Wednesday Tech Briefing: Tencent, Baidu, Pinduoduo

BIG TECH COMPANIES

1. Tencent Loses $140 Billion of Market Value

What: Tencent’s share price has fallen 25% from its peak in January this year, erasing about $143 billion from the internet giant’s market capitalization. This means that Tencent shareholders have lost the most since their company’s 52 week-high out of all companies’ shareholders worldwide. Facebook is right behind Tencent, with $136 billion evaporating from its market value over the past three trading days.

Why it’s important: Tencent’s rout comes amid similar troubles for other tech companies. These companies “have been enjoying fast profit growth in the past few years, so it will be difficult for them to maintain similar growth in the future as the competition grows and some segments are saturated,” Linus Yip, a Hong Kong-based strategist at First Shanghai Securities, told Bloomberg. (Source: Bloomberg)

2. Facing Counterfeiting Accusations, Pinduoduo Says 10.7 Million ‘Problem Goods’ Have Been Removed

What: E-commerce platform Pinduoduo has taken 10.7 million “problem goods” off its virtual shelves since its first day in business as part of an ongoing crackdown on counterfeit goods, company co-founder Da Da said at a press conference in Shanghai Tuesday.

Why it’s important: Pinduoduo, founded in 2016, has long faced accusations of allowing sales of counterfeit goods on its platform. The accusations have intensified in recent days, after the company’s strong Nasdaq debut on Thursday, with Chinese TV-maker Skyworth threatening to sue Pinduoduo over the sale of Skyworth knock-offs.

Big picture: China’s booming e-commerce sector has long struggled to eliminate counterfeit goods from its markets, with internet giant Alibaba’s Taobao marketplace repeatedly making an appearance on the U.S. Trade Office’s list of “Notorious Markets.” (Source: Tencent News, link in Chinese)

3. YTO to Build $1.8 Billion Logistics Hub at Zhejiang Airport

What：YTO Express Group Co. Ltd is set to spend 12.2 billion yuan ($1.79 billion) to build an aviation logistics hub in East China’s Zhejiang province. The hub will act as a cargo center for YTO both nationally and globally. By 2030, the facilities are expected to have an annual freight capacity of 1.1 million tons.

Big Picture: The move comes as the country’s couriers race to expand their logistics networks to meet surging demand on the back of thriving e-commerce activities. YTO Express currently rents cargo capacity from airline companies to provide courier services for more than 1,000 routes. The company is playing catch-up to larger rival SF Express Co. Ltd., which operated a fleet of 40 cargo jets as of the end of last year. (Source: Caixin)

4. Realme Brand Separates From Oppo

What: Realme, a brand owned by Chinese smartphone-maker Oppo, will now be operated independently and led by Li Bingzhong, who is stepping down as vice president of Oppo. Realme will remain 100% owned by Oppo, and will focus on overseas markets and younger buyers.

Big picture: Oppo created the Realme brand to compete against Xiaomi’s low-end Redmi phones, which are highly popular in India, a major market for Chinese phone-makers. Redmi’s market share in India reached 30% in the first half of this year, according to data from CounterPoint. In comparison, Realme holds 1%. (Source: Tencent News, link in Chinese)

PRODUCTS

5. Baidu Gives Up on Online Education Platform Chuanke

What: Baidu plans to shut down its Baidu Chuanke online education platform just six months after the platform’s launch, sources told Chinese tech news site 36Kr. Chuanke, which was intended to form the core of Baidu’s education business, was “sentenced to death” more than a week ago, and its 20 team members have been transferred to other business units, the sources said.

Big picture: China’s online education market has slowed in recent months since its peak in 2016, with almost all paid online education products seeing a decline in usage. (Source: 36Kr, link in Chinese)

Compiled by Shen Xinyue