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Tuesday Tech Briefing: Alibaba, Google, ZTE, iFlytek

BIG TECH COMPANIES

1.Alibaba Opens First Southeast Asia Office in Malaysia

What: Alibaba Group founder and Executive Chairman Jack Ma met with Malaysia’s newly-elected Prime Minister Mahathir Mohamad and Finance Minister Lim Guan Eng on a two-day trip to the country, during which Ma opened Alibaba’s first office in Southeast Asia in Kuala Lumpur. Ma also promised to continue supporting local small and medium-sized enterprises by helping them sell products online.

Why it's important: It was the first time a Chinese entrepreneur met with Mahathir since Malaysia’s landmark election on May 9, which resulted in its first change of ruling party since independence in 1957. Mahathir has vowed to review a slew of mega projects in the country approved by the previous administration, making many Chinese companies nervous about their investments in Malaysia.

Big Picture: Alibaba is deeply involved in Malaysia’s technology sector. The company is setting up a logistics terminal in Kuala Lumpur airport, and its Electronic World Trade Platform serves as the infrastructure of Malaysia's Digital Free Trade Zone. Alibaba also controls Singapore e-commerce platform Lazada, which has operations in Malaysia. (Source: China Daily, link in Chinese)

2.Alibaba Has No Limit for Investment in Quality Content, Says Alibaba Pictures CEO

What: Alibaba’s film production arm Alibaba Pictures will continue to invest “with no upper limit” in content production and its tickets platform “Tao Piao Piao,” Alibaba Pictures Group Ltd. CEO Fan Luyuan said in a recent interview with Caixin.

Fan also said that the company will forge closer ties with film production companies such as Huayi Brothers Media Corporation and Bona Film Group Ltd., as they rely on platforms like Alibaba Pictures for distribution, tie-in products, and financial services.

Why it’s important: Alibaba Pictures, which has a strong presence in the domestic film production landscape, has reported big financial losses due to its strategy of aggressive content acquisition. For the 15 months leading up to March 2018, it reported 3.3 billion yuan ($512 million) in revenue and a net loss of 1.6 billion yuan. (Source: Caixin, link in Chinese)

DEALS AND FUNDRAISING

3.Google to Invest $550 Million in Chinese E-commerce Giant JD.com

What: Google announced that it will invest $550 million in Chinese e-commerce powerhouse JD.com, in exchange for 27.1 million newly issued JD.com Class A ordinary shares. As part of the deal, the two companies will develop retail infrastructure in Southeast Asia, Europe, and the U.S. Google’s shopping service will also promote JD.com products.

Why it’s important: Thanks to Google’s market reach, JD.com will gain channels to sell products in the U.S. and Europe. The deal is also part of Google’s effort to compete with Amazon in product searches.

Big picture: JD.com has been aggressively expanding into overseas markets to compete with its rival Alibaba. It recently established an Indonesian subsidiary, acquired a stake in Vietnamese e-commerce platform Tiki, and formed a joint venture with Thai retailer Central Group.

Google is also stepping up investments across Asia. It recently took a stake in Indonesian ride-hailing firm Go-Jek and is reportedly investing in Indian e-commerce upstart Flipkart. (Source: Caixin)

POLICY

4.U.S. Senate Rejects Trump’s Rescue of Chinese Firm ZTE

What: The U.S. Senate passed legislation on Monday to reinstate an American ban on Chinese telecom company ZTE. The provision targeting ZTE was part of a larger, must-pass defense bill.

Why it’s important: The bill adds to the looming confrontation between legislators and President Donald Trump, who is expected to meet with congressional leaders this week to strip the ban from the bill. For the measure to become law, the Senate and the House must pass identical legislation before Trump signs the bill or uses his veto power.

Big Picture: The U.S. Commerce Department recently struck a new deal allowing ZTE to continue to operate after it earlier dealt the company a life-threatening blow by banning U.S. suppliers from selling components to it. (Source: The Wall Street Journal)

5.U.S. Takes Aim at China’s High-Tech Aspirations With New Tariff List

What: U.S. President Donald Trump announced a refined list of $50 billion in Chinese imports that will face additional tariffs. The list targets products from the “Made in China 2025” plan, covering high-tech industries like aviation, advanced rail systems, new-energy vehicles, communications, and robotics. As the first step of a two-stage process, an additional 25% tariff will be imposed on $34 billion of Chinese goods on July 6.

In response, China said it would levy an additional 25% tariff on about $50 billion of U.S. imports, covering agricultural, automobile, seafood, chemicals, and medical equipment product lines.

In the latest development, Trump responded on Monday by directing U.S. trade representatives to identify $200 billion worth of Chinese goods for additional 10% tariffs.

Why it’s important: The moves made by the U.S. and China could lead to an escalating trade war between the two countries.

Big picture: The refined list is the latest attack on the Made in China 2025 plan by the Trump administration, which sees the program as a threat to the U.S. economy because it aims to make China the global leader in a range of cutting-edge high-tech industries. (Source: Caixin)

PRODUCTS

6.Chinese AI Company iFlytek Joins Telecoms Giants to Move Into Hardware

What: Chinese voice recognition company iFlytek said that it will collaborate with telecom network operators China Mobile, China Unicom and China Telecom to develop a selection of voice-activated smart devices, including smart speakers, earphones and home companion robots.

Why it’s important: Previously, iFlytek focused mostly on developing voice recognition software. The partnership will help iFlytek distribute its artificial intelligence hardware to a large user base, as the three operators had a combined 343.7 million fixed-line broadband subscribers as of April 30.

Big picture: China’s voice assistant market is seeing fierce competition in prices and products, as more than 100 companies, including Tencent and Alibaba, joined the market last year. Internet companies have also been increasingly moving into hardware, with Baidu launching its third smart speaker, Xiaodu Smart Speaker, on June 11. (Source: South China Morning Post)

Compiled by He Shujing.

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