Wednesday Tech Briefing: Xiaomi, JD.com, Cambricon
BIG TECH COMPANIES
1. Xiaomi Delays Mainland CDR Offering Until After Hong Kong Listing
What: Twelve days after it filed a Chinese depositary receipts (CDR) application, Xiaomi Inc. decided to postpone offering its shares in Chinese mainland until after it has listed in Hong Kong, rather than trading shares simultaneously in both markets.
Sources told Caixin the decision was made to protect CDR, not a result of a failure at the initial around of review, which took place on June 15. The China Securities Regulatory Commission said it respected the company’s decision.
Why it's important: Xiaomi was due to become the first tech giant to test the waters of CDR issuance, a pilot program that allows selected offshore-listed tech companies to list directly on the mainland.
Big picture: Xiaomi’s planned blockbuster initial public offering, which is expected to raise as much as $10 billion, will be the largest since the 2014 debut of e-commerce giant Alibaba Group Holding Ltd. The CDR program is aimed at making some of China’s best-known tech companies available to domestic investors, after many previously listed overseas due to inability to access domestic stock markets. (Source: Caixin)
2. JD.com Rakes in 37% More From This Year’s Summer Sale
What: Online retailer JD.com has reported record revenue of nearly 159.2 billion yuan ($24.9 billion) for its midyear sale bonanza, 37% higher than last year. Electronic products and home appliances including mobile phones, personal computers and air conditioners, remained the top-selling items.
Why it's important: Despite its efforts, JD.com’s mid-year sale was still eclipsed by Chinese counterpart Alibaba’s “Double 11” festival, which in a single day brought in 168 billion yuan last year.
Big picture: The midyear sale, known as “618,” starts at the beginning of the month and ends on the 18th. JD.com, backed by social media giant Tencent Holdings Ltd., is scrambling for a greater share of an online shopping space dominated by Alibaba, whose two platforms Tmall and Taobao collectively command around 60% of the market. (Source: Caixin)
DEALS AND FUNDRAISING
3. AI Chipmaker Cambricon Valued at $2.5 Billion in New Funding Round
What: Beijing-based artificial intelligence (AI) chipmaker Cambricon Technologies Corp. Ltd. has completed a $2.5 billion series B funding round led by investors including state-backed venture capital funds such as China State-Owned Capital Venture Investment Fund, SDIC Venture Capital and China Reform Fund, as well as companies like Alibaba Group, Lenovo and Incubator Group.
Why it's important: The latest funding round values Cambricon at $2.5 billion, more than double the company’s valuation after its series A funding round in August 2017. The company was reported to be valued at over $1 billion at that time.
Big picture: As a crucial component of emerging AI technologies, the AI chip industry has been attracting large inflows of capital. Giants like Alibaba, along with start-ups such as Cambricon, DeePhi Tech, and Horizon Robotics, have joined the race in China. DeePhi Tech and Horizon Robotics have already completed their first rounds of funding, and are reported to have raised tens of millions of dollars each. (Source: Caixin, link in Chinese)
4. Tesla Denies Suspending Orders Due to Potential Tariffs
What: Tesla customer service personnel have recommended that customers purchase vehicles that are already in stock, to avoid potential tariffs, although they said the company has not suspended orders from China for its customized Model S and Model X.
Why it's important: After China imposed retaliatory tariffs against U.S. electric vehicles and other imports on June 15, U.S. financial research firm JL Warren Capital reported that Tesla had stopped taking new orders for Model S and Model X. If the tariffs were to take effect, the customized orders would be subject to an additional 25% tariff, while prices of in-stock vehicles would remain unaffected.
Big picture: Tesla recently reduced the price of in-stock vehicles after Chinese authorities adjusted the automobile tariff from 25% to 15% in May. But the escalating trade war between China and the U.S. may now make it more difficult for American companies to operate in China. (Source: China Business Today, link in Chinese)
5. Huawei Calls Australia’s 5G National Security Worries ‘Ill-Informed’
What: In an open letter addressed to Australian lawmakers, Huawei Technologies Co. Ltd. has lashed out after reports that its bid to build Australia’s 5G mobile technology network might be nixed on national security concerns. Local press earlier reported that intelligence agencies were expected to ban Huawei from bidding.
Why it's important: Australian wireless carriers will soon begin building 5G networks that will enable technologies such as driverless cars and robotics. If the Australian government were to issue this ban, it would deal a significant blow to the firm’s operations in a telecom market worth $40 billion a year.
Big picture: Huawei already faces similar challenges in the U.S. where it was regarded as “a threat to the U.S. national security” and was largely shut out from that market. (Source: Caixin)
6. Beijing Subway to Introduce Bio-Recognition Turnstiles
What: Beijing’s subway system plans to introduce bio-recognition technology at stations this year to reduce transit time and operating costs. Two bio-recognition technologies, facial recognition cameras and palm scanners, are being considered.
Why it's important: Bio-recognition technology could eventually enable passengers to bypass traditional ticketing. The Shanghai subway system currently uses bio-recognition technology that allows passengers to pass through turnstiles by swiping their hands against scanners. According to Beijing Subway, the operator of most lines in the city, the technology can be widely applied throughout the subway system. However, how passengers will pay for tickets remains a problem.
Big picture: China has beefed up efforts to apply artificial intelligence-based facial recognition technology to areas such as security. Privacy concerns, which have held back the adoption of these technologies in other countries, are not considered a key factor in China. (Source: China Daily, link in Chinese)
7. Oppo Enters Europe With Launch of Find X in Paris
What: Chinese phone maker Oppo launched the Find X, its latest smartphone, in Paris on Tuesday. The phone features a pop-up hideaway camera and a 6.4-inch curved screen with a screen-to-body ratio of 93.8%. The company also announced its entry into the Europe market.
Why it’s important: The Find X will be the first Oppo smartphone to be sold in Europe and North America. The phone’s debut comes after news of the company’s expansion plans in Europe emerged earlier this year.
Big picture: The launch marks another major expansion by a Chinese phone maker into overseas market. Oppo’s products are already selling in Southeast Asia, the Middle East, and Africa. Other Chinese phone makers, including Xiaomi and Huawei, are also scrambling to for a share of the overseas market as domestic smartphone sales growth slows down. (Source: 36kr.com, link in Chinese)
Compiled by He Shujing.
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