Wednesday Tech Briefing: Huazhu Hotels, Didi, ZTE

POLICY

1. Massive Data Breach Threatens Guests of Huazhu Hotels

What: Nearly 500 million pieces of personal data and booking information were reportedly leaked from leading Chinese hotel chain operator Huazhu Group Ltd. A post emerged online Tuesday selling information related to customers. Huazhu told Caixin that the investigation is still underway and asked for help from internet platforms to prevent the circulation of the information.

Why it’s important: If proved, this could be one of the biggest data-breach cases in China. Huazhu had 3,903 hotels with 393,417 rooms in operation as of June 30, with a primary focus on economy and mid-price hotels. It’s illegal to sell personal data in China. Once convicted, a person can be sent to prison for trading that information.

Big picture: The case is the latest to put online privacy protection under the spotlight. Chinese authorities have launched a crackdown on crimes involving internet privacy violations. As of July 2017, regulators tracked down at least 1,800 data-breach cases and arrested nearly 5,000 suspects, according to official figures. (Source: Caixin)

BIG TECH COMPANIES

2. Didi Apologizes Again for Passenger Murder

What: Late Tuesday, Chinese ride-hailing company Didi Chuxing founder Cheng Wei and President Jean Liu issued an apology after a passenger rape-murder case set off a public outcry over the safety of ride-hailing services. In the written statement, Didi said that “vanity” and “non-stop riding on the force of breathless expansion and capital” contributed to the tragedy. Didi plans to re-evaluate the business model of its Hitch ride-sharing and has suspended the service indefinitely until it can implement a safety protection mechanism acceptable to users. “We are sorry. We failed your expectations,” Cheng and Liu said in a statement.

Why it’s important: This is the second passenger murder case in three months after a female flight attendant was killed in May by another Didi Hitch driver. Didi executives have been summoned by local authorities in several cities, including Beijing, Tianjin, Guangzhou, Shenzhen and Shanghai, to put pressure on the company to take immediate action. People close to Didi’s government relations department told Caixin that authorities in more cities are expected to summon Didi executives on the safety issue. (Source: Caixin)

3. ZTE Production Back on Track, Chairman Says

What: Chinese telecom equipment maker ZTE Corp. has resumed all major business operations, recovering from a crippling U.S. ban on buying American components that was removed last month, according to ZTE Chairman Li Zixue. Li said at a shareholder meeting on Tuesday that ZTE’s production has returned to normal while research and development progress is recovering quickly. ZTE is also stepping up tests on the next-generation 5G network to meet the Chinese government’s requirement.

Why it’s important: ZTE’s domestic business has recovered quickly after the U.S. ban was lifted last month. Company CEO Xu Ziyang said that the ban has caused some losses in overseas markets and ZTE is communicating with major telecom operators outside of China. (Source: Securities Times, link in Chinese)

4. Chinese-Backed Hollywood Studio Starts Layoffs

What: Independent Hollywood studio Global Road Entertainment is laying off employees in London and Los Angeles after several of its movies performed badly at the box office. The studio’s owner Tang Media Partners has strong Chinese ties and counts investment firm China Media Capital, Chinese studio Huayi Brothers and internet giant Tencent as its backers. The situation at Global Road deteriorated this month after Tang Media Partners failed to raise $200 million in financing. Bank of America and East West Bank, which are the lenders, took over Global Road's film operations last week.s

Why it’s important: The investment in Tang Media Partners by Chinese investors was an experiment to see if Chinese capital could work with Hollywood expertise to produce blockbusters. Other Chinese companies, including real estate company Dalian Wanda and investment company Fosun Group, have also invested in Hollywood studios, and have so far achieved little success. The Chinese government has been discouraging Chinese companies against investing in the overseas entertainment industry since 2017, as the government considers this kind of investment “irrational.” (Source: The Hollywood Reporter)

5. Daimler Partners With Chinese Digital Mapping Developer NavInfo

What: Beijing-based navigation-technology developer NavInfo Co. Ltd. said it has inked an exclusive seven-year partnership deal with German automobile giant Daimler AG. NavInfo will provide navigation and its Advanced Driver Assistance System (ADAS) for all Daimler's mass-produced vehicles in China between 2020 and 2024.

Why it’s important: According to Chinese research company Analysys, NavInfo has the largest market share at 38.11% of China’s pre-installed automotive navigator market, followed by Amap, a subsidy of Alibaba Group, which has a market share of 30.45%. Foreign companies are forbidden to enter the map business in China and they are required to partner with Chinese companies in developing autonomous driving technologies. (Source: Caixin, link in Chinese)

DEALS AND FUNDRAISING

6. SoftBank, ZhongAn Announce $200 Million Joint Venture

What: The $100 billion Softbank Vision Fund and Chinese insurer ZhongAn Online P&C Insurance Co. Ltd. have reached an agreement to create a new joint venture to promote the latter’s tech offerings across Asia. Softbank Vision Fund and ZhongAn will each invest $100 million in An An International Ltd., with the first project to be launched later this year, according to Jiang Xing, ZhongAn’s chief operating officer. Softbank will hold a 51% stake as a strategic investor, with ZhongAn holding the remaining 49%.

Why it’s important: ZhongAn is China’s first online insurance provider, and its co-founders include Chinese tech magnates Pony Ma of Tencent Holdings Ltd. and Jack Ma of Alibaba Group Holding Ltd. ZhongAn went public last September in Hong Kong and reported a net loss of 667 million yuan ($97.8 million) in the first half of 2018. (Source: Caixin)

Compiled by Zhang Erchi