Tuesday Tech Briefing: Monster Hunter, Tsinghua, Samsung

PRODUCTS

1. Tencent Pulls Top-Selling Game Days After Launch

What: “Monster Hunter: World,” a blockbuster role-playing title released last week on Tencent’s WeGame platform, is no longer available for purchase after authorities received “numerous’ complaints about the game’s content, WeGame said in a statement on Monday.

Big picture: “The abrupt removal of the Capcom title comes amid a months-long hiatus in government approvals for upcoming titles.” China’s media regulator “has not issued licenses to any new games since Mar. 28, which contributed to a slowdown in China’s gaming market. Revenue was up 5% in the first half, the first single digit growth in at least a decade.” (Source: SCMP)

BIG TECH COMPANIES

2. Studios Cut Stars’ Pay After Tax Scandal

What: Nine major Chinese entertainment companies have said they will limit the wages of lead actors to 1 million yuan ($145,229) per episode, or 50 million yuan in total if the dramas go beyond 50 episodes. Under new rules, the industry must also limit the fees that stars receive for their onscreen work to 40% of total production costs, and no single actor can command more than 70% of the total casting bill.

Why it’s important: The announcement, made by top-three streaming platforms iQiyi, Youku and Tencent, as well as six heavyweight studios, came after authorities said in June they are capping actors’ paychecks in the wake of a tax-evasion scandal involving superstar Fan Bingbing.

Big picture: China has been tightening control over broadcast content. In the recent tax-evasion case, authorities took a swipe at the celebrity culture that has developed around China’s big-screen productions, complaining that many films were “distorting social values” by “misleading the youth into blindly chasing after stars.” (Source: Caixin)

3. China Tower’s Maiden Earnings Leave Investors Calling for More

What: China Tower shares edged down 0.77% in Monday trading after the release of its underwhelming first earnings report over the weekend, ending the day at HK$1.29 (16 U.S. cents), just marginally higher than the price from its initial public offering (IPO), which had become the world’s largest in two years by raising $7.9 billion last week.

Why it’s important: Investors have been unimpressed by China Tower’s slow-growth story. The company’s revenue rose by a modest 6.2% in the first half of 2018 to 35.3 billion yuan. Revenue from the company’s core tower business, which accounts for 96% of its total, rose by an even slower 3.8%.

Big picture: China’s wireless market has experienced a sharp slowdown in growth in recent years, as the large majority of people now have access to both fixed-line and wireless communications. China Mobile, which controls about 60% of the market, last week reported its revenue grew by less than 1% in this year’s second quarter, while its profit grew by about 5%. (Source: Caixin)

4. On Beijing’s Orders, Tsinghua May Give Up Control of Chipmaker Units

What: Tsinghua Holdings Co. Ltd., set up in 2003 by the prestigious Tsinghua University, is considering unloading part of its 51% stake in Tsinghua Unigroup Co. Ltd., which produces smartphone chips and provides cloud services, according to stock filings submitted by two Shenzhen-listed Unigroup subsidiaries and a Hong Kong-listed unit.

Why it’s important: The equity transaction may result in change of the de facto controller of the three subsidiaries — Shenzhen-listed Unigroup Guoxin Microelectronics Co. Ltd. and Unisplendour Corp. Ltd., as well as Hong Kong-listed Unisplendour Technology (Holdings) Ltd. — which are now controlled by the state-owned Tsinghua Holdings.

Big picture: The move follows the May announcement of a government policy to reorganize colleges’ and universities’ commercial assets, which “should follow the path of state capital management reform” and “enable universities to focus on education,” according to the official Xinhua News Agency. (Source: Caixin)

5. Samsung May Suspend Operations at Tianjin Factory

What: “Samsung might stop producing mobile phones this year at Tianjin Samsung Telecom Technology, its Chinese mobile phone manufacturing base in Tianjin,” Reuters reported, citing Korean media, although Samsung said on Monday that nothing had been decided regarding its Tianjin facilities.

Big Picture: Reports of Samsung’s suspension of its Tianjin operations come amid rising labor costs and slumping sales for the company. “In China, the world's biggest smartphone market, Samsung's market share is around 1%, while Chinese brands such as Huawei are dominant players.” (Source: Reuters)

DEALS AND FUNDRAISING

6. Two Chinese EV Sharing Platforms in $730 Million Push to Fuel Growth

What: “Two electric vehicle-sharing platforms backed by major Chinese carmakers plan to seek external funding totaling almost $730 million to fuel their growth,” Reuters reported, citing sources with knowledge of the matter.

Chauffeur platform Caocao Zhuanche, backed by Zhejiang Geely Holding Group, is aiming to raise up to 3 billion yuan, while electric vehicle rental company Evcard, backed by state-owned SAIC Motor Corp, is looking at 2 billion yuan funding from external investors.

Big picture: “China’s NEV sector is expanding rapidly with as many as 102 firms producing 355 different kinds of electric, hybrid and fuel-cell vehicles by the end of March, according to government data.” (Source: Reuters)

Compiled by Isabelle Li