Wednesday Tech Briefing: Tencent, Facebook, Vaccines
BIG TECH COMPANIES
1. Tencent May Back India’s Oyo at $2 Billion Valuation
What: Tencent is in talks with Indian budget hotel brand Oyo Rooms to lead a $300 million to $500 million funding round for Oyo, according to people familiar with the matter. The deal, if it succeeds, could value Oyo at over $2 billion, more than double its previous valuation of $850 million.
Why it’s important: If the investment from Tencent comes through, it will be the first funding round in Oyo led by investors other than SoftBank since 2015. SoftBank is the single-largest stakeholder in Oyo, with a 42% stake.
Big Picture: The investment from Tencent is likely to be used to grow Oyo’s China business. Oyo has been actively expanding in the China market, which now accounts for nearly 90% of the company’s overseas revenue. Oyo has 2,000 employees in China, and operates more than 11,000 hotel rooms in 26 cities. (Source: Times of India)
2. Facebook Sets Up Subsidiary in China
What: Facebook has set up a subsidiary in Hangzhou, home of e-commerce giant Alibaba. The subsidiary was approved on July 18, with registered capital of $30 million and Facebook Hong Kong as its sole shareholder.
Why it’s important: Facebook’s subsidiary in China will be an “innovation hub” aimed at supporting local tech talent, according to a Facebook spokesperson. Its operations will include network information technology development and related services, investment consultancy and marketing planning.
Big Picture: Facebook has tried numerous times to re-enter China since it was blocked from the country ten years ago. Its last attempt, a photo-sharing app called Colorful Balloons, is no longer available on Chinese app stores. (Source: CNBC)
3. Asus, Philips Fined Most in $130 Million EU Antitrust Probes
What: The European Commission has slapped a fine of 63.5 million euros ($74 million) on Taipei-based computer maker Asus, the biggest fine out of 111 million euros of antitrust penalties imposed on Asus and fellow electronic firms Philips, Pioneer, Denon & Marantz. The companies, which were found to have fixed online prices, all got reduced fines after cooperating with regulators.
Big Picture: This is the first in a series of EU investigations into manufacturers who require online retailers to set prices that don’t undercut traditional stores. “As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products. This is illegal under EU antitrust rules,” EU Antitrust Commissioner Margrethe Vestager said in a statement. (Source: Bloomberg)
4. After Vaccine Scandal, Industry Stocks Tumble
What: Amid an explosive scandal involving the administration of shoddy vaccines to hundreds of thousands of children in China, more than 50 vaccine and biotech stocks tracked by data provider Wind opened down 1% on average on Tuesday.
Why it’s important: A subsidiary of the vaccine-maker Changsheng Bio-Technology Co. Ltd., Changchun Changsheng Life Sciences Ltd., sold 250,000 doses of a substandard-quality vaccine for diphtheria, pertussis and tetanus in Shandong province. The unit has also been accused of tampering with production data for its rabies vaccine.
Big Picture: The industry has in recent years been rife with scandals, but previous cases didn’t impact stocks as seriously. In 2013, several infants died after being given hepatitis B immunizations, while in 2016, nine companies were found to have been involved in the illegal sale of improperly stored or expired vaccines. (Source: Caixin)
5. Cloud Migration Set to Ramp Up in China
What: Chinese companies are about to speed up their adoption of cloud computing, which has so far been slower compared to U.S. firms, according to a new McKinsey report. Chinese firms spent an average of 14% of their IT budgets on both public- and private- cloud services last year, up from 9.1% in 2015, and 5.8% in 2013.
Two-thirds of Chinese firms surveyed said difficulty of migration was their top reason for resisting a transition to cloud computing. Other barriers include security concerns and regulatory compliance. Most of the companies chose services provided by China’s three largest public-cloud vendors, although 30% said they would rather engage with international providers who have operations in China.
Big Picture: China’s Ministry of Industry and Information Technology aims to more than double the size of the country’s cloud-computing industry by 2019 over 2015 levels. (Source: The Wall Street Journal)
Compiled by Qian Tong and Hou Qijiang
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