Monday Tech Briefing: Meituan, Foxconn, World Cup
DEALS AND FUNDRAISING
1. Chinese Internet Giant Meituan Files for Hong Kong IPO
What: Internet giant Meituan-Dianping has filed for an initial public offering (IPO) in Hong Kong. The prospectus will be announced Monday. The startup is said to have been targeting a fundraising of $6 billion at a valuation of roughly $60 billion, though Friday’s filing didn’t specify numbers. In its share sale filing, Meituan disclosed that it made a net loss of 19 billion yuan ($2.9 billion) on total revenue of 34 billion yuan ($5.2 billion) for the fiscal year of 2017. The adjusted loss was 2.8 billion yuan.
Why it's important: Meituan was most recently valued at $30 billion, making it the world’s fourth most valuable startup. An IPO would give Meituan additional capital to compete and even to expand. Meituan is also considered a prime candidate to eventually sell Chinese depositary receipts, a government program to give more opportunities to domestic investors and stem a corporate exodus to overseas markets. (Source: Bloomberg)
2. World Cup Lottery Apps Get Red Card
What: Chinese online soccer lottery sellers have suspended operations in recent days, although no official announcement of a crackdown has been made by China’s sports lottery authority. Social networking platform Weibo said its soccer lottery section had stopped accepting new orders as "the platform needs technical upgrades due to overloading during the World Cup." 500Zhongcai and JDD.com have taken similar action.
Why it's important: Daily sales of sports lottery tickets in the three days following the start of the World Cup on June 14 amounted to 1.6 billion yuan ($246 billion), 2 billion yuan and 2.3 billion yuan respectively, consecutively setting new records.
Big picture: The online lottery boom boosts the revenues of province-level governments, but also allows illegal small and private lotteries to flourish. In an attempt to restore order to the market, the government banned unauthorized online lottery platforms in 2015, but the rule is loosely applied outside of World Cup season. (Source: Caixin)
3. China Ends Domestic Data-Roaming Fees
What: China's three big telecom carriers will scrap domestic data roaming fees as of July 1, according to an announcement by China Mobile Ltd., China Telecom Corp. Ltd. and China United Network Communications Group Co. Ltd. (China Unicom) Friday.
Why it's important: The move eliminates existing additional fees for users making calls or using data outside of their home province. While this will benefit consumers, it could also negatively affect the business of wireless carriers in China.
Big picture: China's telecom carriers have been charging domestic roaming fees for mobile phones since services started two decades ago. Although advances in technology have made roaming charges less justifiable, mobile carriers have fought attempts to get them scrapped, especially after several rounds of cuts to local call and data fees forced on them by regulators. (Source: Caixin)
BIG TECH COMPANIES
4. Foxconn Chairman Sees Biggest Challenge in U.S.-China Trade War
What: The biggest challenge facing Foxconn Technology Group is a trade war between the U.S. and China, according to Terry Gou, the billionaire chairman of Apple Inc.’s main iPhone assembler. Foxconn has a number of response plans to a trade war, Gou said, without elaborating.
Why it's important: Foxconn, which is China’s largest private employer and has about a million on its payroll, is sensitive to any escalation in the trade dispute that affects Apple, the source of more than half of its revenue.
Big picture: China’s rising economic and technological prowess is at the heart of its ongoing dispute with the U.S. The White House announced a $50 billion tariff targeting Chinese high-tech industries on June 15. China quickly responded on the same day.（Source: Bloomberg）
5. Chinese Facial Recognition Startup Megvii Pushes Into Southeast Asia
What: Megvii Technology Ltd., the Beijing-based facial recognition startup whose technology has been used by police departments to arrest fugitives, has appointed a distributor in Thailand. In Malaysia, the company is holding exploratory talks with state governments and banks working on demonstrating the feasibility of its technology.
Why it's important: The global facial recognition market is forecast to be worth US$6.5 billion by 2021, up from US$2.3 billion in 2016, according to estimates from research company Technavio. Increasingly, Chinese facial recognition companies, including Megvii and Yitu Technology, have been venturing overseas in search for new growth.
Big picture: China has made strides in facial recognition technology because of its large population and centralized identity databases. The technology is today used extensively in areas such as public security, financial services, transport and retail across the country. (Source: South China Morning Post)
6. Bike-Sharing Growth Hits the Brakes
What: As many as 235 million people will ride a shared bike in China this year, an increase of 14.6%. The number is expected to rise 17.4% to 276 million in 2019, according to a report released Thursday by iiMedia Research Group, a mobile internet consultancy based in Hong Kong.
Why it's important: According to iiMedia Research, there were only 28 million shared bike riders in 2016. But the number exploded by over 630% to 205 million the next year. This year’s growth is minuscule in comparison.
Big picture: After experiencing a massive boom in 2017, China’s bike-sharing market is expected to slow this year. Leading bike-sharing brands Mobike and Ofo have built up a strong user base and economies of scale. (Source: iimedia, link in Chinese)
Compiled by Hou Qijiang and Qian Tong.
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas