Wednesday Tech Briefing: Jinri Toutiao, Tesla, Nokia
BIG TECH COMPANIES
1.Top News-Aggregation App Jinri Toutiao Denies IPO Reports
What: Jinri Toutiao denied it would go public soon, after the Wall Street Journal reported that the top news aggregator’s owner Beijing Bytedance Technology could list in Hong Kong this year at valuation of over $45 billion.
Why it’s important: Toutiao is one of China’s biggest online content platforms for images, articles, short videos, and quizzes, which it promotes to users through artificial intelligence algorithms. Backed by venture capital and valued at around $30 billion as of June, Toutiao, along with on-demand services provider Meituan-Dianping and ride-hailing app Didi Chuxing, is one of a few independent Chinese tech startups emerging from under the shadow of established giants Tencent, Baidu Inc. and Alibaba Group. (Source: Jinri Toutiao, Wall Street Journal)
2.Tesla to Open First Overseas Gigafactory in China
What: Tesla Inc. signed agreements Tuesday with Shanghai authorities to set up a plant that will have the capacity to produce 500,000 all-electric autos a year. The plant will be Tesla’s first Gigafactory – as the company calls its battery and assembly installations – outside the United States. It will be a wholly-owned subsidiary of Tesla with integrated capacity for research and development, manufacturing and marketing.
Why it’s important: The Chinese market, where Tesla sold around 17,000 vehicles last year, has increasingly become strategic to the company. As part of an ongoing trade conflict with the U.S., China recently increased tariffs on imported U.S. cars to 40%, so an assembly facility in Shanghai will allow California-based Tesla to locally produce vehicles and avoid tariffs in the world’s largest auto market.
Big Picture: A new government policy for automakers has opened the door for foreign companies like Tesla to set up wholly owned electric vehicle-making plants. The Chinese government in April announced that it would scrap the 50% foreign ownership cap on new-energy vehicle makers by the end of this year as part of its efforts to liberalize China’s auto manufacturing market. (Source: Caixin)
3.BMW to Build Battery-Powered Mini in New China Venture
What: BMW and China’s Great Wall Motor Co. announced a 50-50 joint venture Tuesday, to build electric-powered vehicles in Zhangjiagang, Jiangsu province. The new venture will produce the battery-powered Mini and Great Wall’s electric models, BMW said in a statement. Both sides will invest 850 million yuan ($128 million) each in the new venture under a 15-year agreement.
Why it’s important: China is BMW’s largest market with sales of nearly 600,000 vehicles last year, an increase of 15% from the previous year. That included 35,000 Mini vehicles, representing just under 10% of the 372,000 sold globally, according to the company.
Big Picture: China’s booming electric car market, the world’s largest, is attracting more global automakers to establish a presence amid Beijing’s push for new-energy vehicles to help reduce air pollution. Also on Tuesday, U.S. electric carmaker Tesla Inc. signed agreements with Shanghai authorities to set up a factory in the city. (Source: Caixin)
DEALS AND FUNDRAISING
4.China Eastern Airlines to Raise 11.8 Billion Yuan
What: China Eastern Airlines Corp plans to raise 11.8 billion yuan ($1.77 billion) through the private placement of shares on the Shanghai and Hong Kong bourses. The company plans to issue its shares to several investors, including Shanghai-based Juneyao Airlines Co. Ltd., which intends to buy $1.93 billion worth of shares. China Eastern expects to spend the funds raised to buy 18 aircraft, 15 flight simulators and 20 backup engines for its expansion.
Why it’s important: Juneyao Airlines will be one of the first private companies to invest in a Chinese state-owned airline, after the Chinese government relaxed investment rules in January. Previously, Delta Air Lines and Chinese online travel agency Ctrip also bought stakes China Eastern Airlines.
Big Picture: Beijing is opening up the country’s aviation sector. In January, the Civil Aviation Administration of China removed its requirement that state-owned airlines be at least 50% government-owned. (Source: Company filing, link in Chinese)
5.Nokia and China Mobile collaborate on 5G and AI
What: Telecom equipment maker Nokia and has signed a 1 billion euro ($1.17 billion) agreement to provide operator China Mobile with mobile network equipment and services. The two companies have also agreed to co-operate on research in artificial intelligence and 5G mobile technology.
Why it’s important: Nokia’s phones were popular among Chinese consumers before the era of smartphones began. Although sales have fallen, Nokia still has a strong brand presence in China, where consumers view its phones with nostalgia. The company is now trying to find new ways to do business in China. It signed a patent licensing agreement last July, and combined its Chi-na assets with American rival Alcatel Lucent SA to form Nokia Shanghai Bell last May. (Source: Press release)
6.China Launches Another Beidou Navigation Satellite
What: China sent its newest Beidou navigation satellite into orbit on board a Long March 3B rocket, which blasted off from the Xichang Satellite Launch Center in Sichuan province on Tuesday. The satellite is the 32nd satellite in the Beidou navigation system to be launched.
Why it’s important: Beidou is Chinese homegrown rival to U.S.-based navigation service GPS. It is also competing with Russia's GLONASS and the European Union's Galileo to offer global satellite navigation services.
Big Picture: China has already gained a foothold in the global market for satellite navigation services, selling technology based on its Beidou system to more than 30 countries. Most of these countries, including Thailand, are members of the Belt and Road initiative that President Xi Jinping launched in 2013. (Source: Xinhua)
Compiled by Bonnie Wang
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