Monday Tech Briefing: Disney, Pinduoduo, Nio
DEALS AND FUNDRAISING
1. Disney Investors Worry China May Not Approve Fox Deal
What: After American chipmaker Qualcomm failed to get China’s green light to acquire NXP, some Walt Disney investors now worry 21st Century Fox may not get Chinese clearance to sell entertainment assets to Disney in a $71.3 billion deal approved by Fox shareholders Friday. The deal was approved by the U.S. Justice Department, but needs antitrust approval from 15 other regulators, including China’s.
Why it’s important: Investors are worried that China may use the antitrust review process as leverage in its trade war with the U.S. Fox executive Rupert Murdoch is close to U.S. President Donald Trump, which could make the deal a target.
Big Picture: The Chinese government said the delay in approving the Qualcomm-NXP deal was due to antitrust concerns, and had nothing to do with U.S.-China trade friction. Still, China’s actions have changed the merger and acquisition landscape for other U.S. companies. (Source: Bloomberg)
BIG TECH COMPANIES
2. TV Maker Skyworth Asks Pinduoduo to Remove Fake Products
What: Chinese TV-maker Skyworth has issued a statement demanding that Chinese group buying site Pinduoduo Inc. stop selling fake Skyworth products on its platform. Skyworth said it reserves the right to sue Pinduoduo for selling fake products.
Why it’s important: The statement comes after Pinduoduo’s successful Nasdaq initial public offering (IPO) last week. The company’s American depositary receipts opened at $26.50 each, nearly 40% higher than the offering price of $19. However, Pinduoduo has long faced allegations that some products on its platform are fakes or substandard — a problem it now has to confront, after going public. (Source: Caixin, link in Chinese)
3. Nio to Lose More Than 5.1 Billion Yuan This Year, Founder Says
What: Chinese electric-car startup Nio will lose more than 5.1 billion yuan this year, according to founder Li Bin. The company opened its seventh flagship store in Shanghai on Saturday. Li said four-year-old Nio is still a new company and people should view the operating loss as an investment in the future.
Why it’s important: Nio unveiled its first model for mass production at the end of last year, the seven-seat Nio ES8. But the company is facing serious production problems as it only delivered 10 cars before May 3. The company submitted an initial confidential IPO filing in May to raise up to $2 billion, but still has a long way to go before it becomes profitable. (Source: China Business Journal, link in Chinese)
4. China Receives WorldFirst’s Application for Payment Business License
What: China’s central bank announced that it has recently received an application from London-based currency transfer company WorldFirst for a payment business license in China. If approved, this will be the first payment business license issued by the central bank in almost three years. The central bank is required to make a decision within 60 working days.
Why’s important: The British company is the first foreign firm to apply for such a license after China opened up its payments market in March as part of the country’s commitment to further open up its financial services market to foreign companies and offer them the same treatment as local companies.
Big Picture: Cross-border payment services are in high demand as Chinese shoppers’ appetite for overseas retailers grows. Foreign players are expected to face fierce competition in China as domestic players maintain strong footholds at home while seeking to trying to attract global users. (Source: Caixin, link in Chinese)
5. Police Take Over Investigation of Fan Bingbing’s Alleged Tax Evasion, Local Newspaper Reports
What: Fan Bingbing, the Chinese actress accused of using business contracts to evade taxes, is now barred from leaving the country, the Chinese-language Economic Observer reported. The police department of Jiangsu Province has taken over the case from the tax authority and has detained an accountant from Huayi Brothers Media Group, which has worked with Fan for many years, the Economic Observer reported.
The story was later deleted from the newspaper’s website and Huayi Brothers Media Group said on a stock exchange forum that none of its staff were involved in the police investigation.
Why it’s important: Fan Bingbing was accused of using hidden contracts to evade taxes by Cui Yongyuan, a popular television presenter, earlier this year. The case gained national attention in June when China’s State Administration of Taxation promised to look into the accusations. Fan Bingbing’s studio has agreed to work with the investigators. (Source: Shenzhen Stock Exchange interaction platform, link in Chinese)
6. Prominent CCTV Host Accused of Sexual Assault
What: Zhu Jun, a household-name TV personality in China, became one of the latest public figures to be accused of sexual assault in the #MeToo movement sweeping China. A former intern on Zhu’s show posted a lengthy account of how she was molested by Zhu four years ago on Chinese social media platform Sina Weibo Thursday. The post went viral but was quickly taken down.
Why it’s important: The intern’s story emerged as the #MeToo movement reached new heights in China. A number of well-known figures have been accused of sexual assault or harassment, many of them activists or intellectuals previously viewed as champions of progressive values. (Source: Caixin)
Compiled by Zhang Erchi and Zhang Yidi
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