Friday Tech Briefing: JD Finance, Tesla, Inke
BIG TECH COMPANIES
1. JD Finance Aims to Raise $2 Billion
What: The financial affiliate of JD.com Inc., China’s second-largest e-commerce platform, plans to raise about 13 billion yuan ($1.95 billion), which would give it a valuation of $19.8 billion.
Investors in JD Finance include CICC Capital, a unit of investment bank China International Capital Corp; brokerage China Securities Co. Ltd; and private equity company Citic Capital, according to a statement (link in Chinese) from JD.com on Thursday. The deal is expected to be completed by the end of September.
Why it’s important: With a $19.8 billion valuation, JD Finance will be worth almost triple its value assigned during its first funding round in early 2016, when it raised 6.65 billion yuan from investors that included Sequoia Capital while it was still a part of JD.com.
Big picture: It is expected that JD.com will have a tough time getting into fintech because digital payments are already dominated by Ant Financial’s Alipay and Tencent Holdings Ltd.’s WeChat Pay. As of the fourth quarter of 2017, Alipay controlled nearly 55% of China’s mobile payments market, with WeChat Pay controlling 38%, according to Beijing-based research firm Analysys International. (Source: Caixin)
2. Panasonic Open to Working With Tesla on China Factory
What: Panasonic Corp. expressed interest in working with Tesla Inc. on its plan to build a factory in Shanghai, although Tesla hasn’t asked the Japanese company to take part in such a cooperation in China.
Why it’s important: Tesla CEO Elon Musk plans to build a Shanghai factory that is expected to begin operating in two years, and could eventually produce as many as 500,000 electric cars a year. Panasonic is already Tesla’s exclusive battery supplier, and a partner at the carmaker’s Nevada factory.
Big picture: A new government policy for automakers 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: Bloomberg)
3. Douyin Deletes More Than 30,000 Accounts in June
What: Top video-sharing platform Douyin said in a statement that it deleted 27,578 videos, 9,415 audio clips and 33,146 accounts in June for violating regulations. The platform does not allow content that falls into categories including pornography, profanity, “rumors,” and piracy.
Why it’s important: Emerging industry leader Douyin enjoys great popularity among young people, but, like other Chinese internet companies, the platform is under huge pressure from the government to regulate online content. The sheer number of accounts deleted in one month highlights the challenge faced by Douyin. Douyin is a unit of Bytedance, which operates the popular Toutiao news aggregating app. (Source: company press release)
4. Authorities Target ‘Overly Entertaining’ Talent Shows
What: China’s broadcast regulator will assess the “ideological implications” of online talent shows, including those produced by internet giant Tencent Holdings Ltd. and video site iQiyi Inc., to prevent them from becoming “overly entertaining.”
The State Administration of Radio and Television demanded provincial broadcasting branches form groups of “experts” to vet online talent shows before their premiere. These examiners are expected to assess the programs’ “themes, values, ideological implications and rundowns.”
Why it’s important: Popular Internet shows produced by Tencent and iQiyi, in which young performers battle to be China’s next pop idol, have reportedly been suspended or had their broadcasts delayed.
Big picture: Unlike movies, which are scrutinized by regulators before their release, online entertainment shows have so far been subject to relatively loose regulation as the authorities have been unable to keep up with the sheer volume of such shows churned out by Chinese companies. (Source: Caixin)
DEALS AND FUNDRAISING
5. Secondhand-Phone Trader Aihuishou Raises $150 Million
What: China’s Aihuishou, a secondhand electronics trading platform, has secured $150 million in its fifth financing round, bringing the company’s valuation to $1.5 billion. U.S. hedge fund Tiger Global led the round, with new investment from existing backer and China's second-largest e-commerce platform, JD.com.
Why it’s important: Aihuishou is one of the largest players in China’s secondhand-electronics market. The Shanghai-based company has served 35 million customers in the last seven years, and is cooperating with China Telecom, China Unicom, Carrefour and real estate agency Lianjia to expand its channels. (Source: company press release)
6. Livestreaming Platform Inke Debuts on Hong Kong Exchange
What: Chinese livestreaming platform Inke had a sweet start to its first day of trading in Hong Kong, debuting higher than its offering price. The Beijing-based company finished up 10.6% at HK$4.26 (54 U.S. cents) after rising as much as 42.3% in the morning.
Why it’s important: 2018 is seeing a boom in listings for Chinese live-streaming platforms. Huya Inc. listed on the Nasdaq Stock Market in May, and Douyu TV, another popular live-streaming platform, is also expected to list in Hong Kong this year.
Big picture: Live-streaming platforms face tightening regulations on “inappropriate content.” Inke said that its Beijing subsidiary had been fined a total of 50,000 yuan ($7,508) by regulators for objectionable content broadcast by streamers on Inke’s app. (Source: Caixin, link in Chinese)
Compiled by Ye Zhanqi.
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