Thursday Tech Briefing: Tencent, Robotics Industry, Ofo
BIG TECH COMPANIES
1. Tencent Posts Rare Profit Drop Amid Regulatory Resistance Against Gaming
What: Chinese internet and entertainment giant Tencent on Wednesday reported a profit decline in the second quarter, down 2% year-on-year to 17.9 billion yuan ($2.60 billion).
Why it’s important: This is Tencent’s first drop in quarterly net income in thirteen years. The company has struggled to monetize new games in a hostile regulatory environment that sees gaming as fostering addiction. The company’s shares are down about 27% year-to-date.
Big picture: China has suspended approval of all new online games since March amid a broader clampdown this year on content deemed unhealthy by government regulators. (Source: Caixin)
2. Ofo Exits U.S. Cities with Bikes Sold for Scrap
What: Beijing-based bike-sharing company Ofo is pulling out from Seattle before the end of this month, according to an email Ofo sent to local users. The company is also reportedly trimming its U.S. workforce.
Why it’s important: After a period of international expansion, Ofo has now withdrawn from a number of international markets, including Dallas in the U.S. and Berlin, Germany. “After Ofo shut down in Dallas, a photo of dumped bicycles left behind went viral. Ofo said those bikes were in disrepair and would be recycled, while others were being donated to local charities.”
Ofo, which has been struggling to comply with local regulations in overseas markets, is shifting its focus onto a few key markets. (Source: Geekwire)
3. U.S. Tech Veteran Kicks Off Y Combinator’s China Business
What: Lu Qi, former president and chief operating officer of Baidu, has joined Y Combinator China as CEO to help the seed accelerator expand in China, Lu announced Wednesday. The China unit’s main plan is to build a team from its current single employee and raise yuan-denominated funds, he said.
Why it’s important: Lu was seen as an instrumental figure in championing search giant Baidu’s shift to artificial intelligence, but announced his departure barely 18 months after he joined the company in 2016. Known as “the most powerful Chinese in Silicon Valley,” he formerly served in big tech companies such as IBM, Yahoo, and Microsoft. (Source: Caixin)
4. Vice Premier Liu He Calls for Collaboration in Robotics
What: China welcomes foreign investment in the robotics sector, and will step up efforts to create a level playing field for foreign companies, Chinese Vice Premier Liu He said at the World Robot Conference in Beijing on Wednesday.
Why it’s important: Liu, who is also China’s top trade negotiator with the U.S., made his speech at a time when the U.S. sees China as a growing threat to its technological dominance. As China transitions into a higher value-added economy, the country has been beefing up its capacity in areas such as robotics, artificial intelligence, and new-energy vehicles through state-sponsored initiatives. (Source: Caixin, link in Chinese)
5. China’s Aviation Authority to Take Over Drone Pilot Certification
What: China’s civil aviation authority will provide certification for pilots of unmanned aerial vehicles (UAV) and set guidelines for the testing, classification, and qualification of pilots, according to a proposal released this week.
Why it’s important: The proposal, once put into effect, will be an overhaul of China’s UAV certification process, which has so far been overseen by a range of training institutions deemed by industry insiders as lacking authority.
Big picture: China has been moving to set up a comprehensive regulatory framework for UAVs, which many see as threats to security and privacy. (Source: Official statement, link in Chinese)
DEALS & FUNDRAISING
6. U.S. Retailer Kroger Teams Up With Alibaba to Sell Organic Food
What: Kroger Co., the world’s third largest retailer, is set to launch a store on Alibaba’s cross-border e-commerce platform Tmall Global to sell organic and natural products.
Why it’s important: This will be the first time Kroger takes its organic and natural product line overseas. The deal will “enable Kroger to quickly scale to reach new customers and markets where we don’t operate physical stores, starting with China,” according to the company’s chief digital officer.
Big picture: Foreign brands, including Ferragamo most recently, are increasingly setting up online presences in China. The country’s online retail sales grew by 30.1% from a year ago to 4.08 trillion yuan ($592.5 billion) during the first half of 2018, according to official figures. (Source: Caixin)
Compiled by He Shujing and Meng Yewen
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