China Roundup: Beijing is tearing down the digital ‘walled gardens’

Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

This week, China gets serious about breaking down the walled gardens that its internet giants have formed for decades. Two major funding rounds were announced, from the newly established autonomous driving unicorn Deeproute.ai and fast-growing, cross-border financial service provider XTransfer.

Tear down the walls

The Chinese internet is infamously siloed, with a handful of “super apps” each occupying a cushy, protective territory that tries to lock users in and keep rivals out. On Tencent’s WeChat messenger, for instance, links to Alibaba’s Taobao marketplace and ByteDance’s Douyin short video service can’t be viewed or even redirected. That’s unlike WhatsApp, Telegram or Signal that offer friendly URL previews within chats.

E-commerce platforms fend off competition in different ways. Taobao uses Alibaba’s affiliate Alipay as a default payments option, omitting its arch rival WeChat Pay. Tencent-backed JD.com, a rival to Alibaba, encourages its users to pay through its own payments system or WeChat Pay.

But changes are underway. “Ensuring normal access to legal URLs is the basic requirement for developing the internet,” a senior official from China’s Ministry of Industry and Information Technology said at a press conference this week. He added that unjustified blockages of web links “affect users’ experience, undermine users’ rights, and disrupt market orders.”

There is some merit in filtering third-party links when it comes to keeping out the likes of pornography, misinformation and violent content. Content distributors in China also strictly abide by censorship rules, silencing politically sensitive discussions. These principles will stay in place, and MIIT’s new order is really to crack anticompetitive practices and wane the power of the bloated internet giants.

The call to end digital walled gardens is part of MIIT’s campaign, started in July, to restore “orders” to the Chinese internet. While crackdowns on internet firms are routine, the spate of new policies announced in recent months — from new data security rules to heightened gaming restrictions — signify Beijing’s resolution to curb the influence of Chinese internet firms of all kinds.

The deadline for online platforms to unblock URLs is September 17, the MIIT said earlier. Virtually all the major internet companies have swiftly issued statements saying they will firmly carry out MIIT’s requirements and help promote the healthy development of the Chinese internet.

Internet users are bound to benefit from the dismantling of the walled gardens. They will be able to browse third-party content smoothly on WeChat without having to switch between apps. They can share product links from Taobao right within the messenger instead of having their friends copy-paste a string of cryptic codes that Taobao automatically generates for WeChat sharing.

Robotaxi dream

Autonomous driving startup Deeproute.ai said this week it has closed a $300 million Series B round from investors including Alibaba, Jeneration Capital, and Chinese automaker Geely. The valuation of this round was undisclosed.

We’ve seen a lot of publicity from Pony.ai, WeRide, Momenta and AutoX but not so much Deeproute.ai. That in part is because the company is relatively young, founded only in 2019 by Zhou Guang after he was “fired” by his co-founders at the once-promising Roadstar.ai amid company infighting.

Investors in Roadstar.ai reportedly saw the dismissal of Zhou as detrimental to the startup, which had raised at least $140 million up to that point, and subsequently sought to dissolve the business. It appears that Zhou, formerly the chief scientist at Roadstar, still commands the trust of some investors to support his reborn autonomous driving venture.

Like Pony.ai and WeRide, Deeproute is trying to operate its own robotaxi fleets. While the business model gives it control over reams of driving data, it’s research- and cash-intensive. As such, major Chinese robotaxi startups are all looking at faster commercial deployments, like self-driving buses and trucks, to ease their financial stress.

Cross-border trade boom

The other major funding news this week comes from Shanghai-based XTransfer, which helps small-and-medium Chinese exporters collect payments from overseas. The Series C round, led by D1 Partners, pulled in $138 million and catapulted Xtransfer’s valuation to over $1 billion. The proceeds will go towards product development, hiring and global expansion.

Founded by former executives from Ant Group, XTransfer tries to solve a pain point faced by small and medium exporters: opening and maintaining bank accounts in different countries can be difficult and costly. As such, XTransfer works as a payments gateway between its SME customer, the party that pays it, and their respective banks.

As of July, XTransfer’s customers had surpassed 150,000, most of which are in mainland China. The company of over 1,000 employees is also expanding into Southeast Asia.

While business-to-business export is booming in China, more and more products are also being directly sold from Chinese brands to consumers around the world. Some of the most successful examples, like Shein and Anker, use a different set of payments processors for their direct-to-consumer sales, which tend to be in bigger volume but smaller in average ticket value.

#alibaba, #alibaba-group, #alipay, #ant-group, #asia, #beijing, #bytedance, #china, #china-roundup, #geely, #jack-ma, #jd-com, #momenta, #online-payments, #robotaxi, #shanghai, #shein, #southeast-asia, #taobao, #tc, #tencent, #wechat, #xtransfer

China roundup: Alibaba’s sexual assault scandal and more delayed IPOs

Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

A sexual assault case at Alibaba has sparked a new round of #MeToo reckoning in China. Industry observers believe this is a watershed moment for the fight against China’s allegedly misogynist tech industry. Meanwhile, social media operators are still undecided on how to deal with the unprecedented public uproar against the powerful internet giant.

In other news, more Chinese tech companies have delayed plans to go public overseas after Didi’s fallout with Chinese regulators over its rushed IPO, including Tencent’s music streaming empire and one of China’s highest-valued autonomous driving startups.

Call for justice

Just past midnight last Sunday, an Alibaba employee posted on the company’s internal forum a detailed account saying her manager and a client had sexually assaulted her on a business trip. She took the case public after failing to obtain support from her superiors and human resources.

The post quickly made its rounds through China’s social media platforms. People stayed up blasting Alibaba’s ignorance, toxic business drinking, and the pervasive objectification of women in the Chinese “tech industry,” which has grown so far-reaching that it’s just the contemporary corporate world.

A day later, on August 9, Alibaba swiftly fired the alleged perpetrator. Two managers resigned and the firm’s head of HR was given a “disciplinary warning.” Alibaba’s CEO Daniel Zhang said he felt “shocked, angry and ashamed” about the incident and called on the company to work with the police to investigate the case.

This is arguably the most high-profile #MeToo case embroiling a major Chinese tech company by far and one that seems to have beckoned the toughest response from the company involved. Alibaba is formulating company policies to prevent sexual assaults, which surprises many that the global tech behemoth didn’t already have those in place.

The case managed to garner widespread public attention in China thanks to social media. Within the first few hours, it seemed as though discussion around the incident was propagating organically and uncensored on microblogging platform Weibo, in which Alibaba owns a majority stake.

But people soon noticed that despite the severity of the event, it took days before the case climbed to the top of Weibo’s trending chart, a bellwether for the most talked about topic on the Chinese internet. The perceived delay recalls Weibo’s censorship of an extramarital affair involving Alibaba executive Jiang Fan last year.

Talang Qingnian, roughly “Surfing Youth,” a social media column under state paper People’s Daily, blasted in an article:

The slow buildup of discussion again raised suspicion over whether Alibaba has manipulated public discourse.

Ever since the Jiang Fan case, the country’s attitude has been very clear that capital must not control the media.

As the basic infrastructure for truthful news in China, Weibo should not be a tool for any stakeholder to manipulate public opinion.

The article fanned up more public outrage but was soon taken down, likely because its wording was too strong. The Chinese state media apparatus is vast and only a few outlets, such as Xinhua, consistently convey top-level leaders’ official opinions. It’s not uncommon to see the less authoritative state-affiliated publications back down on reports that have cause backlashes. Last week, an article from a state-affiliated economic paper removed a piece calling video games “spiritual opium,” a loaded description that had earlier tanked the stocks of Tencent and NetEase, and republished the article with a softer tone.

Smaller war chests

Regulatory uncertainties have always been flagged as a risk by Chinese companies seeking overseas listings, but it was largely up to foreign investors to decide whether they were worthwhile investments. China’s recent regulatory onslaught on its tech darlings, however, has become a real deterrent for Chinese firms’ IPO dream.

This week, reports arrived that NetEase Music, a popular music streaming service, and Pony.ai, an autonomous vehicle startup last valued at $5.3 billion, have respectively postponed their plans to list in Hong Kong and New York.

Beijing has become warier of its data-rich companies getting scrutinized by U.S. regulators. Last month, the U.S. securities regulator said Chinese companies that want to raise capital in the U.S. must provide information about their legal structure and disclose the risk of Beijing’s interference in their business.

Many Chinese tech firms have learned from Didi’s fallout with the government, which had reportedly told the ride-sharing company to hold off on its listing until it sorted out a data protection framework. Didi went ahead regardless, triggering a government probe into its data practice and tanking its shares, which now stand at $8 apiece compared to $16 around its debut in early July.

Beijing’s crackdown has affected every major player in China’s consumer tech sector, wiping as much as $87 billion off the net worth of the country’s tech billionaires, including Pony Ma of Tencent and Colin Huang of Pinduoduo, according to Financial Times. The government wants “hard tech” like semiconductors and clean energy, so it has made it clear to future entrepreneurs where they should allocate their energy. The new generation of startups is listening now.

#alibaba, #alibaba-group, #asia, #beijing, #china, #daniel-zhang, #netease, #sexual-assault, #sina-weibo, #tc, #tencent, #weibo

China Roundup: What’s going on with China’s data security clampdown?

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

A tectonic shift is underway in how Beijing regulates and accesses the troves of citizen data collected by its tech giants. More details of China’s new cybersecurity rules have recently come to light as Didi, the SoftBank-backed ride-sharing dominator in China, became the target of the Chinese government’s latest effort to heighten data protection. This week, we look at what this changing landscape means to Chinese tech firms wooing investors in the United States.

Data sovereignty

The new wave of discussion around China’s cybersecurity rules started with the bombshell dropped on Didi. Just two days after its $4 billion IPO in New York, the ride-hailing giant was hit with a probe by China’s Cybersecurity Review Office on July 2. Two days later, the same government agency ordered the Didi app, which has amassed nearly 500 million annual users, to be yanked because it was “illegally collecting user data.”

The Cybersecurity Review Office is an agency within the Cyberspace Administration of China, the country’s top internet regulator. It has existed for a few years but its roles were only made clear in April 2020 when China put forward its rules on internet security reviews.

Didi appears to be the first target of the department’s enforcement actions. A memo of an “expert meeting” shared among Didi’s investors, which TechCrunch reviewed, said the ride-hailing firm had failed to assure Beijing its data practices were secure before going public in New York. A major concern was that Didi’s data, if unguarded by Chinese laws, could be subject to scrutiny by U.S. regulators. But a Didi executive claimed that the firm stored all its China data locally and it is “absolutely not possible” that it passed data to the U.S.

Before long, the Cybersecurity Review Office was onto other players that could similarly compromise the data security of Chinese users. On July 5, it put SoftBank-backed truck-sharing platform Full Truck Alliance and recruiting site Boss Zhipin — both of which recently IPO’ed in the U.S. — under the same review process as it did with Didi.

The probes were just the beginning. On July 10, the Cybersecurity Review Office unveiled the draft of a revised version of the data security review rules passed last year. One of the major changes is that any business commanding over one million users is subject to security checks if it is seeking an overseas IPO.

Just as the U.S. government frets over Chinese companies commanding Americans’ data, as in the case of TikTok, China is now making sure that its citizen data stays onshore and protected from U.S. authorities. Foreign players operating in China have to comply, too. Giants like Apple and Tesla have pledged and moved to store their Chinese user data within the country.

The new data rule is no doubt a stumbling block for Chinese companies that want to list abroad. TikTok owner ByteDance indefinitely put on hold its plans of a U.S. listing after Chinese officials told it to address data security risks, according to a report by The Wall Street Journal. But how about incumbents like Alibaba that have traded their stocks on Wall Street for years? And do the revised rules apply to companies listing in Hong Kong, which is being increasingly integrated with mainland China?

Also in the news

  • Tencent and Alibaba may tear down their “walled gardens.” According to The Wall Street Journal, the archrivals are considering opening their services to each other. This means users may be able to pay via Alipay on the WeChat app, which currently excludes Alibaba-affiliated Alipay. China has recently been working to rein in its tech darlings and already slapped anticompetition penalties on a cohort of tech firms. Jack Ma’s fintech behemoth Ant Group has been put on the spot and forced to restructure into a financial holding company that would potentially curb its profitability and subject it to more regulatory oversight.
  • TikTok tops 3 billion downloads from the App Store and Google Play, according to Sensor Tower. This makes the hit video platform the only app not owned by Facebook to cross the milestone across the two app stores, said the research firm, and it’s only the fifth one after WhatsApp, Messenger, Facebook and Instagram to achieve that. TikTok is also generating big bucks for ByteDance. Globally, it has made more than $2.5 billion in consumer spending since its launch.
  • Tencent ups its stake in food delivery giant Meituan to 17.2%The deal cost Tencent, a longtime patron of Meituan, $400 million. The proceeds will allow Meituan to invest further in “cutting edge tech” such as unmanned delivery cars and drones, an area where other tech firms have also made similar promises to automate parcel and food deliveries.
  • The smart vehicle craze continues. These days, hardly a week goes by without a major announcement by an autonomous driving or smart car company in China. The news last week came from Banma, which was set up by Alibaba and state-owned carmaker SAIC Motor to make internet-connected cars. It just raised $460 million from Alibaba and SAIC Motor, among others and claimed its technology now serves three million users. It raised its first round in 2018 with 1.6 billion yuan (around $250 million) and was already valued at over $1 billion at the time.

#alibaba, #alibaba-group, #alipay, #ant-group, #asia, #beijing, #bytedance, #china, #didi, #food-delivery, #jack-ma, #meituan, #saic-motor, #smart-car, #tc, #tencent, #the-wall-street-journal, #tiktok

Why former Alibaba scientist wants to back founders outside the Ivory Tower

Min Wanli had a career path much coveted by those pursuing a career in computer science. A prodigy, Min was accepted to a top research university in China at the age of 14. He subsequently obtained Ph.D. degrees in physics and statistics from the University of Chicago before spending nearly a combined decade at IBM and Google.

Like many young, aspiring Chinese scientists working in the United States, Min returned to China when the country’s internet boom was underway in the early 2010s. He joined Alibaba’s fledgling cloud arm and was at the forefront of applying its tech to industrial scenarios, like using visual identification to mitigate highway traffic and computing power to improve factory efficiency.

Then in July 2019, Min took a leap. He resigned from Alibaba Cloud, which had become a major growth driver for the e-commerce goliath and at the time China’s largest public cloud infrastructure provider (it still is). With no experience in investment, he started a new venture capital firm called North Summit Capital.

“A lot of enterprises were quite skeptical of ‘digital transformation’ around 2016 and 2017. But by 2019, after they had seen success cases [from Alibaba Cloud], they no longer questioned its viability,” said Min in his office overlooking a cluster of urban villages and highrise offices in Shenzhen. Clad in a well-ironed light blue shirt, he talked with a childlike, earnest smile.

“Suddenly, everyone wanted to go digital. But how am I supposed to meet their needs with a team of just 400-500 people?”

Min’s solution was not to serve the old-school factories and corporations himself but to finance and support a raft of companies to do so. Soon he closed the first fund for North Summit with “several hundreds of millions of dollars” from an undisclosed high-net-worth individual from the United Arab Emirates, whom Min had met when he represented Alibaba at a Duhai tech conference in 2018.

“Venture capital is like a magnifier through which I can connect with a lot of tech companies and share my lessons from the past, so they can quickly and effectively work with their clients from traditional industries,” Min said.

“For example, I’d discuss with my portfolio firms whether they should focus on selling hardware pieces or software first, or give them equal weight.”

Min strives to be deeply involved in the companies he backs. North Summit invests early, with check sizes so far ranging from roughly $5 million to $25 million. Min also started a technology service company called Quadtalent to provide post-investment support to his portfolio.

Photo: North Summit Capital’s office in Shenzhen

The notion of digital transformation is both buzzy and daunting for many investors due to the highly complex and segmented nature of traditional industries. But Min has a list of criteria to help narrow down his targets.

First, an investable area should be data-intensive. Subway tracks, for example, could benefit from implementing large amounts of sensors that monitor the rail system’s stauts. Second, an area’s manufacturing or business process should be capital-intensive, such as production lines that use exorbitant equipment. And lastly, the industry should be highly dependent on repetitive human experience, like police directing traffic.

Solving industrial problems require not just founders’ computing ingenuity but more critically, their experience in a traditional sector. As such, Min goes beyond the “Ivory Tower” of computer science wizards when he looks for entrepreneurs.

“What we need today is a type of inter-disciplinary talent who can do ‘compound algorithms.’ That means understanding sensor signals, business rationales, manufacturing, as well as computer algorithms. Applying neural network through an algorithmic black box without the other factors is simply futile.”

Min faces ample competition as investors hunt down the next ABB, Schneider, or Siemens of China. The country is driving towards technological independence in all facets of the economy and the national mandate takes on new urgency as COVID-19 disrupts global supply chains. The result is skyrocketing valuations for startups touting “industrial upgrade” solutions, Min noted.

But factory bosses don’t care whether their automation solution providers are unerdogs or startup unicorns. “At the end of the day, the factory CFO will only ask, ‘how much more money does this piece of software or equipment help us save or make?’”

The investor is cautious about deploying his maiden fund. Two years into operation, North Summit has closed four deals: TopScore, a 17-year-old footwear manufacturer embracing automation; Lingumi, a London-based English learning app targeting Chinese pre-school kids; Aerodyne, a Malaysian drone service provider; and Extreme Vision, a marketplace connecting small-and-medium enterprises to affordable AI vision solutions. 

This year, North Summit aims to invest close to $100 million in companies inside and outside China. Optical storage and robotic process automation (RPA) are just two areas that have been on Min’s radar in recent days.

#abb, #alibaba, #alibaba-cloud, #alibaba-group, #asia, #china, #cloud-computing, #cloud-infrastructure, #computing, #dubai, #funding, #ibm, #manufacturing, #siemens, #tc, #united-arab-emirates, #university-of-chicago, #venture-capital

Exclusive: Hepsiburada CEO sets out her vision, as it becomes first ever Turkish Nasdaq IPO

Hepsiburada — Turkey’s giant online shopping platform considered the Amazon of its country — floats on the Nasdaq today, for a valuation likely to exceed $3.9 billion on current projections, especially with shares being marked up to $14 apiece (up from the previously predicted $12 pricing). Bu this isn’t the end of the journey for this break-out Turkish tech and e-commerce company, for long-time founder and chairwoman Hanzade Doğan Boyner – who started the business in 1998 no less, and still has overall control of the company – considers this closer to a growth round of funding, enabling her ambitious plans to mine Turkey’s fast-developing market even further, as well as expand into Central and Eastern Europe. Doğan Boyner, a scion of the powerful Doğan family in Turkey, continues to hold three-quarters of the voting power in the company, according to the prospectus filed to the SEC.

Hepsiburada’s IPO comes after it more than doubled its revenue during the pandemic, as Turkey’s largely offline population was forced to switch to online shopping in what might well be characterized as a sort of enforced ‘Great Leap Forward’ for the country. 

Hepsiburada (which translates as “everything is here”) is also making history as the first-ever Turkish, NASDAQ IPO.

With a massive logistics platform spread across Turkey, the company now offers 2hr deliveries, with around 43 million products available on the platform, available from a more Chinese-like ‘super-app’ which can offer everything from groceries to flights, to payment services, via is ‘Alipay-like’ service called Hepsipay. And in Turkey, many people prefer to buy things on installments, a service Hepsiburada has pre-built into its platform.

Turkish people have also enjoyed its frictionless returns, where goods can be returned for free, involving a super-efficient logistics network.

After growing at about 50% year on year for the last five years, the company says it doubled in size last year, taking advantage of the exponential growth in Turkey’s e-commerce penetration into its 82 million-strong population.

The IPO comes after a mere $100m was invested in the platform over the last 20 years, and a profit-making period until 2018 when Doğan Boyner started investing more in the platform, prior to this moment.

TC: What brought you to this moment in time in terms of the IPO?

Doğan Boyner: “Almost 20 years ago I started with e-commerce and from day one we built it with new features, new services, and today we manage a fully integrated ecosystem, from last-mile delivery to payment to groceries. Hepsiburada is the super app that makes our customer’s lives easier. They can get their groceries or their toys for next-day delivery or flight tickets. Why are we listing now? Because the Turkish e-commerce market is at 10% penetration, and we believe that its penetration will double by 2025. It’s an inflection point. It’s a large market, and as Hepsiburada we are a pioneering platform reaching maturity towards becoming a public company. With the funds raised through the IPO, we will accelerate our growth and continue to execute our vision.”

TC: “Are you satisfied with the $3.9 billion valuation?”

Doğan Boyner: “Today’s valuation is not very important for me. It’s not where you start, it’s where you go. I’m not selling any shares, and this is primarily for growth funding. This is just the beginning. You know, the market is still low penetration, and we have an exciting journey ahead of us. I want the stock to perform well for my investors, but what the value today is irrelevant for me.”

TC: “You’re going to use some of this funding to add on new products onto the platform like booking flights or money transfers and other kinds of new products, what are some of the other kinds of expansion plans you have?”

Doğan Boyner: “One is to continue building our infrastructure, such as frictionless returns, which gives such peace of mind to our consumers. The second is Hepsi Express. It’s still only at 4% penetration. This will change the consumer’s grocery shopping habit because we have such a strong model where we partner with a lot of national chains, regional chains, Mom-and-Pop shops, so we turn those stores into our ‘dark stores’. Plus we sometimes do our own picking from the stores or sometimes the retailer does the picking. So the customer offering is very strong. You can get something in half an hour, or you can schedule it for next day, whenever you want. You can do the weekly shopping, or just get something for that night. Express is an area that we will scale. Payment is another focus. We are the only platform with a payments license. Soon it will be an open wallet and our Fintech capabilities will increase post IPO.”

TC: Are you following a sort of Alibaba / Alipay strategy?

Doğan Boyner: “We will leverage our current customers and marketplace, and we will turn them into our wallet customers. Super apps don’t really exist in Europe or the US. So it’s our vision to digitalize commerce. We are in our customer’s pocket. We want to make life easier for them.”

TC: “How did you shift operations during the pandemic?”

Doğan Boyner: “We almost became a lifeline, not just for consumers but for our merchants as well. So we rose to the occasion to not only scale operationally. We had to onboard 1000s of drivers and employees, very, very fast, but we also had to secure the well-being of our employees. While all of us were isolating we had to ask our employees to work, which, which I think we’ve done a very, very good job of, in terms of providing PPE, and providing health coverage. It was a chance to live up to our values. Our consumers experimented with us as new consumers, and they’re happy with the service so they will stay with us and our merchants appreciated us as well, because in a time when their shops were closed, they could generate revenues through us.”

TC: You’ve been a big advocate of women in your company and also in your country, you’ve created many programs for women and girls and engaged in a great deal of advocacy. Where do you feel you are on that journey?

Doğan Boyner: “Half far our workforce is female, 33% of our management is female – which should be 50%! Our woman entrepreneur program has been very impactful. We tell women entrepreneurs to come, we will teach you ecommerce, we will onboard your products, we will give you free shipping, we will prioritize your products or listing pages, we will give you real estate on our home page. Some 19,000 women have benefitted from this. Women have sent me their inspiring stories. They start small and hire two people, and then they create their own brands. Having said that, when I look at where we are in terms of gender equality globally, the needle doesn’t move much. You look at the number of CEOs in the FTSE 500, the number doesn’t change. So, I will keep doing whatever I can, because every ‘small drop’ counts. And hopefully, it will. I also think there should be a new conversation, a global conversation about gender equality in general. The 19,000 women who benefited from our program became economically more empowered. They gained skills and tools and confidence to trade on a platform like Hepsiburada, which is very meaningful.”

TC: Are you concerned that perhaps your success may attract the attention of government regulation in Turkey, in the future?

Doğan Boyner: “We are considered a national champion. Turkey has different dynamics. I think it’s an inspiration that national champions can come out and be successful.”

TC: You’ve been very hugely successful, you’re a big advocate for women in your country, do you have any political aspirations?

Doğan Boyner: “No.”

#alibaba, #alibaba-group, #alipay, #amazon, #brookings-institution, #business, #central-europe, #e-commerce, #eastern-europe, #entrepreneur, #europe, #jack-ma, #online-shopping, #real-estate, #tc, #turkey, #u-s-securities-and-exchange-commission, #united-states

WalletsClub wants to be the ‘Visa for e-wallets’ across the world

Digital payments are going mainstream around the world. By the end of 2020, there were more than 300 mobile money providers with over 100,000 active users, according to a report published by GSMA, an industry association for mobile network operators. Altogether, over 300 million mobile money accounts were active every month around the world.

Mobile money providers — more commonly known as e-wallets — are used to transfer money, pay and receive payments through mobile phones without the need for a traditional bank. They are useful so long as they enjoy wide adoption and a strong network effect. But even a popular service like Ant Groups’s Alipay, which has over one billion annual users, is practically unusable outside China due to its low penetration in most countries.

The problem is there is no interoperability between most wallets as there is between traditional banks, suggested Xue Zhixiang, who worked on the basic infrastructure for Alibaba’s cloud unit and Alipay before starting WalletsClub.

Registered in Hong Kong in 2019 with a small operational team in mainland China, WalletsClub sets its sights on becoming the Visa for digital wallets, making money transfers possible between the world’s hundreds of electronic money services.

“We are like a clearinghouse for digital wallets,” said Xue, the company’s CEO.

A clearing system is an intermediary for two parties engaged in a financial transaction. It’s designed to ensure the efficiency and security of a transfer by validating the availability of the funds and logging the transfer between two transacting parties. Payments can be sent and received in real-time using WalletsClub, Xue claimed, and its technology is based on the “ISO 20022” standard, a common language for financial institutions to exchange data across the globe.

In other words, WalletsClub is going after the hundreds of e-wallets around the world rather than individual end-users. Its vision is to let people pay with any mobile wallet anywhere as long as the sender’s service provider or financial institution and the receiver’s equivalent services are members of WalletsClub, similar to how Visa and Mastercard process credit cards issued by different banks that are in their networks. The company plans to monetize by charging a flat fee per transaction.

By adding interoperability to electronic wallets, even small, regional players can thrive because they gain compatibility wherever a clearing system is in place.

Instead of challenging the traditional financial system, WalletsClub wants to provide a way for unbanked individuals to easily move money around through digital wallets, which are easier to obtain than a bank account. A big demand will come from overseas migrant workers who need to send money back to their home countries, such as the millions of Southeast Asian workers abroad.

WalletsClub is potentially encroaching on the territory of a few players. Expatriate workers sending money home currently revert to longstanding remittance services like Western Union or MoneyGram, which have large networks of “agent” locations where users go send or collect money. In 2018, Alipay began allowing users in Hong Kong to send money to GCash accounts in the Philippines, but “the focus of Ant Group is payments rather than remittance,” Xue observed.

In 2019, money sent home from diaspora workers became the largest source of external financing in low- and middle-income countries excluding China, according to World Bank data. The money flows amounted to over $500 billion and surpassed the levels of foreign direct investment in these regions.

The other type of business that a clearinghouse for mobile wallets could threaten is cross-border payment aggregators, which save merchants from having to integrate with various digital payment methods.

The biggest challenge for the nascent startup is to establish trust with clients. At this stage, WalletsClub in talks with electronic money services founded by Chinese entrepreneurs in Hong Kong, Singapore and Canada. Chinese-made wallets are especially plentiful in emerging markets, thanks to these founders’ learning from China’s fintech boom over the decade. Many of them found it hard to compete with behemoths like Tencent and Ant, let alone China’s tightening regulations around fintech.

“If we reach 20 members and have several hundreds of transactions between every pair of members on a daily basis, we are basically profitable,” said Xue, adding that the goal is to onboard a dozen customers by this year.

#alibaba, #alibaba-group, #alipay, #ant-group, #asia, #bank, #canada, #china, #digital-currencies, #digital-wallet, #finance, #mastercard, #mobile-payment, #mobile-phones, #money, #moneygram, #online-payments, #philippines, #singapore, #tc, #visa, #western-union, #world-bank

Prime today, gone tomorrow: Chinese products get pulled from Amazon

If you ever bought power banks, water bottles, toys, or other daily goods on Amazon, the chances are your suppliers are from China. Analysts have estimated that the share of Chinese merchants represented 75% of Amazon’s new sellers in January, up from 47% the year before, according to Marketplace Pulse, an e-commerce research firm.

Chinese sellers are swarming not just Amazon but also eBay, Wish, Shopee and Alibaba’s AliExpress. The boom is in part a result of intense domestic competition in China’s online retail world, which forces merchants to seek new markets. Traditional exporters are turning to e-commerce, cutting out excessive distributors. Businesses are enchanted by the tale that a swathe of the priciest property in Shenzhen, the Chinese city known for its vibrant tech industry and expensive apartments, is now owned by people who made a fortune from e-commerce export.

But the get-rich-quick optimism among the cross-border community came to a halt when several top Chinese sellers disappeared from Amazon over the past few days. At least eleven accounts that originate from Greater China were suspended, according to Juozas Kaziukenas, founder of Marketplace Pulse.

Several accounts belong to the same parent firms, as it’s normal for big sellers, those with more than a million dollars in annual sales, to operate multiple brands on Amazon to optimize sales.

TechCrunch has reached out to Mpower and Aukey, whose Amazon stores are gone and were two of the most successful brands native to the American marketplace.

In total, the suspended accounts contribute over a billion dollars in gross merchandise value (GMV) to Amazon, said Kaziukenas.

Amazon didn’t comment on the status of the suspended accounts, but said in a statement for TechCrunch that it has “long-standing policies to protect the integrity of our store, including product authenticity, genuine reviews, and products meeting the expectations of our customers.”

“We take swift action against those that violate them, including suspending or removing selling privileges,” said an Amazon spokesperson.

Chinese e-commerce exporters were startled by the incident. Inside WeChat groups where hundreds of sellers normally exchange business strategies, anxiety is rife and the consensus is that the targeted sellers have “crossed the line” in conducting questionable platform practices. Amazon says it shares enforcement actions directly with selling accounts.

“This isn’t the first time Amazon has shut down accounts over fake reviews and other behavior that violate its rules, but the scale of this wave is unprecedented,” said Bill Zhang, who develops and exports smart training suits through Amazon.

It’s no doubt that Amazon needs Chinese suppliers for affordable and diverse products, of which average quality has also increased remarkably in recent years. But as competition heated up among Chinese sellers, black hat tactics that were common in Chinese e-commerce became a necessity to survive on Amazon.

“It’s an open secret that a lot of Chinese sellers are aggressive towards marketing,” Cameron Walker, who worked for an export trade show in China for over a decade before running a toy export business.

One of the common tricks employed by Chinese sellers is review manipulation because reviews affect how a product is listed on Amazon. This can be done by paying real buyers to leave a positive review or sending fake orders and leaving good reviews through zombie accounts.

The latter approach is often delegated to agents that call themselves “product review” services, which offer a suite of resources to emulate real accounts: IP proxies, virtual credit cards, overseas addresses, any pieces of identity that can help avoid suspicion from Amazon’s anti-fake algorithms, said an executive at a payments service who works closely with Chinese exporters.

Another prevalent tactic, which perhaps poses a greater existential crisis to Amazon than fake reviews, is ways to direct buyers away from Amazon onto merchants’ own web stores. Amazon restricts merchants from collecting sensitive buyer information such as emails, but Chinese exporters find a way around: sending postcards to customers asking them to leave reviews on their own websites.

These tricks have been around for years, so what caused the sudden attack at top sellers?

Exporters contacted by TechCrunch pointed to a data breach uncovered by SafetyDetectives, a cybersecurity firm, which contained a trove of direct messages between Amazon sellers soliciting fake reviews from buyers. The data, which implicates more than 200,000 individuals, was hosted on a server that appears to be in China, according to SafetyDetectives’ report.

The report didn’t mention the names of the sellers involved. TechCrunch cannot immediately verify claims in the report.

Amazon did not say whether it was aware of the data breach. It, however, claimed that it uses “machine learning tools and skilled investigators to analyze over 10 million review submissions weekly” and monitor “all existing reviews for signs of abuse and quickly take action if we find an issue.” It also works with social media sites to report “bad actors.”

But bad actors will likely come back even after the latest episodes of crackdowns, said the cross-border payments executive.

“Amazon is fighting an entire lucrative and tight-knit ecosystem of merchants and fake review services, not just a few big sellers.”

In recent years, Amazon has been trying to nudge more new sellers to join and be “good brands,” observed Walker. Merchants now need to meet strict requirements for brand registries, safety testing, and insurance liability, he said.

“It’s getting more difficult and costly to run a business on Amazon.”

These challenges have encouraged hordes of exporters to diversify sales channels beyond Amazon and invest in their own Shopify-based web stores, where they get to write the rules. They are encouraged by what Shein, an independent e-commerce store that sells made-in-China apparel to overseas markets, has achieved. In the first quarter, Shein was the world’s second most downloaded shopping app, according to data provided by app analytics firm SensorTower. Many Chinese sellers dream that one day they, too, could break free from the grip of a behemoth like Amazon.

#alibaba-group, #aliexpress, #amazon, #amazon-marketplace, #asia, #china, #cross-border-commerce, #e-commerce, #ebay, #ecommerce, #online-shopping, #retailers, #shein, #shenzhen, #shopee, #shopify, #tc

A trove of imported console games vanish from Chinese online stores

In the world’s largest gaming market, China, console games play a relatively small part as their revenue has been meager compared to mobile and PC games for years — at least by the official numbers (more on this later). There remains a community of hardcore console lovers, but they are finding it harder to get hold of devices and cartridges recently.

A handful of grey market videogame console vendors on Taobao stopped selling and shipping this week, according to checks by TechCrunch and online posts by gamers. Before we examine what might be happening here, a bit of industry history is needed.

In 2000, China banned the sale and import of videogame consoles as concerns over addiction in teenagers grew. Even with the ban, imported consoles still existed in the grey market targeting a group of loyal players. Meanwhile, the online PC and mobile gaming industry flourished, in part thanks to their affordability and the social experience built into their mechanics.

When China finally lifted its restriction on consoles in 2015, giants like Sony and Microsoft quickly responded by releasing Chinese editions of their products through local partners. Nintendo Switch hit the Chinese shelves in 2019 via a much-anticipated partnership with Tencent, which itself is the world’s largest gaming firm. But the grey market largely persisted because mainland Chinese versions of the consoles are subject to strict regulatory oversight, which limits users’ choice to a small friendly range approved by censors.

Many Chinese players thus resort to brick-and-mortar electronics bazaars and online marketplaces to find imported editions of PlayStation, Xbox, and Nintendo Switch, along with their games. These products normally enter China through parallel trading, the import of legitimate goods through unauthorized channels. The games that are brought in normally lack a Chinese gaming license, which is hard to obtain even by local publishers.

Several major videogame console importers on Taobao have suspended business. Screenshot: TechCrunch

It’s unclear how many imported consoles and console games were taken down from Taobao and what triggered the purge. Tgbus, one of the largest console game sellers on Taobao with 462,000 followers, currently has zero product listing. When asked by TechCrunch, a customer service staff said the store has temporarily halted shipping due to “a water leak in the warehouse.” When we pressed further, the person said it was due to “an electrical-equipment failure.”

Other vendors keep their responses vague, citing “special reasons” for the suspended services. One seller named the “Shanghai Gaming Console Store” said it suspended its business at the request of Taobao, without elaborating further.

Alibaba could not be immediately reached for comment.

The incident appears to inflict mostly console sellers with a sizable business at this moment. Imported cartridges and console devices can still be found on smaller Taobao stores and alternative platforms like Pinduoduo by searching the right keyword.

Some users see the move as China further tightening its grip on what gamers get to play. Over the past year, Apple’s China App Store removed thousands of games to wipe out games without China’s official greenlight. Other motives are politcal. Animal Crossing was pulled from grey market stores on Taobao and Pinduoduo after one of Hong Kong’s most well-known pro-democracy activists used the game as his protest ground.

Other users point out that customs officers regularly clamp down on parallel trading, which is designed to evade import tax because goods are carried by traders who appear as regular travelers. This isn’t the first time the console grey market has been hit, either. Some grey goods manage to fly under the radar before they attract critical sales. There are signs that the new Monster Hunter Rise, a Nintendo-Switch exclusive which isn’t available on the Chinese console edition, is stoking much interest among local players in recent weeks and may have driven some imports.

#alibaba-group, #china, #console, #grey-market, #nintendo, #nintendo-entertainment-system, #nintendo-switch, #online-marketplaces, #taobao, #tc, #video-game

China’s draft payments rules put Ant, Tencent on notice

A string of recent events in China’s payments industry suggests the duopoly comprising Ant Group and Tencent may be getting a shakeup.

Following the abrupt call-off of Ant’s public sale and a government directive to reform the firm’s business, the Chinese authorities sent another message this week signaling its plan to curb concentration in the flourishing digital payments industry.

The set of draft rules, designed to regulate non-bank payments and released by the People’s Bank of China (PBOC) this week, said any non-bank payments processor with over one-third of the non-bank payments market or two companies with a combined half of the market could be subject to regulatory warnings from the anti-monopoly authority under the State Council.

Meanwhile, a single non-bank payments provider with over one half of the digital payments market or two companies with a combined two-thirds of the market could be investigated for whether they constitute a monopoly.

The difference between the two rules is nuanced here, with the second stipulation focusing on digital payments as opposed to non-bank payments in the first.

Furthermore, the rules did not specify how authorities measure an organization’s market share, say, whether the judgment is based on an entity’s total transaction value, its transaction volume, or other metrics.

Alipay processed over half of China’s third-party payments transactions in the first quarter of 2020, according to market researcher iResearch, while Tencent handled nearly 40% of the payments in the same period.

 

As China heightens scrutiny over its payments giants, it’s also opening up the financial market to international players. In December, Goldman Sachs moved to take full ownership of its Chinese joint venture. This month, PayPal became the first foreign company with 100% control of a payments business in China after it bought out the remaining stake in its local payments partner Guofubao.

Industry experts told TechCrunch that PayPal won’t likely go after the domestic payments giants but may instead explore opportunities in cross-border payments, a market with established players like XTransfer, which was founded by a team of Ant veterans.

Ant and Tencent also face competition from other Chinese internet firms. Companies ranging from food delivery platform Meituan, e-commerce platforms Pinduoduo and JD.com, to TikTok’s parent firm ByteDance have introduced their own e-wallets, though none of them have posed an imminent threat to Alipay or WeChat Pay.

The comprehensive proposal from PBOC also defines how payments processors handle customer data. Non-bank payments services are to store certain user information and transaction history and cooperate with relevant authorities on data checks. Companies are also required to obtain user consent and make clear to customers how their data are collected and used, a rule that reflects China’s broader effort to clamp down on unscrupulous data collection.

#alibaba-group, #alipay, #ant-group, #asia, #bytedance, #china, #finance, #mobile-payments, #online-payments, #payments, #paypal, #state-council, #tc, #tencent, #wechat, #wechat-pay

Alibaba shares jump on Jack Ma’s first appearance in 3 months

Alibaba’s billionaire founder resurfaced as he spoke to 100 rural teachers through a video call, three months after his last public appearance in October, sending the e-commerce firm’s shares up more than 8% in Hong Kong.

A recording of the call was first posted on a news portal backed by the government of Zhejiang, the eastern province where Alibaba is headquartered, and the video was verified by an Alibaba spokesperson.

Speculations swirled around Ma’s whereabouts after media reported in December that he skipped the taping of a TV program he created. Ma, known for his love for the limelight, has seen his e-commerce empire Alibaba and fintech giant Ant Group increasingly in the crosshairs of the Chinese authorities in recent months.

Ma last appeared publicly at a conference where he castigated China’s financial regulatory system in front of a room of high-ranked officials. His controversial remark, according to reports, prompted the Chinese regulator to abruptly halt Ant’s initial public offering, which would have been the biggest public share sale of all time.

Ant has since been working on corporate restructuring and regulatory compliance under the directions of the government. Alibaba, China’s largest e-commerce platform, also came under scrutiny as market regulators opened an investigation into its alleged monopolistic practices.

Some argue that the recent clampdown on Jack Ma’s internet empire signals Beijing’s growing unease with the super-rich and private-sector power brokers.

“Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States. And just like their American counterparts, the Chinese giants sometimes bully smaller competitors and kill innovation,” wrote Li Yuan for the New York Times.

“You don’t have to be a member of the Communist Party to see reasons to rein them in.”

In the 50-second clip, Ma talked directly into the camera against what appears to be decorative paintings depicting a water town typical of Zhejiang. An art history book is shown amid a stack of books, alongside a vase of fresh flowers and a ceramic figurine of a stout, reclining man, looking relaxed and content.

Ma addressed the 100 teachers receiving the Jack Ma Rural Teachers Award, which was set up by the Jack Ma Foundation to identify outstanding rural teachers every year. The video also briefly shows Ma visiting a rural boarding school in Zhejiang on January 10. The award ceremony was moved online this year due to the pandemic, Ma told the teachers.

When Ma announced his retirement plan, he pledged to return to his teaching roots and devote more time to education philanthropy, though the founder still holds considerable sway over Alibaba. The legendary billionaire began his career as an English teacher in Hangzhou, and on Weibo, China’s Twitter equivalent, he nicknames himself the “ambassador for rural teachers.”

#alibaba, #alibaba-group, #ant-group, #asia, #china, #communist-party, #e-commerce, #ecommerce, #government, #hangzhou, #jack-ma, #xi-jinping

From the U.S. to China, Korea, India and Europe, antitrust action against tech is gaining serious momentum

After decades of global expansion and consolidation in the tech sector, antitrust is now a headline issue for the industry across the world.

What has been a slow and sputtering series of disparate actions over the past decade has coalesced in just the past few weeks into a rapid and comprehensive series of actions against the industry, with the United States being a notable laggard worldwide.

Nowhere are these actions more prominent than in China, where the competition authorities have — after many years of a reasonably laissez-faire policy to its internet giants — suddenly decided to take sweeping action against its largest tech companies.

That movement started after Chinese regulators thwarted Ant’s record-shattering IPO in early November. Ant is one of China’s most important tech companies, a fintech company that was looking at a valuation north of $300 billion and that has 1.3 billion active users globally centered on China and the overseas Chinese diaspora.

That regulatory action led to a $60 billion dollar immediate drop in Alibaba’s market cap, given Alibaba’s 33% stake in Ant.

The bad news from Beijing has continued for the tech industry though. Earlier this week, market regulators laid out a “rectification” plan for Ant, including tougher lending standards that are expected to deeply impact the high-flying company’s revenues, margins, and growth. The Wall Street Journal reported this morning that China also specifically intends to “shrink” Jack Ma’s own influence over his business empire, with the government itself potentially acquiring larger ownership stakes in tech companies.

Furthermore, Beijing seems ready to force Alibaba and Tencent to play nicer with each other and create breathing space for startups outside of their two inter-locking corporate webs. Earlier this month, authorities fined Alibaba a nominal amount and also reviewed a Tencent acquisition, actions that were perceived by analysts as the opening shots in a new round of antitrust intervention. More action is expected in 2021.

It’s not just China though that has been bringing tech companies to heel. Almost exactly a year ago, Germany-based Delivery Hero announced a $4 billion takeover of Seoul-based Baedal Minjok, a popular food delivery app. Yesterday, South Korean competition authorities ordered Delivery Hero to divest its existing local delivery assets to get approval for the acquisition — a demand that undermined one of the reasons for acquiring Baedal Minjok in the first place. Delivery Hero has said that it will sell its unit to complete the transaction.

Meanwhile this month, Europe and soon-to-be-Brexited Britain announced a spate of new policies and regulations designed to heighten competition in the tech sector, including increasing legal liabilities for illegal content, broadening transparency around services, and mandating open competition on major platforms. Those policies have been a long-time coming, but now that they are starting to gain traction, they portend huge changes on how the highest-scale tech companies can operate on the Old Continent.

While many of these global policies are designed to undo the consolidation and scale of the industry, in India, regulators are working to prevent such scale in the first place. Local competition authorities there announced in November a framework that would prevent any company from owning more than 30% of local payments volume, and also mandating financial interoperability standards. That policy appears to be designed to avoid the kind of fintech duopoly seen in China between Alipay and WeChat Pay.

With all this global antitrust action bubbling, the laggard has actually been the United States, perhaps since the largest tech giants are all headquartered domestically. While Congress, the president, and dozens of state attorneys general have become increasingly strident on the scope of companies like Amazon, Google, and Facebook, action remains very early against the giants.

The largest and most notable action so far has been a massive lawsuit by 46 states against Facebook that was filed earlier this month. As we reported then, the lawsuit “alleges that the company bought competitors ‘illegally’ and in a ‘predatory manner’ in order to grow and preserve its market power. The suit cites Facebook’s acquisitions of Instagram and WhatsApp as prominent examples.”

Of course, as some of us remember from the 1990s with the U.S. government’s case against Microsoft, antitrust lawsuits often take years to full wend their way through the courts — and often don’t even lead to much if any change in the end anyway.

Whether a Biden administration will dramatically change the course of these actions remains unclear, with the transition offering very limited insight as it prepares to take office next month.

Nonetheless, all of these antitrust actions happening simultaneously across the globe within weeks of each other portends huge regulatory fights for tech in 2021.

#alibaba-group, #antitrust, #asia, #china, #europe, #facebook, #google, #government, #india, #policy, #tencent-holdings

Daily Crunch: Alibaba faces antitrust probe

Chinese authorities investigate an e-commerce giant, Google may be tightening its grip on research and VCs weigh in on the year’s biggest surprises. This is your (briefer than usual) Daily Crunch for December 24, 2020.

The big story: Alibaba faces antitrust probe

China’s State Administration for Market Regulation said that it’s investigating the e-commerce giant over a policy that forces merchants to sell exclusively with Alibaba and skip rival platforms JD.com and Pinduoduo.

“Alibaba will actively cooperate with the regulators on the investigation,” the company said in a statement. “Company business operations remain normal.”

Meanwhile, Chinese authorities have already called off the initial public offering of Alibaba affiliate Ant Group, and the company has now received another “meeting notice” from regulators.

Holiday grab bag

Google reportedly tightens grip on research into ‘sensitive topics’ — Reuters, citing researchers at the company and internal documents, reports that Google has implemented new controls in the last year, including an extra round of inspection for papers on certain topics.

Five VCs discuss what surprised them the most in 2020 — The latest episode of Equity reflects on a year that no one could have predicted.

Gift Guide: Last-minute subscriptions to keep the gifts going all year — They’re easy to order at the very last minute, easy to give from afar and they’ll spread the gifting fun out over weeks and months.

Advice and analysis from Extra Crunch

The built environment will be one of tech’s next big platforms — An in-depth look at Sidewalk Labs’ abandoned Toronto waterfront project.

US seed-stage investing flourished during pandemic — According to a TechCrunch analysis of PitchBook data and a survey of venture capitalists, a few trends became clear.

Use Git data to optimize your developers’ annual reviews — Three metrics can help you understand true performance quality.

(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

#alibaba-group, #daily-crunch, #ecommerce, #policy

Alibaba and Ethiopian Airlines to launch cold chain exporting China’s COVID vaccines

China has pledged that it would be sharing its COVID-19 vaccines with other countries, especially those with which it has close ties. While the country is not ready to deploy its vaccines internationally, it is gearing up the infrastructure for mass distribution.

This week, Alibaba announced that it has struck a partnership with Ethiopian Airlines to introduce a cold chain capable of transporting temperature-sensitive medicines from China to the rest of the world. The air freight will depart from Shenzhen Airport, which Alibaba says houses China’s first cross-border medical cold chain facility, twice a week to countries via Dubai and Addis Ababa.

“As soon as the vaccines are ready, we will have the capabilities to transport them,” a Cainiao spokesperson told TechCrunch.

Shenzhen is the home base of SF Express, another major logistics operator in China that has also been working on storing and shipping vaccines.

The Alibaba route is carried out by the firm’s logistics arm Cainiao, which operates in over 200 countries and regions. It’s certified by the International Air Transport Association to fly Covid-19 vaccines, which normally need to be stored at low temperatures. Cabins will contain temperature-controlled monitors, for instance, and Ethiopia’s cargo terminal comes with facilities that can be adjusted between -23°C and 25°C, or -9.4°F and 77°F.

“The launch of the cold chain air freight has further bolstered our global logistics capabilities and allow us to offer a one-stop solution for the global distribution of medical products such as the COVID-19 vaccines,” said James Zhao, general manager of Cainiao’s international supply chain unit.

China is a major exporter of personal protective equipment (PPE) during the COVID-19 pandemic and the country’s logistics giants, from Cainiao to SF Express, all promptly introduced programs specifically for shipping medical relief items.

#alibaba-group, #cainiao, #china, #cold-chain, #ethiopia, #health, #jack-ma, #logistics, #shenzhen, #supply-chain, #supply-chain-management, #transportation, #vaccination, #vaccine

China’s tech firms rush to deliver solutions for grocery shopping

Nearly all of China’s largest internet firms have established a presence in online grocery. Just this week, news arrived that Alibaba co-led the $196 million C3 funding round of Nice Tuan, the two-year-old grocery group-buying firm’s fourth round year to date.

People in China shop online for almost everything, including groceries. At first, grocery e-commerce appears to have caught on mainly among the digitally-savvy who have grown reliant on the convenience of e-commerce and don’t mind paying a bit more for delivery. Many elderly shoppers, on the other hand, still prefer visiting traditional wet markets where ingredients are generally cheaper.

Now tech companies in China are scrambling to capture grocery shoppers of all ages. A new business model that’s getting a lot of funding is that of Nice Tuan, the so-called community group buying.

In conventional grocery e-commerce, an intermediary platform like Alibaba normally connects individual shoppers to an array of merchants and offers doorstep delivery, which arrives normally within an hour in China.

A community group-buying, in comparison, relies on an army of neighborhood-based managers — often housewives looking for part-time work — to promote products amongst neighbors and tally their orders in group chats, normally through the popular WeChat messenger. The managers then place the group orders with suppliers and have the items delivered to pick-up spots in the community, such as a local convenience store.

It’s not uncommon to see piles of grocery bags at corner stores wating to be fetched these days, and the model has inspired overseas Chinese entrepreneurs to follow suit in America.

Even in China where e-commerce is ubiquitous, the majority of grocery shopping still happens offline. That’s changing quickly. The fledgling area of grocery group-buying is growing at over 100% year-over-year in 2020 and expected to reach 72 billion yuan ($11 billion) in market size, according to research firm iiMedia.

It sounds as if grocery group-buying and self-pickup is a step back in a world where doorstep convenience is the norm. But the model has its appeal. Texting orders in a group chat is in a way more accessible for the elderly, who may find Chinese e-commerce apps, often overlaid with busy buttons and tricky sales rules, unfriendly. With bulk orders, sales managers might get better bargains from suppliers. If a group-buying company is ambitious, it can always add last-mile delivery to its offering.

Chinese tech giants are clearly bullish about online grocery and diversifying their portfolios to make sure they have a skin in the game. Tencent is an investor in Xingsheng Youxuan, Nice Tuan’s major competitor. Food delivery service Meituan has its own grocery arm, offering both the traditional digital grocer as well as the WeChat-based group-buy model. E-commerce upstart Pinduoduo similarly supports grocery group purchases. Alibaba itself already operates the Hema supermarket, which operates both online and offline markets.

#alibaba, #alibaba-group, #asia, #china, #e-commerce, #ecommerce, #food, #funding, #grocery-store, #group-buying, #meituan-dianping, #online-grocery, #pinduoduo, #tc, #tencent, #wechat

Alibaba passes IBM in cloud infrastructure market with over $2B in revenue

When Alibaba entered the cloud infrastructure market in earnest in 2015 it had ambitious goals, and it has been growing steadily. Today, the Chinese ecommerce giant announced quarterly cloud revenue of $2.194 billion. With that number, it has passed IBM’s $1.65 billion revenue result (according to Synergy Research market share numbers), a significant milestone.

But while $2 billion is a large figure, it’s one worth keeping in perspective. For example, Amazon announced $11.6 billion in cloud infrastructure revenue for its most recent quarter, while Microsoft’s Azure came in second place with $5.9 billion.

Google Cloud has held onto third place, as it has for as long as we’ve been covering the cloud infrastructure market. In its most recent numbers, Synergy pegged Google at 9% market share, or approximately $2.9 billion in revenue.

While Alibaba is still a fair bit behind Google, today’s numbers puts the company firmly in fourth place now, well ahead of IBM. It’s doubtful it could catch Google anytime soon, especially as the company has become more focused under CEO Thomas Kurian, but it is still fairly remarkable that it managed to pass IBM, a stalwart of enterprise computing for decades, as a relative newcomer to the space.

The 60% growth represented a slight increase from the previous quarter’s 59%, but basically means it held steady, something that’s not easy to do as a company reaches a certain revenue plateau. In its earnings call today, Daniel Zhang, chairman and CEO at Alibaba Group said that in China, which remains the company’s primary market, digital transformation driven by the pandemic was a primary factor in keeping growth steady.

“Cloud is a fast-growing business. If you look at our revenue breakdown, obviously, cloud is enjoying a very, very fast growth. And what we see is that all the industries are in the process of digital transformation. And moving to the cloud is a very important step for the industries,” Zhang said in the call.

He believes eventually that most business will be done in the cloud, and the growth could continue for the medium term as there are still many companies who haven’t made the switch yet, but will do so over time.

#alibaba-group, #cloud, #cloud-infrastructure-market-share, #earnings, #enterprise, #tc

Alibaba Group will spend $3.6 billion to take control of Chinese supermarket giant Sun Art

Alibaba Group said today it will spend about $3.6 billion to take a controlling stake in Sun Art, one of China’s largest big-box and supermarket chains. After the transaction is complete, Alibaba Group will own 72% of Sun Art.

As in other countries, COVID-19 lockdowns increased demand for online food orders in China, drawing in shoppers who had still preferred to buy groceries in person. Even though lockdowns have lifted, many have continued to purchase online. Alibaba’s new investment in Sun Art will be made by acquiring 70.94% of equity interest in A-RT Retail Holdings from France-based Auchan Retail International. A-RT Retail holds about 51% of the equity interest in Sun Art.

After the deal closes, Alibaba will consolidate Sun Art in its financial statements. Sun Art chief executive officer Peter Huang has also been named its new chairman.

Alibaba first invested in Sun Art back in 2017, spending about $2.88 billion to pick up a 36.16% share in the chain, whose brands include RT-Mart, as part of its “New Retail” strategy.

“New Retail” aims to blur the lines between online and offline commerce through steps like turning physical stores in pickup points for online orders, integrating supply chains and enabling shoppers to use the same digital payment methods on its e-commerce platforms and in brick-and-mortar stores.

All of Sun Art’s 484 physical retail locations in China are now integrated into Alibaba’s Taoxianda and Tmall Supermarket platforms for groceries, as well as Ele.me and Cainiao, its on-demand food demand delivery app and logistics businesses, respectively. For customers, this means faster deliveries and larger selections, while giving Alibaba more sources of data it can use to improve its supply chain and business operations.

Other e-commerce companies are taking a similar approach to integrating offline and online grocery shopping, including Alibaba’s main rival JD, which has similar alliances with supermarket group Yonghui and Walmart.

In press statement, Alibaba chairman and chief executive officer Daniel Zhang said, “As the COVID-19 pandemic is accelerating the digitization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience.”

#alibaba, #alibaba-group, #asia, #china, #food, #fundings-exits, #grocery-delivery, #o2o, #on-demand, #sun-mart, #tc

This new Southeast Asian fund has its eye on Chinese cross-border firms

As U.S.-China relations remain tense, Southeast Asia becomes the darling for investors and tech companies from both sides as they seek overseas expansion. Behemoths like Google, Facebook, Alibaba, Tencent and ByteDance have elbowed into the region. Some set up shop, while others formed alliances and took stakes in local startups.

Now five prominent investors originating from the region are ready to claim their slice of the market. Singapore-based Altara Ventures debuted this week with a goal to raise over $100 million for its first fund focused on early-stage tech startups in Southeast Asia, with an eye on those with ties to China.

The financial vehicle was co-founded by Dave Ng, former head of Eight Roads Ventures, the investment arm of Fidelity International, along with four other general partners. They are Koh Boon Hwee, former chairman of DBS Group and Singapore Telecommunications; Tan Chow Boon and Seow Kiat Wang, who, along with Hwee, co-founded Omni Industries (bought by Celestica) and later managed private equity investments together; and Gavin Teo, a former product manager at Xbox and Zynga and a colleague of Ng at B Capital, a fund started by Facebook co-founder Eduardo Saverin.

Altara derives from the English word “altitude” and the Bahasa word “nusantara”, the historical designation for maritime Southeast Asia, a coinage that captures the firm’s ambition to back early-stage startups concurrent with the region’s technological advancement. The firm considers sectors ranging from fintech, consumer, enterprise software, logistics, healthcare through to education.

What happened in the Chinese internet realm has become a source of inspiration for entrepreneurs in its neighboring countries, and ideas flow from China into Southeast Asia in various ways.

“The first is around Chinese founders bringing their expertise from what they have done and gained in China to Southeast Asia as a new market. This could be totally new startups that they cofound with Southeast Asian entrepreneurs, and together they tackle whitespace opportunities here,” Ng explained to TechCrunch.

“We have also seen Chinese entrepreneurs who were first posted to the Southeast Asian region under tech giants such as Alibaba and Lazada, Ant Financials and etc coming out to start up on their own.”

The second type is what particularly interests Altara, for Ng believed the fund can “back and contribute our experience, expertise and network in Southeast Asia to them.”

What’s more, the investor is bullish on the future of the Southeast Asian tech industry as the U.S. and China enter “a phase of bifurcation.”

“We think Southeast Asia will benefit from its position as the connector of East and West. Over the next 10 to 20 years, we will see more talent and capital coming into the region.”

#alibaba-group, #altara-ventures, #asia, #b-capital, #china, #dave-ng, #eduardo-saverin, #eight-roads-ventures, #fidelity-international, #funding, #lazada, #lazada-group, #southeast-asia, #tc, #tencent

Blume Ventures’ Karthik Reddy on Indian startup ecosystem, geo-political tension with China and coronavirus

Despite the coronavirus outbreak, which has slowed down deal-making across the world, dozens of startups in India have raised considerable amounts in recent months. Unacademy, which raised $110 million in February, closed a new round of $150 million this month.

These large check sizes, and the frequency at which they are being bandied out, were almost unheard of in India just 10 years ago. The list of problems these local startups were solving then was also quite smaller back in the day.

Karthik Reddy has seen this change very closely.

He co-founded venture capital firm Blume Ventures, where he also serves as a partner, 10 years ago. Blume Ventures is the largest Indian venture capital firm. In a wide-ranging interview at Disrupt 2020, Reddy talked about the state of the startup ecosystem in India, some of the challenges it is confronting today and what lies ahead for the market.

“Fifteen years is what you should consider the active VC build-out in India. For the first five to seven years, we were kind of faking it till we make it. We sold the idea that we can replicate what the U.S. and China have done,” he said.

The breakout moment in India happened when low-cost Android smartphones flooded the market. A handful of startups with consumer-facing services such as Flipkart, Paytm and Zomato emerged to serve the first tens of millions of smartphone users in the country.

“The Hail Mary moment there was Reliance Jio’s arrival in the market,” he said. India’s richest man, Mukesh Ambani, entered the telecommunications market in the second half of 2016 with the world’s cheapest mobile tariff.

Moreover, for several months, Ambani simply did not charge Jio subscribers anything for access to 4G data. So India at large, once conscious about each megabyte it spent on the internet, suddenly started consuming gigabytes of content everyday. “It democratized data and smartphones at a scale that we have not seen in countries other than China,” said Reddy.

Karthik Reddy is the co-founder of Blume Ventures, the largest Indian venture capital firm

As hundreds of millions of users in India arrived on the internet, scores of startups in the country started to solve more complex problems: Bangalore-based startup Meesho today is helping millions of women sell products digitally; Classplus, a Blume Ventures-backed startup, has built a Shopify-like platform for teachers and coaching centres to serve students directly.

As India grew into the world’s second largest internet consumer, it has also attracted American and Chinese technology groups, all of which are looking for their next billion users. Several major investment firms, including Silver Lake, Alibaba Group, Tencent, GGV Capital, Tiger Global, General Atlantic, KKR, Vista, and Owl Ventures have also arrived and become aggressive in their investments in recent years.

But the geo-political tension between India and China have slightly complicated matters. In April this year, India amended its foreign direct investment policy to China to seek approval from New Delhi for their future deals in the country. Chinese investors have ploughed billions of dollars into the Indian startup ecosystem in recent years.

It’s a sensitive topic, given the involvement of the government, that most VCs in India are not comfortable addressing it even off the record. But Reddy weighed in.

“If not an arm or limb, it cuts off a finger or two for your choices. You are a little handicapped,” he said. “But there’s a caveat to that. It’s limited to certain segments of the market. I don’t think China and Hong Kong investors, even though they were very familiar with Chinese VC success story, were really interested in India’s deep tech and cross-border tech,” he said.

Today those areas account for more than a third of the robust ecosystem in India, Reddy argued. “If you look at the entire ecosystem collectively, there’s a single-digit influence of Chinese capital. […] If you ask me personally, 40% of my portfolio is not even remotely affected by it,” he said.

But several large consumer-facing Indian startups, such as Paytm, Zomato and Udaan, do have Chinese investors on their cap tables. Reddy said they would be impacted as uncertainty looms over when — and if — India would offer any relaxation to its current stand.

He said he is hopeful that the government would provide some distinction to VC-managed fund money that is not necessarily Chinese just because it’s run by someone who originated there.

Reddy also spoke about why he thinks early-stage startups, despite the proliferation of VC firms in India focusing on young firms, continue to receive less attention. We also spoke about how the coronavirus is impacting his portfolio startups and the industry at large and what advice he has for startup founders to navigate the turbulence times. You can watch this and much more in the interview below.

#alibaba-group, #asia, #blume-ventures, #china, #disrupt, #disrupt-2020, #india, #karthik-reddy, #startups, #techcrunch-disrupt, #unacademy, #venture-capital, #zomato

China’s Alibaba won’t invest in Indian startups for at least six months, report says

Chinese internet giant Alibaba Group has put on hold plans to invest in Indian startups amid geo-political tensions between the two countries, Reuters reported Wednesday, citing two unnamed sources.

The Chinese group, which has invested more than $2 billion in Indian startups since 2015, plans to freeze new investments in Indian startups for at least six months, the report said.

Alibaba Group, and its affiliate Ant, are major investors in a handful of unicorns in India including Paytm, the most valued Indian startup in which it owns about 30% stake, food delivery startup Zomato, grocery delivery startup BigBasket, and e-commerce firm Snapdeal.

The decision comes amid geo-political tensions between the two neighboring nations, which escalated when more than 20 Indian soldiers were killed in a military clash in the Himalayas in June. Ever since, “Boycott China” — and variations of it — has been trending on Twitter in India as a growing number of people posted videos demonstrating destruction of Chinese-made smartphones, TVs and other products.

New Delhi blocked TikTok and 58 other Chinese apps in the country in late June and extended the ban to several dozen more apps weeks later. India, the world’s second largest internet market, also amended its foreign direct investment policy earlier this year to make it difficult for Chinese investors to write new checks to Indian firms.

Zomato announced in January this year that Ant Financial had committed an investment of $150 million into the startup. The Gurgaon-based startup has only received $50 million of that capital so far.

“A change in foreign investment regulation in India led to our further evaluation of the timing of our additional investment in Zomato,” Ant Financial disclosed in its IPO prospectus Tuesday.

#alibaba, #alibaba-group, #asia, #funding, #india, #paytm, #zomato

What India’s TikTok ban means for China

For more than a decade, China has limited how foreign tech firms that operate inside its borders do business. The world’s largest internet market has used its Great Firewall to block Facebook, Twitter, Google and other services in the name of preserving its cyber sovereignty.

The walled-garden approach has helped homegrown giants like Tencent and Alibaba Group win the local market, while giving the Chinese government a better hold on what gets communicated on these platforms. China has even suggested that other nations deploy similar measures.

Be careful what you ask for: Last week, dozens of Chinese firms got a front-seat view to the challenges their global counterparts face in their territory. With a press release, India declared that the world’s second-largest internet market was shutting the door to dozens of Chinese firms for an indefinite period.

India said it would ban 59 apps and services, including ByteDance’s TikTok, Alibaba Group’s UC Browser and UC News, and Tencent’s WeChat over cybersecurity concerns.

New Delhi is open to meeting these firms and hear their defenses, but for now, local telecom operators and other internet service providers have been ordered to block access to these services. Google and Apple have already complied with India’s order and delisted the apps from their app stores.

India’s order is already shifting the market in favor of local firms, several of which have rushed to cash in on the app ban. A crop of recently launched short-form video sharing services have amassed tens of millions of users just this week.

But depending on how long the ban remains in place, the move could also derail a big funding source for thousands of Indian startups. The vast majority of India’s unicorns count Chinese VCs as some of their biggest and longest-term backers. New Delhi’s order could also change how American giants, many of which are already bullish on India, review the market moving forward.

Today, we will explore various ways India and China’s situation could play out and impact various stakeholders. But first, some background on how tension escalated between the two nuclear-armed nations.

#alibaba-group, #apps, #asia, #china, #extra-crunch, #government, #helo, #india, #market-analysis, #newsdog, #paytm, #security, #swiggy, #tiktok, #uc-browser, #wechat, #zomato

Apple and Google block dozens of Chinese apps in India

Two days after India blocked 59 apps developed by Chinese firms, Google and Apple have started to comply with New Delhi’s order and are preventing users in the world’s second largest internet market from accessing those apps.

UC Browser, Shareit, and Club Factory and other apps that India has blocked are no longer listed on Apple’s App Store and Google Play Store. In a statement, a Google spokesperson said that the company had “temporarily blocked access to the apps”on Google Play Store as it reviews New Delhi’s interim order.

Apple, which has taken a similar approach as Google in complying with New Delhi’s order, did not respond to a request for comment.

Some developers including ByteDance have voluntarily made their apps inaccessible in India, a person familiar with the matter told TechCrunch. India’s Department of Telecommunications ordered telecom networks and other internet service providers earlier this week to block access to those 59 apps “effective immediately.”

Thursday’s move from Apple and Google, whose software power nearly every smartphone on the planet, is the latest escalation in an unprecedented tension in recent times between China and India.

A skirmish between the two neighbouring nations at a disputed Himalayan border site last month left 20 Indian soldiers dead, stoking historical tensions. Earlier this week, India blocked 59 Chinese apps including ByteDance’s TikTok citing national security concerns in a move that some saw as retaliation.

In its order, India’s Ministry of Electronics and IT alleged that these apps were “compiling, mining, and profiling” users’ data that posed threats to “national security and defence of India.”

The Indian government has invited executives at these companies to give them an opportunity to answer concerns. Kevin Mayer, the chief executive of TikTok, said on Wednesday that his app was in compliance with Indian privacy and security requirements and he was looking forward to meeting with various stakeholders.

On Thursday, Chinese social network Weibo said it had deleted Indian Prime Minister Narendra Modi’s account at the request of the Indian embassy. Modi had amassed about 200,000 followers on Weibo before his account was deleted.

India has emerged as the biggest open battleground for Silicon Valley and Chinese firms in recent years. Like American technology groups Google, Facebook, and Amazon, several Chinese firms including Tencent, ByteDance, and Alibaba Group also aggressively expanded their presence in India in the last decade. TikTok, which has 200 million users in India, counts Asia’s third largest economy as its biggest overseas market.

The 59 blocked apps that include Likee, Xiaomi’s Mi Community, and Tencent’s WeChat, had a combined monthly active user base of over 500 million users in India last month, according to mobile insights firm App Annie — data of which an industry executive shared with TechCrunch. (A significant number of smartphone users in India use several of these apps so there’s a lot of overlap.)

#alibaba-group, #apple, #apps, #asia, #china, #google, #government, #india, #social

India bans TikTok, dozens of other Chinese apps

The Indian government on Monday evening said it was banning 59 apps developed by Chinese firms over concerns that these apps were engaging in activities that threatened “national security and defence of India, which ultimately impinges upon the sovereignty and integrity of India” in what is the latest standoff between the world’s two most populated nations.

Among the apps that India’s Ministry of Electronics and IT has ordered to ban include ByteDance’s TikTok, which counts India as its biggest overseas market; Community and Video Call apps from Xiaomi, which is the top smartphone vendor in India; two of Alibaba Group’s apps (UC Browser and UC News); Shareit; CM Browser, Club Factory, which claims to be India’s third-largest e-commerce firm; and ES File Explorer.

This is the first time that India, the world’s second largest internet market with nearly half of its 1.3 billion population online, has ordered to ban so many foreign apps. New Delhi said nation’s Computer Emergency Response Team had received many “representations from citizens regarding security of data and breach of privacy impacting upon public order issues.”

“The compilation of these data, its mining and profiling by elements hostile to national security and defence of India,” it said.

The apps India is banning

Tarun Pathak, an analyst at research firm Counterpoint, said the order would impact roughly one in three smartphone users in India. TikTok, Club Factory and UC Browser and other apps put together had more than 500 million monthly active users in May, according to one of the top mobile insight firms.

And, 27 of these 59 apps were among the top 1,000 Android apps in India last month, according to the mobile insights firm — data of which an industry executive shared with TechCrunch.

It’s unclear what exactly the “ban” means and how mobile operating system makers and internet service providers are expected to comply. At the time of writing, all of the aforementioned apps were available to download from Google Play Store and Apple’s App Store in India.

Google said it had yet to receive the order from New Delhi. Apple said it was reviewing the order. The companies have traditionally complied with such app removal requests.

New Delhi said it had received “many complaints from various sources, including several reports about misuse of some mobile apps available on Android and iOS platforms for stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India.”

Monday evening’s announcement is the latest standoff between the two neighboring nations following a deadly clash at the border earlier this month that stoked historical tensions. In recent weeks, custom officials at major Indian ports and airports have halted clearances of industrial consignments coming from China.

Jayanth Kolla, an analyst at research firm Convergence Catalyst, told TechCrunch the move was surprising and will have huge impact on Chinese firms, many of which count India as their biggest market. He said banning these apps would also hurt the livelihood of several Indians who directly or indirectly work for them.

Anti-China sentiment has been gaining mindshare in India in recent weeks, since more than 20 Indian soldiers were killed in a military clash in the Himalayas earlier this month. “Boycott China” — and variations of it — has been trending on Twitter in India ever since as a growing number of people posted videos demonstrating destruction of Chinese-made smartphones, TVs and other products.

Chinese smartphone makers command more than 80% of the smartphone market in India, which is the world’s second largest. For SoftBank-backed TikTok, which has more than 200 million monthly active users in India, New Delhi’s move is its latest headache. The Chinese firm has also faced scrutiny in Europe and the United States in recent quarters.

TikTok has been facing backlash in India since the second half of May after users unearthed and shared numerous recent TikTok videos on Twitter that appeared to promote domestic violence, animal cruelty, racism, child abuse and objectification of women. Many in India rushed to leave a poor rating of the TikTok app in the Google Play Store to express their disgust — and the Android-maker had to intervene and delete millions of comments.

Days later, an app called “Remove China Apps” gained popularity among some Indians. Google pulled the app later from the Play Store citing it violated its guidelines. A TikTok spokesperson did not immediately respond to a request for comment.

In April, India amended its foreign direct investment policy to require all neighboring nations, including China, with which it shares a boundary to seek approval from New Delhi for their future investments in India. The nation’s Department of Promotion of Industry and Internal Trade said it was taking this measure to “curb the opportunistic takeover” of Indian firms that are grappling with challenges due to the coronavirus crises.

When TikTok app was blocked in India for a week last year, ByteDance had said in a court filing that it was losing more than $500,000 a day in the nation.

#alibaba-group, #app-store, #apple, #apps, #asia, #china, #google, #google-play-store, #india, #tiktok, #uc-browser, #wechat

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

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

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

Son said his conglomerate’s holding has recovered to the pre-coronavirus outbreak levels. The firm has benefited from the rising value of Alibaba Group and its stake in Sprint, following the telecom operator’s merger with T-Mobile. Son said his firm has seen an internet rate of return (or IRR, a popular metric used by VC funds to demonstrate their performance) of 25%.

In a shareholder meeting today, he said he was worried that many people think that SoftBank is “finished” and are calling it “SoftPunku,” a colloquial used in Japan which means a broken thing. All combined, SoftBank’s shareholder value now stands at $218 billion, he said.

Son insisted that he was leaving the board of Alibaba Group, a position he has held since 2005, on good terms and that there hadn’t been any disagreements between him and Ma.

Son’s move follows Jack Ma, who co-founded Alibaba Group, leaving the board of SoftBank last month after assuming the position for 13 years. Son famously invested $20 million in Alibaba 20 years ago. Early this year, SoftBank still owned shares worth $100 billion in Alibaba.

A range of SoftBank’s recent investments has spooked the investment world. The firm, known for writing big checks, has publicly stated that its investment in ride-hailing giant Uber, office space manager WeWork, and a range of other startups has not provided the return it had hoped.

Several of these firms, including Oyo, a budget-lodging Indian startup, has moreover been hit hard by the pandemic.

Son, who has raised $20 billion by selling T-Mobile stake, said after factoring in other of his recent deals SoftBank had accumulated $35 billion or 80% of the total planned unloading of investments.

#alibaba, #alibaba-group, #asia, #jack-ma, #masayoshi-son, #oyo, #softbank, #softbank-group, #uber, #venture-capital, #vision-fund, #wework

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

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

China tech abroad

TikTok’s besieged rival

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

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

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

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

Alibaba hunts for global influencers to sell more

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

Data center in Tibet to connect China to South Asia

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

China tech at home

Dingtalk as an OS

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

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

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

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

Apple bans podcast apps

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

Investor’s favorite app is back

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

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

Sought-after Hong Kong listings

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

Chip company Eswin raised $283 million

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

#alibaba, #alibaba-cloud, #alibaba-group, #apple-app-store, #asia, #beijing, #china, #china-roundup, #cloud-services, #content-creators, #display-technology, #jd-com, #kuaishou, #netease, #semiconductor, #tc, #tibet, #tiktok, #turner-novak

Alibaba taps international influencers to sell more globally

For years, Chinese e-commerce exporters have been learning the ins and outs of ad placement on Facebook, Instagram and other mainstream social media platforms to reach customers around the world. But they recently spotted a new way to grab people’s attention, one that has never felt more familiar.

Video influencers.

Shopping via videos is currently all the rage in China. There are efforts from short video apps like Douyin — TikTok’s Chinese sister — that match merchants with content creators for promotion. During the coronavirus lockdown, millions of consumers relied on live videos to check out products and posed questions to merchants remotely, a practice that has won endorsement from local governments as a way to drum up domestic consumption. In just Q1 this year, more than 4 million live shopping sessions took place in China.

In other parts of the world, brands and video creators — especially influencers with sizable followings — are also getting pally. A few American venture capitalists have recognized the early potential of the collaboration. Amazon, a few years behind its Chinese counterparts in live streaming, launched Amazon Live last year.

Now Alibaba, one of the pioneers of shoppable videos in China, has big plans to attract and train up international influencers — so it can sell more around the world through AliExpress . The platform is one of Alibaba’s marketplaces for international consumers, which altogether claim 180 million annual active consumers.

“Chinese manufacturers are always looking for ways to sell and influencers are the quickest way to drive traffic these days,” reckoned Miranda Tan, chief executive of Robin8, a data-driven influencer marketing platform.

Indeed, a few Shenzhen-based e-commerce exporters told TechCrunch that they are actively looking to work with international content creators, particularly TikTok influencers, to market their products. For now, they depend on their Chinese staff to make low-budget promo videos that often miss important cultural nuances.

Everyone is a seller

AliExpress plans to recruit as many as 100,000 “promoters,” who will help merchants and brands on AliExpress promote through YouTube, Facebook, Instagram, TikTok and other popular internet platforms. Besides popular influencers, the platform is also after talented content creators behind the camera and seasoned marketers with access to customer acquisition channels.

Screenshot: a live broadcasted promotion on AliExpress

“Live shopping is still in its relative infancy in the overseas consumer market,” Martin Wang, who heads overseas seller operation and social commerce cooperation at AliExpress, told TechCrunch. “Our initiative will help propel the overseas ecosystem forward.”

To that end, the team created the “Connect” matchmaking system for influencers to find promotional tasks and is providing training and analytics tools to support their creative process. While live selling has been available to Alibaba sellers in China since 2016, AliExpress only added the feature last year and announced the recruitment program in April.

The call for talent came at a time when millions around the world have lost their jobs due to the coronavirus outbreak. It’s no surprise that AliExpress is billing the recruitment as one that could “help individuals rebuild after COVID-19.”

“A lot of people don’t have money now and are looking for ways to make money during the coronavirus outbreak,” contended Tan, who has observed many individuals are learning to be product promoters on social media to make extra bucks. “Everyone becomes their own independent company.”

Cultural differences

An obvious target for AliExpress is the emerging crop of bilingual foreign influencers living in China. “Many are foreign students in China with a positive image and a knack for expression. They have a flexible schedule in the evening, so agencies will approach them, train them as live streaming hosts and eventually sign with them,” said Wang.

The influencers fluent in Chinese and their native language may seem like ideal ambassadors in sellers’ target markets, but there is a potential drawback. “They might look to Li Jiaqi and Weiya as role models,” said Wang, referring to China’s top beauty influencers known for their record-smashing sales. “But what works in China may not work in their home countries.”

On the demand side, Wang worried that Chinese merchants are too accustomed to seeing meteoric sales numbers that influencers in China generate. “The overseas [live streaming] market has not reached the stage of maturity, so it’s our priority to manage expectations from both sides [of sellers and content creators.]”

Most of AliExpress’s sellers naturally come from China, the world’s factory, while Russia is its biggest market for revenue. The platform has been working to boost its inventory by opening up to sellers in Turkey, Russia, Spain and Italy last year. For instance, Russia is a big market for AliExpress’s Turkish merchants. The expansion means an even greater challenge for the Chinese company to cope with differences in business dynamics and consumer behavior across regions.

#alibaba, #alibaba-group, #aliexpress, #amazon, #amazon-live, #asia, #china, #ecommerce, #russia, #social-commerce, #tc, #tiktok

Tibet to become China’s data gateway to South Asia

A sprawling 645,000-square-meter data facility is going up on the top of the world to power data exchange between China and its neighboring countries in South Asia.

The cloud computing and data center, perched on the plateau city Lhasa, the capital of Tibet, and developed by private tech firm Ningsuan Technologies, has entered pilot operation as it announced the completion of the first construction phase, China’s state news agency Xinhua reported (in Chinese) on Sunday.

Northeast of the Himalayas, Tibet was incorporated as an autonomous region of China in 1950. Over the decades, the Chinese government has been grappling with demand from many Tibetans for more religious freedom and human rights in one of its most critical regions for national security.

The plateau is now a bridge for China to South Asia under the Belt and Road Initiative, Beijing’s ambitious global infrastructure project. Ningsuan, a Tibet-headquartered company with data control centers in Beijing and research teams in Nanjing, is betting on the increasing trade and investment activity between China and India, Nepal, Bangladesh and other countries that are part of the BRI.

This generates the need for robust IT infrastructure in the region to support data transmission, Hu Xiao, Ningsuan’s general manager, contended in a previous media interview.

While hot days and spotty power supply in certain South Asian regions incur higher costs for running data centers, Tibet, like the more established data hub in Guizhou province, is a natural data haven thanks to its temperate climate and low average temperature that are ideal for keeping servers cool.

Construction of the Lhasa data center began in 2017 and is scheduled for completion around 2025 or 2026, a grand investment that will total almost 12 billion yuan or $1.69 billion. The cloud facility is estimated to generate 10 billion yuan in revenue each year when it goes into full operation.

Alibaba has skin in the game as well. In 2018, the Chinese e-commerce giant, which has a growing cloud computing business, sealed an agreement (in Chinese) with Ningsuan to bring cloud services to industries in the Tibetan region that span electricity supply, finance, national security, government affairs, public security, to cyberspace.

#alibaba, #alibaba-cloud, #alibaba-group, #asia, #bangladesh, #china, #cloud, #cloud-computing, #india, #nepal, #tibet

Alibaba adds financing tools and online trade shows for US merchants

Alibaba.com is introducing new tools targeted specifically at U.S. merchants.

It sounds like the Chinese e-commerce giant has already been making inroads in the United States. John Caplan, the North American and European president of Alibaba.com (the B2B marketplace that serves as the core business of Alibaba Group), said at an online press briefing that the United States is Alibaba.com’s fastest-growing market — U.S. buyers on the platform have increased 70% year-over-year, while transactions involving U.S. businesses increased 100%.

The new features include Alibaba.com Payment Terms, which will allow buyers to wait up to 60 days before paying for goods that they’ve purchased. Alibaba is offering this financing in partnership with MSTS.

Caplan noted that previously, most cross-border commerce required upfront payments, which meant that “small businesses could not benefit from global supply chain.”

As an example, Alibaba pointed to Necia Boston of Greenville, N.C.-based B.A.A.B.S. Beauty, who said that beauty company’s finances are often tied up in inventory costs.

“With Alibaba.com Payment Terms, we’ll be able to keep our costs competitive with larger beauty brands, plan for our future product lines and stock up far in advance of the back to school and holiday seasons,” Boston said in a statement.

Alibaba is also announcing Alibaba.com Freight, which will allow merchants to compare, book and track ocean and air freight through a partnership with Freightos.

Lastly, Alibaba announced that it will be hosting a number of live-streamed, industry-specific trade shows through its new trade show hub.

There are 20 shows scheduled for the next 120 days, starting with an event focused on nutritional supplements. (In a memorably off-script moment during the call, a representative of a nutritional supplement company declared himself a “big fan of trade shows” but went on to note that they’re “the worst form of birth control.”)

“This is a massive opportunity for small businesses in America, and people are talking about this as a pivot in how small businesses connect and engage with one another,” Caplan said. “You’re not having to invest three days and thousands of dollars to travel.”

#alibaba-group, #ecommerce

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

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

China tech abroad

The other Chinese apps trending in America

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

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

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

Alibaba looks for overseas influencers

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

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

Oppo in Germany

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

Chinese tech stocks return

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

China tech back home

SoftBank doubles down on Didi

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

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

Marriage of e-commerce and live streaming

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

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

Meituan hit record valuation

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

Notion got banned in China, briefly

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

#alibaba, #alibaba-group, #asia, #china, #china-roundup, #didi, #dusseldorf, #germany, #harry-shum, #jd, #jd-com, #jeff-zheng, #kuaishou, #meituan, #netease, #softbank, #tc, #tiktok, #vision-fund, #vodafone