Caixin
Aug 24, 2018 10:32 AM
YOUR BRIEFING

Friday Tech Briefing: Huawei, ZTE, Alibaba

BIG TECH COMPANIES

1. Huawei, ZTE Banned From 5G Sales in Australia

What: Chinese telecom equipment-makers Huawei and ZTE have been banned from providing 5G technology to Australia on national security concerns.

Why it’s important: Australian media said that the ban was due to a new Australian government rule that requires “an extensive review of the national security risks to 5G networks.” Huawei said that it will hold talks with the government and take any possible legal action to protect its rights. ZTE did not respond to Caixin’s request for comment.

Big picture: This is the latest case of Chinese telecom firms facing headwinds in foreign markets due to national security concerns. China’s ambition to upgrade its industrial sector into a global powerhouse through programs such as “Made in China 2025” has encountered troubles in other countries, including the United States. (Source: Caixin)

2. Strategist Maintains $250 Target on Alibaba, Despite Trade War Fears

What: Analysts remain optimistic about Chinese tech giant Alibaba, despite concerns about the ongoing U.S.-China trade war, CNBC reported. Alibaba’s U.S.-listed shares initially surged on Thursday, before closing down 3%, after the company reported that its revenue was up 61% to $12.2 billion in the second quarter.

Why it’s important: “There is no more marquee name in China if you’re going to buy a stock. So, they’re in every ETF (exchange-traded fund), they’re going to be in any Chinese mutual fund, and they’re going to be in ... the Shanghai Indexes. So they can’t escape the...Trump trade war,” John Blank, chief equity strategist at Zacks Investment Research, told CNBC. But the company’s fundamentals remain solid, other analysts said.

Big picture: “The stock has been under pressure in recent months amid a broader sell-off in Chinese stocks over concerns about the U.S.-China trade war.” (Source: CNBC)

3. Waymo’s Shanghai Subsidiary Gives Alphabet Another Route Back to China

What: “Waymo, the business created from Google’s self-driving car project, set up a unit in Shanghai called Huimo Business Consulting (Shanghai) Co. on May 22, according to a filing with China’s National Enterprise Credit Information Publicity System,” Bloomberg reported.

Why it’s important: It is “the latest sign of attempts by parent Alphabet Inc. to get back into the world’s second-largest economy.”

Big picture: “Google executives confirmed for the first time last week that they’re looking to get their search engine up and running in China after a hiatus of almost a decade.” (Source: Bloomberg)

4. Baidu Unit Approved to Sell Mutual Funds Amid Fintech Drive

What: Baidu Inc.’s financial services subsidiary, which is being spun off in a $1.9 billion private equity deal, has been granted a license to sell mutual funds.

Why it’s important: The approval will help the company close the gap with its tech giant rivals in the fast-growing fintech sector. Baidu is the last of the big tech giants — BATJ (Baidu, Alibaba, Tencent and JD.com) — to obtain such a license.

Big picture: China’s e-commerce behemoths are racing to leverage their massive customer base to grab a bigger share of the financial services sector and the burgeoning wealth management market. (Source: Caixin)

DEALS & FUNDRAISING

5. Meituan-Dianping Sets Hong Kong Debut Next Month

What: Meituan-Dianping, China’s largest group-discount platform and on-demand services provider, plans to list on the Hong Kong bourse Sept. 20, raising at least $4 billion and putting the company’s value at $50 billion to $55 billion. The company cleared pre-listing inquiries by the exchange, and will begin a global roadshow Sept. 3, sources close to the matter told Caixin.

Why it’s important: The IPO will deepen Meituan’s resources for an escalating turf war in the online, on-demand local services market. Meituan, backed by social media giant Tencent Holdings, holds a leading position in the hotly contested food delivery sector, offers hotel and travel bookings, has entered the ride-hailing business and recently acquired a bike-sharing company. (Source: Caixin)

6. Alibaba Consolidates Online Local Services Units

What: Alibaba is merging its local services unit Koubei with its online food delivery platform Ele.me. The new “flagship local services vehicle” has secured $3 billion in new funding from Alibaba and SoftBank. More investors are expected to join in, according to Alibaba.

Why it’s important: Alibaba took control of Ele.me in May in a deal that valued the nine-year-old startup at $9.5 billion. The buyout is an important part of Alibaba’s “New Retail” strategy to connect online and offline retail spaces. Earlier this month, Ele.me announced a partnership with Starbucks to add the coffee chain to its delivery menu in 30 Chinese cities. Alibaba founded Koubei more than a decade ago as a restaurant rating and local services search site.

Big picture: China’s on-demand local service market is a new battlefield for internet giants seeking to connect more online users with offline merchants. (Source: Caixin)

7. Air Conditioner Firm’s Plan to Develop Chips is Hot Air, Observers Say

What: Major Chinese air conditioner maker Gree has set up its new wholly owned venture with 1 billion yuan of registered capital to research and develop chips for its air conditioners, Wang Jingdong, a vice president of Gree, told Caixin. Wang said that there is no set timeline for the company’s development of microchips.

Why it’s important: The new company is part of a 50 billion yuan project for Gree to develop its own chips within the next three years. In June, Gree President Dong Mingzhu told shareholders that Gree aims to supply all of its air conditioners with self-developed chips by the end of next year. Market-watchers, however, have expressed doubts, as the company has little experience in researching and developing chips.

Big picture: There are widespread calls for China to develop its domestic chip industry after Washington banned U.S. chip companies from supplying China’s ZTE Corp, which highlighted the Chinese tech industry’s reliance on technologies manufactured overseas. (Source: Caixin)

Compiled by Qian Tong and Hou Qijiang


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