Jul 04, 2018 10:43 AM

Wednesday Tech Briefing: Baidu, ZTE, CMC


1. CDR Excitement Wanes as Tech Firms Balk Over Price

What: Alibaba Group and have pushed back their timelines for issuing CDRs, securities that allow mainland Chinese investors to buy shares of overseas-listed companies, sources told Caixin. Baidu Inc., which was poised to become the first to issue CDRs, has not made any additional progress in its similar plan.

Why it’s important: Earlier in mid-June, Smartphone maker Xiaomi, which was due to become the first Chinese company to issue CDRs, decided to postpone the offer until after its Hong Kong initial public offering. The pushback was likely the result of lack of agreement with the China Securities Regulatory Commission over pricing.

Big picture: The delay marked an inauspicious start for the CDR program, which aims to make some of China’s most famous offshore-traded high-tech names available to domestic investors. Recent volatility in domestic stock markets has added to the uncertainty, with regulators hoping to discuss more arrangements once the stock market stabilizes. (Source: Caixin)

2. Alibaba, Tencent Lead $1.5 Billion Investment in Media Investor CMC

What: Chinese state-backed media investor CMC Inc. raised around 10 billion yuan ($1.49 billion) from investors including Alibaba Group and Tencent. CMC Inc., one half of the CMC media empire whose investments span from sports to amusement parks, said the A-round funding was led by the two Chinese tech giants along with new investors such as property developer China Vanke Co. Ltd.

Why it’s important: CMC is a major force in China’s entertainment and media sectors, which has big global ambitions. The funding comes as China’s leading media firms look to expand into media and cultural industries, where the country’s tech and internet giants like Alibaba and Tencent play an important role. (Source: Reuters)

3. CK Hutchison Buys Remaining 50% Share in Italian Mobile Provider Wind Tre

What: Hong Kong conglomerate CK Hutchison Holdings will buy the 50% it does not already own in Italian mobile services provider Wind Tre.

Why it’s important: The purchase may consolidate Wind Tre’s foothold in the market, where Hutchison is trying to become a major player. (Source: South China Morning Post)


4. Baidu Enters Japan’s Self-Driving Bus Market with SoftBank

What: Chinese internet search leader Baidu is pairing with SB Drive, a subsidiary of SoftBank Group, to enter Japan’s self-driving vehicle market. The companies will cooperate on a bus model that would go into testing by year-end. China’s Xiamen King Long United Automotive Industry will manufacture the buses, currently called Apolong.

Why it’s important: The Chinese government has made artificial intelligence (AI) a key priority under its Made in China 2025 industrial program. Baidu has become one of China’s most aggressive companies in AI and self-driving vehicles, with plans to ship 10 buses to Japan by 2019. (Source: Nikkei)

5. Maxell Wins $43 Million in ZTE Patent Violation Trial

What: A federal jury in the Eastern District of Texas found that the U.S. unit of telecom giant ZTE infringed seven smartphone patents owned by Japan’s Maxell Ltd. The court ordered ZTE USA to pay $43.3 million in damages.

Why it’s important: Maxell and ZTE have been in patent licensing negotiations since June 2013, but ZTE has refused to enter into a formal agreement. The suit claims ZTE knowingly infringed Maxell patents for years as a result. (Source: Court document)

6. U.S. Allows ZTE Transactions to Maintain Networks

What: The U.S. Commerce Department has granted temporary permission to telecom equipment maker ZTE allowing it to conduct business needed to maintain existing networks and equipment in the United States. The move is seen as transitional, as the company works to remove a U.S. ban that has cut it off from its American suppliers. The arrangement runs until Aug. 1.

Why it’s important: ZTE, which makes smartphones and networking gear, was forced to cease major operations in April after the United States cut it off from its U.S. suppliers for illegally selling American-made products to Iran. The company also agreed to pay a $1 billion penalty and put $400 million in an escrow account as part of the deal to resume business with its U.S. suppliers.

Big Picture: The ZTE case has spotlighted the heavy reliance of Chinese high-tech firms on foreign-supplied components, and has also become part of the broader trade tensions between Washington and Beijing.

(Source: Reuters)


7. Washington Proposes Blocking China Mobile’s Entry to U.S., China Urges End to Unreasonable Suppression

What: Washington has recommended blocking China Mobile, the world’s largest telecom carrier, from offering services in the U.S., citing national security concerns. China’s Foreign Ministry spokesman urged an end to such ungrounded suspicion and unreasonable suppression of Chinese companies.

Big Picture: The move comes as U.S.-China trade frictions are intensifying. A first batch of protectionist tariffs by the U.S. against China will go into effect this Friday, and Beijing is expected to respond. (Source: Foreign Ministry announcement, link in Chinese)

Compiled by Zhang Yidi and He Shujing

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