions, people’s basic needs for entertainment and having fun are the same,” said Denise Peng.

Market unification is also reflected in the increase of talents with international backgrounds. “It’s no longer about copy-to-China or copy-to-US. It’s about people with diversified background and capabilities to develop something for the world, with fine tunes for different markets,” she said.

6 things you didn’t know about Taobao live streaming

Eva Yoo — Wed, 07 Jun 2017 06:05:38 +0000

Taobao’s live streaming function has become the main platform for internet celebrities (网红 wǎnghóng in Chinese) to monetize their fanbase.

Recording 180% growth in 2016, live streaming (直播 zhíbō) was one of the hottest topics in China last year and is still wielding influence in the country. While some investors have raised their eyebrows about the sustainability of mushrooming live streaming apps that secured less than 10 million downloads in China last year, the wanghong business itself is getting bigger and is now targeting for content-hungry niche audiences. For example, as Taobao live streaming serves more detailed and vertical needs of consumers, introducing more categories of products including food, maternal and child product, beauty product, sports, and fitness product.

Taobao, as the biggest C2C marketplace in China, stands on the throne of other live streaming apps, since its live streaming goes directly to sales. After gaining fans, wanghong have clear intention to make more money, and they find various ways to monetize their fanbase, such as being part of a weishang to sell cosmetics, become a fashion influencer to start their own store on Taobao or live stream brand products to viewers.

Taobao added up its gross merchandise volume transacted in FY2016/17 to RMB 2.2 trillion (US$ 320 billion), an increase of 17 percent year-on-year, and mobile monthly active users on Taobao’s retail marketplaces reached 507 million in March, an increase of 14 million over December 2016 according to Taobao.

The e-commerce giant is planning to breed its own wanghong too. Last year, the Alibaba reportedly injected 300 million yuan (US$46 million) in Hangzhou-based Ruhan, a celebrity incubator that teaches wannabe stars how to blog, pose for photos and interact with fans.

Here are 6 things you didn’t know about Taobao live streaming.

1. Taobao wanghong can generate up to US$ 46 million in revenue

For both Taobao shop owners and live streaming wanghong, Taobao provides an optimal platform for them to increase their awareness, as well as to achieve sales. Top Taobao wanghong such as Zhang Dayi and Zhu Chenhui made RMB 300 million (US$ 46 million) and 150 million yuan (US$ 22 million) respectively in 2015, according to data from brokerage Guotai Junan Securities. Chinese superstar Fan Bingbing generated US$ 74 million revenue on Taobao, according to Taobao.

2. Taobao Live currently has more than 10,000 wanghong

Taobao Live currently hosts more than 10,000 people, including content creators, wanghong who has their own shops, and wanghong who works for professional agencies. Taobao act as a platform, to help more hosts to achieve better growth and make more money.

Based on its content on the live production capacity, Taobao Live offers different registration processes and mechanisms for individuals, and businesses. To provide complete and true identity information, is the prerequisite for registration Taobao live. In addition, Taobao live does not charge any fees on the registration process,.

3. Consumer upgrade will be the trend on Taobao Live.

As China’s GNI per capita increased from US$ 990 in 1990 to US$ 22,760 in 2015, Chinese people turned their heads from mass products to premium products. This trend, dubbed as ‘consumption upgrade (消费升级)’ brought in more lifestyle and entertainment services into cities as well as awareness of food safety. Taobao Live itself is the product of this consumption upgrade.

4. Wanghong live stream consumption totals 15,800 years

Over the past year, users in Taobao watch live time totaled 140 million hours, equivalent to 15,800 years, according to a survey conducted by Chinese media.

5. Taobao will soon launch VR live broadcast

Director of Taobao Live, Chen Lei says that Taobao will soon launch a VR live streaming: “Live streaming brings a strong sense of integration and interaction, and virtual reality is also a very strong sense of the product, the combination of the two will bring a stronger sense of reality.”

6. Merchants will be able to use big data and AI to find the target user

From this year, Taobao Live will improve its analysis on the crowd, content, traffic, content consuming pattern, monetization with the help of big data aggregated from its platform.

“Taobao’s advantage is that we have a large number of user base, a lot of data, we have a decent data distribution capabilities. In the future, we will focus on the trending subject and theme to attract our consumers,” Chen Lei said. “Through analyzing different groups of consumers, businesses will be able to directly reach potential target customers, and optimize their product to meet the consumer’s taste.”

Airbnb names new China head, rumored in talks with local rival Tujia

Sheila Yu — Tue, 06 Jun 2017 01:19:15 +0000

After nearly two years in China, Airbnb finally appointed someone to head its China business: Ge Hong as vice president. This is another big move to accelerate its push into the country’s lucrative short-term rental market worth an estimated RMB 12.52 billion in 2017 (in Chinese).

Ge Hong

Ge will report to directly to Airbnb CEO Brian Chesky. He worked at Facebook and Google before he joined Airbnb in 2016, taking on product and technology-related roles.

Graduating from Tsinghua University and Yale University, Ge, who set up a local technology team in China with a batch of Silicon Valley-returned engineers last year, “has unparalleled knowledge of our product and what it needs to be in China, combining a deep technical expertise with an understanding of the local market,” Airbnb said in an emailed statement.

Breaking into the Chinese market has never been easy; American tech giants including Google and Uber have fallen out of favor in China in succession despite their great successes elsewhere in the world.

Along with the new appointment comes an adjustment to the company’s business strategy. The global short-term rental service has extended its focus beyond spreading awareness of the company’s brand among China’s vast number of outbound travelers to further expanding its Chinese presence by growing its technology and product team in the country starting last September.

Last year, Airbnb announced its decision to triple the size of its team this year in China, which is the only market that has its independent product and technology team outside the U.S.. In addition, the company has been making efforts to develop services designed just for the Chinese market and connect local payment methods including WeChat Pay and Alipay.

On March 22 Airbnb China was renamed as “爱彼迎” (aibiying) which the company claims to mean “to welcome each other with love”, as part of its efforts to further localize its operations in the country.

These are signs that Airbnb has been paying more attention to the Chinese market and quickening its localization drive there.

Yet a lack of efficient localization, smaller housing supply and limited payment channels, among others, have restricted Airbnb from realizing its grand ambition in China, according to Zhu Zhengyu, an analyst at market research firm Analysis International.

These factors are also increasingly putting Airbnb at a disadvantage when it competes for market supremacy with local rivals Tujia (途家) and Xiaozhu (小猪).

Cooperation rumors

There have been rumors that Airbnb is in talks with apartment rental platform Tujia on capital cooperation (in Chinese). The rumored talks were reportedly prompted by their investors Neil Shen and Ctrip.

Shen is the founding managing partner of Sequoia China, and also a cofounder of online leisure travel company Ctrip. Sequoia China is one of Airbnb’s investors, while Ctrip, which is also backed by search giant Baidu, is one of Tujia’s largest shareholders.

The rumor, if true, will help Airbnb gain access to more housing resources in China, while Tujia may expand its global presence by harnessing Airbnb’s international influence.

Tujia, which rose to unicorn status in series D+ funding in August 2015, claims it had a housing supply of over 450,000 apartments available for rental as of this February, whereas Airbnb has 80,000 listings in China, only accounting for around 3% of the American company’s global housing supply.

Tujia announced its strategy of sharing housing inventory data with seven other online platforms including Mayi (蚂蚁短租), Ctrip (携程), Elong (艺龙), Qunar (去哪儿), 58 (58同城) and Ganji (赶集) at a news conference on March 23. These platforms have short-term home rental businesses and maintain close ties with Tujia after rounds of investment deals in 2016.

That means a home rental advertisement posted by a landlord on any one of these platforms can be seen on the rest of them. Additionally, the interconnection can help drive traffic to Tujia’s website and make it gain more potential customers.

Also at the March news conference, when asked whether Tujia will form a partnership with Airbnb, Tujia CEO Luo Jun made no comment, but added Tujia will give everyone a surprise in good time.

Earlier there were rumors in March that Airbnb was in acquisition talks with its Chinese equivalent Xiaozhu (小猪). This was denied by Xiaozhu CEO Chen Chi, who admitted the firms did have talks on business development and technological cooperation but their talks never involved capital cooperation.

Claim your chance for free access to Taobao Crowdfunding for your hardware startup

Emma Lee — Mon, 05 Jun 2017 08:06:23 +0000

TechCrunch Shenzhen is working with Taobao Crowdfunding to help startups find a smoother way to the market.

The partnership brings a parallel session to TechCrunch Shenzhen, where hardware companies registered at our Startup Alley get the chance to pitch their product at Taobao crowdfunding’s demo zone. The platform allocates online promotion, marketing and professional operational help to the companies in finding their way to Taobao’s massive user base. But the best part of this is that all of this supports is free of charge.

For a hardware startup, you could have a brilliant product, but if it’s not exposed enough, it might easily die. Born as a means for startups to access capital for scaling up, crowdfunding has evolved to be popular if not a must step for Chinese hardware projects to launch their products.

In China, crowdfunding is becoming a major promotional channel, especially for hardware startups. People went so far as to draw a comparison between crowdfunding and e-commerce in China: The country is witnessing the absorption of crowdfunding activities by e-commerce platforms, which makes the crowdfunding industry in China increasingly driven by e-commerce.

Taobao crowdfunding, the crowdfunding unit of e-commerce giant Alibaba, is leading this trend with an edge in online marketing, sales, and e-commerce operation.

Why does working at a Chinese tech company feel like a bad Tinder date?

Guest Editor — Mon, 05 Jun 2017 07:50:38 +0000

A few weeks ago, I attended a dinner party hosted by a fellow expat friend of mine here in Beijing. The attendees were a collection of twenty and thirty-somethings, mostly American and Europeans. A few drinks into the evening, one friend began to complain about her recent struggles with her employer. After less than two months into her new job at a Chinese internet company, she was already contemplating resigning.

“What they told me when recruiting me was a total lie,” she said. “My job role is entirely different from what they promised me, I never even speak to the boss who I was supposed to be ‘working closely with.’ The bonus, which they made seem all-but-certain in the interview process, now seems impossible to obtain, and I don’t even know if they will be able to handle my visa correctly, which they promised they would.”

Her complaints were echoed by the rest of the party guests, who took turns sharing their working-for-Chinese-company horror stories. Right as the mood was getting dark, one friend lightened it with a comedic comparison, saying “you know, working for these companies seems to be a lot like meeting a shitty guy on Tinder, who’s a perfect gentleman until you sleep with him, and then is shitty to you afterward.”

While a funny comparison, it isn’t the best reputation to have. This approach may behoove the Tinder playboy looking for a hookup, it damages the company on many levels. Let’s put aside the less-quantifiable effects of a culture of dissatisfied recruits and a damaged employer brand and focus purely on the numbers that directly impact the financial documents: According to the Society for Human Resource Management, employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement. For hard-to-find foreign employees who have the technical, cultural, and language skills necessary for a Chinese company, this cost is likely even higher.

Employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement.

Despite the high costs of employee turnover, over-emphasis on recruitment and under-emphasis on retention seems to be a trend for Chinese tech and internet companies.

“In most Chinese tech companies, the business leaders focus on recruitment rather than retention and people development. They tend to exaggerate their company’s benefits when attracting talent, but have a very hard time keeping their promises,” says one Beijing-based HR professional who has spent time at Chinese internet firms as well as a big-4 HR consulting firm.

The good thing is, it doesn’t have to be this way. There are many simple, common-sense solutions to these problems, but they will require that companies start behaving more like a good husband or wife, less like a short-term hookup.

1. Accentuate your strengths, but don’t say you’re something you’re not.

If you’re a young guy, fresh out of your master’s degree program, and hoping to find the right job, you have a lot to be proud of. But you’re not a millionaire, and if you say you are, she will be very disappointed when she finds out. Your flashy façade may also attract the kind of girl who is purely interested in money, not the kind of person who would make a suitable long-term partner. The same is true with companies in the recruitment process. If you’re a chaotic start-up where many employees work 9-9-6, don’t tell your recruits that you’re a stable option with good work/life balance. Instead, find out the good things about your company, and emphasize them.

If you’re a chaotic start-up where many employees work 9-9-6, don’t tell your recruits that you’re a stable option with good work/life balance.

Do this not simply by quoting the words of the CEO, but by asking more junior and mid-level employees what they enjoy about working for the company, emphasizing those traits in recruitment, and encourage them at the workplace. Also, be honest about the company’s problems. Nobody expects a person or organization to be perfect, and no one likes being lied to. In job-hunting, like in romance, no one expects perfection, instead, most people are looking for a combination of imperfections and strengths that are most suitable to their situation. By being honest about your problems and emphasizing your advantages, you might not always attract the people with the perfect resumes, but you attract the people who are right for you and your company.

Most importantly, be honest about expectations. When dating, whether you want to have kids, travel, or be part of a corporate power couple, you should always make those expectations clear, and then follow through on them. In recruiting, make your expectations clear as well. This means KPIs, job responsibilities, the realities of performance-based pay, and standards for performance appraisals. No one wants to enter a relationship assuming that their partner wants to travel the world, only to learn that they want three kids asap. In the same vein, no one wants to join a company assuming one job description, only to learn that the reality is completely different.

2. Find their “love language”

In the best-selling book The Five Love Languages: How to Express Heartfelt Commitment to Your Mate, author Gary Chapman outlines five “love languages,” through which individuals express, and prefer to receive, love: gift-giving, quality time, words of affirmation, acts of service, and physical touch. In his book, Chapman explains how for many couples, a difference in love languages causes them to be unable to effectively communicate their appreciation to each other, which causes misunderstanding and conflict in the relationship.

The idea of “love languages” applies to the workplace as well, as employees, managers, and companies each have their own way of expressing and perceiving appreciation. In many cases, they are not the same, and conflict is the result.

Employees, managers, and companies each have their own way of expressing and perceiving appreciation.

This is particularly true with cross-cultural teams and organizations. In China, where value and appreciation are expressed largely through salary and status, business leaders may feel frustrated when their non-Chinese express dissatisfaction.

“We gave [a foreign employee] a salary 30 percent above market value, but he still spent a lot of time complaining about what was wrong. I don’t think anything could have made him happy,” said a close friend of mine who works as an executive for a BAT firm.

Expressions of loyalty and appreciation from employees can often get misinterpreted through differences in love-language. When working with leaders, I often ask them to describe to me the behavior of an effective leader, a healthy organization, and a loyal employee. While, in many ways, these descriptions have heavy overlap across many cultures, one area in which stark differences appear is in how “loyalty” is defined.

In the case of Chinese leaders of whom I’ve asked this question, loyalty is often described in personal terms, rather than towards the organization as a whole. A loyal employee is, therefore, one who diligently executes the demands of his or her leader. For the Western leaders to whom I speak, a loyal employee is most often defined less in personal terms, and more in terms of commitment to the organization as a whole, and its mission, vision, and values. In this situation, the connection that is developed between the manager and an employee results from a set of shared values as well as a shared purpose.

Chinese leaders often describe loyalty in personal terms. Western leaders often describe loyalty as a commitment to the organization’s values.

If you take this difference into account, you’ll notice that an expression of loyalty may look very different from culture to culture. For example, if someone defines employee loyalty in the broader organizational way, they may view it as their responsibility as a good employee to vocally oppose company decisions or policies which they view as detrimental to the company, or in opposition to its mission, vision and values. For those who do not hold this view, those actions may be viewed as being expressions of opposition to the leadership of the company, and therefore disloyalty to the company itself. Through a misinterpretation of our cultural and professional “love languages,” it becomes difficult to see a shared interest and sincerity behind the actions.

3. Seeing, hearing, and appreciating

Belgian sex and relationship expert Esther Perel, in a TED Talk on the topic of extramarital affairs, expresses a broader view on the concept of romantic fidelity.

“People cheat on each other in a hundred different ways: indifference, emotional neglect, contempt, lack of respect, years of refusal of intimacy,” says Perel, “Cheating doesn’t begin to describe the ways that people let each other down.”

Indeed, most relationships do not fail simply because of one affair or a one-time decision to break up, but from a long, slow decline in which the partners cease to meet the other’s emotional and physical needs. People have a need to feel seen, heard, and appreciated, and when that doesn’t happen from their partner, they look elsewhere.

In many cases, the same is true with employer-employee relationships. When someone decides to leave their job, it is most often not a sudden decision, but an end result of months or years of not feeling acknowledged and appreciated. Often their superiors are unaware of this situation until it is too late. One American friend of mine told me about his experience after he resigned from a position in which he worked for over a year in a position that demanded a 9-9-6 schedule, with a hard-driving boss.

“My boss called me the day after I resigned, praising my skills and asking me to return,” he said. “At that time, I had already accepted the offer for another position, but if my boss had said those things to me more frequently when I worked for him, I probably would have stayed much longer.”

Many companies organize a “day of appreciation” once per year in which they say a very general “thank you” to their employees. While these events are nice and provide for good photos on social media, expressions of appreciation, in general, are far from being frequent or sufficient enough. If your partner ignored you 364 days out of the year, then bought you a gift on Valentine’s day and said “thanks for being a good partner,” I doubt you would be very satisfied with this relationship.

If your partner ignored you 364 days out of the year, then bought you a gift on Valentine’s day and said “thanks for being a good partner,” I doubt you would be very satisfied with this relationship.

Indeed, appreciation is best expressed through specificity and frequency. Compliments like “when you look at me and smile, it warms my heart,” or “the way you think makes me see the world in a whole new way” have much more meaning than simply saying ” I love you” for the 3,000^th time, or saying “you’re beautiful” without much emotion. Frequency and spontaneity also matter. These genuine expressions of appreciation seem much more heartfelt when done on a random day every couple of weeks, not simply the one day when they’re “supposed” to happen.

The same goes for expressing appreciation at the workplace. When a manager praises an employee specifically for good behavior, they not only make the employee feel valued, they also encourage more of that behavior in the future. It is a free resource, something that is high in value but costs nothing to give away.

This technique can be used even when the performance is not what you desire.

“I spent a week working on a project, only to have my manager in Beijing tell me that we weren’t going to use what I worked on, but did not give me a reason,” said an American employee for a Chinese internet company.” After that, it was very hard to stay motivated.”

In this kind of situation, that employee’s manager would have been wise to take ten minutes of his time, explain why the project was changed, point out specific things that could be done better next time, identify what was done well, and thank the employee for their effort. By not doing that, the manager turned an engaged employee into a disengaged one. This is dangerous and frankly unacceptable in the highly-competitive world of the Chinese internet, where success and failure are determined by weeks and months, not years. In this environment, having disengaged employees is simply not an option.

In this kind of situation, that employee’s manager would have been wise to take ten minutes of his time, explain why the project was changed, point out specific things that could be done better next time, identify what was done well, and thank the employee for their effort.

Final Thoughts

These issues are certainly not exclusive to cross-cultural relationships, but intercultural environments can certainly complicate them. Successful relationships, whether romantic or professional, require time, effort, and commitment from both sides. When those strong relationships are formed, they are are the cornerstones to happy, healthy, and wealthy lives. By acknowledging this truth and acting on it with their multicultural staffs, Chinese internet companies can build a foundation to global success.

Chinese gaming giants are setting their sights on Europe

Emma Lee — Fri, 02 Jun 2017 09:38:37 +0000

As an important part of the global entertainment business, gaming is looking pretty good and the uprising trend of this sector is showing signs of slowing down for the near future as people living the digitalized world are seeking for more entertainment. Global venture capital firm Atomico released a report to shed some light on the latest changes in the sector.

2016 has witnessed some remarkable tipping points of the gaming industry, according to the report. Firstly, the field has become a global industry with games revenue exceeding USD$ 100 billion. To put the number into perspective, this means that the gaming industry is now worth three times as much as movies worldwide.

The surge in revenue is in line with the increasing player base, which broke 2 billion for the first time last year. Mobile has become the most lucrative segment after years of continuous growth.

Atomico’s bullish views towards mobile gaming are shared by many research agencies. Newzoo made a bold prediction that the mobile segment will account for 42 percent of worldwide sales this year and to over half of the total games market by 2020.

Image credit: Atomico

China, the home to world’s top gaming developers like Tencent, is taking a fair share of this boom. The report shows that 11 out of 24 gaming companies worth more than US$ billion have come from China. Europe took the runner-up position with 6 companies

While investors have more confidence in publicly listed companies, the enthusiasm is also felt by private gaming firms. Of the total private investments, Europe is taking an increasing share of global games funding rounds, with Chinese acquirers playing a big role.

The top twenty largest games M&A transactions of the last five years have created US$ 46 billion in exit value, of which European targets accounted for 70% of the value. Looking at the origin of the buyers, 55% of deal value came from strategic Chinese acquirers, illustrative of growing interest from China.

This interest is only set to increase in 2017 and beyond, as the growing appetite for fresh content from Chinese gamers leads to investors seeking to exploit this through selective investment in European studios, the report noted.

The analysts attribute this surge to two reasons. For one, although the surge in listed entities has allowed VC communities to see increasing markups, they are often only on paper. Games companies are more than twice as likely to achieve liquidity as $B+ companies from other tech categories.

Additionally, Europe’s unique culture, as well as technical and commercial factors, have helped the region to become a world leader in mobile game development. Many of these are subtle points, such as the region’s rich, centuries-old history of storytelling and creativity, or, its deeply connected communities of passionate individuals that came together through the region’s mod and demo scenes, creating fertile ground for mobile game development.

Most importantly, European studios were developing for mobile before it even became the “mobile” that we think of today, learning their craft building games on Java and optimizing for Nokia or Motorola feature phones, a world away from the mobile devices and games we recognize today.

On the other hand, the prosperity of European game development finds its root in rising demands from the world, of which China is an important market gaming studios can’t ignore. It’s now not only the world’s largest market of gamers – with over 600 million – but also it’s most valuable by spend, eclipsing the US and even the whole of Europe combined.

“There are unique opportunities. Almost 90% of the 24 billion dollar games companies founded in the last 15 years have achieved liquidity, proportionally more than any other sector – so games studios, especially in Europe, are a good bet. As the Chinese market continues to thirst for content, and continues to expand in size, we expect to see an uplift in Chinese interest,” Mattias Ljungman, Partner at Atomico said.

10 of the best performing Chinese tech companies in Q1

Sheila Yu — Fri, 02 Jun 2017 05:51:22 +0000

Major listed Chinese tech firms have released their latest quarterly results, and most of them delivered strong performances. Here’s a roundup of some of the top performers, including BAT, JD, Weibo, and Momo.

Chinese tech companies listed in Hong Kong

Tencent (腾讯)

Market cap: US$329.84 billion

Tencent Holdings Limited (00700.hk) is China’s largest tech company by market cap as of August 22, and the 16th largest tech company in the world, according to Forbes.

Tencent reported May 17 better-than expected results for the first quarter of this year ended on March 31, 2017. The company’s revenue structure is composed of value-added services (revenue generated from online games and social networks), online advertising (revenue mainly comes from WeChat Moments, WeChat official accounts and the company’s mobile media advertising) and others (this revenue mainly includes payment-related services and cloud services).

Financial Highlights:

The tech giant reports a 58% profit surge in Q1 driven by its popular messaging app WeChat and gaming business.
The company’s revenue surged 55% year-on-year (YOY) to RMB 49.55 billion (around US$ 7.18 billion).
The profit for the period was RMB 14.54 billion (US$ 2.10 billion), a 57 % increase YoY.
Profit attributable to equity holders for the period was RMB14,476 million (USD2,098 million), an increase of 58% YoY.
Basic earnings per share were RMB1.540. Diluted earnings per share were RMB1.522.

China Mobile (中国移动)

Market cap: US$228.45 billion

China Mobile Limited (00941.HK), the world’s biggest telecom carrier by subscribers, released April 20 its unaudited financial data for the first quarter of 2017. As of March 31, the total number of mobile customers was around 856 million.

Financial Highlights:

Operating revenue was RMB184.0 billion (US$27 billion), up by 3.7% over the same period last year; of which, revenue from telecommunications services was RMB160.9 billion, up by 6.1% over the same period last year.
Profit attributable to equity shareholders was RMB24.8 billion (US$3.6 billion), up by 3.7% over the same period last year.
EBITDA was RMB67.1 billion, up by 3.0% over the same period last year.

Chinese tech companies listed in the U.S.

Alibaba (阿里巴巴)

Market cap: US$302.76 billion

Alibaba Group Holding Limited (NYSE: BABA) announced on March 18 its financial results for the quarter ended March 31, 2017. The company is the world’s largest retail platform (as of April 2016), and it is more than an e-commerce giant with businesses composed of core commerce, cloud computing, digital media and entertainment, innovation initiatives and others.

Financial Highlights:

Revenue was RMB38,579 million (US$5,605 million) during the quarter, an increase of 60% year-over-year.
Net income was RMB9,852 million (US$1,431 million), an increase of 85% year-over-year.
Diluted EPS was RMB4.12 (US$0.60) and non-GAAP diluted EPS was RMB4.35 (US$0.63)
Non-GAAP net income was RMB 10,440 million (US$1,517 million), an increase of 38% year-over-year.
Mobile MAUs on its China retail marketplaces reached 507 million in March.

Baidu (百度)

Market cap: US$64.45 billion

Baidu, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, announced April 28 its unaudited financial results for the first quarter ended March 31, 2017. The search giant reported the second consecutive decline in quarterly net profit, after being hit hard by a advertising scandal last year. The biggest chunk of revenue still comes from online marketing, which made up 87.25% of the company’s total revenue in Q1. The company is now betting big on artificial intelligence to spur its future development.

Financial Highlights:

Total revenues in the first quarter of 2017 were RMB16.891 billion (US$2.454 billion), a 6.8% increase from the corresponding period in 2016.
Operating profit in the first quarter of 2017 was RMB2.006 billion (US$291.4 million), a 9.3% decrease from the corresponding period in 2016.
Net income attributable to Baidu in the first quarter of 2017 was RMB1.777 billion (US$258.1 million), a 10.6% decrease from the corresponding period in 2016.
Diluted earnings attributable to Baidu per ADS for the first quarter of 2017 were RMB4.63 (US$0.67); Non-GAAP net income attributable to Baidu in the first quarter of 2017 was RMB2.390 billion (US$347.2 million), a 1.3% increase from the corresponding period in 2016;
Non-GAAP diluted earnings per ADS for the first quarter of 2017 were RMB6.85 (US$1.00).

The reduction in net profit can be attributed to the company’s soaring costs on bandwidth, content, research and development and equity incentives. The increased costs are largely related to AI, an area that Baidu is betting big on and hoping will improve their future growth.

JD.com (京东)

Market cap: US$56.90 billion

JD.com, Inc. (NASDAQ:JD), China’s second largest online retailer, announced May 8 its unaudited financial results for the quarter ended March 31, 2017.

It booked its first quarterly profit as a public company, and the profit increase is due in large part to declining logistics costs and expanded product line-up.

Financial Highlights:

Net revenues for the first quarter of 2017 were RMB76.2 billion (US$1 11.1 billion), an increase of 41.2% from the first quarter of 2016.
Net income reached RMB 239 million (US$35 million) for the three-months period, turning a profit for the first time since it was listed in 2014.
Net income per ADS for the first quarter of 2017 was RMB0.17 (US$0.02), compared to net loss per ADS of RMB0.66 for the first quarter of 2016.
Non-GAAP net income per ADS for the first quarter of 2017 was RMB1.03 (US$0.15), as compared to non-GAAP net loss per ADS of RMB0.15 in the first quarter of 2016.
GMV for the first quarter of 2017 increased by 42% to RMB184.1 billion (US$26.7 billion) from RMB129.3 billion in the first quarter of 2016.

NetEase (网易)

Market cap: US$36.88 billion

NetEase, Inc. (NASDAQ: NTES), China’s leading internet and online game services providers, announced May 10 its unaudited financial results for the first quarter ended March 31, 2017. It is worth noting that the company derived 79% of its total net revenues from its online game services.

Financial Highlights:

Net revenues were RMB13.6 billion (US$2.0 billion), an increase of 72.3% compared with the first quarter of 2016. Online game services net revenues were RMB10.7 billion (US$1.6 billion), an increase of 78.5%compared with the first quarter of 2016.
Gross profit was RMB7.5 billion (US$1.1 billion), an increase of 63.2% compared with the first quarter of 2016.
Total operating expenses were RMB2.7 billion (US$394.0 million), an increase of 57.8% compared with the first quarter of 2016.
Net income attributable to the Company’s shareholders was RMB3.9 billion (US$569.9 million), an increase of 59.4% compared with the first quarter of 2016. Non-GAAP net income attributable to the Company’s shareholders was RMB4.3 billion (US$630.0 million), an increase of 62.6% compared with the first quarter of 2016.[1]
Diluted earnings per ADS were US$4.29; non-GAAP diluted earnings per ADS were US$4.75.

Ctrip (携程)

Market cap: US$ 27.97 billion

Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading online leisure travel companies in China, announced May 10 its unaudited financial results for the first quarter ended March 31, 2017.

Ctrip.com International, Ltd. is the top performer among Chinese online leisure travel companies listed in the US, including Tuniu.com (NASDAQ：TOUR) and Qunar.com (NASDAQ:QUNR). It was established in 1999 and has become China’s largest travel company. The company mainly derives its revenue from its accommodation reservation, transportation ticketing, packaged-tours and corporate travel management.

Financial highlights:

First Quarter of 2017 Financial Results and Business Updates

For the first quarter of 2017, Ctrip reported net revenues of RMB6.1 billion (US$884 million), representing a 46% increase from the same period in 2016. Net revenues for the first quarter of 2017 increased 20% from the previous quarter.
Net income attributable to Ctrip’s shareholders for the first quarter of 2017 was RMB82 million (US$12 million), compared to net loss of RMB1.6 billion in the same period in 2016 and net income of RMB645 million in the previous quarter.
Gross margin was 80% for the first quarter of 2017, compared to 73% in the same period in 2016, and 78% in the previous period.
Diluted earnings per ADS were RMB0.15 (US$0.02) for the first quarter of 2017. Excluding share-based compensation charges, Non-GAAP diluted earnings per ADS were RMB1.09 (US$0.16) for the first quarter of 2017.

Weibo (微博)

Market cap: US$15.40 billion

Weibo Corporation (NASDAQ: WB), a Twitter-like social media platform, announced May 16 its unaudited financial results for the first quarter ended March 31, 2017. Weibo span off from online media company Sina in 2014, which still has a 49.8% stake in the company. Alibaba took a 31% stake in Weibo, remaining the second largest shareholder.

Financial Highlights:

Net revenues totaled $199.2 million, an increase of 67% year-over-year, exceeding the Company’s guidance between $185 million and US$190 million.
Advertising and marketing revenues were US$169.3 million, an increase of 71% year-over-year.
Net income attributable to Weibo was US$46.9 million, an increase of 561% year-over-year.
Non-GAAP net income attributable to Weibo was US$57.8 million, an increase of 254% year-over-year.
Monthly active users in March 2017 reached 340 million, an increase of 30% year-over-year, 91% of which were mobile users.

ZTO (中通快递)

Market cap: US$10.3 billion

ZTO Express (Cayman) Inc. (NYSE: ZTO), a leading express delivery company in China, announced May 18 its unaudited financial results for the first quarter ended March 31, 20171. Its major Chinese rivals include S.F. Express, STO Express and Shanghai YTO Express, which have all managed to go public since 2016.

Financial Highlights

Revenues were RMB2,614.6 million (US$379.9 million), an increase of 33.5% from the same period of 2016.
Gross profit was RMB730.6 million (US$106.2 million), an increase of 21.5% from RMB601.4 million in the same period of 2016.
Net income was RMB502.9 million (US$73.1 million), an increase of 48.4% from RMB338.8 million in the same period of 2016.
EBITDA was RMB804.8 million (US$116.9 million), an increase of 54.7% from RMB520.2 million in the same period of 2016.
Basic and diluted earnings per American depositary share (“ADS”4) were RMB0.70 (US$0.10), compared to RMB0.47 in the same period of 2016.

Momo (陌陌)

Market cap: US$7.03 billion

Momo Inc. (NASDAQ: MOMO), a leading location-based social networking platform, announced May 23 its unaudited financial results for the first quarter 2017. Thanks to its strong performance in live streaming business, the company continued its outstanding performance.

Financial Highlights:

Net revenues increased 421% year over year to US$265.2 million.
Net income attributable to Momo Inc. increased to US$81.2 million in the first quarter of 2017 from $7.1 million in the same period last year.
Non-GAAP net income attributable to Momo Inc. increased 615% to US$90.7 million in first quarter of 2017 from US$12.7 million in the same period last year.
Monthly Active Users (“MAU”) were 85.2 million in March 2017, compared to 72.3 million in March 2016.

The top 10 Android app stores in China in 2017

Eva Yoo — Fri, 02 Jun 2017 01:47:48 +0000

We’ve updated for 2018. Check out this year’s list here.

While Apple continues to have their struggles in China, Android-powered smartphones are picking up the slack. Unfortunately, Google isn’t doing so well in China either. This means that if Android users want to download applications, they must rely on app stores operated by local players.

The app market ranking in April 2017 released by Newzoo shows that Tencent takes almost a quarter of the China’s fragmented Android app market without the presence of iOS. Compares with the top 10 Android app store ranking of 2015, Tencent’s store Myapp (应用宝) is now the king with 24.7% of the market, followed closely by Qihoo’s 360 Mobile Assitant (360 手机助手).

Despite the current trend of using WeChat Public accounts to start a business, the number of installed apps and app usage hours both increased compared to a year ago, according to China Internet Watch. Mobile apps in China have more than 10 million monthly active users in Q1 2017.

App stores of Chinese smartphone companies, Huawei, Oppo, Vivo, and Xiaomi all gain more pieces of market share compared to the figure in 2015. Looking at those peers, Qihoo 360 also jumped into the smartphone business.

Their smartphone sales ranking doesn’t exactly reflect on app store ranking though. Huawei made the biggest sale in April, but Xiaomi still takes the first place in the app store among the smartphone players.

1. Tencent MyApp (24.7%)

“Tencent attracted users through its current services like QQ, WeChat, and games, dwarfed other services by the number of users and the sales,” Hyunjoo Kate Lee, Senior Principal UX Designer at Tencent told TechNode.

As other mobile device manufacturers promote users to use their own app stores, the Android app market will saturate, it is unlikely app market will see much more growth.

“Once artificial intelligence is applied to the phones and the apps in the future, I believe User Experience on applications will be very different from what is now,” Lee said.

2. 360 Mobile Assitant (15.5%)

360 Mobile Assistant lost the market share of 9.5% compared to 2015’s figure. Following in the footsteps of other Chinese smartphone companies, Qihoo also launched its 360 N5S smartphone with 6GB RAM and Dual front camera setup priced at 1699 RMB.

Supplier of anti-virus software Qihoo has several mobile security products including 360 Safe Guard, 360 Anti-virus, and 360 Mobile Safe, which helped the company to gain traction with its own app market. Qihoo, in fact, cracked part of last month’s ransomware virus that breached 200,000 computers on this month with its software patch that can recover the data encrypted by the unidentified attackers, reports CCTV.

3. Xiaomi App Store (13.0%)

“Xiaomi has a better grip on software part than the hardware. In Xiaomi store, they did a good job in the app distribution and user experience, more than 85% of the apps are downloaded and updated, all from their own distribution system,” Cherry, a previous employee at Xiaomi told TechNode.

4. Baidu Mobile Assistant (12.7%)

Baidu Mobile Assistant has given its 3rd rank to Xiaomi, with its market share falling 4.3% than two years ago. After the issues with Baidu’s medical ads, Baidu hurt its reputation as a search engine emperor and is now transitioning away from mobile.

“Baidu is transitioning its core business from its mobile technology to artificial intelligence,” said Lu Qi, currently Baidu’s chief operating officer and a top level AI expert to according to South China Morning Post.

5. Huawei (10.5%)

Founded in 1987 by Ren Zhengfei, Huawei started its business as a networking and telecommunications equipment and services company. After the Shenzhen-based company unveiled their first Android phone in 2009, now it takes the biggest market share in China’s smartphone market. Huawei has expanded aggressively into overseas markets including Europe and South America.

This February, Huawei released its latest high-end smartphone P10, manufactured in their own production line and introduced a Leica dual camera to attract young female customers.

6. OPPO (7.4%)

OPPO app store was not even on the top 10 list of app store ranking in 2015, and has made a big leap to 6th place. Thanks to their low-end phones targeting rural China, OPPO R9s made 1.7 million shipments according to Sunrise Big Data. In Southeast Asia, OPPO has taken the no.2 spot in both Indonesia and Vietnam in two years, according to market research firms IDC and GFK.

OPPO, founded in 2001 by Chen Mingyong, started out by selling DVD players, audio speakers, and later the MP3 players, and expanded into the mobile phone market in 2006, and introduced its smartphone in 2011.

7. Wandoujia (4.0%)

You might wonder what Alibaba is doing in this app store war. Alibaba, rather than developing its own app store, acquired a big app market. Last year July, Alibaba acquired Wandoujia for an undisclosed amount. Wandoujia was valued at more than a US$ 1 billion when it landed a US$ 120 million funding round led by Softbank in 2014. For two years, its market share of 4% has not changed.

8. Google Play Store (3.7%)

Google Play is not shipped on any phone made in China, but it is possible to install it, given the right tools and knowledge.

Wangping, a Chinese tech blogger and a Xiaomi phone user for 2-year-and-a-half tells us how why he uses Google Play.

“Xiaomi’s app store had too many advertisements last year, and there were so many apps that I wanted to download on Google Play. So I started using Google Play Store from 1 year ago,” Wangping said. “I mostly use Google Play to download foreign apps, and use the Chinese Xiaomi app store to download Chinese apps.”

9. Vivo (3.3%)

Oppo’s sister brand Vivo has made progress in catching the favor of lower tier cities in China, with the Vivo X9 making 1.3 million shipments according to Sunrise Big Data. However, its app market dominance fell down to 3.3% this year, from 4% in 2015.

The company signed an endorsement sponsorship with NBA player Lebron James, to increase its brand awareness. In India, Vivo’s sales grew 220 percent, according to Gartner’s research director Ansul Gupta.

10. Hi Market (2.6%)

HiMarket was launched in 2011 by 91 Wireless in an attempt to expand into the Android market. In July 2013, Baidu bought 91 Wireless, which owns both 91 Assistant and HiMarket, for $1.85 billion USD, recording the most expensive deal that time.

Workplace tech is the key to differentiation says one Beijing co-working startup

Emma Lee — Fri, 26 May 2017 07:49:07 +0000

The co-working boom is in full swing in China. Again, the country’s tech history is repeating itself as capitalists are ready to dive in for supporting players, big and small, to buy into market shares.

Founder & Managing Director of MyDreamPlus- Bill Li

MyDreamPlus, a co-working space operator that runs 16 locations in Beijing, just closed US$20 million B round led by Joy Capital to fuel nationwide expansion. The company has already secured a US$ 5 million series A at the end of 2015.

“Our OaaS (office-as-a-service) product has reached a point where we can take advantage and scale our space with it. The series B funding will be used in space expansion as well as to improve the office working experience. We also plan to spend money on talent and team building,” founder and managing director Bill Li said to TechNode.

The firm is looking at Beijing as the main expansion site with a goal to increase the density there. Now there are nearly 30,000 square meters of new spaces in the pipeline, all located at core commercial areas of the city. “Shanghai and Chengdu are also on our expansion agenda,” Li added.

The funding comes at a time when several major companies in the field are cashing up for a fight for China’s co-working space. Domestically, UrWork raised about US$ 58 million earlier this week, shortly after merging with rival New Space in April and scooping a similar size funding in January. Shanghai-based co-working space operator also booked B round to accelerate global expansion. In addition, their heavy-loaded US counterpart WeWork is also looking at the Chinese market.

With so many competitors moving in, the question for managers and operators of shared spaces has become “How to remain unique?” Operators, like URWork and SOHO3Q, have strengths in property resources with realtor background, while rivals, like naked Hub, may excel in their design and operation with hospitality expertise.

For the MyDreamPlus team, they believe workplace technology is their differentiator in the increasingly crowded market. Gone are the days when co-working spaces are defined by desks and polished spaces only, technology is going to be a crucial component of the shared spaces, according to Li.

In an attempt to fully adapt to Chinese users’ habits, MyDreamPlus’s OaaS system enables office users to control everything through WeChat. After registration on WeChat, most resources, including door admission, workstations, conference rooms, projection, printing, and photocopying, can be controlled while on-the-go. At the same time, the system makes it possible for the space operator to know about the traffic, facilities, and community of the space.

Given the technological support, MyDreamPlus has an efficient team for on-site operation. “Currently, we have one community manager on-site for 3,000 square meters space for all 16 locations,” Li noted.

That allows the company to allocate most of its team to product development. Of the 100-staff team, around 70% are engaged in three parts of core development: space design, R&D team, and community operation.

The occupancy rate of MyDreamPlus spaces is normally 95% after a 3 month start period, Li disclosed. The prices range from RMB 1800 to RMB 2200 depending on different locations, lower than WeWork’s China operations, on par with other domestic players.

With the quick boom in the shared working space, Bill Li believes the potential of this industry is huge. “Co-working industry is still taking a very small market share in the whole office market. The space operated by all co-working operators combined is around hundreds of thousands of square meters for now. But if you look at the office industry, that accounts for perhaps less than one percent of the whole traditional office space market. This means, we still have a long way to go.”

Tencent reports 58% profit surge on strong Q1 driven by WeChat and gaming

Emma Lee — Thu, 18 May 2017 12:02:08 +0000

Shortly after hitting US$ 300 billion milestone earlier this month, Chinese internet giant Tencent reported Wednesday better-than expected results for the first quarter of this year ended on March 31, 2017.

The company’s revenue surged 55 percent year-on-year (YOY) to RMB 49.55 billion (around US$ 7.18 billion), beating the market estimation of RMB 46.23 billion (US$ 6.7 billion). The profit for the period was RMB 14.54 billion (US$ 2.10 billion), a 57 percent increase YoY.

Source: Tencent

Revenue from value-added services, which include online games and social networking services increased by 41 percent to RMB 35.10 billion for 1Q2017 on a YoY basis. Online advertising revenues increased by 47percent to RMB 6.88 billion in the reporting period. Other revenues increased by 224 percent to RMB 7.55 billion, primarily driven by higher revenues from their payment related and cloud services.

Source: Tencent

“We delivered a strong set of operating and financial results for the first quarter of 2017. Financially, our smart phone games, payment related services, digital content subscriptions, PC games and social advertising businesses all contributed to our broad-based revenue growth,” said company chairman and CEO Pony Ma.

Entertainment service benefits from Chinese New Year

The company’s entertainment services from the video platform to newer products such as karaoke app WeSing (全民K歌), photo editing app Pitu (天天P图), and mobile games such as Honor of Kings (王者荣耀) have achieved notable growth during the quarter.

As China’s dominant provider of online and mobile games, the company’s online games revenues grew by 34 percent YoY to RMB 22.81 billion in the reporting period. The increase mainly reflected higher revenues from both smart phone games (such as Honour of Kings and Dragon Nest Mobile) and PC client games (such as LoL and DnF). Of the total, smartphone games contributed RMB 12.9 billion, up 57 percent YOY.

Tencent’s blockbuster MOBA game Honor of Kings went viral since its launch two years ago, driving users in WeChat and QQ to spend money on game items. The firm’s 2016 annual report showed that the game has booked over 50 million daily active users. In Q4 last year, the game has generated a revenue of RMB 10.7 billion. Local media reports that its DAU surged to 80 million during the lunar New Year in February this year.

The company seems to be confident about the growth potential of the MOBA game. “[Honor of Kings] is still in the early stage of its life circle. We will continue to improve and optimize with new features and contents,” company president Martin Lau said in a call conference.

In addition to gaming, the company’s video platform, which featured popular original content also contributed greatly to the revenue growth. Revenue from video subscription services doubled YOY in the reporting period, major driven by self-produced TV drama Ghost Blows Out the Light and licensed TV series Country Love 9.

WeChat keeps strong momentum, QQ growth stagnates

Tencent’s killer app WeChat continues growth momentum as its monthly active users hit 938 million, up 23 percent YOY. It’s also a notable jump from 889 million in Q4 last year.

However, QQ witnessed a slight drop in the period. Its monthly active user dropped 2 percent YOY to 861 million, while that for Q Zone dipped 3 percent YOY to 632 million.

3 successful marketing strategies to win over the new Chinese consumer

Junse Lee — Thu, 18 May 2017 08:52:52 +0000

Old tricks don’t work anymore. Brands’ advertising ROI in China have been tumbling down to subzero levels in the past years. What was once the El Dorado of marketers is becoming a blood red ocean. New channels pop up every day for the pleasure of Chinese consumers and the headaches of brands trying to reach them. For each channel in the West, twenty can be found in China.

Chinese consumers are maturing faster than in any other markets in the world. Differentiation, particularly in first-tier cities, is becoming a major consumption drive. A study by McKinsey reveals that by 2020 discretionary spending will nearly double compared to 2000.

Also, Chinese consumers are at the forefront of technology, leading the global market of mobile payment among others. That means marketers cannot use the same old tricks that they were before.

Only the most creative and engaging initiatives will hit home. Here are 3 lessons learned in the field from experts who have managed to attract consumers’ attention for the better, and got a great return on investment as a result.

1. Use AI to segment your customers

Wyoming Xu, CEO & Founder at OCheng, has been working with Sephora and LVMH for several months and explains how they managed 5x growth in social commerce sales of these retail giants thanks to intelligent customer segmentation.

“Thanks to AI, we can send personalized messages to millions of customers within seconds. Our deep learning algorithm can target very precisely brand’s WeChat followers and thus adapt strategies for each segment,” says Xu.

Depending on the area where you live, how long you’ve followed the account, which channel you entered the account if you are already a member and other factors, you will receive a highly personalized message including recommendations or coupons. Adapting the brand’s promotional message to each customer highly increases the likelihood of purchase.

2. Generate sales through social media content marketing

We have a tendency to consider content marketing as a waste of time and budget without clear visibility on return on investment. A case study of 有书 WeChat store shared by WalkTheChat proves us wrong. This official WeChat account is a monthly reading list and book recommendation with 7 million WeChat followers. They have successfully applied content marketing strategies with direct effects on sales. They use WeChat groups as their main way to engage with followers. Anyone can talk about books they read and comment. Once a week, the account will recommend a book and of course, a link where to purchase it on JD.com.

Results were astonishing.

“For instance, a book called Chinese Philology History sold 917 books in one day after You Shu listed it in their Reading List of May. It sold more than 3,000 books within a week, that’s the amount the publisher would have sold in 2 whole months without the promotion,” says Chen Tingyi in this case study.

3. Engage customers with games and giveaways

Having consumers test your product for themselves will ensure they will remember it and actually experience its benefits. Combining it with a fun challenge makes consumers feel unique and exceptional: only the best will get rewarded.

Lihaoma (礼好吗), a Shanghai-based company using gamification to increase advertising ROI, has made games and rewards the cornerstone of their value proposition to brands. For example, they were able to increase the WeChat post engagement rate of Feiyue 5x through a branded trivia game where winners could enjoy a free pair of collector Feiyue shoes. Having a clear call to action and incentive to engage was a key success factor for this campaign.

The famous KOL Melilim FU (1.8M followers on Weibo) strongly recommends product giveaways or special discounts for any Weibo marketing. Giveaway campaigns score on average twice better results than campaigns with no clear benefits for brand followers.

Survival guide for the AI age from startup guru Kaifu Lee

Emma Lee — Wed, 17 May 2017 07:14:56 +0000

Kaifu Lee arguably knows the most about China’s tech landscape. The former Microsoft and Google China executive is now an active opinion leader who gives insights into tech trends and entrepreneurship in the country.

Lee, more widely known as the founder of accelerator/VC Sinovation Ventures now, has been unreserved in expressing bullish views on the AI industry, while a group of world’s top scientists, including Stephen Hawking, are adopting a more ominous approach to the technology.

“The most important area for future Sinovation Ventures investment will be artificial intelligence,” as he disclosed at TechCrunch Beijing last year.

Coming from a technical background, Lee has a lot to say about the ongoing craze surround AI and he put his understanding about the industry into his latest book, Artificial Intelligence. In an interview with Sina Tech (in Chinese), Lee explained his views on how we should fend off the increasing challenges from AI.

Tips for the youth

Compared with killer robots that could endanger our lives, job replacement is a more imminent issue brought by AI. This dynamic is already underway and part of the world is feeling it. People losing jobs to robots would become a greater issue in the future, and young people would be the first group to be affected.

Lee’s advice for university students is to dig deeper into your studies to an extent that AI can’t replace your work. He also believes cross-disciplinary research will become the next trend. “AI enjoys unparalleled advantages in big data accumulation in a singular sector, but people could outperform when it comes to cross-disciplinary studies,” he says. “For example, there will be lots of innovation opportunity and startup prospects at the cross-sections among finance, sociology, philosophy, and education.”

He noted that art students may embrace more opportunities in the new era because art and beauty are very hard to replicate with AI. Service industry may also receive a boost, he added.

Tips for traditional enterprises

As an advocate of AI technology, the influential technologist called it “the singular thing that will be larger than all of the human tech revolutions added together, including electricity, [the] industrial revolution, the internet, mobile internet — because AI is pervasive.”

In the fullest belief of AI’s powers to change our world, he suggests traditional enterprises shift to a “back to zero” mindset because the disruptions brought by AI would easily leapfrog over the advantages of older companies.

“For example, brokers, bankers, and insurance companies may be not ready to integrate AI into their products,” he said. “Because the DNA and culture of the industry, past success, and existing profits have become huge burdens for them to move on. Just like Kodak. They knew the age of digital cameras was coming, but the firm can not escape the vicious cycle.”

Tips for VCs

A majority of business application cases in AI industry fall into two models: 2B or 2C. Lee thinks both of them are going to work, but he believes there are more opportunities in the former at present because enterprise applications of AI would generate values faster, especially in banking, insurance, brokerage and the secondary trading market.

For the time being, consumer-facing services would encounter more obstacles because AI isn’t an application. “Although BAT has put their AI technologies in consumer-facing services, that’s because they have a huge user base, big data and commercialization capabilities support that,” he says. “For a startup without traffic sources, there’s no big data to speak of. So it’s more difficult for To C startups to get started.”

Tips for AI talents

By setting up Sinovation Ventures AI Institute, Lee is trying to duplicate the talent training model that he’s experienced with after working for Microsoft Research Asia and Google China.

He also calls for Chinese researchers working overseas to come back to their homeland. Talents originally from China are working in the U.S. because there are more opportunities for global training and career development. These perks that once helped make U.S. preferred employers are becoming less attractive to Chinese professionals with the arrival of AI trend and rising demands for big data. AI is luring more Google, Microsoft and Amazon-trained engineers to come back to China, he emphasized.

Although we are not sure whether China’s going to dominate the AI, but it’s sure a place where we can expect more innovations.

Editor’s note: The translations above are our own.

As China gaming opens to Western design studios, the West wants more Chinese studios

Junse Lee — Tue, 16 May 2017 09:37:49 +0000

With over 305 million online gamers in the People’s Republic of China, it’s easy to see why western gaming developers are so eager to enter the market. Gaming giants like Supercell (makes of hit Clash of Clans) are getting swooped up by Chinese tech giants such as Tencent to aid in entry and flourishing in the world’s biggest gaming market. And the effort has been paying off: League of Legends (developer Riot Games also acquired by Tencent) and others can be seen in the hands of many subway riders in the major cities.

Meanwhile, Chinese game-makers and other tech verticals are shedding the stigma of poor-quality tech. From behemoths like Huawei to startups like Kika Tech with over 275 million overseas downloads and even independent developers, consumers abroad are embracing Chinese products like never before. And these accomplishments are not going unnoticed.

Embracing high-quality games, apps, and hardware is not just happening among users. The app stores are recognizing quality as they see it, no matter the size of the developer. Carl Wang Chun, the former lead designer for several Glu Mobile and Kingsoft (owner of Cheetah Mobile) games, is one such developer who has recently left Big Gaming to start his own company, Cyberlodge Interactive.

“As developers, we’ve been fortunate to gain experience and utilize resources of major developers like Glu Mobile and Kingsoft. But we wanted more,” Carl, CEO and founder of Cyberlodge Interactive said. “That’s why we started Cyberlodge. We wanted to create a home for those who love to make games and work together with our developers and distribution partner SuperD to help our dreams come true.”

In that spirit, Cyberlodge and SuperD have launched their first offering, Downgeon Quest, on the Google Play store. And it has come with a warm welcome from Google, being featured in the United States, Canada, France, Great Britain, Australia, and Southeast Asia beginning today – a true testament that China is catching up to the West in terms of quality.

In Downgeon Quest, the stage is set with the hero, Dumholf, who battles and crafts his way through the depths of a dungeon, collecting recipes and artifacts to increase power, and recruit new heroes. The twist is that, in order to survive, you need to craft spells, weapons and other items from materials that can be found as you delve. The game pulls you in with its simplicity and brings you back with the new tricks and secrets you learn as you play.

Already heralded as a hit game on iOS, it has been listed as one of the best games of 2017 on CNET. The Android version is even getting the YouTube star treatment, with the likes of Clash with Cam, Lady Calysta, Chief Pat and mystic7 getting in on the action.

With the rest of the world caring less about the location of the developer and more about the quality of the product, expect to see more Chinese firms duplicating the success of those that ventured beyond the Great Wall before them.

This is what expat startups say about five startup accelerators based in China

Eva Yoo — Mon, 15 May 2017 07:56:28 +0000

Expanding your startup to China or starting a business in China is not a piece of cake, especially if you’re an expat not speaking Chinese, or have zero experience in China. Local startup accelerators are there to help you out, but it’s not only a certain amount of funding and a free office space that you want from them in exchange for a stake in your startup. So, how do you know which one is the best for your startup, and do they really provide extra value, like valuable business connections and mentorings?

TechNode interviewed five Korean startups that have gone through 3 months long accelerator programs in China. This is what they say about the accelerator programs.

If you’re outside of China, then you first might want to decide the city that you want to settle down, then find a startup accelerator there. Chuangyebang and Feimalv are both based in Beijing and Shanghai, and other accelerators like Innospace, Chinaccelerator, XNODE, Suhehui, iStart are only based in Shanghai. In Shenzhen, HAX is notably the destination for hardware startup, providing 111 days acceleration process. Some accelerators like NodeSpace targets emerging second-tier cities like Hangzhou and Chengdu.

1. Chuangyebang (创业邦), born out of media, full of Chinese startups

Changyong Cha, co-founder; Jinsung Kim, CEO (Image Credit: Membersheep）

Chuangyebang, a Chinese online and printed publication company, runs its own acceleration program, leveraging its business networks. Headquartered in Beijing, Chuangyebang’s accelerator program is concentrated on its base, but also has wide office space around the Minhang area in Shanghai to further its presence.

In the spring of 2014, Jinsung Kim, CEO of Membersheep and his Chinese co-founder Changyong Cha spent 3 months with the Chuangyebang accelerator program in Beijing. Membersheep is a B2B e-commerce startup that sources brands from the U.S. and Europe and distributes to Chinese retailers including Alibaba. According to the CEO Jinsung Kim, the ecommerce startup made US$ 2.6 million sized order on this April in China, and is seeing average monthly growth of 170%.

“Chuangyebang really tried to help us out. On our first orientation dinner, they created a WeChat chatting room so that startups can communicate with the same batch startups and their previous batch startups. We introduce our startups in the WeChat room, and if any startup thinks that they can collaborate with us, then they send me private message right away. The cool thing is that the best companies in Beijing are all there,” Changyong Cha, the co-founder of Membersheep told TechNode.

“When I have inquiries about legal matters or need advice, then they put me in a meeting room where I can have 1:1 WeChat video chat with a lawyer or a mentor. After the call, I can give feedback on the quality of their service.

In Chuangyebang’s magazine, and there are all the latest and hottest startups of that month. I get to see which VC invested in which company in O2O, commerce sectors and check all my competitors. When I try out apps from these startups, I get special offers like free meal or discounted service, since they are freshly funded, and has a lot of campaigns running!

In our building, there were about 30 startups in our batch, and about 10 employees from Chuangyebang. You don’t have to be a Chinese startup to apply for their program. You can pitch either in Chinese or English.”

2. Feimalv(飞马旅), born out of consultant group, full of Chinese startups

In the middle: Heejong Kim, CEO of Thinkthink kids school (Image Credit: Thinkthink kids school)

Feimalv (meaning journey of Pegasus) started in 2011, by Yuan Yue, president of Horizon Research Consultancy Group. Based in 9 startup cities in China, including Shanghai and Beijing, Chinese startups like P2P loan platform Chenengdai, Yiwai11, Yitiao, Yiboyo, Chelaile are born out of Feimalv.

Thinkthink kids school is creativity education company with has more than 45 physical offline education centers throughout China. Thinkthink kids school (想象乐) was chosen as one of the top 10 startups in 2012 on a TV program “第一财经” hosted by Yacai. At that time, Feimalv saw the TV program and reached out to the company to be part of their 3rd batch of Feimalv’s acceleration program in 2013 in Shanghai.

“The biggest help I received from them is on networking,” Heejong Kim, CEO of Thinkthink kids school told TechNode.

“People from education sector all know each other. In Feimalv, there were companies from all different sectors, and we are still in a WeChat group of 300 people to exchange information. You just say what you need, then can easily find resources and contacts you need.

In 2013, they chose 3000 teams, mostly startups in O2O sectors, not many startups with physical products. Now they pick out 15 – 20 teams a year, and many businesses flock to trending sectors.”

3. Chinaccelerator, operated by SOSV, full of international startups

Rudy Lee, CEO of VREX (Image Credit: TechNode)

Chinaccelerator is famous for its hands-on-approach startup mentoring to localize expat startup’s business to Chinese way, leveraging WeChat public account and Chinese social networks. Operated by venture fund SOSV, the startups hustle to make revenue and co-working partnership with big brands during its 3-month program. CEO of VREX, Rudy said that out of 11 startups in batch 10, 10 startups have pocketed the funding they need after the Demo day on last December.

VREX offers AR-based app Rush that allows K-pop fans and stars to digitally communicate in physical locations. Cherry picked by SOSV managing director William Bao Bean, VREX went through 3-month long acceleration program in Chinaccelerator batch 10 in 2016.

“There are three things that Chinaccelerator do better than other accelerators: communication, mentor, and habits,” Rudy Lee, CEO of VREX told TechNode.

“Firstly, their communication style. They try to provide an open environment where as many people can communicate with each other as possible, such as “Geeks On A Train”. They run a lot of events, inviting alumni to their events, and it’s not like one time and that’s it.

Secondly, they have a huge network, with 240 official mentors and advisors. They are management levels in big corporations, VC, or serial entrepreneurs who successfully expanded to China and Asia Pacific region. They have built up a relationship with people from legal, investment background and all different sectors.

For example, if your WeChat public account is suddenly blocked, they contact the person in charge of that right away to solve the problem. If you want to talk to companies that leveraged WeChat to growth hack, they connect you to them. The depth and width of their network is remarkable.

Lastly, they help you on building up good habits. I think it’s like a personal trainer in a gym. There are things that you have to do, but you don’t feel like doing, such as checking the figures on your app or following up with the investor, something that you want to ignore or feel awkward to do it. They make you do that. Later on, it becomes your habit, and you come to track those things naturally. They drum your eyes on building these habits.”

4. Innospace+, born out of a real estate company, full of Chinese-speaking startups

Innospace, started out by a real estate developer, launched a new space called Innospace+, sitting right in front of Fudan University in Shanghai. They maintain strong relationship with Cyberport in Hong Kong, DMM from Japan, and CCCC and N15 from Korea, and tailor the acceleration program accordingly to meet their needs in bringing their foreign startups in China. For example, Innospace’s autumn batch in 2015 was wholly funded by KISED, a Korean government fund fostering Korean startups, where child’s education gaming startup CREATIVE BOMB took part in. Innospace provided mentorship and other systematic courses as well as a physical working space to the startups.

Yup Ma, CEO of CREATIVE BOMB (Image Credit: CREATIVE BOMB)

“Innospace surely had a strong point as a China-based accelerator,” says Yup Ma, CEO of CREATIVE BOMB.

“Innospace invited Dazhong Dianping and other series A, B companies to give a lecture to us on how to expand a startup in China. When we asked questions, they gave us real examples from the China’s business world.

Secondly, they helped us connect with companies that we wanted to reach out to. When we name the specific company names, they somehow got in touch with them and connected us to them.

Thirdly, the staffs checked our business models, and give us advice on how to pivot our business in the Chinese market. For example, my business is about child education, and they advised me to find a local partner to create content together.

In the office, it’s basically all Chinese startups, we have seen Hong Kong and Taiwanese companies apart from us, but haven’t seen other overseas startups than us. On our demo day in June, we pitched with another five Chinese startups.”

5. XNODE, full of Japanese and European startups

Ryan Lee, business development of SmartStudy (Image Credit: SmartStudy)

XNODE, started in 2015, is home for startup accelerators like Takumi Innovators, connecting Japanese and Chinese startups and Austrade landing pad, providing programs with the support from the Australian government. XNODE, however, doesn’t take equity shares.

“We will launch the first tailor made corporate accelerator program for two leading global MNCs in July,” Zhou Wei, CEO of XNODE told TechNode.

SmartStudy is a child education startup that brings a handful of English learning apps built around its fox character PINKFONG. Last year, the company recorded US$ 15.5 million in sales, leveraging its IP businesses.

“XNODE’s CEO Zhou Wei previously worked in a real estate sector, and he chose a great location for XNODE. The environment is very nice, and the startups in XNODE are very international, coming from all different countries.”

Chinese netizens react to Russia lifting WeChat ban

Emma Lee — Fri, 12 May 2017 03:04:22 +0000

Russian communication watchdog Roskomnadzor removed China’s most popular social networking tool WeChat from the list of prohibited websites this Thursday, nearly one week after the app was blocked for failing to comply with the country’s regulations.

The regulator said WeChat has now “provided the information that is necessary to include them in the registry” of online firms.

When the app was blocked on May 4, the news sparked heated discussions on China’s online community because the situation is drawing a comparison on China’s ban on western services, like Facebook and Twitter.

While the Russian authority may claim that WeChat was blocked over its failure to register contact details, some Chinese netizens believe there are more political issues involved and that the news indicated a rift between China’s usual ally.

Others think the media is making a fuss over a trifle technical issue and there’s no point to make a big deal of it.

Despite the discussions, the truth may lie in somewhere in between. It might be a technical issue, but there are some political issues involved as well. Russia is taking an increasingly similar approach to China in controlling its online environment. The country passed a law in 2015 that requires companies to store data about Russian citizens in the country, similar to Chinese regulations preventing data collected in China from leaving the country.

Obviously, this move is not designed to fend off any particular country or company. All kinds of services including LinkedIn, Line, and BlackBerry Messenger have been blocked previously for violating the law.

WeChat, which claims around 900 million monthly active users globally, has yet to meaningfully expand its presence beyond China or the Chinese community overseas. Despite its aggressive global push, a dominating majority of its users still coming from its home country.

Ofo hits speed bump as internal corruption allegations go public

Emma Lee — Thu, 11 May 2017 07:28:56 +0000

Ofo, a leader in China’s burgeoning bike-rental market, has found itself embroiled in corruption allegations this week.

The new first broke out on Maimai, a real name registered social networking platform for professionals, where one user was asking about working at ofo. However, the answers that followed took an unexpected turn towards internal corruption allegations.

Screenshot of the Q&A on Maimai

A person claiming to be a former employee laid bare their own experiences, saying that there’s an overtime culture in the company.

“996 (means the workday starts at 9 am, finishes at 9 pm, with an extended 6 day week), is the standard work practice here. The internal management is chaotic there’s no mechanism to speak of. Corruption is everywhere from the executive to grass root levels,” they wrote.

But then, a supposed current ofo employee confirmed the corruption allegations by adding that “a regional operator can steal tens of hundreds yuan per month, even a university operator can take tens of hundreds yuan or more.”

According to the exposure, the corrupt employees are ripping off the firm through two means: creating phantom workers (fake positions forged by corrupt staff who put the salaries in their own pockets) or soliciting kickbacks from manufacturing suppliers.

The phantom workers are usually in bike maintenance positions. If the rumors are true, this could partially explain why there’s such a high degree of damage to ofo bikes. Although ofo positioning itself as a connector rather than a maker of bikes, it’s a fact that most of its bikes are made by suppliers rather than contributed by end users. Local media cites a person familiar with the matter as saying that a supply chain leader purchases old tires from friends as pawns them off as new components for manufacturing. Needless to say, there must be some kickbacks involved in a case like this.

In response to the anonymous allegations, ofo has released an open letter to emphasize its zero tolerance attitude towards corruption. We have the open letter translated as below:

Anti-corruption is a top priority for all enterprises. Ofo established the Risk Control Department in 2016, a fast-forward move for a startup company. In this department, there are a number of experts from public security, supervision, and law, who have rich experience in anti-corruption work.
We have zero tolerance for corruption. Once a case is verified, we will treat these incidents with fair measures.
These accusations from the anonymous source lack details. These remarks are full of personal emotions but lack the specific details of time, place and character. They should be used neither as evidence for anti-corruption work nor as a news source for quoting when there’s no direct verification from the parties concerned.

The broader picture is that this is not a single case. China’s tech landscape is filled with unsavory practices. Internet giants from BAT to medium-sized firms like Meituan-Dianping and JD have all launched campaigns to clean out corruption.

A brand consulting company is buying one of China’s biggest live streaming platform

Emma Lee — Wed, 10 May 2017 07:46:24 +0000

Shunya International Brand Consulting (宣亚国际), an A-share listed communications agency, has announced that they are purchasing at least 50% of Inke (映客), China’s leading live streaming service.

Shunya’s announcement said that the deal would involve transactions of shares held by the founding team, staff and investment institutions. The firm added that deal will be conducted in cash and deal will be concluded within a month. No further details on the shares involved in this deal were revealed. They have also told local media that “. . . Inke’s model is facing great challenges and it needs a capable partner to push its enterprise-facing businesses.”

Shunya offers various communication solutions, including digital power compartment, brand-wide communication, public relations, advertising, experiential marketing, data marketing, and other business solutions.

TechNode has reached out to Inke for comment and will update when they respond.

As an early entrant to the sector, Inke has grown quickly during China’s live streaming frenzy over the past two years. The combined forces of the market and the team has turned Inke into one of the most invested-in upstarts in the country. Here’s a breakdown of its fundraising path:

July 2015: RMB 10 million angel round from A8.com
Nov 2015: Eight-digit RMB A round from SAIF Partners China, GSR Ventures, Buttonwood Capital
Jan 2016: RMB 80 million A+ round led by online gaming firm Kunlun
Sept 2016: RMB 210 million Pre-B round led by GX Capital

In a later deal, Inke’s investor Kunlun sold a 3% stake in September 2016 for RMB 210 million, meaning the valuation of Inke surged more than 17 times to RMB 7 billion in nine months. That’s almost as much as Shunya’s valuation of RMB 7.2 billion when they went public earlier this year.

Despite the surge in valuation, Kunlun’s sale hinted that the company was having profit problems. In 2015, their revenue was only RMB 30.48 million with RMB 1.67 million in net profit.

Like other hot verticals in China, live streaming is one more battlefront in the proxy war between China’s tech giants. Compared with other competitors backed by larger companies, Inke was all by itself and its skyrocketing market valuation made it even harder for the company to find more backing.

China’s star swimmer Fu Yuanhui live streaming on Inke

2016 has been called “Year One” for China’s live streaming industry. There were more than 200 live streaming services back then and over half of them had capital injections. However, as the live streaming craze cools off and the implementation of regulations tightens, China’s live streaming game is entering a knockout round marked by the death of smaller platforms.

Even for top players like Inke, an app that claimed over 25 million daily active users at its peak, it is difficult to maintain growth based on a capital-driven model. Inke’s monthly operation cost hit around RMB 100 million, founder Feng Yousheng told local media September last year.

The company also encountered roadblocks earlier this month when its app was removed from Apple’s App Store. This was actually the third time was removed by Apple, the previous two being in January and February of 2016.

Inke seems to have few options left outside of Shunya, who just went public on February 15^th this year at a valuation of RMB 7.2 billion.

Rumors about a tie-up between the two companies have been circulating since the beginning of April, although Inke denied the news at the time. The two companies created a joint venture in March to explore ad-based business models for live streaming platforms and to connect potential ad clients.

Inke’s founder Feng said to local media this March that “. . . live streaming is compatible with all kinds of business models such as ad, e-commerce, membership and value-added service, but ads are still the one that achieves the best performance.”

China’s tech M&A in 2017: Less consolidation, higher valuations

Emma Lee — Tue, 09 May 2017 08:33:01 +0000

Consolidation, a normal part of any industry, generally consists of three stages: fragmentation, acquisitions & expansion. The stages are the same for all industries, yet every industry will experience these stages differently.

2015 was a banner year of consolidation for China’s technology industry, marked by a frenzy of M&A cases among top players across various vertical sectors while leaders began to emerge from the early fragmented stage.

Such M&A cases could be found everywhere in joint attempts to scoop the market and share the resources, from red-hot sectors like ride-hailing (Didi/Kuaidi), local listing services (58.com/Ganji.com) and O2O (Meituan/Dianping) to smaller fields such as online education (51talk/91waijiao) and social e-commerce service (Pinduoduo/Pinhaohuo). The market consolidation trend continues in co-working space with the merger between URWork and New Space earlier this year.

However, 2017 is shaping up to be a bit different. We will see a steady transition of Chinese internet companies to the expansion stage as more newly-formed tech giants are choosing independent development as a way to capture further growth rather than M&A, an analysis report from M&A intelligence vendor Mergermarket pointed out.

Large-scale fundraising and unicorn deals have become an increasingly prominent aspect of Chinese M&A. Didi Chuxing’s record-breaking US$ 5.5 billion fundraise is the most spectacular reminder of this shift. The case along represents a staggering 27.6% of the total US$ 12.4 billion fundings that local companies received so far this year.

Along with Didi Chuxing, there’s a growing number of Chinese tech giants in this trend. Since last year, we have been continuously bombarded by billion dollar investments as well as the creation of a new breed of unicorns in different verticals. Alibaba’s local services platform Koubei.com raised US$ 1.1 billion and Toutiao, a news mobile application provider, raised a US$ 1 billion Series D.

However, these mega fundraises have not translated into a growing number of takeovers, the report added. So far this year, tech deals have decreased in value by 13% to US$ 19.9 billion (65 deals), compared to US$ 22.8 billion (73 deals) in the same period of 2016. And since the beginning of 2017, 41 fewer deals have been announced compared to the same period in 2015, when 106 deals worth US$ 21.6 billion were announced, according to data from Mergermarket.

Chinese M&A suffered a slower start to the year than has been seen in the last couple of years, with the lowest year-to-date value since 2013 (US$ 39.6 billion). This year has seen 413 deals worth US$ 82.1 billion, a 24.6% drop in value compared to the same period in 2016 (479 deals, US$ 108.8 billion). The first three months of the year represent the lowest quarterly value since Q1 2014 when US$ 52.6 billion changed hands across 267 deals.

Chinese M&A: Quarterly Breakdown (source: Mergermarket Group )

IPOs now provide an attractive exit option for investors with China Securities Regulatory Commission approving 103 IPOs in Q1 2017 alone, a 66% YoY increase, the report noted.

Chinese photo-beautifier Meitu was listed at the end of last year while several Chinese tech companies are reportedly in the IPO pipeline including Tencent-backed online reading platform China Reading, internet company Qihoo 360 and Ant Financial.

Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, serving as mutual market access, are expected to make Hong Kong another attractive listing venue for Chinese companies.

Video: Now In Shenzhen: Workshop, Trouble Maker and Gravity Innovation

Eva Yoo — Mon, 08 May 2017 02:34:57 +0000

This is the final post of Now in Shenzhen, where TechNode visits a handful of Shenzhen-based companies leveraging Shenzhen’s core strength: manufacturing.

Shenzhen is becoming an ever dynamic place for startups and makers, and the city now is seeing more companies finding a niche in the market that big factories and notable hardware accelerators could not embrace. Workshop, the Uber of manufacturing to beat big factories, and Trouble Maker, a co-working space for non-professional makers are a good example of that trend. You can see that the manufacturing is moving towards serving much smaller scale of startups and individuals. Here’s our video of visiting Workshop, Trouble Maker and Gravity Innovation. Hope you enjoy it!

Youtube

Youku

http://v.youku.com/v_show/id_XMjc0NjI4ODg1Ng==.html?spm=a2h3j.8428770.3416059.1#paction

“Now In Shenzhen” covered six stories on interesting trends emerging in Shenzhen:

1. Workshop

Workshop is “Uber for manufacturing”, helping hardware startups on manufacturing and scaling production in China, especially when they go through crowdfunding.

2. Trouble Maker

Trouble Maker is a Shenzhen-based product development platform that works like a co-working space for makers who want to realize their product.

3. Madrasters

Madrasters is a designer community in Shenzhen where people can learn and chat about design trends and network. The key message is “Made In China” needs more expat designers.

4. Focalmax

Focalmax, a Shenzhen-based company that specializes in smart optical technologies and products, says that its artificial intelligence robot combining VR technology will be ready by the end of this year.

5. EcoFlow Tech

EcoFlow Tech, the battery startup founded by ex-DJI employees, launched a mobile power station RIVER that can charge up to 11 devices simultaneously.

6. Gravity Innovation

Gravity Innovation wants to encourage young students to get interested in space with their connected rocket lamp and SpaceGO app.

Tracing Baidu’s decline from search engine emperor to the “Yahoo of China”

Emma Lee — Thu, 04 May 2017 09:03:10 +0000

If you’ve been paying attention to China’s internet industry, then you are surely aware of the term “BAT”, an acronym that’s used to refer China’s IT triumvirate Baidu, Alibaba and Tencent. For a long time, this term is the only one you need to understand China’s digital market.

As pioneers of China’s internet boom, BAT are often dubbed as the first generation of Chinese tech companies. When they began, they each had their own distinct focus: Baidu for search, Alibaba for e-commerce and Tencent for social networking and games.

Different from the U.S. and Europe, where internet companies focus on one sector and try to be the best at it, Chinese companies start by focusing on and solving one problem, but their ultimate goal is to build huge companies that can attack all different parts of the market.

As the most typical example of this mentality, BAT have been spreading quickly to each other’s core businesses and whatever is trendy in the market. The presence of BAT kingdoms are so visible in China. They are the powers behind nearly ever emerging sectors from ride-hailing, bike-rental, m-health, online education, AI, cloud and big data.

While the kingdom of Tencent and Alibaba have continued their upward run, Baidu, which comes first in the acronym, is gradually lagging behind. Many have started to doubt whether the internet giant is qualified to remain in the term.

Baidu vs Tencent and Alibaba in market cap

Market capitalization is perhaps the most direct means of evaluating the size of a company. Tencent just reached US$ 302 billion market cap this week. After all the fanfare about its historic IPO in 2014, Alibaba came close to breaking the US$ 300 billion barrier on April 24 with a market cap of US$ 286.6 billion. That number does not include Alipay’s operator Ant Financial, which has been seeking an individual listing in the near future.

Regardless of stock price fluctuations, the market cap of Tencent and Alibaba linger around US$ 300 billion. In comparison, Baidu closed at around US$ 178 per share with approximately US$61 billion market cap at the time of writing. That’s only around one-fifths of its peers.

The NASDAQ-listed company has seen its market cap drop constantly after reaching a historical high of US$ 249 per share on November 10^th, 2014. In terms of revenue and profits, the gap between Baidu and the other two companies is also widening due to Baidu’s lack of long-term growth momentum.

Image credit: The Economist

Always one step behind

BAT are trying their best to diversify their businesses in order to construct an ecosystem that would facilitate synergy effect among different units. Tencent and Alibaba are no doubt the bellwethers in creating their business ecosystems.

For example, you can’t really define Alibaba as an e-commerce company anymore. In addition to its core business, its revenue source is quite diversified with significant growth from cloud computing as well as digital media and entertainment. Its business covers sectors including entertainment, m-health, mobile payment, B2B services and cloud computing. Tencent is doing something very similar but with a slightly different focus. In addition to core messaging tools like WeChat and QQ, Tencent saw positive returns from Tencent Video, Tencent Music, and investments in Dianping and Didi.

However, Baidu is highly reliant on its search service and has few successful investment cases to boast about. Alibaba and Tencent’s startup investment strategy looks like a trawler net fishing, while Baidu seems to be going for precision strikes. However, precision takes time and the search company has been consistently derided for coming late to the game. For that reason, it has missed chances to capitalize on several waves of tech trends.

China’s ride-hailing market really heated up at the beginning of 2014. At that time Tencent and Alibaba were competing through proxy by investing in Didi and Kuaidi respectively. Baidu joined the battle almost one year after at the end of 2014 through investment in Uber. Something similar happened to Baidu when it’s transitioned to mobile and O2O. Sure it’s the safest to enter the arena when the scene is maturing, but it would also generate the least return.

Bogged down in negative news

Press coverage about Baidu has trended somewhat negative in the past few years along with a series of scandals.

One of the most scandalous events that sparked public outcry was the death of a college student named Wei Zexi, who blamed Baidu for promoting untrustworthy hospitals that failed to cure his cancer. Baidu’s paid listing practice has long been questioned by the public for selling listings to bidders, especially medical institutions, without adequately checking their claims. In January 2016, it was revealed that Baidu had sold the management rights to a popular online message board on hemophilia to a private hospital in Shaanxi province.

In addition to the incidents themselves, Baidu’s slow and ill-received responses lead the company to a larger PR crisis. The fiasco created a popular meme in the tech circle: “This session of Baidu PR sucks.”

Baidu bets its future on AI

In order to stay focused, Baidu has sold the mobile gaming business that was shaped out of 91 Wireless, acquired for US$ 1.9 billion, and axed several businesses with mediocre performance including their mobile health department, Baidu Future Store (an e-commerce platform), and Baidu Shuoba (a social networking unit).

Now, they are focusing on AI and autonomous driving, especially after Lu Qi, former Microsoft exec, took office as the company’s COO at the beginning of this year. But the company suffered a server brain drain as several top execs in AI unit left the company last month, led by Andrew Ng, the man behind Google Brain.

Baidu, who put forward the concept of Baidu Brain back in 2016, surely enjoys some first mover advantage this time and it’s continuing it through home-grown R&D and investments. In the past one-year period, it has announced acquisition or investment in five startups related to the businesses, including AI service xPerception, electric car manufacturer NextEV, Alexa-like Raven Tech, Velodyne, Lidar for self-driving cars, and fintech company ZestFinance.

In a recent article, The Economist pointed out that Baidu is becoming the Yahoo of China, “a once-dominant search giant that sank owing to lack of innovation and a series of management blunders” and that AI is probably the company’s last resort to restore its former glory.

Currently, however, no matter if it’s Baidu Brain or autonomous driving, Baidu’s AI businesses are more in the R&D stage. They still need more application scenarios to apply these cutting-edge technologies before making profits from it. Even if they were the first, this advantage is slowly diminishing as both Tencent and Alibaba have announced their own AI projects.

Baidu just open-sourced its self-driving technologies and services through Project Apollo, a tentative commercialization drive of its auto drive technologies, as company COO Lu calls it.

Robin Li also disclosed last month that the company is going to accelerate the commercialization drive for its AI products. We still need time to see what changes this strategic change will bring to the search giant.

Bike-rental war escalates with Alipay supporting “scan-and-ride” function for six bike-rental apps

Emma Lee — Fri, 28 Apr 2017 08:42:12 +0000

Alipay, the online and mobile payment platform operated by Ant Financial, has teamed up with six bike-rental apps to allow users to rent 6 million bikes in 50 cities across China directly through the app’s new “scan and ride” function.

Users can unlock any ofo, YouonBike, Bluebike, hellobike, Ubike or funbike vehicle simply by scanning its QR code through the Alipay app starting from today, the company announced.

Bike-rental has exploded in China over the past year, with tens of millions of users taking millions of rides every day across the country. However, users are facing with an increasingly bothering problem of choosing between a “rainbow” of different bike rental services. For users, new service eliminates the need to download individual apps for each service. For the companies on the other hand, the partnership helps both parties to drive more traffic.

Bike-rental apps are no longer the only place where urban commuters can borrow a bicycle. Behind the heating competition, there’s an increasing presence of internet giants, who are entering the battle field through capital injection or product line-up, or both.

Mobike’s service was integrated this March into WeChat, a popular messaging app developed by Mobike’s investor Tencent. Didi also added ofo to its app earlier this week in a similar move.

Although Alipay’s cooperation comes a bit late, it has certain advantages. The sheer number of partners, which indicates more bikes, is a plus in a market where bike availability is the top priority for users. When Alipay users scan the QR code, no user registration for separate bike-rental apps is needed for renting the bike. In addition, any user that rents a bike through Alipay automatically receives comprehensive accident insurance.

“Bike-sharing is transforming lifestyles across China, providing a healthy, convenient and affordable way to get across town. Integrating Alipay with these apps will make life even easier for users and help the industry continue its tremendous growth.”
~ Chen Long, Chief Strategy Officer of Ant Financial

Before this product tie-up, Alibaba has already tapped the market through its credit rating system Sesame Credit. Ofo and YouonBike allow users with qualifying scores on Sesame Credit to rent bikes without a deposit.

[Op-ed] In India, Chinese tech companies see the next big growth market

Guest Editor — Wed, 19 Apr 2017 07:03:48 +0000

Editor’s note: This was contributed by Tao Li, Founder & CEO at APUS Group. APUS creates apps designed to optimize and improve the Android experience and has over 1 billion downloads to date. APUS is the second youngest unicorn, valued at US$1 billion in less than seven months of its founding.

This year is set to be a pivotal year in India’s technology scene. I believe this is a year where more overseas investment than ever before will flow into its start-ups and early stage businesses. Although in recent years many of the biggest investments have come from US firms synonymous with Silicon Valley, 2017 will be the year when more Chinese companies are at the heart of the most interesting investment stories. These will be the businesses that use knowledge gained from China’s mobile internet boom to uncover the stars of tomorrow.

Much was written in 2016 about the investments made in Indian start-ups by Chinese companies. Many media commentators mistakenly linked the growth in outward investment by Chinese tech companies to the health of the Chinese economy. While economics will always play a part in business; the real reason is that Chinese companies see India as a major opportunity. It is at the same point that China was at perhaps five or six years ago, with the same tantalizing, untapped potential for technology and the mobile internet to revolutionize the lives of billions.

Today, India is home to more than 12,000 start-ups – some of which may become the next tech Unicorns, with products or ideas that will change our lives. With its fast developing economy, educated and English-speaking workforce and well-established IT sector, India has many things that make it attractive to overseas investors. It also has set up business and cultural connections with Europe and the US – an area where India is arguably more advanced than China.

In the last six months, more than $2 billion was invested in Indian companies – a sixfold increase over the previous year. That’s almost double the total invested over the past fifteen years. These investments are from Chinese companies that have already made the leap from being domestic successes to global companies. Tencent, Alibaba, Xiaomi and are some of the best known and most active investors in India to date. The Indian government has also been a proactive supporter of this inbound investment, through initiatives like Make in India, the Smart City program and Digital India. There is also an ongoing collaboration between the governments of the two nations.

At APUS, we have already announced partnerships with mobile advertising technology company InMobi, and the streaming video platform Hotstar. We are also exploring the collaborations with several of India’s biggest smartphone manufacturers, including Micromax, Reliance JIO, Intex, Lava, and Zen. These kinds of discussions are happening between Chinese and Indian companies right across the board, looking at where collaboration can outpace organic growth, and where the right investments today can drive change tomorrow.

Although APUS may not have the same resources as a company such as Alibaba or Tencent, we still plan to invest 10 billion Rupees ($152 million) in India over the next five years. Today, APUS has 50 million users across India, making it our biggest market. We believe that India’s growth will outstrip elsewhere, reaching 150 million users by the end of 2017.

Considering that India currently has over 371 million smartphone users in total, this may seem an overly confident prediction. But this is precisely the kind of growth we experienced in China as users switched from feature phones to smartphones – leaping from fewer than 50 million smartphone users in 2011 to more than 160 million by the end of 2012. Today, 980 million people are connected to the internet via their phones.

This wave of new smartphone users represents a significant opportunity for social and economic change – perhaps the greatest since the first emergence of the internet – as it offers access to services that currently are unaffordable and out of reach of much of the population. Education, commerce, banking – these are industries which are being transformed around the world as they shift from the desktop to the mobile device. What India also shares with China – and other markets where this will also happen in the coming years – is the leapfrogging of fixed-line infrastructure, straight to 3G and 4G networks. Millions of people who don’t have access to schooling, banking or government services become empowered through access to the mobile internet.

As well as improved infrastructure, schemes such as Digital India will depend on the energy and ideas of India’s start-ups and local companies to create the content and services that drive the mobile internet. This is where we are targeting our investments, to help businesses who are already innovating to grow and take advantage of the next opportunity. And of course, we want those companies to add their services to APUS, creating a whole ecosystem of local services that are available through the APUS user system as well as other local channels. The best of these services will shape the experience of the millions of new mobile internet users.

In the past decade, mobile technology has played a huge role in the transformation of Chinese society. China is now one of the most advanced smartphone markets thanks to the many innovative services which are mobile-first. These are the same services shaping so much of the wider technological and social changes happening in China today. There’s no reason why Indians cannot experience the same uplift and transformation from its mobile revolution. It’s this unique similarity with something that many Chinese entrepreneurs have already lived through, and it is this opportunity that is bringing Chinese and Indian companies together.

TechNode does not necessarily endorse the commentary made in this piece.

MockingBot lets you build mobile app wireframes in minutes

Emma Lee — Thu, 13 Apr 2017 07:06:19 +0000

These days, we have to acknowledge that being a programmer is kind of cool, but the days when coding is the crucial skill-set in developing a good mobile app have long gone. Even for experienced programmers who can work with code, wouldn’t you prefer something easier, like a tool that allows you to build prototypes quickly?

That’s exactly what Zhang Yuanyi, the founder of MockingBot, thinks when he first started the project in 2012. Like many entrepreneurs in early 2010s, Zhang was inspired by Mark Zuckerberg’s story and sought to build his own social network service for Chinese users. But he finds it’s darn hard to explain his ideas to friends and there are no products available on the market to facilitate the process.

As a full stack developer, he built MockingBot single-handedly and the product received lots of positive feedbacks after it hit the overseas market in 2012. Zhang explained that he choose to tap overseas market first mostly because the users have better payment habits for software.

Despite the growth, Zhang treated it as a hobby project and for the following four years, he remained the only person on the project. With the rise of startup craze and shifting of China’s user payment habits, MockingBot team believes that it’s the right time for prototyping services to boom.

MockingBot, or Modao (墨刀) in Chinese, is an online mobile prototyping tool that enables users to build interactive mobile app wireframes and prototypes in just a couple of minutes. In a well-organized and clean workspace, users can put their ideas into inspiring user experience by using combo templates, built-in widgets, and intuitive drag-and-drop features, with no coding required.

Real-time collaboration allows you to share prototypes with others by adding your team members to your MockingBot prototype project. “There are more possibilities in this feature, we can also share the prototype to a larger number of testers as a means to validate the features and receive early feedbacks from users,” pointed out Yu Xiaomeng, a post-90 serial entrepreneur, who joined the company one year ago as the co-founder to oversee finance, recruitment and public communications.

The Beijing-based startup now registered over 420k users globally with most coming from China, where they have launched some marketing campaigns, introduced Yu.

“Of the total users, around 50k are coming from the overseas market, where we have done zero marketing and have recorded a 5 percent payment rate,” Yu says. “We have high hopes for the U.S. and India markets, where we have seen favorable growth.”

“We are a bit intimidated when entering U.S. market because there’s plenty of competitors, like Proto. But we find that the app development in the US is designer-centric, so most of the US prototyping tools need users to import PS or Sketch pre-treated images. On the other hand, China’s app development workflow is product manager-centric, that’s why MockingBot’s ready-to-use models are easy to use. This also greatly shortens the time it takes to generate a shareable app,” said Yu.

While the demand from designer developers continues, there also raise a demand from green-hand users who don’t have designer skills. “Our users in the US are mostly students from colleges, newbies in the app industry, outsourcing companies and small teams,” she explained. In addition, there’s the price difference, which would be an effective means for user acquisition in the initial stages.

After receiving a 5 million RMB pre-A financing from FreeS in April last year, the Beijing-based startup has more than 20 employees now and planning to raise the next round this year.

3 Chinese journalists who turned into successful tech entrepreneurs

Emma Lee — Tue, 11 Apr 2017 09:19:04 +0000

The gradual and painful demise of traditional media has seen more and more talented journalists seek new opportunities. Among the options, starting a business of their own is becoming a favorable alternative.

Obviously, journalists would make good entrepreneurs for their expertise in detecting and addressing the latest trends. Moreover, they surely enjoy abundant contact resources to draw back upon. But more importantly “[j]ournalists tend to possess the right mix of idealism, skepticism, and determination to bring useful ideas to life,” according to the former editor of the Chicago Tribune, Jason Goodrich.

In that vein, TechNode presents 3 journalists-turned-tech entrepreneurs.

Hu Weiwei — Mobike

In a little bit more than one year, dockless bike rental firm Mobike has brought amazing changes to China’s intercity transportations. Hu Weiwei, the 34-year-old founder of Mobike, once worked as a journalist at the Daily Economics Newspaper, mainly covering automobile news, which later helped her to form Mobike’s founding team.

After leaving the company, she went to The Beijing News and Business Value to report about technology news. In December 2015, she formed a team from her automobile industry networks and established Mobike in 2016. Obviously, Hu’s reporting experience in transportation and technology sector has contributed greatly to her project.

As one of the top players in the vertical, the Chinese bike rental startup has closed its 215 million USD series D in Jan. this year. The company is also planning to expand beyond China to the global market.

Tang Yan — Momo

Like many Beijing drifters, Momo’s co-founder and CEO Tang Yan, originally from Hunan Province, came to Beijing more than ten years ago in the pursuit of his dreams. Before founding the social networking app with his colleagues, he worked at the internet firm NetEase from 2003 to 2011, when he left his post of editor-in-chief at NetEase’s news service.

As one of the country’s leading dating apps, Momo went public in the US in 2014. The hook-up app, which now claims 81.1 million monthly active users by the end of 2016, is one of the Chinese companies that have capitalized on the booming live streaming services in the country. The firm’s revenue recorded a significant 524% YOY jump to US$ 246.1 million USD in Q4 last year, mainly contributed from the growth of their live streaming business.

Li Xueling — YY

Li Xueling, the 44-year-old CEO of YY, was a reputable tech reporter before founding the gaming portal for China’s gamers. He joined the China Youth Daily after getting a BA at Renmin University. Li worked for NetEase between 2003 to 2005, when he left the company as editor-in-chief for the news portal.

YY went public on the NASDAQ in late 2012. The firm started as a voice chat service for game players and has since transformed into an interactive video platform. The sectors the platform now covers include music, gaming, education, and dating. The majority of its revenue come from virtual item sales.

Majority of China-listed gaming firms in the black in 2016

Sheila Yu — Mon, 10 Apr 2017 08:27:53 +0000

China’s gaming sector continued its boom in 2016, thanks to increasing internet penetration and its vast population. More than three-fourths of China-listed gaming firms reported gains for 2016, local media is reporting (in Chinese).

Among a total of 61 China-listed gaming firms, 52 have published their 2016 annual results as of April 9, with 47 of them making profits, according to data compiled by financial data provider East Money Information. In addition, 30 firms, or roughly 58% of the firms that issued results, have each grossed in more than RMB 100 million in net profit.

Perfect World (完美世界 in Chinese) and 37wan Network (三七互娱 in Chinese) were the top two performers, reaping RMB 1.17 billion and RMB 1.07 billion in net profit in 2016.

Despite their stunning performance, they are eclipsed by Hong Kong-listed internet giant Tencent and US-listed NetEase, which are the real heavyweights in the country’s gaming sector.

Due to its powerful distribution channels and vast user base, Tencent’s online game segment revenue rose 25% to hit RMB 70.84 billion, representing 47% of the internet behemoth’s 2016 revenue, according to the firm’s 2016 annual report. This makes Tencent the largest online game publisher in China.

Tencent is the operator behind the country’s top three highest-grossing PC client game titles, namely League of Legends (英雄联盟 in Chinese), Dungeon Fighter (地下城与勇士 in Chinese) and CrossFire (穿越火线 in Chinese).

While in the mobile gaming arena, Tencent’s mobile MOBA Honor of Kings (王者荣耀 in Chinese) has amassed 50 million daily active users since its launch in November 2015. The sought-after gaming title recently took in a whooping RMB 3 billion revenue every month for the firm, revealed some Tencent staff. (in Chinese).

As for its rival NetEase, it’s net revenue from online games reached roughly RMB 28 billion in 2016, up 61.6% from the previous year, according to its unaudited 2016 results (in Chinese).

Its popular gaming title Onmyoji (阴阳师 in Chinese), which made to the top ten outstanding games last year in China’s iOS app store, was rumored to bring in RMB 1 billion revenue every month (in Chinese).

Now In Shenzhen: This Chinese company is building an artificial intelligence robot using VR

Eva Yoo — Fri, 07 Apr 2017 02:17:49 +0000

This is the fourth post of “Now in Shenzhen”, where TechNode visits a handful of Shenzhen-based companies leveraging Shenzhen’s core strength: manufacturing.

Focalmax’s robot showcase at MWC (Image Credit: Focalmax)

“We’ll have the beta version of the AI product by the end of this year. Artificial Intelligence needs the R&D, investment, and capacity,” Raymond Lei, co-founder as well as deputy general manager at Focalmax told TechNode.

Their AI robot works like any other home robot in China: provide audio and video entertainment, charge itself when the battery is running out, recognize face and voice, and manage your schedule like a secretary. The differentiation lies in its VR capacities. The built-in projector will use VR technology to make 360 video calls and use an infrared remote control to manage household appliances. It can also monitor indoor air quality.

“Currently, artificial intelligence research done by China’s companies isn’t all that different. It’s about how fast they are developing it and how much data they have aggregated,” Raymond says. “Our strength is the platform around optical technology. Robots need to combine optical technology, including 360-degree mapping, interpreting, and monitoring. That’s why our robot research is based on visual optical technology to lead as a platform.”

Optical technology is key to best VR experience

Raymond Lei, co-founder of Focalmax

The company is now committed to building a VR+AR ecosystem in China. The strength of the company is its optical technologies, largely coming from its founding members. Founded in August 2014, the co-founders have 20 years of experience in optical technology, smartphone, hardware, and trade.

The company is focusing is on the B2B market with strategic partners including Qualcomm, China Telecom, Ebaby, and Philips.

“The core of a great VR product lies in its computer chip, its screen, and its optical system. Everyone can buy 20K, 10K screen, if you have money you can buy the best computer chips, too. So what matters is the optical system. It decides the user experience and clarity of view,” Raymond says. “Since our main strength is the optical technology, we can apply this technology to any machines and devices for other companies.”

While their AR, VR products will mainly focus on B2B customers Scati ONE, their flagship AR headset will launch its Indiegogo campaign soon.

When China’s Biaoqing meets western GIF economy: Q&A with BiaoqingYun CSO Grant Long

Emma Lee — Thu, 06 Apr 2017 02:57:46 +0000

Like any modern netizens that are moving towards an era of visual communications, you may like to throw one or two stickers into the midst of a dull conversation to spice it up in what is being called “micro-entertainment“. But be careful when you do that in China, you may well start a doutu.

Grant Long, BiaoqingYun’s CSO

Digital expressions have had an amazing impact on the way people talk online. To look into the emerging vertical, we spoke with Grant Long, Chief Strategy Officer for BiaoqingYun, about how China’s digital expression industry is different from the U.S. as well as the unique opportunities coming inside and outside China.

Grant has years of experiences in the industry. He joined Chinese digital expression startup BiaoqingYun this year. Grant previously worked as Head of Strategy and Business Development for Swyft Media, which aims to evangelize emoji and visual expression in mobile messaging. After Swyft was acquired by Monotype, Grant continued his initial dreams of spreading the digital expression business around the globe and found his first stop in China, where the fast paced internet ecosystem was far ahead in the adoption of “biaoqing” (表情), a unifying term to describe stickers, animated GIFs, static shareable memes and more.

“[Biaoqing] are used by young and old (in China), and have an established place in society. And yet, biaoqing seemed to thrive organically despite many inconveniences like limited platform support, and commercialization of the format was scarce. To me, it felt like an opportunity,” he said on his personal blog.

Below is an edited excerpt from our talk with him.

What do you think are the key differences between Chinese and U.S. digital sticker market?

For one, I think it is important to note that biaoqing (emoji/stickers/gifs/etc) have their origin in this part of the world, and while recent adoption in the West has been phenomenal, I think these formats of digital expression are more universally adopted – and loved – in China and the nearby region. However, although biaoqing are relatively new in the West, there has been far more adoption of the unit as a form of advertising – something that I helped to pioneer at my last company, Swyft Media. I think this makes for an exciting opportunity… Adoption of Biaoqing in China is more universal, and yet, the format has not been monetized yet at scale.

What are your tips for localization in overseas markets?

There are several important factors for moving overseas in the biaoqing space. Ease of integration is very important. Every tech company has a lengthy product backlog, so offering a simple integration path is essential to forming partnerships. Additionally, supporting both SDK and API implementations is key – we have both, as well as HTML5 support.

The second factor is relevant content. This requires top artists (illustration, animation, film, etc), an operations team to guide the artists, and a partnership team to form relationships with local IP/content owners. Also important is having data on how people use biaoqing to communicate, and creating content that fits those communication patterns. We know that our artists are amazing, and we know that our data about communication patterns is unmatched. We also have fantastic processes for content operations and partnerships – and as we expand, will likely hire local team members into these positions.

Finally, understanding the competitive landscape and important partners is key here. Many Chinese businesses struggle to expand globally because their teams lack awareness of international markets, trends, etc… it really is a completely different ecosystem of apps outside of China, not to mention pop culture. That is the beauty of our company. Most of our core team is Chinese, but many of our executives lived for long periods abroad in Japan and have fantastic global awareness. Meanwhile, I bring the experience of working for years on biaoqing outside of China. We have a truly international leadership team with the right makeup to have success globally.

Why China and why BiaoqingYun? What’s in the country and the company that attracted you?

You have to be foolish to ignore the growth and economic opportunities that abound in China. The country has a massive population of highly connected mobile internet users, with rising incomes and a propensity to spend. This is also the core of the biaoqing phenomenon that has since expanded to all other parts of the world, yet hasn’t been commercialized in China yet. But the factor that made this an easy decision for me was finding a very capable and experienced team of friendly, trustworthy people that I felt great about taking a risk with. After leaving Swyft Media, I made sure to study the market, the competition, and the team before finally deciding to join. Any new venture is risky; the best way to beat the odds and be extremely successful is to work with a great team! I truly believe we have that.

What’s BiaoqingYun’s business model? What kind of innovations do you want to bring?

At this point, we offer most of our services to app developers for free. Our products are also completely free to end users. However, what we are doing is building a massive scale of attention and engagement from highly connected mobile users, often at times when they are communicating with close personal connections. These moments can prove extremely valuable for brands. We’ve done some small executions with advertising partners – Microsoft, 20th Century FOX, and Paramount, for example – but right now our main focus is on expanding the reach and offering fun and engaging solutions to our app partners and their users.

China’s TMT investment gathers steam in H2 2016

Sheila Yu — Sat, 01 Apr 2017 05:07:06 +0000

China’s telecommunications, media, and technology (TMT) industry remained the apple of investors’ eyes in the second half of 2016, maintaining rapid growth in both value and volume. A total of 1,478 PE/VC deals were recorded during the period, with a total value reaching US$ 25.02 billion, according to an industry report recently released by PwC China (in Chinese)

According to the report, PE/VC investments in the TMT sector remained dynamic in the country in the latter half of last year, representing more than half of the whole industry investments by value, with the highest single deal worth US$4 billion.

The total value of investments that had a single deal value over US$ 100 million accounted for nearly half of the TMT total investments during the reporting period, while a large number of investment deals were below US$ 100 million in terms of single deal value.

Image credit: PwC China

Gao Jianbin, PwC China’s technology industry leader, says that there is a lag in the investment decline for the TMT industry compared with overall industry, but the industry is still attracting far more investments than other industries. The polarization in investments reflects a fact that the high valuations of unicorns have deterred new investments.

Internet was the best performer in the TMT sector, in terms of deal value and volume. The sub-sector saw total investment value hit US$18.19 billion in H2 2016.

Image credit: PwC China

Some new business patterns such as O2O bike-rentals and live streaming have attracted huge investments. In addition, investment in entertainment and media subsector was on the rise, with the number of deals reaching a record high of 108.

IPOs have become a major form of exit for investors. A total of 58 Chinese TMT firms have raised RMB 33 billion in the second half of last year.

During the reporting period, the two largest tech IPOs in the country belonged to Meitu and China Film Corp. Photo editing and sharing app developer Meitu raised roughly RMB 4.2 billion through its Hong Kong IPO last December, recording the largest technology listing in Hong Kong in a decade. China Film Corp listed in the country’s A-share market, raising RMB 4.17 billion.

China Oceanwide acquires US tech media firm IDG

Sheila Yu — Thu, 30 Mar 2017 09:26:07 +0000

China Oceanwide (中国泛海), a Chinese privately owned investment company, announced yesterday that it has completed the acquisition of the majority of assets of American technology media and marketing services International Data Group (IDG), including its subsidiaries International Data Corporation (IDC) and IDG Communications, as part of its bid to expand overseas, local media is reporting (in Chinese).

With the completion of the acquisition, the Chinese conglomerate has become the American firm’s controlling shareholder by holding a 90% stake, while IDG Capital, the China-focused investment firm run by IDG China, has taken a 10% stake.

IDG is a leading media, data and marketing services and venture capital firm, headquartered in Boston. It recorded US$3.8 billion in sales for fiscal year ended Sept. 30, 2015.

Market intelligence firm IDC is the first global technology research company that has entered the Chinese market, while IDG Communications is the world’s largest media, data and marketing services, creating personalized content of market influence in areas such as video, cell phones and social media.

China Oceanwide has branched out into financial services, media and culture, strategic investment fields from real estate development over the past three decades since it was founded by Lu Zhiqiang in 1985. The company holds shares in a number of Chinese private commercial banks such as China Minsheng Bank and Guangxi Beibu Gulf Bank.

After the acquisition, the conglomerate worthy of billions of US dollars has nearly 20,000 employees across the world with more than 40 subsidiaries and branches.

The low-key Chinese conglomerate has embarked on an overseas M&A spree in recent years.

The company bought U.S. insurer Genworth Financial Inc for around US$ 2.7 billion last October (in Chinese), the largest acquisition ever of a foreign insurer by a Chinese firm in China.

Lu’s sprawling business empire also expanded its reach to the US real-estate market. In August 2015 alone, the company bought a property for US$ 390 million in a Manhattan (in Chinese).

“We believe the sky is the limit for where IDG business development is headed in the future. As a new shareholder, we will share China Oceanwide’s experience and advantages with IDG, while integrating the existing business with theirs,” said Liu Bing, new president of IDG and vice-president of China Oceanwide.

China’s Giphy BiaoqingYun wants to change the way Chinese use stickers

Emma Lee — Fri, 24 Mar 2017 06:14:27 +0000

Wanted or not, we are shifting quickly away from face-to-face communication towards texting. In this new era where people speak with their fingers, emoji (表情 biaoqing in Chinese) are becoming an important part of our daily communications to convey emotions and feelings both for the spoken and the unspoken.

This new means of communication has become so common that it is almost impossible to find a purely textual conversation in chat groups. Overall 6 billion out of the 45 billion messages sent out in 2015 in the U.S. were digital expressions. The growing market fostered star projects like Giphy, which was valued at $600 million in the latest round of financing.

BiaoqingYun (literally “emoji cloud” in English) is China’s answer to Giphy. They bill themselves as a platform for personalized expression and communication online, enabling hundreds of millions of mobile users to communicate using fun and engaging media formats like animated GIFs, stickers, and emoji. The company just received an undisclosed amount of A Plus round in January this year.

The Shanghai-based startup was born out of curated avatar design service Siyanhui. The company then grow into a full-fledged platform that powers every aspect of digital expression communication, whether enabling the creation of original content, licensing content or sharing content on social networking and IM platforms through its API.

The firm’s flagship product BiaoqingSoSo API, which enables end users to share GIFs in conversations and on social feeds, has been integrated into top-notch services in China like Alipay, WeChat (through their mini-app), QQ, live streaming platform musical.ly, Tinder-like dating app Tantan and enterprise software Fxiaoke. Up till now, the API has stored over 5 million expressions. The service receives over 100 million search requests per day and has reached 500 million end users, according to the company.

Additionally, the company provides a full product line of the expression services from sticker search engine BiaoqingSoso, fully featured sticker shop SDK, and cloud service.

Although BiaoqingYun has been so far focused on the China market with very limited efforts to expand beyond these borders, the company, like many Chinese startups, is trying to expand its business beyond its home turf.

Grant Long, former exec at Swyft Media, the startup that turns stickers into cash, joined Biaoqing Yun as chief strategy officer earlier this year. Monotype Imaging acquired the New York city-based startup in 2015. After leaving Swyft Media, Grant spent time studying the market, the competition, and the team before finally deciding to join.

“You have to be foolish to ignore the growth and economic opportunities that abound in China. The country has a massive population of highly connected mobile internet users, with rising incomes and a propensity to spend,” Grant said. “This is also the core of the biaoqing phenomenon that has since expanded to all other parts of the world, yet hasn’t been commercialized in China yet.”

“But the factor that made this an easy decision for me was finding a very capable and experienced team of friendly, trustworthy people that I felt great about taking a risk with,” he added. “Any new venture is risky; the best way to beat the odds and be extremely successful is to work with a great team.”

The future of the startup support system: A conversation with China’s leading incubators and accelerators

Sheila Yu — Wed, 22 Mar 2017 03:41:36 +0000

Incubators and accelerators have been growing like mushrooms in China’s major cities since 2015. While competing with one another in terms of venues, services, and professional advantages, incubators and accelerators went through all of the ebbs and flows during this period.

At the ChinaBang Awards 2017, Microsoft Accelerator Beijing CEO Luo Bin, Innospace+ General Manager Richard Tan and UrWork partner Xu Binchao talked about the future of this industry.

Incubators sprang up in large numbers in 2015 and 2016. In some incubators, three-fifths of a five-story building may be vacant, as there were not so many startups to be served. After experiencing such a downturn, what’s the current incubator sector like now?

Both Xu Binchao and Luo Bin said that the sector is actually picking up.

Xu held that the whole market has been recovering since the end of 2016, which has seen increased policy support, more public attention towards innovation services, and rising demand for higher levels of specialization.

Xu also maintained that the market reshuffle actually serves as a sieve, and the exit of some unprofessional incubators will help straighten out the sector.

Luo told the audience that Microsoft Accelerator Beijing has accelerated 140 startups over the past five years, with 93% of these startups securing funding during the enrolled period. Take the eighth batch of the 14 startups for example. Their total valuation has surged from less than RMB 700 million to RMB 2.9 billion after graduation.

A lot of incubators and accelerators don’t have a clear idea of how they should make money even when they collapse. So what’s your profiting model?

Richard Tan said that INNOSPACE+ closely follows projects that are at a stage between seed investment and angel funding, which means that the incubator focuses more on people than projects in their selection. INNOSPACE+ has a three-month probation for those candidates and will have them enrolled if they fare well during the period. If not, INNOSPACE+ will recommend them to another group innovation space, or some other government-sponsored incubators.

“With our occupancy rate reaching 80 to 90%, we pick out the best projects from within to accelerate. …. Some companies hire us to accelerate their overseas projects, and some invite us to conduct inner innovation for them. They pay us service fees, but our major revenue source comes from investment returns,” said Tan.

“We screen startup candidates like VC does, though we are not. Only 2% of them can be enrolled, compared with the 5% enrollment of Harvard University last year,” said Luo Bin. After they are enrolled, we provide to each of them US$ 500,000 worth of cloud computing resources for free, apart from teaching them what to do with their business plan. But they must be the best.”

Speaking of the profiting model, Luo said cultivating the best team and helping them adapt to the future is their top priority before considering making money.

UrWork has completed an RMB 400 million funding round in January, where will you use the money?

Beijing-based incubator UrWork has seen its valuation nearing RMB 7 billion after securing six funding rounds since it was founded in 2015.

“We hope to use the money to strengthen our services and expand our market. In addition, we hope to invest more in smart office, smart big data and the Internet itself,” said Xu Binchao.

In addition, when asked what development path they will follow in the future, Luo said Microsoft Accelerator will focus on something related to cloud and enterprise computing, such as big data, machine learning, artificial intelligence, augmented reality and virtual reality.

Tan said INNOSPACE+ is working with Siemens on an Industry 4.0 accelerator plan, apart from its collaboration with BMW in the IOT and the tie-up with 3M in new materials.

Xu predicted the country’s group innovation space may develop in two directions – one that is more vertically and professionally focused, and the other that aims for nationwide or global expansion.

[Podcast] China Tech Weekly March 19: Airbnb inches closer to the Chinese market?

China Tech Insights — Tue, 21 Mar 2017 03:30:20 +0000

Editor’s note: This originally appeared on China Tech Insights, an English research unit affiliated to Tecnent’s Online Media Group.

In this week’s episode:

Listen to the episode here or subscribe.

Chinese companies made their debut at this year’s SXSW. Heated bike-sharing venture Mobike, China’s Quora-equivalent Zhihu, among others, shared their view on how Chinese technology is establishing new tech trend.

Airbnb is said to have received investment from Chinese state-backed firm CIC(China Investment Corporation) in its latest funding round but will this be enough for it to make a dent in the Chinese market?

Google may be another step closer to being unblocked in China. Chinese lawmaker reveals that Google Scholar could be the first among Google’s services for re-entry into China if negotiations go through.

Premium electric car maker NextEV, another Tesla rival in China, has landed USD nine-digits from lead investors Tencent and Baidu.

LeEco, the Chinese conglomerate in trouble is seemingly trying to sell the property in Silicon Valley it bought from Yahoo no more than a year ago to ease its financial crisis.

LimeBike, a dock-less bike-sharing startup set up by two Chinese in Silicon Valley, is said to have taken inspiration from the model created by Chinese players.

TechNode does not necessarily endorse the commentary made in this program.

Dianrong, Quark Finance launch innovative credit factory

Sheila Yu — Tue, 21 Mar 2017 03:13:45 +0000

Chinese fintech industry leaders Dianrong (点融网) and Quark Finance (夸客金融) announced on March 20 that they will launch a financing business operation model called Dianrong-Quark Credit Factory, aimed at exploring new ways to increase access to financial services for both individuals and small and micro-sized businesses, according to a Dianrong press release posted on its website (in Chinese).

Pioneered by Singapore’s Temasek Holdings, the “credit factory” (in Chinese) model is a business model mainly used for credit certification of small and micro-sized enterprises as well as individuals. Loans lent to such groups are small, but are lent at high frequency. The adoption of the “credit factory” mode, thanks to its high efficiency and economies of scale in handling petty loans, can help big financial firms gain some ground lost to the country’s mushrooming small loan companies in the microfinance market.

An upgrade to the traditional “credit factory”, Dianrong-Quark Credit Factory utilizes such fintech means as big data, anti-fraud management systems, and decision engine. It can help lenders reduce manual operation, save costs and cut operation risks through its powerful quantitative system when they handle credit certification for individuals or small and micro-sized businesses.

The rollout of Dianrong-Quark Credit Factory risk management system comes at a time when the country’s US$ 60 billion worth of peer-to-peer (P2P) lending sector has been embroiled in a plethora of frauds and bankruptcy scandals in recent years. This may serve to help the P2P sector out of doldrums to some extent after it experiencing all such credibility crises.

Named the “Lending Club of China”, Dianrong is a leading peer-to-peer lending platform committed to providing innovative financial technology solutions to the Chinese marketplace. It was founded in 2012, and completed its US$ 207 million Series C funding round in 2015.

Quark Finance, which started operation in Shanghai in 2014, is a leading online financial institution specializing in personal financial service. With rich work experience in renowned global banking institutions, the firm’s management is experienced in risk management.

Evolution of Chinese gadgets: From quantity to quality

Guest Editor — Tue, 21 Mar 2017 03:07:10 +0000

Editor’s note: This was contributed by Nera Cruz, writer and web merchandiser for different online marketplaces around the globe since 2011.

The words “Made in China” elicit a wide range of responses and perceptions. We often see this label on a wide variety of things from our favorite sneakers, to our smartphone adapters and some of the best-selling and popular toys on the market. There’s no surprise that these three little words can create such ambivalence.

How “Made In China” Got a Bad Rap in the First Place

There was a time when people enjoyed and appreciated products from China. Items such as furniture, dining sets, and tea had cultural value worldwide. However, since China became the de facto supplier of products for many brands, people all over the world had a change of heart.

Consumers are all too aware of some of the issues associated with many products made in China. These include product safety concerns, such as toxic capsules, contaminated food, and toys containing lead paint. News stories even featured human rights concerns regarding labor as well as international trade disputes. Consumers also know that products that carried the “Made in China” label are cheap, and that often wasn’t a good thing.

The relationship between Chinese exporters and their customers are deemed dubious as well. Chinese suppliers and Western importers maintained business relationships wherein the suppliers receive payment before products are shipped. This meant that a lot of problems never came to light until after the shipping containers reach their destinations. The suppliers have plenty of leverage, simply because importers have grown accustomed to continuity, and will want to preserve continuity over quality.

Climbing the ladder of global value

Negative perceptions of Chinese manufacturers remained pervasive until fairly recently, when the central government drafted a five-year plan to change things. This plan sought to move away from quantity and towards quality, with the help of foreign funds to move the economy up the global value chain.

This foreign direct investment (FDI) plan meant that China will no longer rely on foreign investors for the manufacturing of products, but instead be used for such sectors as education, elderly care, and finance, areas that the central government feel would benefit from foreign expertise.

Domestically and internally, China began to shift their focus towards “streamlin(ing) administration, mandat(ing) more powers to lower-level governments to vitalize market to boost market vitality.” By increasing the involvement of private businesses, prioritizing innovation over mass production and reshaping the fiscal framework, the goal for China is to reduce dependence on exports and increase domestic consumerism.

Although this led to an economic slowdown, wages have continued to increase. Of course, economic pressures help to ensure that suppliers of low-priced mass-produced goods will not prevail over those whose products meet higher standards.

An example of the principle of “quality over quantity” can be found in the approach to combat music piracy, thanks to the advent of Starwish, a recent music business startup. Founder Gary Chen began with his confidence in online advertising and gained notoriety for successfully convincing major music labels to offer free digital music downloads in mainland China. By leveraging advertising revenue from Google AdSense, his online music Top100.cn became the first legitimate digital music provider in the country.

Success stories of gadget innovation

Today, China is a source for products at various levels of quality. Even products of the highest quality are produced in China. Luxury brands, smartphones, and other high quality consumer goods are manufactured in China, thanks to many factors.

The learning curve for Chinese manufacturers to produce high quality products was undoubtedly steep. There were requisites that could not be overlooked—the acquisition of skills and technology, training of qualified workers, and the development and maintenance of sustainable infrastructures were all needed in order to succeed.

This year, CES 2017 gave us a glimpse of some of the latest innovations coming from players such as Lenovo, Asus and Dell, all of whom have manufacturing locations in various parts of China. Lenovo’s Smart Assistant can handle a wide array of tasks. Asus’ Zenfone AR utilizes augmented and virtual reality technology, and Dell’s 2-in-1 Latitude seeks to change the landscape for laptop computers.

Indeed, the smartphone industry in China is in the middle of a boom, thanks to some aggressive players in the market. Xiaomi once held the spot as the world’s fifth-largest seller of smartphones, but was overtaken by Oppo, Huawei and Vivo. Rather than undercut the competition, Xiaomi is taking the approach to create products that are cooler, more desirable than the competition, and move into markets that aren’t saturated. This strategy falls in line with the principle of “quality over quantity,” leading to greater innovation for future projects.

And the ChinaBang 2017 Awards go to …

Emma Lee — Sat, 18 Mar 2017 03:00:30 +0000

It’s that time of the year again: the festive weekend for Chinese techies, startup entrepreneurs and investors alike. ChinaBang Awards, an annual ceremony recognizing the best startups in China, is on the go.

To continue last year’s initiative in finding out the amazing startups nationwide- not just 1^st tier cities, this year’s ChinaBang Award ceremony takes place at Changzhou of Jiangsu Province which sits at the center of China’s highly developed Yangtze Delta region.

After a few additions and changes, there are more than twenty award categories for this year from “VC of the Year” and “Entrepreneur of the Year” to “Best Startup” to honor the achievements they’ve made in the past year.

To guarantee the justice of the awards, the award process combined the results of an online poll with judgments from a specialist committee, taking into consideration aspects such as the startups’ innovation, growth potential and market influence.

Here comes the winners, congratulations to you all!

VC of the Year

Yu Lifeng (V Star Capital), Li Feng (FreeS Fund), Elton Jiang (Northern Light Venture Capital), Matt Cheng (Cherubic Ventures)

Entrepreneur of the Year

Hu Weiwei, Mobike

Hu is the founder of Mobike, a leading bike-rental company in China. Using specially designed bikes equipped with GPS and proprietary smart-lock technology, Mobike enables users of its smartphone app to find a bike near them and unlock it using their smartphones. The company is operating in more than 20 cities in China.

Han Kun- Yixia Technology

Han is the founder of Yixia Technology, one of the leading video app developers to have ridden China’s video and live-streaming boom. The company’s core products include Miaopai, a leading video clip editing and sharing app which claimed over video-dubbing app Xiaokaxiu and live streaming platform Yizhibo.

Startup of the Year

Mobike

Emerging Startup of the Year

Zero Zero is the producer of Hover drone cameras.

Pear Video is a live streaming startup.

Philm is a video-editing app that enables users to convert video clips into animated art.

Gago’s cloud-based platform helps farming companies to realize real-time monitoring and make smarter decision-making by leveraging visualized agronomic data.

Uisee: a smart driving technology company

Best Hardware

Xiaomi Mix – Xiaomi’s highly popular flagship smartphone.

Zero Zero

Insta360 is a manufacturer of panoramic cameras. User can attach the cameras to a smartphone for 360 degree panoramic video.

Deepfar Ocean Technology is primarily engaged in the research and development of underwater vehicles for military uses.

Best Apps

Fenda is a knowledge sharing service that enables users to pay to ask celebrities questions and get voice responses from the celebrities.

Flipboard China– the Chinese edition of the magzine-format social networking agreegation app.

Xianyu, meaning an idle fish, is a second-hand e-commerce platform. Customers can use their smartphones to run their stores and add promotional voice recordings to sell their products, making the app more like a social app.

Best Technologically Innovative Product

Yunzhou-Tech is a professional company focusing on USV development and offering USV solutions for water environment sampling & monitoring, hydrographic survey, oceanographic survey, nuclear radiation monitoring and water surface cleaning, etc.

Sougou is the owner and developer of Sogou search engine, Sogou Input and Sogou browser.

Shadow Creator is an VR/AR solution provider.

Best Enterprise Service

Zhipin is an online recruitment platform.

Shimo is a cloud-based productivity suite that combines chat, documents, spreadsheets, and more in a simple interface.

Tezign is an online platform connecting creative professionals with projects efficiently. Tezign engage creative individuals in three areas: graphic design, user interface design and illustration with a variety of organizations with design requests.

Daydao creates one-stop business management cloud platform in China.

Biaoqing Yun provides sticker and emoticon solutions.

Best E-commerce Platform

Aihuishou is an online gadget recycling platform. The company has received an RMB 400 million series D in December last year.

Beibei is an infant care online retailer.

YOHO! is a fashion e-commerce platform.

Best AI Product

Aispeech: a speech recognition and analysis start-up

Microsoft Xiaobing: Microsoft’s chatbot

WestWellLab is a commercial lab specialized in neuromorphic engineering.

Best Online Education Startups

Genshuixue is a website and mobile app that allows users to search for courses, both local and online, in a variety of subjects from piano to SAT prep.

Zuoyebang: a K-12 online education startup.

Haifeng Education: an online education platform

BOXFiSH: an online English training class

Best Fintech Startups

Paymax, a Shanghai-based startup in China’s growing mobile credit field, aims to provide micro loan service that specifically targeted at the country’s working class.

Okcoin: a Chinese crypto-currency trading platform

Maizi Jinfu: an online financial platform

Best VR|AR Startup

7D Vision: a startup engaged in computer vision, graphic and video processing

Hiscene: a AR service provider

uSens is principally engaged in designing gesture recognition and hand-and-head tracking technologies and 3D ‘Human Computer Interaction’ system design.

Chingmu, a developer of infrared optical position tracking system

Whaley: a smart TV startup.

Best Expats Startup

Hatchery: a food and beverage incubator based in Beijing.

MoneyLocker is a startup that shows advertisements on phone unlock screens and rewards users for viewing them,

The Carevoice is a Shanghai-based review-based social platform dedicated to healthcare sector, bringing trusted ratings and recommendations on top quality medical providers. The platform evolved by launching a SaaS solution for insurers and employers to improve the healthcare choices and experiences of their insurance members and employees.

Italki started as a language learning community in 2007. The site evolved into an online teaching platform by creating a marketplace that brings students and teachers together for paid lessons.

tataUFO is a social networking platform for youth.

Most Popular Starutps

Airvisual, Daxiangrenshi, Yaomaiche, Hongdou Live, Tupu Tech, Knowbox, Visionertech, APUS

Startup Service Institution of the Year

Microsoft Accelerator, DayDayUp, INNOSPACE+, URWork, Bigbang Coffee, P2, plug and play, Bay West, Genisis Ark, Q+makerspace

VC Institution of the Year

ZhenFund, Gobi Partners, Vertex Ventures

Best After-invest Service

Yunqi Partners, Cherubic Ventures, Cyanhill Capital

Best Startups from NodeSpace (TechNode’s incubator)

marketin, Easy Travel (轻旅星球), Easylinking (生意帮), Yitu8 (易途吧), Meiheyoupin (美盒优品), Huanxing (幻行科技), Robsense (若联科技), Jianghun (匠魂网), Aide Information (艾锝信息)

Best Startups from Changzhou常州创业新锐

Wbne Group (江苏万帮德和新能源科技有限公司), Ston Robotics (金石机器人常州股份有限公司), Maymuse (江苏美淼环保科技有限公司), Volitation (天峋(常州)智能科技有限公司), Changzhou AMT (常州阿木奇声学科技有限公司), Cudatec (江苏赞奇科技股份有限公司), BeStar Sensor (常州波速传感器有限公司), Jingang Technology (江苏金刚文化科技集团股份有限公司), Very Cloud (常州云端网络科技股份有限公司), Changzhou Marine Cable (常州船用电缆有限责任公司), Final11 (兔几科技).

Annual Media Award

Yicai Global

Pet e-commerce in China is quietly capitalizing on the expanding market

Sheila Yu — Fri, 17 Mar 2017 06:13:42 +0000

As the internet has become more and more a part of our life, in China, so too have our furry friends.

According to the data released by the National Bureau of Statistics, China has become the world’s third largest pet market. The country’s pet owners spent RMB 130 billion on animals last year, up 21.4% year on year (in Chinese).

Riding the internet wave, pet firms are flexing their muscle in eight sub-segments, including pet-related e-commerce, social networking, foster care, veterinary medicine, pet travel, and pet trading. In the pet e-commerce arena, Boqii (波奇) and E-pet (E宠) remain the top two players, while Mr.Bear (宠宠熊) has been striving to catch up.

The increase in the aging population coupled with continued economic development contributed to the rise of the pet market. China’s pet population reached 85.50 million in 2016, raised by over 30 million households, or only 7% of the country’s total. This signals that the Chinese pet industry still has huge growth potential. It is estimated that China’s pet market may top RMB 200 billion in 2020 (in Chinese). Upbeat about the growth potential, investors has been flocking to the sector (in Chinese).

Pet e-commerce site Boqii has snapped up more than US$ 125 million (in Chinese) from three funding rounds since it was founded in December 2007. Its investors include Goldman Sachs and China Merchants Bank.

One-stop pet service Leepet (乐宠网) saw its valuation rise to RMB 1 billion after raising US$ 100 million in five funding rounds over the past six years.

Mr. Bear (宠宠熊), a pet startup focusing on online sale of pet related products and offline pet care and pet hotels, has closed RMB 10 million funding and is now valued at RMB 100 million.

Pet social networking app Smellme (闻闻窝) won an aggregate RMB 47 million backing from investors such as Innovation-works, since its establishment in January 2013.

Chinese wiki Baike exposed for false entries

Sheila Yu — Thu, 16 Mar 2017 09:17:45 +0000

A scandal around Chinese wiki Baike (“互动百科” in Chinese) entry counterfeiting is causing a stir. As reported (in Chinese) by state television broadcaster CCTV’s annual gala for World Consumer Rights day, the for-profit encyclopedia was discovered to be allowing contributors to create entries at will as long as they pay advertising fees.

According to the report, fabricated and false medical content was found in articles. While the platform may sometimes remove content, a deleted entry can be reinstated as long as the contributor pays RMB 4,800. An entry related to a doctor or a medical expert only costs RMB 1,980 a year. The practice has left loopholes for some “customers” to create entries for illegitimate interests.

Baike.com, claiming itself to be the largest Chinese wiki and “devoting itself to providing mass, comprehensive, timely and free encyclopedic information to hundreds of millions of Chinese users,” was founded in 2005 and got listed on the country’s ChiNext in February 2016.

According to public data released by Baike.com (in Chinese), it has 16 million entries and 20 million pictures created by 11 million users, with mobile app users of 20 million as of the end of 2016.

Baike.com has a fierce traditional rivalry with Baidu Baike (“百度百科” in Chinese), an online collaboratively-built encyclopedia under internet giant Baidu.

The current entry fabrication scandal may even worsen the profit outlook for Baike.com, which has swung to a net loss of RMB 4.3 million in H1 2016 (in Chinese).

China-based online services are fighting fraud from within

Emma Lee — Wed, 15 Mar 2017 13:01:04 +0000

With the development of technology, fraudsters are becoming increasingly sophisticated. They are tech-savvy, open to new software and tools, and have developed multiple advanced techniques so that fake accounts blend in with normal users.

The total estimated cost of global fraud is greater than US$ 50 billion per year and the global losses on credit, debit, prepaid general purpose, and private label payment cards reached US$ 16.31 billion last year, a recent report from fraud detection solution Data Visor points out.

Fraudsters are everywhere. The report details the countries hosting the highest number of fraudulent accounts that target online services based in North America and Europe. The US and China host the highest number of fraudulent accounts, but Southeast Asia and Eastern Europe are producing their fair share of malicious accounts as well.

While online properties based in North America and Europe are attacked by global fraudsters, China-based online services are attacked more by fraudsters in their immediate region.

Ninety-five percent of fraudulent accounts that target China-based services originate from within China. It is interesting to note that most of the coastal provinces are highlighted as the regions where fraudulent accounts were hosted, likely due to larger populations in those locations and the presence of fraudster communities in bigger cities.

Online fraud in China is growing into a great pain for the country. Liewang Platform, a website where internet users on the mainland can report online fraud cases, reports that online fraud victims in China were each cheated of over RMB 9,400 RMB (around US$ 1360) on average last year, a 90% jump from 2015.

To some extent, the rampancy of online frauds in China is aggravated by the fact that the country is dominated by Android, which controls 79.9% of the market, data from Kantar shows.

Data Visor’s research found that Android, being an open source operating system that gives users (including fraudsters) the flexibility to make system-level customizations and add new features, is more vulnerable to attacks. There are 3x more fraudulent accounts from Android devices compared to those from iOS. Overall 74% of the fraudulent accounts are coming from Android platform, versus a 25% for iOS system.

Furthermore, there are also more apps available for Android systems compared to iOS, some of which are specifically designed to spoof GPS location services on the device, forge network requests, automate human-like activities, or provide other functionalities convenient for conducting fraud. A user from an Android platform is 8x more likely to be fraudulent than a user from an iOS device. When an online service is “mobile only,” criminals will opt for Android as the best platform for attacks, according to Data Visor.

While everything is moving toward mobile, fraudsters and their armies of fake accounts appear to have a preference toward desktop platforms. Data from the report shows 82% of fake accounts originated from desktop machines, compared to only 18% from mobile platforms. The vulnerability of PC platform is largely due to the lack of reliable device fingerprints that can be used to uniquely track web users.

Creating the appearance of a different user can be as simple as clearing the browser cookie and/or spoofing the user-agent string. By contrast, mobile apps sit directly on the device and collect more accurate device identifiers, or monitor user behavior within the app, making it harder for fake accounts to avoid detection. Also, it is much easier for fraudsters to use emulation software on a desktop to create hundreds or thousands of virtual devices, which appear as uniquely legitimate users

Growth hacking in China with Steve Hoffman

Junse Lee — Wed, 15 Mar 2017 01:47:46 +0000

Steve Hoffman, Captain and CEO of Founders Space, made his visit to Beijing, China on March 13, 2017. Before becoming to known as Captain Hoff, he wore numerous hats such as serial entrepreneur, venture capitalist, angel investor, mobile studio head, computer engineer, filmmaker, Hollywood TV exec, published author, coder, gamer designer, manga rewriter, animator and voice actor.

He shared his experience of coming into Shanghai to bridge the divide between Silicon Valley and the startup ecosystem in China. Founders Space is one of the world’s leading global incubator and accelerator with 50 partners in 22 countries.

TechNode, in partnership with Startup Grind Beijing, hosted a fireside chat with Steve on growth hacking strategies for startups in China and the US. The following are edited highlights from the chat.

Why Shanghai first? Why not Beijing, which has been called the Silicon Valley of China?

That’s what Shenzhen and Hangzhou say as well, that they are the startup hub of China (laughs). I knew Beijing is a really important startup hub and therefore didn’t want to mess things up in Beijing. I started out in Shanghai, and things have worked out there. I built more Founders Space in other cities, and we are almost ready to open a branch in Beijing, finally. Beijing is much harder in a lot of ways and Shanghai is much more international, making it a bit easier for us in the beginning.

What are some of the biggest difference you see between China (Beijing/Shanghai) and Silicon Valley?

There is more genuine competition in Silicon Valley than in China. Although China has lots of talents and skills, often times competitions are unfair or hindered by non-business-related factors. But there is little doubt China is outcompeting Silicon Valley in terms of innovation.

Why is it so important for larger companies to innovate?

Big corporates have their rigid structure and procedures to go through, and therefore it’s harder to bring about new innovation. Small enterprises, on the other hand, are less restricted and therefore have more creative ideas, but often times they lack the adequate funding. That’s why we focus on education – educating startups and corporates how to build products, how to be innovative, and how to acquiring funding, etc. And larger companies tend to be more traditional. People are averse to change when there already exists a solid structure, which took them years to establish. So “disruptive strategy” or innovation is nearly impossible to come across in big corporates.

When you’re looking at founders and CEOs, how can you tell if they’re going to be successful? What gets you interested?

My advice to most founders and CEO’s is to fail faster and to destroy their visions as soon as possible. You must be able to see the flaws in your product and business plans because everything you planned is going to go wrong. If a startup CEO’s can break out of their original vision, that gives a room for them to build something better. Recognizing and acknowledging their product/strategy is difficult, but is a necessary step. That is why disruptive innovation is hard. Change is inevitable, but often times painful. Psychologically, people are meant to fall in love with that they build. Doing things with your own hands creates attachment. But founders must learn to develop a keen and sharp eye for their products/business and learn to break out the attachment they build. If you can betray your business plan, then you are one step closer to success.

Another point I focus when accessing a business is what team members they bring into the team. A successful company cannot be established without the right people. Strong managers will hire and bring strong team members who will make things happen together as a team. Building products and establishing the right brand image, they are all important factors. However, in the long run, nothing can compare to having the right people to make an elephant fly.

We are seeing more and more large technology companies open their own VC and/or incubator divisions. Are those effective in creating the innovation they need?

From my past experience, building incubators within large companies does not work well. There may be some room for individuals to work on creative projects or products in the incubator, but to appeal that project to the higher officials in the company do not work very well. Some big tech companies like Google encourage creative contributions from employees. However, to cultivate that kind of culture within a corporate is immensely difficult. I still encourage people to always think outside of the box and be different. However, being different also requires tremendous grit and perseverance.

More of Steve’s insight into startups can be found in his new book Making Elephants Fly.

A brief look at the current state of China’s P2P lending industry

mjkim — Fri, 10 Mar 2017 09:50:31 +0000

Since 2007, peer-to-peer platforms (P2P) lending has mushroomed in China as a new source of fixed income for retail investors. Peer-to-peer lending is a new method of debt financing that allows people to borrow and lend money without a financial institution. Harnessing technology and big data, P2P platforms connect borrowers to investors faster and cheaper than any bank.

Various P2P finance platforms in China (Image credit: crowdfundinsider)

Last year, the country’s $60 billion peer-to-peer lending sector was dogged by scandals and fraud due to loose oversight. This resulted in China’s authorities’ imposing new rules due to concerns about defaults and fraud among the nation’s 2,349 online lenders.

Right now, China is facing two extremes of P2P platforms going up and down: record-breaking funding rounds (Lufax US$ 10 billion) and record-breaking Ponzi schemes (Ezubao, US$ 7.6b).

eZubao was one platform embroiled in scandal (Image credit: eZubao)

Despite the concerns, it is hard to forecast a sudden downfall of P2P platforms in a country where outstanding loans totaled RMB 816.2 billion at the end of December 2016 from P2P lending platforms alone. Using those platforms have already become a habitual thing for Chinese public, especially those who don’t fall into China’s traditional banking categories.

China’s online lending: outstanding loan balance (Image credit: PIIE)

In fact, recent abnormalities in the industry are not all bad for the industry in the long run. This helps the market to finally cool down. In this process, those who stay healthy and stable are ‘real players’ while those who struggles are not. With this taking place, it brings a market consolidation. In order for this industry to grow steadily, systematic rules were necessary after all. These new rules will bring a much-needed house cleaning.

With all that in mind, TechNode would like to introduce some of the ‘real players’ in the P2P market in China and rest of the world.

Yirendai (China)

Yirendai, established in 2012, holds significant meaning for the Chinese P2P industry. Listed in December 2015, it is the first Chinese internet finance firm to be listed on the US stock exchange. The New York-listed firm, unlike its peers, has not only been expanding its business rapidly but also set its sights on disbursing loans worth 100 billion yuan (HK$ 112.8 billion) a year by 2020.

In South China Morning Post’s recent interview with Tang Ning, founder of Yirendai, Tang said that Yirendai is invincible despite a slew of rules to rein in the country’s rampant P2P lending sector.

Following Yirendai, there are a number of P2P platforms planning an IPO. According to Reuters, Ppdai.com, one of the mainland’s largest online lending platforms is planning to go public in the US by 2017. Also, Lufax, backed by Ping An, is considering an initial public offering in Hong Kong this year or next year, according to the Financial Times.

Dianrong (点融)

Founded in 2012, Dianrong is often coined as ‘Lending Club of China.’ One reason is because the company was founded by Soul Htite, co-founder and former Head of Technology at Lending Club and another reason is that it leading the innovation in P2P finance sector in China.

Dianrong received series C funding in the amount of $207 million in August 2015. Image credit: crowd fund insider

Just a few days ago, Dianrong made an official announcement that it is launching China’s first-ever blockchain platform, named ‘Chained Finance’ by joining efforts with FnConn, a subsidiary of Foxconn Technology Group. Although it was widely accepted that blockchain technology will bring disruption into the finance industry, there had not been any P2P platforms that dared to apply the technology. Now, with Dianrong joining the Hyperledger Project, the world’s biggest blockchain alliances, we can expect further evolution of P2P platform with top-notch technology.

Lufax (China)

Image credit: Global Times

Lufax (陆金所) is the largest player in China and the third largest in the world. It is important to note that Lufax, formally known as Shanghai Lujiazui International Financial Asset Exchange, is 44% owned by financial conglomerate Ping An Insurance Group. In fact, for a P2P lending platform where meticulous screening process of the lender and borrower is constituted the core of its reliability, being backed by Ping An changes a lot of things. Ping An, the Goldman Sachs of China, probably owns more financial data of Chinese population than any other companies.

Lufax ranked the first in its evaluation of enhancement by WDZJ.com Image credit: WDZJ.com

Electric car rental startup UU Cars shuts down service

Sheila Yu — Fri, 10 Mar 2017 09:34:39 +0000

Electric car rental startup UU Cars (“友友用车” in Chinese) ceased operations due to financial difficulties, local media is reporting (in Chinese).

The company’s operation plan was thrown out of whack when an investor did not provide funding as scheduled, said the firm’s CEO Li Yu.

The Beijing-based electric car rental firm was founded three years ago. It started out as a P2P private car rental platform before switching to the electric car timeshare rental service in October 2015.

During this period, the startup won an aggregate US$ 20 million backing from investors including Yiche (“易车” in Chinese), Lightspeed China Partners (“光速安振” in Chinese), China Renaissance K2 Ventures (“险峰华兴” in Chinese), as well as angel investor Wang Gang.

The startup ended up in burning through all of its cash in three years, plagued by high costs in vehicle purchasing, operation, and maintenance, as well as the slow development of charging stations. Timeshare rental firms are estimated to lose RMB 50 to RMB 120 on average on each electric vehicle they operate every day.

In recent years, electric vehicle timeshare rentals are picking up steam in major Chinese cities, with government support. The new rental model has provided another channel to promote the use of electric cars, as exorbitant purchase prices, coupled with a lack of charging facilities and long charging time, have posed serious impediments to the further development of electric cars in the country.

Since 2015, roughly 15 firms have been engaged in such timeshare rental operations in major Chinese cities, including Beijing’s Yidu Yongche (“一度用车” in Chinese) and Shanghai’s EVCARD.

Building a browser community: Q&A with Jon von Tetzchner, founder of Opera and Vivaldi

Emma Lee — Fri, 10 Mar 2017 03:18:07 +0000

Being an entrepreneur is all about realizing the long cherished vision regardless of the difficulty of the process. For Jon von Tetzchner, that vision is to build the most powerful browser for users.

Jon worked more than ten years as the co-founder and CEO of Opera Software, a majority of which was sold last year to a Chinese consortium led by Qihoo 360. He left Opera in 2010. Motivated by his original vision, however, Jon is back in the arena six years later with Vivaldi, a feature-rich browser for power users, to continue where he’s left with Opera. The Vivaldi browser was born out of a namesake social network and forum site for exiles from Opera’s now-closed community site, which Jon built in 2014.

The Icelandic programmer shared with TechNode his insights on the Chinese browser market as well as how to build an active fan community to power product development here.

Building an active user base is crucial for startups to improve their products constantly based on quick customer feedbacks. This is especially true for Vivaldi, a user-centric browser targeting power users who have higher and more detailed demands.

Why did you leave Opera when it was doing great?

The reason for leaving the company was a disagreement with investors about the direction of the company. I wanted to continue to grow Opera, while the investors and the current management wanted to sell the company. They did not believe that we could continue the growth we had had for 15 years.

Two years after I left Opera, they decided to change the product philosophy to be more like the others, meaning a simpler browser with limited functionality and flexibility. This made a lot of Opera users unhappy and me as well. I had planned to continue to use Opera for all time, but Opera no longer had the features I and other users wanted. Thus we decided to make Vivaldi, a browser for our friends.

How is Vivaldi different from Opera or any other browsers available on the market now?

The general trend in software is simplification. In the past software was feature rich, but hard to use. During the last 15 years or so, there has been a trend towards simpler software, where features are removed unless they get widespread use. We believe it is possible to make feature rich software that is still easy to use and that adapts to your needs. We see every single user as an individual that deserves to get a browser that fits their need.

This means that Vivaldi has a lot of features that no other browser has and typically many different ways to do the same thing, as we know people differ in how they use this tool. People spend hours each day with their browser, so learning a few tricks is worthwhile if it saves you a lot of time and effort. That is what Vivaldi is all about.

How’s Vivaldi growth in China and what’s your strategies in building a local community?

China is one of our top 20 countries. Clearly, Asia is very important to us and we are seeing a lot of users in many Asian countries, such as Japan, South Korea, and India as well.

We currently have a dedicated Chinese community where Chinese volunteers with whom we engage personally help us understand the needs of the users in the Chinese market.

Vivaldi supports both traditional and simplified Chinese language. We intend to get deep into blogging, social networking sites, online communities. 92% of Chinese netizens use some kind of social media. Initiatives like the Vivaldi Club by our Chinese volunteers is an example that we do want to reach out to more.

In a vertical community of tools such as browsers, members are the end users. The characteristics of such users are a willingness to try products, a pursuit of individuality, strong practical ability and high engagement in software-related industries. Most of our Chinese users were familiar with Opera and were loyal users of the browser. They believe in Vivaldi’s values and mission of being a very personal browser that adapts to the user.

A large proportion of Chinese internet users are mobile first or even mobile only. What are your plans on releasing mobile browser?

Clearly, we are working on a mobile browser, with a focus on Android. We aim to provide a browser that is more advanced than what you normally find in the market. Also on the mobile side, browsers tend to be too simple for the kind of use you are seeing. Especially for those that only use mobile devices, a more advanced browser is needed, but also for others.

What are your tips for fellow entrepreneurs in product, team management or in managing relations with investors?

I co-founded Opera and I have now co-founded Vivaldi. I am also involved in some other companies, but in general, I have stayed on course. In many ways that is my best advice. Do something that really interests you, whatever it is. You are much more likely to succeed if the project is something that you are engaged in, instead of just a way to make a buck.

It is important to have a great team that has balance. People with different skills, but with the same mission. That applies to the investors as well. They need to be on board with where you want to go or the whole project may be a disaster waiting to happen. So many projects have been destroyed by having team members and/or investors that are not in tune.

China’s online insurance industry gains momentum

Sheila Yu — Thu, 09 Mar 2017 10:07:57 +0000

With the boom of internet finance and the popularity of online shopping, China’s online insurance industry has some golden opportunities up for grabs. Low penetration rate and the country’s huge population combine to form potent market opportunities.

The country’s online insurance industry took in RMB 234.7 billion (in Chinese) in premiums last year, compared with RMB 3.20 billion in 2011. Moreover, the insurance penetration rate rose from 0.22% in 2011 to 7.58% last year.

As many as 13 Chinese online insurance startups have raised more than RMB 1 billion (in Chinese) in total financing since last February, according to a report recently released by Chuancai Securities. Online vehicle insurance and wealth management insurance remained the two major forms, while life insurance has a relatively small share in online insurance.

Online insurance startups have shifted their focus from the B2C to the B2B model after having a hard time getting clients and generating revenue. In contrast, it is much easier to attract and retain corporate clients and insurance agents, said an insider.

The core risks for online insurance platforms may not stem from insurer titans, but from crossovers such as Alibaba and JD. The participation of these giants would trigger ferocious competition at a rapid clip.

[Updated] The bike-rental war is creating unsustainable demand for bikes

Sheila Yu — Thu, 09 Mar 2017 07:09:29 +0000

China’s booming bike-sharing business has been disrupting the country’s traditional bike industry landscape, while also being acclaimed by city travelers for playing its part in cracking the hard nut of the last kilometer of their journey.

After receiving multi-billion RMB investments from 30-some institutional investors, major bike-sharing services Mobike, Ofo, and their competitors have been embarking on a manufacturing land grab, reaching out to medium and large-sized bicycle makers. They hope this will give them an edge in terms of production capacity, quality and design, for closer cooperation.

In the race for market share, bike-rental startups are pinning their hopes on putting into use more and more bicycles. Ofo has been expanding their cooperation with bicycle manufacturers such as Flying Pigeon, Phoenix-Bicycle, and Fuji-ta Bicycle, while its arch rival Mobike’s recent partnership with Foxconn is supposed to double the number of bicycles it plans to make this year to 10 million.

The influx of capital has brought in a surge of bicycle orders, invigorating the moribund bicycle making industry, which has suffered a decline in sales in recent years due to poor channel marketing and brand protection.

According to the China Bicycle Association, roughly 15 to 20 bike-sharing startups have emerged in the country since 2016, placing on the streets more than 2 million (in Chinese) bicycles in total in over 30 cities. In 2017, the total count may approximate 20 million. The figure may be even higher given that the actual production capacity of Mobike and Ofo each is estimated to reach 15 million (in Chinese) bicycles this year.

China makes around 80 million (in Chinese) bicycles every year, around 25 million of which are sold at home, according to the China Bicycle Association. That means the production capacity of the two bike-sharing startups could surpass the domestic demand (in Chinese) for 2017, and an industry glut may be around the corner.

In addition, the tie-up with bike-rental businesses can be a double-edged sword: sure, they’re getting more orders, but this could lead to a marginalization of the brands, a reduction of the bike categories, and a chaotic reshuffle of the current industry leading to the closure of smaller companies.

According to Mobike, they have the advantage because they do not need to compete for production capacity.

“We are the first company to set up our own factory producing Mobikes, and collaborating closely with over 100 production partners and suppliers. We also partner with Foxconn, the world’s largest high-tech manufacturer. Our current annual production capacity is over 10 million bikes, which is far greater than anyone else in our industry,” the company has told TechNode.

Updated, March 10, 2017 to include comment from Mobike.

Momo sees record revenue growth thanks to live streaming

Emma Lee — Wed, 08 Mar 2017 10:14:56 +0000

Momo, China’s top location-based social networking app, has continued last year’s growth feat with the announcement of an outstanding performance for the past year. The company, backed by Alibaba, listed on NASDAQ in December 2014.

The firm’s revenue recorded a significant 524% YOY jump to US$ 246.1 million USD in Q4 last year, while the annual revenue soared 313% YOY to US$ 553.1 million USD. Momo reported a non-GAAP earning per share of 0.44$ in Q4 and 0.87$ for the whole year.

Momo’s monthly active users bounced to 81.1 million in December 2016 from 69.8 million, rebounding to exceed its historical peak from back in early 2015. This is some amazing improvement after the company began seeing stagnant active user growth in H2 2015.

Previously, Momo cited smartphone sales and software updates as the reason for the stagnation.

From LBS dating app to social platform

Momo is certainly not aiming to become a live streaming company even the business now represents nearly 80% of its revenue. Rather, the company has evolved from a simple location-based feature that helps people discover new relationships. It is now a platform that accommodates a variety of different social and entertainment use cases, including one-to-one communications, group chatting, postings in various formats, and of course, live broadcasting and short videos.

Live streaming drives growth

Momo has been recording profits for eight consecutive quarters, but 2016 is the real start point for its rocketing growth. Like many of the social networking services in China, live streaming became the most significant propeller for its business, generating US$ 194.8 million revenue in Q4 2016. Add to the platform in Q3 2015, live streaming has taken a larger and larger share of Momo’s revenue stream, up to almost 80%.

Coupling a younger user base with the culture of the platform, paying users picked up quickly. Momo says that in Q4 2016, they had 3.5 million paying live stream users.

Virtual gift-based live video streaming has been highly profitable in China. Momo’s live video streaming business is adopting a similar commercialization model where the platform enables viewers to buy virtual gifts for singers, splitting the gains with the company.

“We believe we are still early in the monetization process and have many opportunities to drive further growth year… In 2016, we have primarily relied on converting existing Momo users onto the live streaming service. In December 2016, the service covered around 23% of the daily active users for the main application. In 2017, we plan to expand the user acquisition effort beyond the Momo platform,” said company CEO Tang Yan in the earnings conference call.

Momo 2016 revenue break down (unit: 10k USD) (Image credit: Sina Tech)

Social networking, marketing, and gaming

The rest of the annual revenue was primarily derived from membership and gifting on their social network as well as marketing and gaming, both on mobile.

Value-added service revenues from their social network, which totaled 19.1 million USD in Q4 2016, mainly include membership subscription revenues and virtual gift revenues. The firm cites the increase of premium VIP users and total users as well as virtual gift service as the reason.

Mobile marketing revenues recorded a 29% YOY growth to $19.7 million in Q4 2016, mainly driven by more new customers and orders introduced by sales agents, as well as the increase of eCPM (effective cost per mille) of the in-feed advertisement service.

Momo’s mobile gaming unit has been growing quickly thanks to several big titles like hard-core game Momo Craft and Momo Fight the Landlord. The company is gradually retreating from game publishing joint operations to focus on in-house developed games in 2016. The effect of this strategy is evident that the company’s mobile games revenues surged 45% YOY to $11.3 million in Q4 2016.

Chinese appliances brands expand presence in Korea

Sheila Yu — Wed, 08 Mar 2017 09:59:06 +0000

Chinese appliances brands are gaining a greater hold in the Korean market, thanks to their lower prices and improving quality, South Korean media (in Chinese) are reporting.

According to the reports, the smartphone launch by Chinese tech giant Xiaomi in 2014 has served to change the stereotype that Chinese electronics products are shoddy and dangerous.

Chinese household appliances, TV and washing machines in particular, have received rave reviews in Korea; Xiaomi power banks even gained a market share of more than 60% for their neat appearance and outstanding performance, according to the country’s electronics retailer Lotte Himart.

Chinese companies are quickening their pace to march into the low-end electronics and automobile markets in South Korea. Appliances brands such as TCL, Haier and Xiaomi have seen impressive results, although they are not strong enough to loosen Samsung and LG’s grip in the Korean market.

TCL’s 32-inch LCD TV is priced 30% lower (in Chinese) than its local rivals in Korea, while the price tag of Midea’s 3.2 kilogram top loading washing machine is one-third the price of its local competitors’.

Chinese automaker BAIC Yinxiang Automotive unveiled an SUV called KENBO600 in South Korea last month, marking the debut of the first Chinese passenger vehicle in the country.

Chinese appliance companies have injected significant capital into product research and development. TCL is developing its man-machine interface test system, Hisense is focusing on the new Hi-View Pro chip used for smart TVs, and Haier is building up its smart home product offerings.

Lenovo names new exec as part of strategy to bolster falling smartphone sales

Sheila Yu — Tue, 07 Mar 2017 09:45:47 +0000

Chinese PC-maker Lenovo yesterday appointed Ma Daojie (in Chinese), a former China Mobile executive, as the executive vice president of its China Mobile Business Group (MBG), as it tries to bolster its teetering smartphone business.

Ma, also ex-general manager of China Telecom’s mobile terminal subsidiary eSurfing, will report to Gina Qiao, Lenovo’s senior vice president and MGB co-president, and assist the China MBG achieve strategic breakthroughs and transformation.

The move comes after Jiang Zhen, a former mid-level Samsung executive, joined Lenovo last month as the firm’s vice president heading China MBG in product strategy and product management.

Moreover, the Chinese technology giant has already poached Gary Yu, former general manager at China Mobile’s Zhejiang subsidiary, to serve as its vice president in charge of smartphone sales.

The appointments signal Lenovo’s determination to revive the glory days of its smartphone business in China when it crowned the Chinese market with a share of 12.5% (in Chinese).

In recent years, the smartphone unit of the Chinese technology giant saw declines in both global shipment and revenue. It recorded an operating loss of US$ 112 million in the fiscal third quarter last year, with revenue tumbling 23% to $2.2 billion during the same period (in Chinese), according to the firm’s Q3 2016 report released in February.

With the PC market shrinking, Lenovo has been striving to diversify its revenue source, whose PC and smart device business account for around 70% of its total revenue, according to the financial report. However, it has not fared well in its endeavor into the smartphone business.

4 things cross-border mobile marketers should know about Chinese travelers

Eva Yoo — Mon, 06 Mar 2017 06:01:54 +0000

Chinese outbound travelers totaled 122 million trips, up 4.3% YoY according to China Internet Watch. As Chinese people are very tech-savvy and highly mobile-centric, targeting them on their mobile became an important mission for advertising companies, following the digital footsteps of Chinese tourists to overseas travel destinations.

“Cross-border mobile marketing is predicted to have a strong growth in the coming decades as marketers are desperate to broaden their customer base and revenue streams, rather than solely maintain local markets,” said Victor Wu, CEO at Vpon Big Data Group.

Here are four things you should know about Chinese outbound travelers when conducting cross-border marketing, according to Vpon’s 2016 APAC Mobile Programmatic Advertising Statistics and Trends Report released on March 1st, 2017. This report had divided Chinese people into three groups: Greater China, Taiwan, and Hong Kong.

1. Japan is the most popular destination and Thailand is next

According to Japan National Tourism Organization, 52% of tourists in Japan were from China (25%), Taiwan (19%) and Hong Kong (8%). Half of Taiwan and Hong Kong tourists visited Japan for more than 3 times and 35% of China tourists visited Japan more than once, according to Vpon Big Data Group’s survey.

Vpon’s report said that the next destination for Chinese tourists will be Thailand. The strongest digital footprint of Chinese tourists in Thailand is Bangkok, Chiang Mai, and Chiang Rai.

2. The best times to send travel information is early morning and late evening

Morning time (5 a.m. – 9 a.m.) and night time (8 p.m. – 11 p.m.) have shown the highest traffic, hence companies can send out ads at this time. On the other hand, it is wise to not disturb Chinese tourists during the daytime as they may ignore their phones while sightseeing.

3. Greater China travelers spend the most and are the most connected

According to 2016 Q3 spending in Japan per person, mainland tourists spent JPY 685,000, Hong Kong tourists spent JPY 169,000 and tourists from Taiwan spent JPY 133,000. When traveling to Japan, Chinese travelers purchased cosmetics/perfume, followed by medicine/ health goods/ toiletries, and confectioneries.

Chinese tourists were highly connected to mobile throughout the day and they had a higher acceptance toward mobile ads during the trip, such as mobile ads showing discount or special promotion with clear call-to-action, leading to a high click-through-rate (CTR) which is 25% higher than in Japan than in home origins. CTR of Greater China tourists increased 59% percent during the trip compared before the trip, while tourists from Taiwan increased 20% and tourists from Hong Kong increased 7% higher CTR.

4. Mobile advertising inventory has been dominated by India, Japan, and China

The top 3 mobile ad markets are India, Japan, and China, taking up to 60% of the total biddable inventory. As for effective cost per mille (eCPM), the Greater China region and Indonesia have shown the lower cost for mobile ads. With the limits in the biddable inventory, New Zealand, Singapore, and Australia’s eCPM ranked top.

Health & beauty (22%), finance (17%), food & beverage (11%) are the categories that showed bigger share in mobile advertising.

PPTV snaps up rights for 2017 Chinese Football Association Super League

Sheila Yu — Fri, 03 Mar 2017 09:49:47 +0000

Chinese online TV provider PPTV, a media division of the country’s Suning retail group, announced today an exclusive partnership with China Sports Media to broadcast the 2017 season of the Chinese Football Association Super League (CSL) (in Chinese).

The one-year deal, worth RMB 1.35 billion, will allow PPTV to air all of the CSL’s 240 matches on PC and mobile terminals. In 2015, China Sports Media paid RMB 8 billion for rights to produce and transmit signals and sell broadcasting rights related to the CSL games between the 2016 and 2020 seasons.

This is yet another extension of PPTV’s foray into sports events broadcasting after it has gained the live rights for matches from Spain’s La Liga (with royalty payments of around RMB 1.8 billion) and Britain’s Premier League (for RMB 5 billion) in China since August 2015.

PPTV’s partnership with China Sports Media also marks the knockout of rival LeSports in the contest for the broadcasting rights.

This deal is another blow to LeSports, the sports arm of Chinese online video firm LeTV, which has recently lost its rights to broadcast the Asian Football Confederation (AFC) games in China due to a payment default. Earlier at the end of 2016, the sports media firm narrowly escaped being stripped of the broadcasting rights of Britain’s Premier League as it managed to pay a portion of its contract price at the deadline.

The Chinese internet giant, which once saw its market value fall to RMB 70 billion this January from a peak of 150 billion RMB (in Chinese), has been struggling with a cash squeeze after years of breakneck expansion.

Apart from smartphone and TV manufacturing, LeEco has branched into the film and television production, music, gaming, electric vehicle and sports industry. Its operating income doesn’t come close to its cash burn rates, despite the several funding rounds it secured.

In contrast, PPTV has received support from the country’s largest electronic retailer Suning. In 2013 Suning bought a 44% stake, becoming PPTV’s largest shareholder.

While leading players including iQiyi, Youku Tudou, Tencent Video and Sohu.com continue to battle for the top spot in the country’s video streaming sector, PPTV hopes to find their niche in live events broadcasting.

Foxconn solidifies pivot to OBM with Guangzhou government deal

Sheila Yu — Thu, 02 Mar 2017 07:10:12 +0000

Foxconn recently inked a deal with the Guangzhou Municipal government to build an 8k LCD panel production park in the city’s Zengchen District, signaling its intention to monetize the technology and brand strength after its takeover of Japanese electronics firm Sharp last year.

Under the deal, Foxconn will invest 61 billion RMB in the 10.5-generation 8k LCD panel production park (in Chinese) via its subsidiary Sakai Display Production (SDP). The production park is expected to start mass production in 2019, with output value estimated at around 92 billion RMB per annum once the production reaches capacity.

In January, Foxconn reported its first annual revenue decline since it listed in 1991. Its revenue dropped 2.81 percent from a year earlier to US$ 136.38 billion for 2016 (in Chinese), dragged down by declining orders for Apple’s iPhone 7. As a major contract manufacturer of the U.S. smartphone maker, Foxconn derived more than 50 percent of its operating revenue from Apple.

To get rid of its Apple-reliant woes, Foxconn has been shifting from a contract manufacturer to an original brand manufacturer (OBM); the big-ticket investment is part of its efforts to diversify its income away from overdependence on a single client.

Sharp is the world’s only firm that owns operation capacity of and has experience with the 10.5-generation LCD line. This will help Foxconn shorten construction and running-in period in its new Guangzhou SDP plant.

A look into Asian’s tech M&A market with Finquest CEO Tanguy Lesselin

Emma Lee — Thu, 02 Mar 2017 04:15:40 +0000

Initial public offering (IPO) has ceased to be the most appealing way for VC exits. While the demand for exits is still there, the market is shifting towards another path – mergers and acquisitions (M&As). On the global level, M&A activities soared in two straight years to an all-time high in 2016, when a dry spell hit the IPO sector. Together with the transition, rose the startups that aim to change the traditional way of connecting and accelerating M&A deals.

Finquest CEO Tanguy Lesselin

Tanguy Lesselin, co-founder and CEO of Finquest, has felt all the points in the traditional M&A model as a former consultant working on post-merger and joint-venture projects. He started Finquest in belief that there is a better solution for tech startups looking for investors.

Finquest is a global platform to foster cross-border mid-market direct investments in Asia to build bridges between institutional investors, M&A Advisors, and Asian mid-market companies.

“Our goal is to help the market identify the right kind of party for the right marketplace. If you want to get these targets manually, you would lose a lot of opportunities,” said Tanguy.

As part of its expansion plan, the Singapore-based company just acquired Detecq, a private marketplace that matches technology companies with strategic investors in Asia. Detecq’s founder Wong Zi En, will join the Finquest team to expand the company’s presence in Asia’s tech ecosystem.

Why tech, why mid-market, why Asia?

Started as a cross-sector platform, Finquest gradually strengthened its presence in technology M&As segment not only because it is becoming an increasingly large part of the M&A market. Tanguy pointed out that tech is becoming less and less a vertical by itself in the sense that all industries are integrating into tech in their value chain.

“Take healthcare, for instance, we are meeting investors that don’t have constraints from VC or PE. When they look at healthcare they could very well buy a hospital or invest in doctor booking application. That’s why every vertical is being penetrated horizontally by tech,” he said.

For the estimated half a million mid-market companies in Asia, most are too small to go public but too large to have their corporate finance needs met by early-stage venture capital firms, crowdfunding platforms, or peer-to-peer lending. Furthermore, less than 1% are currently backed by private equity.

“We define mid-market by transactions between 10 and 150 million USD. In the tech segment, we choose to look at series B and beyond because series B start to be cross-border deals. When you do fundraising as a business owner and CEO, series B is quite often where you expand your operations at the international level,” he said. “So that’s where you would be actually seeking investors who are in new markets and by definition, you don’t have a network there.”

With economic growth in Asia continuing to outpace other regions, the world’s institutional investors are becoming more interested in exploring opportunities in this market. However, lack of access and the market’s overwhelming size and complexity are blocking progress.

“Finquest will keep Asia as the core priority because M&A data is missing here as compared with other countries like the U.S.,” said Tanguy. “I’m not saying I’m not interested in expanding to additional geographies. But the figures in Asia is very significant part of the future growth, It’s more than 50 % of future GDP growth in the world, so it’s already a very large territory.”

Tech M&A in China

China often makes the headlines with regards to M&A transactions these days, for a number of reasons. There is a very strong appetite from Chinese institutional investors and companies to purchase assets outside of China and leverage them in the domestic China market.

“We see strong demand from Chinese investors for IP and brand related assets in general. From an outbound M&A perspective, some of the new constraints imposed by the government may create a more uncertain environment, but we also see more structured funds from large Chinese technology companies looking for investment opportunities in Asia and beyond,” said Tanguy.

“From an inbound perspective, we see strong demand from institutional investors to access Chinese innovative companies in various sectors,” he added. “Because of the highly concentrated market structure in some segments, key industry players outside China are trying to generate new opportunities by approaching the few large players in the digital space.”

Ofo becomes first bike-rental unicorn after US$ 450 million series D

Sheila Yu — Wed, 01 Mar 2017 10:06:56 +0000

Chinese bike-sharing firm Ofo announced today that it has secured US$ 450 million (around RMB 3.1 billion) in its Series D financing, a move that is heating up the already cut-throat competition in this nascent market, our sister site TechNode Chinese is reporting.

The round is led by Moscow-headquartered DST, and other investors in this round include Didi Chuxing, Coatue, Atomic, MatrixPartners China, and CITIC Private Equity Funds Management.

“Ofo is committed to becoming a leading company with worldwide impact. We will lead the whole industry towards a rapid and sound development, and provide convenient short-distance travel services for global users,” said Ofo founder and CEO Dai Wei.

The US$ 450m round is just part of its Series D funding; there will be follow-up financing to be announced in the future, Dai added.

Dai attributed Ofo’s success to the firm’s young team who understand the needs of Chinese youth as well as the rapid expansion strategy it pursues. Ofo aims to expand to 200 cities and cover tier-four cities this year.

Ofo may turn a profit by the end of this year, Dai revealed.

Ofo has registered 20 million users with the number of its yellow fleet bikes topping 1 million since June 2015. The bike-sharing startup has leaped to the top spot in the sector with a 51.2 percent share, followed by its arch-rival Mobike with a 40.1 percent share, according to public data released by third-party research firm BigData-Research (in Chinese).

Mobike has raised US$ 300 million in funding since this January, attracting investments from renowned investors such as Temasek, Hillhouse Capital Group, to name just a few.

Ofo and Mobike have waged an all-out war against each other in terms of funding and subsidization, trying to outdo each other. Although both are far from well-established and it is too early to tell who has the last laugh, it’s likely that the competition in this sector will become even fiercer as the market matures and more investors get involved.

2017 could see China dominate in artificial intelligence

Junse Lee — Wed, 01 Mar 2017 08:20:19 +0000

This year could be the year China solidifies it’s lead in artificial intelligence.

The growing presence of Chinese AI was strong enough to affect the date and location of the 2017 Association for the Advancement of Artificial Intelligence (AAAI) conference, in which top AI researchers, scientists, practitioners, and invited speakers were held in one place. When AAAI first announced the 2017 meeting will be held in New Orleans in late January, Chinese AI experts were not pleased, since the dates happened to conflict with Chinese New Year. In the end, the meeting was relocated to San Francisco, CA in February instead.

While top-level AI experts are still from North American and the UK, over 40% of the leading AI research papers in the world are published in Chinese. Chinese researchers also have the advantage of being able to speak both English and Chinese, giving them access to a much wider knowledge pool. The language barrier creates an information asymmetry of the West and the East allowing a room for the Chinese to dominate the field.

Moreover, Chinese government’s full support and investment has been the major fuel for the growth of the field. The government spending on science and technology research doubled its digits every year for the past decade, as outlined by the 2015-2020 Five-Year Plan . According to the plan, which contains little concrete details on the exact numbers and measures but a long list of priorities instead, Beijing promises to increase its R&D investment for 2.5% of the gross domestic product, compared with 2.05% in 2014.

As a part of the government’s ambitious plan to become a global leader in AI, Chinese National Development and Reform Commission (NDRC) recently approved the plan to set up a national artificial intelligence lab for researching deep learning technologies. While major Chinese top tech companies like Baidu, Didi, and Tencent are all betting on AI, Baidu will be in charge of the lab in partnership with other Chinese elite universities such as Tsinghua, the Beijing University of Aeronautics and Astronautics, and other Chinese research institutes.

The online lab is responsible for researching topics in seven major fields: machine learning-based visual recognition, voice recognition, new types of human-machine interaction and deep learning intellectual property. The project will be led by Baidu’s deep learning institute chief Lin Yuanqing and scientist Xu Wei, along with academics from the Chinese Academy of Sciences, Zhang Bo and Li Wei. The goal of the project is to enhance efficiency and to boost China’s overall competence in AI by designing a machine that mimics human brains’ decision-making process.

“As an open platform itself, the national lab will help more Chinese researchers, companies, and universities to access the most advanced AI technologies in China,” said Yu Kai, the former head of Baidu’s deep learning institute and a lead of NDRC lab project.

While the exact size of the investment involved is yet to be revealed, the highly competitive Chines AI environment demonstrates the enormous potential China has to unlock.

Bitcoin mining operations follow cheap power to rural Sichuan

Linda Lew — Mon, 27 Feb 2017 09:40:26 +0000

Bitcoin has proliferated in China so much that 70% of the world’s bitcoin computational power is concentrated here. Many bitcoin mining operations have even sprung up in power stations deep in rural Sichuan hillsides, an unexpected place to be associated with a blockchain-based digital currency.

As Bitcoin Mining explains, “mining” is a way to reward those who contribute computational power to the Bitcoin network by converting electricity. Miners are rewarded by bitcoins or the transaction fees included in the transactions validated when mining bitcoins. It can be easy to start mining for bitcoins: the required computer hardware and software are readily available. What is hard to do, however, is to mine bitcoins profitably.

Locations with cheap power will have a definite advantage. At Sichuan’s Leshan city, where many large scale bitcoin mines are based, the rate for commercial use electricity during the wet season is around RMB 0.5 per kilowatt. This is less than half of the rate in metropolitan centers, such as Beijing where commercial power costs around RMB 1.28 per kilowatt.

“Sichuan’s is rich in hydroelectric resources,” Ke Lei, a bitcoin mining supervisor explained in an interview (in Chinese). “When in season, the hydropower stations generate more than what’s needed and the electricity actually ends up being wasted. Why don’t we make the most of this and turn the wasted power into Bitcoins?”

Estimates say that there are over 10 thousand bitcoin mining machines hooked up to Sichuanese hydropower stations. National Business Daily visited (in Chinese) the largest Bitcoin mining operation in Leshan, where there are over 5,800 machines going. In total, they generate on average 27 Bitcoins each day. Power accounts for 60% of the operational costs, with labor, broadband and other utilities making up the rest.

However, where there are opportunities, there are also risks. Seasonal variation in the electricity rate is an issue when mines have to be moved to ensure that the power cost remains low. The volatility of Bitcoin pricing as well as unfavorable regulations are factors that can turn business unprofitable in the blink of the eye.

Story of co-founder booted out over share option dispute goes viral on China’s social media

Emma Lee — Mon, 27 Feb 2017 03:20:45 +0000

As with any business venture, the agreements you make with your partners are important. However, having the wrong, or even no, partnership agreement from early on can be disastrous. A WeChat post that has been flooding Chinese social is a sad testament to this rule.

Under the tear-inducing title “Even if my husband didn’t make a penny, he’s still the best entrepreneur in my heart”, the post was published by Emily Liu, the wife of an entrepreneur. In a couple of hours, the article was read by 100,000 WeChat users and collected nearly 50,000 likes.

Emily’s husband launched a startup with partners in 2010. As the number 2 employee of the company, he is acting as co-founder and CTO. The author gives a vividly and touching description of the hardships her husband and their family went through along the growth of the startup.

However, as the business started to thrive, things got ugly among the founding team. After a talk with company CEO, Emily’s husband failed to gain the share options his partner has promised previously and was stuck with only two choices: either leave the company with nothing or stay with a slim salary.

Picture of the family in the post

She also pointed out the company’s CEO is playing tricks with them by secretly setting up a new company which he has full ownership.

Although Emily was writing under a pseudonym, China’s powerful netizens soon discovered the true identity of the couple. There’s plenty of clues left in the post: a mobile gaming company and having received funding from both Sinovation Ventures and Sina. To top it off, she even attached a post of their family at the end of the article.

The author’s husband was widely guessed to be Han Donghui, CTO of game developer ZCTTECK GAMES with his CEO partner as Chen Yuxiang. Local media revealed that the two were once colleagues at BBS platform operator Comsenz before starting their entrepreneurial journey.

Chinese social networks are full of indignation about how Han was ill-used and screwed out of the shares that his hard work deserves. People with knowledge of the affair are also adding fuel to public indignation.

Li Mingshun, the founder of Haodai.com who once worked with the two entrepreneurs at Comsenz, went so far as to refer to Chen as “a piece of trash” in his personal WeChat. He added that Han is not the only one and some investors were also screwed by Chen.

Screenshot Li Mingshun’s WeChat comment

But others believe (in Chinese) believe Han has no one to blame but himself.

“Working in a company for seven years as part of senior management and still having no idea about how many shares you own in the company? That’s ridiculous, not only for Han but also for the CEO and investors,” said one commentator. “Because holding share options does not only mean how much money you are going to have from the company but also the responsibilities you are going to take. If the company goes bankrupt, you have to pay for the debt as well.”

At the center of the storm, company CEO Chen Yuxiang responded with his side of the story. Chen admitted his management wasn’t impeccable, especially in delaying the share option plan, but he did defend himself. He said ZCTTECK GAMES has already distributed 2 million RMB of dividends to Han in 2013, instead of 1 million RMB as claimed by Emily. Chen emphasized that Han has been less motivated since then and several important projects of the company have failed under his leadership.

No matter which side you take, one lesson should be learned from the incident: Even though you are starting a business with your best friend, it’s necessary to have partnership agreements in place to outline each party’s role and obligations as early as possible, ideally at the very beginning, but certainly, before it accumulates profits or bake debts.

[Podcast] Analyse Asia 164: Trends & predictions for China’s tech industry 2017 with Rhea Liu, part 1

Guest Editor — Tue, 21 Feb 2017 03:58:45 +0000

Rhea Liu from China Tech Insights, Tencent joined in a 2 part conversation on their recent published report “Trends and Predictions for China tech industry in 2017”. In the first part of our conversation, we discussed the objectives, methodologies and key results from the report, and deep-dived into different themes such as the complete mobilization of China’s Internet and the impact of Baidu-Alibaba-Tencent to the China domestic and international markets & Chinese startup ecosystem.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with time-stamps included):

Rhea Liu, (LinkedIn, @yushan_l), Analyst at China Tech Insights by Tencent (@CNTechInsights, Wechat: ChinaTechInsights)
- How did you start your career? [1:15]
- China Tech Insights is part of Tencent, one of the Baidu-Alibaba-Tencent (BAT) axis which is also well-known for QQ & Wechat. China Tech Insights is part of Tencent’s Penguin Intelligence.
- What’s your role and coverage for China Tech Insights? [2:17]
- Through your career, what are the interesting careers you can share? [4:46]
Trends and Predictions for China tech industry in 2017 (English, Chinese) [6:40]
- The report is inspired by Mary Meeker’s annual report on the Internet. The aim is point to provide an accurate depiction of China’s Internet.
- What are the objectives for this report? [6:58]
- What are the methodologies used for research in preparation for the report? [9:03]
- What are the key results from the report? [10:24]
- The Chinese Internet is close to complete mobilization [12:50]
  - What does it mean by complete mobilization? [12:58]
  - The research data on smartphone and desktop penetration is from CNNIC in China.
  - Does that mean that you are beginning to see the niche services becoming important i.e. the emerging growth of long tail niches within the Chinese Internet services? [14:58]
- The impact of the BAT (Baidu-Alibaba-Tencent) [17:00]
  - How does each of these companies impact the local markets and international markets differently? [17:15]
  - How is the China startup ecosystem reacting to the influence of the BAT? [20:51]
  - How are foreign companies entering China work within the BAT ecosystem? [23:14]

Author’s Note: The sound quality for BL’s side is not so good for these two episodes due to issues with skype recording.

TechNode does not necessarily endorse the commentary made in this program.

Tencent extends “double-hundred plan” to cover legal services platform, Kuaifawu

Eva Yoo — Mon, 20 Feb 2017 09:57:54 +0000

One-stop legal services platform Kauifawu has announced that the company was selected as one company for Tencent’s double-hundred plan (双百计划).

Under the agreement, Kuaifawu has exchanged shares for traffic. Tencent is giving the company credit to use on channels owned by Tencent, including Guangdiantong, WeChat, and other content channels. The credit reflects the current valuation of the company; the total valuation, however, was not disclosed.

Kuaifawu is China’s one-stop legal services platform for small and medium enterprises. It helps companies handle company registration, tax, accounting, trademark, patents, social security, funds, contract, and finding qualified legal advisers and choose the rated legal advisers on the company website to handle the legal service for them. There are over 500 kinds of online legal services that the Beijing-based company provides.

“Tencent has its ads platform Guangdiantong, and we’ll be able to benefit from their traffic,” Roy Huang, co-founder of Kuaifawu told TechNode. “Yes, we gave a small portion of our shares to Tencent.”

Under the “double hundred plans”, which was announced in 2014, Tencent “invests” its traffic to startups to fully integrate Tencent’s online and offline resources and create closer partnerships. Tencent will direct 10 billion user visits to 100 startups that are valued RMB 100 million or more. Live streaming app Inke, grocery delivery service Missfresh, fitness recording app 51Yund, education app Afanti are all companies that Tencent has invested under “double hundred plans”.

Through this cooperation, the two companies will work together to better complement each other. Kuaifawu will benefit from Tencent’s brand and traffic to achieve faster growth, while Tencent now gets access to a professional legal service platform for its growing startups.

Kuaifawu’s website (Image Credit: Kuaifawu)

Established in April 2014, Kuaifawu raised US$ millions of series A in August of that same year. In September 2015 it raised US$ 10 million USD in their series B round.

According to Kuaifawu, the company currently has 150,000 registered enterprise customers, nearly 50,000 paying enterprises, and over 5000 cooperative service staff, and their service runs across more than 10 cities in China.

A growing enterprise market in China

It looks like the China government’s Internet+ plan has worked out for 2016, at least in growing the number of startups in China. According to the 2016 government work report, integration of internet in traditional industries has accelerated coupled with the rapid growth of new industries. New registered enterprises increased 21.6% throughout the year, an average of 12,000 new companies registered daily.

Entrepreneurship has become a social wave in China, and the enterprise service market has huge growth potential in China. It is estimated that the enterprise service market size is as big as RMB 100 billion RMB, and the market is still growing rapidly.

Didi is rolling out an English version this Spring

The Beijinger — Mon, 20 Feb 2017 07:14:16 +0000

Editor’s note: A version of this post by Mike Wester first appeared on the Beijinger, a leading source of English-language lifestyle information on the city of Beijing.

Didi Chuxing, the local car hailing app that managed to get Uber to withdraw from the China market (and then discontinued support for Uber’s English interface Nov 26), is soon re-introducing a way to hail a ride in English: this time through their Didi app.

Expats have felt abandoned since support for Uber’s English interface was discontinued late last year, resulting in a convoluted set of difficult choices for the average Beijing-based laowai. While the original international version of Uber still works elsewhere, it does not work here. Didi Chuxing made a local version of Uber available, but in Mandarin only. Finally there is Didi, which is also in Mandarin only.

Despite the lack of an English interface, many expats have gravitated towards Didi due to a more thoroughly developed set of local services.

Now comes word that Didi Chuxing is resurrecting an English version. But rather than build it on top of the Chinese version of Uber, they’re going to do it with the Didi app.

We’ve heard from reliable sources that a basic English interface will be rolled out as early as spring or summer of this year, and the intention is to eventually make the app 100 percent bilingual. Foreign PR and advertising agencies have already been retained to help the company with the rollout.

As of now there has been no change in the Chinese Didi app for iPhone, but some Android users that download from the Google Play store are reporting a version of the app was released recently that has the beginnings of an English interface.

We checked China-based Xiaomi and Samsung app stores early Saturday evening but neither had English-enabled versions.

While in the process of trying to unearth the latest Didi iPhone app on the US Apple store, we did come across a fully English verison of Didi – but it turned out to be a shanzai version out of Vietnam that shamelessly uses the Didi name and logo to promote their car-hailing service (which appears to feature only female drivers):

While this app is fully in English, a spokesperson from Didi confirmed that this app has nothing to do with Didi as we know it here in Beijing. We were a little skittish about poking our credit card details into the Vietnamese version so we went no further to see if it works here in Beijing.

If you’re a genuine Didi user that uses Google Play and has seen the English interface, let us know about your experience in the comments below.

We checked out 8 co-working spaces in Shanghai, so you don’t have to

Eva Yoo — Fri, 17 Feb 2017 06:22:29 +0000

Looking for a co-working space in Beijing? Check out these spots.

With the mushrooming co-working spaces in China starting in 2015, there are so many decent co-working spaces in Shanghai to choose from. To help you ease the pain of visiting every single place to compare, we visited 7 co-working spaces in Shanghai.

1. People Squared

Coffee: Manner coffee available at 15 ~ 20 RMB. Members get 5 RMB discount

Price: Dedicated desk starting from 1,700 RMB a month

Location: 16 offices in Shanghai, 3 offices in Beijing, 1 office in Ningbo

Good for: People who want to grow their startup in China or a maker looking for 3D printer and laser cutter

People Squared is the first co-working space in China started in 2008 by Bob Zheng. It first served as a startup office for himself and his friend’s and only later developed into a business by word of mouth. People Squared in Yuyuan East road is home to Chinaccelerator and maker space Xinchejian (新车间). You can meet early-stage startups and expat founders in Shanghai hustling to scale up their business go to Chinaaccelerator and find cool hardware born out of Xinchejian, and even join their free open session on Wednesday night. Electric skateboard startup Stary’s‘s first skateboards were also assembled in Xinchejian. As the pioneer of co-working spaces in China, it is now getting ready to launch dedicated co-working space for artists and content writers.

2. WeWork

Coffee: Unlimited access to Seesaw coffee, tea, as well as Qingdao and Boxing Cat beer

Price: Dedicated desk starting from 2,200 RMB a month to 3,200 RMB a month. Private office starting from 2,800 ~ 3790 RMB a month

Location: 5 offices in Shanghai

Good for: People who go on a lot of business trips abroad or love moving around the world

WeWork has more than 100 spaces in 14 countries in the world, and it has a base in Shanghai and Beijing, in China. WeWork claims it is running a community business rather than a co-working space business and brings in resources to help collaboration between members. Their Weihailu office is the biggest co-working space, which includes 3-stories and an open space in the middle. WeWork is the only foreign company in this co-working spaces list, that started from U.S. and later expanded to China. WeWork was founded in New York in 2010 by Adam Neumann and Miguel McKelvey. WeWork will open two spaces in Beijing in April and will add three more spaces in Shanghai starting from April.

3. We+

Coffee: A cafe is located in the co-working space, but does not offer discounts to its members.

Price: 1,200 ~ 2,000 RMB a month for hot seats

Location: 8 offices in Shanghai

Good for: People who are okay with speaking Chinese, looking for investment and hands-on support for your startup.

We+ has established a 300 million yuan-sized fund to invest in promising teams and has partnered with venture capital firms in Shanghai, such as Gobi Partners, Cathay Capital, and Lightspeed China Partners. Also, if you cannot spend a day without lifting weights, We+ has a small gym in the co-working space. We+ announced the completion of 100 million yuan pre-A round of funding in November 2016, and it plans to expand to more cities adding up to its spaces in Shanghai, Beijing, Guangzhou, Ningbo, Hangzhou, Suzhou, Xi’an, Wuhan, and Qingdao.

4. Naked Hub

Coffee: Unlimited access to coffee, tea, and beer

Price: 3,000 RMB ~ 5,000 RMB for private office membership depending on location. 1,800 RMB for hot desk membership. 300 RMB for online community membership.

Location: 8 locations in Shanghai

Good for: People who value community or love to go to meet ups

naked Hub organizes a lot of open events, such as monthly startup salon StartupGrind and Startup Weekend. Once renting a place in one spot as a member, the “Hubbers” get access to other spaces in the city. Aiming to bring in co-wellness to its co-working space, the Nanjing space currently offers yoga sessions on its rooftop, and the company further plans to build wellness centers, yoga rooms, and gyms. Born from a hospitality company naked Group, which owns a resorts called naked Stables and naked Castle in Moganshan and restaurants, the members get a discounted price when visiting these spots.

naked Hub has received an undisclosed amount of series B round in November 2016 to add up 30 new locations. Grant Horsfield, the founder of naked Group started naked Hub in 2015 and has co-working communities in Shanghai, Beijing and Hong Kong.

5. Agora Space

Coffee: Coffee, tea, and milk are free. Stock Belgium beers and French cheese.

Price: 168 RMB for one day and 1160 RMB for one month

Location: Panyu Road 1199, Building 1, Unit 402. 15-minute walk from Hongqiao station (line 3, 4, 10)

Good for: Individual worker or startup who wants the fastest internet speed

It is full of entrepreneurs and engineers who are freelancing, building up their business or, quite often, both! Artists would love this place too, as there are a painting salon and a big gallery room, which is also optimal for yoga sessions. Unlike other places, Agora Space breaks down the open space in rooms of 10-20 desks across three distinct floors and one underground space (formerly a bomb shelter), so it is literally ‘homely’.

Agora Space has been awarded the fastest Internet speed by SmartShanghai since 2015 thanks to their tech team challenging the limits of bandwidth and internet protocols. They were also awarded as one of the top 2 “best air quality co-working space in Shanghai” in the Pureformance Challenge.

6. Distrii

Coffee: A cafe inside the co-working space. Doesn’t offer discounts.

Price: 1,000 RMB for Yangpu office, 3,500 RMB for Lujiazui office. Other 5 locations are priced at 1,500 RMB.

Location: 9 locations in Shanghai.

Good for: People who like quiet environment to keep your privacy and resources kept safely

Members of Distrii (shorten for Distribute) use an app to open the glass door to the office and have a locker that works with QR code. If you hold a lot of remote meetings with other offices, Distrii offers you with a huge television call meeting service, and a connected board, where you can note down the meeting notes and it automatically sends to your app. To organize an event, it’s 500 RMB to use the venue for one hour, and space is free under the mutual partnership. Distrii was also awarded as one of the top 2 “The best air quality co-working space in Shanghai”. A visitor can sign up in their application to book any Distrii hot desk or office for one day.

7. Sandbox3

Coffee: A Mini bar located in the co-working space. Americano priced at 11 RMB

Price: Free. Renting an office for 3-6 people is priced at 6,500 RMB. Booking a meeting room costs 80 ~ 1000 RMB one hour, depending on the size of the room.

Location (4 stars): 3 locations in Shanghai

Good for: People who are looking for a free co-working space

My favorite co-working destination is Sandbox because it’s free! When you first visit Sandbox, bring your ID with you to issue a Sandbox card, then you become a member of them and get access to their space and facilities. I conduct a “We Asked” series interviews here, hitting random people in the space. Members should pay extra money to book a meeting room or rent an office space.

8. XNODE

Coffee: A cafe inside the co-working space, but offers no discount to its members.

Price: One fixed desk at Jingan Center priced at 1,880 ~ 2,180 RMB. One fixed desk at Zhangjiang space and Hongqiao space is priced at 1200 RMB.

Location: 3 locations in Shanghai

Good for: People who are looking for a startup accelerator

XNODE is a good option for you if you want to get in touch with Shanghai’s international startup community, since its home for Japanese accelerator Takumi Innovators, Korean entrepreneurship center D.CAMP, Australia Landing Pad and global fintech community Next Money SHA. Their main Jingan center is smaller than other co-working spaces, but you’ll be surprised how many different events are held in this space a month. Compared to other co-working spaces, it’s smaller and brings in the dedicated environment to network and collaborate with other companies.

Gofun offers electric car rental for RMB 1 per hour

The Beijinger — Thu, 16 Feb 2017 04:01:01 +0000

Editor’s note: A version of this post by Charles Liu first appeared on the Beijinger, a leading source of English-language lifestyle information on the city of Beijing.

Beijing’s sharing economy has taken a huge step forward with the recent announcement that some 5,000 electric cars will be available to rent on a time-sharing basis in the city within two years.

By using the Gofun app, Beijing residents will be able to rent an electric car at a rate of just RMB 1 per hour.

With some 1,100 cars already available in Beijing, Gofun will add another 2,000 cars by the end of this year, and another 3,000 by the end of 2018.

Making this car-sharing service especially practical is that they will be available in the capital’s central district. 40 to 50 locations along the Second and Third Ring Road are planned to be converted into retrieval and parking locations for the electric cars.

These locations, which will make use of vacant space under overpasses and bridges of the ring roads, will also be equipped with electric car recharging stations in order to broaden the recharging network for Beijing’s growing electric car user base.

Renting an electric car using Gofun is very similar to the Ofo and Mobike online-to-offline (O2O) services that have taken off over the past few weeks in Beijing.

After downloading the app, Gofun users will register on their phone using their personal identification and driver’s license. After authentication, which takes just one hour, users will be given GPS-based directions on how to locate their rental car, which will honk upon their arrival.

Previous plans called for a payment rate of 1 yuan/1 kilometer. Additionally, users were offered a flat fee payment option of 10 yuan that would free the user of having to pay any car damages in case of accident of up to 1,500 yuan.

Gofun’s big emergence comes after last year’s merger of heated Chinese ride-sharing competitors Uber and Didi Chuxing. Meanwhile, some analysts are predicting that the current competition between Ofo and Mobike will also result in a merger.

Gofun currently operates in four Chinese cities and has future plans to extend its Beijing network outward to include neighboring Tianjin and parts of Hebei.

For a city as polluted as Beijing, any initiative to promote alternative energy comes as a breath of fresh air. City authorities have encouraged electric car use by lifting licensing quotas for electric car users.

It’s not clear if this service will be offered to expats living in Beijing.

Image credits: Gasgoo, D ahe

Tencent confirms WeChat will introduce paid content for official accounts

Guest Editor — Thu, 16 Feb 2017 02:24:50 +0000

Editor’s note: A version of this post first appeared on Yicai Global, the English-language financial news service of Shanghai Media Group. Yicai Global is one of just two dedicated Chinese news feeds connected to the Bloomberg terminal.

WeChat, Tencent Holdings Ltd.’s social networking and chat app, will roll out paid services for the content offered by official accounts, an authority at the Chinese internet giant told Yicai Global.

WeChat invited selected official accounts to trial its paid content function, which is not open to general users for the time being. Posting ads and original content remain the primary ways for official, or business accounts, to earn revenue through the platform.

The challenge for WeChat is to attract paying customers for its reading services when there is a common perception online content is largely free.

A survey of more than 1,700 netizens conducted by a Tencent research unit found 55 percent of respondents had paid for professional knowledge or advice, including paid content and documents in the past year. Over 50 percent of Chinese netizens have paid or are willing to pay for contents, compared with only 30 percent two years ago, an iResearch report found.

Zhihu, a knowledge-sharing app similar to Quora.com, which allows readers to pose a question and answer other users’ queries, has been able to monetize its Zhihu Live, an online lecture room. Per capita consumption by users is RMB 52.08 and a one-hour lecture can bring speakers, who are usually specialists in their fields, an average fee of RMB 10,000 (US$ 1,455).

[Discover China’s Next BAT] 8 rising stars, part 2

mjkim — Wed, 15 Feb 2017 09:56:48 +0000

This is the fourth post in our series: Discover China’s Next BAT, where we will go over the potential tech giants that are leading China’s IT industry. Stay tuned over the coming month to keep updated on the next ‘BAT.’

iiMedia Research Group, a leading research institute in China, has released a list of leading mobile internet companies based on the findings of a corporate judging panel consisting of global industry experts, influential investors, and public voting with over a million ballots cast.

From that list, we have chosen eight companies we believe will dominate their markets. Previously, we listed the first four. Here is the second group:

5. Xian Yu (闲鱼) – second-hand market

Xian Yu, meaning an idle fish, is a second-hand e-commerce platform. Customers can use their smartphones to run their stores and add promotional voice recordings to sell their products, making the app more like a social app.

Chinese e-commerce giant Alibaba invested at least RMB 100 million (US $15.4 million) to launch this platform in June 2014. Alibaba Group’s C2C e-commerce site Taobao recently added a face-to-face trading function called Jianyijian to Xian Yu in December last year and the platform is considering ways of adding more interactive content in the future.

Jianyijian works by allowing buyers to talk face to face with the seller by requesting a Jianyijian transaction. If the seller agrees, the two parties can then further discuss through a chat window in the app. Once the two parties have decided on a time, they will meet in person and the buyer will scan a code generated by the seller.

6. Lagou (拉勾) – Job-seeking platform

Lagou is a Beijing-based job-seeking platform established in July 2013. Lagou.com operates a recruitment website and offers staffing services. The company’s clientele includes Tencent, Baidu, Alibaba Group, SINA, JD.com, Beijing Xiaomi Tech, and Zhaopin.com.

Lagou raised RMB 220 million yuan through series C funding in March 2016 from Hongdao Capital and Chiming Investment Corporation to fund developing products and technology to provide more diverse human resources services.

7. boqii (波奇网) – Pet e-commerce

Boqii, launched in September 2008, is an online pet shopping mall. It provides various services such as companion hotel, medical, beauty, bath for pets and also an online community for information sharing. There are more than 10,000 kinds of animal products sold at boqii. It expanded to O2O services in March 2014 which have since exceeded 100 million yuan in annual sales.

After receiving US$ 10 million in series A funding from JAFCO Asia and Goldman Sachs in 2012, and US$25 million for series B funding from undisclosed investors in 2014, boqii completed series C funding from China Merchants Bank in February 2016. The company says it plans to use the latest proceeds on expanding its services into more cities and adding new products, as well as potential mergers and acquisitions.

8. JOYRUN (悦跑圈) – running app

Founded in 2014, JoyRun’s mobile app allows users to find running partners, share running stats, network with each other and browse related content. This Guangzhou-based runner mobile app has completed US$18 million series B round of financing led by the Arena Capital. The company says it will use the proceeds on technical improvements, expand its events business and monetization.

The app has daily active users of 500,000 as of November 2015. The Arena Capital was established in 2015 by Chinese sportswear company Guirenniao Co., Ltd., sports portal Hupu.com, and Greenwoods Asset Management. The fund focuses on making early stage, growth stage and pre-IPO investments in the Internet+ sports sectors in China.

Panel: WeChat mini-apps have promise, but fail to deliver

John Artman — Tue, 14 Feb 2017 10:48:24 +0000

Editor’s note: On Feb 13, 2017, TechNode held its first event of the year, looking at WeChat mini-apps, what they are and whether they have a future. Below are some highlights. You can also listen to the whole panel here.

After much hype, WeChat mini-apps don’t seem to have much a future. That was the conclusion of a panel discussion held on Feb 13 at DayDayup in Beijing.

Both Thomas Graziani and Drew Kirchhoff shared their views of mini-apps and unfortunately, the conclusions drawn ranged from lukewarm reception to outright dismissal.

Thomas Graziani, CEO of WalktheChat, a WeChat marketing consultancy, was very bearish, going so far as to say that mini-apps have no future.

“If you think about new innovation, there are basically three categories: innovations which don’t suck, . . . things which suck for now, . . . and then you stuff which really sucks and will suck forever,” said Thomas. “What makes mini-apps really weak is that [they are competing with WeChat service accounts] which is just better. There’s no amount of improvement you can make to make them competitive against service accounts.”

Drew Kirchhoff, co-founder of WeChat-based language learning platform yoli, however, was more conciliatory, saying that while they may have been launched poorly, mini-apps could provide the foundation for WeChat’s future dominance through AR.

“I’m not going to say they’ve been a complete failure. The response from the [WeChat] team is that this is all about offline. Mini-apps aren’t supposed to be apps themselves; they’re supposed to create an offline experience,” said Drew. “Instead of online to offline, mini-apps are more offline back to online. In [Alan Zhang’s speech] when he announced mini-apps, he talked about how in ten years we would be able to use [AR integration] . . . to create an offline OS.”

What are mini-apps?

Before release everyone called them mini-apps, but now WeChat is officially calling them Mini-Programs, seemingly in an attempt to steer clear of any conflicts with Apple and their App Store provisions against other app stores on their platform.

“After Tencent denied approval for calling them yingyonghao [应用号 or “app account” in English)], WeChat came up with xiaochengxu [小程序 or “little program” in English],” said Drew. “Both are literal translations, but they are basically the same thing.”

Interestingly enough, they can potentially replace traditional apps. Instead of having to install and uninstall, users can just use once and never have to think about them again. Not only that, but app stores across platforms are oversaturated and underutilized.

“The basic idea is that you don’t have to install apps so much. If you look at how many apps you installed last week or last month, the average number is close to zero. The question is how do you get more people to interact with you on a more personal basis, said Thomas. “The solution for WeChat is service accounts and subscription accounts, but that was not good enough: they wanted something more native and faster. The more nerdier branch of Tencent in Shenzhen decided that solution would be mini-apps. The idea is that people don’t need to download apps and brands can interface with users.”

Do mini-apps have a future?

Given this promise, there are quite a few companies exploring this type of user experience, most notably Google with their instant apps. However, unlike Google and their massive Android I/O conference, WeChat has been relatively silent about their mini-apps. And, yet, there was a ton of buzz about mini-apps, with even some speculating this could be Tencent’s play to replace the App Store and obviate the OS as a platform.¹

“A lot of developers knew that if you were the first, if you could be the first one to launch your mini-app, you would get a huge amount of users on the first day and would be able to monetize it and convert those users to other channels,” said Drew. “For a lot of developers in the beginning, it was a chance to be first, to capitalize on the very short development times of 1-2 weeks, and of lot of people are just kind of sick of app stores. Mini-apps were supposed to be the chance to do something new and be potentially the first to be part of the next revolution.”

However, in just over a month, mini-apps have lost a of traction. According to Baidu’s search index, searches for xiaochengxu have decreased dramatically over the last 30 days.

Baidu 30 day seach index for mini-apps (Image credit: WalktheChat)

On top of that, there have yet to be any compelling use cases with most mini-apps being extension of official accounts.

“Offline use cases are interesting if its something you can use once, like paying for gas. I can scan the QR code and pay for the gas, increasing convenience for users. You could argue that its a bit faster than a website even though I find that questionable,” said Thomas. “Why not have people follow your service account so that you can interact with them later? If you really don’t to talk to these people again, then its really about have one touch point and that can make sense.”

Even then, they do still provide an alternative to traditional apps by not taking up any space on your phone’s storage. This may be good for people who are finding themselves with too many apps already or just not enough space on their phones, in particular lower-end devices with little space to begin with.

“Before mini-apps launched, I couldn’t download any more apps because my phone didn’t have enough storage. So instead of downloading ofo, I just used the service account,” said Drew. “At the time, I thought it was great because I don’t have to leave WeChat to use ofo. . . but since the first week of launch I haven’t used any mini-apps [because using apps is faster].”

And, yes, TechNode did contribute to some of this (some might say) over-hype. ↩

[Podcast] Analyse Asia 162: Huawei in 2016 with Carolina Milanesi

Guest Editor — Tue, 14 Feb 2017 03:59:22 +0000

Carolina Milanesi from Creative Strategies & Techpinions joined us for a two-parter discussion from Huawei to artificial intelligence & Internet of Things. In the first part, we discussed Huawei, the leading hardware technology giant from China on their global focus on the consumer sector with smartphones in 2016, and what to expect from them in 2017 particularly in their global expansion and enterprise push with Internet of Things.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Carolina Milanesi, Consumer Tech Analyst, Creative Strategies (@caro_milanesi, LinkedIn, Techpinions) [0:38]
- How did you start your career? [1:22]
- From your various roles from Kantar, Gartner and now Creative Strategies, what are the interesting career lessons learned? [3:00]
- What is your current role and coverage in Creative Strategies and the areas of focus? [4:43]
Huawei Technologies, China in 2016 & now in 2017 [5:42]
- Introduction to Huawei (Wikipedia)
- As Huawei is a private company, why does it hold an annual summit for analysts? What is its motivation to show their financial numbers in public? [6:25]
- What kind of information does Huawei share with the analysts in their summit? [7:25]
- What have you learned about Huawei during their annual summit in 2016? [8:34]
- Huawei Technologies are broadly broken into three categories: Carrier, Enterprise, and Consumer, in last April, how was each of these business lines doing? [11:29]
- Huawei’s competency with hardware technology from chips to carrier and is vertically integrated similar to Apple. [14:43]
- Huawei is a combination of Cisco, Alcatel, and Apple in one company. [15:26]
- Focusing on the consumer aspect, can you talk about the different smartphones from Huawei, particularly the Honor and P9? (Reference: Huawei’s Push into the High End Depends on Continued Growth of its Honor) [16:25]
- Do you see Huawei creating its own mobile OS instead of depending on Android? [20:17]
- Huawei should just buy Xiaomi for their software competency with MiUI. [22:19]
- Where do you see Huawei’s focus will be in 2017? [22:57]

Huawei’s Financial Performance in 2016:

TechNode does not necessarily endorse the commentary made in this program.

Xiaomi turns to brick-and-mortar to bolster decreasing market share

Emma Lee — Mon, 13 Feb 2017 08:52:04 +0000

Xiaomi, a once red-hot Chinese hardware startup touted as the China’s answer to Apple, is encountering serious challenges from local competitors of Oppo, Vivo, and Huawei in the past year. It’s even been being moved from the first to the fifth spot in the market share list.

The reasons behind this disastrous drop were multi-faceted and involve issues from supply chain management to the lack of high-end products. However, the company’s online-focused marketing strategy is widely considered as a major reason.

Online marketing was a success, but it’s not one-size-fits-all

Born in 2010, Xiaomi positioned itself a brand with internet DNA and tried to engage customers with its geeky positioning. This is perfectly reflected in its slogan “Born for You, Burn for MI” (为发烧而生). In line with the positioning, Xiaomi leveraged corresponding online-focused marketing strategies, rejecting physical retail stores, traditional distribution channels, and conventional advertising as a way to keep lower product prices.

From online flash sales, social media promotion to creating a fanatic fan community, Xiaomi’s marketing moves proved to be a success in tapping China’s urban starter smartphone user base in its early stage of development with smartphones packed decent specs and affordable prices.

As the first regions to adopt smartphones, China tier-one and tier-two cities have gradually becoming saturated in recent years. Lower-tier cities and rural areas, where internet penetration is lower and traditional retailing still dominates, are taking bigger roles in driving smartphone market.

Market changes. Sticking to the old strategies, no matter how effective it was in the past, to tap a different market is obviously not a wise choice.

How will Xiaomi differentiate?

While Xiaomi is losing ground, its local competitors Oppo and Vivo are rising by adopting the exact tactics that Xiaomi once avoided. Now, Xiaomi is shifting to the offline-focused strategy that’s helped its rivals boom.

Xiaomi opened its first flagship retail stores in 2013. Back then, the move was largely a PR effort to build a more favorable company brand. Currently, there’s overall 47 Mi Homes in the country, including one in Hong Kong and one in Taiwan.

The firm’s obviously more serious about going offline this time. Company founder Lei Jun said the smartphone maker is going to add 200 brick-and-mortar Mi Home stores in 2017. A combined 1,000 such stores will be opened in the future three years.

In addition, the company started a pilot of a direct-to-retail model to eliminate distributors and other middlemen. Every individual retailer can order directly from the company on Xiaomi’s marketplace. The site shows that Xiaomi will offer training and incentive plans to individual merchants in the plan. Compared with opening physical stores, this is a less pricey way to reach to customers.

[Discover China’s Next BAT] 8 rising stars, part 1

mjkim — Mon, 13 Feb 2017 08:22:35 +0000

This is the third post in our series: Discover China’s Next BAT, where we will go over the potential tech giants that are leading China’s IT industry. Previously, we looked at the next BAT and their founders. Stay tuned to keep updated on the next BAT.

From that list, we have chosen eight companies we believe will dominate their markets. Here are the first four:

1. Xbed（搜床科技）- internet hotel

Xbed provides self-service hotels rooms. Here, self-service means a literally no service staff, no front desk, or security personnel. Using Xbed, users can rely completely on Xbed mobile app (or its WeChat account) for the whole stay from reserving the hotel room and checking in and out to opening and locking of the room door and payment.

Founded in May 2015, Xbed is said to bring a sharing economy model into the accommodation industry as it allows people who have worked in accommodation industry to be part-time workers to help with the cleaning.

Xbed raised $1 million in its seed round on December 5, 2016, from Gobi Partners and QF Capital.

2. Douyu TV (斗鱼) – live broadcasting

Founded in 2014, Douyu TV is one of the earliest live-streaming platforms among more than 200 Chinese streaming platforms that have popped up. The market is estimated to be worth US$ 5 billion (RMB 34.4 billion) in 2017.

Attracting investment from gaming giant Tencent, it has been dubbed the Chinese Twitch.tv with many top streamers playing MOBAs (multiplayer online battle arenas) similar to League of Legends. This has fueled the game’s continued popularity with the company now claiming over 100 million registered users, including 15 million daily active users (Twitch, for comparison, claims 100 million monthly users).

Last year, it secured more than RMB 2 billion yuan (about US$ 13.7 billion) in funding. The round reportedly pushes Douyu TV’s valuation above US$1 billion, making it yet another Chinese unicorn.

Although its strength is still in game broadcasting, it is also producing its own content.

3. Inke (映客) – live internet broadcast

According to the Cyberspace Administration, in November there were more than 300 live streaming companies in the mainland. The China Internet Network Information Center reported in June that there was a total of 325 million live streaming users in China, comprising 45.8 percent of the total internet user population. Inke is a live-streaming app where users earn money from their content.

Inke has a quite interesting way of monetizing. Viewers can send virtual gifts to hosts through in-app purchases. The host receives 30 percent of the gift’s value, which encourages them “to produce high-quality content”, while also keeping the platform profitable. Hosts can also “enhance the viewing experience” by adding interactive stickers.

By its entertainment promotional efforts, for instance, broadcasting live shows for a popular South Korean band called Big Bang, Inke’s downloads and revenue started to ramp up and even made it to the seventh spot on App Annie’s worldwide revenue rankings of iOS and Android apps in April 2016.

4. Yidao (易到用车) – vehicle sharing

In 2010, before there was a Didi or Uber entered China, Yidao was the first to start ride-hailing business. Six years later, it is not first in terms of market share, but Yidao still provides car services in 74 cities in China and 24 cities in the United States, has 1.35 million active users and a market value of US$ 15 billion.

After Didi announced its acquisition of Uber’s operations in China last year, there was even a joke that Yidao had finally jumped from third to second place in the market. Although the pioneer of the market, Yidao had always struggled with the rise of Didi and Uber China, which became popular on the back of heavy subsidies and cheap prices.

In fact, new regulations in the ride-hailing business after Chinese authorities finally legalized car-hailing apps in July 2016 might be a good news for Yidao. The new regulations by the government stipulated that unfair competition—giving heavy discounts and subsidies for services at below-cost price—should stop. In other words, Didi may not be so cheap as it always had been for many consumers, while affect on Yidao is probably minimal as Yidao targets on offering premium services at higher prices.

10 live-streaming apps luxury brands need to know in 2017

Jing Daily — Mon, 13 Feb 2017 03:27:04 +0000

Editor’s note: A version of this post first appeared on Jing Daily, the leading digital publication on luxury consumer trends in China.

From Papi Jiang’s Swiss watch collaboration to Tmall’s virtual U.S. shopping trip, live-streamed luxury brand campaigns are part of a growing trend as China’s live-streaming audience expands. The latest report by Chinese consulting company iiMedia Research estimated that the number of live-streaming platform users had exceeded 312 million by the end of 2016, with more than 200 apps and platforms making up a market worth close to 9 billion RMB (roughly $1.3 billion). Even though the Chinese government has recently tightened its grip on the practice, many industry experts remain optimistic about live streaming’s potential. For example, Credit Suisse noted in its September report that the market would grow to $5 billion by the end of 2017, which is about 50 percent of the size of China’s mobile gaming sector.

The excitement, real-time experience, and authenticity live streaming can bring to its audience represent a tremendous opportunity for luxury brands in China to improve their brand awareness and boost sales. Many of them, including Hilton Hotels and Resorts, Chanel, Dior, and L’Oreal, have already tested the waters—last year, Chanel debuted its products via a live-streaming event, Dior broadcasted its haute couture fashion show in Paris, and L’Oreal gave users the opportunity to buy its products as they watched its live broadcast.

Brands doing live-streaming campaigns usually choose several platforms to broadcast the same event in order to reach a wider audience. Below is a roundup of 10 Chinese live-streaming apps that are catching the attention of marketers and quickly building large followings.

1. Meipai

Meipai is well-known for its video and editing features, favored by many Chinese celebrities and KOLs. Its live-streaming feature was added in January of last year, after which it didn’t take long before it attracted a score of beauty brands, including L’Oreal, Maybelline, and SK-II, as loyal users. As of June 2016, Chinese media reported that Meipai’s live streams had 570 million viewers.

Chinese celebrities Li Bingbing and Li Yuchun live streamed their participation in the Cannes Film Festival last year

As the main sponsor of the Cannes Film Festival last year, the French cosmetics company L‘Oreal invited a number of Chinese celebrities, including Li Bingbing and Li Yuchun, to live stream their attendance and show viewers how they applied their L’Oreal makeup. As this was happening, the app pushed out information on where to buy these items. This “See Now, Buy Now” model successfully boosted the sales of the featured products. L’Oreal’s flagship store on Tmall reported that the lipstick used by Li Yuchun during the event was sold out within four hours.

2. Douyu TV

Douyu TV’s anchor broadcasted the luxury hotel Hilton Hainan in collaboration with Tuniu

Douyu TV is among the first generation of live-streaming platforms in China. Founded in 2013, the Twitch-like platform gained its reputation and popularity for its e-sport live-streaming service. However, the app started to produce more diverse live content after Tencent acquired it last year. For example, Hilton Hotels and Resorts, in collaboration with Ctrip Travel Group, live streamed at its hotel in Hainan in June. Analysts estimate that the app’s daily active users were close to 1.2 million last year.

3. Huya

China’s telecommunication leader Huawei launched its latest Magic phone through a 168-hour live-streaming event on Huya

Launched in 2011, Huya is a leading live-streaming app in China. The company’s financial statement shows its app’s revenue reached 200 million RMB ($28 million) by the third quarter of 2016. Last September, China’s telecommunications company Huawei debuted its “Honor” 5A phone on the app. The live-streaming event lasted 168 hours and sparked animated discussion on Chinese social media.

Chinese celebrity Yan Dancheng broadcasted her luxury cruise on Huajiao

4. Huajiao

Launched in 2015, Huajiao has been dedicated to exploring partnerships with Chinese celebrities, and in mid-2016, it became the first live-streaming app in China to have a virtual reality (VR) function. Due to its technological strength and close relationship with celebrities, Huajiao was the best performer in the market in 2016. It currently boasts more than 5 million daily active users.

Last year, the app invited Chinese actress Yan Dancheng to broadcast her cruise with Tuniu, an online leisure travel company.

5. Inke

Brands, such as Hilton Hotels and Resorts, use the app to live stream

While it’s not the most well-known of the bunch, Inke has been used by luxury brands, including Hilton Hotels and Resorts, for live-stream campaigns since its launch in 2015. The app’s founders claim Inke is the first platform in China to invite Chinese celebrities to live stream. In 2016, the popular Chinese fashion blogger gogoboi used the app to live stream the “Cruise 2016 Collection” by Louis Vuitton. On the app’s official website, Alibaba’s Tmall is listed as one of its official partners. As of June 2016, the number of registered users on Inke exceeded 130 million, with nearly 15 million daily active users, according to Chinese media reports.

6. Taobao’s and Tmall’s live streaming platforms

Alibaba launched live-streaming features on Taobao and Tmall in early 2016. Unlike other live-streaming apps, the e-commerce sites have made it clear at inception that their goal is to promote consumption. The live-streaming page on Taobao features information about products, purchasing links, coupons, and recommendations. Tmall’s live-streaming platform is more brand-focused. Brands not only can use the platform to broadcast, they also can work with Tmall to come up with an exclusive and tailored live-streaming plan if needed.

In a 2-hour live-streaming event, the popular Taobao storeowner Dayi Zhang locked 20 million of turnover

So far, official data from Alibaba indicates that the “See Now, Buy Now” model works well on both platforms. The conversion rate (from viewership to order) is between 10 and 20 percent on Tmall and more than 30 percent on Taobao.

7. Yizhibo

Chanel released the latest version of its signature fragrance N°5 with Yizhibo last year

As a go-to channel for live-streaming events on Weibo, Yizhibo has attracted many Chinese celebrities and brands to debut collections and products on its platform. For example, Chanel launched the latest edition of its signature fragrance N°5 with the app last year. The newest available data released by the app says that the number of its daily active users has reached 7.73 million.

8. Tencent TV

Dior live streamed its latest haute couture fashion show on Tencent TV

The main Chinese video streaming website owned by tech giant Tencent, Tencent TV also has a live-streaming feature. The French luxury powerhouse Christian Dior exclusively live-streamed its Haute Couture Spring/Summer 2017 fashion show with the platform in January.

9. Panda TV

The only son of Wanda’s Wang Jinlin, Wang Sicong, founded Panda TV in 2015

Wang Sicong, the only son of Chinese tycoon Wang Jianlin, founded Panda TV in 2015. Even though the app currently focuses on live streaming PC games, industry analysts believe it has potential in the future to be a live-streaming leader because of its close relationship with Wanda Group. Chinese media reports estimate that the app has about 1.5 million daily active users.

10. Xiyou

Overseas purchasing agents use Xiyou to broadcast their shopping experience to show viewers their goods are real

Xiyou is not a live-streaming app for luxury brands, but rather, it is specially designed for overseas purchasing agents (daigou). The brand “Xiyou” was first established on WeChat, where agents (maishou) could record themselves shopping to reassure buyers that their goods were not domestically-made knockoffs. At that time, Xiyou’s monthly turnover was around 250,000 RMB. Then in late 2015, the company launched the app, and soon had more than 2000 agents conducting business on its platform.

mHealth still not enough to fix China’s healthcare problems

Junse Lee — Fri, 10 Feb 2017 09:13:30 +0000

China is experiencing an unusual combination of growth factors that leads to abundant opportunities in the healthcare market: burgeoning middle-class, advanced technology, and government support.

Over the last decade, China embarked on the biggest health system reform aiming to extend health services beyond the country’s prosperous urban centers. In August 2016, President Xi Jinping held its most important national meeting on health—the National Health Conference—in twenty years, demonstrating the government’s tremendous political support in health investment. Xi further made it clear that health is to be an explicit national priority by approving the Healthy China 2030. China’s health science and technology innovation already rank amongst the world best. With the application of technological advances and improvements to the health insurance system, China aims to ensure health equity by 2030.

The burgeoning middle class implies the demand for high-quality medical services and the strains on public health care system. According to an EY report on China’s health care, the market for private health insurance grew from 1.5 trillion RMB in 2014 to 2.4 trillion RMB in 2015. The number is expected to grow up to at least 5 trillion RMB by 2020. Furthermore, the government encourages private sector involvement by relaxing regulatory restrictions and providing tax incentives.

On top of this, new disruptive technologies such as mobile apps and internet-based services are widening the health care options for Chinese customers. Currently, roughly 700 million people have internet access in China, of which 86% connect through their phones, easing the collection of health data for Chinese tech juggernauts. Such active mobile population allows room for mHealth to transform the healthcare experience for the Chinese people. Established players are already enhancing their offerings by launching health-related mobile apps and internet-based services to enhance customers’ personalized experience.

“About four years ago [mHealth conferences] were just a few people in jeans meeting occasionally,” says Peter Benjamin, Managing Director of CellLife, a South African NGO developing mHealth technology. “Three years ago proper doctors started to show up; about two years ago we had reports of the first randomized controlled trials, and last year the suits got involved so that many mHealth conferences are now dominated by [corporate] executives [discussing return on investment].”

However, change entails conflict. Despite the connectivity and mass data collection healthcare technology can bring, the discrepancy between expectation and reality is still quite wide. The expectation that mHealth could be tailored to the needs of growing middle class and cut down costly healthcare expenses often ignores the vast size and population of China–the country with 1.3 billion population across the vast socio-economic spectrum and geographical locations. There are significant differences in cost and care between cities and provinces, which may take years to realize returns as the market matures and expands.

“The low satisfaction with public health care is draining the growing Chinese middle class outside the country to access better health treatment. For those who can afford a better health care system, are yet prone to seek for high-quality resources outside the mainland as opposed to going through the struggles of nascent mHealth,” according to Douglas Corley, an expert in Chinese Healthcare policy and the founder of Beijing Healthcare Forum.

While the idea of technology integration may sound romantic, the country still struggles from its slow and costly healthcare system. Less than half of doctors are openly integrating the technology to their traditional complex healthcare system. Some skeptical patients have little trust in the new online platform system, preferring the face-to-face diagnosis as seen in the news.

Who is TMD: The founders behind China’s next BAT

mjkim — Fri, 10 Feb 2017 07:15:57 +0000

This is the second post in our series: Discover China’s Next BAT, where we will go over the potential tech giants that are leading China’s IT industry. Previously, we looked at what TMD is. This time, we take a closer look at the founders.

Toutiao, Meituan-Dianping, and Didi Chuxing (TMD for short) are indeed the last winners who survived in their each sector of the market. As the leading platforms, their market value is notably high.

For Toutiao, a high-flying news-aggregation app that has quickly become one of the hottest start-ups in China, Investors are considering hanging a valuation of more than $US10 billion ($13bn)

The app’s parent company, Beijing Bytedance Technology, seeks to raise about $1 billion in its latest round. The fresh valuation marks rapid progress for the company, which was worth only $500 million in 2014.

Didi Chuxing, after a merger with Uber, is now worth around US$ 35 billion – combining Didi’s most recent US$ 28 billion valuation and Uber China’s estimated net worth.

In January, last year, Meituan-Dianping confirmed that it has closed a colossal $3.3 billion round at a valuation of $18 billion. In fact, this was the largest single funding round ever raised by a venture-backed Internet startup in China at the time.

Lanxi, the founder of Zhulu (逐鹿网) said in his blog post that he expects that among these three companies, at least two will complete its IPO this year.

Founders of TMD

Interestingly, these three companies all were established around a similar generation. Toutiao was founded by Zhang Yiming, a 33-year-old entrepreneur in 2012. Meituan was founded by Wang Xing, a 31-year-old entrepreneur in 2010. Didi Chuxing’s CEO, Cheng Wei was also 30 years old when he founded Didi in 2012.

As we often group together Robin Li, Jack Ma, and Ma Huateng, the founders of Baidu, Alibaba, and Tencent respectively, Zhang Yiming, Wang Xing, and Cheng Wei are collectively seen as the next generation of leaders of China’s IT industry

It is true that at the time Baidu, Alibaba, and Tencent were growing their business, BAT were often criticized for being the copycats of existing giants in the US; Baidu copying Google, Alibaba copying Amazon and Ebay. However, Toutiao, Meituan, and Didi are applauded to have captured a specific demand and needs of Chinese consumers and somewhat more original in terms of a business model with their own ways of innovation.

New WeChat feature shows that Starbucks is no longer a foreign brand

John Artman — Fri, 10 Feb 2017 03:40:55 +0000

After the stunning success of hongbao (红包 or “lucky money” in English) and the more recent gold gifting, WeChat has partnered with Starbucks to offer coffee gifting.

Found in the WeChat Wallet, you can purchase Starbucks-branded gift cards either for a single drink or with money pre-loaded on the card. After purchasing, you will be taken to a sharing screen where you can choose who to send to. Once accepted, the gift card will appear in “Cards & Offers” menu where it can then be presented at the coffee shop.

As with much of WeChat, this has come with little fanfare. They have even gone out of their way to show clearly that this is a limited campaign with the buttons labeled “For a limited time only” (限时推广 in Chinese). However, there is no mention of when the campaign will finish. This is presumably done as a way to induce people to use the feature soon; indeed this was launched just ahead of Valentine’s Day and even features Valentine’s Day themed gift cards. This could also be a way to address any concerns from Chinese netizens who may question why WeChat is partnering with Starbucks and not with a local partner.

This is the first time that a foreign brand has appeared in the Chine WeChat Wallet, according to Matthew Brennan of ChinaChannel. There are two obvious lessons here: the power of gifting as well as what it takes to succeed in China.

The power of gifting

Gifting of cash on WeChat has become immensely popular. So popular, in fact, that even without the incentives of previous year, they still beat out Alipay for the most hongbao sent on Chinese New Year’s Eve. Soon after, WeChat introduced gold hongbao as a way to encourage users to sign up for Tencent’s Micro-Gold (our translation), a new gold trading service.

Straight up giving cash to friends and family may seem odd to Westerners of a Judeo-Christian background where the outright giving of money seems a bit gauche (gift cards, however, are quickly changing this, especially in the US). For China, on the other hand, it makes a lot of sense. First, China has a long history as a gift-giving culture, with personal and business relationships solidified and maintained through reciprocal gifting. Second, the hongbao is an integral part of Chinese tradition since at least the Qin dynasty (221 to 206 BC) when money threaded on a red string was given to children to first ward off evil spirits. This later evolved into giving hongbao (in English, this can be translated as “lucky money”, “red envelopes”, and “red packets”).

However, digital hongbao take this to next level, making a game out of the sending and opening of them. Usually sent in a group chat, there is a limited number of people who can open one hongbao, anywhere from 1 to 100. Whereas physical hongbao are consciously given to others, digital ones become a question of who can open them the fastest. A simple game, but one that has so many cultural hooks (especially how it solidifies group ties) that it is no wonder they have become so popular.

What it takes to succeed in China

China is a notoriously difficult market to crack. Many companies, both online and off, have tried to enter the Middle Kingdom to no avail. Indeed, even global food giant McDonald’s decided to sell 80% of their China business after struggling for decades. Starbucks, however, is one the very few foreign successes in China. Opening their first store in 1999, Starbucks now has 2,204 stores and plans to have 5,000 by 2021. In those almost 18 years, Starbucks worked quietly and patiently to teach Chinese consumers about coffee as well as making sure they create and maintain the right relationships.

We’ve talked before about what it takes to succeed in China and these lessons still hold true: don’t expect the same success as other markets, find local partners who understand your market, and be prepared to take the time to educate your customer.

With the China business expected to exceed the US, the new Starbucks gifting feature proves that Starbucks is officially part of China.

Meet the best of Chinese underwater drones

Emma Lee — Thu, 09 Feb 2017 08:18:59 +0000

Emerging Chinese drone manufacturers led by DJI and EHANG have contributed greatly to the full transition of aerial drones from military devices to instruments that we use in everyday life. While they are trying their best to provide a bird’s eye view of our world, there are other Chinese companies are dedicated to give you a glimpse under the sea.

To highlight some of these companies, we’ve come up with a list of consumer oriented underwater drone startups that’s coming from the Middle Kingdom.

FiFish Atlantis

FiFish Atlantis is a smart ROV (Remotely Operated underwater vehicle) for the mass consumer market. It allows users to take videos underwater and send back high-definition videos in real-time. Its maximum water depth for normal usage is up to 100 meters and the embedded battery can last two hours at a full charge.

When equipped with a professional camera, it can be used to gather images for VR and AR applications. The FiFish series can also work as an underwater operation platform for industrial use when equipped with robotic arms or ocean environment detection system.

Born out of a project under Chinese incubator platform Taihuoniao, Qiyuan Technology, developer of FiFish Atlantis, has received funding from Chinese startup guru Kaifu Lee and Li Wanqiang, co-founder of Xiaomi.

White Shark Mini

Designed for recreational purpose, White Shark Mini is a underwater drone that’s able to film two-megapixel videos. It can move with other gadgets attached, such as 3D camera, GPS, and sonar.

Deepfar Ocean Technology, the company behind White Shark Mini, is primarily engaged in the research and development of underwater vehicles for military uses.

Due to the instability and long project cycle of military orders, the Beijing-based company rolled out the White Shark brand at the beginning of last year, spreading to consumer market in an attempt to capitalize on China’s drone boom. White Shark MAX, another product under the brand, targets professional customers like filmmakers and aquarium staff。

GLADIUS

GLADIUS is a smart ROV underwater drone built for filming, observing, and exploring. As a portable device, GLADIUS measures 430mm * 260mm * 95 mm and weighs only 3kg. The gadget comes with two built-in batteries, which can last up to 3 to 4 hours on one charge.

One cool thing about GLADIUS is its ability for precision maneuvers. The Quattro-thrusters design makes it able to nimbly move in all directions at a speed of up to 4 knots or 2m/s.

PowerRay

While the abovementioned ROVs are created for recreational purposes in general, PowerRay goes into a more specific vertical — fishing. Designed for freshwater, saltwater and even ice fishing, PowerRay is a underwater robot that uses sonar technology and ‘internal fish luring lights’ to detect and attract fish up to 30 meters under water.

To enable more immersive experience, the drone can provide a first person view experience through connecting to a PowerVision VR goggle. With gravity and gesture recognition capabilities, the goggle allows users to interact with and control the robot via head tilting.

TMD is the new BAT

mjkim — Thu, 09 Feb 2017 02:49:04 +0000

This is the first post in our series: Discover China’s Next BAT, where we will go over the potential tech giants that are leading China’s IT industry. Stay tuned over the coming month to keep updated on the next ‘BAT.’

Anyone who is interested in IT industry in China would probably be familiar with what ‘BAT’ stands for: Baidu, Alibaba, and Tencent, the three tech giants in China. However, they are all quite mature and old. Indeed, it is time for a new acronym that represents three significant companies, following the success of BAT.

Now, we’d like to introduce a new acronym, TMD: Toutiao, Meituan, and Didi Chuxing.

Toutiao （头条)

Toutiao, meaning “headlines” in Chinese, is an insanely popular Chinese news aggregation app. Toutiao boasts some 700 million users in China, with more than 68 million active daily users.

It is important to note that Toutiao is not a mere news reading service but rather a curation platform with highly sophisticated machine learning technology. With the database of readers’ taste and preference, Touiao precisely tailors its offerings accordingly to get more clicks.

Recently, Toutiao acquired Flipagram, a popular video app in the US. The company plans to integrate Flipagram videos in those recommendations, so that should improve Flipagram’s reach.

Meituan–Dianping (新美大)

Meituan and Dianping, two of the dominant group deals e-commerce platforms, merged in October 2015, forming a joint company called Meituan-Dianping or Xinmeida in Chinese.

By joining forces, it claimed RMB 170 billion (US$ 25.84 billion) in gross merchandise volume (or the value of merchandise sold online) last year and currently serves about 150 million monthly active users who place about 10 million orders each day.

Just last month, Meituan-Dianping announced the launch of their own online financial services, following Alibaba and Tencent.

Didi Chuxing

After a bruising two-year battle in mainland China, Uber sold its China operations to Didi Chuxing which in turn gives Uber a one-fifth stake in Didi.

The Didi deal is the latest sign that global Internet and technology companies are struggling to break into China’s cut-throat market, where local entrepreneurs have built formidable businesses, partly helped by a supportive government.

[Beijing Event] WeChat Mini-Apps: Behind the Hype on Feb 13, 2017

John Artman — Wed, 08 Feb 2017 09:11:52 +0000

On January 9th, WeChat officially launched mini-apps after much fanfare and speculation. Touted by many as the “App Store” killer in China, Mini Programs, as they are now officially called, were believed to be the next step in WeChat’s continued dominance.

However, one month on and it seems that Mini Programs have already lost most of their traction. Are Mini Programs a victim of too much marketing? Or are they just a function waiting for its use case?

To discuss this, TechNode and DayDayUp will be hosting a panel discussion with:

Thomas Graziani, CEO of WalktheChat

Drew Kirchhoff, co-founder of yoli

When: February 13, 2017 at 630pm

Where: DayDayUp Sanlitun, Sanlitun SOHO Office C Level 22, Beijing

朝阳区三里屯SOHO办公C座22层

About Thomas:

Thomas is CEO at WalktheChat, a company helping foreign brands sell cross-border via WeChat. Before joining WalktheChat, Thomas spearheaded the Smart City initiative at Schneider Electric and was a consultant at the Boston Consulting Group. He is a graduate of Ecole Polytechnique in France and the University of Cambridge in the UK.

About Drew:

Drew is a co-founder of yoli, a WeChat-first on-demand English and Chinese language learning platform. Before co-founding yoli, Drew worked at Yodo1, where he helped build up the mobile gaming company’s international biz dev and global publishing business. He was the product manager of Crossy Road, a casual mobile gaming title that won an Apple Design Award and earned Google Play Game of the Year in 2015, tallying more than 100 million downloads worldwide. Since co-founding yoli just over a year ago, he has been an avid WeChat entrepreneur, featured by WeChat’s Enterprise Account team, and frequently consults for companies on their WeChat product development strategy.

Gay dating app Blued bags strategic investment from China’s state-run media

Emma Lee — Wed, 08 Feb 2017 07:44:42 +0000

Contrary to most foreigners would believe, China is shifting to a much milder tone towards the country’s thriving LGBT community, especially when it comes to the online world. This is evident enough with the extent to which LGBT-related topics can be talked about online and the number of tech services that goes after this special group. It seems that the country’s tolerance for GLBT community is spreading from the cyber world to the real world.

Chinese gay chat and hook-up app Blued announced Tuesday that it has sealed eight-digit RMB strategic funding from the investment arm of The Beijing News, a state-backed newspaper group.

The expanding globalization initiative of Blued and its growth in live streaming, e-commerce, gaming healthcare and entertainment were the main reasons for this investment, according to a representative from the investor.

Like many Chinese companies, the Beijing-based startup has been pushing into the rest of the world. It now supports 13 languages and has set up offices in Thailand, Vietnam, and the U.K. In December last year, Blued made a strategic investment with U.S. dating app Hornet in an attempt to make forays into North American and Latin American markets.

The company is recording profits now thanks to thriving live streaming and mobile marketing businesses which have contributed hundreds of millions RMB of revenue in 2016. Revenue from live streaming is expected to maintain stable growth in 2017, while membership, gaming, and healthcare services are expected to become the new revenue growth points, according to the company.

“The current financing round is more of strategic meaning given that the company is booking profits now.” said Geng Le, CEO of the firm.

Born out of LGBT NGO Danlan, Blued has been active in improving the living status of this group.

“Sexual minority is still a highly controversial group, we need a proper channel to talk with the government and the public, letting them know what we are doing and what problems we can solve for society,” Geng said.

Online film surpassed theater releases by 500% in China in 2016

Tracey Xiang — Wed, 08 Feb 2017 07:22:30 +0000

China’s 2016 box office fell well short of the expectations with growth a mere 3.7% from 2015, the first time in more than a decade that the growth rate slumped below 25%. Domestic films actually declined by 2% year-over-year in box office gross sales.

In sharp contrast, the market for Chinese “online films”, feature-length motion pictures for online release, saw explosive growth in 2016 in terms of both output and revenue.

More than 2500 such online films, or 网络大电影 (also known colloquially as “网大”) in Chinese, were published on the major seven Chinese on-demand video streaming platforms in 2016, up 260% from the previous year, according to EntGroup, a local entertainment market research firm. The total number of theatrical films was only 423, including 92 imported titles.

iQIYI, an early entrant to this field, was the largest publisher in 2016 that released 1780 titles, up from 612 in 2015, according to EntGroup and iQIYI. Sohu Video, Youku-Tudou and Tencent Video were ranked second, third and fourth, respectively.

Sources: EntGroup, iQIYI & Boxofficecn

Most online films are on the revenue sharing programs of video streaming sites’. Majors including iQIYI, Sohu Video, LeTV and Tencent Video have launched online systems where film providers can check their revenue shares in real time or on a daily basis.

Revenue sharing programs vary on different platforms. iQIYI, for instance, pays RMB 0.5 to RMB 2.5 per view to films on the subscription revenue-sharing program and RMB 0.5 to RMB 1 per view to those who take advertising revenue cuts, according to Yulezibenlun.

In 2016 iQIYI paid out a total of RMB 198 million (roughly US$30 million) to the top 20 grossing titles, compared to RMB 56 million in 2015 and RMB 6 million in 2014, according to the company. 山炮进城2 (Legend of 4 Idiots II) was biggest-grossing title on iQIYI in 2016, receiving RMB 18.3 million, up from RMB 9.9 million in the previous year. A total of RMB 30 million in advertising revenue was paid to 78 titles in 2016.

Source: iQIYI

Subscriptions, as we discussed before, are an increasingly more important revenue source for Chinese on-demand video streaming services. The total number of paying subscribers in China surpassed 75 million in 2016, up 240% from the previous year and is estimated to reach 100 million in 2017, according to EntGroup. Total Chinese online video users reached 545 million as of the end of 2016, according to China Internet Network Information Center (CNNIC).

Source: EntGroup

Of the total iQIYI subscribers who watched online films, 49% were aged 19 to 24 and 38% aged 25 to 30, with 70% being male, as disclosed by Dou Lili, general manager at the Internet Film Center of iQIYI at an event in April 2016.

Still at an Early Stage

China’s online film industry got started in 2013, and almost all of the existing online films are produced by local production companies or online video sites.

iQIYI started publishing films on its website after finding that “more than 600 films are made each year, but only around 300 of them make it to movie theaters. Many talented filmmakers don’t have an opportunity to produce movies”, Yang Xianghua, Senior Vice President of iQIYI, said in an interview with World Intellectual Property Organization (WIPO).

Unlike theaters, there’s technically no limits on the number of films online video sites can publish, and Chinese video sites are happy to add those films whose prices haven’t been driven as high as the average of online-published drama serials.

The much lower entry barrier as a result and the promise of revenue sharing have attracted hundreds of local companies to produce and distribute online films. Video sites have also begun making investments in this field or producing content in-house. iQIYI established an Internet Film Center in 2015, aiming to produce about 20 online-only films in-house per year, according to Mr. Yang.

Most of the existing online films are poorly budgeted. In the first half of 2016, 30% of titles cost less than RMB 500, 000, and the most costly 30% were budgeted between RMB 800,000 to RMB 1.5 million, according to EntGroup. It’s estimated that 10% of new titles in the second half of the year climbed over RMB 1.5 million in production cost. Lie Ling Shi, one of the most expensive, was reportedly budgeted at about RMB 6 million (less than USD 1 million).

So it’s not surprising that the average quality of the existing titles is pretty poor. It drew attention from Chinese regulatory authorities that resulted in the removal of dozens of titles that include allegedly unlawful content in November 2016.

122 titles on iQIYI platform received more than RMB 1 million in revenue sharing in 2016, with 23 earning more than RMB 5 million. Those titles are at least profitable considering their low costs.

But the vast majority of production companies couldn’t rely on revenue cuts from video sites to turn a profit or break even. Some tried to diversify their revenue streams through product placement, merchandising, among others.

It is expected that there will be big changes in this market in 2017 as increasingly more investment capital and veterans from the traditional film industry are joining in. In December 2016 iQIYI announced a deal with Sony Pictures Television to co-produce a three-part film serial and another one with American director Roger Corman to produce a sci-fi online film together with a team of Chinese filmmakers.

Disrupting the Conventional Theater Industry

Thousands of “private cinemas”, which provide small private rooms where consumers can watch online videos, have emerged across China in the last couple of years. The total number is believed to be approaching that of big-screen film theaters which were more than 7000 in 2016.

Most of such private cinemas haven’t obtained licenses from copyright holders. A few claimed that their contents were licensed from Baofeng, a Chinese online video and smart hardware company, or 1905, a state-owned film website, according to a recent report by Yulezibenlun.

A widely reported copyright infringement lawsuit against a private cinema took place in September 2016 and the owner was sentenced to ten months in prison plus a fine of RMB5000. Private cinema was one of the major targets of China’s latest anti-piracy campaign that carried out in the second half of 2016, according to The National Copyright Administration of PRC.

But this business has obviously inspired some online video companies who have accumulated a large catalog of legitimate video content, either licensed from third parties or produced in-house.

In September 2016 Baofeng launched its private cinema chain BFC. iQIYI rolled out Yi Qi Kan Micro Cinema (not official translation) by partnering with a third-party company.

Both companies adopted the franchise model, providing franchisees with software and hardware products with their own content catalog built in.

Baofeng BFC Private Cinema (Image credit: Baofeng)

Very soon the line between online film and theatrical film, online video-backed private cinema, and conventional film theater, will blur in China, if it hasn’t already. It’s has become common in China that local theatrical films will land on one or more video streaming sites after the first theatrical window. A few films managed to been simultaneously released online and in theaters last year.

Chinese major internet companies, including Tencent, Alibaba, and Baidu, each own a major video streaming site and have stepped into the film industry by either establishing their own dedicated companies or investing into leading local companies. They will play an increasingly more important role in China’s film industry and other entertainment content sectors.

Image credit: Shutterstock

China’s edtech is set to surpass the rest of the world

Junse Lee — Wed, 08 Feb 2017 06:48:53 +0000

Forget about cram schools and gaokao (高考 or “college entrance examination” in English), China is seeing a surge of distance learning and edtech unicorns funded by the government.

Chinese government invested a record 1.07 billion USD in edtech startups in 2015 alone, and the investment in the quality and online education is on the rise.

Some even predict China is about to surpass the US regarding education technology investment. The government announced it would invest 30 billion USD in venture capital in startups by 2020.

Aside from the funding, China is also attracting its tech-savvy brains overseas back home, providing them with local training. Chinese edtech is gradually focusing on the new STEM education (i.e. programming, electronic engineering, mechanical engineering, and innovation classes), project-based learning, and Massive Open Online Courses (MOOC) for its K-12 programs.

The OECD predicts that by 2020, 37 percent of STEM major will come from China that things are no longer “Made in China” but “Engineered in China“.

And in the middle of the education revolution stands Haidian District, Beijing.

As the saying goes, “中国教育看北京，北京教育看海淀” (zhongguo jiaoyu kan Beijing, beijing jiaoyu kan haidian” or “China’s education centers around Beijing, Beijing’s education centers around Haidian district” in English). Zhongguancun in Haidian District is the Silicon Valley of China, where most eduTech unicorns are located.

Haidian district is also where the China’s top prestigious universities are located at including schools such as Peking University (PKU), Tsinghua University (THU), and Renmin University.

PKU- and THU-associated elementary schools and middle schools directly benefit from their environment. These K-12 schools are among the first schools to adopt school project-learning programs launched by many edtech startups in the area.

Zhongguancun No. 3 school is one example of edtech transformation happening in China. The school revamped its environment by eliminating traditional “classrooms” as they normally have in K-12. Instead, they created more interactive meeting spaces where children can build teamworking and digital skills.

It is easy to assume such prestigious education is only open to the privilege. However, a significant percent of student population come from migrant families as well as the upper class in Haidian area creating equal opportunity for students.

Sophia Su, the founder of Genius Lab, is one change-maker in Chinese education. Founded in 2013, she and her company have been providing future-oriented online and offline courses to local public schools as after school programs.

“We offer STEM courses including 3d printing classes, reverse engineering courses, science experiment courses to schools. We also have four offline centers in Beijing and three other in China,” she says.

For instance, 课后330 project (kehou 330, or literally “after school 330” in English) offers opportunities for students to take technology and computer science related courses that students wouldn’t otherwise be exposed to in traditional education system. The project partners with local schools as an after-school program, allowing students to sign up for courses outside of traditional subjects.

Su admits, however, the new education system aims towards K-12 students as opposed to higher education. Most Chinese secondary school students are obliged to take gaokao, where students spend years cramming for it. For these students, learning additional skills based on their personal interests is a luxury.

Another edtech startup called Creatica Lab also strives to push alternative education in China. The company believes students’ performance in school does not necessarily reflect students’ ability to succeed in the future. Creatica Lab, co-founded by Molly Wang and Joanna Wei, offers workshops and project-based classes where students can learn by doing.

“I have seen some of the most creative kids during our workshops,” Jonathan Nylander, CTO of Creatica Lab, shares his excitement. A former game developer, Jonathan confesses he made a transition from game industry to education technology industry after he realized he was helping people waste their time on the subway playing games.

“Because of the internet, there is too much knowledge to learn out there. That’s why it is imperative for students to know what they are really interested in and to choose only the necessary skills related to themselves. We are a huge advocate of self-directed learning, in that sense,” he says.

Molly Wang, CEO and co-founder of Creatica Lab, grew up going down the “elite path” in China.

“I have been through the traditional route myself, where you have a regular routine set up or you,” she says, “But I felt like my talent wasn’t recognized and my possibilities restricted. Students who fail to maintain good grades in this (traditional) education system, they still remain in the system. But they don’t seem to realize those who don’t fit into the system can still do better.”

So far 99% of students follow the traditional educational route according to Evangeline Zhang, a course director at Creatica Lab. But the team prides themselves in opening more options to these students by constantly working against the status quo.

“We can’t convince students to drop out of school to pursue a completely different and uncertain route,” Zhang says. “But we are interested in improving students overall learning by ‘adding’ values to the traditional educational system, not by ‘replacing.’ “

Chinese tech IPO candidates to watch for in 2017

Emma Lee — Tue, 07 Feb 2017 07:07:51 +0000

After a dry spell for tech IPOs in 2016, we are recording a good beginning for a new year with brightening IPO market globally. Snapchat is expected to set a new record for tech IPOs at a 25 billion USD valuation, while a raft of anticipated listings from uprising startups are in the pipeline.

As market prospects soar, Chinese tech companies are also poised to win back investors hearts. Here’s a list of IPO candidates from China in this year.

Ant Financial

As the most valuable spin-off of the e-commerce giant, Ant Financial has completed a 4.5 billion USD round at a valuation of 60 USD billion.

The company has been on the rumored IPO list for years and it seems that the company is in no hurry for the IPO as it’s putting its focus on business growth and user acquisition. But 2017 is definitely on the radar, especially for late 2017.

In preparation to the IPO, Ant Financial reshuffled its top leaders last year. The company is likely to get listed in mainland China and Hong Kong.

Kuaishou

Image credit: Kuaishou

Kuaishou might be a lesser-known name for users outside of China, but the 3 billion USD video clip and photo editing and sharing app, is hugely popular in the Middle Kingdom, especially in low-tier cities and towns, in the wake of China’s video and photo sharing boom.

The app has recorded its first surge since the beginning of last year, with traffic consumption topping that of Weibo and WeChat, the two biggest mobile apps in the Chinese market.

Currently, Kuaishou claims over 400 million registered users. TechCrunch citing sources that the firm has amassed more than 40 million DAU against 100 million MAU. The same source disclosed that Kuaishou is planning to go public in the U.S. in the later half of this year.

The company is venture backed by Sequoia Capital, DST, Baidu, and DCM.

China Reading

Image credit: China Reading

Backed by Chinese internet titan Tencent, China Reading, aka Yuewen Group, is China’s biggest online publishing and e-book company. Born out of a merger of Tencent Literature and Shanda Cloudary in 2015, the platform claimed some 600 million registered readers across its nine e-reading platforms like QQ Reader and Qidian.

Reuters reported that the company plans to raise up to $800 million in a Hong Kong IPO in 2017.

Qudian

Image credit: Qudian

Founded just two years ago, online microlender Qudian rose to prominence on the back of its student loan service Qufenqi, which allows college students and young white-collar workers to purchase smartphones, laptops and other consumer electronics with monthly installments.

The Ant Financial-backed startup is looking to an offshore IPO in Q1 this year to raise more than 500 million USD, local media Caixin reported.

[Podcast] Analyse Asia 160: CES 2017 Part 1 with Ben Bajarin

Guest Editor — Tue, 07 Feb 2017 03:25:24 +0000

Ben Bajarin from Creative Strategies and Techpinions joined us in a two-part conversation to discuss the recent Consumer Electronics Show (CES) 2017 in Las Vegas. We discussed the major themes which have emerged from the show: the developing television sets and screens from Asian OEMs, the dominance of the Amazon Echo, the rising average selling price of personal computers and finally, the automotive industry making their appearance with cars. Last but not least, we reflected on the growing presence of the Asian OEMs and Shenzhen manufacturing companies in the show over the past few years and their innovations this year.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Ben Bajarin (@benbajarin, LinkedIn, Techpinions profile) from Creative Strategies and Techpinions.
- What have you been up to since we last spoke? [0:39]
CES 2017 (Part 1) [2:06]
- An introduction to Consumer Electronics Show (CES) & its significance in tech. Annual event for most technology companies except Apple and this year is held on 9-12 Jan 2017 in Las Vegas.
- Ben’s introduction to CES [2:32]
- How do you usually cover CES? What do you look out for during the events with the different exhibition halls or product launches from companies such as Samsung or Huawei? [4:57]
- Do you see the international booths particularly from China getting larger as compared to the US booths in CES shows for the past few years? [7:19]
- What are the major big themes that emerge from CES 2017? Reference: A Few Big Themes from CES 2017 in Techpinions (require subscription) [9:16]
  - On Bigger, Brighter, Thinner TVs [9:47]
  - The rising average selling price of PCs [11:30]
  - Year of the smart home: Amazon Echo and Alexa. [13:45]
    - How the Amazon Echo or Google Home are driving sales of other home products in retail during Christmas. [16:50]
  - Voice UI everywhere [17:50]
  - Cars are interesting again [20:15]
- What are the Asian OEMs particularly China are up to in CES 2017 and any interesting innovations from their end? [22:58]
  - Shenzhen section of CES 2017

TechNode does not necessarily endorse the commentary made in this program.

“Flash delivery” service Shansong clinches 50 million USD series C

Emma Lee — Mon, 06 Feb 2017 08:30:32 +0000

Shansong Express, a Chinese startup that provides intercity courier services, has announced a $50 million series C led by SIG Asia Investment and Yi Capital, our sister site TechNode Chinese is reporting. Prometheus Capital, a fund backed by Wang Sicong, the son of Chinese billionaire Wang Jianlin, also participated.

Founded in 2014, Shansong (闪送, literally “flash delivery” in English) provides short-distance and same-city logistics services.

Chinese consumers are impatient and speed is crucial to good user experience. Shansong pledges a 60-minutes delivery for orders within five kilometers. After that, its 30 minutes for every other 5 kilometers.

But it seems that the platform is working far more efficient than its basic promises. According to company data, the average delivery time for orders within 5 km in Beijing is 23 minutes and orders within 10 km can be delivered in 33 minutes. According to Shansong, only 1% of parcels are later than promised.

Unlike traditional logistics systems which transport packages from station to station, Shansong assigns a single delivery task to one courier who will be responsible for the order in the whole delivery process, shortening the delivery time and eliminating risks of customer information disclosure.

After three years of development, the Beijing-based startup has accumulated over 12 million users and 184,000 couriers. It currently operates in 31 cities in China and has an average of around 100,000 deliveries daily at an average price of 35 RMB per order.

For the overall incomes, the company would take a 20% and another 10% go to the couriers and users as subsidies. The firm claims to have broken even since April last year.

The funding is earmarked for standardizing its services and expanding into more cities.

Previously, Shansong received an undisclosed series A round from CDH Investments, a series B round led by JD Capital, and a series B+ round from Tiantu Capital.

WeChat introduces gold hongbao to promote new financial product

Tracey Xiang — Fri, 03 Feb 2017 06:27:25 +0000

Pony Ma, CEO of Tencent, shows off gold hongbao (Image credit: Qieshengtai)

WeChat began testing a new lucky money feature during the recent Chinese New Year holiday that enables transfers of gold bullion among users with the same mechanics for the existing cash hongbao (红包, lucky money or red envelopes in Chinese).

With the gold hongbao (not official translation), like the cash hongbao, a sender can either send packets to certain persons or let the system randomly divide a certain amount into certain parts and send it to a chat group for group members to try their luck.

Tencent Micro-Gold (not official translation), the online gold investment service jointly launched by Tenpay, the online payment arm of Tencent (WeChat’s parent), and Industrial and Commercial Bank of China (ICBC), one of the largest state-owned banks, in late January 2017, is so far the only supplier of gold for the new hongbao service.

Launched only several days before the gold hongbao feature, Tencent Micro-Gold is built as a WeChat Service Account where WeChat users can purchase gold directly and access to information about investment in gold. The service currently doesn’t charge any fees.

Screenshot of Tencent Micro-Gold Service (image credit: Qieshengtai

Users must activate their account with the Tencent Micro-Gold service, by subscribing to the WeChat Service Account of the latter, to send or receive gold hongbao, which is believed to be able to boost signups. The same logic applied to the cash hongbao service got millions of users to add their bank cards onto WeChat Payment shortly after the launch of the former in early 2014. As of March 2016, more than 300 million WeChat accounts had added their bank cards.

The major difference between gold hongbao and cash hongbao is, of course, gold prices fluctuate over time. However, it is believed the gold hongbao may be preferred by many users as gold has long been seen as a safe haven and part of the monetary gifts giving culture in China.

China has been the world’s biggest gold consumer for four consecutive years. It was recently found that gold was becoming increasingly popular among Chinese investors on the online platforms operated by state-owned banks that allow investments on the Shanghai Gold Exchange.

Gifting gold jewelry or other forms of gold is a tradition in some Chinese regions like Guangdong province, where WeChat and its parent company Tencent are located.

The WeChat hongbao project itself was initiated to create a more convenient way for Tencent management to give away hongbao to employees on the first working day of the Chinese lunar calendar every year, according to the latest book on Tencent by Wu Xiaobo, a well-regarded Chinese business journalist.

WeChat hongbao turns out to be surprisingly popular and now is one of the most used services on the Chinese mobile web. A total of 14.2 billion hongbao were exchanged on January 27th, the eve of 2017 Chinese New Year, according to WeChat.

Before the Tencent Micro-Gold, Tencent’s internet finance business had had a wide range of services, including Tenpay (online payment), Licaitong (online financial products marketplace), Weilidai (online personal loans), Tencent Credit (credit rating), and a cloud service. And all of the consumer-facing offerings are available and easily accessible on WeChat and QQ, the social services of Tencent. WeBank, the online-only private bank in which Tencent has a 30% stake at launch, opened in 2015.

Tencent is now competing directly in the mobile finance field with Ant Financial Services Group, the finance arm of Alibaba Group, who also provides a wide range of financial products and services on mobile through Alipay app, including gold investment. But Ant and Alibaba don’t have social tools like WeChat and QQ to boost the growth of their products, though wanting one badly and having tried and failed a few times.

To compete with WeChat Hongbao, Alipay launched an AR hongbao feature before the 2017 Chinese New Year and some hongbao campaigns during the holiday, but attempts by Alipay and Alibaba affiliates haven’t been as lastingly popular as WeChat hongbao.

Even when not playing, WeChat still wins the 2017 hongbao wars

Eva Yoo — Thu, 02 Feb 2017 08:11:15 +0000

This year’s hongbao war winner goes to WeChat, who sent out 14.2 billion red envelopes on New Year’s Eve. Alipay adopted augmented reality technology to its lucky money promotion, inspired by PokemonGO, but was not strong enough to battle WeChat’s hongbao feature, which became a hugely common culture in China.

A total of 14.2 billion red envelopes were exchanged via WeChat on New Year’s Eve alone, peaking at midnight with 760,000 transactions per second, according to state-run Global Times. The figure was up 75.7 percent in comparison with the same period in 2016, according to WeChat’s press release.

Zhang Xiaolong, head of WeChat, previously announced that there would be no red envelope promotions on WeChat for the coming Spring Festival. However, we witnessed that WeChat, which has 80% weekly active penetration rate among other social apps in China, appealed to its users as a dominant app to send out hongbao against its counterpart Alipay. Grabbing hongbao on WeChat groups became a popular and common culture in China, and local smartphone companies even rolled out some useful features to help its users grab hongbao earlier than other peers.

As you can see from 2016 WeChat data report, WeChat lucky money is not only sent during Spring Festival, but also other Chinese holidays, like Mid-Autumn Festival or Valentine’s Day.

Apart from its AR-powered lucky money promotion, Alipay continued last year’s theme of collecting five different styles of fu (福 or “good fortune” in English), giving away 200 million RMB (29 million USD) in cash and coupons to users who completed the collections.

Tencent’s other instant messaging tool QQ also rolled out AR-featured marketing campaign, which attracted 342 million users, 68 percent of whom are from the post-90 generation, according to Global Times.

LUXSENS uses machine learning to find the best price for luxury bags

Eva Yoo — Sat, 28 Jan 2017 06:58:57 +0000

It’s hard to be the smartest shopper paying the right price for items. When considering to buy a luxury item, there are millions of merchant stores in the world, both online and offline and fragmented data points about the price. A Shanghai-based company is appealing to price-savvy customers who want to purchase luxury items at the lowest price as well as to learn more about the price fluctuation on different locations.

LUXSENS profiles product information on a centralized platform with their real-time pricing and inventory system. The team possesses the technology related to neural networks and uses a deep learning algorithm to map the prices and attributes of products automatically.

Their luxury e-commerce platform runs on their WeChat account, where customers can either order the product online or purchase the item on-site by traveling abroad. LUXSENS takes 10% commission for online purchases and 5% commission for items reserved and bought in-store.

Kenny Au, founder and CEO of LUXSENS, did not mention sales figures but did reveal that the company had sold six Hermes Birkin bags which costs 60,000 to 90,000 RMB, in less than two months.

“In the next five years, prices will be more transparent than ever, shoppers will continue to be very rational via the best content that internet companies can bring to them. Content is important to drive. It’s the building the trusted relationship with them,” he told me.

As a head of commerce at Brand Off, Kenny managed 65 stores in Japan, Hong Kong, and Taiwan, specializing in luxury products. This allowed him to establish a good relationship with luxury brands.

“Some people find us similar to Xiaohongshu. Their user-generated content allows them to appeal to the younger customers, mostly interested in cosmetics and face masks. But for those who want to buy luxury fashion items, they will rather search on the platform that has very professional information,” Kenny remarked.

LUXSENS comparing prices of Hermes bags over the world / The user can visit the retail shop using the map / The company produces content around luxury brands (Image Credit: LUXSENS)

Other players in the market include Shanghai-based luxury product and service platform Secoo, who raised 50 million USD series E round from Ping An in 2015, and XIU, a Shenzhen-based luxury brands e-commerce company who raised 30 million USD in 2015.

“Their business models are highly capital intensive. They need to take pictures of the product, package and store them, which requires just too many staff, and they need to negotiate with the merchants,” Kenny said.

The Shanghai-based company will close their 1 million USD angel round soon and their goal is to form a shipping hub in Hong Kong this year. The company is also planning to start offline events to build trust and relationship with customers.

“Milan station is the first listed company in Hong Kong for second-hand luxury brand bags. We want to be the first listed internet company in the world that specializes in pre-owned luxury brands. Milan station grew offline through retails, but we want to grow online,” Kenny added.

Tactics to make sure you get your hongbao this Chinese New Year

Eva Yoo — Fri, 27 Jan 2017 09:06:18 +0000

Editor’s note: This article originally appeared on our sister site, TechNode Chinese.

If you’re working in a Chinese company, then you’d better be prepared for Chinese New Year’s Eve, the best time of the year to grab red envelopes on your WeChat group.

Chinese people give red envelope (hongbao, 红包) with money to their younger children and co-workers as a wish for good luck in the new year. Nowadays, Chinese people give hongbao using WeChat and Alipay, and it’s also the best time for Chinese companies to run on hongbao marketing bringing the term ‘hongbao wars‘.

Over the six-day Chinese Spring Festival period last year, 516 million people sent and received 32 billion digital red envelopes, which is 10 times the number as over the same period in 2015. Forecasters are expecting up to 100 billion digital envelopes to be sent and received around the world this year.

On Chinese New Year’s Eve day, your Chinese boss will send out a digital red envelope on WeChat group, which is then often grabbed by your peers in only a few seconds. Three things matter: your hand speed, the speed of your phone, and the network speed. If you cannot guarantee any of these three conditions, then these tactics might be useful to you to compete against your colleagues to secure your hongbao.

Use these apps or features on your phone to grab hongbao

1) iPhone

The latest version of iOS allows user to automatically grab the red envelope using iTools. How to: open the iTools click on the bottom bar “more”, open automatically grab red packets.

A WeChat’s plug-in called “Fun-multiplier For WeChat” can help you too. Go to the WeChat settings, where it supports a variety of plug-ins: for example, to prevent the withdrawal of information, to alarm you specific time, to automatically grab red packets, to prevent typing state, and to edit your custom location.

Grabbing Hongbao using different brands of Android phones

Many Chinese mobile phones, such as Xiaomi, Meizu and Nubia have provided “red envelope assistant” (红包助手, hongbaozhushou).

2) Huawei

Huawei recently released the latest red envelopes application, supporting WeChat, and sending out hongbao reminders on Alipay. The software supports Huawei EMUI version of EMUI 3.0 and above.

3) Meizu

Meizu phone will instantly notify the user with a notification saying, “You received a red envelope.” When the user clicks on the reminder, they will be able to grab a red envelope. Activation for the click is; Settings – Accessibility – Red envelope assistant, open the red envelope assistant.

4) Xiaomi

When received a red envelope on Xiaomi phone, it will give you a reminder on your screen. In addition, MIUI supports major online platforms to grab red envelopes, set an alarm, and provide you the timetable to grab a red envelope to give you more opportunities to grab red envelopes. MIUI developer ROMs already comes with the function, and the users using stable ROMs of Xiaomi phone can download “Xiaomi Red Envelope Assistant (小米红包助手)” on the Xiaomi app store.

Use DIY Robot arm

Chinese makers grab hongbao using a DIY robot arm. You can grab the red envelope as well as observe how it moves so magically to grab it. Props and methods are as follows:

Materials: Arduino Mega2560 (with USB interface, the core circuit board with 54 digital input and output, suitable for a large number of IO interface design), bread board model, DuPont line, key switch, acrylic board, rubber band, sausage × 1 (Key props).

How to: Using open source computer vision library open CV analysis of picture signals, determine whether there is a new red envelope to click on. When the red packets appear, then send instructions to Arduino. Arduino will control the sausage robot arm to click on the screen three times to grab red packets.

Robot arm grabbing the hongbao

Four strategies of China’s top 10 e-commerce apps

Eva Yoo — Fri, 27 Jan 2017 06:54:51 +0000

Pushing advertisement online and offline has been the typical strategy of China’s e-commerce giants to bring in customers, explaining why e-commerce sector is one of the toughest battlegrounds for freshly born startups since they have little money to spend on advertising. However, the trend is changing.

As startups like Bolome, combining live streaming into cross-border e-commerce, and Yitiao, a WeChat public account-based e-commerce platform with high-quality content and storytelling around their handmade products, even the e-commerce behemoths are following the trend of live streaming and content marketing. Of course, Chinese e-commerce giants were not lazy on their investment and M&A to consolidate the market.

Seeing the ranking, Alibaba stayed competitive in its forte, e-commerce sector. Alibaba’s C2C e-commerce platform Taobao ranked first, its B2C e-commerce platform Tmall ranked second, its second-hand retailer ranked seventh, and its electronics retailer Suning ranked the eighth. The report was jointly published by Cheetah Global Lab, Cheetah’s big data platform libra and 36kr.

China’s e-commerce market will get even bigger, with a boost from the Chinese government. Online retail sales could reach 10 trillion yuan in 2020 as the country’s online population will pass 1 billion, growing by 7.8 percent a year from 2015, according to the 2016-2020 e-commerce development plan released by the Ministry of Commerce and other government departments. The e-commerce market will employ over 50 million people by the end of 2020, according to the plan.

1. Live Streaming

Taobao, JD and Mogujie added live streaming to their platform. Online celebrities live stream and recommend products on the video, and shoppers can click on the link while watching the video to buy the featured product.

Online celebrities, mainly female broadcasters in their 20s and 30s, try on brand cosmetics and clothing at home. Online celebrities in overseas countries visit the local supermarket and explain each product while putting them in the cart and visit the local cosmetic shop to get further explanation of the cosmetic product from the clerk.

2. Content is king

Some e-commerce platforms added content-reading features to their apps, such as Taobao Headlines (淘宝头条) and JD Findings. Since Alibaba’s content cannot go on WeChat public accounts, Alibaba had no option but to come up with a content service on its e-commerce platform to encourage their customers to get to know more about their products.

Vipshop is a Guangzhou-based online discount retailer for brands in China. After listing on New York Stock Exchange, the company reported its revenue up 38.4% YoY to 12 billion RMB (1.8 billion USD) in the third quarter of 2016.

3. Consolidating the market using M&A and investment

Some e-commerce companies showed consolidation. Hangzhou-based Mogujie now takes control of its previous rival Meilishuo (ranking 20th in the list) through a stock swap in January last year. Ranking 5th in the list, Mogujie was founded in 2011 by a former Alibaba engineer.

Suning is an electronic product focused retailer in China. The company invested in Eight Days, an e-commerce startup targeting university students to get a grip of post-95 consumers in April 2016.

4. Focusing on the second-hand market

Xian Yu (meaning Idle Fish), a second-hand e-commerce has risen from no.10 to no.7. Alibaba spent 15 million USD to acquire Xianyu in March 2016. The customers can use their smartphones to run their stores, and add promotional voice recordings to sell their products, which makes the app more like a social app.

Other e-commerce companies include Zhe800 and Juanpi. Pinduoduo is an e-commerce company invested by James Mi, the co-founder and managing director of Lightspeed China Partners.

China’s top social apps all owe thanks to live streaming

Eva Yoo — Thu, 26 Jan 2017 04:48:40 +0000

2016 was the year of live streaming and it played a crucial role in driving growth. All of the top 6 social apps, except WeChat, have added live streaming services, according to the report jointly published by Cheetah Global Lab, Cheetah’s big data platform libra and 36kr.

(Image Credit: Cheetah Global Lab)

As WeChat is maturing as a user acquisition platform, we’ve introduced some other Chinese social apps that startups can use for growth hacking, such as Weibo, Momo, Baidu Tieba, and Zhihu, which also appear on the top ranking.

Sina’s Weibo was said to be declining as a social app, however, it topped the list again last year, as the company devoted itself to short video and live-streaming.

Momo, a location-based social network, also added live-streaming function and gathered a handful of users and revenue around it. It is still used as a hook-up app along with Tantan. Mobile advertising serves as the largest revenue source for Momo, followed by membership subscription, based on its second half 2015 report released last year.

Baidu Tieba is a 13-year-old service of Baidu where Chinese people form communities to discuss their interests and topics. Last year July, Baidu confirmed that it will not commercialize Tieba forums as Baidu is embroiled in health-related scandals last year.

Tantan, a Tinder-like mobile dating app in China, raised a 32 million USD series C funding in May last year. Tantan has not applied monetization plans to its app and said it will keep trying to attract daily active users before they launch a paid version.

MiTalk, the mobile messaging app by Xiaomi, ranked 8th. It first launched in November 2010, earlier than WeChat. The chatting app allows users to buy Xiaomi products without leaving the app.

Dingtalk, an office communication app launched by Alibaba in 2014, ranked 9th, quickly catching the people’s needs for dedicated office communication app, as We Chat users were feeling the pain of not being able to separate their personal life from their professional life. WeChat, for that reason, rolled out enterprise version for WeChat in April last year.

Zhihu is a platform for Q&A service and a freshly born unicorn. The knowledge sharing company announced the completion of 100 million USD series D this month. Zhihu started its live function Zhihu Live, giving the revenue source to the KOLs in its app. People should pay a certain amount of fee to join one-on-one sessions with a topic expert.

Interestingly Blued, a gay social networking app ranked the 13th. The app quickly responded to live streaming trend, adding live streaming function to its app. In June 2016, the company raised hundreds of million of RMB in series C round and C+ round.

Douban, a popular social platform for topics around culture, books, and films fell out of the top 15.

Data from Cheetah Global Lab reinforces that WeChat IS the Chinese internet

John Artman — Wed, 25 Jan 2017 09:01:16 +0000

Cheetah Global Lab and Chinese tech portal 36kr have just released the 2016 App Ranking. We will have more coverage of the report in subsequent posts, but I’d like to highlight the first ranking to appear in the report:

The first thing that popped out to me was WeChat’s 80% weekly active penetration rate and 166.9 weekly opens per capita (that’s an average of almost 24 opens per day per user). Granted these numbers are only coming from Android users, but Android accounts for more almost 83% of the total market, according to some estimates.

WeChat is continually compared to Facebook. However, AOL might be a better comparison. While booking a cab through Didi over the weekend, my father-in-law remarked, “What’s Didi? I just use WeChat to book a cab.” The implication, of course, is that he almost never has to exit WeChat to get something done in the physical world.

With mini-apps (or mini-programs, whatever your inclination) and an increasingly integrated O2O offering, WeChat is poised to become the main entry point into anything internet powered for a majority of China.

Alibaba’s lifestyle unit Koubei snags 1.1B USD to accelerate local expansion

Emma Lee — Wed, 25 Jan 2017 08:13:31 +0000

Alibaba has grown into a diversified conglomerate that encompasses several multi-billion dollar affiliates from Ant Financial and AliCloud to Cainiao Logistics. Yesterday, the e-commerce titan announced a 1.1 billion USD financing round for its local life commerce arm Koubei.

Investors include Silver Lake, CDH Investments, Yunfeng Capital, and Primavera Capital. Alibaba’s billionaire founder Jack Ma is one of the founders of Yunfeng Capital. It is interesting to note that the current round marks the first money from external investors.

Although the exact amount contributed by each investor wasn’t clear, Xie Fang, managing director of CDH Investment, confirmed with local media that this is their largest single investment in the TMT sector.

Koubei is a joint venture founded in 2015 by Alibaba and its mobile payment affiliate Ant Financial to tap into China’s rising O2O initiative. Fan Chi, CEO of Koubei, said they will continue to invest in data-supported services in a bid to let offline merchants enjoy the benefits brought by internet technologies.

At the same time, Koubei will cooperate with more third-party partners to create a local life ecosystem that includes all kinds of supports from platform, traffic, marketing, and supply chain.

After more than one year of development, Koubei has partnered with over 1.5 million offline merchants, recording daily orders of 15 million. The platform generated 73.1 RMB billion (10.5 billion USD) payment volume through Alipay during the fourth quarter of 2016, representing a 52 % increase over the prior quarter. It’s 2016 annual gross merchandise volume hit 173.1 billion RMB.

Alibaba 2016 Q4 Fiscal Report

Despite the growth, Koubei is still recording losses. Alibaba’s quarterly loss attributed to Koubei is around 237 million RMB, according to the company’s fiscal report. Given that Alibaba and Ant Financial each hold half of the shares in Koubei, the quarterly loss of Koubei would stand at 474 million RMB. Alibaba and Ant Financial both put RMB 3 billion into Koubei when it was created.

The e-commerce giant pledged to have “aggressive growth” with Koubei after the funding as it fights competition from Meituan-Dianping, Baidu, and Ele.me.

Are China’s bike-sharing platforms really part of the sharing economy?

Junse Lee — Tue, 24 Jan 2017 03:41:31 +0000

China’s O2O market has seen quite a few companies doing interesting things, some succeeding, some failing. The latest hot vertical is bike-sharing.

According to the China’s bike sharing industry mini-report by China Channel, Mobike (backed by Tencent and Foxconn) and Ofo (backed by Didi and Xiaomi) are clear market leaders amongst growing competitors. Founded in January 2015, the orange Mobike boasts about 400K Tencent Android app store downloads, mostly in Shanghai. The Beijing-based yellow Ofo bike, on the other hand, lags behind with about 170K Tencent Android app store downloads.

Both companies have their apps, but Ofo lowers friction by linking the app to WeChat without having to download a separate app. The users can either register their mobile phone or log in via WeChat account and unlock bikes on the streets at their convenience.

While many business analysts predict how the two rivals will merge eventually, Jeffrey Towson, consultant and professor at Guanghua Peking University, thinks otherwise. He explains why bike-sharing is nothing like ride-sharing of Didi and Uber. The professor compares the bike-sharing economy to a vending machine business than a ride-sharing one.

“Unlike ride-sharing, bike-sharing does not have a network effect,” he says. “The ride-sharing experience is a two-sided network, in which additional riders increases the networks’ value to the drivers and each new driver increases to value each rider. Through customer rating and recording of wait-time, the service gradually improves as its user population grows.”

“The problem with bike-sharing, however, is that there is no second population of drivers using the platforms and providing the bikes,” he adds. “The bikes are constantly replenished by companies themselves as opposed to each rider adding any value to the other riders. It seems that bike-sharing isn’t really part of the sharing economy.”

Bike-sharing (or more accurately, bike-rental) is simply a traditional merchant B2C service. It’s the size of the company that helps (seeing Mobike and Ofo’s leads) but does not prevent other competitors from joining the market (i.e. Bluegogo, Unibike, Ubike, WeBike, etc). Ofo and Mobike should thrive as they are in the short-term by providing innovative new service. However, unless they come up with some means to actually share, it’s hard to predict the long-run.

Another question bike-sharing companies face is their compatibility to other modes of transportation. Bike-riding isn’t the only cheapest way to run around the city. The most affordable new bike costs about 200 RMB, less than the cost of the Mobike deposit (299 RMB). The value of bike-sharing limits itself to convenience than replacement of traditional means of transportations.

Bike-sharing is a welcome change from the usual transportation problems. The business had substantial contributions to the way people commute, reshaping the dynamics of the city. As Chinese urban population grows, there will be demand for more innovative ways to commute. Only those who adapt in the most creative and fastest ways will survive.

This startup wants to bring classifieds to all of China’s expats

Eva Yoo — Tue, 24 Jan 2017 01:56:03 +0000

Given the China’s market size, it’s obvious why we see so many foreign startups and expats in China. However, it still might sound a little silly if a business targets non-Chinese in China given the the relatively small population. But if you’re also a non-Chinese living in China, focusing on expat market can actually serve as a smart tactic, because you understand expat’s needs, and it can gradually appeal to the English-speaking Chinese community.

China Classifieds, an expat-founded startup based in Shanghai, won the second prize at the 5th Startup Leadership Program (SLP) demo day held on Saturday, followed by the first winner, Bizbuzz, a global calling network with directory services.

“Between number 1 and number 2 was only a one vote difference, very close. They had a clear problem to solve, and a clear solution for it. They both got traction and clear idea where they want to go,” said Ryan J King, a professor at Fudan University as he announced the winners.

Marian Danko, founder and CEO of China Classifieds

According to China’s most recent National Census of 2010, there were at least 600,000 expats living in the country. The expat market keeps on growing despite the sluggish speed of growth. The government seems to be doing its best to make it easier for expats to live and work in China.

“I am sure the expat market will keep on growing and China Classifieds will be the place to serve and help English-speaking communities in China, including expats, returnees, professionals, students, interns, and travelers,” Marian Danko, founder and CEO of China Classifieds, told me.

Marian is from Ukraine, and he lived 2 years in Shijiazhuang, where he truly experienced what it means to be an expat in China.

“There was no expat bubble; I know how hard it is to make your life more transparent and less stressful. My personal experience is one of the strengths, that make it difficult to copy,” Marian said. “China Classifieds is much more than just listings. We are reaching out to build partnerships with expat-oriented businesses and distant expat communities across China, which takes time and trust.”

Serving English-speaking communities across China, China Classifieds focuses on real estate, secondhand market, and the job market in particular. Users can quickly post their listing on company’s WeChat account, which also syncs and uploads to the website. While many major Chinese cities have similar offerings, they are usually still geographically limited. China Classifieids, on the other hand, is available across major cities in China.

“Current solutions on the market are either not focused on listings or not designed for posting listings, require VPN, do not have a mobile version of the website, use old technology, or are limited to certain locations,” Marian says.

Screenshots of China Classifieds

All services are currently free as the company focuses on growing their user base. They are working on a freemium service, where users can post one listing for free, but must pay for more. The company is also thinking of providing a package service for expat-oriented businesses in China. They will support both WeChat and Alipay for payment.

Startup Leadership Program (SLP) is a training program and lifetime network for entrepreneurs, startup founders, and innovators. It is not an incubator or accelerator, and takes no stake, nor gives investment.

“For me, the value of SLP was practical knowledge and a wide network. In my SLP journey, I learned a lot about how to run a startup from founders of successful businesses, and I met wonderful and inspiring people on my way. Usually, Chinaccelerator picks startups from SLP program,” Marian said.

The classifieds startup had bootstrapped until now, and is looking for more business partnerships and funding.

Mobike to double annual bike production through partnership with iPhone maker Foxconn

Emma Lee — Tue, 24 Jan 2017 00:26:05 +0000

Chinese bike-sharing Mobike is starting the New Year with good news. Just three weeks after receiving 215 million USD fresh funding, the startup announced a strategic partnership with Foxconn, the Taiwanese manufacturing giant behind Apple’s iPhone and numerous other major electronics devices.

As part of this deal, Foxconn has also become a strategic investor in Mobike. The details of the deal, however, were not disclosed.

Partnership with iPhone maker will be a strong boost for Mobike’s hardware business in terms of smart bike production, distribution, as well as enhancing its design and user experiences. A company statement disclosed that the tie-up would boost the annual production capacity for Mobike’s proprietary smart bikes to 10 million, up 5.6 million units annually.

Foxconn also intends to locate production hubs in a number of its facilities globally, in locations close to Mobike’s priority markets. Foxconn will also leverage its strengths in industrial design, R&D, and high-tech manufacturing to enhance the Mobike design, with a particular focus on optimizing the user experience and ride quality, the company pointed.

Despite the fashionable designs, Mobike’s innovations in its proprietary smart bike have always been shadowed by criticisms for its exceedingly high production cost.

The cost of the company’s first generation bike is around 20 times of the 299 RMB deposit, company CEO Davis Wang once told local media. That means that a single Mobike could have cost nearly 6,000 RMB (874 USD) when the service was first officially launched in April last year.

The firm has managed to lower the production cost to less than 2,000 RMB and Mobike Lite, a lighter version, costs between 200 RMB and 500 RMB. But this is still much higher than the per unit cost of its arch-rival Ofo, which has a per bike product cost of around 300 RMB for its bikes. Apart from that, Ofo allows users to register their own bikes on the platform in a model to connect bikes rather than make them, said Ofo representative to TechNode.

Of course, Mobike’s bikes are more sturdy and thus have a longer life cycle, but still, higher cost per unity may leave the startup capital dependent, a negative factor for a company that has been entangled in a land-grabbing battle with a mounting number of competitors.

Additionally, the high production cost makes Mobike a really asset-heavy startup given it’s now operating in 13 cities across China. These include China’s largest Tier 1 cities – Beijing, Shanghai, Guangzhou, and Shenzhen – where Mobike operates over 100,000 bikes in each location.

Taking too much effort to peddle is another problem beset the company’s smart bike. Getting the wheels rolling on an uphill is no easy feat: Mobike weighs a whopping 25kg, twice the weight of a regular bike. Non-adjustable seat and no damper were among the criticism that raised by local users.

The tie-up with Foxconn is definitely a partnership in need for the company to optimize its hardware and facilitate more quick expansion globally.

“This partnership is all about bringing more bikes to more cities around the world,” said Davis Wang, co-founder, and CEO of Mobike. “In 2017, we aim to enable residents in a hundred cities in China and internationally to enjoy our unique and convenient solution to the global challenge of last-mile travel, and Foxconn is the ideal partner to support these ambitious expansion plans. They are globally renowned for their extremely efficient, high-tech and cost-effective production, and their strengths in design and global supply chain management.”

Five unicorns coming from China’s emerging verticals

Emma Lee — Mon, 23 Jan 2017 08:50:14 +0000

The word “unicorn” was first coined by Aileen Lee of Cowboy Ventures in 2013 to refer to startups valued at $1 billion by private or public markets. They were supposed to a select group of rare and mythical creatures. Since then, however, it has expanded quickly with Chinese companies providing their fair share. Here we compile for you a list of unicorn startups coming from China’s emerging sectors.

URWork, co-working

Valuation 1.02 B USD
Date joined: 1/18/2017

As one of the leaders in China’ booming co-working space, URWork became the first unicorn company in the sector in January this year after receiving a 400 million RMB (58 million USD) series B at a valuation of 7 billion RMB (1.02 billion USD).

The company was founded in April 2015 by Mao Daqing, former vice president of Chinese real estate conglomerate Vanke Co., Ltd. In addition to providing the physical spaces, the shared-office-space startup is actively constructing an ecosystem that involves all kinds of supporting services, such as financial assistant platform, human resources services, startup acceleration program, and space design.

Data from real estate service JLL shows that the number of co-working spaces in China has grown rapidly this year, with currently over 500 sites in Shanghai and Beijing alone compared to just a few in 2015. Other major players in the field include Soho 3Q, naked Hub, People Squared, Sandbox, and SimplyWork.

Zhihu, knowledge sharing

Valuation: 1B USD
Date Joined: 1/12/2017

China is embracing a transition from free knowledge to paid knowledge and the shift is creating the first unicorn in the sector with China’s Q&A platform Zhihu.

Zhihu, the go-to place for Chinese internet users who want to seek expert insights into various areas, received a 100 million USD D round at a valuation of 1 billion USD this month.

The startup is among a series of companies that’s capitalizing on the rising knowledge sharing trend in China. Zhihu’s competitors include Fenda, the knowledge sharing service developed by science networking platform Guokr, and Baidu Zhidao.

iCarbonX, biotech

Valuation: 1B USD
Date joined: 4/12/2016

Jun Wang, founder and CEO of iCarbonX

China’s biotech market is on the cusp of its boom thanks to huge market size and support from the government. iCarbonX, a biotech startup raised a 1 billion RMB (about $154 million USD) round of series A funding with a valuation of $1 billion USD last April.

The company is building a big data-driven health platform, capable of processing a wide variety of health-related data, including genetic data and data from smart hardware devices.

UBTECH Robotics, robotics

Valuation: 1B USD
Date joined: 7/26/2016

Founded in 2012, UBTECH Robotics is engaged in the research, development, and commercialization of humanoid robots for education and entertainment sectors.

As the startup behind bipedal entertainment robots Alpha 2, the company got a ton of free publicity last year after their performance at CCTV’s annual gala, China’s most-watched TV show, and being booked in the Guinness Book of World Records for the “most robots dancing simultaneously”.

Guazi, used car trading

Valuation: 1B USD
Date joined: 3/12/2016

Guazi.com was established by China’s answer to Craigslist, Ganji.com, which later merged with rival online classifieds site 58.com. The used car trading platform was then spun-off from the consortium to facilitate faster growth. The startup got 200 million USD financing round last year at 1 billion USD valuation.

Second-hand car trading is one of the traditional industries Chinese internet companies are poised to disrupt. The rising market has attracted a slew of players includes Cheyipai, Youxinpai, and Renrenche.

Image credit: URWork, Zhihu, iCarbonX

Here’s why you shouldn’t believe the hype about bitcoin in China

Junse Lee — Mon, 23 Jan 2017 07:40:23 +0000

The World Economic Forum (WEF) was aflutter about bitcoin and blockchain this year, going as far as creating the Global Blockchain Business Council spearheaded by China. This is unsurprising given the fact that Shanghai is home to the largest BTC exchange by volume.

Neil Woodfine, COO of Remitsy and Beijing Bitcoin meetup organizer, however, debunks the myth of China and Bitcoin in his article, “How Chinese is Bitcoin?”. He argues that China’s 90% trade volume is completely misleading. Chinese bitcoin trade volume sure is supermassive. The three major exchanges (OKCoin, Huobi, and BTCC) report a 30-day trade volume totaling 186.3 million BTC accounting for 98.3% of all global trade volume. However, if you stop there, you’re only getting a small part of the picture.

“Basically, bitcoin old-timers have been on a long journey. We think about it every day. And our ideas of what bitcoin are changing all the time. What I thought about bitcoin and blockchain have radically changed over even the last six months,” Neil says. “Then you get all these newcomers coming in, saying that blockchain is the real innovation and it’s going to change this and that.”

China bitcoin exchanges charge zero trade fees, meaning there is a lack of friction. The zero trade fees indicate that there is zero cost to making any trade. This leads to the question of who actually pays for the mining done. Anyone can participate in blockchain, moving bitcoin from one node to another. But blockchains are only responsible for recording the transactions, not for turning cryptocurrency into actual liquidity. In other words, there is no actual value on the blockchain.

Neil gives another example of bitcoin fraud through wash trading. A trader could set up two separate accounts and trade his bitcoins back and forth rapidly. If he trades one bitcoin a thousand times a day, he will generate 1,000 BTC in trade volume without any value or real trading happening. Couple this with the fact that most exchanges generate revenue from withdrawals, the fees of which are based on each trader’s transaction volume. The higher the volume, the lower the withdrawal fee.

Moreover, despite all this manipulation, blockchain is still not exactly a “trust protocol.” Blockchain has advertised itself as the ultimate source to eliminate trust barriers. The truth is, however, for anything of value other than bitcoin to be transacted via blockchain requires additional layers of agents, third parties, and auditors. Participants can also choose their level of transparency when it comes to transactions.

The core of the problem is nobody has really figured out what this distributed ledger technology is about or what problems it could solve.

“Bitcoin and blockchain are more a cultural paradigm shift than just a technology. It’s all about decentralization, so the attempt of intermediaries to repurpose it appears quite ludicrous,” says Ferdinando Ametrano, “Bitcoin and Blockchain Technologies” teacher at Politecnico di Milanoan.

This company is changing how China moves

John Artman — Mon, 23 Jan 2017 02:58:28 +0000

China is a big country with big cities and big roads. Imagine what it must feel like to know that the closest subway station or bus stop is 20-30 minutes away. Imagine getting in your car at 2 pm on a Thursday thinking that the traffic should be okay only to find that traffic definitely isn’t okay. Imagine taking a cab to the nearest supermarket because it would take 30 minutes to walk there.

Welcome to the life of over half the Chinese population.

The last 6 km problem

Usually, when we talk about the last mile problem, we’re referring to connectivity or logistics, i.e. how does an ISP ensure efficient investments to few people? However, for transportation in China, it’s the last 6 kilometers that’s the real problem. That’s exactly the problem that Token Hu, co-founder and head of product at Niu (pronounced “new”), set out to solve.

Token Hu at the Niu’s launch event in 2015

“The goal we set for ourselves was to find the solution to the problem of city traffic. After a lot of research about the situation in China, US, and Europe, we don’t think electric cars can solve the problem. There are enough cars on the road already,” he says. “We thought about the last mile problem when we first started thinking about the product, but when we were doing our research, we found it’s not only the last mile. Every day people travel to work, meetings, grab a coffee, or meet friends, the average distance is 3-6 kilometers. Everyone does about that distance. So we asked ourselves, what kind of vehicle can conveniently travel that distance?”

The answer, as we now know, was e-scooters. However, they were about to enter into an already saturated market: 20-30 million e-scooters and e-bikes are sold each year for a total of more than 200 million. These bikes, however, are relatively cheap to make and buy; the most expensive and inconvenient part is the battery, traditionally a heavy lead-acid block weighing anywhere between 20 to 50 kilograms depending on power and capacity.

The three biggest problems

Looking at Token’s industrial and graphic design background, one might easily assume that the first problem they would look to solve would be the most obvious and visible: the look and feel. Niu, however, came from a different angle.

The company’s full-size model

“The first major problem we wanted to solve was the battery mobility problem. We wanted to make something that was removable, light, and small,” says Token. “A major reason people don’t buy an e-scooter is the battery. Removable, small, and really efficient was the first problem we tried to solve.”

So, they created a lightweight, but powerful, lithium-ion battery. However, as anyone who has spent any time in China knows, a bane for any bike or scooter rider (electric or no) is theft. Theft of the battery, theft of the vehicle, and sometimes just theft of parts.

The best way to prevent is obvious: make it hard to steal. There are a few different ways to do that: you can add more locks or you could do what the car and mobile phone industry have done.

“Before Niu, every e-scooter company uses different suppliers for the batteries, motor, controller, dashboard, different parts,” Token says. “There’s no operating system. We want to make the whole system communicate with each other and communicate with our cloud services. Every time you change a piece, our servers will know.”

Niu’s single person e-scooter

Only after did they solve the two most fundamental problems, did they begin to consider look and feel. As China’s economy is developing, consumers are beginning to expect more and are willing to pay for it. That’s the market they targeted.

“Why are people buying a 2,500 RMB bike? Because they have no other choice. The older people are buying the older generation of products, the young generation doesn’t want to buy that stuff because it doesn’t fit their philosophy. It doesn’t fit their beliefs. It doesn’t fit with their style,” Token says. “People like us, we use iPhone or Xiaomi. We want things that are simple, elegant, friendly.”

A successful strategy

Their strategy seems to be working.

Crowdfunding pre-sales campaigns for their first full-sized e-scooter and mini e-scooter have been major successes: 72,022,526 and 81,380,425 RMB, respectively. Even with prices 40-130% higher (3399 to 6899 RMB), their sales is growing along with their fanbase. To date, they have sold over 90,000 units of their the latest full-sized model, the N1S, and 60,000 units of the M1.

Image credits: Niu

This company wants to bring AR-powered treasure hunt to K-pop fans

Eva Yoo — Sun, 22 Jan 2017 08:26:45 +0000

Being a fan means you start to put interest and context around your loved one. VREX is a Korean startup wants to mingle fan power with AR technology to digitally connect fans with their loved stars.

K-pop is not just a cultural phenomena, it has both economic and social impacts. Lu Han, a member of EXO took a selfie in front of a mailbox on the Bund in Shanghai and posted on Weibo. That evening 20,000 EXO fans lined up and took selfies there. Fans of another member of EXO Yixing, put up a happy birthday message on a giant billboard in Time Square in New York.

“Fans travel to China and South Korea to experience K-pop, and they generate 6 billion in revenue. However, 88% of fans responded that they feel they are disconnected to their stars,” Rudy Lee, CEO and founder of VREX says.

There are more than 35 million K-pop fans worldwide, according to Korea Foundation’s global hanliu (韩流 or “Korean wave” in English) data from 2015. YG Entertainment‘s top band group Big Bang made revenue around 150 million USD in 2015 in concerts.

Rudy Lee, CEO and founder of VREX

Tons of content, but no context

As interaction rate on Instagram has plummeted by 40% globally in 2016, the demand for a much more immersive photo sharing experience has been growing.

“There are tons of photo content, and we go whipping through the photos on Instagram other apps, but there is no context that the fans can really relate to,” Rudy told me. “There is a lot of content, but less context.”

By combining content with context, VREX came up with an app called Rush (the Chinese version is called Tiele or 贴了) to connect fans with stars. When fans visit designated locations they can see floating AR messages from the stars, to which they respond by taking selfies with special K-pop stickers offered in the app. The company is currently offering stickers related to boy band BTS and EXO’s Zhang Yixing. Rush has also partnered with LOEN entertainment.

Previously, Rudy co-founded a co-production company that made music videos and commercials. Being a Big Bang fan himself and having worked with the Korean celebrities, he could easily feel and observe the influence they have in the fan community.

From left to right: A user posts a selfie at a bookstore, asking her boyfriend to come and read the book she is holding; a group of Fiestar fans post a group photo of themselves with a sticker; Jackson Wang of GOT7 has overtaken the LED screen in a mall in Shanghai. (Image Credit: Tiele)

Rush is seeing traction strong from its users in China, South Korea, Indonesia, Philippines, India, Taiwan, Pakistan, as well as many other countries outside Asia. Using special stickers inside Rush, K-pop fans can post love messages for their favorite stars including hashtags. Rush counts the hashtags and posts and creates a real-time K-pop ranking billboard on their website.

Every two weeks, the K-pop star who has claimed #1 on the Rush chart will have a fan-created video of them displayed on a massive LED screen on the 1st floor of the Henderson Metropolitan Mall in Shanghai. The first period, Zhang Yixing of EXO took the center stage, and now Jackson Wang of GOT7 has overtaken the EXO star on the LED screen.

Here’s what to expect for this year’s Spring Festival hongbao wars

Emma Lee — Sun, 22 Jan 2017 08:02:21 +0000

Spring Festival, an annual celebration of the Chinese New Year, is almost upon us. While some traditions haven’t changed much, like family dinners and lighting firecrackers, others have evolved with the times. Since hongbao (红包 or lucky money in English) went digital on WeChat in 2014, we wait every year to see what exciting new features China’s internet giants have introduced. And the Year of the Rooster is no different.

WeChat is out, but that doesn’t mean it’s only Alipay

Although several services backed by the Chinese internet giants have joined the battle, WeChat and Alipay were widely regarded as the two major pioneers of the war since the majority of promotions lean toward them.

One interesting phenomenon for this year is that WeChat, the platform where the red envelope feature boomed, is retreating from the battle.

“Red envelope has completed its historical task. There would be no red envelope promotions on WeChat for the coming Spring Festival.” Zhang Xiaolong, head of WeChat, said on the WeChat Open Class 2017.

This is a surprising development given the critical role hongbao have played in getting traction for WeChat’s payment service. Facilitated by the red packet function, WeChat Payment recorded substantial growth in the past three years, posing a great challenge to the dominance of Alipay to an extent that Alipay’s founder Jack Ma defined it as “the Pearl Harbor attack”. Indeed, over 8 billion WeChat red envelopes were sent during Chinese New Year last year.

But the retreat of WeChat doesn’t necessarily mean the end of the battle. Tencent is replacing WeChat with QQ, another IM tool developed by the company, which also performs exceedingly well in the sector. During Chinese New Year last year, over 308 million red envelopes were sent through QQ, which claims that 75% of their users are from the post-90 gen.

More LBS and AR

Although Pokemon Go probably won’t be coming to China anytime soon, it hasn’t stopped Chinese users from having fun in similar games that combine the LBS and AR technologies.

Alipay is continuing last year’s theme of collecting five different styles of fu (福 or “good fortune” in English). Instead of acquiring the fu cards by inviting friends of shaking your phone while watching the New Year’s Eve Gala on CCTV, you can collect the card by scanning anything with the Chinese character fu on it, no matter if it’s on the poster attached to your door or on a physical red envelope.

Another difference from last year is that the 200 million RMB total giveaway will be distributed in various sums among users who have collected all of the five styles of fu cards, rather than everyone sharing the same amount as we saw year.

Actually, this is not Alipay’s first endeavor to integrate new technologies with hongbao. It already launched a Pokemon Go-inspired feature at the end of last year to add more gamified ingredients to the cash gifting function.

Tencent’s QQ rolled out its marketing campaign for the Spring Festival this week. From Jan. 20 to 24, users in 369 Chinese cities will be able to collect red packets that have been placed in 4.25 million geographical entry points nationwide. The total red packet amount will hit 250 million RMB.

Overall 127 million QQ users have participated, winning 484 million red packets as of 21:00 Jan. 20, Tencent disclosed.

China’s fintech is leaving the rest of the world behind

Junse Lee — Sun, 22 Jan 2017 07:52:30 +0000

China is emerging as a leading fintech market on a global scale. Half of the global investment in financial technology is happening in Asia, especially China, according to the World Economic Forum.

Contrary to trends in many developed countries, Chinese consumers are ready to embrace fintech technology as seen from the common use of Alipay, WeChat Pay, and e-commerce services such as Taobao and JD. The willingness of Chinese customers to embrace fintech offerings is beyond expected supply, creating opportunities for both incumbent and new financial services providers.

According to a report published by DBS and EY, 40% of Chinese consumers are open to using fintech payment methods compared to 4% in Singapore. The rate of fintech participation in wealth management and lending also tend to be higher. The report says that China has moved beyond the point of disruption compared to the West which is only just reached the tipping point of inflection.

Chinese lives are deeply integrated with technology giants both financially and non-financially. China already accounts for 47% of global digital retail sales, resulting in a massive domestic retail market in a closed digital economy. The digital generation in China is also driving the online retail market and leading the charge in China’s mobile payment adoptions. 66% of post-1990’s millennials shop and 54% of them bank via their mobile phones according to the EY report.

Major markets for fintech are also under-banked or unbanked populations in China. Traditional banks are not winning consumer’s’ trust, and a rising number of young Chinese consumers end up turning to digital disruptors with higher interests rates. They are more risk-embracing and less reluctant to greater propensity to spend than the older generations. The Chinese younger customers also demand higher-quality and client offerings.

“We hope the new generation of the financial system will be more inclusive focusing on the underserved or unserved including small-to-medium-sized enterprises (SMEs),” says Jonathan Lu, vice chairman of Alibaba Group and CEO of Alipay during his DAVOS 2017 panel discussion.

“In a small county in Tibet, 90% of overall electronic payments are made through mobile payments. This number is the highest mobile penetration that can bridge the gap for the people in the West and the developing East,” says Lu sharing his optimism for new opportunities.

Moreover, the willingness and trust Chinese customers put money into fintech give them a huge advantage compared to the Western world. Many of the Western companies are slow to adopt financial disruption system compared to the US.

China possesses unusual advantages of rapid urbanization, regulatory acquiescence, a massive and underserved SME market, escalating e-commerce growth, and explosion in online and mobile penetration that create a fertile ground for innovation in commerce, banking, and financial services as shared by EY report.

To meet the growing demand of online financial technology, the Chinese technology giants BAT are aggressively creating all-encompassing platforms with the aim of embedding their services into customers’ lives.

“There has been a lot of experiment around the financial technology,” says David Craig, President of Thomson Reuters during the panel discussion, “Financial industries have not historically been particularly good at collaboration. It tends to be a lot of group of people sort of collaborating, sort of competing. And this [fintech] actually offers a way changing how we operate and things work.”

China is already positioned to be the next global financial technology leader. There seems to be little doubt whether it will happen. It is, rather, a matter of timing.

[Podcast] China Business Cast 55: Chinese regulation updates in cross-border investments

Guest Editor — Sun, 22 Jan 2017 02:41:37 +0000

We are hosting Bruno Bensaid here already for the 2nd time. Last time we spoke about investors mindset in China and this time because of regulations the Chinese government there are constraints on outbound investment.

Listen to the episode here or subscribe.

EPISODE CONTENT:

Hey Bruno, so for the listeners who didn’t listen to our previous episode, which was a bit over a year ago. Can you brief us of what are you doing these days?
We brought you on the show to speak about the change of Chinese policy towards outbound investment. First, what are the restrictions exactly?
What are are the reasons for those restrictions?
Should small local and foreign startups in China should be worried?
Is there any way around this policy for now. Any legal structure that can work to still being able to move the money?
Because of these new regulations, is there any shift in which companies Chinese investors are currently looking to invest?
Where are the best places looking for Chinese funding these days? Where are the easier areas?

TechNode does not necessarily endorse the commentary made in this program.

4 things hardware startups should know when entering China

Eva Yoo — Fri, 20 Jan 2017 10:06:17 +0000

For hardware companies, China is a no-brainer place to be, considering its market size and its role as a manufacturing hub. Hardware companies like Xiaomi and Huawei and success stories about crowdfunding campaigns have proven that the Middle Kingdom has gone from “Made in China” to “Designed in China.” This year’s CES 2017 was also splashed by Chinese founders’ innovative technologies and hardware, such as iGULU, NEOBEAR, and uSens.

At a panel organized by Startup Grind Shanghai yesterday, Jason Wong, founder and CEO of Omnicharge, shared his insights on building a hardware company in China.

1. Shield your product with patent and license

When startups successfully launch their product, multinational companies sometimes approach for cooperation. Jason advises the startups to be protective of their product, saying that the benefit usually leans on the corporate’s side rather than the startup.

“Be cautious when taking your ideas or innovation to a larger company. Make sure your ideas is already well protected as corporations may take a financial interest approach to your ideas, and they may or may not license from you,” he said. “If you have strong IP protections you will have more confidence when working with corporate partners. Always read the fine print in any contracts, and pursue what makes sense to your business model.”

2. Focus both U.S. and China market

Hardware founders weigh between two markets. Strategically, some Chinese companies position them as an international company to get global attention.

“When you are competing on a global scale, you need to have a presence in your key markets. It is hard to be successful otherwise. For us that is the US and China. It is critical for us to work closely with our suppliers. Not everyone can be like Apple, with an established partnership with Foxconn. Manufacturing and supply chain is very critical in the hardware business,” Jason remarked.

3. Register your patent globally.

The patent issue is a controversial one. To avoid something similar to Apple losing it’s iPhone case in China, startups should register their patents globally as soon as possible.

“Always protect your ideas and apply for IP protection in your key markets using PCT (Patent Cooperation Treaty). It is great to launch a product on crowdfunding and get funded, but if you fail to register first, you will encounter other companies copying your product quickly,” Jason said.

4. Do not follow the trend.

Finally, Jason advises startups to follow their guts, rather than following the market trend.

“Rather than following major trends or hot sectors, focus your efforts on problems that you personally care about. It takes sometimes 5 to 10 years to scale your business, and you need to have passion in order to survive the journey. So ask yourself what you care about,” Jason added.

[Podcast] Analyse Asia 158: WeChat mini-programs with Matthew Brennan

Guest Editor — Fri, 20 Jan 2017 06:53:04 +0000

Matthew Brennan from China Channel and a well-known expert on WeChat joined us for an in-depth discussion on the recent launch of the WeChat mini-apps or programs, the philosophy behind them with interpretations on Allen Zhang, the founder of WeChat and their impact on WeChat developers, businesses & brands living within the ecosystem. He also shared his thoughts on how the Chinese Internet are making huge leaps and bounds from online to offline and provide his perspectives to how WeChat dominate messaging and apps in China.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Matthew Brennan, Co-founder of China Channel dot co (chinachannel.co, @MattyBGooner, Linkedin, WeChat:Yowdy-CQ) [0:39]
- How did you start your career? [1:28]
- What brought you to China and eventually set up China Channel there? [2:32]
- Role and coverage of his role in China Channel [4:10]
- From different parts of your career, what are the interesting career lessons you can share? [5:07]
WeChat Mini Programs [6:14]
- To start, can you give an introduction of WeChat by Tencent in China? [6:30]
- Can you share some recent interesting data from WeChat on their user base, usage? [9:12]
- Recently WeChat has launched Mini Programs, can you briefly describe what they are? [10:40]
- How are mini-programs actually experienced by users? [14:23]
- What is China developer community saying about mini-programs? [16:18]
- Impact of WeChat mini-programs to Alipay [18:20]
- As we understand WeChat has other types of official accounts for businesses: subscription accounts, service & enterprise accounts, what distinguishes mini-programs from them? [19:05]
- How do mini-programs impact the app stores from iOS and Android given that it bypass downloading for the major apps? [23:28]
- How do mini-programs impact the rivalry with the other members of BAT or 2nd tier top Chinese companies such as Qihoo and JD? [25:58]
- What does it mean for businesses that are both leveraging or not leveraging on WeChat mini apps? [27:36]
- Matthew’s thoughts on Snapchat [29:51]: Snapchat hired Oakley’s head of retail operations & Snapchat acquires Israeli AR company
- Matthew’s perspectives on China’s Internet ecosystem vs the rest of the world [31:00]

Additional References on Tencent and WeChat:

Zhang Xiao Long (Father of WeChat) described the Mini Programs as “What are Mini Programs?: Mini Programs are a type of app that you can immediately use without having to install anything, it achieves the dream of apps “at your fingertips”, users scan a QR code or search and can immediately open an app. Recognizing that so many apps are used once and then abandoned, users will now no longer have to worry about installing too many apps. Apps will be everywhere, ready to use at any time, but you won’t have to download and install them.”
Tencent Q3 Earnings Report
WeChat 2016 Data Report
How to use WeChat mini programs (user guide) by China Channel
Mini program Case Studies
Mini program’s technical aspects
Unofficial WeChat Mini-Program store (in Chinese)
Mini Program O2O interactions (in Chinese)

TechNode does not necessarily endorse the commentary made in this program.

How do China-based VR developers choose a platform? We asked

Emma Lee — Fri, 20 Jan 2017 06:38:15 +0000

The content ecosystem surrounding VR technology is quickly becoming the biggest opportunity in the sector. iiMedia Research expects the revenue from VR content market to soar by 279% from an estimated 98.9 million USD in 2016 to 375.1 million USD in 2017.

Driven by the growth, a bunch of VR platforms are now competing for to find the “killer content” to be the core force for them to allure more users.

Similar for other content creators, VR developers’ choice of platform depends on a number of factors: cost and accessibility of hardware as well as developer choice between drive revenue or driving broad adoption. Last week, HTC Vive held a developer meetup in Shanghai. I headed over to see what China’s VR content developers are thinking.

Xu Chenliang, founder of VR content outsourcing company

In order to realize the positioning functions that needed in the experience, we choose more sophisticated devices. Currently, all of our contents are based on HTC Vive given its excellent VR experience and supporting services as well as the accessibility. Similar to its parent company Facebook, Oculus’s devices and services are still not available, at least in legal channels, in China.

As an early entrant to the VR content market, we have been feeling the market change as more developers are swarming to this sector. I think the supply is outrunning demand and a price war between VR content providers is looming ahead.

Team of Directive Games, developers of VR game Super Kaiju

Since our company was recruited into the Vive X accelerator, we are developing obviously for HTC platform, but we have also developed a version for the Oculus as well. We are also planning on putting another version out for the Sony PlayStation VR.

A lot of these VR kits just went retail very recently. So the consumer base for all of these kits are small, obviously, the PlayStation is an exception, but for the ones like Oculus, I would say they are still at the very beginning. They still require bit more time to built the user or installment base before we can see the effect the ecosystem would bring.

Although gaming is the first sector that’s pioneering VR technology adoption, it has yet to commercialize as compared to 2B businesses, like real estate. Our team or even the VR gaming industry is still experimenting with more diversified commercialization models.

The in-app payment model that’s been working well in mobile gaming sector wouldn’t fit here cause most of the users have their VR experiences in VR arcades or VR zones in shopping centers. The basic features would be enough for beginners and it’s difficult to convert VR arcades into paid users. But we believe in the potential of the market when hardware penetration goes up in the future.

Justin, VR game developer

At this point, the VR platforms are pretty close to each other. HTC Vive started off with a leg up with the controllers that enable stable motion control. Oculus is making great leaps forward with their Oculus touch controllers in the past couple months.

It’s kind of good so you have this kind of duality between the two big companies right now; they are in an arms race to compete with each other. In some industries, you got a single monopoly that controls most things so they don’t have the intention to push their technologies forward. So we are kind of in a good place right now with two companies competing and trying to deliver a better experience to the consumer.

Anonymous developer (chose to not to reveal identity)

We are developing VR contents for car demonstration and airplane maintenance. We are based primarily on HTC Vive now, but also looking to other hardware and platforms. The core parts of the software can be transferred from platform to platform and I think it’s the content quality that really matters. Like an animation, you can watch it in cinema, on PC, or on mobile devices.

Image credit: Emma Lee, Super Kaiju

Growth strategy for China’s fintech firms: Q&A with Chris Skinner

Guest Editor — Fri, 20 Jan 2017 02:03:56 +0000

Editor’s note: This post was contributed by Jx Tan, Countly Analytics’ Chief Growth Officer (China & APAC). Founded in 2012, Countly’s Open Source framework represents a new category of collaborative technology that answers difficult questions like for innovative companies like Atom Bank based on their users’ in-app behavior and crash data.

China’s internet finance industry is booming. The country leads the world when it comes to total users and market size; financial-technology (or fintech) start-ups are mushrooming, as are company valuations; capital markets are aggressively pursuing the Internet finance industry, and consumer behavior is changing dramatically. By the end of 2015, the market size of the country’s Internet finance sector was more than 12 trillion renminbi ($1.8 trillion), dominated by the payments sector.

I spoke with Chris Skinner, a UK-based commentator on financial markets and author of Digital Bank and Value Web, about the unique opportunities for China’s fast-moving fintech industry, international fintech trends, and how traditional banks & fintech start-ups are exploring new ways to work together.

What are the noteworthy opportunities you see in Chinese fintech?

First of all, we need to acknowledge that China and fintech is starting from a very different position relative to American and Europe who had technology applied to finance for over 60 years. Whereas to a large extent, the technology applied to finance in China has only started 15 to 20 years ago.

Fintech is growing very quickly in China. Half of China’s top 10 unicorns are fintech companies (Ant Financial, Lufax, Jiedaibao, Zhong An Insurance, and JD Finance). In a very short time, Ant Financial has built up a reliable database of individual credit ratings on millions of Chinese who shop on Taobao’s e-commerce platform, enabling it to make small business and individual loans that largely bypass incumbent banks. Jack Ma has always seen Ant Financial as a global player and will continue to position for global expansion.

Of course, there are challenges too. China’s P2P ecosystem has taken a hit over the past year as a lack of transparency has taken its toll.

What are your views on the major differences between Chinese and Western fintech ecosystem?

I guess the Chinese approach to technology in finance has been far less regulated that what we have seen in some of the Western markets. This has been allowing the market to grow without constraints except for products like Bitcoin that are suppressed due to tight regulations. On the hand, you have areas like P2P lending that are not. Now that is changing too as we see more interest in Blockchain technology in China and across the world.

I see only two markets in the world where you can scale rapidly to major growth: US and China. In these markets, you see fintech companies that can grow to millions of users on a national basis very quickly without changing your core product. You don’t have that in Europe or Southeast Asia where differences in domestic regulations means that you have to change your product for every country.

A big difference between China and America is the number of regulations at the state level. You can’t start a new bank in U.S without going through 200 regulatory discussions with different authorities. However, in China, so long as the government gives the go-ahead, banks like Webank and YesBank can be created almost overnight and scale quickly within weeks. For example, Yu’ebao got to 90 billion USD in assets in within 18 months.

Another part of it is that the Chinese consumers have been under-served as the traditional banks focus on the most profitable segments that make up a small part of the Chinese market. With Alibaba and Tencent platforms, these companies can reach out to millions of such consumers and scale very quickly.

To add on, fintech companies worldwide generally seek to grow in two key areas:

Serve the underserved: This includes customer and business segments that are not adequately served by incumbent banks. For example, such segments include microloans to small businesses
Enhance existing products: The introduction of fintech technology offers opportunities to disrupt products and processes served by legacy systems and thinking. For example, Blockchain offers transparency and the potential to enhance international trade financing services

Can you share some examples where Western fintech companies are creatively leveraging data to deliver additional customer value?

There are 5 or 6 major innovations areas within fintech:

Payments: Probably the most exciting area is around Payments. Payments is moving into plug-and-play technologies. You have already seen that with PayPal. Now Stripe is taking on PayPal. Since 2011, Stripe has grown to a US$9.2 billion company within 5 years. This is just for an API that allows merchants to get set up within 10 minutes instead of a couple of days rather than a bank. Look out for Stripe. They have recently received investment from Sumitomo Mitsui Card company. In 2016, they have expanded to Indonesia and Singapore.
Blockchain: I am bullish on Blockchain. Blockchain is a decentralized ledger or database that keeps a record of all transactions that take place across a peer-to-peer network. This technology will be game-changing as it allows market participants to transfer assets across the Internet without the need for a centralized third party. Apart from international payments, there are other applications such as Trade Financing. Look out for Wave. They manage ownership of trade documents on blockchain eliminating disputes, forgeries, and unnecessary risks. Wave has a collaboration with Barclays Bank and its product helps speed up the time it takes to complete a trade transaction, e.g. letters of credit – from as many as 20 days to just a few hours by eradicating human effort to process a paper trail. Also look out for Everledger, a blockchain-based digital vault that now holds the records of almost 1 million diamonds. Once items are registered on the blockchain, the records are permanent and can’t be changed, providing a clear audit trail to be used by multiple parties throughout the supply chain to prove authenticity and reduce the risk of fraud, theft, and trafficking.
P2P Lending: The model of P2P lending is very admirable, with algorithms matching lenders with investors with the right risk appetite. In the U.S, P2P lending is now mostly between institutions due to the regulations with regard to securitized lending. As a result, P2P lending is also subject to market forces: in Europe, there are insufficient quality lenders and some P2P platforms have stopped taking deposits. For example, Zopa, a UK P2P platform, has recently tried to diversify its business by targeting to launch a neo-bank in 2018 (or next generation bank or digital-only bank).
Wealth Management: Roboadvice is already being deployed to target the customers who are just below the private banking tier. However, I am not bullish on roboadvice as this can be offered by existing players like Charles Schwab on top of their services and could be wiped out very quickly. Look out for Charles Schwab Intelligent Platforms, an automated investment advisory service with no advisory fees, no account service fees, and no commissions charged.

In the Chinese context, how can incumbent banks maintain their lead over fintech companies?

The big 4 Chinese banks are not as agile as newcomers like Baidu and Tencent and traditionally not focused on the consumer side of the business. There are some regulatory barriers to prevent fintech companies from entering the consumer space.

I can’t really comment on One Belt, One Road (OBOR) as I don’t know how that is going to play out. Just an immediate view would be that China does have a problem in terms of slowing growth. The Chinese economy has been delivering annual growth rates of 6 to 7% but is this due to real growth or stimulation of demand? To create sustainable growth, OBOR sounds like a key growth strategy.

Another question in my mind is, “What are Chinese banks going to be doing and how will this support the OBOR initiative?”

Incumbent banks are likely to play an important role and support Chinese businesses that are venturing to less developed parts of the world that are commodity producers. So this is where I see the most activity from the big 4 Chinese banks to support global trade. At this moment, incumbent banks have more experience relative to fintech companies to provide trade services and should build upon this lead.

Incumbent banks worldwide are aware of the potentially disruptive effect of Fintech startups. When you look at what incumbent banks have done elsewhere, DBS (Singapore), Barclays (UK) and Sumitomo Mitsui Financial Group (Japan), they have all actively sought to nurture fintech start-ups while enriching their existing service offerings with the resulting innovations. Chinese incumbent banks may wish to consider a similar strategy.

In the Chinese context, what can Chinese fintech companies do better to challenge the traditional banking incumbents? In particular, what can these newcomers do to gain trust from the consumers or provide services that incumbents are unable to provide?

As a first step, Chinese fintech companies can organize themselves as an industry body to lobby policy-makers and raise consumer awareness. In the US, Amazon, Apple, Google, Intuit, and PayPal have formed a Public Policy Coalition known as Financial Innovation Now. This will make it easier for these newcomers to enter new areas of business within the financial industry. I can easily see Baidu, Tencent, and Alibaba doing something similar.

Within the Chinese fintech ecosystem, Alibaba and Tencent have obvious brand and financial advantages over other rivals. With no brand, no customers, and no trust, it is very hard for independent Chinese Fintech startups to achieve critical mass unless their product is hugely compelling. My view is that Chinese versions of newly launched international Fintech products are unlikely to reach this threshold of innovation.

So what can independent Chinese fintech start-ups do? For start-ups with no brand, starting with something like mobo roboadvice sense as what you are doing is to analyze what customers have got and providing information services. Most consumers will be happy to use such tools. More broadly, their strategy will probably be similar to fintech start-ups elsewhere in the world: Serve the underserved, like providing student loans or small loans to businesses. Also, collaborate with traditional banks which will be beneficial to start-ups in terms of acquiring trust and customers.

Omnicharge makes a portable charger for your laptop

Eva Yoo — Thu, 19 Jan 2017 09:33:23 +0000

A startup wants to keep your laptop and mobile phone alive even when you’re cycling across China for a couple of months. A portable battery charger Omnicharge has recorded 4259% funded of its goal amount on Indiegogo, raising over 3 million USD in September. The company recently participated in CES 2017, and are now busy with shipping the product to backers.

Compared with other power bank distributors currently available in the market, such as ChargeTech PLUG (35 oz) and GoalZero Sherpa 100 (30.5 oz), Omnicharge is the lightest: 20.8 oz and recharges in three hours. The competitors do not have a screen, nor support heat management.

The battery charger has an OLED display screen that shows the time left for charging, AC/ DC power outlets, and two USB fast-charging ports. The company has two models: Omnicharge 13600 and Omnicharge 20400.

Omnicharge 20400

It also has a strong safety feature which ensures overheating and overpower protection. Once you connect high power consuming device that goes over 100 watts, it is not going to damage the device nor the Omnicharge, just deactivate. If the environment is too hot, then it will shut down to ensure there are no hazardous situations.

“We have been getting very inspiring stories and feedbacks from backers. One early adopter brought Omnicharge with him when he climbed the Himalayas to charge his heated socks, and Omnicharge was also able to power NBC journalists at the Olympics, and the recent Presidential Debates,” Eric Mathiesen, Customer Relations Manager at Omnicharge says.

The charger also supports wireless charging when the device is lying on top of it, working within 2-3 millimeters and users can take the charger on a flight. Omnicharge kit provides all the different connectors for different devices and supports solar charging. The cool thing is, you can charge five different devices at one time, using AC/ DC power outlets, two USB fast-charging ports, and wireless charging.

I wanted to charge my MacBook Retina 12-inch using Omnicharge, but the team didn’t have USBC connector. I connected my phone to Omnicharge instead, and boom, it charged up my phone in the nick of time.

Omnicharge uses battery cells produced by Panasonic, also used for Tesla to ensure safety and reliability. The battery charger looks slick and high quality. When you touch it, it feels solid.

Omnicharge will be available online and in retail stores in the U.S. later this year, and will also be available in China later this year.

Image credits: Omnicharge

Mobile medical healthcare trends in China, part 1: China’s health problems

Guest Editor — Thu, 19 Jan 2017 09:05:22 +0000

Editor’s note: This series was written by Federico Sferrazza, digital marketing manager at Daxue Consulting, a market research company based in China. The images were created by Kevin Maher, co-founder of information design agency Diatom. Part 1 looks at the current problems with China’s healthcare. Part 2 will analyze how current technologies, particularly mobile medical healthcare, will help alleviate many of these issues.

Mobile technology, social media, and e-commerce seem to dominate the conversation when it comes to digital technology in China. The healthcare industry, which traditionally lags in digital innovation relative to its peers, ranks among the least innovative sectors. New technologies pose a significant challenge for the healthcare sector, but also represent a tremendous opportunity for innovation and individualization of treatment to suit patients’ needs. Progress in digital technology has already left a radical mark on Chinese consumer behaviors and lifestyles; the healthcare industry should follow suit by moving quickly to embrace digital innovations. Private digital investment in the health industry reached $1.4 billion for the first semester of 2016, surpassing total investment in 2015. With a revolution off the table for now, here instead are the most problematic trends in healthcare for China:

The One-Child Policy and China’s Aging Society

China’s rapidly aging society and subsequent expansion of government support programs mean the Chinese healthcare industry has garnered a larger share of public attention than before. China is growing older, and this trend shows no signs of slowing down. In 2016, 142 million Chinese were 65 or older, equating to 10.35 percent of the population. This number is expected to double to 330 million by 2050 – nearly one in four Chinese. But the demographic crisis will occur even sooner: China is expected to become the world’s most aged society by 2030.

China’s more than 35-year-old “one–child policy,” which ended in January 2016, successfully stemmed population growth and ensured economic stability. The total fertility rate (TFR) dropped from 3.78 births per woman in 1979 to 1.6 per woman in 2016. But the effects of the one-child policy were not all desirable; the proportion of elderly Chinese relative to the overall population has increased significantly over the past decade and a half. Further, it appears that repealing the controversial policy has not delivered the results sought by the Chinese government.

Long-term suppression of fertility in females and high costs associated with childbirth and childrearing significantly reduced people’s willingness to have children in China. Meanwhile, slow population growth also relieved stress on scarce educational and medical resources. Due to improvements in quality of life and medicine, the average life expectancy for China increased from 71.4 to 77 years and is projected to reach 80 in 2050.

It seems likely that this fast growing, yet aging population will raise concerns for the development of the world’s second-largest economy. The elderly dependency ratio, which represents the number of elderly people per every 100 working people, will increase from 13.7 to 46.7 by 2050. The world watches on as China prepares to deal with mounting strains on an already troubled healthcare system.

Rise of Chronic Diseases

The increase in the number of elderly people corresponds with rising life expectancy and prevalence of chronic illness. With more and more Chinese suffering from chronic illnesses, plus expensive treatment costs and longer recovery times, the Chinese healthcare system is laden with tension. Moreover, chronic disease is now a major public health issue in China.

According to The State Council Information Office of the People’s Republic of China, doctors diagnose 260 million people with chronic illnesses every year. Chronic diseases are responsible for 85 percent of yearly mortalities. The diseases that account for the most deaths are cancer (27.79 percent), cerebrovascular disease (20.22 percent) and heart disease (21.3 percent).Rising rates of incidence and the spread of chronic diseases prompted a serious government response. To combat chronic diseases, the government created the “Chinese Chronic Disease Prevention Work Plan (2012–2015).” A focal point of the prevention plan is the use of monitoring devices to treat chronic diseases. Regardless, chronic diseases are expensive to treat. The treatment of chronic diseases accounts for 70 percent of healthcare spending. The World Health Organization estimates that heart disease, stroke, and diabetes altogether cost China 3.91 trillion RMB (US $558 billion) between 2006 and 2015.

To combat chronic diseases, the government created the “Chinese Chronic Disease Prevention Work Plan (2012–2015).” A focal point of the prevention plan is the use of monitoring devices to treat chronic diseases. Regardless, chronic diseases are expensive to treat. The treatment of chronic diseases accounts for 70 percent of healthcare spending. The World Health Organization estimates that heart disease, stroke, and diabetes altogether cost China 3.91 trillion RMB (US $558 billion) between 2006 and 2015.₇The continued rise of chronic disease could mean even higher costs in the future. The National Health and Family Planning Commission of the PRC estimates the total cost of medical care in 2012 at 2.891 trillion RMB, an increase of 456.85 billion RMB over 2011. Despite steep medical bills; much Chinese do not receive adequate care for their chronic diseases. In the future, it is likely that chronic disease treatment will consume more resources. The Chinese government is currently working to provide all citizens with basic medical insurance. However, the growth of chronic diseases has made this endeavor costlier than expected. Therefore, it is critical that the government adopt policies to treat better and prevent chronic illness.

Despite steep medical bills; many Chinese do not receive adequate care for their chronic diseases. In the future, it is likely that chronic disease treatment will consume more resources. The Chinese government is currently working to provide all citizens with basic medical insurance. However, the growth of chronic diseases has made this endeavor costlier than expected. Therefore, it is critical that the government adopt policies to treat better and prevent chronic illness.

The Diabetes Epidemic

China currently faces the world’s largest diabetes epidemic, one worsening at a fearsome pace. The explosion in diabetes incidence has been considered by previous studies, and the most recent research found that China has overtaken the USA in terms of cases; according to the latest data, 11.6% of Chinese adults have diabetes. The population of Chinese with diabetes stands at some 114 million people — about a third of all people with diabetes.₉In 2015, China was home to estimated 110 million people suffering from diabetes – roughly 11 percent of its population, according to the International Diabetes Federation’s Diabetes Atlas (IDF). Also troubling was the study finding that of the 99,000 people surveyed, half had pre-diabetes blood sugar – abnormally high, but not high enough to diagnose diabetes. Some projections even suggest 493.4 million Chinese could be afflicted by pre-diabetes.

These findings indicate the enormity of diabetes as a public health problem in China. In the 1980s, Chinese doctors rarely saw diabetes; China has since risen to claim the most diabetes cases in the world.

Jeppe Thieseen, Vice President of Marketing at Novo Nordisk in China, estimates that 70 million diabetics—an astronomical number nearly equal to the population of Germany—live without treatment.

Diabetes is set to become the heaviest burden on the Chinese healthcare system, as the IDF estimates diabetes accounts for 13 percent of medical expenditure in China, with yearly costs estimated to reach $47 billion by 2030. The number of people affected by diabetes has spiked in recent years and is expected to reach 150 million Chinese by 2040. The biggest challenge now for the Chinese government is to raise public awareness of the symptoms of diabetes and the benefits of early diagnosis.

This startup wants to be the DJI of the sea

Emma Lee — Thu, 19 Jan 2017 06:37:38 +0000

Chinese companies have taken a leading role in the years-long transition of drones from niche cutting-edge technology to affordable consumer electronics. However, the once emerging sector is already crowded with DJI dominating. Seeing this, one company is moving from air to sea to capture market share.

Developed by Shenzhen-based startup Chasing Innovations, GLADIUS is a smart ROV (remotely operated vehicle) underwater drone built for filming, observing, and exploring. As a portable device, GLADIUS measures 430mm * 260mm * 95 mm and weighs only 3kg. The gadget comes with two built-in batteries, which can last up to 3 to 4 hours on one charge.

One cool thing about GLADIUS is its ability for precision maneuvers. The Quattro-thrusters design makes it able to nimbly move in all directions at a speed of up to 4 knots or 2m/s.

In addition to speed and portability, GLADIUS also excels in terms of the areas it can cover. The underwater drone uses a 100 m buoyant tether to communicate to a towable buoy on the surface of the water. The pilot connects to the buoy using wireless communication technologies, CMO Yang Yang told TechNode.

The vehicle can go 100 m below the water surface via the tether and 500 m horizontally through long range Wifi communication.

“Using a wireless towable buoy greatly increases the practical range of the vehicle since a physical connection between the vehicle and the pilot doesn’t need to be maintained,” he noted.

The underwater drone can stream live video with built-in Full HD camera and LED lighting, which enables users to take high-quality 16-megapixel photos and 4K videos. Users can control the drone with a remote control that’s compatible with Android or iOS devices.

Chasing Innovations was started by former engineers from Huawei and now it’s developed to a team of over nearly 20 employees. The company is going to kick off a crowdfunding campaign for its products on Indiegogo in February. The standard version will be priced at 1,399 USD while the premium version will go for 1,699 USD. The super earlybird price on Indiegogo could be as low as 599USD.

Image credits: Chasing Innovations

This food e-commerce company is focusing on VR to drive its growth

Eva Yoo — Wed, 18 Jan 2017 09:57:30 +0000

Coolhobo, a Shenzhen-based food VR commerce company, is stopping its subscription-based food boxes to focus on their VR platform.

The company, a fresh graduate of Chinaccelerator, originally launched with their subscription-based imported goods box, containing imported goods, varying the country every month. It helped the company generate 60,000 RMB (8,800 USD) in monthly revenue. According to the company, the 30% of our customers were repeat customers.

Coolhobo’s imported goods subscription box (Image Credit: Coolhobo)

“We are building something bigger, and we cannot make everyone happy,” Loic Kobes, the founder and CEO of Coolhobo says. “We are small, and the market is big. We can experiment everything here in China.”

The pivot into VR commerce is risky, however. Alibaba, in partnership with HTC, is poised to bring its VR commerce Buy+ platform to consumers in the near future.

As we discovered from 2016’s failures, a startup should never try to outspend a tech giant. Loic is aware of the challenges and has a plan.

First, Coolhobo is focused on the higher income group. While Alibaba appeals to price sensitive customers, Coolhobo is targeting higher income consumer and high-end stores.

“VR commerce is a new concept. And we will bring experience and quality for high-end customers,” Loic says. The company is targeting two groups: tech savvy millennials and people who are looking for quality imported food.

The company is partnering with retailers, starting with Olé, headquartered in Shenzhen, to bring their VR experience to customers and will set up VR booths in the supermarkets to improve the shoppers’ experience and deliver an international lifestyle.

Their VR shopping assistant will provide voice recognition to guide the customer through the food journey. For example, video content about French wine will take the customer to the vineyard, helicopter, and a souvenir in a boutique restaurant showing how to serve the wine, combined with a story talking about the brands.

Second, the company focuses on the quality of the product. Currently, 40 high-quality imported food brands are exclusively working with Coolhobo.

Coolhobo VR Shopping assistant at a store (Image credit: Coolhobo)

Third, the company will provide a unique 360-degree video focusing on food content. The company will produce unique content and feature it on Chinese video platforms.

“Watching the food value chain before you consume, engages the customer and enhances the trust. For vendors, it’s an interesting channel. After seeing the VR video, the customer wants to share the story,” Loic remarked.

The beta version of Coolhobo’s VR commerce platform will be ready after Chinese New Year’s day. Users will be able to do VR shopping using their native app or on the website.

URWork becomes co-working unicorn after 58M USD series B

Emma Lee — Wed, 18 Jan 2017 08:47:47 +0000

Chinese co-working office space URWork is moving a step further to catch up with its U.S. peer WeWork, at least in valuation. The company announced today the completion of 400 million RMB (58 million USD) series B at a valuation of 7 billion RMB (1.02 billion USD), our sister site TechNode Chinese is reporting.

The valuation may still not comparable to WeWork’s whopping 16 billion USD mark, but it already boosts the company to China’s first co-working unicorn.

Investors of the round include Tianhong Asset Management, a fund management affiliate of Alibaba’s Ant Financial, Junfa Group, Shanghai Chuanghehui, an alumni of renowned business schools, Tianming Shuangchuang Technology and Dahong Group, adding to a top-notch current investor roster that includes reputable VCs like Sequoia Capital China, ZhenFund, and Sinovation Ventures.

As of present, the co-working company has raised six rounds of funding with total venture fundraising of over 1.2 billion RMB (175 million USD).

URWork was founded in April 2015 by Mao Daqing, former vice president of Chinese real estate conglomerate Vanke Co., Ltd. In addition to providing the physical spaces, the shared-office-space startup is actively constructing an ecosystem that involves all kinds of supporting services, such as, financial assistant platform, human resources services, startup acceleration program, and space design.

Operating in twelve Chinese cities serving 15,000 users, the firm is poised to accelerate its oversea expansion that started in second half of 2016 in Singapore, London, New York, and Taiwan.

The new funding is earmarked for opening more spaces domestically and overseas, facilitating business cooperation among member companies, improving and standardizing supporting services, and adopting mobile and smart hardware devices in the spaces, according to a company statement.

Thanks to a series factors like the rise of the millennial workforce and government support, China is recording a boom of co-working spaces in the recent years. Capital flows in the sector to capitalize on the market boom. Upcoming co-working startup nakedHub received new funding at the end of last year for overseas expansion.

While Chinese co-working startups are busy with globalization plans, their foreign counterparts are targeting China. WeWork launched its first space in Shanghai last year after sealing a 430 million USD pay packet to fuel their Asia expansion. Australia’s largest startup hub Fishburners is also entering China.

WeChat data report reveals unreliable nature of Chinese tourism data

Jing Daily — Tue, 17 Jan 2017 08:12:26 +0000

Editor’s note: A version of this post first appeared on Jing Daily the leading digital publication on luxury consumer trends in China.

WeChat recently released a brief data report, unveiling user behavior and trends on its services in 2016. Sporting some 846 million monthly active users and a range of features ranging from social networking to consumption, WeChat may possess the best dataset in the world on Chinese consumer habits—justifiably making it a relevant data source for everything Chinese consumers. However, its travel data is so far off the mark that it prompts the question if any statistics on Chinese travel can be trusted. If WeChat can’t figure out where Chinese tourists are going, who can?

While clearly more of a promotional tool than a resource for academic research, WeChat proudly presented its travel data during a “pro workshop” in China to later distribute it to partners and other stakeholders through its official, English-language, channels. As can be expected when a platform of WeChat’s magnitude releases user insights, the story was quickly picked up by both domestic news outlets, overseas media such as Business Insider, CCTV International, as well as various more niche outlets covering topics such as technology and travel.

The elephant in the room is that the data is, without question, completely misguiding—at least insofar insights on Chinese travel are concerned.

WeChat’s 2016 data insights into Chinese travel preferences.

There are more reliable numbers than others. The gold standard, used by organizations such as the World Bank, the United Nations, and the European Union, comes directly from official statistical offices around the world, such as the U.S. Department of Commerce. Depending on reporting practices, such data can be more or less in-depth, but the bare minimum is generally to report the number of arrivals of different nationalities, nights spent in the country, as well as seasonality with monthly intervals. While certainly not in-depth enough to serve as a minute-to-minute dashboard that covers all types of data about international travelers, it acts as an indispensable guide for both domestic and international stakeholders and authorities.

When it comes to China, things become a bit more involved. A fundamental, yet often unanswered, question is the definition of China. Does it include the Special Administrative Regions (SARs) of Hong Kong and Macau? With a few exceptions, the consensus is to treat mainland China as a separate market—a practice that makes sense for historical, economical, and practical reasons. After all, mainland Chinese people hold a different passport and face different visa regulations than what for instance Hong Kong travelers do. While China has many reasons to highlight that Hong Kong and Macau are part of “One Country, Two Systems”, it also treats these places as overseas destinations in its reporting. The official number of Chinese outbound tourists in 2015, the latest number to be released by Chinese tourism authorities, stood at 120 million and included journeys to Hong Kong and Macau, number one and two on the list of top destinations respectively.

Now, since WeChat doesn’t provide any actual arrival numbers for the destinations it lists as the top destinations in 2017—it instead provides some sort of indication with differently-sized bars—we can’t really say anything about for what destinations the numbers add up, and for what destinations they don’t. What we can do, however, is to put WeChat’s top destinations in comparison to the numbers reported by the destinations themselves.

The number of arrivals of Chinese nationals between January and October 2016 according to the official statistical offices of each country.

Assuming that WeChat considered Hong Kong and Macau “domestic destinations,” we’re left with the United States, Taiwan, and Japan rounding up the top three destinations in 2016. This would indeed contradict official data by a substantial margin—especially when taking the height of the bars into account. According to WeChat, the United States received more than double the number of Chinese visitors than the closest runner-up, and some 400 percent more visitors than Thailand which ranks as the fifth most popular destination.

The real story is that Thailand ranked the most popular “non-Chinese” destination in 2016, receiving approximately three times the number of Chinese tourists than the United States did in the same period. Given the recent crackdown on Chinese “forced shopping” tours in Thailand, many industry voices have questioned the reliability of the government’s figures altogether, but even if statistical foul play was involved, the sheer number of flights connecting China and Thailand dwarfs the number of connections between the United States and China, making such a dramatic shift an extremely unlikely event. No, the United States did not receive hundreds of percent more Chinese tourists in 2016 than it did in 2015, and no, Thailand’s tourism crackdown in the fall of 2016 didn’t cause Chinese tourism to Thailand to drop to zero. Even if not a single Chinese tourist visited Thailand after the crackdown, the number of Chinese tourists it had received by the start of the crackdown would still outnumber the full-year arrival number in the United States.

Similar things can be said of WeChat’s second top destination, Taiwan. It falls far behind other East Asian destinations such as Japan and South Korea—not to mention Hong Kong and Macau. However, Taiwan performing better than Japan and South Korea would require Chinese arrivals to double more than twofold, a highly unlikely event given the political fallout between the Chinese and Taiwanese governments.

Without picking WeChat’s top destinations apart any further, how could it go so wrong?

It could be the case that WeChat leverages the number of social media posts made by Chinese nationals in each country to gain an idea of the number of tourists visiting each country. Long-haul destinations such as the United States, where tourists spend longer, would likely generate more posts per visit, while popular weekend getaways such as the SARs, Japan, and South Korea would see the opposite result if using such a methodology. If overseas Chinese are also taken into account, the vast number of Chinese students at U.S. universities could also skew the numbers in the United States’ favor.

Methodology, as it happens, is key to getting an accurate picture of the state of Chinese tourism, and it would appear that it is in this area where WeChat failed miserably with their report.

The reasons such studies, despite their flaws, gain significant traction among stakeholders and media around the world are however easy to explain. They’re free, easily digestible, clearly presented, and come from a famous Chinese company that can claim user numbers in the hundreds of millions. The data should be an almost perfect snapshot of Chinese tourism, yet it isn’t.

The most reliable data, however, is unexciting and usually hidden in some government spreadsheet. Generally limited to arrival numbers, it doesn’t necessarily tell stakeholders too much about their potential Chinese visitors either. For marketers, more interesting data such as demographic insights and up-to-date trends are best extracted from focused surveys, perhaps in a particular city or for a particular market segment. To get something representative for the whole Chinese population, the survey would have to reach so many people that the cost is simply unlikely to motivate the benefits, especially considering how trend-sensitive (and politically sensitive) Chinese travel still is. Other estimates and surveys, no matter how interesting they may seem, usually tend to rely on a very limited number of survey respondents, making it difficult to draw reliable conclusions, or are pure guesses based on historical growth rates combined with assumed impact of events reported in the media. As the cases of, for instance, South Korea, Taiwan, and Thailand in 2016 would prove, media tends to have a distorted picture of reality—also, ironically, because of the lack of good data. If the methodology seems questionable or if the data is completely out of line with official estimates, the results of relying on such data are probably questionable as well.

Until Chinese companies like WeChat, UnionPay, and Ctrip up their ante with Chinese tourism data, tourism stakeholders seem to be stuck with quite bland, but highly reliable, data. Bland data, however, is better than unreliable data, even if the latter is the data going viral on social media platforms such as WeChat.

WeChat did not respond to requests for comment on its 2016 data report.

Brainco wants to improve China’s education with a brain-machine interface wearable

Junse Lee — Tue, 17 Jan 2017 03:05:08 +0000

China is taking its education to a virtual level. With the advances in technology such as virtual reality and artificial intelligence, China seeks to enhance its quality and accessibility of education.

Traditionally, the country has been known for its notorious gaokao (高考 or college entrance exam in English) where students cram impractical knowledge for years to get into top schools. In recent years, however, there has been a growing demand for education reform to better prepare students for post-college life.

While most education technology focuses on creating online content, one company from Boston is tackling education reform from a different angle.

Brainco, founded in 2015 and incubated in the Harvard Innovation Lab, has ambitious goals to improve Chinese education by providing neurofeedback training. The company is one of the pioneers of BMI (brain-machine interface) wearables, armed with 5.5 million USD funding from various investors and pitch competitions.

Han Bicheng, the founder of Brainco, aims to break the traditional classroom mold and help schools use the most advanced technology to enhance the future of education. As China gradually increases its investment in education technology such as integrating MR and AR, Brainco takes a different angle to directly enhance students’ academic performance.

“In a traditional classroom, it can be challenging for teachers to easily understand how well their students’ are comprehending the material. It can also be difficult to have insight into what teaching methods are most effective at engaging their class. Additionally, students can feel frustrated when they are not engaged and perform poorly,” Han says.

That is where Brainco’s Focus EDU comes into play. The product aids teachers in analyzing students’ learning experience and outcomes. The data provides personalized student analysis to better understand their performance. The device also provides a school or district-wide approach to quantitatively measure student engagement in class. Han believes Focus EDU can maximize student participation through identifying individuals’ strengths and weaknesses.

Brainco currently works with the Harvard Graduate School of Education to solidify their strategy to enter into the US education market. They will also have their first clinical trial in Spring for children with ADHD in the US.

The company is smart to position itself in a specific niche market in China. With the growing middle class and demand for education reform, education technology has a huge room for investment in China. Few companies, however, focus on mental health wearables that combine neurofeedback training, attention level algorithms, and the most advanced realtime electrical signals (EEG) detection technology like they do.

According to the Mental Health Research Institute of Peking University, there are 15-19 million children suffering from ADHD in China. Han’s goal is to provide neurofeedback training to these students to enhance their attention span and performance.

Han admits, however, that there are cultural barriers entering the Chinese education market.

“Chinese parents are more amenable to neurofeedback training that takes the form of traditional academic tasks such as reading and mathematics. In the US, parents are open to using video games as a medium of neurofeedback training,” he says.

Such difference in education training challenged the company to come up with different cultural contents for the US and China.

Han is confident Brainco has been teaming with some of the best neurofeedback therapists in the world to create a training system that minimizes any side effects.

8 questions about Chinese tech we will see answered in 2017

mjkim — Tue, 17 Jan 2017 02:38:43 +0000

In the tech industry, new innovations are constantly supplanting old ideas and seemingly stable companies can find themselves facing unexpected challenges.

However, the trends we saw started in 2016 posed questions that have yet to be answered. Here are eight of them we think will be answered in 2017.

1. Can Alipay effectively deter the aggressive rise of WeChat?

Alipay and WeChat (Image credit: cztv.com)

Considering that Alipay has been trying hard to make Alipay a something more than just payment platform; a social community, what kind of strategies will actually attract users to use Alipay for engaging with other users?

2. How will competition between China’s bike-rental platforms, Mobike and Ofo, play out?

(Image credit: Emma Lee)

Which one will become more dominant? Around the end of 2016, Ofo had officially entered Silicon Valley while Mobike entered Singapore. We’ve talked a lot about these two companies and bike-sharing (actually bike-rental) in 2016. Will they be able to gain a meaningful presence in foreign markets? Will they actually survive until the end of 2017?

3. How will LeEco’s car business develop?

LeEco’s CEO, Jia Yueting, doing a live demo of LeSEE, an electric concept car of LeEco (Image credit: Engadget)

LeEco is probably the most argued-about company in China, especially regarding its financial status. Starting off with its reconfirmation of partnership with Faraday Future and introduction of brand-new electric cars, LeEco is expected to make lots of things clearer in 2017. The latest news is fresh funding of 16.8 billion yuan ($2.4 billion) from real estate developer Sunac . How that will impact the company’s transportation plans is still unclear.

4. Will WeChat’s newly-launched mini-apps replace actual apps in China?

‘Mini Program’ was added in the ‘Discover’ tab. (Image credit: MJ Kim)

It is not impossible considering the fact that websites were replaced by WeChat official accounts. Also, it is expected that before long, the number of mini-apps will sky-rocket. However, there is already a backlash occurring as users question their use and relevance. Will these mini-apps actually replace their bigger brethren?

5. How will Alibaba push the envelope on this year’s Singles Day?

(Image credit: Netease)

Granted, this is still some time away, but Single’s Day is always something to be excited about. In 2016, Alibaba created an AR game similar to Pokemon GO where users could find hongbao (红包 or lucky money in English) by capturing the Tmall cat mascot. It seems that every year we ask if they’ll be able to top last year and every year they do. We’re already getting excited to see what they have planned for this year.

6. Will Baidu be able to catch up to Tencent and Alibaba?

Robin Li introducing Baidu’s AI car at Baidu Technology Innovation Conference 2016 on September 1st, 2016. (Image credit: Techweb)

With the stunning successes of Tencent and Alibaba over the past few years, Baidu seems to have lost much of its steam as its services are replaced by big and small competitors alike. However, rather than position themselves as a leader in consumer technology, Baidu is refocusing on developing proprietary technology such as AI and AR.

7. Will Didi overcome troubles caused by unexpected regulations imposed by municipal government?

(Image credit: TechCrunch)

New rules late last year may hamper Didi’s China operations. Big cities, including Beijing and Shanghai, now require that all drivers have a local hukou (户口 or household registration in English) and that the vehicles be locally registered. According to Didi, these new restraints could eliminate nearly 80% of the company’s Shanghai vehicles and potentially put the breaks on Didi’s ride-hailing business.

8. How many more global acquisitions will Chinese companies make?

Martin Lau and Ilkka Paananen (Image credit: Supercell)

In 2016, notable cases were Tencent acquiring Supercell, a Finnish game publishing company and C-trip acquiring Skyscanner, a British travel information website.

This startup connects China’s LGBT community for marriages of convenience

Eva Yoo — Mon, 16 Jan 2017 09:51:47 +0000

We have seen many LGBT startups in China in the past years, such as Blued, Lesdo, and The L. While these apps connect same-sex homosexuals, one startup set out to connect different sex homosexuals to solve their real problem. iHomo, a Beijing-based startup is now helping out LGBT community to find a beard to ward off increasing pressure from family members.

“Marriage and having children all seems to be taken for granted in China. My parents are no exception,” CEO and founder of iHomo, Xiaobai Ou told TechNode. “They began to urge me to get married. In order to appease my family, I chose xinghun (形婚, marriage of convenience or lavender marriage in English). We had a wedding ceremony in 2012, which was fairly smooth. My girlfriend was my bridesmaid and make-up artist at the wedding.”

In their first year of marriage, they needed to move to each other’s home. Later, they didn’t have to do that so frequently. “My husband is now a good friend of mine, and we go out together to eat and chat. When things come up, we help each other,” Xiaobai said.

Thinking that she is not the only one struggling with this problem, Xiaobai and her girlfriend Yi Zhi launched an app called iHomo aiming to connect the gay community with the lesbian community to find beards.

Due to China’s traditional culture, rigid concepts of family, many other factors, China’s LGBT community will take a long time to achieve the status quo seen in the U.S.

Along the way, Xiaobai believes xinghun is a necessary process, and more suitable for the majority of homosexual groups in China. According to her, the gay community’s demand for xinghun is increasingly growing.

“Coming out is very hard and we shouldn’t expect too many people to do this is in a short period of time. In fact, it could bring more harm to the LGBT community,” she added. “We believe that any form of choice must be related to the social status quo, and xinghun is a relatively moderate approach.”

From left to right: Users are divided into gay and lesbian; the company analyzes users to match them; users can post to updates to their network (Image credit: iHomo)

The iHomo app can be downloaded on both iOS and Android. A new user can only access the app through an invitation code, which the company claims is to protect user privacy. The app works like a social network, with a focus on the xinghun connection.

In the early stages of development within two years, iHomo will first focus on accumulating users, then invite users to sign up for paid membership service on the app. Finally, the company aims to provide a paid on-line platform for xinghun, and receive a service charge for business partners and take commissions when connecting the two groups for xinghun.

“In the future, we will enhance the business value through a combination of online and offline services, including activities, matchmaking, wedding services, pregnancy, and legal advice,” Xiaobao remarked. “After the platform has reached a certain level, and the development of Chinese homosexual groups to a certain stage, we will provide more practical services; not just marriage services around homosexual groups, but also employment, rent, pension and other homosexual group’s needs.”

The company has not yet raised any funding and has bootstrapped since 2014.

Other similar companies include Chinagayles, which has over 400,000 users and claims to have matched almost 50,000 couples, and Queers, which is operated by the same company as LGBT social networks GayPark and LesPark.

Is LeEco’s 2.4B USD new funding enough to redeem the cash-strapped conglomerate?

Emma Lee — Mon, 16 Jan 2017 08:08:59 +0000

Chinese internet company LeEco announced Sunday that it landed 16.8 billion RMB (2.4 billion USD) in fresh funding led by China’s real estate titan Sunac China Holdings Ltd. Sunac will become the company’s second-largest shareholder after the deal.

The company disclosed that Sunac will contribute 15 billion RMB of the total funding broken into three parts:

6.04 billion RMB for 8.61% of the company’s listed arm Leshi Internet from founder & CEO Jia Yueting
7.95 billion RMB for 15% of Leshi Zhixin, the company’s television subsidiary, through transfer existing shares and expansion of share capital
1.05 billion RMB for 33.5% of Le Vision Pictures, LeEco’s film production unit

Hua Insurance and Leran Investment, a state-backed venture capital firm, were also part of the deal, injecting 400 million RMB and 1.43 billion RMB in the company, respectively.

The financing comes at a vital timing for the company, which has experienced two most troubled months after Jia confirmed November that it’s facing a major cash shortage due to overly aggressive expansion plans.

Jia, the 43-year-old tech mogul, has built his reputation as a capital-raising machine in China’s internet industry. Local media Yicai reported that the company has already raked in a whopping 80 billion RMB funding as of November 2016, bankrolling a variety of businesses from smartphone, television, film production to cloud services.

Will the new funding solve the cash squeeze?

This hefty round would definitely ease the capital pressures the company has faced and to rebuild confidence in its investors, but is it big enough to fill in LeEco’s funding gap to the fullest? Jia’s answer for this question is affirmative.

“Apart from LeEco’s electric car business, the 16.8 billion RMB funding is well enough to address all our needs to drive a smooth transition of the LeEco system strategy from the first stage to stage two,” said Jia.

The transition would mark a shift from taking an all-out approach into every business on a shared loop ecosystem on the global level to achieving true eco chemistry between the seven sub-ecosystems.

In the second stage, creating revenues will be a key goal for the listed as well as the unlisted entities. China, the U.S., and India will be the primary focus of the company, said Jia in an internal letter released last November.

LeSEE launches A round financing

According to the funding plan, LeEco’s electric car division, SEE Plan (Super Electric Ecosystem Plan) also the biggest cash-burner, is not included in the current financing round. Jia said last week that they could put their cars into production with a further 10 billion RMB round, adding that more funding is still needed since the project is larger in scale.

LeSEE already raised 1.08 billion USD round in September last year from investors include Yingda Capital Management, China Communication Construction Ltd., and China Aerospace Science & Industry Corp, among others.

Together with the funding news, Jia announced the launch of its funding plan for LeSEE. “We are really looking forward that more investors with visions could join the LeSEE ecosystem. Some progress has been made recently and hopefully we could share more good news within one month,” he said.

Qtum wants to unify Bitcoin and Ethereum blockchain applications

Eva Yoo — Fri, 13 Jan 2017 08:50:13 +0000

Qtum a Shanghai-based blockchain company, announced on Wednesday a more than 1 million USD angel round from top blockchain evangelists, academics, venture capitalists, and technology enthusiasts on Wednesday. The company claims they have the world’s first digital currency that can execute smart contracts with a proof-of-stake consensus mechanism, and are now working on a project called Qhola to circulate its currency on top of WeChat mini program.

Some of the project backers include Kuaidi founder Chen Weixing, OkCoin CEO Star Xu, founder of Ethereum and Jaxx Blockchain Interface Anthony Di Iorio, blockchain technology advocate Bo Shen, and Chinese angel investor, Xiaolai Li.

Qtum (pronounced “quantum”) is an open-source value transfer protocol and decentralized application platform that aims to pool the development resources of Bitcoin with decentralized application developers from Ethereum. Ethereum is a platform and a programming language that makes it possible for any developer to build and publish next-generation decentralized applications.

“Bitcoin is primarily a value transferring network while Ethereum is predominantly a smart contracts platform. Qtum utilizes the core technology from both of these platforms; it merges the value transfer technology of Bitcoin with smart contract execution technology of Ethereum,” John Scianna, PR manager at Qtum told TechNode.

The funding will allow the Qtum Foundation to develop a working beta of the project. Until now, the team has managed to get the Ethereum Virtual Machine (EVM) running on a fork of Bitcoin Core 0.13, which allows the company to use many of the decentralized applications that were already built on Ethereum.

Leveraging WeChat mini-apps

“Light wallet” protocol supporting Qtum

Qtum is aiming to leverage WeChat’s new mini-apps platform to circulate its tokens on WeChat. Qhola takes advantage of WeChat’s mini programs to allow users to send and receive Qtum tokens as well as pay for products and services within WeChat. Qhola also aims to take this technology to other mobile messaging platforms such as Facebook Messenger and Telegram.

“Current tokenized applications require users to download the whole blockchain. When you think about a user trying to store over ten gigabytes of data on their phone just to run a few apps, it’s not realistic,” John remarked. “Qtum can run tokenized applications without having to download the blockchain.”

Qtum is currently compatible with the existing Simple Payment Verification “light wallet” protocol and will support mobile device use cases.

Uniting Bitcoin and Ethereum

“The support we received from public figures in both the Bitcoin and Ethereum communities illustrates that we are uniting these two groups,” said Patrick Dai, Founder of the Qtum project and previous employee at Alibaba. An alumnus of Draper University, Partick has been part of the Bitcoin community since 2012.

Many current blockchain projects were built with the ideology that technology should disintermediate corporations, and have programs run by themselves with no central governing body. Most businesses, however, will continue to rely on people for most operations, but there are still many use cases where blockchain technology can reduce waste and inefficiencies for businesses.

Qtum aims to be the bridge between the two so that users can have autonomous applications and businesses can have their blockchain applications without having to create their own technology from scratch.

Post-90s are becoming pillar of China’s rising global shopping force

Emma Lee — Fri, 13 Jan 2017 07:47:51 +0000

Despite the implementation of tougher taxation policies, China’s cross-border e-commerce sector maintained momentum thanks to the combined forces of consumption upgrading (消费升级) and the rise of a younger consumer group.

A recent report from Tmall Global and CBNData shows that the online sales value of imported goods maintained a growth rate of more than 30% in 2016. However, that is slower than the 40% growth seen in 2015. The online penetration of China’s total domestic import consumption also continued to rise.

Along with the growth, the market is recording a major shift in consumer demographics – there’s a notable increase in the number of young buyers (defined as those born after 1988). This group, which now accounts for nearly half of all consumption on Tmall Global, represents more than 50% of newly added customers on the platform in the past year, showing a healthy future for purchasing power, the report pointed out.

Sales share of different consumer groups from 2014 to 2016 (source: Tmall Global)

A transition in personal and family circumstances may have contributed to this change; a majority of customers born between 1988 to 1993 have just got their first job after graduating from university, getting married, or having babies. But the consumption power of post-95 and post-00 groups is nascent as this group has yet to find stable income.

Sneakers, maternity and baby products, cosmetics, alcohol, and snacks are the most popular items among the 1988-1993 group. The younger, 1994 to 2000 group favors cosmetics, personal care products, gadget kits, as well as comics and animation derivative products.

Not only are the Tmall Global users getting younger on average, but more and more of them are from lower-tier cities. Over 31% of the new customers in 2016 were from third and fourth-tier cities in China, compared to about 24% of the already-existing customer base. This reflects the growing market reach of Tmall Global, as well as a rising living standard in the less developed cities.

Interestingly, the report also revealed some unexpected boosts in the sales of some very specific categories. The vote for Brexit and subsequent drop in the value of the British pound brought about a spike in sales of products from the UK. The screening of popular Korean TV drama Descendants of the Sun (太阳的后裔) drove the sales of a YSL lipstick that the lead actress wore while a deterioration in air quality boosted the sales of air purifiers.

The biggest level of spending on Tmall Global came from Shanghai, Beijing, Hangzhou, Guangzhou, and Shenzhen.

The top 5 countries for imported goods on Tmall Global were Japan, the U.S., South Korea, Germany and Australia. Here’s a further breakdown of top selling items from these regions:

Japan: beauty products and serums; diapers, strollers, and baby products; personal care products
U.S.: health foods and supplements; baby formula and snacks; bags and luggage
South Korea: beauty products and serums; cosmetics and perfume; women’s apparel
Germany; milk powder, dietary supplements, and snacks; kitchenware; health and nutrition supplements
Australia: health and nutrition supplements; milk powder, dietary supplements, and snacks; coffee, oatmeal, and instant beverages

Zhihu crowned China’s first knowledge sharing unicorn with 100m USD series D

Emma Lee — Thu, 12 Jan 2017 09:47:07 +0000

China’s Quora-like Q&A service Zhihu announced today the completion of a 100 million USD series D, our sister site TechNode Chinese is reporting. The funding would boost the startup to unicorn status with a valuation of over 1 billion USD, according to Kaifu Lee, renowned Chinese startup guru and early-stage backer of the company.

Investors of the round include Capital Today, a reputable VC firm that has invested in NetEase, JD, and Meituan-Dianping, as well as several current investors like Tencent, Sogou, SAIF Partners, Qiming Venture Partners, and Sinovation Ventures.

Launched in December 2010, Zhihu is the go-to place for Chinese internet users who want to seek expert insights into various areas. Originally started as an invitation-only Q&A platform for tech-savvy and entrepreneurial minds, it opened registration in 2013 to everyone. Since then, its topics have diversified to cover popular topics from movies, games, and culture, as well as IT and finance.

As of January this year, Zhihu has 65 million registered users with 18.5 million daily active users. The site has received over 6 million questions and 23 million answers in 2016, according to data from the company.

2016 was a crucial transition for Zhihu: they were able to monetize through the launch of new services, including institutional accounts, ads, cooperation with book stores, and Zhihu Live, a service which allows users to join live one-on-one sessions with topic experts for a fee.

However, the company is facing fierce competition in the knowledge-sharing sector from both old rivals like Baidu Zhidao and up comer Fenda. How to commercialize the product without hurting user and community experience remains a big challenge for the company.

After receiving a 1 million RMB angel round from Sinovation Ventures (formerly known as Innovation Works) in January 2011, Zhihu raised a 8 million USD series A from Qiming Venture Partners and Sinovation Ventures in November of the same year. In June 2014, the startup booked a 22 million USD series B from SAIF Partners and Qiming Venture Partners. In November 2015, Tencent led a 55 million USD series C that valued the company at 300 million USD.

Nearly 90% phones sold in China in 2016 came from domestic makers

Emma Lee — Thu, 12 Jan 2017 08:22:20 +0000

While spearheading aggressive forays into overseas markets, Chinese smartphone brands are also taking a firmer hold of the domestic market and eating into the shares of multinational phone makers like Apple and Samsung.

In 2016, a total of 559.7 million mobile phones were shipped in China, up 8.0% from the previous year, according to a report from the China Academy of Information and Communications Technology (CAICT). The number of new model releases reached 1,446, down 3.3 percent year over year (YOY).

Source: CAICT

Of the total amount, local smartphone makers have shipped 497.8 million units in 2016, up 16.1% YOY. The figure accounts for 88.9% of the domestic mobile phone shipments, higher than 85.0% one year ago.

The CAICT report shows that the number of new models released by local brands (1381 units) decreased by 2.5% YOY and represented 95.5% of the total number of new model release in the domestic market.

In wake of the smart and well-connected trend of phones, the market share of 4G and smart devices grow stably.

The country’s smartphone shipments surged 14.0% YOY to 521.6 million units in 2016, representing 93.2% of the total domestic mobile phone. Android still dominates China’s smartphone market with 425.4 million units shipped were based on the operating system.

A total 519.4 million or 92.8% of the total shipments in China support 4G networks, up 18.0 percent YOY.

The growth of local companies like Oppo and Vivo were the main contributors to the swift rise in shipments from domestic companies; both Oppo and Vivo drove sales with extensive offline retail outlets as well as innovations in design and key features.

Data from research institute Counterpoint shows that Oppo and Vivo have taken the top two spots in China’s smartphone market with 17% and 16% share respectively in Q3 2016, biting into the shares of Samsung, Lenovo, Xiaomi, Coolpad and Apple.

Source: Counterpoint

Apart from domestic market, Chinese smartphone brands are expanding quickly in overseas markets like Southeast Asia, Middle East, and Africa. In India, for instance, Chinese brands grabbed 50% of the $10-billion Indian smartphone market in 2016, biting into sales from top-selling competitors like Samsung.

This Shanghai startup is making it easier to brew beer at home

Eva Yoo — Thu, 12 Jan 2017 04:29:03 +0000

We have seen a lot of connected coffee machines last year, from Auroma Brewing Company to Smarter Coffee. This year in CES 2017, iGulu, the company behind an automated home beer brewing machine, won CES 2017 Innovation Awards honoree in the Smart Home product category.

This is not the first time for this Shanghai-based startup to get noticed by the Western market. On June 2016, the company successfully funded their Indiegogo campaign, surpassing its goal by 701%, with over 1 million USD. Since then, the company changed its name from Artbrew to iGulu.

China is the world’s largest beer producer and consumer for the past 12 years. According to a report released by USDA China, annual sales of U.S. craft beer sales could reach 12 million USD by 2017.

“In the next five years, we will see a rapid development of the craft beer industry in China, for both family and commercial purpose,” CEO and founder of iGulu, Shu Zhang told TechNode.

With the continued growth of income, Chinese beer consumers pursue better quality and various flavors. Imported beers, particularly those from Europe were popular. The iGulu team believes that they can bring more quality and flavor options with their customizable brewing machine. The team believes beer home brewing goes along with the DIY trend in China, too.

“More and more Chinese people are willing to DIY at home for daily necessities. As the world’s second most consumed drink, more Chinese people are willing to brew their beer at home,” Shu added.

iGulu’s automated beer brewing machine allows both beer experts and novices to brew high-quality beer by pressing a few buttons or using an app. It also offers a database of thousands of beer recipes, along with the option to modify or create new recipes. The user interface uses a 4.3 inches LCD screen for operation and comes with a matching app.

iGulu’s automated beer brewing machine

Despite the huge beer market, Chinese consumers, beer trade, bars, and restaurants all lack awareness and know-how of craft beer. To raise market awareness, iGulu’s goal for this year is to raise funding using a Chinese crowdfunding platform and introducing their products in the retail market. Offline agents and online KOLs, like wanghong, will be their main promotion channel.

“As for the commercial market, we will provide automatic smart brewing devices with at a low price so that small business owners can brew customized beers for their customers,” Shu remarked.

The company raised 4 million RMB (~~57.9 million~~ 578,678 USD) in an angel round from Hofan based in Shenzhen and Yinxinggu Capital based in Zhejiang.

The idea of automatic brewing machine comes from Shu’s experience with craft beer.

“Once I tried craft beer that my friend brewed at home, and the taste changed my impression of beer. I hoped I could brew my own beer at home, and share with friends. So I came up with the homebrew idea,” Shu says.

Shu Zhang, the CEO and founder of iGulu, previously worked within the data center of Cisco and was the technical leader of Motorola’s Software Group. The core members and technology development team of iGulu hail from Eson, Oracle, Motorola, Cisco, and AB-InBev.

“Experiences at Cisco and Motorola gave me the space to be creative, and the outstanding colleagues made me feel proud. But I think it’s time to live a new life. I want something challenging,” he said.

Image Credit: iGULU

Victim uses live streaming to document alleged sexual harassment

Guest Editor — Thu, 12 Jan 2017 03:27:10 +0000

Editor’s note: A version of this post first appeared on the Beijinger, a leading source of English-language lifestyle information on the city of Beijing.

The woman involved in the sexual molestation case that landed a Beijing high-tech executive in jail for five days says she’s just a student seeking justice and not a wanghong (网红 or internet celebrity in English) using the incident to get more popular.

Zhang Yang Yang accused Galaxy S Chief Operating Officer Li Yuanjie of groping her breast on a January 3rd red-eye flight from Shenzhen to Beijing. She recently told her side of the story via on online streaming broadcast on huajiao.com and in interviews with The Mirror.

Zhang says she’s nothing but a student and was unkempt and not wearing revealing clothing at the time of the incident. She adds that she’s not using this event to advance her online popularity and insists she’s only after a face-to-face apology from Li.

Li previously denied the molestation, saying that he had even moved out of the way after Zhang had swung a leg in his direction while asleep in her seat next to him. However, he has quit over the allegations and Galaxy S has publicly apologized on their official Weibo account.

After the incident, many online commenters found Zhang’s online streaming channel on huajiao.com and speculated that she had in some way staged or used the incident to drum up new followers. Zhang says that she wants to stand up for other female friends who have encountered this same situation and tell them not to back down, even though many people might stigmatize them.

Zhang initially reported the incident via a Weibo account she had set up specifically to document the incident. Later she live streamed details of the incident via Huajiao, but has been deleting her account history after each successive broadcast.

“At the time I decided to create a second, smaller account to broadcast this incident – I didn’t use my large [main] account,” she described. Zhang erased her posting and broadcasting history for fear that people would accuse her of making the accusations just for publicity’s sake.

After making the broadcast, she once again deleted the content of the account. The Mirror journalists noted however that her account had been gifted 160,000 “Huajiao coins,” currency used on site for users to “tip” broadcasters they like. One Huajiao coin is the equivalent of 1/10th of RMB 1, so the broadcast likely netted Yang Yang somewhere close to RMB 16,000, The Mirror concluded.

However, she denied being paid directly by huajiao.com for her efforts and has never signed any contracts to do any broadcasts.

At this point, it is unclear who did what and whether this is all just a publicity stunt. However, we here at TechNode wonder if she was not a wanghong (网红 or internet celebrity in English) whether this story would have gotten as much traction as it has. Sexual harassment is a big problem in China with some research saying that youthfulness and having a paid job is enough to become a target. We have talked a lot about live streaming and the only thing for certain in this story is the greater role live streaming is going to play in China’s digital evolution.

Image credits: The Mirror

Security vulnerability hinders Alipay’s social networking foray

Emma Lee — Wed, 11 Jan 2017 05:31:03 +0000

China’s most popular online payment app Alipay announced Tuesday that it plugged a user authentication security flaw.

Alipay got busy patching the flaw after receiving complaints from China’s internet users. Many found they could login into an account with just some personal information and didn’t require a password to make payments.

The process of hacking into an Alipay account takes just a few steps, as described by a user on China’s Q&A site Zhihu:

Tap forgot my password.
I don’t have my phone.
Select one recently purchased item from nine –
Choose one friend from nine friends or choose one recently used address –
Login successful!

Before Alipay plugged this hole, you could just make payments by scanning a QR without a password.

Retrieving Alipay password by identifying friends (source: Zhihu)

The required information for verification is easy to guess and puts Alipay user account at risk to anyone who has this information. This could include a user’s intimate friends, Taobao merchants, or even deliverymen if they are included in user’s Alipay contact list, quite possible given Alipay’s aggressive push into social networking.

The company claims it has raised its security level to fix the security flaw. To a retrieve password, Alipay users have to input a verification code that’s been sent to their registered phone number via text messages. For those users whose phones are not around or want to change mobile devices, Alipay said it would evaluate the risk in terms of network environment and whether the account information is intact.

The company also warned users to report loss of the account as soon as possible when receiving notifications about unauthorized logins.

Alipay said that users can only retrieve their login password, not their payment password. However, this is not a valid defense because even though the flaws only allow login, payments still can be made by scanning QR code where no payment password is required even if it’s only small sums.

In the upgraded version, password retrieval through selecting purchased items or friends works only for users who try to recover their passwords through their own previously registered devices.

Alipay’s bumpy way to social networking

This is yet another setback that Alipay has encountered in its social networking push. Just one month ago, the most commonly used payment app was been blasted by criticism for generating lewd content.

Many feared that integrating social networking features into a financial service would put customer assets and personal information at risk.

Although Alipay pledged to raise its security levels, lots of netizens remain skeptical. More than 2,400 people liked a harsh comment from one Weibo user:

“Still want to say dirty words, do your fucking job in payment, and stop dreaming about social networking.”

In response, all Alipay could say was: “You are right.”

The animated film industry is taking off in China with help from South Korea and Japan

Eva Yoo — Wed, 11 Jan 2017 03:10:39 +0000

As China sees more and more overseas animations doing well domestically, the country is vying to create its own profitable animation industry. China’s animation market is still in its early stage and is greatly influenced by companies in neighboring Japan and South Korea.

Asian animated films were big hits in 2016. Japanese animation Your Name made 80.5 million USD (556.93 million RMB) in China. Chinese animated epic fantasy film Big Fish & Begonia grossed 565 million RMB (81.66 million USD) in China. It was co-produced by Korean animation shop Studio Mir.

“Seeing this success, TV animation companies are also moving from the TV to the movie screen,” Yup Ma, CEO of CREATIVE BOMB told TechNode.

CREATIVE BOMB, a South Korean animation company recently established a joint venture with Ruyitoon an animation company in China to make a film together.

“Animation is very developed in Japan and South Korea. Japan developed animation for teenage manga fans, while South Korea developed animation for the general public, mostly for children. Since China’s animation is just starting to grow, they are collaborating with Korean animation studios,” Mr. Ma says.

According to Mr. Ma, almost all the aspects of making animation have improved greatly in China, especially in design or animators themselves. However, China still has more room to make growth in production and story development. Currently, Chinese companies are buying the story, production, and IP from overseas companies.

“Many content companies are entering China market after they complete the story. I advise that these companies enter China when they have only the story and production plan because the content needs to be localized to China,” Mr. Ma added.

Theaters are mushrooming in China. The country has now approximately 7,000 cinema screens with approximately 27 new cinema screens were built per day in 2016. Thanks to Alipay and WeChat Wallet making it easier for the public to book tickets via their phone, more Chinese people are going to theaters to enjoy movies.

“TV animation is based on stories, but animated films focus on the background of each scene, which takes three or five times longer time to create and more budget to put in. When the animation is done, it can generate up to 2000% in revenue, but it also means that there is also a high risk if it fails,” Mr. Ma said.

South Korea’s content companies usually have 20-30 people while Chinese companies can have up to 3000. In South Korea, the animation is drawn chronologically, from the first series to the next, but in China, the animation is drawn 10 series at a time by a huge team of animators. For that reason, China has a middle manager who checks the drawings of each series, so that the series drawn by different animators will look the same.

Game company now getting into animation

CEO of CREATIVE BOMB, Yup Ma

The company previously made educational game apps for three to six-year-old kids that improve child’s cognitive ability, creativity and musical sense. Currently, the company has merchandising partners in Southeast Asia, with 2,000 daily downloads from Vietnam, Thailand, and Indonesia.

Mr. Ma worked in an advertising company, building a marketing strategy for camera phones. When he started the CREATIVE BOMB in 2012, he decided to expand to Japan first, which was not a common strategy for a Korean company at that time.

“Japan is a market known to be competitive for education content, but also where the parents are willing to pay for e-contents,” Mr. Ma said. Expansion to Japan was a success as the startup earned monthly profits of 8,200 USD.

“As Japan is the leader in animation and character industry, Korea, China and South East Asian markets recognized these results,” Mr. Ma added. The Korean animation company came to China in November 2015, invested and was incubated at Hanwha group’s DreamPlus center. CREATIVE BOMB said that its TV series will be released this July in China.

Image Credit: Creative Bomb

Here’s why Shenzhen will replace Silicon Valley in 2017

Guest Editor — Tue, 10 Jan 2017 03:20:57 +0000

Editor’s Note: This post is contributed by Sean Konieczny, a tech entrepreneur and extensive traveler. While in Asia, he settled in Beijing and co-founded a digital health data company to provide precision healthcare services that correspond with user health data.

For the past few decades, Silicon Valley has been the global innovation hub. To think that this will last forever, however, is ludicrous. Just as history has proven, the world’s “center for innovation” cycles from place to place – just as Babylon changed the world, eventually so did Alexandria, then Ancient Greece, and then Berlin. These cities are just some of the places throughout history that have taken form of a “Silicon Valley”. History will repeat the cycle, and sooner than we think.

The next Silicon Valley will be a city much deserving of the title. It will take a special combination of developing skill sets, growth velocity, infrastructure, location, and put plainly, good timing. Some candidates are places like government-backed Singapore, renewable energy leader Munich, intellectually and academically centered Boston, progressive and aggressive Bangalore, and even the high-tech and fast transforming city of Rio de Janeiro. They’ve all shown to be solid candidates for a future epicenter of innovation.

With all these places filled with opportunity, the future of innovation on a global scale seems bright but which candidate will take the title? The answer is Shenzhen, China.

From fishing village to global powerhouse

35 years ago, Shenzhen was just a fishing village across the border from Hong Kong. In 1979, just one year after Deng Xiaoping became China’s paramount leader, he designated the village of Shenzhen as a “special economic zone”. This would be the first test of capitalism as the Chinese economy began to liberalize.

In 1983, the worldwide sales of personal computers grew by 73% and the technological shift began to station itself in Silicon Valley. Meanwhile, in the East, the fishing village of Shenzhen was radically changing its infrastructure. The city grew faster than any other in the history of civilization, as it went from a population of 300,000 to over 10 million in the time of a single generation. Shenzhen quickly became the incubator of technology for China.

Since the transformation, Shenzhen has acted as a round peg in a square hole, forcing China to think differently. Simply put, the manufacturers make new products, introduces new business models and consistently remains on the cutting-edge of technology. Shenzhen got its economic start by manufacturing products for foreign companies but quickly used its knowledge acquired from experience to start building its own economy. The city has grown not only as a manufacturer but as an authority for innovation.

Many of today’s technological leaders prefer to use Shenzhen as their headquarters. Companies such as Huawei, Tencent, BGI, and ZTE call Shenzhen home. As the city moves to shake its manufacturer label and become an innovator in its own right, it transitions from old to new at an astonishing rate.

People make the difference

The city is in the middle of an upgrade from manufacturing hub to global groundbreaker. With the support from the government, Shenzhen is set to transform rapidly.

According to Shenzhen’s current mayor, Xu Qin, more than 17,000 Shenzhen manufacturers have shut down in the past five years primarily due to the city’s plan for an upgrade. Xu also confirmed that Shenzhen will become a “global innovative center” as the city shifts investments from manufacturing to research and development in the technology sector.

Xu’s goal is to attract more high-end global-based business. Leveraging the city’s entire ecosystem is key. However, it is the people that will ultimately make the difference.

The people of Shenzhen are different from traditional innovators. Many of the existing electrical engineers in Shenzhen are performing well above of their international peers, but without any formal training.They never went to school because they never had to. They were raised building logic boards using spare parts from factories.

The gap of academic knowledge for most of this community actually plays to their advantage. Skills have been adopted primarily through real experience, something the traditional schooling system fails to offer. The existing environment breeds creativity and efficiency which are prime advantages when designing and developing new products and business models.

Open source, open innovation

Besides the advantage of experience, Shenzhen has another huge edge over its competitors: its ability to open source. Evolved from its manufacturing background, the city has learned to share technology, creativity, and innovation all in the spirit of creating efficiency. The open-source model has proven to work wonders for a number of companies.

Some argue that open-source is the reason why Shenzhen is beginning to lead the world in selective industries, with virtual reality as one of the best examples.

Minal Hasan, of Silicon Valley venture capital firm K2 Global, said, “I think China will adopt VR way faster than the U.S. because of how the country is structured, and how involved the government is.”

Shenzhen is leading China, an $86 million domestic market, in VR development. Some may argue that VR is the highest potential market in today’s world economy. Judging by the existing infrastructure inclination, Shenzhen will take ownership of the market and Silicon Valley will trail in a distant second.

Industry leading companies are also validating the worth of an open-source model. Elon Musk, like Shenzhen, understands the value of leveraging open-source to drive innovation. In June 2014, he announced that Tesla was removing all patents in the spirit of open-source and “for the advancement electric vehicle technology.” Musk’s goal is to advance an industry as an existing leader, not to slowly beat down smaller, less resourceful competitors through patent battles.

Musk isn’t the only one in the valley that’s leveraging the model. Microsoft recently joined the Linux Foundation as a Platinum Member to leverage the open-source operating system and build products beyond previously untouchable limits. Google, a leader in software and web search, has opened its Scholar platform to allow anyone to contribute to scholarly journals, as well as many other resources in their ecosystem. The open-source model has also been adopted by rising entrepreneurs and pioneered by crowdfunding with platforms like Indiegogo, Kickstarter, and Bountysource.

Imagine the difference it makes when not just a single company, but an entire city adopts an open-source model. Shenzhen is not only dipping its toes; they have been growing with this model deep within their bloodstream. This will be a determiner for the transformation from Silicon Valley to Shenzhen as the leading city for innovation.

Silicon Valley is slowing down

The Western world, in contrast, has traditionally been known to try to control the economy and create high barriers to entry. Silicon Valley is the perfect example. The start-up environment in Silicon Valley resembles one of a fraternity.

As an entrepreneur, maybe you can bootstrap your idea and hustle your way with a small team to an office conveniently located next to a food truck in Soma. Although, in order to scale enough to make a dent in the market, getting funded to gain broader resources is often necessary.

The group of venture capitalists in Silicon Valley is small, tightly-knit, and has a very exclusive selection process. With the existing system in Silicon Valley, the investors are the ones who have control of how technology is developed, applied, and distributed to the general public. It’s an underlying, silently controlled economy.

In parallel, companies like Apple and Samsung are constantly in legal battles over who patented rounded rectangles and 4.7” screens. For many companies, the business model and contributed value are strictly generated from patenting. Unfortunately, this causes many Silicon Valley companies to allocate heavy spending for lawyer fees and court battles – a huge distraction from the importance of innovation.

Factors for a paragdigm shift

In order for Shenzhen to make the most of this opportunity, there are two vital factors:

Shenzhen must never forget that consumers love quality, design, and purpose of products. The city will need to shed much of its manufacturing mindset and begin recognizing itself as a leader in design and as a global innovator. With this mindset and stereotypical shift, Shenzhen can become the new powerhouse of innovation and the technological world.
Silicon Valley must fail to demilitarize the traditional model of the Western intellectual property and a patent-packed ecosystem. Silicon Valley’s current infrastructure and value model were built for traditional innovation. It will be very difficult for the community to completely transition to the new, open-source structure. This is good news for Shenzhen.

Filled with experience, history, and dedicated drive, Shenzhen is on the verge of achieving greatness. The city has the chance to become the next epicenter of innovation. 2017 will be an important year to prove itself.

No matter where the next Silicon Valley is, it will be an upgrade. The new norm is a flexible ecosystem of exponential ideas and open-source innovation and Shenzhen has an incredible head start.

Mini-apps are here. Here are our first impressions

mjkim — Mon, 09 Jan 2017 07:55:04 +0000

The day has come: the long-awaited WeChat mini-apps were officially launched today, January 9th, 2017. Now, WeChat users can find the mini-apps inside their own WeChat and download some of them.

TechNode has been following the development of the mini-apps, ever since its first announcement in September last year. In our last article, we explored whether or not WeChat can be thought as another entry-point for more traffic in an interview with Zhao Jiuzhou, CEO of HuosuMobi.

Today, we bring our first impressions.

Light and easy
The whole process of searching, downloading and using the mini-apps takes less than a minute. It even felt like there were no ‘download’ per se. Once you click the mini-app icon and enter it, it loads automatically. From a user-experience perspective, it feels almost like an advanced version of a WeChat official account.

List of mini-apps, all downloaded in less than two minutes

More app-like functions
However, of course, the functionality and content inside a mini-app are much the same as their larger brethren. On Android, mini-apps can even be placed on home page of the phone, making it hard to distinguish between them and regular ones.

Large differences in quality
But, for the time being, there is a great degree of variation among the mini-apps: some look like there was a lot of effort put into them, while other appear too simple to be compared to an actual app. Each major company has probably considered whether or not its users will use the mini-app instead of its original app and, if so, how much of its user base. Based on this reasoning, they chose which functions to include in their mini-app.

Below is a screenshot from the Didi mini-app: you can only call a kuaiche (快车, Didi’s private car-hailing service). Didi decided to leave out other functionality in this version of the mini-app.

On the other hand, in the case of Zixuangu (自选股, a stock market tracker and news app), all functions except their news stream is available in their mini-app.

There are already promotions. For instance, when you take a look at the Maoyan Movies mini-app, you will notice that you can receive a hongbao (红包 or lucky money in English) when you make your first purchase in the mini-app.

If you haven’t used a mini-app yet, here are some instructions:

Open your WeChat and click “Discover” on the menu. You will see “Mini Program” at the bottom. (Editor’s note: In order to avoid conflict with Apple or Android app stores, WeChat is avoiding any use of the term “app”.)

Here you can search for a mini-app that you are looking for. I had searched Maoyan Movies(猫眼电影).

The landing page will only show you the mini-apps you have already. Great for going back to an app, not so great for discoverability.

Tap the mini-app and use it. You can also forward to different chats and share with your friends.

Baidu shows off their AI on popular mental athletics show, The Brain

John Artman — Mon, 09 Jan 2017 03:02:00 +0000

Last Friday, Baidu pitted their artificial intelligence against China’s best minds in the Season 4 premiere of Zui Qiang Danao (最强大脑 or The Brain in English), a popular weekly show featuring contestants performing feats of mental agility.

Seasons 1-3 all featured international competitions between China and visiting teams, leading sometimes to uncomfortable results. However, after Alipay’s facial recognition AI Mark lost to Wang Yuheng last year in an unrelated competition, The Brain’s producers decided to invite Baidu’s Xiaodu on as a contestant.

Coming in a cute package that has simulated facial expressions and can respond to questions, Xiaodu is actually just an avatar for Baidu’s proprietary AI, Baidu Brain. Interestingly, Baidu’s team chose for Xiaodu to compete in areas where computers are particularly weak: face and voice recognition. If it does well, then, perhaps we can say that their AI is robust enough for commercial use.

Rather than going the route that Google’s DeepMind has gone with their AlphaGo, Baidu has decided to focus on things are simple that we don’t need to think, that we do intuitively. Baidu claims that their AI can recognize people even after massive changes, whether that’s from makeup, plastic surgery, or aging.

Over the past few decades, China’s technology sector has been dominated by Baidu, Alibaba, and Tencent (BAT). But more and more, Baidu seems to be left behind as both Tencent and Alibaba dominate social, e-commerce, and mobile payments. Indeed, Baidu has had a rough time recently: partnering with Uber only to have them ultimately leave the market, questions about their spending, as well as other recent negative publicity.

Xiaodu, however, may just be what they need to prove that they’re still in the game. By focusing on Baidu’s traditional strength in computing and analysis, they’ve created an artificial intelligence that can ostensibly perform simple activities that we take for granted, activities that have a broad range of applications. And, while Xiaodu may be a cute ambassador for our future AI overlords, Baidu isn’t focusing on any consumer applications for the time being.

According to the company, they plan on selling their facial recognition software to governments and businesses mostly for security uses. For example, both facial and voice recognition are particularly suited for the increased interest in biometric security. Fingerprints may be the most ubiquitous form of identity verification, but they have been proven over and over to be a very weak way of ensuring secure access. Voice and facial recognition, on the hand, offer a more secure way for banks, businesses, and the government to know that you are you.

Image credits: Baidu

Mini-apps are WeChat’s strategy to connect to the offline world: HuosuMobi Zhao Jiuzhou

Emma Lee — Sun, 08 Jan 2017 09:26:46 +0000

“No mini-app stores, no entry point in WeChat, limited push notifications, no sharing in WeChat Moments.”

This description from Zhang Xiaolong, Tencent senior vice president and the “Father of WeChat,” on mini-apps has shaken public predictions about WeChat’s product structure. From what we can tell so far, Tencent has been strikingly restrained in integrating mini-apps into WeChat ecosystem.

In anticipation of the official launch of mini-app on January 9th, increasing attentions is being paid to the new feature, expected to create another boost to China’s internet industry like what WeChat has done with public accounts (公众号).

TechNode had the pleasure of speaking to Zhao Jiuzhou, CEO of HuosuMobi, to hear his insights on the prospect and potential impacts of mini-apps. Founded in 2015, HuosuMobi is a B2B service dedicated to HTML5 app and mini-app development.

WeChat mini-app VS H5 and native apps

H5 apps have once been widely regarded as an alternative to overtake native apps. However, both the pros and cons of this technology are obvious: high development efficiency but poor UX/performance. After years of debate, H5 still lacks traction for developers who want to promote user stickiness and gradually turned into a tool for company or product introduction.

Native apps sure can guarantee rich UI and engaging user experience, but it poses higher demands on development and marketing costs. Moreover, it’s difficult to get users download native apps that only offer low-frequency services.

Zhao believes that mini-apps have combined the advantages of H5 and native apps while get rid of their disadvantages.

“Mini-apps have a similar development process with H5 apps. WeChat is a container and mini-app is more efficient because it has put the key elements for loading on WeChat platform (as compared with H5 which needs to download everything),” he says. “Mini-app provides user experiences similar to native apps. That’s why some media consider it a combination of H5’s acquisition model and native app experience.”

Don’t pin your hopes on WeChat traffic: This about connecting offline to WeChat (O2W)

Perhaps more than the technology, people care about whether mini-apps are going to bring new market opportunities. Despite the limited integration with the WeChat system, many are hoping that mini-apps will bring a traffic boost to their brand or product, like the public account feature. However, they may be sadly disappointed.

With 768 million daily active users as of the end of last year, WeChat is shifting its focus from acheiving a larger user base to engaging current users for a longer period of time. In the past, WeChat is the go-to place for social networking and payment. However, even though we may pay for products and services through WeChat, it is not where the sale begins or ends.

Tencent wants to see more users spending more time on WeChat through mini-apps for shopping and entertainment. Furthermore, the company’s real focus is not only about the consumption made online, but the traffic in offline in bricks-and-mortar stores or spaces. In order to truly connect the physical world to the digital, WeChat has given mini-app the best entrance: the QR code.

In the long-term, mini-apps will be the tool for offline merchants to digitalize their customer base. Of course, it may also bring detrimental impacts to online tools. Once discovering a convenient and hassle-free mini-app, who would download a more heavy and complicated native app?

The leading players in different verticals may start feeling the pressure.

This article is translated from a post that first appeared on our sister site, TechNode Chinese.

Image credit: WeChat

Report says 71% of China’s self-media accounts make less than national average wage

WalktheChat — Sun, 08 Jan 2017 08:55:10 +0000

Editor’s note: A version of this post first appeared on WalktheChat’s website. WalktheChat specializes in helping foreign organizations access the Chinese market through WeChat, the largest social network on the mainland.

WeChat analytics company Newrank released data from a survey of 1,032 zimeiti (自媒体 or self-media in English) in China. Some of the interesting findings include:

most operators make less than 5,000 RMB/month, far less than the country’s average wage
over 50% of their revenue comes from WeChat and KOL advertisement combined
almost 50% work more than 8 hours a day on their account
almost 71% say they are actively looking for investment, or plan to in the future

Who are they?

The survey reveals that social media account operators in China are:

Majority male: 74.1%
New to the job: 45% of them have been operating an account for less than a year, and only 16% for more than 3 years

We also learn that the participants of the survey are:

Mostly young people: only 11% of them are older than 37 years old, while 42% are under 22
Located in large cities: 66% of the account operators are located in Tier 1 or Tier 2 cities
Highly educated: 88% of them have a bachelor degree or above

40% of the operators are doing it as a side job, or plan to go full time but aren’t quite there yet. Only 16% of the accounts surveyed were part of media agencies.

What are their prospects?

The data reveals that 71% of the operators are actively looking for investment or might do so in the future.

This reveals that “Self-published-media” is, if anything, more similar to startup culture than it is to traditional media culture.

How much money do they make?

However, these social media accounts are not making much money. 71% of them make less than 5,000 RMB per month. That’s less than the average wage for the entire country (5,169 RMB/month in 2015) and far less than first-tier cities of Beijng (9,277 RMB/month), Shanghai (8,664 RMB/month), and Shenzhen (7,728/month), according to a Zhaopin report in early 2016.

Although we have heard much about large WeChat accounts charging 30k RMB and above for each of their native ads, this represents a tiny portion of accounts; most of them are actually struggling to monetize.

The majority of accounts are using either WeChat native ads (31.7%) or KOL advertising (24.5%) as a way to monetize

What does their life look like?

Most account operators are mostly struggling with continuously producing content (47%) and defining their business model (26%, which makes sense given the trouble we saw they have monetizing).

Only a small fraction (5%) is considering finding investment as their main struggle.

“Self-media” also turns out to be a challenging job: nearly 50% of the operators work more than 8 hours per day, 18% of them more than 11 hours per day, and 41% of them do overtime every day or nearly every day.

What do they plan to do next?

Most encouragingly, most of the account operators seem content: 60.2% are happy to keep on with it next year, and 84% overall are planning to stay in the industry next year.

Image credits: WalktheChat, QQ News

Here’s what you can learn from China’s biggest startup failures of 2016

Emma Lee — Fri, 06 Jan 2017 07:20:50 +0000

As billionaire investor Warren Buffett once said, “It’s only when the tide goes out that you know who’s been swimming naked.”

China’s overly heated venture capital market has spawned numerous startups in 2015, but as dramatic funding slowdown hit the country in 2016, Chinese startups are facing a bleak funding prospect and even once-hot companies are struggling to survive the chilly market. Here are a few high-profile failures that in 2016 and the lessons you can learn from them.

Metao – Never try to outspend a giant

Founded in 2014 by Xie Wenbin, Metao was one of the companies that come up during China’s cross-border e-commerce boom since 2014. The company recorded their first wave of growth as a C2C daigou platform (代购, people or organizations that buy products abroad and ship directly to the end consumer in China).

Because of problems with the C2C daigou model, such as low margins and long delivery periods due to lack of homegrown warehouses, the Beijing-based startup pivoted into a B2C e-commerce platform in mid-2014 to focus on Korean products. However, the shift brought it into direct competition with heavy hitters like JD.com and Tmall.

Metao recorded a short-term growth spurt after pouring money into advertising and offering major sales to attract customers. But a price war with heavy-loaded e-commerce giants could never work.

They finalized their series B round in late 2014, but never made it to series C and eventually closed their doors in mid-2016. The company’s founder was convinced that even with a billion-dollar round, Metao wouldn’t be able to keep up with the e-commerce giants in the war to burn cash.

In addition to the initial angel round, the company raised a combined 35 million USD in two rounds of financing from well-regarded VC firms, including Matrix Partners, Morningside Ventures, and Greenwoods Investment.

Shenqibuy – Just because they’re cool doesn’t mean they know how to run a business

It could have been one of those legendary stories about how China’s rising post-90s and high-school drop-out entrepreneurs can actually realize their startup dreams. Unfortunately, it turned out to be yet another flash-in-the-pan startup.

Founded in September 2015, Shenqi was an e-commerce platform targeting at the “post-95s”, offering snacks, stationery, backpacks, anime-related toys and other things teenagers would find appealing. The company got massive public attention after its teenage founder Wang Kaixin pitched the project to well-known investors on 我是独角兽 (I am a Unicorn in English) a TV show for startup demos.

After the show, the startup landed a 20 million RMB (3 million USD) funding led by Matrix Partners China with participation from ZhenFund and Inno Valley.

Local media reported in May last year the CEO was guilty of data fabrication and spending the financing to lead an extravagant personal life. Wang defended herself in a recent interview against these accusations, but she acknowledged that management issue is one of the main reasons that led to the sale of the company to Shenzhen Big Bang Tech Co Ltd, her exit, and the shutdown of the website.

Dakele – Don’t build your business around a played out strategy

Launch in June 2012, Dakele (大可乐 or Big Coke in English) was among a series of China’s smartphone brands that aimed to emulate Xiaomi. All their products were budget phones retailing less than 1000 RMB (153 USD), featuring big screens and Kele UI, the company’s proprietary OS.

Dakele’s selling point, like most Chinese smartphones, was their low price and decent specs. Although the same strategy may have boosted Xiaomi above the pack, the method has already lost its charm in a now more competitive market.

The smartphone maker failed to adapt to the changing market and suspended its business in March last year.

Pengpai Car – Make sure you can actually make money

China’s O2O craze has invaded almost every vertical imaginable from food delivery to manicure. The auto industry is no exception.

Pengpai Car was an online platform where users can order car wash and maintenance services. The firm followed a development path popular with many O2O companies, grabbing customers by providing subsidies and monetizing the user base with paid services. With an entry-level car wash service priced as low as 9.9 RMB, the company was successful in acquiring users very quickly. Operating in 22 cities, it once claimed to control 75% of China’s after-sales car service industry.

However, the startup never managed to fully commercialize its user base; its customer conversion rate to value-added businesses like maintenance, insurance, and road rescue services was only in the single digits. The company shut down its services with a WeChat announcement in April 2016.

Pengpai Car raised 10 million RMB in 2014. An 18 million USD series B round was finalized in 2015 from JD at a valuation of 600 million USD.

Li Xiang, founder of auto vertical portal Autohome and co-founder electric car maker NextEV, once said about the O2O car maintenance industry:

Neither on-demand car washing service nor on-demand car maintenance business make sense. It’s crazy to bet on high-value services while losing money on a basic car wash business. The basic rules about people seeking the most efficient services can’t be broken. Most after-sales services in the automobile industry are by nature low frequency. It’s difficult to acquire uses and offer services in this sector.

Image credits: Metao, Dakele, Shenqibuy, Pengpai Car

This Shanghai-based startup is showing off its AR magnifier at CES

Eva Yoo — Thu, 05 Jan 2017 10:02:59 +0000

At this year’s CES in Las Vegas, NEOBEAR is debuting MAGNEO, an AR intelligent device developed for children, allowing them to better understand the world and greatly broaden their imagination. Recognized with a CES 2017 Innovation Award, children can use it and special AR cards to learn math, writing, and more.

NEOBEAR is a Shanghai-based startup that has successfully penetrated AR education scene in China, selling over a million AR card sets during the 2015 Chinese New Year.

Together with its augmented reality technology, MAGNEO features a built-in high-definition camera allowing the user to capture images of MAGNEO-related products, as well as some natural objects, and then overlay rich media on top of them. It also includes a dedicated operating system, which contains functions including one-key call and parenting assistance.

Before its launch, MAGNEO’s design has been honored with the German iF Design Award in 2015 and Italy’s A’ Design Award in 2016.

MAGNEO comes with AR teaching tools including coloring books, picture flash cards, and a globe. When a user colors a picture drawn on an AR coloring book and scans the picture with MAGNEO, the picture comes alive and flies around inside the screen.

With an aim to integrate traditional education into technology, Young Zone Culture Co., Ltd, the company that holds the NEOBEAR brand, was established in 2009. The company says it will focus on creating a series of AR products and expand into cartoons and movies in the future.

Chinese mobile AR market is estimated to grow 110% by 2019, and NEOBEAR is only one example of AR education startups booming in China. Fantasy of Kaka (奇幻咔咔3D小熊) is another AR education startup. After downloading the app and scanning the figure of the cub, the Kaka bear appears as a 3D image and dances on the app. China’s tech behemoths Baidu, Renren and Tencent are expected to produce a number of AR mass-consumer apps in the next few years.

Image credit: NEOBEAR

Didi accelerates globalization with investment in Brazilian Uber rival 99

Emma Lee — Thu, 05 Jan 2017 01:53:12 +0000

Half a year after Didi and Uber struck a truce in the Chinese market, another land-grab between the two is looming, only this time the battle is for the global market.

Didi Chuxing announced on Wednesday that it has made a strategic investment in 99 (formerly 99Taxis), an Uber competitor in Brazil market. The company didn’t specify the investment size or number of shares involved in the deal.

Under the terms of the partnership, Didi will assume a seat on 99’s Board of Directors and will provide strategic guidance and support, including in the areas of technology, product development, operations and business planning, according to a company statement.

Founded by young Brazilian entrepreneurs in 2012, 99 offers an app-based on-demand private car and taxi-hailing services across 550 cities in Brazil, the world’s second fastest-growing internet market. 99 has over 140,000 registered drivers and more than 10 million user downloads. They maintain a leading position in Sao Paulo, Rio de Janeiro, and other tier-one cities across Brazil.

Peter Fernandez, CEO of 99, said, “We welcome Didi to Latin America. Didi’s financing, state-of-art technology, and operations knowledge will play a key supporting role as 99 actively expands our network and services in Brazil and reshapes the competitive landscape in Latin America.”

Uber retreats from China, Didi goes global

Didi is the dominant player in China’s ride-hailing market with close to 400 million users in over 400 Chinese cities. However, the Chinese company won’t stop at conquering its home country, as Didi’s president Jean Liu said at a Vanity Fair event last October— “We are definitely going global”.

In line with its globalization drive, the heavily-loaded company has already reached a strategic partnership or invested in several regional ride-hailing leaders across the globe.

Didi invested 100 million USD in Lyft, Uber’s main competitor, in the U.S. market in September 2015. The tie-up generates several avenues of cooperation, such as allowing users to summon rides through each other’s network. Didi is also expanding aggressively in Southeast Asia with investment in Ola and Grab.

Didi’s global expansion puts it in direct competition with Uber; their partnership between the four companies is widely considered as an anti-Uber alliance. With the latest investment in 99, the alliance has expanded to Latin America.

For a time, Didi’s acquisition of Uber China cast the alliance into doubt. However, after the taking solid control of the domestic market, global expansion is now a top priority and consolidating the alliance makes more sense for the company.

In Wednesday’s announcement, Cheng Wei, founder and CEO of Didi Chuxing, highlighted thei cooperation with more global partners:

“China and Brazil are the world’s foremost emerging markets with enormous opportunities for our rideshare industry. Partnering with 99, the local market leader, Didi will begin sharing capabilities and products with more diverse communities and innovators. . . . We look forward to working with more global partners in creating better mobility services and more work opportunities for our cities, as we reshape together the future global transportation system.”

Image credit: Shutterstock

Ewaybot to debut humanoid assistant robot at CES

Eva Yoo — Wed, 04 Jan 2017 10:34:14 +0000

Over the past two years, we have seen a handful of home robots in China. However, humanoid robots are yet to come to our daily lives, and Ewaybot, a humanoid robot company, focuses on the education market, not consumers, for their near-term growth.

Ewaybot’s first flagship robot MoRo will debut this week at CES in Las Vegas to get user’s feedback, seek investment, and appeal to potential buyers. MoRo is a human-size assistant robot that can grasp and handle objects, designed for academic research and education, business activities, as well as home assistance.

“Robotic market in 2020 will be huge. People will be learning, knowing, and accepting the robots. Currently, the consumer robotic market is not mature enough,” CTO of Ewaybot Weijian Shang told TechNode. “The problem is the lack of robotic talent in China and in the world. Only a few people know robot technology as a whole, and that’s why we focus on the education market. We want to partner with leading universities and many regular universities to push the robotic market bigger and bigger.”

The company claims that MoRo is the first humanoid robot to use ultrasound and infrared together. This allows the robot to move indoor and outdoor freely, compared to other robots that are only available for either indoor or outdoor use. Mr. Shang says their direct competitors in the market use ultrasound sensors, including Willow Garage’s Personal Robot 2, Pepper robot developed by SoftBank, NAO, and ATLAS developed by the U.S. Defense Advanced Research Projects Agency .

The Beijing-based robotic company is now getting support from research labs and university departments in China.

“Most education robot companies in China are looking into middle and high school education markets; their user interfaces are pretty basic. We want to support the education of robot-specialized talents. Robotic engineers and researchers will be the workforce in the future. We want to help educate them,” Mr. Shang told us.

Ewaybot secured 110,000 USD seed funding from angel investor Yachao Liu, an angel round of 480,000 USD funding from Future Works in 2015, followed by pre-A funding of 1.7 million USD from Future Works and Seekdource in August 2016.

Founded by three Chinese students from Harvard and Carnegie Mellon University, the team says they will bring the product to the consumer market when the humanoid robotic market is mature enough.

“Consumer market now is dominated by desktop AI robots. Our focus is a mobile robot and we also put a lot of effort on the robotic arm. The concept is too sophisticated for the current market,” Mr. Shang added.

Image Credit: Ewaybot

Tencent’s JOOX uses curated playlists to dominate music streaming in Southeast Asia

Eva Yoo — Tue, 03 Jan 2017 09:16:46 +0000

Music streaming is a difficult space to dominate: people refuse to pay for it and incur little personal penalty by switching between providers. But what if there is a music streaming service with a voice, that understands what the trends are and give you exactly what you want to hear?

Powered by an editorial team, heaps of data, and curated recommendations, Tencent’s JOOX was the most downloaded music streaming app in Hong Kong, Thailand, Malaysia and Indonesia in the first 10 months of 2016. JOOX now accounts for more than 50% of all music streaming app downloads in those markets, according to a McKinsey report, beating out both global and local players.

“We have editorial teams on the ground to identify not only what’s trending now, but also what’s cool,” Poshu Yeung, General Manager of International Business at Tencent told us.

JOOX recommends playlists based on current socio-political events. Recently, they curated playlists based on hot topics and local happenings; for example, a Bob Dylan playlist was created when the singer won the Nobel Prize in Literature. They have also created playlists for popular music awards ceremonies such as 2016 Mnet Asian Music Awards and a Christmas playlist during the holiay season.

“Our people on the ground are critical to this process – it’s not just a matter of algorithms and big data,” Mr. Yeung added.

JOOX realizes the importance of making use of data to curate music, however. Data from JOOX users’ everyday music choices across languages, geographies, and genres gives them intelligence as well.

“Being part of Tencent enables us to tap into some of the best data scientists and AI programmers in the world,” Mr. Yeung told us. “However, we believe, in music particularly, tastes evolve in unpredictable ways, so we think there will be an important continuing role to be played by our teams on the ground.”

Another localization strategy that JOOX uses in the Southeast Asian market is cooperating with leading brands such as Coca-Cola, Coach, Hong Kong Express Airlines, and Prudential. They offer customized interfaces and premium subscriptions to their customers and fans, among other tailored services. JOOX is also rolling out V-Station, a streaming video element to its service, from producing original content to streaming promotional events live.

The team is building JOOX based on both advertising and subscription revenue streams. While many Asian markets are somewhat behind more developed markets in terms of premium subscription rates, Mr. Yeung says that they are already seeing signs that consumers – particularly at the high end of the market, who our advertisers often value the most – are very much prepared to pay a nominal amount for the value that a premium subscription provides.

With JOOX’s lyric cards, users can save lyrics and share them on social media. (Image credit: Tencent)

While JOOX is also the brainchild of Tencent, it operates quite separately from WeChat, although the services do work together. Mr. Yeung says that they have made it very easy for JOOX users to share songs on WeChat Moments or directly with their WeChat friends, but ultimately, they’re focused on serving the JOOX consumer, rather than pushing WeChat to the Southeast Asia market.

This strategy goes the same for JOOX’s entry to China market.

“China is very well served by our sister service, QQ Music. JOOX, on the other hand, will expand internationally, although it’s too soon to make specific announcements at this time,” Mr. Yeung remarked.

Image credit: Shutterstock

China to see electric vehicle boom before the rest of the world: Tom Tan, President of BorgWarner China

Emma Lee — Tue, 03 Jan 2017 08:21:34 +0000

Like computing, changes in transportation accelerate every year. China, the world’s largest automobile market, is recording a spectacular growth of the New Energy Vehicle (NEV) with 200-plus companies in the industry.

Tom Tan, Vice President of BorgWarner Inc. and President of BorgWarner China, recently talked with us to share his thoughts on the rise of NEV in China and on current trends in the automobile industry. The following are edited excerpts from the interview.

What will be the prospect for China’s automotive industry in the coming ten years?

China’s auto industry will continue to grow over the next decade, albeit at a much slower pace than the double-digit growth of the last ten years. Overall growth in the low single digits is to be expected.

There are four important trends at work here: 1) China’s population is the largest in the world and urbanizing rapidly; 2) The nation has an ever-increasing middle-class, with growing purchasing power and changing lifestyles; 3) Air pollution is becoming a serious issue; 4) The government has announced an energy strategy that will cap oil importation at the current 60+% level and gradually reduce it.

The first two trends are certainly supporting the continued growth of the automotive industry in China, while concerns about air quality and foreign oil dependency are prompting the government to establish more rigorous fuel and emission standards. Taken together, these four trends provide a major motivation for the government to accelerate the development of New Energy Vehicles (NEVs) such as electric vehicles (EVs), hybrid electric vehicles (HEVs), and plug-in hybrid electric vehicles (PHEVs), along with highly efficient low-emission combustion engines.

In recent years, China’s government has made a huge effort to promote NEVs, largely to reduce oil importation. As this effort continues, we will see the overall auto market gradually increase, but with HEV and EV growing at a much faster rate, with HEV dominating in the next five years and EV in the five years after that.

It is believed there will be a shift from combustion to electric propulsion systems in the near future. What is your view on this?

I expect that the market for traditional combustion vehicles will be flat over the next seven years. The growth rate for pure EV will be much higher, but we’re starting from such a small base and the current cost is high, as is user inconvenience, so I expect that the market share will be less than 2% worldwide.

The story could be different in China, though. With strong government incentives and policy guidance, pure EV and plug-in hybrid EV will likely achieve 4%-5% of the total China market, which could be well above one million units a year in five to seven years’ time. We understand that there are now more than ten new companies in China dedicated to building EVs, and most claims to have raised capital of more than $1 billion in first-round financing. We should see the first EVs from these companies in the 2018 to 2020 period.

Due to the advantages of HEVs in terms of technology, cost, and CAFE achievability, we will see hybrids take off faster and on a larger scale in China. The most aggressive forecast is that HEVs will reach 20% market share in 10 years.

How long before we have fully autonomous vehicles on the road? What are the challenges of product innovation?

When we talk about fully autonomous vehicles, we really mean the ultimate SAE Level 5 self-driving car with no steering wheel, pedals, or human driver….it may take another 10 or more years before we see fully autonomous vehicles on the road in any meaningful number.

There are many challenges to overcome including the navigation systems (using radar, lidar, GPS, sensor, vision, laser, or satellite mapping) and the vehicle-to-vehicle (v2v) and vehicle-to-infrastructure (v2i) communication systems that allow vehicles to communicate even under extreme conditions, such as city chaos or heavy snow.

BorgWarner Automotive Components (Ningbo) Co., Ltd. In Ningbo, Zhejiang Province, China

It has been said that over time, as self-driving cars as well as ride-hailing and on-demand service becomes more prevalent, that the demand for car purchases will decrease. Do you agree?

Yes, to some extent I do agree. A certain number of people will choose to not own a vehicle when self-driving cars and ride-hailing services become mainstream. However, I believe that the majority of people will choose to own their own vehicle for quite a long time.

Certainly, there will be a lot more vehicle-sharing options on the market when self-driving vehicles become mainstream. We will likely see some reduction in private vehicle ownership, especially in cities where parking is problematic and expensive. Car ownership will carry some inconvenience in the future, but this will not necessary mean that most people will want to give up the enjoyment of driving their own vehicle. There is a social meaning to car ownership that won’t quickly change.

Image credits: BorgWarner

TechNode’s Top 10 “Other” Stories of 2016

John Artman — Mon, 02 Jan 2017 05:30:00 +0000

It’s official: 2016 is finally over. From celebrity deaths to surpise elections, no one could have predicted how it went. That certainly is true for us at TechNode as well. After delving into our top posts for many different verticals, we all agree that 2016 was disappointing, unpredictable, but also amazing in it’s own way.

In that spirit, we present you with our top 10 “other” stories: stories that don’t fit our usual categories.

1. This Chinese Lingerie Startup Crowdsources Their Underwear Models

Shanghai-based startup O2 (氧气) crowdsources their lingerie ads from their users. For every three sets of lingerie photographed, models receive one set for free. O2 calls their models “lingerie experience masters.”

2. Chinese Delivery Companies Are Selling ‘Empty’ Packages To Boost E-Commerce Sales

An investigative report by The Beijing News revealed China’s illegal market of “empty package scalping” (空包刷单, our translation), whereby shop owners on Taobao and Tmall inflate their sales statistics though fake package deliveries by using “empty package” service websites and delivery services.

3. Chinese New Year Special: Top 3 Memes For The “Year of the Monkey”

猴腮雷 (housailei, the Cantonese pronunciation for “very impressive” or “intense”)，六小龄童 (Liu Xiao Ling Tong, the stage name of Zhang Jinlai, famous for portraying the Monkey King), and 耍猴 (shuahou or “putting on a monkey show”) all made the list of monkey memes. We can’t wait to see what’s in store for the Year of the Chicken!

4. Meet The Chinese Tinder-Like Sugar Daddy Dating App For Students

Sudy is a swipe-based dating app that only pairs rich men with attractive women, and especially caters to college students looking for financial help on tuition fees.

5. 5 Things You Should Know About China’s Luxury Market

A look at the main trends in luxury market from 2015, including an overall decline, steady growth in some verticals, more purchases in Japan, South Korea, and Europe, crossborder e-commerce taking off, as well as brands pricing their items globally instead of regionally.

6. Lyft Looks To Didi, Apple, G.M. For An Exit Lane

After Didi agreed to take over Uber China, Lyft struggled to figure out how it could survive. At the time, they were reported to be in talks with different companies to sell the company.

7. Announcing The Winner of TechCrunch Beijing 2016 Startup Competition: Ruff

Ruff, a startup focusing on building an IoT development system, took home the top prize at this year’s TechCrunch Beijing. Lack of compatibility and standardization among devices and operating environments slow down development and release of innovative IoT solutions. By using Ruff’s platform, developers do not have to double-compile or go through another kernel.

8. This Company Is Bringing Ethereum Blockchain Tech To China’s Tech Giants

China is a powerhouse when it comes to Bitcoin trading. According to a report published by Goldman Sachs last March, about 80% of Bitcoin transactions are driven by the Chinese yuan. However, awareness around Ether, another cryptocurrency, is much lower. ConsenSys wants to bring Ethereum to China’s tech and finance giants, such as Tencent, Ping An, Ant Financial, and Alibaba.

9. Xiaomi Is Expanding Their Smart Transport Empire With Bicycles

After tackling Segway-style smart transport in 2015, Xiaomi Inc. expanded further into smart hardware. Xiaomi-backed smart bicycle company IRiding released a ‘smart’ bike called the ‘QiCycle’, as part of Xiaomi’s Mijia white-label strategy. In late 2016, Lei Jun, CEO of Xiaomi, announced they expected sales to reach 2.2 billion USD by the end of the year.

10. Is China’s Startup Incubator Bubble Set To Blow?

As more government attention is paid to innovation, more money is flowing into incubation. In April, we questioned whether or not there was a bubble in the incubation space. At the end of 2016, incubation and co-working were still going strong with no signs of stopping.

Image credits: Technode, Shutterstock

TechNode’s Top 10 Fundraising Stories of 2016

Emma Lee — Mon, 02 Jan 2017 04:24:46 +0000

It’s finally 2017. While the capital winter has spooked China’s internet industry since the beginning of 2016, many have still managed to score new funding and hope that this year will be better than last.

Overall, social networking, biotech, electric cars were some of the hottest verticals in China. Contrary to what we believed before we started looking at our traffic data, funding stories of small and medium-sized startups, rather than BAT (Baidu, Alibaba, Tencent), grabbed the top spots in the list. This indicates a shift in interest from China’s internet behemoths to the more innovative startups coming from China.

Here’s the list:

1. Chinese Tinder-Like ‘Tantan’ Rakes In 32 Million USD

China’s Tinder-like dating app Tantan raised a 32 million USD series C funding from a group of investors, including LB Investment, Vision Capital, and DST Global. The two-year-old app claimed 2.5 million active users, around 80% of which are part of China’s post-90’s generation.

2. Chinese Startup Connecting College Students And Part-Time Employers Raises $8.5 Million Series A

Chinese startup Qingtuanshe completed a 55 million RMB (about 8.5 million USD) round of series A funding this April. Qingtuanshe’s student-facing app connects university students with part-time jobs, such as shopkeeping at a hamburger joint, live streaming on an app, and even “liking” a company’s social media posts. On the other side, companies can download Qingtuanshe’s free corporate app and post job opportunities and track applications.

3. iCarbonX Becomes China’s First Biotech Unicorn

iCarbonX, a six-month-old biotech startup, raised a 1 billion RMB (about 154 million USD) round of Series A funding, boosting the Shenzhen-based company to unicorn status with a valuation of $1 billion USD.

4. Used-Car Trading Platform Guazi Seals 200 Million USD Funding

C2C used-car trading platform Guazi.com completed a 200 million USD financing round in March 2016. Guazi.com was established by online classifieds site Ganji.com, which later merged with rival online classifieds site 58.com.

5. Diabetes Management Platform Weitang Raises Series B From Yidu Cloud

Diabetes management platform Weitang raised tens of millions USD in series B round of funding led by Yidu Cloud Technology Company Ltd. The app helps patients to track their blood sugar levels, food intake, exercise, and medication using the app, generating a real-time medical record. Based on the data, doctors can then provide customized management plans for patients.

6. Online Education Firm VIPKID Secures $100M From Yunfeng, Sequoia Capital

Education platform VIPKID closeda 100 million USD series C from existing investor Sequoia Capital and new investor Yunfeng Capital, the VC firm co-founded by Alibaba founder Jack Ma.

7. SoftBank, Foxconn Commit $30M To Chinese AI And Cloud Startup

CloudMinds, an AI and cloud computing startup, raised a 30 million USD round of seed funding, led by SoftBank International.

8. NextEV Co-Founder Lands $120M For Consumer Electric Vehicle Company

Chinese electric vehicle company Chehejia has raised a combined 780 million RMB (120 million USD) in series A funding at a valuation of 2.98 billion RMB from seven investors.

9. Alibaba’s Cainiao Logistics Confirms First Financing At $7.7B Valuation

Alibaba-backed logistics company Cainiao has sealed their first-ever funding round, worth over 10 billion yuan (1.54 billion USD), from a consortium including Singapore’s Temasek Holdings and GIC Pte Ltd, Malaysia’s Khazanah Nasional Bhd, and China’s Primavera Capital.

10. This Startup Wants To Disrupt China’s Floral Business

FlowerPlus, a subscription flower delivery service, raised a 70 million RMB (10 million USD) series A round led by New Margin Ventures in May. As an early entrant to the field, FlowerPlus is among a series of no-frills flower delivery services that targets China’s rising middle class. Other similar services include AmorFlora, EasyFlower, and Floral & Life.

Image credits: Shutterstock; TechNode

Fun Facts From WeChat’s 2016 Data Report

Eva Yoo — Mon, 02 Jan 2017 02:07:44 +0000

Editor’s note: Tencent revealed its 2016 WeChat Data Report last week, giving a wide array of WeChat statistical data and analysis. Matthew Brennan, CEO and founder of China Channel, has summarized some of the most interesting information. A version of this post first appeared on China Channel’s WeChat account.

Here are some highlights from the report:

768 million Daily Active Users now on WeChat (35% Increase YoY)
50% of WeChat users spend 90 minutes per day in WeChat
Only 1% of WeChat Active Users are 55 or above!
Chinese travelling to the states are 90% from Beijing and Shanghai
Typical WeChat users spend 580 yuan on sending lucky money to friends per month

[Editor’s note: Baidu also released a report earlier this year. They revealed the top destination for Chinese travelers was Taiwan and the top destination city was Tokyo. According to Key Account Manager of Baidu Jason Zheng, male travelers preferred visiting North America, New Zealand and Australia, because they like to go see natural scenery; female travelers preferred South Korea, Japan and Europe, because they like to go shopping and enjoy the historic buildings in Europe.]

[Editor’s note: One reason for getting an overwhelming number of red envelopes sent on Chinese New Year’s eve is thanks to WeChat’s photo campaign on Moments. To clearly see the blurry photos, users had to send the photo owner a hongbao (红包 or lucky money in English).]

Image credits: China Channel

TechNode’s Top 10 Live Streaming Stories of 2016

Eva Yoo — Fri, 30 Dec 2016 10:08:17 +0000

Wanghong (网红 or internet celebrity in English) have gained a lot of traction this year, fueled mostly by live streaming services. The wanghong economy has become so big that its current 2016 value is worth more than the film industry’s 2015 gross box office total, according to a report released by CBNData.

Chinese online video viewers reached 504 million, 73% of the total Chinese internet users, and mobile video viewers were 405 million as of 2015.

As live streaming and wanghong economy were one of the hot topics this year, TechNode has brought the top 10 stories from live streaming market.

1. Live Concert Streaming Is Taking Off In China

A flock of Chinese tech behemoths entered the live concert streaming business beginning in 2014. LeTV charges 20-30 RMB (3-5 USD) for monthly subscribers and has generated a total of more than 2 million RMB (320,000 USD) in sales for one two-day concert.

2. China Has Finally Seen Explosive Growth In Short Original Videos

China’s YouTube will come out, and its main stage will be on mobile, such as Miaopai and Meipai. Vlogger stars are beginning to emerge, including Papi Jiang and Luojisiwei. However, monetization of the videos is still in the early stage, mainly harnessing virtual gifts and advertisements.

3. A Boom In Live Streaming Apps Is Creating Chinese Internet Mega Stars

On Yizhibo, streamer Big Sister King ranks number one with 28,000 followers and 1.69 million “diamonds,” the app’s currency. What’s more, filmmakers are using the technology to build buzz in the early stages of a movie’s production.

4. Virtual Gifts Are Still The Top Earner In China’s Live Video Streaming Market

Chinese live video streaming website later spawned into a ‘virtual gift’ businesses, a model that has become as lucrative as gaming. These platforms enable viewers to reward content contributors with virtual gifts that can be purchased with real money. Virtual gifts pulled about 1.5 billion RMB (230 million USD) for Nasdaq-listed YY in the fourth quarter of 2015.

5. China Is Creating A Revolutionary Talent Show Format Online

Mango TV, the video streaming service of the Hunan Broadcasting System, kicked off the singing reality show Super Girls. The show introduced an online open audition that allows those auditioners to perform live from any place. Viewers can reward contestants virtual points and vote for their favorite singer online.

6. The World Of Chinese Interactive Online Video Shows

YY live video streaming has expanded its karaoke service to different sectors like gameplay, e-learning, and dating. YY’s dating service has speed dating participants on a virtual stage with a host for each dating session. Unique features from Chinese online video services include Danmu (a real-time commenting function) and virtual gifts.

7. China’s Top 10 Online Celebs And How They Commercialize Their Fame

The first group of Chinese online celebrities mainly attracted their fans through the power of language. Then the picture era came, making web stars based on their visual attractiveness. The arrival of multimedia has granted grassroots identities a more convenient way to build up their fan bases.

8. China’s Live Streaming Hosts Are Motivated By Money, Not Fame

Out of 4,525 Chinese netizens surveyed, the 43% of those who are willing to be live stream hosts would do so for the money, according to a report released by Tencent. The second most popular response was to kill time (34.6%), for fun (32%), to share experiences (22.2%) or to gain followers (17.9%).

9. Homemade News Videos Are Booming In South Korea

South Korea has produced generations of live-streaming trends since 2006. However, the latest trend is tapping traditional new media broadcast styles to push curated content. In one video, for example, a Korean guy is arrested for making women fall in love with him by being too nice.

10. China’s Live Streaming Boom Spawns Online Celebrity Agent Industry

The earning potential of online celebrities has led to the formation of a full-fledged industry for online internet celebrity talent agencies. Yujia Entertainment, a Chinese talent agency for online celebrities, secured 15 million USD in series B funding, and Yixia Technology, the parent company of Miaopai, has set up a separate department this year to run agent business.

Image credit: TechNode; Shutterstock

25-Year-Old Li Jing Becomes Baidu’s Youngest VP Ever

Emma Lee — Fri, 30 Dec 2016 07:47:46 +0000

Baidu announced yesterday in an internal letter the appointment of Li Jing, a 25-year-old entrepreneur, as vice president. This makes Li the youngest VP in the history of the search giant.

The appointment comes after Baidu’s full acquisition of Beijing Shoujiao Info Technology, the company behind WeChat-based marketing consulting account Professor Li (李叫兽), founded by Li Jing in 2016. Li will oversee Baidu’s creative advertising business, marketing strategies, productization and will report directly to Baidu’s senior VP Xiang Hailong, according to the company.

The success story of this young entrepreneur soon became the hottest topic on China’s social media. While some were amazed at his achievements at such an early age, others questioned his qualifications. For a time, praise, envy, mockery filled China’s social media.

Compared with other Baidu VPs, Li Jing has only just started his career. Born in 1991, Li graduated from Wuhan University in 2014, majoring in marketing and went to Tsinghua University for his master’s degree. He set up the WeChat public account Professor Li to share marketing methods. The account gradually accumulated a ton of fans. In the meantime, there were companies asking him to do consulting services on marketing programs, including Baidu.

Many local media compared Li Jing to Li Mingyuan who held the title of Baidu’s youngest VP. He resigned earlier this year following the news of huge private financial scandals earlier this year.

Li Mingyuan’s resignation is perhaps one of the reasons why Baidu made such a bold move to include young members in management: to keep up with the change in a market that’s increasingly dominated by the young generation. Additionally, Baidu has suffered from a series of blows in the past year, including the death of college student Wei Zexi and scandals surrounding Tieba. The company desperately needs to revamp its brand and hopes that Li Jing can help.

Image credit: Professor Li

EHang Turns Up Volume in Passenger Drone with Command Centers and Flight Tests

Emma Lee — Fri, 30 Dec 2016 03:16:36 +0000

EHang‘s autonomous passenger drone 184 caused a stir at CES in early 2016. In preparation for this year’s CES, the Chinese drone maker released some new updates about what it claims to be the world’s first autonomous helicopter drone.

In a video from the company, the eight-rotor aircraft completes a series of tests, from taking-off and landing, to hovering, maneuvering, altitude recovery, and vertical climbing. According to a company statement, they are now testing autonomous flight test under 4G network while carrying a load.

Different from its debut at CES, where EHang remains quite secretive about the technical specifications of the aircraft, the Chinese drone maker has released some information about its hardware and software, as well as how the product has evolved over the year.

EHang says the third generation propeller has improved has increased aerodynamic efficiency by 10 to 15% and significantly reduced the noise generated by propeller rotation. Previous generations focused on early flight and limit drag.

Its current Battery Management System (BMS) is an industrial-grade solution that monitors the parameters of all cells, including the temperature, current capacity, and voltage.

EHang 184 running flight test

Given that the aircraft doesn’t allow passengers to control the vehicle, the auxiliary systems play a crucial role in keeping the passengers safe. The company has finished construction of a special flight command center for the EHang 184. Located in Guangzhou, the ground command center will monitor a variety of flight data of EHang 184 as well as air traffic information.

“The command center will not only enable the passengers in the air to make real-time video/voice calls with the ground but also receive real-time flight sensor data from every EHang 184 in the air. This ensures that passengers will understand the real-time flight conditions through one-on-one calls with our ground staff at all times without much tension for the duration of the flight,” explained the company.

The release of all this information comes as the company is trying to win back trust from customers and investors amid a series of recent setbacks. Layoffs, financial problems, as well as news that they have yet to perform a single test flight in the US even with Nevada approval, have all triggered speculation about the health of the company.

EHang 184 command center in Guangzhou

When the 184 was first announced, it was widely speculated (in Chinese) that EHang was using it to gain more visibility for its standard-sized consumer drones. This new update shows that the firm may be more serious about the 184 than we previously thought.

However, no release date has been set for the product. From what we have seen, we will still have to wait some time to see an actual demo flight outside of a video.

Image credits: EHang

TechNode’s Top 10 WeChat Stories of 2016

Eva Yoo — Thu, 29 Dec 2016 06:55:47 +0000

WeChat, a social network born out of Chinese tech behemoth Tencent, is redefining how China lives, communicates, and does business.

WeChat Wallet, released in August 2013, and Weidian, released in May 2014, have changed the way how startups do business in China. 5-year-old WeChat now has 846 million monthly active users. As witnesses of founder’s success stories leveraging WeChat, TechNode gathered this year’s top stories about WeChat.

1. WeChat Officially Replaces The App Store

A photo posted on Moments by the “father of WeChat” suggests that the upcoming mini-apps may actually be placed on the home screen, not just inside WeChat itself.

2. This Startup Is Using WeChat Chatbots To Scale English Learning

Rikai Labs is using chatbots to boost the scalability of its English education platform. Instead of only interacting with either a computer or a human, the company implements “Artificial Aritificial Intelligence,” which blends the two.

3. Are WeChat Service Accounts Killing Apps In China?

People outside of China keep thinking they need an app to expand in China, but in China, companies use WeChat Service Accounts. Currently, there are more than 12 million corporate WeChat accounts. One of the earliest adopters of WeChat service accounts is now monetizing their user base.

4. A Day In The Life Of A WeChat-Obsessed User (According To Tencent)

Tencent’s report in October 2015 gave us a view into the life of an imaginary WeChat-obsessed user. You get up at 7’o clock and browse WeChat Moment. At 7:45, while heading towards the office, you read two articles or play games on WeChat. Click on the article to read more about WeChat’s handful of insights.

5. WeChat’s App Within An App: Free At Last From Endless Installing And Deleting

WeChat mini-apps beta invitations were sent out to developers. These are essentially web apps embedded inside the WeChat app that you can find and use without installing bulky applications on your phone.

6. WeChat Users Have An Obsession With Technology

WeChat public accounts are overwhelmingly dominated by tech, a study by social marketing startup Robin8 has found. Popular keywords on public accounts were mobile phones, design, products, technology and popular tech brands were Apple, Huawei, Tencent, and Alibaba.

7. Weishang Knows Cosmetics: Internet Celebrities Tap Into Cosmetics

Weishang are getting influential in China’s cosmetic sector, largely dominated by overseas cosmetic companies. Internet celebrities are starting their own cosmetic weishang, reaching a turnover of few million RMB a month, leveraging its sales force of hundreds of internet celebrities.

8. Alipay, WeChat Pay Speed Up User Authentication Amid Tightening Regulations

China has been hastening their real-name registration process for online payments. The internet giants behind the country’s biggest payment services are scrambling to get their customers registered before the lockout. New regulations took effect on July 1st this year.

9. WeChat Is Maturing, Use Other Platforms To Drive Traffic

WeChat is now overloaded with content, and it’s getting much harder to get users to follow a WeChat public account. We also introduced an example of a foreign company using other Chinese social network for growth hacking.

10. Alibaba’s 800 Million RMB Challenge To WeChat’s Red Envelope Photo Campaign

On Chinese New Year’s Eve, Ant Financial had thrown 800 million RMB (about $122 million USD) to its users in discounts and money through their online payment system, Alipay.

Image credit: Shutterstock

Weishang Knows Cosmetics: Opportunities For Foreign OEMs and ODMs

Eva Yoo — Thu, 29 Dec 2016 06:55:02 +0000

This is the third post of “Weishang Knows Cosmetics.” In the previous posts, we explained how weishang are gaining more influence in the cosmetic sector and gave an example of a weishang based in Shanghai that leverages their internet celebrity salesforce to build their brand. In this post, we talked with Korean cosmetic OEM/ODM company based in Shanghai to discuss the challenges of weishangs in China and its opportunity for foreign brands.

One major challenge for weishang is building the brand. Weishang (微商, WeChat sellers) that focus too much on quick sales don’t usually last long. This weakness affects not only the weishang itself but also foreign cosmetic companies in China that are helping fill in the gap between traditional cosmetic and the new economy.

“They need to build up the brand to make people crave their brand identity. Currently, weishang have no long term plan. In order to build a brand, they need to establish a long-term plan, and plan their marketing accordingly,” said Eunhee Kim, marketing representative at BT-COS.

A wanghong (网红, internet celebrity) takes a selfie with a weishang’s facial mask and posts on her WeChat Moments (Image credit: Pearlosophy)

Normally an international cosmetic company would plan and manufacture a line of products, consisting of skin, lotion and cleaning foam, for example. China’s weishang only focus on one product and try to spread it out fast.

“They are quick to catch the latest trends and then push marketing efforts on the item. Weishang really care about what’s popular and what the trends are,” said Ms. Kim. “The problem is that the message is not consistent.”

For instance, a weishang will plan out a new facial cream in a green case, then come up with a skin product in a red case, with a different design. Their products have different concepts, even though they are from the same weishang.

“Many weishang operators were previously working in sales or distributors; they only focus on quick sales. They don’t care about building a long-term relationship with their brand,” Ms. Kim said.

Weishang weakness in branding could also mean opportunity for international startups to fill the gap. Beauty Technology Cosmetics (BT-COS) is one foreign company that helps weishang to plan out a cosmetics brand and to manufacture high-quality cosmetics.

CEO of BT-COS, Soung-oun Jung (Image credit: Eva Yoo)

“It’s hard for foreigners to compete against weishang. All the online sales are done by Chinese, using their relationships. I don’t think foreigners can act as a weishang to build such a trusted network,” said Soung-oun Jung, CEO of BT-CO. “In Korea, you can easily search cosmetic distribution channels through the internet. But in China, there’s just too many cities and distributors. How would you know sales channels of third and fourth tier cities?”

Founded in 1993, Korean cosmetics company BT-COS focused on door-to-door sales. To build competitiveness in the China market as a foreign player, the company built smart OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer) in China in May 2014 to manufacture cosmetics on behalf of other brands. Since then, the yearly sales of the company have gone over 1 million USD.

“China’s big cosmetic brands have factories to produce their cosmetics, but weishang do not. So that’s why we help them to plan, design and manufacture the cosmetics,” Mr. Jung says.

BT-COS headquarter in Shanghai, where it plans, manufactures, and supplies cosmetic products to its client weishang (Image credit: Eva Yoo)

The Shanghai-based smart ODM company has about a hundred clients; 90% are Chinese clients, mostly weishang, and the rest are Korean cosmetic brand clients. 80% of the products are made for Chinese clients and 20% are for Korean cosmetic brands. According to Mr. Jung, Chinese clients make 10,000 to 1 million product orders at a time.

“In the next five years, China will be the biggest market in cosmetics. Just like Taobao and WeChat, China will be able to develop new distribution channels in the future,” Mr. Jung says.

Image credit: BT-COS

WeChat’s Long-Awaited Mini-Apps to Go Live on January 9th [Updated]

Emma Lee — Wed, 28 Dec 2016 10:01:29 +0000

Months after opening for beta tests, Tencent announced today more details about its long-awaited mini-app (小程序) feature. Zhang Xiaolong, Tencent Senior Vice President and the “Father of WeChat,” disclosed at the WeChat Open Class that the new feature will be released on January 9th.

At the beginning of the year, Zhang Xiaolong defined mini-apps as “. . . apps that you don’t need to install, you can open them simply by searching or scanning them, which accommodates a ‘delete after use’ habit.”

In November, Zhang posted this photo of mini-apps on his phone’s home screen. (Image credit: Zhang Xiaolong)

What will Mini-Apps Look Like?

There will be no entry point for mini-apps inside the WeChat app itself. Rather, mini-apps will only be accessible through QR codes.

Zhang explained that the design is consistent with the company’s initiative of forming a decentralized landscape away from WeChat.

“This will also motivate internet companies to work closer with offline stores because the entry point of mini-apps is in QR codes rather than WeChat,” he said.

In good news for app stores, Zhang reiterated that WeChat has no plan to develop a store for mini-apps or get involved in app distribution. In addition, these apps will only have limited push notification functions so that users won’t get bombarded with spam. However, if a user wishes, they can choose to receive a limited set of notifications. The details of how this will actually work remains unclear.

It seems that Tencent is aiming something completely different from its previous features. Users cannot share mini-apps in their WeChat Moments, but can send them to friends of group chats. In addition, mini-app search and gaming features are not supported.

There’s Too Many Apps, Does This Solve the Problem?

In today’s world of more than 2 million Apps, we could safely say that There’s TOO MANY APPS for that. Mini-apps could be an option to reinvent the mobile app to make them ubiquitous and constantly accessible.

Tencent is not alone in seeing this market change. Both Apple and Google released some “apps within apps“ feature to give brands and businesses new and more valuable ways of reaching consumers.

WeChat has certainly been the dominant social media player since launching in 2011. However, with its growing ubiquity has also come a growing saturation and stagnant user growth. Mini-apps, a threat to app stores or no, seem to be another move by WeChat to ensure that their service stays as sticky as possible, both online and off.

Update, Dec 29: The original article stated that mini-apps could only be found by scanning QR codes in physical stores. This is inaccurate: WeChat did not specify that mini-app QR codes could only be found in certain places, online or off.

Image credit: Tencent/WeChat

This F&B Incubator Wants to Find China’s Next Starbucks

John Artman — Wed, 28 Dec 2016 09:23:48 +0000

If you came to Beijing for the Summer Olympics in 2008, you would be hard pressed to find an affordable variety of palatable non-Chinese food. However, as China’s economy develops, as more of its citizens go abroad, as their desire for something different multiplies, there is a surprisingly huge gap between what they want and what is available.

“The demographic of consumers has changed a lot in the last 10 years. We’re seeing a more educated class of consumers in China,” says Stewart Johnson, co-founder of Hatchery, a food and beverage incubator based in Beijing. “They’ve spent time abroad and are used to more innovation in their city, whether its events, the arts, there’s a broader demand.”

However, that doesn’t mean that you can just open a business and be an overnight success. In fact, it’s quite the opposite. History is littered with the failures of a China entry strategy: Home Depot, Best Buy, Groupon, eBay, Tesco, and Marks & Spencer. ¹

Stewart Johnson, co-founder of Hatchery (Image credit: Hatchery)

Lean Startup for F&B

As any entrepreneur learns very quickly, the biggest challenges to creating a successful business are market fit and execution. Tech startups, by their very nature, are already optimized for efficiency and speed. Doing the same in food and beverage is almost impossible.

“A lot of people fail because it’s a bad idea. It’s a complete waste of time if you have a concept that just won’t work. The problem with food and beverage is that lean startup is very difficult,” says Stewart. ”The upfront costs are just so high. For a space in a popular area like Sanlitun in Beijing, you’re looking at least 2 to 3 million RMB in costs before you even open.”

This is where Hatchery comes in. Started as a way to bring interesting food concepts to Beijing, they have quickly turned from experimenters to facilitators. They believe that creating China’s next Starbucks actually shouldn’t be that hard.

“We want to incubate and accelerate that next restaurant,” says Stewart. “It doesn’t need to be that difficult, setting up a new restaurant, setting up a new food business, you don’t need to recreate the wheel. We want to help people get around that by systemizing as much as possible.”

Creating a Feedback Loop

With their 5 stage “HatchTrack” system, Hatchery believes they are well positioned to not only develop interesting F&B concepts, but also to iterate, validate, and grow them into businesses in their own right.

By leveraging their burgeoning community to collect data, Hatchery is well positioned, and experienced, to test and iterate ideas until they can be successfully spun out.

“We’re building a community of users and customers. So we’re always going to maintain contact with them, whether that’s in the restaurant or in an app we’re working on,” he says. “The main thing for us is that before they come, they know what’s going on here, they can follow everything, order from WeChat and, should be able to vote up products.”

Community is the Key

Their community is Hatchery’s biggest competitive advantage. With a glut of options, but only a few channels for discovery, it can be quite difficult for potential customers to find you. However, with Hatchery, their incubator is a known and well-respected quantity granting entrepreneurs immediate access to consumers, access that could be difficult otherwise.

“The 2C part of the B2C is much harder to access in China,” he says. “If you make products, then you’re always stuck behind the business trying to sell the product. Access to the consumer can sometimes be more important than having the best product.”

And it’s not just access either, but an engaged pool of consumers that like your product and, through crowdfunding or direct investment, have a deep sense of ownership.

“There’s only a certain type of customer who will like certain types of food, so if you can quickly find that and they can quickly get engaged with a concept, that’s more valuable,” Stewart says. “Having a thousand of your target segment customers quickly on-boarded and engaged is way more valuable than have 10,000 from every single segment across the China market.”

China’s Next Starbucks

Iteration, aggregation, access: put all those together and Hatchery is hoping that they have the secret formula for China’s “Next Big Thing.”

“The big question for the China market is how do you find the next Starbucks,” says Stewart. “We hope that it will come out Hatchery so we’re putting a lot of resources into early stage growth, but in the future, there might 100 stores and become more valuable than Hatchery itself.”

Image Credit: Hatchery

Uber was not included in this list because it could be argued that Uber’s exit was neither an exit nor a failure. They now own almost 20% of Didi, are losing money at a slower rate, and “lost” not because of market strategy. ↩

TechNode’s Top Sharing Economy Stories of 2016

Emma Lee — Wed, 28 Dec 2016 03:32:12 +0000

The sharing economy is exploding in China. Worth about 299 billion USD in 2015, the market is expected to surge by 40 percent over the next five years, China’s National Information Center reported earlier this year.

While the sharing economy is relatively a broad term referring to businesses that are based on peer-to-peer sharing of assets and services, the concept is expanding quickly to involve all kinds of business from sharing lodging, transportation, working space, knowledge, skills, and production capabilities.

Here are TechNode’s top sharing-economy stories of 2016.

1. “Uber for Escorts” Services Become Popular in China

For years, Internet users can rent a fake boyfriend or girlfriend on Taobao to ease the intense pressure from overly concerned relatives during large family reunions. The trend is gradually expanding from renting fake dates for special family occasions to general companionship, like going to the movies, eating dinner, and jogging. “Come Rent Me” is a service that wants to monetize the spare time of China’s young people – by renting it to others.

2. This Ex-Uber Exec Is Creating China’s Uber For Bicycles

Bike-sharing boomed almost overnight in the latter half of 2016. As a top player in the bike-sharing industry, Mobike expands quickly and operates in eight cities now. In Shanghai alone, the company runs 100,000 bicycles.

3. This Chinese Q&A Platform Is Selling Celebrity Answers For $750 A Pop

Fenda, which means one-minute answers, is a mix between Quora and Reddit’s AMA operated through a WeChat enterprise account. Answers are delivered via voice messages and are no longer than 60 seconds – hence the name of the service. Three months after its successful launch, regulators suspended the platform for more than one month. The returned version deleted some of the most sensational topics like celebrity gossip and added enhanced audio recognizing censorship abilities.

4. Running A Coworking Space In China: Bob Zheng Founder of People Squared

As one of the earliest co-working pioneers in China, People Squared (P2) was founded in 2010, long before the real boom of this sector in China. In this exclusive interview with TechNode, Mr. Zheng talked about his view on co-working spaces in China, specific challenges, and what P2 has planned for 2016.

5. Didi Grapples With Devastating Draft Laws From China’s Major Cities

Tightening regulations are a definite thorn in the side of Didi. In a draft regulation released in October, Chinese regulators have stipulated that drivers must have a local hukou (户口 or residence permit). This is a heavy blow for Didi, as it eliminates more than half of the drivers in Beijing and Shenzhen, and dispels an overwhelming majority of Shanghai drivers from the platform. Despite complaints from leading ride-hailing companies, the state has made the regulation official with minor changes in details.

6. Bad Air Quality Spawns The ‘Uber Of Gyms’ In India

FITPASS is aiming to bring high-cost gym memberships to the masses through a sharing model, which lets users swipe their card at a number of gyms on a plan that costs up to 70 percent less than competing gym memberships.

Image credit: Shutterstock/TechNode

Ofo Wants to Connect Bikes, Not Make Them

mjkim — Tue, 27 Dec 2016 08:57:34 +0000

A lot of people are curious about how Ofo and Mobike, China’s dominant bike-sharing platforms, are different. From a user perspective, they may not be so different, but from our previous post, we can see that Mobike is about creating a moving IoT platform. Ofo, on the other hand, emphasises user connection and the sharing economy.

To learn more, we spoke with Li Zekun, Head of Ofo Public Relations.

A rider in Beijing (Image credit: Ofo)

How many university campuses have OFO implemented its business so far?

Over 200 campuses so far across Shanghai, Guangzhou, Shenzhen, Wuhan, Xian, and Hangzhou.

How do you differentiate yourself from your competitors?

I would say that Ofo took a ‘sharing economy’ model. While Mobike manufactures the bikes in its own factories, Ofo wishes to share the bikes. That is, users can share their own bikes by registering their bikes to Ofo platform.

What happens when people register their own bikes?

They give up the bicycle and instead, get the access to all the Ofo bikes, wherever and whenever they want for free for one to three years. Their bikes will be re-painted yellow and we will put an Ofo lock and number plate on them.

Our model promotes the right to use a bike more conveniently by giving up the right to own.

It was announced recently that Ofo will partner with 700Bike. How will this partnership benefit Ofo?

Partnership with 700 Bikes marks the beginning of another way of sharing. Ofo will become an open platform to the businesses, bicycle brands, and manufacturers. In this ecosystem, bike-sharing platforms do not compete with traditional bike manufacturers. Rather, two players are mutually beneficial to each other. These manufacturers can continue their business by producing bikes with Ofo brands.

Through cooperating with the bike suppliers, Ofo ensures the stable and efficient supply of bikes so that it does not slow down the growing demand. At the same time, Ofo brings in the individuals’ bikes into Ofo’s platforms to expand the value of existing resources.

Why did you choose this business model?

The main reason Ofo never tried to manufacture bikes is because our society does not need more bikes. In Bejing alone, there are more than 20 million bikes.

Rather than increasing the absolute number of bikes and making the existing ones become obsolete, Ofo wants to bring the bikes to our platform and add value from existing resources, preventing waste and bike-jams.

A rider in Shanghai (Image credit: Ofo)

One major difference from Mobike is that Ofo’s bikes are not equipped with a smart
lock. Do you plan to implement one in the future?

There are a number of advantages of using our traditional number lock, so we currently do not plan to change our lock system.

It is more robust, stable, and reliable. In very low temperature and harsh weather conditions, smart locks can break. As users have to unlock the bike before riding it, lock break-downs can deter a good user experience.

We accumulate data through the app itself, not through the smart lock on the bikes. It is just like the running apps. All the movement data is tracked through the mobile interface.

Is Big data important for Ofo? How do you make use of it?

Big data is crucial for enhancing our service.

The data of how many people use Ofo’s bikes, in what kinds of places directly represents the size of demand. So, it is used to decide distribution plans such as where to put how many bikes.

Furthermore, this data will also be used for urban traffic planning. That is, we want to identify which roads have more bike riders to help the government implement bike lanes. Only when this kind of infrastructure in city scale is improved to fit the demand can Ofo really solve the last mile problem.

Image credit: Ofo

This Co-Working Space Uses a Freemium Model to Build Their Community

Emma Lee — Tue, 27 Dec 2016 06:01:30 +0000

Just four years ago, co-working spaces were a rarity in China. Propelled by a series of favorable policies and trends, hundreds of thousands of operators have flocked to the emerging market. Local tech media has said that there are over 2,300 co-working operators in the market as of early 2016. After this stunning growth, however, we can now see the inevitable overcapacity problem, leading to major consolidations in the market since the beginning of this year.

“Over the past years, co-working boomed, but the supply has definitely exceeded the demand. The demand is coming up but not as quickly as the supply,” said Liu Lei, founder and CEO of Sandbox, one of the few free co-working spaces in Shanghai. “Having an open community and the belief that anyone can adopt this lifestyle is how we built our demand.”

Why An Open Community?

“In co-working, we sell the community. The key essentials for the community is a group of people that understand each other’s commonality, they share values, interests, and sharing the same space is the fundamental commonality a lot of these people have,” said Liu.

While commonality is easy for most co-working communities to achieve given their word-of-mouth marketing, Liu pointed out that diversity, another essential component that defines a prosperous community, is missing in most of China’s co-working spaces due to the closed nature of their operation.

“I went to a major co-working brand in Shanghai just to look around. There was a glass door, I stand outside the glass door for almost 30 minutes like an idiot and couldn’t get in until the reception opened the door for me,” he said. “The first thing she asked is whom I am here to see. When I told her I just want to take a tour around the facilities, she brings the salesman who inquires on what kind of space I want.”

While noticing that the whole space is 70% empty, Liu wondered why they still kept their doors shut rather than open it up to people who are willing to use it and allow more diversity to flow in.

“With an open community, what happened is your open portion of the room allows diversity to come in, allows people to come for maybe just a cup of coffee, maybe just for the meeting room, or meet a friend or two,” he said. “Those people could be your potential customer, guest’s customer, future suppliers, or partners. That inflow of diversity is essential for a community. We want to have an inflow of different kinds of people. We call it ‘fresh blood’: every day you end up seeing a portion of people you have never seen before. That gives you an opportunity to know them.”

Freemium Model Pays Well

Being known for providing rental-free spaces, people may easily wonder how Sandbox makes money.

The company seems to have been paid well by building an open community. A four square meter meeting room with the maxim of 5 seats and one round table in Sandbox’s Zhangjiang location is priced at 50RMB per hour.

“In October, from just that one room we generated 6750RMB (971 USD). That’s 57 RMB per square meter per day, much higher than retail space on Huaihai Road [a popular shopping street in Shanghai],” he said.

Hands-off Approach for Running A Space

Sandbox started just a year ago as the odd man out: completely free to use the public space and very few staff. When you walk around Sandbox, you can’t see any senior staff who control the community, just a few trainees or some young hipsters willing to help you out when needed.

“Everything build online because we want to build a space that manages itself. We don’t put in much effort to control the community,” said Liu. “We rarely host events. All the events held in Sandbox are organized by our community members. We provide the space and things just take happen.”

Image credit: Sandbox

[Podcast] China Startup Pulse: Startup like a rolling stone with Archie Hamilton founder and CEO of Splitworks

Guest Editor — Tue, 27 Dec 2016 02:32:42 +0000

Editor’s note: This originally appeared on the China Startup Pulse, a weekly podcast designed to give startup enthusiasts around the world a behind-the-scenes and on-the-ground understanding of what’s happening in China’s startup ecosystem. Founded and hosted by Ryan Shuken and Todd Embley, and produced by Vivian Law and David Xu, China Startup Pulse is sponsored by Chinaccelerator, People Squared, and TechNode.

Building something that doesn’t exist is what some entrepreneurs thrive on. The risk, challenges, and potential drove Archie Hamilton to pioneer an entire industry in China. Archie Hamilton founder and CEO of Splitworks, started in 2006 to help build the music festival industry in China. Realizing that there was no audience here, he started to make up the rules and fought to understand his audience while learning how to survive, and built one of the greatest music festivals in China.

We talk with Archie about what it was like to jump into China, risking it all to build an international music festival scene. Archie talks about how to make up your own rules, be lean, and how the hard lessons of China business made him a better CEO. This is a great episode for the dreamers and believers who want to build their own empire in the East.

Thanks as always to our sponsors Chinaccelerator, People-Squared, and our syndication partner TechNode. A huge thanks to our Producer, Vivian Law and Production Editor David Xu, and finally our listeners –Thank You!

Listen to the episode here or subscribe.

TechNode does not necessarily endorse the commentary made in this program.

Weishang Knows Cosmetics: Building and Sustaining a Business

Eva Yoo — Mon, 26 Dec 2016 11:17:39 +0000

This is the second post of “Weishang Knows Cosmetics”. In the previous post, we explained how weishang is gaining more influence in the cosmetic sector, traditionally dominated by overseas cosmetic companies like L’Oreal, Amore Pacific, and Shiseido. In this post, we will give an example of a weishang based in Shanghai that leverages their salesforce and builds their brand.

Pearlosophy is a Shanghai-based cosmetic weishang looking to capitalize on the stunning growth China’s beauty market is witnessing. With only 10 people working in their office, they see sales of tens of millions RMB every month. The company has a network of over 1,000 Internet celebrities (网红 or wanghong in English) that act like wholesalers taking proceeds from the sales as payment. Most of these Internet celebrities are post-90s and some have a following of 300,000 people.

To make sure that Pearlosophy can maintain their salesforce, the company organizes offline events and seminars.

From left to right: Top seller posting her 310,000 RMB (44,600 USD) bonus on WeChat; top 88 wanghong group chat; wanghong group chat

A top Internet celebrity can make 600,000 RMB (86,000 USD) a month through cosmetic sales, according to Peggy. Peggy Sun, the 32-year-old CEO of Pearlosophy, communicates with through WeChat with groups ranging from the Top 88 sellers to a general sellers group.

Peggy Sun, CEO of Pearlosophy

Peggy previously ran a brick-and-mortar cosmetics retail store in China for 10 years, where she sold international brands including Sephora’s cosmetic products. But the business didn’t grow quick enough for her. With the advent of weishang, she opened her own business in November 2015. She says the key to her success has been branding.

“Other weishangs doesn’t have a brand. Weishangs mostly lasts 3 to 6 months, and very few last 1 year, then disappear,” Peggy says. “We have been 1 year in business, and we are showing a smooth growth. Other company’s growth fluctuates very quickly.”

China market is showing a huge appetite for international cosmetic brands. Foreign-funded enterprises may still play a dominant role in China’s cosmetics market, accounting for roughly 86% of the total volume of retail sales, but cosmetic sales online is dominated by weishangs.

“Weishang will take 50% of cosmetic online sales in the China market,” Peggy says. “Many people from third and fourth tier cities haven’t had a chance to get exposed to international brands. Those consumers have no idea and they have never heard about it. They rely on what their friends post on WeChat, get recommendations from their friends, or they know about it through traditional advertising channels.”

One of the strategies for the company to stay competitive in the market is to building trust with the top products. Pearlosophy’s sources their products from OEMs in South Korea, France, and Australia to ensure the cosmetics are safe and high-quality. In 2014, 80% of beauty products sold on WeChat by weishang were facial care masks, and Pearlosophy is no different. They started their business selling the same masks. Currently, their 50% of product is skin care segments, which are best sellers after the still-dominating face masks.

“Now there is a trend, Chinese women started to put on make-up. In the coming one or two years, the market will be very good. Weishangs will greatly benefit from this trend,” Peggy says. “As for make-up products, users need to learn how to use it. The make-up market will see its peak in the coming years, and we have started to focus on make-up products.”

However, Peggy is not sure if WeChat will be the ultimate platform to dominate the businesses.

“Three years ago, nobody guessed that WeChat would go this far. For the last two to three years, it was difficult to use WeChat public account. Now everybody follows this trend. We never know what’s going to be the top platform in the coming years.”

Image Credit: Pearlosophy

Xiaomi Expects Mijia Hardware Sales to Reach $2.2 Billion in 2016

Tracey Xiang — Mon, 26 Dec 2016 05:04:20 +0000

Correction: An earlier version of this story’s headline implied that the expected sales are to come from Xiaomi’s first-party hardware. The expected sales are to come from third-party companies that Xiaomi has invested in.

Lei Jun, CEO of Chinese smart device maker Xiaomi, is known for making ambitious predictions. This year is no different: At the 2016 China Mobile Global Partners Conference last week, he announced the company has invested in 77 hardware makers with total sales expected to be 15 billion RMB (2.2 billion USD) this year alone.

Only a few product categories are designed and made by Xiaomi itself even though it offers a wide variety of hardware products. The company unveiled a “100-hardware-company” strategy in 2014, aiming to invest in all kinds of consumer electronics companies. Branded as Mijia (米家 or Mi Home) in March, Xiaomi has partnered with Shunwei Capital, a VC firm co-founded by Lei Jun, to sell white-label products through Xiaomi’s online and offline channels.

Out of these 77 companies, 30 have so far launched products. These new products include not only popular smart hardware categories, such as self-balancing scooters, cleaning robots, drones, VR headset, smartwatches for kids, and connected bikes but also some interesting products including a connected rice cooker and an electric mosquito repellent device.

Together with the in-house managed categories, including smartphone, laptop, tablet, smart TV, set-top box, and WiFi router, Xiaomi offers now more than 40 categories of electronics products. As its smartphone shipment growth has stagnated, Xiaomi now depends on Mijia products for sales growth and media attention.

The Mijia app, developed by Xiaomi, connects and controls all the devices. Through the app users are also able to buy other related products such as the replacement filters for the water purifier. The app has had more than 50 million installs and more than 5 million daily active users, according to Xiaomi. More than 40 million devices are already connected

Mijia products are leading in several popular categories in China. The Mi Band, the smart wristband developed by Huami Technology, the first member of Mijia, has shipped 23 million units since its launch in July 2014, according to Mr. Lei. Apart from activity trackers, the company has also developed a pair of smart shoes, by partnering with Chinese sports brand Lining, and a smart body scale. Huami Technology unveiled last week that its total annual shipments had reached 16 million and annual sales had reached RMB1.5 billion (roughly US$220 million) (announcement in Chinese).

Xiaomi earbuds, made by 1More, have shipped 18 million units; Ants, a Dropcam-like video monitoring camera, have sold 3.3 million units; the air purifier launched in late 2014 and has shipped 1 million units, according to Mr. Lei.

Some accessories also sold pretty well: Mi Power Bank, one of the first products Xiaomi introduced from a third-party company, and a power strip has sold 55 million units and 5.5 million units, respectively.

16 of the Mijia member companies has exceeded RMB100 million (about US$14 million) in total sales this year and 3 of them have reached RMB1 billion (about US$140 million), according to Xiaomi CEO.

Like other Xiaomi products, these from Mijia products are all very affordable. Xiaomi’s cleaning robot is priced 35% lower than the cheapest Roomba model. Mi Bands are sold for a fraction of their counterparts by Fitbit.

Four of Mijia member companies are “unicorns”, private companies valued at US$1 billion or more, according to Mr. Lei. It is reported that the four companies include Huami Technology and Zimi Technology, the maker of Mi Power Bank.

Not only startups, Xiaomi and Shunwei Capital also make investments in established companies: iHealth whose connected healthcare products are available on Apple’s online store; Ninebot, the Chinese personal transportation device maker that acquired the US-based industry leader Segway last year; and Midea, leading Chinese home appliance companies.

Xiaomi has also established a Mijia open platform, offering custom hardware and software development solutions, cloud services, and other technical support. Accepted products will be able to use the Mijia brand, run crowdfunding campaigns on Xiaomi’s own platform, and sell their products on Mijia’s online store. Third-party products that have successfully landed on Mijia store include an electric toothbrush, a portable smart washing machine, a smart lamp, and a plant monitor.

image credit: Xiaomi

2016 Christmas List: Cool Crowdfunded Chinese Hardware

Eva Yoo — Fri, 23 Dec 2016 08:38:50 +0000

Christmas is right around the corner. This year, we decided to ask Santa for the best of China’s crowdfunded hardware products.

With its unique technology and design, China is leading trend in hardware with more geeks craving “Innovated in China” products.

Last year’s Christmas wish list had mostly IoT products including a projector, a smart water bottle, a scanner, a robotic arm, and a connected helmet. These successful crowdfunding projects this year range from robotics, VR camera, bikes, and projector all the way to an air pump. Two products hail from Chengdu and Dalian, showing that China’s hardware innovation is spreading into the second-tier cities.

1. COWAROBOT Suitcase

COWAROBOT R1 might be helpful to Santa carrying all the presents to your house. It is a robotic suitcase that follows its owner around, so that he don’t have to carry it and can be controlled using matching app. The Indiegogo campaign raised 550,797 USD (456% funded) on September 10th. TechNode interviewed the founder and CEO of COWAROBOT, Tommie He in Shanghai; he mentioned the possibility of developing an AI-enabled “a passenger companion robot” in the future.

2. Insta 360 Air

Insta 360 Air can provide a cool method to livestream Christmas parties using its 360 ° videos and take unique selfies using flat mode, sphere mode, VR mode and planet mode. Users can clip the compact camera to their Android smartphone to take 3K stills or film 2K videos and share the images and videos to social networks. Shenzhen-based Insta 360 previously launched their 360 ° panoramic camera Insta360 Nano at CES in 2016. Insta 360 Air 360 has raised 77,042 USD so far and was 385% funded on Indiegogo with 10 days more to go.

MAX PUMP

Founded by university alumni in Dalian, MAX PUMP raised a total of 192,092 USD, and was 3430% funded on August 13th, 2016. Priced at 35 USD, it can inflate and deflate air mattresses, life buoys, air beds, and vacuum bag.

4. Z4 Aurora Projector

For those who don’t want to brave the Christmas cinema crowd, the Z4 Aurora can provide a better option at home. Priced at 699 USD, Z4 Aurora is a smart LED projector that can transform any surface into a 300-inch screen. Unlike other projectors, Z4 Aurora provides vertical and horizontal correction that provides an optimal image from any angle, eliminating the hassle of set-up. Founded in Chengdu, the projector has raised 323,852 USD, and was 597% funded of its pledged goal on May 2nd.

5. FLX Electric Bike

Santa won’t need Rudolph if he had an e-bike that can pull him up the slope. Priced at 2,199 USD, FLX electric bike is 22.67 kg, lighter than other e-bikes. It’s one of many good examples of bike innovation in China, as the bike market begins to see Chinese brand bikes with technology and design. Shanghai-based FLX’s e-bike has raised 1.7 million USD and was 3192% funded of its pledged goal on May 29th. Another example is Beijing-based SpeedX road bike, raising over 2.3 million USD of a 50,000 USD goal.

Image Credit: Indiegogo

Tips for Foreign Founders: QR Codes and WeChat

mjkim — Thu, 22 Dec 2016 05:27:20 +0000

This is the first post in our series: Tips for Foreign Founder. We talk to a group of foreign entrepreneurs who have found success in China and want to share their experience with those inside and outside China.

As China’s economy, spending power, and global heft grow, so too does interest in doing business here. This intense interest, however, is also coupled with intense trepidation due to huge market differences. Getting over these differences is the first step.

“China is an island where nothing works. Your website, app, and the way you worked back in your country might all have to change when you come to China,” says Ryan King, Professor at Fudan University and startup advisor in Shanghai.

Indeed, the biggest web browser, Chrome does not work very well in China and neither does Facebook, the biggest marketing tool for most global startups.

“Look at your customers and see which tools they use. You have to use those tools, not the ones that you had always used outside of China,” says Sian Lovegrove, founder of Shanghai training and director of youth expedition business of UK’s World Challenge in China. In the process of bringing the UK’s business into China, she witnessed the struggles that foreigners have due to lack of understanding the particularities of Chinese culture and business. Since then, she works as an advisor to many foreign startups coming to Shanghai.

Below, we highlight 4 tools every foreign founder needs to know.

Tip 1. Get used to putting QR code on everywhere

On almost every leaflet, brochure, advertisement, and pretty much anything free, you can easily see a plethora of QR codes.

“Although you rarely spot QR codes in your home country, it is everywhere in China. Literally, everywhere,” Sian says.

QR codes entered China all the way from Japan in 2010 but really took off when Alibaba and Tencent adopted the technology to reduce mobile payment friction.

Make sure you add the QR code for your WeChat account on your business care. This makes it much easier for people to find you and reach out to partner.

Tip 2. Don’t use email, just use WeChat

“I have seen some people complaining that they had not received or had waited a long time to get a response when using email with Chinese partners,” Ryan said. “This is because Chinese people, especially those that work in startups do not really use email when working.”

Although it is hard to imagine WhatsApp or Facebook being used in business environment, it is very common for Chinese startups to ‘work through WeChat.’

“When our expedition teams from Austrailia came to China, they didn’t even know what WeChat is. But, now after weeks of doing projects in China, they can’t leave WeChat, not even a second,” says Sian.

Tip 3. Choose 8 app stores to list your app

Since the Google Play Store doesn’t work in China, distributing your app on Android is not as easy as it is for iOS. There are over twenty different Android App stores, including the Baidu App Store and the Tencent App store.

When it comes to developing an app, it is important to first choose on which app store to list. The demographic differences between stores can be quite large.

“I suggest you choose around eight Android app stores first and then start developing the app”, Ryan says.

Tip 4. Make a WeChat official account instead of a website

In China, people live inside WeChat, sometimes even forgoing a web browser. To effectively attract and maintain a Chinese audience, a WeChat official account can actually be more effective.

Once a user subscribes to your official account, they get a message whenever there is an update. It is more accessible and easily keeps your audience updated on for news and events. WeChat official account can be designed to be a little more than just a notice board; it can even be used as an online shop.

A lot of Chinese startups choose to first open up an official account inside WeChat to present their product and service and receive feedback before they create an independent app.

“The only thing is that only Chinese can open up an official account. So, if there is no Chinese member in your team, you might have to seek a reliable Chinese friend to register on behalf of your company,” warned, Ryan.

[Update] Sanook Online Rebranded To Tencent Thailand

Emma Lee — Thu, 22 Dec 2016 04:06:56 +0000

Chinese internet giant Tencent has branded its wholly owned subsidiary Sanook Online, a leading Thai web portal, to Tencent (Thailand).

Sanook started in 1998 as a Thai-based web directory and gradually developped into an all-inclusive entity with businesses ranging from web portal (Sanook.com), news portal (NoozUp), music-streaming (JOOX), IM (WeChat), and e-commerce (Sabuy).

Sanook.com claimed over 30 million active monthly users, while JOOX has amassed 22 million users, the report citing data disclosed by the company. To bring these figures into perspective, Thailand’s internet population is 41 million as of June this year; the country has around 68 million people.

Tencent already holds a 49.2% stake in Sanook through a 81.7 million HKD (10.52 million USD) deal completed in October 2010. Different from strategic investments, Tencent is playing a hands-on role in the management of the Thai company with seats in the board. As the local partner, Sanook runs WeChat and JOOX, the in music-streaming platform backed by Tencent, in Thailand.

Tencent Thailand will focus on three businesses in the future: news portal business led by Sanook Online and iPick, entertainment and multimedia by JOOX and Tencent Games, and services by Top Space, an advertising agency, according to the local media report citing Managing Director Krittee Manoleehagul.

As the domestic market has become saturated, the battle among Chinese internet companies is expanding to Southeast Asia market, the first stop for their global expansion. Tencent’s arch-competitor Alibaba is also aggressive in the region with investments in e-commerce platform Lazada, PayTM, and third-party payment service Ascend Money.

The entry of heavy-pocketed Chinese internet giants may lead to fiercer competition for local startups, but on the bright side, the trend will also bring lots of positive effects.

“It’s encouraging to see a lot of similarities between China and SEA. Our current landscape is very similar to China’s of five to ten years ago. For this reason, we expect China to play two key roles for SEA startups: as a provider of strategic capital and as a knowledge-sharing partner”, Joel Neoh, founder of Malaysia’s top gym pass and O2O company KFit, said in a previous interview with TechNode.

Image Credit: Tencent Thailand

This post is updated on 17:55 December 28th to clarify that Sanook has been renamed to Tencent (Thailand) as of December 19th, 2016 rather than an acquisition.

It’s Official: You Need Local Hukou To Become A Didi Driver in China’s Tier-one Cities

Emma Lee — Thu, 22 Dec 2016 01:37:39 +0000

Still remember China’s tough draft regulations on the ride-hailing industry that could potentially cut the number of drivers on major platforms like Didi by half? Well, now it’s official. Beijing and Shanghai each rolled out specific regulations for the car-hailing business yesterday.

A majority of requirements from the drafts were kept, including the types of vehicles that can be used and who can drive them. According to the regulations from both cities, drivers on the ride-sharing platforms must have local residency registration (户口). Additionally, the municipalities maintained the requirement that the cars must be registered locally, leaving many of the existing cars that registered in other provinces barred from running.

The blow is extremely significant since both the cities are known for their tremendous migrant populations. Didi’s previous estimate shows that this requirement will slash more than half of its drivers in Beijing and forces out an overwhelming majority of Shanghai drivers from the platform. According to Didi, of the 410 thousand registered drivers in Shanghai, only 10 ten thousand have a Shanghai Hukou.

Beijing has made some minor adjustments on the cars that can be used for ride-hailing. The stipulated minimum engine size (1750ml/1.8T/2.0l) was lowered to less than 1.8T and the minimum wheelbase was reduced from no less than 2700mm to 2650 mm (2600mm for cars in Shanghai). In addition, a five-month transitional period was added so the companies can make the necessary adjustments.

Most of the leading ride-sharing platforms from Didi Uber, Yidao, Shenzhou, to AA Zuche released announcements that they will comply with the regulation. However, given the usual “ask for forgiveness, not permission” approach many of these companies take, we are still skeptical that these rules will be fully followed. There is one silver lining: ride-sharing companies may face less pressure in lower-tier cities that have proposed less restrictive rules.

Image Credit: Shutterstock

TechNode’s Top VR and AR Stories of 2016

Eva Yoo — Wed, 21 Dec 2016 08:30:35 +0000

China is a country of early adopters and the VR/AR industry is no different. From arcades to humanity’s greatest obsessions, from this year’s biggest disappointment to Korean startups, we present you with the top VR and AR stories from our site this year.

1. Virtual Reality Arcades Are Taking Off In Shanghai

Shanghai is the home for most VR arcades in China. A quick search of VR Arcade (虚拟现实体验馆) or VR (虚拟现实) on Dazhong Dianping show that Shanghai has 101 VR experience sites, while Beijing has 55, Guangzhou has 22, and Shenzhen has 16. China’s VR arcades are attracting the middle class of young, tech-savvy Chinese people and are becoming a test bed for overseas VR games.

2. Sex Tech Is Entering Virtual Reality In China

Concentrated investment has led to a boom in China’s ‘smart’ product innovation – including sex tech. Chinese online sex product retailer Chunshuitang invested 10 million RMB (1.5 million USD) in R&D to put adult VR products on the shelves. “A virtual reality-created lover can be a good partner without having to break the current relationship,” the founder and CEO of Chunshuitang, Lin Degang told TechNode.

3. Secretive Alibaba-Backed Magic Leap Is Suing Its Staff And Making Robots

Alibaba and Google-backed augmented reality startup Magic Leap filed a lawsuit against two former employees, claiming they worked on proprietary robotics technology while building a similar project outside the company for over a year. The company is working on a VR-style headset and imaging technology that allows users to overlay high-quality 3D imagery onto real life scenes.

4. Insta360 Nano Can Open Consumer Generated Content Market VR Industry

The Insta360 Nano is an entry-level piece of hardware for the VR and AR industry. Users can download the Insta360 official app and place the Nano camera on their smartphone to start shooting a 360 ° panoramic video. Users can also try out VR viewing mode by placing their phone into a VR HMD to experience the live feel of 360 °.

5. Meet Some Of The Best VR Headsets Coming Out Of China Right Now

This post compares the experience and specs of HTC Vive, Baofeng Magic Glass, LeEco Super Helmet 3D VR Head-Mounted Glasses, and DeePoon M2.

6. Here Are Seven Startups From South Korea’s Thriving VR Scene

South Korea is a hotbed for VR technology and VR content, powered by the country’s major hardware tech brands and entertainment industry that includes K-pop and Korean dramas. This post features seven Korean VR companies; three VR technology companies providing a 3D video product system, a 360-degree audio solution, a facial expression recognition, three VR content companies and a VR motion controller company.

Don’t forget to stay tuned next year for even more about China’s rapidly growing VR and AR industry!

Image Credit: TechNode

Gay Dating App Blued Buys Into Hornet To Boost Global Expansion

Emma Lee — Wed, 21 Dec 2016 06:18:20 +0000

Blued, a Chinese gay flirting app, has entered a strategic partnership with U.S.-based dating app Hornet in an attempt to spread its popularity around the globe. As a part of the cooperation, Blued will invest an undisclosed sum as an extension of the 8 million USD A round Hornet announced in November.

Hornet, which claims to be the world’s second largest gay social network, has now registered over 15 million total users with 3 million monthly active users. The company has grown rapidly over the last year through the acquisition of gay city guide Vespa and LGBT content provider Unicorn Booty. Although Grindr and Scruff may dominate in the U.S., Hornet says it is the number one network in France, Russia, and Brazil.

It is worth noting that Ventech China, a shared investor behind the two companies, may have played a significant role in this partnership. As the leading investor in Hornet’s A round, Ventech China also participated in Blued’s C round.

“Hornet has one of the most successful growth rates of all the gay social apps on today’s global market,” said Geng Le, CEO of Blued. “We share a vision to bring gay apps outside of the first generation hook-up model and into digital homes for the gay community.”

Founded as a virtual community for gay men in 2000, Blued has grown rapidly along with changing public attitudes toward gay people. The app claims to be world’s largest gay social network with approximately 27 million total users and 3 million daily users. Around 80% of their users are in China.

China has seen a “pink economy” boom in recent years. In addition to Blued, a bunch of services like Zank, lesbian dating app The L, and Queers, an app designed to help young people arrange sham marriages between gay and lesbian people, have all seen massive growth. The trend is so strong that Chinese game developer Beijing Kunlun Tech Co. purchased a majority stake in world’s top gay dating app Grindr earlier this year.

Image Credit: Shutterstock

Weishang Knows Cosmetics: Internet Celebrities Tap Into Cosmetics

Eva Yoo — Wed, 21 Dec 2016 04:02:00 +0000

This is the first post of “Weishang Knows Cosmetics”. In this post, we will explain the phenomena of weishang getting influential in the cosmetic sector, largely dominated by overseas cosmetic companies like L’Oreal, Amore Pacific and Shiseido. On our second post, we will give an example of a weishang based in Shanghai conducting marketing and making sales through WeChat.

Starting a business used to be quite difficult, even in China where making money is an almost spiritual pursuit. However, with the rise of the mobile internet, platforms to create and grow a business significantly lower many barriers. WeChat, with its amazing user base, has proven to be one place where entrepreneurs can be very successful.

Weishang (微商), or micro business, is one feature in WeChat that allows users to sell goods and services to their contacts, advertising them through Moments, the app’s status update function. As cosmetics sector is one of the fastest growing sectors in China, cosmetic weishangs are gaining more traction online.

Previously in order to create a cosmetics brand, it required a lot of investment. However, a weishang doesn’t have to build up offline shops or advertise their brand on offline channels saving a lot of money. In addition, WeChat provides business and marketing channels for individuals who want to launch their weishang.

“We have had a turnover of few million RMB this month,” says Niki Liu, CEO of UChange. “It’s because of the wanghong effect. Wanghong can easily attract followers and fans on their channels. A lot of my followers came to work with me.”

Niki, at only 26 years old, is the founder and CEO of a cosmetic weishang with 30,000 employees and 100 Internet celebrity (网红 wanghong) working for her company. She herself is an influential Internet celebrity. She started her Weibo account in the summer of 2013 and already has tens of thousands of followers. In February 2015, she launched her cosmetic brand UChange in her home city of Wuhan, one of the fastest growing second-tier cities in China.

Internet celebrities in her company post product photos on their WeChat moments. Interested customers based in China, as well as overseas countries like Canada or Australia, talk to them individually on WeChat to purchase the item. The sellers talk one on one with customers and manage them individually. All the Internet celebrities selling cosmetics use one WeChat group to communicate Niki says UChange provides professional training to all their sellers, very different from other companies.

Niki Liu, her WeChat moments, and UChange’s public account

The cosmetic sector is one industry greatly benefiting from WeChat. Over 70% Chinese consumers cosmetic searches online are non-brand terms, according to China Internet Watch.

“Chinese sellers largely depend on viral marketing, and that’s why they like weishang. The catalyst of this phenomena is the easy payment method using WeChat pay,” Eunhee Kim, marketing representative at Beauty Technology Cosmetics. The Korean OEM company plans, manufactures, and supplies cosmetic products to its clients who range from big cosmetic companies to weishangs specializing in cosmetics sales.

Over 50% consumers search for methods and techniques of makeup no matter using desktop or mobile devices (Source: China Internet Watch)

According to Ms. Kim, there are two kinds of weishangs in China. The first is the top cosmetic distributors and agents in China. These companies used to be part of the logistics or sales chain. The second ones are post-90, who are mostly Internet celebrities or KOLs (Key Opinion Leaders) in China.

As Chinese consumers tend to go for products with natural ingredients, weishangs have a higher demand for cosmetic products than bigger-size cosmetic companies.

“They would ask us to put in all the natural ingredients to the cosmetics and ask us to take out all the artificial dyes and components,” Ms. Kim says. “Rather than considering how they can differentiate from other weishangs, they all want the eco-friendly components.”

In order to attract more employees, a post-90s weishang CEO usually posts about how much money they have made on their Moments. Niki and her colleagues fill in their WeChat Moments with selfies holding their product, screenshots of their customers making over 2,000 yuan purchases through a WeChat conversation, and pictures of their office piled with cosmetic packages ready to be delivered. To raise brand awareness, cosmetics weishang sometimes collaborate with the other big corporations. UChange is currently partnering with media companies to do cross-promotions.

Image Credit: Shutterstock

Entering and Growing in China: Q&A with Daniel Negari, CEO of XYZ

John Artman — Wed, 21 Dec 2016 01:39:01 +0000

Ever since ICANN relaxed controls over domain name suffixes, there has been an explosion of every combination under the sun from .bike to .pottery. However, finding a memorable domain can still be quite difficult: how do you pair the theme of your website with an appropriate suffix?

Alphabet, Google’s parent company, created abc.xyz, a memorable and simple representation for their company. Launched in 2014, .xyz has gone on to be one of the most used suffixes, more than .info, .co, and .biz. Earlier this month, .xyz became one of the first foreign-operated domains to get approval for domestic hosting in China.

Daniel Negari, CEO of XYZ

To learn more about the process and their future plans, we spoke with Daniel Negari, CEO of XYZ.

Why did it take so long to get accredited?

Getting accredited in China was unchartered territory. We spent over a year working very closely with China and ICANN to develop and test a technical solution that met policy and system requirements. XYZ is the only registry to receive approval from ICANN for our technical solution to operate in China.

We also set up our WFOE, created our Chinese Business Entity, Beijing XYZ Technology Co LTD, and opened an office in China. All of this was done ahead of accreditation to prepare for the exponential growth our registrar partners are expecting in 2017.

What policy and security requirements did you have to meet in order to get accredited?

In addition to setting up our WFOE, business entity, and office, we hired Mason Zhang as Beijing XYZ’s first employee to lead our expansion efforts in China. We also partnered with ZDNS, a local backend registry to handle our DNS, escrow files, and other local data in a secure manner that meets China’s policies.

What is the difference between being accredited inside vs outside of China?

Accreditation outside of China is only through ICANN, the nonprofit organization that maintains the internet’s stability. Our accreditation as a registry operator through ICANN allows us to sell .xyz domains through registrar partners all over the world, such as GoDaddy, Hostinger, and Crazy Domains. The registrants can then host their websites or email services on their .xyz domains.

ICANN also allows us to work with registrars within China, like Alibaba, Chengdu West, and XinNet. But even though people were buying .xyz domains in China, they could not actually use their domains until we were accredited. That means even domains like 1.xyz, which sold for over 1.1 million RMB in April 2016, could not be hosted in China until now.

Why is the .xyz domain selling so well globally?

.xyz is for every website, everywhere. We provide businesses and individuals all over the world with an affordable, memorable, and flexible platform to connect online through the community we are cultivating called “Generation XYZ.” This includes a number of very well-known organizations and businesses, such as the Massachusetts Institute of Technology (MIT). The university recently announced the launch of Engine.xyz – their startup accelerator with $175 million USD in funding to support technologies that are making a positive impact on a global scale. The cofounders of Skype have also been in the news a lot recently for their newest venture, Starship.xyz, which just partnered with Mercedes-Benz and Just Eat for affordable robotic food delivery.

How much of your success do you attribute to Google choosing abc.xyz?

.xyz has been a popular choice among internet users – especially young adults, startups, and registrants in emerging internet markets – because it just makes sense. As the last three letters of the Latin alphabet, .xyz transcends language barriers. This is especially important in countries where English isn’t the first language, such as China, Japan, and Russia – all countries where .xyz has become very popular.

How will you expand in China over the coming year?

Now that .xyz is accredited in China, we expect to see many more innovative use cases come online at an even faster rate. We already have a dedicated team focused on growing in China and are hiring more employees to work in our Beijing office.

Just like we have in over 200 other countries, we will help end users in China get online and connect with their audience all over the world. Many of the innovative marketing strategies we have implemented in the past, such as #WebsiteWednesdays and website design contests, are already in the works for registrants specifically in China.

We are also supporting domain investors in China by creating tools to help them invest in .xyz domains. For example, our whole premiums site – which allows you to search for available Chinese phrases, 4-character, 6-number, and other desirable domains – is now in Chinese: www.gen.xyz/cn/jingpin. We are also organizing our biggest auction ever, which we expect to generate over $1 million USD in sales.

This Is How Alibaba Is Using Big Data to Fight Fakes

Emma Lee — Tue, 20 Dec 2016 10:06:16 +0000

Alibaba has long been haunted by a controversial reputation as the go-to marketplace for counterfeits and fakes. However, they are now under increasing pressure to clean up.

In their latest anti-counterfeiting initiative, the China’s e-commerce behemoth is drawing upon the big data technologies in the monitoring, tracking, and detection of counterfeit goods and manufacturers offline.

Operation Cloud Sword (云剑行动), led by Zhejiang law enforcement, used information provided by Alibaba to stop 417 counterfeit production groups, including 332 suspects and counterfeit good valued at 1.43 billion RMB (205 million USD).

As a continuation of the initiative, the operation will be further extended to Shanghai, Anhui, Jiangxi and Jiangsu, the regions where China’s counterfeiting goods and manufacturing ran rampant, to form the “Cloud Sword Alliance.”

Counterfeit Facilities Location (source: Alibaba)

How Big Data is Applied in Anti-Counterfeiting

The figures sure appear impressive. But for average customers and tech fans, we may easily wonder how the technology is actually applied. Here’s some insight.

Real Time Scanning and Detection Models Powered by Big Data

Alibaba’s AI bot continuously scans entire platforms such as Taobao and 1688 (an online market for wholesalers) to detect counterfeit goods. With its 600 data analytics models, the bot analyzes in real-time merchants and product listings using hundreds of millions of data points such as product specification, customer reviews, and user reviews. All the new listings that enter the system each day have to go through the bot’s scanning system, taking about 30 milliseconds from start to finish for each product listing.

The model also analyses relational data associated with the user behavior, merchandise, payment, and logistics (receiver/return addresses) to detect anomalies, determine suspected counterfeit goods, and high-risk merchants for timely interception and disposition.

Optical Character Recognition

OCR (optical character recognition) technology processes text analysis and detects textual information on product images. For example, some watch counterfeiters may put RMB 100,000 in the price field, but they put something like price ranging from RMB 1,000 to 7,800 on the product image which tells it is potentially a fake product, according to information provided by Alibaba.

“For example, some watch counterfeiters may put RMB 100,000 in the price field, but they put something like price ranging from RMB 1,000 to 7,800 on the product image which tells it is potentially a fake product,” said the company.

Textual analysis capabilities are used at a higher-level to analyze syntax and semantics rather than only compare keywords. The image recognition algorithm enables the company to identify the information related to counterfeit goods-related, in particular, irregularities with brand logos and trademarks.

Machine Learning

Alibaba’s detection technology improves itself constantly through self-learning. In addition, all the data gleaned from offline investigations will be adopted by the system to enhance its counterfeit detection and tracking capabilities, creating a virtuous cycle.

Anti-Counterfeiting: A More Pressing Issue For Alibaba Than Ever

While Alibaba is tuning up its global expansion strategy after the record-breaking IPO, anti-counterfeiting is becoming the most pressing issue that affects the confidence and trust of Alibaba’s customers and investors. Chairman Jack Ma has set a goal of getting over half the company’s revenue from overseas. But there’s still a long way for the company to go: that the figure was just 4% when Ma set this goal in 2015.

In addition to expanding businesses, Alibaba is also struggling to rebuild its image as a trusted and responsible international company. Shortly after becoming a member of The International Anticounterfeiting Coalition under the “intermediary” category, Alibaba’s membership was suspended amid a backlash from brands that include Tiffany, Michael Kors, and Gucci. Similarly, the American Apparel & Footwear Association called to re-list Alibaba as a notorious market.

To solve the problem, the company founded the Platform Governance Department in 2015 to fight against fakes and IP infringement. With an annual investment of nearly 1 billion RMB and the joint effort of 2,000 staff, Alibaba’s big data system was able to remove 120 million suspicious items from the platform, according to data released by the company in 2015.

At the same time, the company is firing at other disingenuous practices that used to be prevalent on the platform such as click farming.

“With our big data analytics and technology, we have the ability and we have the will to track down counterfeits once they are detected online, We won’t stop until we bring them to justice with the help of the authorities,” says Jessie Zheng, Chief Platform Governance Officer of Alibaba Group.

Anti-counterfeiting & OEMs

Despite the impressive figures of anti-counterfeiting endeavors, the scale of fakes is still enormous in China.

Earlier this year, at the Alibaba investor day, Ma told that audience that “[f]ake products are of better quality and better price than the real names. They are exactly the same factories, exactly the same raw materials but they do not use the names.”

Later, in a signed article for the Wall Street Journal, he pointed out several reasons why counterfeit goods are so ubiquitous, shedding some light on how to solve the problem. Small Chinese businesses, which used to serve as OEMs for overseas partners, are finding it hard to survive when export demand from Western markets is shrinking. The rise of Internet, with its lower communication and distribution barriers, has become the most accessible channel for the OEMs to sell their extra product, according to Ma.

Upgrading the whole industry perhaps is one way to fix the problem, but this would be long-term crusade and there’s no quick fix. For Alibaba, anti-counterfeiting will be their top priority for now, according to Ma.

Image Credit: Shutterstock

Mobile is Reshaping Content Aggregation and Delivery in China

Tracey Xiang — Tue, 20 Dec 2016 09:38:09 +0000

Different from the incumbent online content aggregators who produce a large portion of their content in-house and depend on traditional display advertising for revenue generation, a new wave of content aggregation apps in China use an open publishing system, an algorithm-powered recommendation engine, and a programmatic advertising system.

This trend is led by four-year-old startup Toutiao (今日头条) that it has surpassed most of the incumbents, including Sina, Sohu and NetEase, in terms of active users and potentially in ad revenue.

Toutiao’s one-year-younger competitor, Yidian Zixun (一点资讯), though not nearly as successful, has attracted investment from two leading smart device makers, Xiaomi and OPPO, who have pre-installed the app in their smartphones. Pheonix New Media, one of the biggest online media companies in China, is also an investor.

Their approach in product design and monetization has attracted a number of copycats. The big three Chinese Internet companies, Tencent, Alibaba, and Baidu have each developed a similar service. Tencent’s Tiantian Kuaibao (天天快报), by leveraging its parent company’s huge user base, has grown very fast since its launch in mid-2015.

Source: QuestMobile

Toutiao was able to generate advertising revenues immediately after monetization kicked off in 2014. It had reached its annual revenue target of RMB6 billion (roughly US$900M) as of October, according to local media outlet iheima (article in Chinese). Sina, still one of the leading online news aggregators in terms of ad revenue, reported a total of 602 million USD in ad revenue (from both desktop and mobile), in the first nine months this year. Toutiao’s annual revenue will very likely be much higher than most of the old content aggregators.

ByteDance, Toutiao’s parent company, was valued at 500 million USD in its latest round of financing in June 2014 and reportedly valued at 8 billion USD earlier this year. Sina, by contrast, is trading on the NASDAQ at a market cap of over 4.6 billion USD as of this writing.

A New Model for Digital Content Distribution

A number of the first-gen Chinese Internet companies, such as Sina and Sohu, relied on the old online content aggregation model to grow. Their model would later be adopted by many other big Chinese tech companies, such as Tencent and NetEase, to complement their core business.

The new model created by Toutiao and its peers is a major update. Apart from indexing content from partnering sources, they allow not only media outlets but businesses, organizations or individuals to set up accounts and self-publish content. Earlier this year, Toutiao even created a news-writing bot.

So long as content creators are active, these apps can easily expand to other content categories. Their recent traffic growth has benefited much from the explosion of short videos in China. Toutiao saw a 160% increase in short video views in the first half of this year, much higher than article reads growth rate which is 43% in the same period of time.

Some 70% of articles consumed daily on Toutiao are from self-operated accounts. Article reads and video-clip views on Toutiao had reached 3 billion and 1 billion daily, respectively, as of November.

Toutiao generates revenue primarily from in-stream and in-article ads. Advertisers are able to place targeted ads through an automated ad-buying system and choose to pay on a CPM, CPC or CPA basis. The existing content aggregators like Tencent’s have also found automated ad-buying more efficient. During their latest earning call, Tencent management said the ad volume served by Tencent’s automated ad-buying system on Tencent News had accounted for around one-third in the third quarter this year, up from less than ten percent a year and a half ago.

Toutiao pays content partners ad revenue shares or a flat license fee, or both. Content providers can join the targeted advertising program or run their own ads including links to online stores or app install ads. Many other content platforms don’t allow including such links.

APIs and SDKs have been available for third-party developers to build related applications. Toutiao shares ad revenues with third parties such as smartphone makers and browser vendors who are allowed to integrate its service. Yidian Zixun, preloaded in Xiaomi and OPPO mobile devices, also let the latter take a revenue cut.

In the past September, Toutiao added a shopping channel by partnering with Chinese online retailer JD.com and announced a jointly developed program which will enable readers to buy items shown in some pictures in the near future.

Toutiao says they will stick with a technology-centric approach that, apart from the absence of a big editorial team, they don’t employ a big screening team as many other Chinese content services do. The app depends on algorithms to filter out misinformation or “low-quality” content.

Both Toutiao and Yidian Zixun believe that their underlying technologies will be able to scale overseas and have launched an English version. Earlier this year Toutiao acquired a stake in DailyHunt, a similar content service based in India.

Currently, the biggest competitor to Toutiao is Tencent. The social networking and gaming giant owns not only the leading old-style news service Tencent News and a fast-growing Toutiao copy but also WeChat, the most used mobile messaging app in China with its own publishing system. Like Toutiao, WeChat also enables third-party organizations or individuals to publish multi-media content. It is reported that Tencent expressed interest in acquiring Toutiao earlier this year, but was turned down.

Image Credit: Shutterstock

Co-working Isn’t Only Startups: naked Hub Brings Different Model

Emma Lee — Mon, 19 Dec 2016 09:56:40 +0000

Co-working spaces in China are usually related to the concepts of entrepreneurialism and startups. This may be because it rose to popularity in the wake of the startup boom. But as the emerging working model becomes mainstream, more large and medium-sized companies are jumping onto the bandwagon to benefit from the new style of office management. naked Hub, the Shanghai-based network co-working space, is one of the companies that’s leading the way.

naked Hub @Xintiandi

In Xintiandi—a landmark entertainment area in the heart of downtown Shanghai—naked Hub launched last week its flagship location, a four-floor property of spaces, hot desks, open offices, and meeting rooms that have been designed to meet the taste of “Hubbers”. As the eighth addition to the coworking network, naked Hub Xintiandi has all the trimmings of a typical co-working space, only much, much nicer. All kinds of facilities from a meditation space, fitness area, wine tasting, and chess facilities are offered to keep with the co-working vibe.

Of course, co-working spaces are known as much for the infrastructures and alcohol as for their online communities. naked Hub’s namesake app facilitates and adds values to the physical community. “When an online community is created, people start to work with each other not because they are forced to because they trust each other, that’s, in our opinion, the secret sauce,” said Manoj Mehta, CEO of naked Group.

Going For the High-Tier Market

In an increasingly crowded co-working industry, naked Hub is going for the higher end of the market. For one space in the newly launched Xindiandi location, people have to pay 5,000 RMB (around 719 USD) per month. The cost of a hotdesk starts at 1,800 yuan; others vary by location and privacy ranges from 2,500 RMB to 5,000 RMB.

“We believe the majority of the crowd is at the bottom end. We actually want to give you an office which is significantly better than what you can afford with the same amount of money or less because we help everybody to share the space,” Mehta says.

For a diversifying group of tenants from large corporations to medium-sized companies, the price difference is offset by the other values offered by the space, such as businesses opportunities that arise from an active neighborhood, reception service, parcel pickup, and career development.

“This is probably most expensive in the whole of China, but still more than 35% cheaper than office building next door. But the object is not to be cheap, the object is to give value to our member,” says founder Grant Horsfield. “Most of the Chinese co-working companies are more of trying to focus on startup companies, But people are not going to move from Plaza 66 to other some low-end co-working spaces, but would move from Plaza 66 to here.”

Lots of Chinese co-working spaces mix incubation with co-working to broaden their revenue sources. naked Hub, however, has stayed away from investment.

“At this point, we have no plans for incubation. I relate incubation to a baby formula milk, you only take it for a short period of time, after that you grow to real things,” says Horsfield. “Incubation is for people who are trying to pick companies that they want to invest in. We want to provide a service and create a community.”

Is there a bubble in the Market?

“I think most of the co-working spaces in China, if not all, are there for the wrong reason: it’s the next attractive thing to do,” says Mehta.

“It’s not necessarily a bubble; it’s a fashion everybody is following. The defintion of bubble is too much right capacity. Right now there’s too much wrong capacity. The places where co-working to thrive are places where normal companies not just incubators, not just startups companies, normal companies as well as startup companies can be together,” he points out.

It’s Not Fast Enough

Launched late last year, naked Hub, backed by hospitality service naked Group, has expanded quickly over the past year. Xintiandi is the eighth location of the co-working network and more are in the pipeline. But, according to Mehta, this is not fast enough. Backed by recent funding, naked Hub has some aggressive expansion plans of establishing 30 new locations in the coming year.

“Our goal right now is to be No.1 in Asia. We already leased some places in Hong Kong and Beijing,” he says. “We are still evaluating the market of Southeastern cities about whether they can bear something like this.”

The company is looking at expanding to all the tier-one cities in China as well as overseas, including Singapore and Sydney.

“All the operations staff has to be local. We have 4-5 five people for each localization. With the use of technology and self-service, it’s important to create an environment where people are doing things themselves,” says Mehta.” Last month, in about 6-7 hubs, we had 90 events. So it’s 15 events per hub per month, things could be quite efficient.”

From Co-working to Co-wellness

In addition to co-working, naked is going to apply the model to the fitness and gym industry. Company founder Horsfield disclosed that naked is going to launch early next year a co-wellness infrastructure and platform where people can rent wellness centers, yoga rooms, and gym studios on an hourly-basis.

image credit: naked Hub

WeChat Is Maturing: Advice For Leveraging Chinese Social Networks

Eva Yoo — Mon, 19 Dec 2016 09:27:24 +0000

This post is the third post of “WeChat Is Maturing”. In the previous post, we explained how WeChat is maturing and gave examples on to drive conversion from other social networks. In this post, we will explain how two foreign founded companies use Chinese social networks to grow their business.

“Overseas startups often think that when they offer to provide something to Chinese users, they will easily gain traction. There is a Chinese word, jiediqi (接地气). For us this means we should step on the same ground as the Chinese users to better understand Chinese users,” Emmy Teo, CEO of Fashory tells TechNode. “Fashion is elegance, and it’s not about just waiting for users until they come.”

Emmy Teo, CEO of Fashory

The key message Emmy throws for her growth hacking is:

Understand The Context And The Target Audience

“On Weibo, you see the list of hot topics. You know it’s hot because people talk about it. Now a Korean drama called Legend of the Blue Sea starring Jun Ji-hyun and Lee Minho is the hottest topic on Weibo. As for singers, everybody is talking about EXO and Big bang, for example,” Emmy says.

That’s where the opportunity is: people start talking about not just the topic, but also where to buy the things they see. Not only that but brands themselves are eager to point out which of their products was featured by a celebrity or TV show.

Using the pull strategy, Emmy was able to increase traffic and conversions exponentially. Rather than pushing advertisements to an audience she thought may be interested, she waited until they were ready to be pulled by the product or brand.

According to her, there are two kinds of customers: the one who buys on impulse and the other that is driven by demand. Using the pull strategy, retailers can lead demand driven consumers to their WeChat account. Using the push strategy, the managers directly post and recommend their outfit inside the community.

Figure Out How To Best Leverage A Social Network

“See where you devote your time the most on a social platform, is it personal messages, or public discussion? Then think about where the majority of conversation happens on that platform,” Emmy says. “Then we play with few functions on the platform, to learn which function allows us the most exposure of our brand.”

For example, one might spend more time looking at their private message on Facebook and spend more time looking at the conversation around a topic on Twitter. By comparing the one versus mass exposure and its effectiveness, Emmy found the best fit for her company.

“You need to understand how Chinese use a certain app. Dating apps are not all the same. One app is for hook up, one for same sex hook up, and the other is for a marriage partner hook up. Also, think about women of different stages in their life, what do they want?”

Use Videos To Attract Followers

Yoli on Huajiao Zhibo

Yoli, an online platform for English learning, uses video materials to get attention from English learners on the Chinese live streaming platforms. Team Yoli posts their daily English live content on Huajiao Zhibo (花椒直播) and Yizhibo (一直播). Yoli’s content creators from New York, London, and Prague stream their life outside of China, telling their stories in English, and answering questions as they go. They get 3,000 to 4,000 views with 17,000 views at its peak. Some of the viewers convert to their customers by registering one on one class with a native speaker on Yoli’s WeChat account.

Yoli on Weibo

“Weibo is filling the top of the funnel for us,” Drew Kirchhoff, co-founder of Yoli told TechNode.

On Weibo (微博) a Chinese microblogging website, team Yoli posts videos that are not necessarily educational, but amusing or insightful enough to be shared on Weibo and WeChat. Yoli plans to connect their TMall store to Weibo in the future so that users can make direct purchases on their premium video class packages. Yoli said that they were profitable from day one. With 200 native English teachers and 1,000 students on their WeChat public account, the Beijing-based company is now going through an angel round.

Image Credit: TechNode

[Podcast] Analyse Asia: Episode 151: The LeEco Group with Wang Boyuan

Guest Editor — Mon, 19 Dec 2016 03:45:01 +0000

Wang Boyuan from Technode & TechCrunch China joined us in an interesting discussion the LeEco Group. He began with the vision, mission, and team behind the company and break down the intriguing web of business structures within the group. Last but not least, he also discussed whether the LeEco can survive their ongoing crisis and offer his perspectives whether LeEco is truly disrupting the industry or a house of cards.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Wang Boyuan, Writer and Editor, TechCrunch China (@thisboyuan, WeChat:boyuanw, TechCrunch China) [0:39]
LeEco (Wikipedia, Bloomberg, main site) [1:29]
- Introduction: LeEco is a leading global Internet Company, started from the media space with LeTV, and now it is in different business such as mobile phones and cars and launched in the US. It’s a public company listed on Shenzhen Stock Exchange, with an annual revenue of US$1.6B with market capitalisation in the range of US$13B.
- Can you introduce the company LeEco formerly known as LeTV or Leshi? [2:09]
- What is the mission and vision of LeEco Group? [3:01]
- Who are the key executives in LeEco Group together with their charismatic founder, Jia Yueting? [3:35]
  - Hank Liu, Vice Chairman & co-founder of LeEco Group [4:41]
- Who are the board of directors in the LeEco Group? [5:30]
- Can you share how the company is structured for example, it has many subsidiaries within the Group itself for example, Letv.com, Leshi Zhi Xin, Le Vision Pictures, Wangjiu.com, Letv Holding, Letv Investment management and Le Mobile? [6:38]
  - LeHoldings is said to have 34 subsidiaries according to The Economic Observer经济观察报. They can be parted in two categories: listed and unlisted. (see the picture below)
  - Leshi Internet Information & Technology (LeHoldings only takes 0.64% share), 13 affiliates, including the video platform Letv.com, Leshi Zhi Xin which provide Smart TV devices and online store, LeSports and LeMusic which holds its Intellectual Properties and content services, like the right to air China top soccer league in China, and to air NBA games in HK.
  - The listed subsidiaries also include Letv Investment management (its fintech branch), LeCloud (cloud service), HuaErYingShi (TV drama production) and LeShi NewMedia (company to buy IPs).
  - The unlisted business including Le Mobile its smartphone business, Faraday Future, its supercar business, Le Vision Pictures (motion picture production and distribution) behind the upcoming Hollywood blockbuster “The Great Wall” directed by Zhang Yimou and starring Matt Damon, Leshi Agriculture, including Wangjiu.com sell wines and alcohol.
- How are the different business units within LeEco Group structured? [9:47]
- How do LeEco generate revenues and what are the business models for their different businesses? [10:50]
  - In 2015, 46.78% of their venue came from TV (terminal), 20.82% came from subscription, and advertisement took 20.23%
- Can you talk about the hardware products launched by LeEco? [12:00]
- Why did LeEco acquire Vizio for US$2B? [14:15]
- LeEco’s strategy in the US market. [15:40]
- Is LeEco really a disruptor going big or a house of cards that will crash at some point? [16:30]
- How is LeEco compare to BAT and Xiaomi? [17:50]
- Recently LeEco has admitted to problems of over-expansion and cash shortfall, what do you think for their way forward? [19:22]

Here’s the structure of LeEco Group from their 2015 annual report (and it’s written in Chinese)

References:

A new tech giant? Why you need to know about China’s LeEco by Tech in Asia
Is LeEco China’s Most Ambitious Tech Company? By Fortune
A real disruptor or a big talker? The myth of LeEco, China Tech Insights
LeEco talks about its “overstretched” overseas expansion, Technode.
Nevada official voices concerns about Faraday Future financial problems，Review Journal
LeEco got 600 million investment

TechNode does not necessarily endorse the commentary made in this program.

WeChat is Maturing: How to Drive Conversions from Other Social Networks

Eva Yoo — Fri, 16 Dec 2016 08:12:26 +0000

This post is the second post of “WeChat Is Maturing”. In the previous post, we explained how WeChat is maturing and getting harder to acquire users. In this post, we will give a specific example of a foreign company using other Chinese social network for growth hacking.

Fashion e-commerce company Fashory made 250,000 RMB (36,000 USD) sales in just one week. With a combination of social networks, this Singaporean startup created buzz on other platforms then drove traffic to WeChat where they converted their audience into customers.

Emmy TEO, CEO, used eight social networks to growth hack her company. Below, she shares some of her secrets.

Baidu Tieba (百度贴吧）

Korean drama Descendants of the Sun forum

Baidu Tieba is a social network with about 19 million discussion groups ranging from food to TV programs. On the Descendants of the Sun (a Korean drama) forum, there are 426,000 followers and 2,567,000 topics. Even though the drama series finished in April, it is still trending topic, with the new threads posted every 8 minutes.

“The best case is when someone posts a scene from the drama and questions directly, ‘Do you know which brand this is?’ then we type the brand name and attach our WeChat account link that allows them to purchase the item instantly. It’s the pull strategy!” Emmy says.

Zhihu (知乎）

Zhihu is a Chinese Q&A website where questions are created, answered, edited and organized by the community of its users. Just like how it works for Baidu Tieba, Fashory answers users’ questions and send them a direct link to their WeChat account for the direct purchase.

Douban（豆瓣）

Douban yoga groups

Douban is a Chinese social network service allowing users to create content related to film, books, music, and recent events. Fashory uses three groups on Douban: Yoga, Fashion, and their Fashory official account.

In the yoga community group on Douban, there are more than 10,000 yoga lovers. Then Emmy pushes their yoga wear to the group.

Chitu（赤兔）

A growing business, of course, requires a growing team. Fashory turned to Chitu, a network for professionals, to not only look for people, but also get insight into potential customers.

After creating Fashory’s official company page, the team posted job openings, saying that they are hiring people who are fashion enthusiasts. This helps to not only get interested in their brand but also understand their customers.

Fashory’s Chitu account and job applicants messaging them

Keep

Emmy Teo’s Keep account

Keep is a health and fitness app that secured 30 million users in China 15 months in only 15 months.

Unlike other social media, Emmy identifies herself with her real name and her picture on Keep. Then she posts yoga clothes. People look at Emmy’s profile, see what she does, and then checks the product.

Image Credit: Fashory

Lost in Translation – Top Chinese Memes of 2016

Emma Lee — Fri, 16 Dec 2016 02:16:55 +0000

With the rapid pace of change, new memes and expressions come and go with the blink of an eye. As 2016 comes to an end, Lost in Translation, with the help of Yaowenjiaozi, is here with the top Chinese memes of 2016.

Primeval Power（洪荒之力）

When asked how she won her race at this year’s Olympics in Rio, Fu Yuanhui* responded that she used all of her inner strength and “primeval power.” The term, together with her adorable facial expressions, made for instant memery.

*Editor’s note: If you don’t know who she is, make sure you check her out. She’s amazing.

Watermelon eaters (吃瓜群众)

“Watermelon eaters” refers a big crowd of passive onlookers. Similar in meaning to lurker, watermelon eaters usually refers to people on social media who do not actually contribute anything. As with any good meme, this has evolved into chicken eaters and pancake eaters, referring people who lurk, but don’t really pay attention.

Small Target (小目标)

Earlier this year, Wang Jianlin, China’s richest person, said in an interview, “You shouldn’t be that ambitious. Set a small target first, like earning 100 million RMB (15 million USD).” This was his advice to young people who want to be wealthy. And, like any public figure making an embarrassing gaffe, the quote quickly became meme fodder with one-liners like: “First set a small target for losing weight, such as losing 70 pounds in three days.” and “I will set a small target for myself, like finding a boyfriend like Daniel Wu before the Spring Festival.”

Whenever you disagree with each other… (一言不合就…)

This phrase refers to when a completely irrelevant tangent is brought into a discussion. The most typical usage is when Chinese mock Bollywood for their song-and-dance routines that disrupt the flow of the story: “Whenever they disagree with each other, they solve it by dancing.”

Other examples includes “Whenever you disagree with each other, you take selfies.” and “Whenever you disagree with each other, you solve it with doutu.

Sinking Friend “Ship” (友谊小船，说翻就翻)

De-friending: a much-discussed phenomenon in the heady early days of Facebook. That same phenomenon has made its way to China. You look up a casual acquaintance or high school sweetheart only to find you’re not friends anymore! To send them a message, you even have to resend a friend request!

The phrase mocks how easy it is for a cyber friendship to fall out. Any tiny trigger can lead to a broken friendship, from taking a bad selfie of your friend to losing weight when they cannot.

Ge You slouch (葛优瘫)

Originally from a China’s popular TV show I Love My Family (我爱我家), the decades-old photo of the Chinese comedian Ge You slouching has spawned a wave of humorous reinterpretations and imitations online. As the representative sitting position of Beijingers, it is also dubbed the Beijing Slouch. Send us a picture next time you see one!

Kungfu Forms (套路)

套路 originally refers to a series of skills and tricks in Chinese Kongfu. It now refers to tricking someone into doing something for you for your own personal gain.

Blue Skinny Mushroom (蓝瘦香菇)

Blue skinny mushroom became an internet phenomenon in China almost overnight. It’s however not about mushroom. The term is pronounced very similar to feel bad (难受) want to cry (想哭) in China’s southern dialect.

Image Credit: Baidu

WeChat Is Maturing, Use Other Platforms to Drive Traffic

Eva Yoo — Thu, 15 Dec 2016 03:08:22 +0000

This post is the first post of “WeChat Is Maturing”. In this post, we will explain how WeChat is maturing and getting harder to acquire users. On our second post, we will give a specific example of a foreign company using other Chinese social network for growth hacking.

Born on January 21, 2011, WeChat now boasts 846 million monthly active users and is unquestionably the number one platform to consider when entering the China market. However, with slowing user growth, it is quickly becoming a red ocean with companies fighting harder to attract customers.

“WeChat used to be an easy way to acquire users. It’s now much harder to get users to follow a WeChat public account. They are overloaded with great content and spam marketing content. WeChat is maturing,” says William Bao Bean, managing director of Chinacelerator, an accelerator based in Shanghai.

Aiming for “user acquisition cost zero,” Chinaccelerator has experimented WeChat public account as a marketing tool for its fresh born startups on Batch 10, leveraging high quality content, growth hacking, and conversion.

William was the first one to tell TechNode the phenomena of startups leveraging WeChat to slash marketing cost last year. However, more recently, he says that putting all your marketing focus on WeChat could be risky.

Instead of solely relying on WeChat, each company in Batch 10 companies used 10 to 15 different platforms, including Miaopai, Douban, and Zhihu to acquire users. Fashion e-commerce startup Fashory, from Chinaccelerator’s recent Batch 10 used 12 Chinese and international social networks, including Baidu Tieba, Keep, Momo, Facebook, and Snapchat to attract users.

“WeChat is a closed network, meaning, you need a lot of friends to effectively expose your business. However, when you see other Chinese social networks, like Douban and Zhihu, it’s open platform, and you can get instant exposure,” founder and CEO of Fashory Emmy Teo said. Fashory made 250,000 RMB (36,000 USD) in sales, with over 500 transactions in the fourth week of November.

WeChat, Still The Best Platform For Monetization

William Bao Bean, Managing Director at Chinaccelerator

Yet, even with all the challenges and barriers, WeChat remains the best platform for customer engagement and monetization.

“One follower’s purchase rate can be as high as 4%. It’s very high compared to Facebook whose monthly conversion is close to 0.03%,” William says.

Fashory used the traction gained on other social networks to drive traffic to their WeChat store and make sales conversions there.

“When you use a website link, people are unlikely to come back to your website. However, WeChat is easier to retain customers, because it takes time for people to unfollow an account,” Emmy says.

In fact, Chinaccelerator’s Batch 10 startups have shown even better traction than the previous batch startups in leveraging WeChat public accounts.

“The size of revenue traction changed greatly. Previously, we were happy with from 500 USD to 10,000 USD sales a week by the end of the last Batch 9,” Willam says.

In the last month of Batch 10, the startups recorded 247 ticket with 1.1 million RMB (158,000 USD) in total revenue, a 250% increase since they started in August.

“Since the companies can sustain their business by themselves, they are not raising much money,” William says. “Average money they ask for is falling. They are already profitable, and they think now they don’t have to raise too much money.”

Image Credit: Shutterstock, Chinaccelerator

UnionPay Says Better Late Than Never to QR Codes

Emma Lee — Wed, 14 Dec 2016 06:00:39 +0000

China’s state-backed bank card association China UnionPay announced (in Chinese) on Monday that it will start using QR codes to process payments. This seems to be the latest signal that government is relaxing control on the technology, long in use by other sectors. In addition, it is expected that this will create a more competitive environment in China’s mobile payment sector. Alipay and WeChat Wallet have been the main players dominating the sector.

Actually, it was only in the last few months that QR codes were legally approved for financial transactions. Since March 2014, all QR code transactions were supposed to be suspended after China’s central bank announced security concerns.

However, the ban has not hindered the rapid application of QR code payment over the last two years. Domestic internet companies led by Alibaba and Tencent have continually pushed the use of this technology.

Chinese Internet companies have a tricky relationship with the country’s regulators. In the rush to increase financial offerings, they have developed an “ask for forgiveness, not permission” approach. Something similar happened with the ride-sharing industry: the legal status of drivers on leading platforms like Didi Chuxing and Dingding Yueche is still being questioned

The efforts of domestic third-party payment companies have been very productive. Data from Internet consultancy Analysys International shows the total transactions by third-party mobile payment tools exceeded 7.5 trillion RMB (1.08 trillion USD) in the second quarter of this year. It is clear that China’s state-backed institutions cannot afford to ignore this trend.

UnionPay faces stiff competition from Alipay (55.4% of market share) and Tencent (32.1% market share). UnionPay seems to be betting that it’s better late than never to enter this market.

Even before mobile payments, QR codes were a regular phenomenon, especially in first- and second-tier cities. The ride-sharing subsidy war between Alibaba-backed Kuadi and Tencent-backed Didi brought millions of users into the mobile payment ecosystem. Afterward, educating them on QR code-based transactions was simple, something that UnionPay does not have to think about.

However, there are still many challenges. Both Alipay and WeChat Wallet are so ubiquitous that changing user habits in favor of another service may prove difficult. Other large challenges include lowering marketing costs and making bankcard payment options available for small offline retailers.

Despite all these, the recent move by UnionPay marks a shift in focus from traditional financial institutions towards financial technology (fintech) solutions. In July of this year, the Industrial and Commercial Bank of China, a UnionPay member, released a QR code payment function. Several other UnionPay members include China Construction Bank, China Merchants Bank, China CITIC Bank, Minsheng Bank, SPD Bank all followed suit to release similar mobile payment features this year.

Image Credit: Shutterstock

Co-Working Is Booming in China, Here’s Why

Emma Lee — Tue, 13 Dec 2016 10:55:45 +0000

China has witnessed a huge boom of co-working spaces in recent years with hundreds of thousands of operators emerging. However, co-working is not happening only in China, but developing along with global trends. At the Co-working China Forum, Claire Stephens, Head of Workplace Strategy at global real estate services firm JLL, shared insight on China’s co-working boom.

Claire Stephens speaking Co-Working China Forum

Sharing Economy Is Changing People’s Concepts of “Ownership”
As the sharing economy takes root in China with increasing vigor, a growing number of Chinese customers are shifting to a collaborative consumption lifestyle. An iiMedia report shows that China’s total revenue from sharing economy is expected to reach 3.95 trillion RMB (roughly 633 billion USD) this year.

Co-working space is among the sectors that benefit most from this mindset change: from owning something to renting something.

“For many years, we had a lot of trouble encouraging people to do desk sharing, but suddenly people are actually asking whether they can have a Mobike for desks. This idea of a sharing economy, of communally using a space is really taking off. And that’s one of the reasons why co-working will potentially be very successful here if you getting the model right,” said Stephens.

Rise of the Millennial Workforce

Millennials, who are taking an increasing portion in China’s business world, want a different type of experience in their working environment. They aren’t interested in status, but more about how an experience feels. Co-working offers flexibility, mobility, and a cachet that many young people are looking for.

“The generational difference makes people work differently so they prioritize different things at work,” Stephens says. “Millennials tend to be more community oriented, particularly with an online community, they are quite tribal as opposed to being identified with a particular company. They could be very loyal if they view that company as being one part of their tribe. So, making them identify with the space is very important.”

Government Support

In line with China’s state support for mass entrepreneurship and innovation, the country is recording a rise of supporting industries that help to foster startups. Co-working spaces and incubating programs mushroomed to take advantage of this trend.

Technology Element is Crucial for Successful Co-working Space

Technology is one the most important features in a co-working space. It is probably the one area where most operators fail.

“At the moment, there’re a lot of people setting up co-working environments which are essentially just nicely-designed business centers. It’s more about having an online and offline community, having people to reach out and use co-working and co-working environment not just when they are in the physical space, but also online.”

Image Credit: Emma Lee, naked Hub

4 Takeaways on How China’s Post-90s Influence the Job Market

Eva Yoo — Tue, 13 Dec 2016 06:37:08 +0000

Born under the ‘One Child Policy’, the post-90s generation are well known for their free will and inner motivation. Their stickiness to mobile and online has greatly influenced many companies in China. And now, with many of them graduating, how will they affect China’s job market?

“What is important for post-90s is not whether they should work long hours or not, but rather knowing why they work,” Sheng Guo, CEO of Zhaopin says.

According to him, companies need to pay more attention to creating company values and mission in order to motivate their young employees.

Here are 4 takeaways from Sheng Guo on how the post-90s generation is affecting China’s job market.

Sheng Guo, CEO of Zhaopin

1. Chinese graduates are not in a hurry to find a job

China is experiencing a high unemployment, but Chinese graduates are not in a hurry to find a job. Students live with and depend on their parents even after graduating from university. Many graduates do not even want to find a job, preferring to pursue a graduate degree or study abroad. This is not directly linked to the market or the economy itself, rather this is the overall trend reflecting their personal life choices.

2. Name brand universities are preferred by employers

Students graduated from the top universities such as Peking University, Tsinghua University, Shanghai Jiao Tong University, and Fudan University are particularly sought-after by companies. By contrast, students from other universities will find it particularly hard to find a job.

3. Emerging internet companies are more keen to recruit university graduates

This year, BAT [Baidu, Alibaba, Tencent] has decreased the recruitment of graduates. Next year, I think BAT would still need to recruit people. In fact, in the Internet industry, the one who has a big appetite for recruiting fresh university graduates is not BAT, rather it’s emerging Internet companies in China. We see the largest recruitment this year is coming from the Internet industry, mostly small- and medium-sized companies with less than 20 employees. They are very active and, of course, this also gives us a lot of confidence to be more optimistic about the job market next year, because these companies have considerable economic vitality.

4. Less Chinese graduates are inclined to start their own business

The most discussed topic among university students is about starting their business the most, but we see the university graduate choosing to start their business has fallen down from 6% last year, to 3% this year. Students understand starting their own business is not the best choice, but a good supplement for their carrier. Internet companies and finance companies are indeed the main sectors that show huge employment of college students.

Zhaopin, China’s online recruitment platform announced China’s Best Employers on Thursday. Along with the announcement, they released new trends in job market based on its database of 100 million users on its website. Among these users, a few million are university graduates with the rest made up by white-collar workers from different industries. Founded in 2004, Zhaopin went public on the New York Stock Exchange in 2014.

Image Credit: Shutterstock, TechNode

China’s Online Video Market in the Middle of Transition to Paid Subscribers, Self-Produced Content

Tracey Xiang — Mon, 12 Dec 2016 10:24:34 +0000

China is set to reverse the course of history and again defy expectations. iQiyi, an on-demand video streaming service, expects their advertising revenue to account for only half of their total revenue for 2016.

“iQiyi’s total revenue for 2016 will be more than 10 billion RMB. Advertising accounts for only half of that with the rest coming from user-facing offerings [i.e., premium subscriptions] and other sources,” said Gong Yu, CEO of iQiyi, at the 2016 China Internet Audio-Visual Conference (referred to as CIAVC hereafter) last week.

Major Chinese on-demand video sites are still struggling with fierce competition and profitability. Since 2015, they have heavily promoted paid subscriptions in an effort to diversify their revenue structure. The hope is to move away from an advertising model to a model based on paid subscriptions. In June of this year, Gong Yu told Yicai (report in Chinese) that they want to reduce advertising from about 75% in 2015 to around 33% in 2016.

Subscription prices are relatively low, from 15 RMB to 25 RMB per month. However, Vice President of iQiyi, Yang Xianghua, told Jiemian (article in Chinese) the average revenue per user was 20 times more than revenue from advertising.

At the same time, advertising growth is slowing. According to QuestMobile (report in Chinese), a mobile market research firm, monthly active users on Chinese mobile video apps reached 800 million in July of this year. With fewer new users, the growth of impression-based advertising revenue is set to flatten or decline.

At a media event last week, Yang Xianghua estimates that next year, major Chinese on-demand video sites will be able to generate more revenue from subscription than from advertising (report in Chinese).

10% of Monthly Active Users are Paying

At CIAVC, Sun Zhonghuai, President of Tencent’s Online Media Business, said that Tencent Video estimates paying users now account for 10% of the total active of online video and audio services in China.

Earlier this month, Youku-Tudou, the online video site of the Alibaba Group, announced it has 30 million paying subscribers. Tencent Video and iQiyi announced the 20 million user milestone last month and earlier in June, respectively.

According to a report by the EntGroup (report in Chinese), the number of paying consumers for online video services in China has increased from 8 million in 2013 to 20 million in 2015. With this amazing growth, we can expect the total for 2016 to be another big increase.

Starting from the middle of 2015, iQiyi added a paywall for a selection of new releases. This strategy quadrupled their subscribers in just one year. Mgtv.com, the video site of China’s leading TV broadcaster Hunan Broadcasting System, adopted the same strategy to sign up subscribers.

Youku-Tudou was able to sign up some 7 million subscribers from one campaign during the Chinese Spring Festival holiday earlier this year. Jointly run by Alipay, Alibaba’s online payment service, both companies promoted the new subscriptions through their various services to amazing success.

No Slow Signs for Costs Growth

Paid subscription offerings have actually been available for a long time. However, there were quite a few limiting factors: 1) pirated digital content was abundant and users were reluctant to pay; 2) online payment services were not as widely used; 3) there was little differentiation in content or services between the different video sites.

Now we see that the first two problems are virtually non-existent with many users already converted into paying subscribers for differentiated content. However, this paid user acquisition comes at a cost; almost all Chinese video sites have been spending heavily on exclusive content.

LeTV was one of the first companies that made a fortune from purchasing TV show rights at low prices. However, they are now exploring a new model as those rights get more expensive. In an internal email earlier this month, Gao Fei, President of LeTV, disclosed that more than 70% of new releases in 2017 will be either self-produced or co-produced (source in Chinese).

Other sites are also placing big bets on self-produced content as it’s easier to control costs and have more ways to monetize such as selling adaptation rights or licensing rights to game developers. Tencent Video found the views of self-produced content as a percentage increased to 14% in August from 8% at the beginning of this year.

And as TechNode has discussed before, the traffic to these video sites is mainly driven by a small number of hits or new titles, but the costs to produce these shows keeps climbing. Sun Zhonghuai estimates that the user base is growing by 10% while views are growing by 50% to 100%. The costs, however, are growing by 200%, according to Sun. On top of that, of course, is also the marketing spends for those shows that are increasing as well.

But that hasn’t stopped big companies, including Tencent, iQiyi, and Youku-Tudou’s parent company, Alibaba, from establishing film and entertainment content companies to produce and distribute content not only for their own platforms but also to movie theaters or TV stations. The content and related rights will be their new revenue sources.

Image Credit: Shutterstock

[Podcast] Analyse Asia 149: Fintech in China with Zennon Kapron

Guest Editor — Mon, 12 Dec 2016 10:12:21 +0000

Editor’s note: This originally appeared on Analyse Asia a weekly podcast hosted by Bernard Leong, dedicated to dissecting the pulse of business, technology, and media in Asia. The podcast features guests from Asia’s vibrant tech community.

Zennon Kapron

Zennon Kapron from China Fintech & Kapron Asia joined us in a conversation to discuss the state of fintech in China. We discussed the different verticals within the fintech sector from digital payments, peer to peer lending to wealth management. He explained how the Baidu-Alibaba-Tencent axis is dominant in fintech against the traditional Chinese banks and western banks and serve as a business model for fintech startups. Last but not least, Zennon shared how local and foreign companies need to navigate regulation.

Listen here or subscribe in iTunes or Android.

Here are the interesting show notes and links to the discussion (with timestamps included):

Zennon Kapron (@chinafintech, LinkedIn, Wechat:zennon ), Founder and Director of Kapron Asia & China Fintech [0:40]
- How did you start your career? [1:26]
- From your various roles from CitiGroup, Intel to your current role, what are the interesting career lessons you can share? [2:20]
- What inspired your interest into fintech? [3:25]
- Can you talk about your role and coverage in Kapron Asia and China Fintech? [4:07]
Fintech in China [4:59]
- Can you describe what fintech is and what’s the context of fintech with respect toChina? [5:23]
- Is Fintech in China focused on financial inclusion or disruption to traditional banks? [6:41]
- What is the environment like in China for fintech, given the existence of Baidu, Alibaba and Tencent (BAT) which have disrupted the space with their digital payments and products such as Alipay & Wechat? [8:30]
- What is happening with the traditional banks, clearing houses and payment networks in China with BAT’s disruption in fintech? [10:14]
- What are the strategies pursued by Western banks to go digital? How does their strategy differ from the Chinese counterparts? [11:46]
- Can you talk about the different sectors & innovations for fintech in China and the most exciting startups or BAT products in the space? [13:12]
  - Digital Payments (Paypal, Stripe): Alipay and Wechat pay [13:39]
  - Wealth management (Betterment, Wealthfront): Yu’ebao [14:06]
  - Bitcoin and Blockchain (Check out Zennon’s book “Chomping at the bitcoin“) [15:56]
  - Crowdfunding [17:49]
  - P2P lending: Dianrong, Lufax and its partnership with Ping An [18:39]
  - Stock Index with Baifa 100 index [20:01]
  - Credit rating: Sesame Credit
  - Any other areas which I have missed?
- BAT are the new business models for fintech startups in China, why is this so? [22:30]
- How does traditional banks in China cope with the onslaught of BAT and Chinese fintech startups? [23:38]
- What is the operating environment for fintech companies in China? Are there any regulation or legislation that foreign fintech startups should watch for when they enter China? [25:00]
- What is the current appetite for venture capital investment in fintech within China? Any interesting exits or acquisitions? [26:04]
- What are the implications for China fintech companies going out of China and expand globally? [26:57]
- What are the interesting trends for fintech in China in the next 5 years and what willwe see in the next year 2017? [29:05]

TechNode does not necessarily endorse the commentary made in the podcast.

Ecommerce Giant JD Apologizes for Leak Exposing User Data

Emma Lee — Mon, 12 Dec 2016 06:23:09 +0000

Chinese e-commerce giant JD has apologized for a user data leak in an official announcement on Sunday. The data leak exposed millions of users’ user names, passwords, email addresses, QQ accounts, ID numbers, and phone numbers.

JD claims that the leak actually took place in 2013. They attribute it to a security loophole in Apache Struts 2, an open-source web application framework used widely by Internet companies and governments.

Leaked Database (via Yiben Caijing)

JD claims to have notified at-risk customers to update their accounts after detecting and closing the security holes.

Most of the affected users have updated their accounts, according to the announcement. However, the firm acknowledges risks remain for a small portion of users who haven’t updated their account.

The company is urging users to set more complicated passwords to make them harder to crack and changing those passwords regularly. They have already enlisted the help of the authorities.

On Saturday, Huxiu (report in Chinese) reported a 12 GB data package was being sold for between 100k to 700k RMB (14k to 100k RMB). Peddlers were claiming that the data came from JD.

The report cited an insider as saying the package had already been resold several times and was controlled by “. . . at least one hundred scammers.” The insider added that it is still unclear why data from 2013 is now being sold.

This is not the first time the NASDAQ-listed company has had a problem with data leaks. One year ago, more than 100 users filed a collective lawsuit against JD for leaking information and banking fraud.

Image Credit: JD

What Does China Mean For Southeast Asian Startups? Q&A With KFit Founder Joel Neoh

Emma Lee — Wed, 07 Dec 2016 08:09:14 +0000

Along with the globalization drive of Chinese companies, China is having a greater influence on the rest of the world as a marketplace, a foreign investor, and more importantly, a source of innovation. Southeast Asia (SEA), a densely populated region that’s expected to foster the next unicorn, is among the areas that are feeling these impacts.

Thanks to geographical adjacency and cultural similarities, SEA has become the first stop for Chinese companies when expanding abroad with an increasing number of Chinese firms like Huawei, Alibaba and Xiaomi are taking their foothold in the region. But what, if anything, will SEA startups gain from this boom?

TechNode got a chance to speak with Joel Neoh, CEO of KFit and former head of Groupon Asia-Pacific, to hear from the other side of the story. Malaysia-based KFit is a gym pass and O2O commerce platform that offers subscribers cheap health options and other offline services like salon and spas. As a hit startup in the region, KFit has marked a series of milestones this year. After securing a 12 million USD series A round this February, the company acquired Groupon Malaysia and Groupon Indonesia earlier this year.

Screenshots of KFit App

What does China mean for SEA startups?

China is significant because it has really laid the groundwork for startups in SEA. As frontrunners in online-to-offline (O2O) commerce over the past decade, Chinese startups have evolved into ‘tech giants’ in the world’s largest developing market. They’ve proven that there is a massive growth opportunity in countries with fast-developing infrastructure and rising middle-class income levels.

It’s encouraging to see a lot of similarities between China and SEA. Our current landscape is very similar to China’s of five to ten years ago. For this reason, we expect China to play two key roles for SEA startups: as a provider of strategic capital and as a knowledge-sharing partner.

I see a huge opportunity for China to partner with us as we develop the SEA commerce ecosystem through popularizing high-frequency use cases, such as restaurant payments on online platforms, and other means. We are currently exploring collaborations that will help us capitalize on fast-improving infrastructure and growing mobile penetration across the region to serve SEA’s vast population.

The O2O model is in full swing in China. KFit launched Fave earlier this summer to pioneer the O2O trend in SEA. What were the obstacles you faced in localizing this model for local market?

Benefitting businesses and consumers alike, our O2O platform is already proving its worth in SEA. It successfully generates increased sales for offline businesses (such as restaurants, spas, movie theatres, gyms, and so on), while also offering great savings and convenience to consumers. To date, we have sold over 5 million online vouchers for offline businesses in Indonesia, Malaysia, and Singapore.

For us, the key aspect to localizing this model is to have a deep understanding of the language, culture, consumer habits, and regulation in each country we want to serve. There is no shortcut to this knowledge; we invest a significant amount of time and energy in each of our markets. We work with teams of local experts who understand local merchant requirements and who know local consumers and how best to appeal to them.

What tech trends coming from China do you think would have potential to grow in the Southeast Asia market?

I think there’s huge potential for the ‘consumer internet’ and everything related to it. By this I mean businesses that offer services, products, or content to capitalize on the growing consumer class and the growth of internet and mobile adoption. There are also promising opportunities for large companies to support digital commerce through better and more convenient payment solutions.

As we continue to build our O2O platform in SEA, we see a big opportunity for local services. Even more than transportation or physical goods e-commerce, this sector holds great promise due to how frequently people use local services. At this point, the market is still pretty fragmented and no single player dominates. However, the rapid development of the mobile wallet in SEA will further expedite the adoption and development of O2O local services. This is creating a gap in the market that we hope to close.

As the economy in China slows down, India, being backed by developments of SEA, is expected to overtake China as the next innovation hotspot. How are your views on this?

Like China, both India and SEA have a huge consumer base and growing technology adoption. With a combined population of almost 2 billion people, India and SEA have to be a significant piece of any technology giant’s globalization plan.

India, in particular, has greatly benefited from an influx of global investors. The market is currently the ‘sweet spot’ for China’s BAT companies: the ‘big three’ of Baidu, Alibaba and Tencent. All three are very active in India, with Alibaba investing in Paytm and Snapdeal, Tencent’s Hike and Practo, and Baidu-backed Ctrip investing in India’s largest online travel agency MakeMyTrip.

SEA is currently at an earlier stage of the cycle. For example, in 2015, total investment in Indian startups was USD 9 billion, compared to USD 1.6 billion for SEA startups. So while SEA is quite far behind India in terms of funding today, we foresee that SEA will be the next region to hit an upcycle.

Google, Amazon, and Microsoft for the U.S. Baidu, Alibaba, and Tencent for China. What about the tech giants in Southeast Asia? How does the dominance of internet giants impact local entrepreneurial environment?

The tech giants of the US and China have led the tech world to where we are today. For example, China’s BAT have together played a crucial role in educating the market and spearheading growth in the tech industry over the past decade. Local startups benefit from the ecosystem that these ‘big three’ have built.

In SEA, the more well-funded startups like Lazada, Gojek, and Grab are burning cash and investing time and effort into educating the market about e-commerce and mobile payment. Many startups and growing platforms, like Fave, will benefit from the efforts of these trailblazers to popularize online payment. SEA is still an open market at this point, with a few companies with the potential to grow into the SEA equivalent of one of China’s BAT companies. That’s something we at Fave are aspiring to.

Most disruptive startups attract customers by providing more convenient or cheaper services. The early explosive growth is usually reliant on highly-subsidized models – that’s the case for China’s Didi Chuxing and several others. When the company stops providing subsidies or discounts, they risk losing customers. KFit has just discontinued the offer for unlimited classes for more sustainable profits. How do you balance this?

The core value proposition of our O2O platform is convenient savings for customers and increased sales for businesses. This was our underlying aim when we started, back in April 2015, helping consumers save money and get fit while also supporting gyms and fitness studios to increase sales and gain customers. After signing up more than 65% of all gyms and studios in our key cities in SEA, we are now expanding the same value proposition across new verticals, such as dining, health and beauty, and entertainment. The acquisition of Groupon Malaysia and Groupon Indonesia allows us to integrate millions of customers and thousands of merchants into Fave, achieving greater scale of impact.

In terms of the high-subsidy business model, we must remember that the subsidy is strongly correlated to competition; it’s a factor when competitors are backed by funders with deep pockets. And this is not yet happening in O2O local services in SEA — especially as our largest competitor, Groupon, is now part of our business. As the early market leader in this space, we’re now prioritizing growth in order to establish our position and ensure we dominate the market in terms of users and supply. In the platform business, there is no room for more than two players and so the fight for market position is intense. Once you become a dominant player, you can set sensible prices and increase profits.

Any tips for Chinese startups that are aiming to expand into the Southeast Asian market?

My best advice for anyone aiming to grow in SEA is to find or invest in a local partner. If you’re already considering a local partner to help you avoid the pitfalls of doing business in our diverse region, try to partner with an individual or company with a strong entrepreneurial spirit. You need someone who can be very nimble and react quickly in order to win in this market. In general, I’d say the SEA startup scene is ‘fast eat slow’ rather than ‘big eat small.’

There is a rise in the number of Chinese entrepreneurs born in the 1980s to 1990s. As a part of this generation, what are your views on the rise of young entrepreneurs globally?

I believe there is rebirth of renaissance thinking among Chinese entrepreneurs of this generation; they believe that they can win globally as well as locally. Better education and global exposure over the past 10 to 20 years, coupled with passion, hard work, and strong ethics have increased the confidence of Chinese entrepreneurs, encouraging them to compete with the rest of the world and build winning global companies.

Image Credit: KFit

Alibaba Invests In Irish Cinema Analytics Startup Showtime Analytics

Emma Lee — Wed, 07 Dec 2016 02:45:05 +0000

Alibaba Pictures, the film and entertainment arm of Alibaba Group, has invested in Irish movie data startup Showtime Analytics, through its cinema ticketing system subsidiary Yueke (aka Finixx). The tie-up will see Showtime and Finixx collaborate to develop products specific to the Chinese cinema industry, the company noted.

Screenshot of Showtime Analytics Dashboard (via Showtime Analytics)

Founded in 2014, Showtime Analytics provides data analytics products and services to cinema owners and film distributors, allowing them to collate, analyze and visualize their operational data in real time to deliver insights that drive improved business performance. The Irish company now employs 30 full time staff.

Yueke is a leading cinema ticket software system service in China, where its Finixx system serves more than 2,000 theatres and more than 30 third online movie-ticketing platforms, include QQ Movie Ticket, WeChat Movie Ticket, Alipay, Mtime, Gewara and Maoyan. Alibaba Pictures fully acquired the company for 830 million RMB (around 120 million USD) in 2015.

Alibaba Pictures, valued at 9.6 billion USD, has been investing aggressively in building out assets across the film and television production, distribution, and ticketing line. The firm launched a $300 million USD investment fund this July, aiming for film and television production. Earlier this year Alibaba Pictures acquired a stake in Steven Spielberg’s Amblin Partners. Taobao Piao Piao, the ticketing subsidiary of Alibaba Pictures, raised this May a 1.7 billion RMB (260 million USD) series A, valuing the company at over 13.7 billion RMB.

“In recent years, video-on-demand has stolen a significant march on the cinema industry as the likes of Netflix knows more about its customers and they are using this to their advantage. We want to help cinema owners and film distributors to unlock the potential of their data and help them understand more about the types of films being made, how they’re being made and marketed, and how audiences are responding to them,” said Showtime CEO Richie Power.

Chinese moviegoers’ growing appetite for quality films is fostering a booming movie market. The country is expected to overtake the United States as the world’s largest movie market by the end of this year. The country has now approximately 7,000 cinema screens and is building approximately 27 new cinema screens per day in 2016.

Image Credit: Showtime Analytics

Alibaba Sues Click Farm Company in Attempt to Burnish Reputation

Emma Lee — Tue, 06 Dec 2016 08:47:13 +0000

Chinese media is reporting that Alibaba has filed a lawsuit against Hangzhou Jianshi Technology Co., Ltd., the company behind click farm site Shatui, for damaging the credibility of Alibaba’s Chinese marketplaces. The e-commerce giant has asked for 2.16 million RMB (312k USD) in compensation for fraudulent practices on their platform. If they win, Alibaba says they will use the money to establish an anti-click farm fund. This is the first time a Chinese e-commerce companies has tried to sue a click farm firm.

Despite its huge success, Alibaba still gets a lot of flack for allowing merchants on their platform to engage in various types of malpractice, including selling knock-offs, fake reviews, and fraudulent sales volumes. They have taken big steps to reduce counterfeit goods on the platform. However, they still have large problems with disingenuous reviews, inaccurate sales numbers, and the click farms that enable both of them.

Click farming is used in China to inflate transaction volume, create bogus ratings, and leave fake reviews. With search results determined by a mix of these three factors, more and more merchants are hiring click farms to boost their popularity.

The fraudulent practice first become popular on Taobao and has become a common tactic for many of China’s online services. A grey market has formed with online services like Meituan-Dianping, Ctrip, and Didi all embroiled in similar click farming scandals.

Alibaba’s lawsuit against Shatui follows a government crackdown on the site in April of this year. Alibaba has decided to pursue a civil suit because the site was only subjected to an administrative penalty of around 100k RMB. This is far less than the 2 million RMB Alibaba claims Shatui has made from their fraudulent practice.

Shatui’s Click Farm Services Listing (via Chuangyebang)

Since March this year, Shatui has helped more than 3000 retailers on Taobao and Tmall to doll up their shop credits and reviews, generating 26.39 million RMB in transactions.

Alibaba’s data show that in the one-month period between February 15 to March 15, total click farming has deprived the display priority of around 220k Taobao retailers. The fact that Shatui only serviced 3000 stores shows they’re only the tip of the iceberg.

State authorities and Internet companies are cooperating to address the problem. The National Development and Reform Commission has signed a memorandum with Alibaba for improving the construction of busines credit rating system. In October this year, seven state authorities and eight internet companies including Alibaba, Tencent, Baidu Nuomi, and Didi all entered an agreement to share information on click farming.

Image Credit: Alibaba

Remote Meetings are Getting Better with VR

Eva Yoo — Mon, 05 Dec 2016 09:31:54 +0000

Imagine instead of choppy video, broken voice, and a laggy screenshare, you could have a remote meeting in virtual space where everyone can see and share the same thing. French developer MiddleVR is doing exactly that.

Improov3 is VR software that offers a virtual meeting room for engineers, designers, and architects. Using the software, users from different locations can invite multiple users for a product review while seeing a CAD (computer aided-design) model.

“If a company wants to see the CAD model in reality before making a prototype, they can import CAD 3D model into our software. As they put on VR headset, they can see the product in real size,” Hanna Burdorf, Shanghai manager at MiddleVR says. “It’s useful for companies that create products like motors and engines.”

Three users having a product review meeting using Improov3 (Image via MiddleVR)

In a virtual meeting room, users can load multiple 3D models, speak with each other, measure the length of each part of the product, take off the parts, and take pictures. For the user who doesn’t have VR headset, there is also a desktop version. The desktop version is available for trial.

Launched in July, Improov3 is now adding other functions such as collision checking. Collision checking is a suite of algorithms that detect, and possibly prevent, two or more virtual objects from colliding.

“There is huge potential for VR in the B2B market. Companies can use VR to improve their work communication,” Ms. Burdorf says.

More and more VR companies providing B2B solutions have emerged in China this past year. Shanghai-based GDI provides VR solutions for high-end manufacturing, national defense training, and education sectors. Plex VR creates custom 360 degree content for shops, museums, and real estate developers. While VR companies focusing on B2C find it hard to monetize from its customers, the B2B market is gaining attention powered by Chinese tech giants like HTC and Alibaba.

“China is the manufacturing hub. In China, people create things, design, and produce things. We believe our solution can be useful for companies here and want to expand into the Asian market from here,” Ms. Burdorf says.

Founded in 2012 in Paris, MiddleVR provides immersive VR applications and services, including a VR plugin for Unity. The founder and CEO of MiddleVR, Sebastien Cb Kuntz gained 15 years experience in virtual reality during his time wth SNCF French Railway.

Image Credit: Shutterstock

iPhone Explosion Ignites Customer Rage In China

Emma Lee — Mon, 05 Dec 2016 08:37:58 +0000

While the turmoil surrounding Samsung’s exploding phones has yet to settle down, the Chinese Internet is again ablaze (pun-intended!) with rage as customers complain after a series of iPhone explosions.

The incident first caught public attention after China’s state media reported the explosion of an iPhone6 Plus on August 31st this year in Zhejiang Province. The owner, identified as a Ms. Chen, says that her phone exploded while she was in the car with her family. She reports that the phone began to “puff up” and emit smoke. She was able to quickly kick the phone out of the car before any damage could be caused.

Apple offered Ms. Chen a new smartphone, but did not give any explanation.

Image from Ms. Chen (via Xinhua)

A similar case happened with Ms. Liu from Jiangsu Province.

“While I was charging my iPhone 6 Plus with the original charger, the rear cover of the phone cracked and melted together with the chair. They nearly caught on fire.” she said to local media.

Image from Ms. Liu (via Xinhua)

These incidents are not the first case, nor would they be the last, of spontaneous iPhone combustion. In the three-months period ending on Nov. 30^th, the Shanghai Consumer Council has received complaints from eight customers who reported their phones igniting, even while charging properly.

Apple’s hard-earned reputation on quality products is in danger as more and more concerns is raised about iPhones. Data from Shanghai Consumer Council shows that the number of complaints addressing Apple surged to 2,763 since the beginning of this year, nearly doubling from the same period last year. In addition, the complaints were mainly focused unusual shutdown iPhone 6 series smartphones.

For a growing numbers of iPhone 6s devices with shutdown problems, Apple has announced a free repair program. This applies to devices that were manufactured between September and October 2015; the company citied battery over-exposure to ambient air during the manufacturing process as the reason for the unexpected shutdowns. However, the company has refused to acknowledge this is as a safety issue.

The news comes when Apple is losing ground to domestic smartphone makers, like Oppo, Huawei, Xiaomi, and Vivo. Although the global smartphone maker is quickly being eclipsed by local competitors in terms of market share, it still holds a top place in the high-end market for quality products and services.

However, the current complaints have led Chinese customers to start doubting whether the phones are worth their high-price. If Apple fails to offer a plan that the public feels comfortable with in a timely manner, like Samsung did, it could be damaging to the global conglomerate.

Image Credit: Shutterstock

The Best Co-Working Spaces for Clean Air in Shanghai

Eva Yoo — Mon, 05 Dec 2016 03:25:56 +0000

On a polluted day, the murky gray air outside usually gets the most attention. More dangerous, however, can be the air inside, if only because we never consider it. That’s why one air quality management company decided to see which co-working spaces in Shanghai have the best air.

On Dec 1, 2016, two co-working spaces, Distrii and Agora Space, were awarded for the best air quality in the Pureformance Challenge. Organized by Gams, the Challenge monitored ten co-working spaces over a period of two weeks. Finalists included Agora Space, CREATER SPACE, Distrii, naked Hub, People Squared, PSA Group, PTL Group, Swiss Center Shanghai, Tech Work, and We+.

Agora Space is actually located underground, presenting a unique challenge for keeping the air clean. They use three DIY filters made by Smart Air Filters and one Xiaomi filter to ensure clean air for their residents.

“People think indoor quality doesn’t matter, but that’s not true. We spend about 90% of our day inside,” Noah Willingham, Smart Air head of South China, told TechNode.

Smart Air Filters is a Beijing-based social enterprise that makes two models of air purifier, both at an affordable price of 200 RMB (29 USD) and 471 RMB (69 USD). With the revenue generated from the sale of the filters, the company holds free workshops for companies and schools in China. Smart Air Filters wants to raise awareness of indoor air quality and encourage people to build their own DIY air filter.

“Inside air quality is about the half PM2.5 of outside,” Mr. Willingham says.

WHO’s guideline for indoor air quality is 10 μg/m3 annual mean and 25 μg/m3 24-hour mean. According to Greenpeace air quality rankings of China’s major startup cities, Beijing ranked 27 with 80.4µg/m3, Shanghai ranked 144 with 53.9µg/m3, Guangzhou ranked 261 with 38.8µg/m3, and Shenzhen ranked 320 with 29.9µg/m3. Calculating the indoor air quality of each cities, Beijing and Shanghai need further air cleaning solutions to keep up to WHO’s guidelines.

To raise awareness of air quality, Gams started the Pureformance Challenge in 2015.

“Good indoor air quality can help improve productivity and creativity in the workspace. Providing best environment for young people is very important,” Stefan Berder, CEO of Gams told TechNode. “Unlike outdoor air quality, there are solutions to help improve indoor air quality and I feel that everybody should have them.”

Gams Air Monitoring System (Image Credit: Eva Yoo)

The company does not provide the solution themselves; rather they partner with the air quality solution providers in the market, such as AtmosAir Asia, PureLiving China, Reset, and Giga.

“We are not selling the solution. We want companies to trust our measurement, and that’s why we don’t provide solution ourselves,” Mr. Berder says.

Image Credit: Distrii

51GIF: Weighing Anchor in the Sea of Stickers

Eva Yoo — Fri, 02 Dec 2016 09:00:53 +0000

Its official: stickers are the new emoji. If you think it’s only a casual way for people to chat, you’d better get your facts straight. Basically a GIF, stickers are more interactive than a picture, but smaller in size than a video. By including them in iMessage, Apple made global a phenomenon that East Asians have been using since at least 2011.

In China, there are over 570 million people using social media services like Weibo and QQ; WeChat alone has over 800 million monthly active users where stickers became mainstream in 2015. It is now common to see doutu (斗图, sticker wars) on WeChat, where friends post stickers in a seemingly endless stream. Shanghai-based startup, 51GIF sees this and believes that is a huge opportunity for a sticker platform to take off. In Chinese, 51GIF sounds like “我要GIF” or “I want GIF.”

“Unlike South Korea, where Kakao and LINE’s emoticons are a lucrative business, in China, users moved directly to stickers, skipping emoticons,” Mingu Kang, CEO of 51GIF says. “We aim to become the Giphy of China.”

New York-based Giphy, a platform for searching and sharing GIFs, has 100 million users with 1 billion GIFs in the search engine. It recently has reported a valuation of 600 million USD.

51GIF is a GIF platform that provides both a search engine and a creating tool. The company reportedly has 4 million stickers on its search engine; other competitors in China like Beijing-based Kuaishou and Shanghai-based SOOGIF only have about has about 100,000.

“We crawled GIFs from Baidu and Tieba. Our stickers includes Chinese and English versions, but we mainly focus on Chinese stickers,” Mr. Kang says.

Since neither Google nor Baidu provide cache for GIF in their image search, finding the right one to use as a sticker can be quite difficult.

The company came up with a solution: hashtags. For example, when you search ‘bear’ on sticker search engine, there can be a lot of images of bear, from angry ones to the happy ones. With precise hashtags, users can find the exact sticker they want with words like “win” or “satisfied.”

51GIF’s search engine can also do a reverse sticker search so that users will be able to find out where a movie GIF clip comes from, including the name of the actor and the title of the movie. The company also provides a toolset that enables users to make a sticker that is compatible with mobile applications and PCs.

51GIF plans to monetize much like other search engines: displaying sponsored stickers first.

“For example, if a user search ‘underwear’ on 51GIF, the partnered brand’s sticker will come up first. If a user searches ‘movie’, the latest movie sticker from that partnered company will be on top of the search results,” Mr. Kang says.

The next goal for the company is to make stickers searchable on the mobile keyboard, just like how Facebook lets this messenger’s users add GIFs when chatting. Finally, the company aims to provide an SDK and API that connects to social networks like Weibo and QQ to add stickers. It will also create an extension on browsers, so that users will be able to drag stickers from the desktop into their email.

The Secret To Getting Users Involved

Mingu Kang, CEO of 51GIF, and Dongdong Wang, co-founder (in red shirt)

Launched this past June, 51GIF claims to have 100,000 users. In order to provide better search results and attract more users, however, the company needs more hashtags.

“We are currently focusing on putting the hashtags on all stickers. We have about 100,000 hashtagged stickers now,” Mr. Kang says.

To speed up this process, the company is now rewarding users for adding hashtags, using a similar model as its parent, Money Locker. Money Locker is a screen lock app that rewards users for watching advertisements on their lock screen. It currently has a user pool of 10 million along with a database of their likes and dislikes based on how they react to the advertisements. If users want to know more about the ad, they will swipe left and if not, they will swipe right to unlock the screen.

Using a similar reward system, 51GIF will reward users every time they assign a hashtag with point that can be used to buy physical good or converted into mobile money on WeChat or Alipay.

Money Locker has raised 20 million USD in their series B and claim to have made 150 million yuan (21.7 million USD) in revenue this year. 51GIF said it will soon close its first round of funding.

Image Credit: 51GIF

VR Tops the List of China’s Top 5 Tech News Searches In 2016

Emma Lee — Fri, 02 Dec 2016 07:42:17 +0000

With the end of 2016 fast approaching, Baidu has announced the most searched news in China. Based on data collected in the first eleven months of this year, a total of 26 lists on a wide range of topics like international and domestic affairs, “in” words, poplar apps were complied by leveraging data from various services under Baidu’s brand.

Let’s take a look at the top 5 searches about tech.

VR Going Mainstream

Image credit: Shutterstock

This is year one for virtual reality. Born decades ago, the technology has finally found its way to large-scale commercial applications. The change almost happened overnight in 2016 both in China and globally with the rise of quite a few leading products from head-mounted devices like HTC Vive, Hololens, and Oculus to VR accessories like KAT VR. With the boom of VR arcades around the country, VR technology is no longer a novelty and has entered the everyday life of average consumers.

VR is also taken very seriously by mainland tech companies. Nearly all leading domestic internet companies released VR devices or VR-related services: Baidu, Alibaba, Tencent, Xiaomi, LeEco, Sougou, Baofeng, as well as many small companies. At the same time, business use of VR technology is opening more opportunities in this booming market.

Detecting Gravitational Wave

Recruitment show Only You with Guo demonstrating his equations

For decades, scientists have been attempting to detect the gravitational waves that Albert Einstein predicted in his general theory of relativity. The first observation of gravitational waves was finally made on 14 September 2015 and was announced in February this year.

In China, this news went even further with calls for Fang Zhouzi, an outspoken critic and science writer, to apologize. Five years ago, Fang appeared on 非你莫属 (Only You, a job hunting show) as a judge. During the show, he went on to ridicule Guo Yingsen, a 55-year-old who had been recently laid off, for his belief in gravitational waves. Fang and Zhang Shaoshang, host of the show, were both roasted online for their harsh and, more importantly, erroneous words.

AlphaGo Beats Go Master Lee Se-dol

Image Credit: Taimeiti

In a competition in March 2016, Google’s AlphaGo program beat Lee Se-dol 3-0 in a best-of-five match of Go, considered to be much more challenging for a computer than chess due to its complexity. The event was seen as a landmark moment for artificial intelligence, and hence, triggered concerns that AI will doom human race in the future. Scientists and engineers have taken sides on what are the future prospects for AI and human race. But one thing is for sure, the technology is receiving the attention it has never obtained before from both entrepreneurs and investors.

Shenzhou 11 Crewed Spacecraft

Image Credit: CCTV.com

China launched Shenzhou-11 spacecraft on October 17th, sending with the Long March Rocket two astronauts who spent a 33-day stay in the space station. That was the longest Chinese astronauts have spent in space. It is China’s sixth manned space mission since 2003. A source of enormous national pride for China, the space program has been receiving lots of public attention linking is with the country’s economic and technological progress.

Driverless Car

Image Credit: Baidu, Baidu’s Concept Car Traveling on the Outskirts of Beijing

Driverless cars, along with AI, is getting lots of traction. As a leading player in the field, Baidu has been testing in the outskirts of Beijing, Wuzhen, and in the U.S. LeEco is also rapidly expanding their testing grounds for autonomous cars both locally and abroad. Despite the attention, there are still lots of technical and ethical obstacles to be solved before the wide application of this technology.

Image Credit: Shutterstock

Shanghai Bike-Sharing Battle: Ofo vs Mobike vs Xiaoming

Emma Lee — Thu, 01 Dec 2016 11:06:24 +0000

Ready or not, China, once known as the bicycle kingdom, is in the midst of a cycling revival. While the car has rapidly displaced bikes, we now see more than a dozen startups flooding into the dockless bike-sharing arena. Investors have taken their sides in the stiffening battle, but a more pressing question is which startup provides a better experience?

TechNode decided to test out some of the cycling apps to shed some light on this question. We chose Mobike, Ofo and Xiaoming Bike because they are the most accessible bikes on the street of Shanghai and the most easily identified with bright colors: orange and white for Mobike, yellow for Ofo, and blue for Xiaoming Bike.

Image Credit: Emma Lee

Registration

All three apps require real-name registration with phone number, ID card, and a deposit. But the deposit varies from 299 RMB (43 USD) for Mobike, 199 RMB (29 USD) for Xiaoming Bike, and 99 RMB (14 USD) for Ofo. The difference in deposits is mostly because each company charges a different rate to rent the bikes. However, all the deposits are completely refundable and, if you use WeChat or Alipay, the process is almost frictionless.

Image Credit: Emma Lee

As to price, Xiaoming Bike wins. In Shanghai, Xiaoming Bike is 0.5 RMB for 30 minutes. However, you can get a 0.1 RMB discount for every friend you invite; the cheapest possible ride is 0.1 RMB for 30 minutes. Ofo is roughly the same price (but no discount) at 1 RMB per hour, but offers a discounted rate of 0.5 RMB per hour for students. Mobike is the most expensive at 1RMB for 30 minutes for the regular Mobike. Mobike Lite is a bit cheaper at 0.5 RMB for 30 minutes.

With such low prices and little difference, the winner in this space is going to be all about user experience.

Finding & Unlocking Bikes

Finding bikes is one of the biggest differences among the three. Like Didi and Uber, GPS-enabled Mobike and Xiaoming Bike allow users to locate the bikes on the map and help to navigate your path to the exact location of the bike. Users can reserve the bikes 15 minutes (Mobike) or 20 minutes (Xiaoming Bike) before actually using them, making it convenient for those who know they will need it soon.

Image Credit: Emma Lee

Each Mobike has a QR code printed on the handlebar and on the back. When you scan either one, the lock will open. In addition to a similar QR code-scanning feature, you can unlock the Xiaoming Bike via a Bluetooth-powered, handy if the QR code has peeled off or been defaced. Mobike has said they will also add Bluetooth in their latest update.

If everything goes well, finding your Mobike or Xiaoming Bike should be quite easy, but be mindful: the real world is complicated and sometimes seriously sucks.

Ofo, whose bikes are run of the mill street bikes, does not equip GPS on their run-of-the-mill bikes and so can’t show them on a map. The app can only show an estimated number of bikes around you. This seems like a pretty big design flaw as users will only use Ofo if a bike is right in front of them. Ofo uses a low-tech combo lock. They make up for this, however, by being the only platform that can work directly from WeChat.

Image Credit: Emma Lee

Mobike plans to have over 100K bikes in Shanghai by the end of this year, company CEO and founder Davis Wang said to local media in October this year. Ofo’s official website shows they have over 200K bikes in the country, of which more than 20K are running in Shanghai. Xiaoming Bike’s team disclosed it’s going to have 400k bikes in Shanghai and Guangzhou by the end of this year.

These figures seem to coincide with our anecdotal findings. Mobike has the widest coverage, not only in downtown areas like Xujiahui, but also in suburban districts like Jiading, Qingpu, and Songjiang. Ofo and Xiaoming Bike are expanding quickly, but they are seldomly seen beyond central Shanghai.

Cycling Experience

Mobike is known for it’s fashionable and sleek design. The original orange bike is sturdy and well crafted, but takes too much effort to paddle. Getting the wheels rolling on an uphill is no easy feat: the bike weighs a whopping 25kg, twice the weight of a regular bike. The Lite version, which weighs 17kg, is much easier to ride. Xiaoming Bike weights 16kg and offers a smooth cycling experience; the adjustable seat is a huge plus. Cycling-wise, however, Ofo is our favorite for its light frame.

If you live more than a few kilometers away from the nearest metro-station, bike-sharing is a nice alternative to walking. But, if you’re outside central Shanghai, Mobike is your only option for the time being; we call it a lucky day if we come across a Mobike Lite. For long-distance travel in downtown areas, Ofo is the best choice because the bike takes a lot less effort to paddle and it’s charged on an hourly basis. If you have a lot of friends, Xiaoming Bike is your choice: inviting four friends for a steep discount isn’t difficult.

The market is just going to get more competitive; these companies need to paddle harder to get ahead of the pack.

Image Credit: Mobike

(1 USD = 6.89 RMB)

China Business Podcast: WeChat Engagement For Brands In China With Philip Beck

Guest Editor — Tue, 29 Nov 2016 03:32:20 +0000

Editor’s note: The following comes from our syndication partner, the China Business Cast. The goal of China Business Cast is to help entrepreneurs who want to learn how to do business in China. The podcast features conversations with experienced entrepreneurs and business people who’ve built their businesses in China. They dig into the details so you can learn from real, on-the-ground accounts of how business actually gets done.

This week we’ve got an interview for you from Philip Beck, who has 38 year career at C-Level positions in SME’s and publicly-listed companies across the advertising, digital media, eCommerce, marketing, recruitment and traditional media sectors in China, Asia-Pacific, the UK and Ireland.

Here is a quote I think says it all about building your business in China:

So the biggest issue I find with major brand is just they just too slow and in China compared to the rest of the world What happens and in china, in a space of one year is equal to 7 years in any other market so you have to move quickly and if you don’t move quickly you just get smashed.

Hope you enjoy this episode and don’t forget to join our WeChat group. Either send a request to ‘shlomof’ or ‘michelini’

EPISODE CONTENT:

How did Philip end up in China?
Speaking about WeChat engagement done right.
What is a Wechat CRM? And what can you do with it?
Is WeChat marketing & CRM fits small businesses as well?
What is the thought process behind making a customer engagement campaign?
How to measure your success, specifically in Wechat?
What are common mistakes you see brands making, specifically in Chinese marketing / Wechat?
Tips or resources to someone thinking to start their digital marketing in the Chinese market? Books, blogs, etc?
Philip Beck contact details (Also on Episode Mentions section)

Download MP3 (22.1 MB) or Subscribe via iTunes

TechNode does not endorse any commentary made in the program.

Alipay New Feature Sparks Criticism For Generating Salacious Contents

Emma Lee — Mon, 28 Nov 2016 08:12:11 +0000

Alibaba has been tenacious in spearheading its forays into the social networking sector, where its arch competitor Tencent still rules. The e-commerce giant has added lots of social networking features to the recent updates of Alipay in hopes of capitalizing on the huge user base of the payment app.

However, it seems that the users weren’t quite happy about Alibaba’s endeavors in turning a payment tool into a social networking app. “Quanzi”, an interest-based community function in Alipay’s most recent update, version 9.9.7, has now been accused of pimping as erotic photos run rampant in the app.

In some aspects, Quanzi resembles WeChat’s Moments feature, allowing users to post photos and short videos in a rolling news feed. Users can interact with “Likes”, comment, and send up to 200 RMB (29 USD) as tips to the content creators they like. Commenting is only open to users who has higher than 750 points on Alibaba’s credit-scoring system Sesame Credit.

However, the involvement of monetary reward has lead to the emergence of lots of revealing photos, meant to attract tips from male followers who also sent flirty comments.

The communities, either open for all users or invitation-based, currently covers a range of sectors in the fields of gaming, pets, electronics, and maternal care. But two of the most popular groups are female university students and white-collar women, almost wholly due to their lascivious content. Current estimates put the number of users who have browsed these two groups at over 13 million and 11 million, respectively.

This isn’t the first time for Alipay has tried to add social networking features. In the 9.0 update released in July last year, networking features targeting close friends were added, but similarly, they are not well received by the users.

Wang Sicong, an outspoken blogger and son of China’s richest man Wang Jianlin, is among a group of acute critics on the company.

“Alipay has transformed itself into a place for men to find hookers”, he said on his Weibo account.

Investigative journalist Luo Changping also commented sarcastically, “A small step for social networking, a big step for prostitution.”

Letter from the Editor: New Beginnings

John Artman — Sun, 27 Nov 2016 23:00:51 +0000

When I saw the advertisement a little over a month ago for the Editor-in-Chief position, I was amazed at my luck. I had been working for a localization company in Beijing for a little over a year after doing radio for almost six. After working a typical 9-5, I slowly realized how unique and special media work is. It is, perhaps, the only profession where curiosity, critical thinking, concern about the world, and idealism come together in such an active and exciting combination.

As I say, I feel very lucky. I’m joining TechNode at an exciting time for the blog, as well as for the startup and technology ecosystem in China.

Started in 2009, TechNode has evolved from a pet passion project into a trusted and respected information outlet, events organizer, and integral part of tech community both inside and outside of China. My predecessor, Cate Cadell, has left the blog better than when she came: her ethics and professionalism can still be felt and we aim to preserve the high standards she set for writing and reporting.

When I first came to China in 2008, the debate was whether China was innovative, with many saying that, as a country and a culture, it was not. Now, with that debate laid to rest, the question turns not to ability or creativity, but to access. Access to information, communication, funding, and markets. We at TechNode want to shed light on the many exciting companies, ideas, and people that China and Asia have to offer, acting as (yes, I know this is cliche) a bridge between those who want to understand more and those who need to be understood.

That being said, we now find ourselves in a much different the digital landscape in China and abroad. TechNode must change and adapt to meet these challenges. Over the coming months and year, we will be introducing changes in both content and structure. Some of these changes may be obvious, others not so obvious. But, they will all serve one purpose: to ensure that TechNode becomes the number one authority on the tech space in China and greater Asia.

So, bookmark our homepage, read us often, and join us on a our next adventure as we explore this new landscape together.

Sincerely,

John Artman

Image Credit: Shutterstock

[Updated] Samsung in Talks with Lenovo to Sell its PC Business

mjkim — Fri, 25 Nov 2016 05:14:26 +0000

Update: November 28, 2016 — Our sister site reports that Samsung has denied they are in talks with Lenovo.

Samsung is in negotiations with Lenovo, the largest IT company in China, to sell its PC business, according to thebell, a South Korean financial news site. This comes only two months after Samsung sold its printer business to HP.

While it is still uncertain whether the deal will go through, the transaction amount is expected to reach 850 million dollars USD. Samsung Electronics previously sold the printing solution division of its consumer electronics (CE) division to HP for US $1.05 billion.

On the back of this rumor, speculation now turns to how well Samsung has been doing with their PCs and whether this is part of a larger strategic pivot. Over the last few years, with the advance of a number of alternative and more portable smart devices such as smartphones, tablets, and watches, PCs have slowly fallen out of favor. According to IDC and Gartner reports, PC shipments have declined over the past few years. At the same time, Samsung’s competitiveness faded away with the advent of global competitors on the same top-tier PCs such as Lenovo and cheap PCs such Asus.

On the other hand, Lenovo has grown rapidly to become the world’s largest PC maker, accounting for 20% of worldwide shipments after entering as the mobile phone business in 2001 and acquiring IBM’s PC business in 2005.

Meanwhile, it is reported Lenovo also in negotiations with Fujitsu in Japan for acquiring its PC business. It is observed that since Lenovo is weighing two options, the deal with Samsung Electronics’ PC business has been sluggish for several months.

Samsung’s recent moves show its strong willingness to restrucute and reshape around mobile smart home appliances and connected cars with Artificial Intelligence. While selling the PC and printer business, Samsung also made a number of acquisitions.

Last month, Samsung Electronics acquired Harman, market leader in connected car solutions. A month before that, they acquired Viv, the next generation AI platform, founded by the original Siri developers.

Samsung Electronics also acquired Joyent, a cloud service provider, AdGear, a Quebec-based leading digital advertising technology company, and NewNet Communication Technologies, a Canadian company specialized in Rich Communications Services (RCS). Yesterday, Samsung acquired Quantum Dot Tech Company’s QD Vision, the US-based provider for consumer displays.

For Samsung, consumer appliances such as TVs, refrigerators, and washing machines are evolving into a smart home system combined with the Internet (IoT), making artificial intelligence, cloud, and data management system technology even more important.

Co-working Startup naked Hub To Add Up To 30 New Locations With Fresh Funding

Emma Lee — Wed, 23 Nov 2016 09:07:35 +0000

naked Hub, a Shanghai-based network of co-working spaces, announced today an undisclosed amount for the first tranche in their Series B round. This round of funding comes from a fund managed by Gaw Capital Partners, an investment company focusing on real estate markets.

According the the company, naked Hub will accelerate its regional expansion and enhance its property resources via Gaw Capital Partners. The co-working brand aims to add 24-30 new locations (approximately 150,000 square meters and 30,000 members) across mainland China, Hong Kong, Singapore, and other key Southeast Asian cities.

Backed by lifestyle and hospitality company naked Group, naked Hub now operates 8 hubs in prime Shanghai neighborhoods in Xintiandi, Xuhui, Nanjing Lu (a popular shopping area), Century Avenue (a financial center), Hongqiao (a transportation hub), Jingan, and Gubei.

“Like a tech company, naked Hub moves fast and innovates in an agile way. I believe we already have the strongest in-house user experience and technology team of any co-working operator in Asia and our innovations in online-and-offline service experience for our members has only just begun,” said Dominic Penaloza, CIO of naked Group.

The co-working space market has boomed in recent years, growing 71% annually from 2007 to 2015. It is projected to grow 68% annually from 2016 to 2018. China’s co-working market has also witnessed exponential growth in the wake of global explosion. Companies with different backgrounds such as real estate (UR Work, Soho 3Q), hotel development (naked Hub), media (KrSpace), have all flocked into the sector hoping to ride this wave. Foreign co-working space giants like WeWork and Aussie company Fish Burners have also dipped their toes in the rising market.

According to Wall Street Journal, there were 3,200 co-working space companies in 2014, compared to 400 in 2008. But as the market continues to saturate, companies will have to offer more than just a polished, beautiful space.

Sharing Swedish Success with China: Q&A with Peter Levin, CEO of Goodbye Kansas

John Artman — Wed, 23 Nov 2016 08:43:12 +0000

Sweden, home of many very successful technology companies, has a lot to say about how China can be more innovative and successful.

Sweden’s unique advantage for global market: its size. Given that the market size is small compared many others, companies are automatically geared towards the global market. This, interestingly, is exactly where Chinese companies have a big problem. Their market is so large that their first consideration is domestic, then global. However, going outward, rather than beginning outward, can be amazingly difficult.

This was exactly the topic of the Sino-Swedish Innovation & Entrepreneurship Forum held on November 21, 2016 at the Zhongguancun Yonghe Hanxing Science Park in Beijing.

With an entrepreneurial culture tied to the Nordic tradition of solitary living and, some may even say, going all the way back to the Vikings, Sweden and China are at opposite ends of many spectrums. So, to learn more about Swedish entrepreneurial culture, its games industry, and what China can learn from it, we spoke with Peter Levin, CEO of Goodbye Kansas, a VFX, motion capture, and animation company whose studios have been involved in some of the biggest AAA games in recent memory.

Peter Levin, CEO of Goodbye Kansas

How did you get started in the games industry?

I got started because I was interested in creative people and creative businesses. I’m not that kind of person myself; I’m more of a complement to them. In the late 80s, I started a business that imported and distributed Sega in the Nordic countries. At the same time, I also started working with games studios because that’s where you can create real value: your own IP or educating or developing studios and people. In 1996, I was headhunted to Electronic Arts.

How does China fit into your company or your personal vision?

Everything we do is trying to act global. When Western people say that unfortunately, they don’t necessarily mean Asia for one reason or another, but adding China and Asia is an amazing thing. I’ve always been challenged by China.

The game industry is quite young, about 35 years old. The VFX industry is younger, about 25 years old. Now, those two industries are growing like never before globally. We have two approaches now with China: one is to work with the film and TV industry and then, of course, with the games industry.

Sweden has had a number of successes in the games industry over the past decade, in part because of the engineering as art heritage we received from Ericsson and Volvo. What we have developed is skill, responsibility, and transparency that is very different from the development approaches by studios in UK or France, for instance.

Now we are seeing the second wave, in the Swedish and global markets, where indie developers can go directly to consumers through online distribution platforms and we want to make sure to be involved in helping Chinese indie developers.

How do you see Goodbye Kansas getting more involved with game developers in China?

We’ve had Chinese developers and publishers visit us in Stockholm and now I’m here in Beijing. What we talk about is how our game development model is a bit different. We typically own never less than 25% and never more than 50% because we want to encourage studios to feel a sense of ownership. We then support them with resources from our executive producers, our services from VFX and animation companies, all the dull things like bookkeeping, and money.

We see Goodbye Kansas as a building bridges with investment going both ways. More importantly, its about exchanging knowledge. We have in our ecosystem, Goodbye Kansas GameInvest, young and senior producers and developers who are looking for more opportunities all around the world.

What are some of the challenges you see in trying to be a bridge?

From my experience here in China six years ago, there most certainly are cultural challenges, but Swedes are familiar working around these challenges; even in the Nordic region, there are different cultures. Coming to China there will of course be some big challenges, but the challenge is one of the reasons we want to do it: it’s great fun and interesting to get know other cultures. And, with China’s influence in global markets, you just have to bridge that.

One big challenge we see are differences in aesthetics; Chinese people prefer much more colorful, flamboyant games. Another challenge is mobile. We don’t do mobile because it’s extremely crowded and we don’t have the skills in house, but that may change in the future with more cooperation with Chinese developers and publishers.

What would say Sweden has to learn from China? What do you think China has to learn from Sweden?

I think we have everything to learn from a country like China that has grown so rapidly over just a short period. We have a lot to learn from that rapid growth, but also how to manage that growth.

The other way around, when I meet Chinese people, they are always so curious how could a country survive, much less be successful in that climate, with only 10 million people in a huge area. Our entrepreneurship started a long time ago, maybe even with the Vikings on how to survive and develop further. And, more recently, we have seen a lot of success stories over the last 10-15 years with one success feeding another. With Swedes being normally quite solitary, we are still very loyal.

I believe that the growing VFX industry along with the games industry is a very interesting mixture and fits very well with China. The Chinese film industry is like Klondike during the Gold Rush. Then, of course, there’s AR and VR where China is a bit ahead. We are doing VR stuff as well, but the market itself is not that big yet.

Yixia: 500 Million USD Series E Solidifies Social Video Gains

mjkim — Wed, 23 Nov 2016 07:34:31 +0000

Short videos are becoming a pillar of Chinese social media, especially on Weibo.

Yixia Tech, parent of popular video streaming and sharing apps such as Miaopai, Xiaokaxiu, and Yizhibo, recently raised 500 million USD investment in a Series E led by Weibo. Following a 200 million USD Series D last year, this values the company at between 3 and 5 billion USD.

Miaopai is a a Vine-like service where users shoot, edit, and share 10-second video, launched in 2013; Xiaokaxiu is a video-dubbing app; and Yizhibo is a live streaming service inside Weibo.

Miao Pai

While Twitter may be bearish on their own short video service, Vine, other platforms are becoming more and more popular not only in China. Instagram has just announced that it is adding a live-streaming video function while its parent company, Facebook, has already put lots of effort on developing their live-streaming business.

Weibo led this round with 120 million USD. This put the total amount invested by Weibo alone at 190 million USD. That, plus a 100 million USD fund for Miaopai video makers, shows that relationship between the two companies is deepening.

Investment in Yixia Tech (Credit : IT Juzi)

Indeed, Weibo is gearing up to become the most prominent “social media platform” in China. According to their latest financial reports, the company has been growing rapidly with users increasing 30 percent from last year.

Over the past year, Weibo has made a series of strategic adjustments that have contributed to their growth. At the Wuzhen Internet Internantional Conference last week, Cao Guowei, CEO of Weibo, mentioned that second-quarter growth can be attributed to short video sharing and real-time content consumption, enhancing user experience.

Redpoint Ventures Geoff Yang On Changes In China’s VC Market Over Past Decade

Emma Lee — Wed, 23 Nov 2016 04:52:28 +0000

Despite what has been said and written about the capital “winter” in China, there’s enough evidence to show that China is still an investment hotspot globally. With over 3,000 funds managing more than 1 trillion RMB, the country is world’s second largest destination for venture capital, next only to the United States.

As one of the first foreign venture capital firms seeing the potential of this market, Redpoint Venture set up its China team in 2005 and has invested in over 35 Chinese companies, including Qihoo 360, iDreamSky, Yixia, and APUS. The firm adopted a more aggressive strategy despite slowing market growth with the launch of a dedicated 180 million USD fund this October to back innovations coming from China.

At the Integral Conversation hosted by Esquel Group, we had the pleasure of speaking with Geoff Yang, founding partner of Redpoint Ventures, on a range of topics from his insights on China’s VC market, his investment philosophy, and the traits of successful investors and entrepreneurs.

Geoff co-founded Redpoint Ventures in 1999 and has backed trailblazing consumer and communications platform companies from their founding including Arista, Ask.com, Bluefin, Calix, Efficient Frontier, Foundry Networks, Excite, Juniper Networks, MySpace, and TiVo.

Redpoint Ventures has been in China for more than 10 years, what do you think are the biggest changes in China’s venture world?

The biggest change is probably how good the entrepreneurs are. Over the last 11 years, we have experienced three generations of entrepreneurs, which is extraordinarily fast. When we first came to China it was “copy-to-China”, local companies basically looking at what works in the U.S. and do a Chinese version. Today some of the things in the U.S. are copied from China. It’s about things that really best suited and almost unique here.

There are very few exits when we first came and almost all of them were U.S. listed exits. Now, there’s lots of U.S.-listed exits but also China-listed exits as well as M&A. One decade ago, it was all about whether a company we developed could be one of the few U.S.-listed Chinese companies. Now the number of exits is quite large. If you look at the top-15 valuable technology companies on the NASDAQ, my guess is six or seven of them are Chinese companies.

Like you said, U.S. market is the top option for Chinese companies to get listed. But now China becomes their No.1 choice and a series of U.S. listed tech stocks choose to seek a relisting the in domestic market. Two of Redpoint Venture’s portfolio companies: iDreamsky and Qihoo 360 chose this path. Why do you think companies are doing this?

There are a couple of reasons for this trend. Firstly, certain industries are almost deemed strategic, for certain businesses, they might not access the government businesses or certain company businesses because they are an U.S. listed company. The other is because there’s an arbitrage value of what the company was worth as a U.S-listed company versus what it could be worth on the China’s stock exchange. Some companies explained it as we are not understood in the U.S. market. But I think the main reason was the arbitrage value in the two markets. Entrepreneurs felt their market value is under appreciated in the U.S. and more properly appreciated in China.

Redpoint Ventures announced a new fund dedicated to China’s market this October. What’s your plan for the funding and what possible verticals are you aiming for?

We have invested in Chinese companies out of our core fund and China represents only 15% of the portfolio in the past. We decided to raise a separate China fund because the number of opportunities in China has skyrocketed in the past few years and there are more opportunities in China than we had capacity for.

I think the opportunities we will go after are still the same ones we have been looking at. Stage wise, it will be early-stage series. In terms of industries, it will be largely consumer, but enterprise is becoming an increasingly important part of the portfolio.

The fund comes at a time when Chinese startups grapple with the so-called “capital winter” or funding shortage. What’s your opinion on this issue? Is China’s VC market going to warm up in the near future?

I think there’s more normalization. For the attractive deals, we still see a very competitive market and there’s still lot of people who are interested in putting money behind great entrepreneurs in various interesting spaces.

A few years ago, China was very hot and a lot of LPs were putting money in China funds. I think everybody is chasing the potential of China and now that things are normalized, people have pulled back some because they are a little bit concerned with the growth rate of China; some funds didn’t get great results. But we still think it’s a very attractive market.

What do you see are the most important characteristics in a successful entrepreneur or startup team?

The biggest is definitely being able to see patterns where other people see chaos. The opportunity comes when nobody know which way to go and one or two people see where the world is going and they move forward in that direction. The second is the ability to articulate to others. If you can’t, you can’t convince others to come joining you.

The third is to be able to adjust on the fly and not to give up. Along every entrepreneurial journey, there’s time when you think you should give up. However, the best entrepreneurs are the ones that can wheel a company into existence. Last is probably the ability to hire people who are smarter than they are and not compromise on hires. It’s very difficult to hire above you, but great entrepreneurs can hire the best people and they are not afraid to hire people that are even smarter than they are.

What have you learned from your past investments that weren’t successful?

One of the things I have learned is that you could be right but timing may be wrong. The second is management makes all the difference in the world. You can never act too early on making management changes. The last is that there are outright failures, stuff that just doesn’t work, but it’s rarely the technology doesn’t work; it’s that the market wasn’t ready and poor management wasn’t addressed quickly enough.

What makes a great venture capitalist? How is it different between China and Silicon Valley?

It’s the same in some aspects. In both places someone sees what there is and imagine what it could be. Someone who has the contacts and network with entrepreneurs and convinces them to partner. Someone who always looks less at what could go wrong and focuses more on what can go right.

In China, understanding of the local landscape is really important. You have to live in the market and understand the dynamics and culture of the market. In China, more than in anywhere else in the world, you really have to have a strong network. You have to know the right people to ask the right questions in order to figure something. Whereas in Silicon Valley, they can talk to people they don’t know as well. People in China tend to do business with someone they’re comfortable. You can usually get a straighter answer if you have the right connection.

What do you think will be the biggest opportunities in the next 5 years?

I think the venture business has been a great business since 2007, when the smartphone revolution really started to take off. We rode that wave until 2014 to 2015. Right now, people are looking to see what’s the next wave, but nothing is really obvious. Machine learning/AI and data analytics are the most obvious candidates.

The real question is: what’s the next platform? I think it’s probably autonomous vehicles and AI, but I am a bit skeptical about VR/AR, which has been seen as a new platform by many people. For applications, it’s digital health and fintech. But, on the whole, it’s a lot less obvious than it was in 2008.

Meet AI Robot That Responds To Your Voice

Eva Yoo — Wed, 23 Nov 2016 03:29:56 +0000

This is the fifth post in our series: Discover Korea’s Tech, where we will talk to a mix of Korean startup entrepreneurs who stood their own ground with their technology, in Korea’s economy notoriously dominated by gigantic companies. Stay tuned over the coming month as we talk to Korean entrepreneurs. You can follow our updates @technodechina for new stories in the series.

Artificial Intelligence is getting more and more traction in the consumer space. We’ve already seen a few home robots coming out of China earlier this year. Now, Innovative Play Lab, based in Korea, claims to have a robot that, because of its power AI, is smarter than all the others.

iJINi, powered by IPL’sproprietray AI, can recognize voices and faces. The founder and CEO of IPL, Kyungwook Kim, has been developing robots for ten years, and he believes that hardware interfaces are will soon be based on voice, not touch.

iJINi can provide face-to-face calls and monitor home when the owner is outside. It can also assist in baby care by recognizing when the baby turns its body and by alerting parents when the baby cries. The robot connects to the pairing mobile application with all the data processed in the cloud. It was awarded the Red Dot Award in the product design category in July 2016.

iJINi goes back to its charging station when its battery is getting low.

IPL announced last week a distribution deal with China-based ROOBO worth 16 billion KRW (13.4 million USD). ROOBO has previously invested 2.2 million USD in IPL.

IPL will take on the design and development of robot system, while ROOBO will take on the robot’s distribution and AI service in China. ROOBO will also connect O2O services to iJINi so that owners can order food and call a cab through iJINi. The robot is schedule to be released in China, Thailand, and South Korea by early next year.

The Korean company has developed a robotics-optimized version of Android. They are aiming to provide a toolset for robotics developers to come up with content on top of the robot. The robotic API developing tool will be launched in the near future, the IPL says. The company ultimately aims to build a platform, providing a content ecosystem for robots.

iJINi’s main competitors are Jibo made in U.S. and Buddy, a companion robot for families, made by Blue Frog Robotics in France.

However, IPL is betting that their cloud AI will prove to be their competitive advantage with it’s adaptabililty and expansibility.

“AI robot needs AI cloud and a hardware platform that is compatible with the service it provides,” Mr. Kim says. “Our platform is compatible with other AI platforms.”

The social robot company aims to build a smart home robot, targeting home appliance market.

“People don’t feel that robotics are that necessary at the moment. That’s why we target home appliance market. We want to transfer information to the robot using the voice interface. We aim to connect the robot with other internet of things, and help users to control other home appliances with their voice,” he says.

IPL is supported by K-ICT Born2Global Center, a major Korean government agency under the Ministry of Science, ICT and Future Planning (MSIP).
Image Credit: IPL

Getui Pockets $58M D Round To Fuel Customizable Ad Business

Emma Lee — Mon, 21 Nov 2016 08:40:57 +0000

Getui, a third-party push notification service provider which celebrates its sixth anniversary this week, announced Monday a 400 million RMB ($58 million USD) D round from several returning investors. The company disclosed that the valuation for this round doubled that for its C round, which the firm has secured in April this year.

The Hangzhou-based startup helps app developers to set up and send notifications to users across iOS, Android and other platforms by leveraging data-driven analysis on customer profiles.

According to data from the company, Getui’s SDK installation totaled 12 billion from 8 billion in April this year with daily active users hitting 750 million. Currently, the service covers 1.6 billion mobile devices and 430,000 app developers.

Together with the funding news, the company rolled out Gexin, a mobile marketing platform that help local brands to engage customers more efficiently with specific demographics of their audiences, including age, gender, country, hobby, consumption habits and social networking features.

The company has formed a pretty clear business model after six years of development. Its services and products mainly fall into two categories: push notification services targeting at developers and big-data driven marketing solutions targeting at businesses partners.

Getui’s rivals include both startup competitor JPush and similar services backed by big Chinese internet companies, such as Tencent (XGPush), Baidu (Cloud Push) and Alibaba (Umeng).

China Startup Pulse Podcast: How to Startup, Step 1 with Trevor Owens

Guest Editor — Mon, 21 Nov 2016 06:42:48 +0000

Step 1: Validate your assumptions! Startups all over the world make the same mistake; they build a startup based on assumptions, with no data to validate a need. Trevor Owens, Co-Founder of the Lean Startup Machine, and author of The Lean Enterprise takes us through his winning method. His vision: “I want to create more millionaire entrepreneurs; if you really want to start a unicorn, it really helps if you already built a successful company, it really helps even more if you have a few million in your bank.”

China’s start-up scene is energized by top down support and heavy competition. Trevor shares his secret to help startups validate and pivot to beat the competition. The focus is on building a company which impacts your consumer’s life; the money is a by product, not the goal. Listen in for the lean startup method from the master himself.

Show Notes: Jump ahead to topics

2:00 Trevor Owens Intro

7:00 Invalidating ideas using the Lean Startup Method

14:00 Why Trevor has brought LSM to China and why it works so well in China

18:15 China is the only real Silicon Valley Competition

24:00 Lightning round question – How to do the method now

26:50 contact Trevor Owen directly!

Download the MP3 (20.0 MB) or Subscribe via RSS

China Startup Pulse is a weekly podcast designed to give startup enthusiasts around the world a behind the scenes and on-the-ground understanding of what’s happening in China’s startup ecosystem. Founded and hosted by Ryan Shuken and Todd Embley, and produced by Vivian Law and David Xu, China Startup Pulse is sponsored by Chinaccelerator, People Squared, and TechNode.

TechNode does not endorse any commentary made in the program.

WeChat Officially Replaces the App Store

mjkim — Mon, 21 Nov 2016 06:39:07 +0000

Months after the official announcement, WeChat Mini Apps are finally here.

On November 18, Zhang Xialong, Tencent Senior Vice President and the “Father of WeChat”, posted a picture on Moments of his home screen filled with WeChat Mini Apps. This suggests that the apps themselves can actually be placed on the home screen, not just inside WeChat itself, at least for Android phones.

At the beginning of 2016, Zhang Xiaolong introduced the idea of “an app within an app within WeChat”, saying, “These are apps these are apps that you don’t need to install; you can open them simply by searching or scanning a QR code. This make for one-time use apps.”

On September 22, Tencent officially sent out two-hundred invitations for closed beta testing of the Mini Apps. Lifestyle companies like Dianping, Miaoyan Movie, and Hainan Airlines participated in testing the platform.

Just as with other application stores, WeChat Mini Apps will be vetted, by either Tencent or a certified third party. WeChat promises that all apps within the Mini App store will meet security and safety requirements.

With WeChat’s already large user base, attracting users should not be a problem. And for users, the benefits are obvious: users no longer need to download all their Mini Apps, thus saving space; plus, when switching phones, Mini Apps don’t need to be re-downloaded.

For service providers, they don’t need to invest large amounts into app development. Rather they can easily build a Mini App and test market viability. What’s more, WeChat Mini Apps are by nature cross platform: they exist solely within WeChat, completely negating the common problems with compatibility across so many different phone models.

There is also speculation that, in the long term, Mini Apps may even threaten aggregation platforms such as Tmall. Brands, merchandisers, and retailers can now simply create their own Mini Apps for users to browse and purchase products, directly inside WeChat.

WeChat, like Facebook, is quickly becoming more than just a social media platform. Now, with Mini Apps, their domination of China’s attention will only grow.