Jun 22, 2018 10:54 AM

Friday Tech Briefing: Tongcheng-Elong, VIPKid, Huawei


1. Tongcheng-Elong Files for Hong Kong Listing

What: Tongcheng-Elong Holdings Ltd., a Chinese online travel service provider backed by Tencent Holdings and International Ltd., filed for an initial public offering (IPO) with the Hong Kong Stock Exchange on Thursday.

The size of the planned IPO was not disclosed. The Wall Street Journal reported in March that the company could raise between $1 billion and $1.5 billion in a potential share sale.

Why it’s important: Tongcheng-Elong, which mainly targets budget-conscious travelers, joins a number of Chinese tech firms eyeing a Hong Kong debut this year, including smartphone maker Xiaomi Corp. and online on-demand service provider Meituan-Dianping.

Big picture: China’s booming tourism market provides a lucrative opportunity for online travel agencies. In 2017, Chinese tourists made 4.53 billion trips domestically and internationally, according to a report from the Chinese Academy of Social Sciences. (Source: Caixin)

2. Xiaomi Rolls out Roadshow, Brings in Seven Cornerstone Investors

What: Smartphone-maker Xiaomi Corp. has launched a roadshow to prepare for its Hong Kong listing, offering investors 2.18 billion shares priced from HK$17 ($2.10) to HK$22 per share, according to a document viewed by Caixin.

Around 10% of Xiaomi’s publicly traded shares — worth $548 million — will go to seven cornerstone investors: CICFH Entertainment, China Mobile Ltd., China Development Bank, SF Express, China Merchants Group, Poly Group, and U.S. chipmaker Qualcomm, the sole foreign firm on the list.

Why it’s important: Xiaomi aims to raise up to $6.1 billion in its upcoming IPO, scaling back its previous plan to raise as much as $10 billion through a Hong Kong listing and Chinese depositary receipts (CDR) on the mainland. Xiaomi’s recent decision to delay its CDR issuance was likely a result of regulators’ concern over valuation.

Big picture: Xiaomi’s IPO will be the largest since the 2014 debut of Alibaba Group Holding Ltd. The company had also been expected to be the first tech giant testing the waters of CDR issuance, a pilot program that allows selected offshore-listed tech companies to list directly on the mainland. (Source: Caixin, link in Chinese)

3. New Funding Sends Online Educator to Head of Class in China

What: Chinese online English-language education startup VIPKid has secured a new round of funding worth $500 million. Main investors include Coatue Management and existing shareholders Tencent Holdings Ltd., Sequoia Capital, and Yunfeng Capital. The company raised $200 million in its previous round of funding in August.

Why it’s important: With the latest round of funding, the company is set to become China’s largest online education startup with a valuation over 20 billion yuan ($3.1 billion).

Big picture: The revenue of childhood online English education firms grew 40% each year for the last five years and is estimated to hit 5 billion yuan by 2019, according to iResearch. Fueled by a booming market, online English education startups like VIPKid have sped up their fundraising pace in recent years. (Source: Caixin)

4. May Lead $25 Million Series C Round in Indian B2B Logistics Company Shadowfax

What: Indian B2B (business-to-business) logistics platform Shadowfax is in talks with Chinese e-commerce company for a Series C funding round. According to sources, talks began in May and are at a preliminary stage. The funding is likely to be in the range of $18-25 million.

Why it’s important: Shadowfax claims to be India’s largest crowdsourced delivery platform, with a presence in 75 cities. is expanding rapidly into overseas markets, recently announcing a partnership with Google Inc. to develop retail solutions in Southeast Asia, the U.S. and Europe.

Big picture: This could be’s first investment in India, helping it catch up with other Chinese companies pouring money into India’s promising tech sector. E-commerce rival Alibaba has already invested in Indian e-commerce startup Paytm, while fellow tech giant Tencent has invested in Flipkart. (Source: Entrackr)

5. Le Vision Pictures Bows to Future With New Name, Financing Plans

What: Le Chuang Entertainment, formerly known as Le Vision Pictures, is planning another round of funding. The company now has a valuation significantly higher than its 3 billion yuan valuation after a 1 billion yuan funding round earlier this year, company Chairman and Chief Executive Officer Zhang Zhao told Caixin.

Why it’s important: After changing its name to distance itself from its former largest shareholder, the financially troubled LeEco, Le Chuang Entertainment hopes for a fresh start. Zhang stressed that the company will face investors on its own, and that the company’s financial links with LeEco, including 1.7 billion in debt it is collecting from LeEco, would not affect the upcoming financing plan. (Source: Caixin, link in Chinese)


6. ZTE Team Presses Ahead Under High Secrecy to Replace Management

What: The three-person team tasked with overseeing implementation of ZTE’s settlement with the U.S. government is working under conditions of high secrecy. All other ZTE staff have been instructed to stay away from the team’s work, which includes replacing the current board and firing a number of senior executives within the 30 days after June 7.

Why it’s important: ZTE had reached settlement deal with the U.S. Commerce Department on June 7, in which it agreed to pay an additional $1 billion in fines and put down $400 million as a deposit. During the period it was banned from purchasing from U.S. suppliers, the company was reported to have lost several million yuan per day.

Big picture: The work of the team appointed by the Commerce Department could decide the Chinese manufacturer’s fate, after it suffered huge losses in the wake of the U.S. ban. Adding to the uncertainty is the doubt cast by the U.S. lawmakers over whether the Commerce Department has dealt with the issue of national security properly.

(Source: South China Morning Post)

7. U.S. Lawmakers Urge Google to Ditch Huawei

What: In a letter to Google CEO Sundar Pichai, five U.S. lawmakers expressed concern about Google’s collaboration with Huawei Technologies Co. Ltd., saying it could pose a serious risk to U.S. national security and American consumers. Under the partnership, which was announced in January, Huawei will integrate Google’s instant-messaging app, Android Messages, into its smartphones.

Why it’s important: Huawei has run into several problems in its attempt to capture more of the U.S. smartphone market in recent months, including its phones being dropped by retail chain Best Buy in March and April reports of the U.S. Department of Justice launching an investigation into the firm’s dealings with Iran.

Big picture: The letter is the latest expression of suspicion about a data collaboration between a Chinese equipment maker and a U.S. internet giant. Facebook recently acknowledged that Huawei and a few other Chinese handset-makers had been given access to its data. In this case, Google has replied that it does not provide Huawei with special access to Google user data as part of these agreements.

(Source: Caixin)


8. Cheetah Mobile President Xu Ming Resigns

What: New York-listed mobile internet company Cheetah Mobile Inc announced that its President Xu Ming will step down for personal reasons on July 21. Xu will continue to serve as a consultant, and his responsibilities as president will assumed by the company’s CEO Fu Sheng and Senior Vice President Sun Mingyan.

Why it’s important: Xu Ming, an eight-year veteran of Cheetah Mobile, has been central in helping the company expand into overseas markets and integrate artificial intelligence (AI) technology into its product lines. Xu is likely to remain in the AI robotics industry after leaving the company, according to an email sent by Fu Sheng following the announcement. In 2017, the company reported a revenue of $764.6 million, a profit of $491.0 million, and 5.8% year-on-year profit growth. (Source: Jiemian, link in Chinese)

Compiled by He Shujing.

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