Tuesday Tech Briefing: Alibaba Cloud, E-House, Xiaoi Robot
BIG TECH COMPANIES
1. Alibaba Cloud Partners With Siemens to Power IoT in China
What: Alibaba Cloud, Alibaba Group’s cloud-computing arm, has partnered with Germany’s Siemens to explore Internet of Things projects to support “China’s manufacturing upgrade and transformation and other industrial internet initiatives.”
Why it’s Important: Alibaba Cloud has expanded rapidly since 2009 in the global market, where it competes with Amazon. Alibaba Cloud is now the world’s fourth-biggest cloud service provider, and is in talks with British telecommunications company BT Group Plc over a potential cloud partnership. (Source: Press release)
DEALS AND FUNDRAISING
2. Chinese E-commerce Platform Secoo Raises $175 million
What: Secoo Holding Limited has raised $175 million through issuing convertible notes to e-commerce company JD.com and investment firm L Catterton's Asian division.
Why it’s Important: Secoo is one of China’s largest luxury fashion retailers, with online and offline platforms. The company’s stock price fell 23% when it debuted on Nasdaq in September.
Big Picture: China’s luxury market shrank amid an anti-corruption campaign in 2015, but the industry has slowly recovered. In the first quarter 2018, it recorded 800 million yuan in revenue, and a net profit of 21.92 million yuan, after years of net losses. (Source: Company Filing)
3. Online Real Estate Firm Knocks on Hong Kong’s IPO Door
What: E-House (China) Enterprise Holdings Ltd. has filed an updated ver-sion of its IPO prospectus to the Hong Kong Stock Exchange. The company, backed by China’ s major property developers, delisted in August 2016 with a market valuation of $987 million.
Why it’s Important: Shanghai-based E-House was founded in 2000 and provides agency services for real estate companies. Three of China’s largest real estate developers — China Evergrande Group, China Vanke Co., and Country Garden Holdings Co. — together have a 45% stake in the company. Cornerstone investors for E-House’s new IPO bid include Alibaba Group Holding Ltd. and Overseas Chinese Town Asia Holdings Ltd.
Big Picture: Several U.S.-listed Chinese companies have privatized in recent years to relist on the mainland or in Hong Kong, where their names are more familiar to investors. In March, software security firm Qihoo 360 Technology Co. Ltd. — which was previously listed in the U.S. — debuted in Shanghai after getting approval for a backdoor listing by acquiring another Shanghai-listed firm. (Source: Caixin)
4. BMW to Buy $4.7 Billion Worth of Battery Cells From Chinese Maker
What: German carmaker BMW plans to buy 4 billion euros ($4.7 billion) worth of battery cells from Chinese battery maker Contemporary Amperex Technology Ltd (CATL) over the next few years, BMW said. On Monday, during a visit to Germany by China’s premier Li Keqiang, the two companies signed a contract to build a new CATL plant in Germany.
Big Picture: BMW is sourcing raw materials for its battery suppliers, including CATL, to use. Increased global production of electric car batteries has caused a spike in prices of lithium and cobalt, key raw materials for lithium-ion rechargeable batteries.
While China is home to the world’s fifth-largest volume of lithium deposits, a combination of environmental concerns, inconvenient geographic conditions and immature lithium-extraction technology mean most of the country’s bat-tery-makers must look abroad for steady supplies of the metal. (Source: Reuters)
5. Chinese AI Firm Xiaoi Robot Expects Sales Boost, Seeks IPO
What: Shanghai-based Xiaoi Robot Technology expects to record sales of 500 million yuan (US$75.1 million) this year, up from 200 million yuan in 2017, co-founder and chief executive Zhu Pinpin told SCMP. The company recently delisted from China’s over-the-counter National Equities Exchange and Quotations market, and plans to go public in 2019.
Why it’s Important: Xiaoi Robot, which develops bots that run automated tasks over the internet, is backed by investors including Everbright Group and e-commerce giant Alibaba Group.
Big picture: China plans to be the world’s leader in artificial intelligence by 2030, and the industry’s global business value is expected to reach $3.9 trillion by 2022, according to data from IT research company Gartner. (Source: SCMP)
6. China Vows Continued Tight Grip on Internet Finance
What: Regulators will take an additional one to two years to correct the online financial market, dissolve financial risks and set up a long-term regulatory system, said Pan Gongsheng, deputy governor of the People’s Bank of China, who oversees the campaign against online financial risks.
Why it’s important: Over 5,000 online financial service providers shut down between April 2016 and May 2018. Regulators have set up plans to continue the crackdown on illicit practices related to peer-to-peer lending, or P2P, and online microlending until June 2019, sources close to the central bank told Caixin. Other online financial institutions, such as wealth management businesses, are required to clean up their practices by the end of June this year.
Big picture: Internet finance, from mobile payments to online banking, has thrived in China like nowhere else in the world, thanks to the rapidly expand-ing penetration of the internet and the public’s quick adoption of innovative services. But in its explosive growth the market has been plagued by fraud amid loose oversight. (Source: Caixin)
Complied by Bonnie Wang & Meng Yewen
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