Friday Tech Briefing: Games, Compal, JD.com
BIG TECH COMPANIES
1. Chinese Game Publishers Grow Rapidly in U.S.
What: Chinese game publishers made more than $600 million from App Store and Google Play users in the first half of the year, up by 52%. Total downloads grew 54% to nearly 200 million, according to data provider AppAnnie.
Why it’s important: The game business is one of most profitable sectors for Chinese internet companies Tencent and NetEase. Tencent operates the world’s largest games business by revenue, thanks to its dominance of the Chinese market, which according to data from consultancy Newzoo is the world’s top video-games market with estimated sales of $32.5 billion in 2017. NetEase’s game business generated over 10 billion yuan ($1.47 billion) in revenue in the second quarter this year, accounting for 60% of its total revenue. (Source: Caixin)
DEALS AND FUNDRAISING
2. PC-Maker Logs Out of Lenovo Joint Venture
What: Compal Electronics Inc., one of the world’s largest personal-computer (PC) contract manufacturers, has disposed of its stake in a joint venture with Lenovo Group Ltd., cashing out with a gain of NT$2.58 billion ($84.2 million) as it looks to increase profitability.
The Taipei-based company, which counts Dell Inc. and Acer Inc. as clients, is selling its 49% stake in Lienpal (Hefei) Ltd. for $257 million, Compal said in a statement Tuesday.
Why it’s important: Compal supplied smartphones to LeEco, once a star Chinese tech giant that saw financial troubles emerge in 2016 after getting involved in other interests as diverse as smartphones and electric vehicles. In November the same year, Compal said that LeEco owed it around $140.3 million.
This deal will offset losses caused by LeEco, but the company is still struggling to make a profit from its non-PC businesses.
Big Picture: Compal and Lenovo formed the $300 million venture in 2011. The move allowed Compal to secure more orders from Lenovo, one of the world’s largest PC brands, but the terms required Compal not to sell its stake until after October. (Source: Caixin)
3. JD.com’s E-Commerce Unit Nets $500 Million in Fundraising
What: Dada-JD Daojia, the delivery and grocery e-commerce unit of JD.com Inc., has completed a $500 million fundraising round from its parent company and U.S. supermarket chain Walmart Inc.
Why it’s important: JD.com’s involvement in this fundraising round highlights the effort to broaden its presence in the physical retail market. In February, JD.com said it would acquire a 5% stake in the supermarket chain Better Life Commercial Chain Share Co. Ltd., whose stores are located mostly in western China, for 739 million yuan ($108.2 million).
Big Picture: JD.com’s larger rival, Alibaba Group Holding Ltd., has also ramped up effort to expand offline. In May, the technology titan said it has recently opened 10 stores of its own supermarket chain — named Hema — in 10 Chinese cities, expanding its network to 46 stores in 13 cities across the country. (Source: Caixin)
4. China Mobile Weighs Spinoffs for Separate Listings
What: China’s most valuable phone carrier, China Mobile Ltd. may spin off three to four subsidiaries for separate listings either in Hong Kong or on the mainland, company CEO Yue Li revealed on Thursday.
Why it’s important: Faced with rising competition and pressure to keep prices down, China Mobile is looking for new business model. The company, along with the country’s two other major telecom operators, has been ordered by regulators to slash the price of data services on mobile devices by at least 30% by the end of the year.
Spinoffs might involve China Mobile units such as advertising, internet TV, infrastructure, or the online video and content service arm Migu Culture and Technology Co., a telecom analyst said. Separating multiple subsidiaries would be in line with China Mobile’s strategy of shifting to a more asset-light model, according to the analyst. (Source: Caixin)
5. China’s Second Startup-Produced Electric Car Hits Online Stores
What: Chinese company Qiantu has begun accepting orders for the K50, the second electric car produced by a domestic startup, after Tencent-backed Nio. Unlike most other electric car startups in the country, which are facing production difficulties, Qiantu has produced more than 60 K50 cars, which will retail for 686,800 yuan ($100,655) each after new-energy vehicle subsidies. Qiantu Chairman Qun Lu said he expected to sell around a thousand of the vehicles.
Big picture: China’s electric-vehicle startups have attracted substantial investment, which the top 10 reportedly securing investments totaling more than 50 billion yuan as of February. But domestic companies are facing increasing competition foreign carmakers, who have been pushed by government policies to increase their production of new-energy vehicles in China. (Source: Caixin, link in Chinese)
6. China Revamps Top National Technology Strategy Body
What: China’s State Council, the cabinet, has established the National Science and Technology Leading Group, a cabinet-level entity responsible for planning and setting national technological development strategies. The sci-tech group replaces the former National Technology and Education Leadership Group under the State Council.
The new group will be led by Premier Li Keqiang with Vice Premier Liu He as deputy, the cabinet said Wednesday.
Why it’s important: The new panel reflects Chinese authorities’ determination to expand the country’s technology and innovation capacity and promote self-motivated innovation through top-level policy design, the official Xinhua News Agency said Thursday in an editorial.
Big Picture: The revamp is part of the government's institutional reform and was made because of "relevant arrangements" required by the needs of government operations, the General Office of the State Council said without elaborating. (Source: Caixin)
Compiled by Wang Luyao
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