Wednesday Tech Briefing: Africa, Tencent, Xiaomi

BIG TECH COMPANIES

1. China’s Payments Giant is Ready to Boost Financial Inclusion in Africa

What: Ant Financial, the payments and financial-services platform affiliated with Alibaba, has pledged to promote digital financial inclusion in Africa, through a recently announced partnership with the United Nations Economic Commission for Africa. Alibaba will invest in and offer technical help to businesses catering to “largely unserved consumers, including displaced people and refugees with no official documents or identity papers.”

Why it’s important: “By looking to Africa, Ant hopes to replicate its tremendous success in countries including China, India, and the Philippines. The firm, spun off from Alibaba, runs Alipay, one of the world’s largest online payment platforms.”

Big Picture: “This comes as Sino-African political and economic relations have grown, with increasing diplomatic ties and investments in much-needed infrastructure and trade zones, in addition to technological assistance, military cooperation, and the training of the next generation of African elites.” (Source: Quartz)

2. Unilever to Use JD.com to Move Products Across China

What: Chinese e-commerce company JD.com has reached an agreement with Unilever “to move products like Lipton’s tea and Lux soap between warehouses across China as the consumer goods firm looks to expand sales in more remote parts of the country.”

Why it’s important: “The deal is the latest move by an e-commerce company to muscle into the territory of logistics companies by leveraging the expertise and supply chains they have built up for their own retail business to offer those services to others.”

Big picture: “The move comes as many Western brands are pushing to expand sales to consumers beyond Chinese cities, both online and offline. JD.com agreed a similar partnership with the water subsidiary of France’s Danone last year.” (Source: Reuters)

DEALS AND FUNDRAISING

3. Filing for U.S. IPO, Nio Hopes to Become Tesla of China

What: Nio Inc., which has proclaimed its desire to be China’s Tesla, filed an initial public offering application with the Securities and Exchange Commission on Monday. Nio intends to raise as much as $1.8 billion, equivalent to the amount it plans to spend over the next three years for research and development, upgrading its manufacturing facilities, and expanding its sales and service networks.

Why it’s important: Nio will become the first Chinese electric-car startup to tap the U.S. capital markets. “The aggressive expansion means that continuing funding is necessary for Nio,” said industry columnist Qiu Kaijun. “It has to turn to public capital as private investors have been reluctant to inject more money due to its high valuation.”

Big picture: Shanghai-based Nio has been dependent on funding from investors for much of its existence. Founded in 2014, Nio only started to generate revenue earlier this year when it began to deliver the ES8, which was launched in December at half the sticker price of Tesla’s Model X. Nio has faced doubt over its ability to meet its goal to fulfill orders for 10,000 vehicles by the end of the year (link in Chinese). (Source: Caixin)

4. Tencent-Backed Publisher Has Big-Screen Ambitions With $2.2 Billion Acquisition

What: China Literature Ltd., an online publishing unit spun off from social media giant Tencent Holdings Ltd., said it will acquire local production house New Classics Media Corp. for as much as 15.5 billion yuan ($2.2 billion), in a deal expected to close by the end of the year.

Why it’s important: Acquiring New Classics will help China Literature in its vertical integration by tapping its massive literary library to build a content-to-studio empire, and could pave the way for it to become the next Marvel Studios, analysts said.

Big picture: China Literature has the rights to the lion’s share of the country’s pool of online authors and readers. It benefits from having its content distributed via Tencent’s mobile apps such as WeChat and Tencent Video. The company boasts 7.3 million writers and 213.5 million monthly active users as of June, according to Bloomberg data. (Source: Caixin)

PRODUCTS

5. Xiaomi Creates New Poco Brand to Take on Samsung, Huawei in Premium Smartphone Market

What: “Xiaomi, the world’s fourth largest smartphone supplier, is set to introduce a separate mobile phone brand, Poco, to take on industry leaders Samsung Electronics and Huawei Technologies in the premium segment of the global Android handset market. The first device under the new brand will be unveiled on Aug. 22 in India.”

Why it’s important: “It would be a strategic launch in India for Poco, which means ‘little’ in Spanish, because it would come several weeks after Xiaomi was unseated by Samsung as the country’s leading smartphone brand in the second quarter.” (Source: SCMP)

POLICY

6. PBOC Highlights Challenges for E-Commerce, Delivery Sectors

What: China’s e-commerce and package delivery sectors face a saturated market, rising costs for retaining customers and for logistics, and a squeeze on margins, the central bank concluded in a recent policy report.

During the first half of 2018, China’s online retail sales grew by 30.1% to 4.08 trillion yuan ($595.8 billion), much faster than the overall growth of retail sales, according to the PBOC. But the central bank pointed out that the growth in both online sales and delivery revenue has slowed significantly as the market approaches saturation.

Why it’s important: This was the first time the People’s Bank of China (PBOC) included e-commerce and package delivery sectors in its quarterly monetary policy implementation report, reflecting the increasing contribution of e-commerce to the economy. (Source: Caixin)

Compiled by Isabelle Li