Tuesday Tech Briefing: India, Souche, Maoyan
BIG TECH COMPANIES
1. Xiaomi Bows to India Security Concerns
What: Xiaomi Corp. is now storing data generated in India on local servers, after the nation’s government indicated that concerns about security breaches may lead to rules mandating domestic data storage for overseas smartphone firms. All existing data will be fully migrated to local servers by mid-September, the world’s fourth-largest smartphone-maker said on its corporate blog.
Why it’s important: India has become one of recently listed Xiaomi’s biggest success stories, after it unseated global leader Samsung Electronics Co. Ltd. to become the nation’s top player last year. India recently overtook the U.S. as the world’s second-largest smartphone market in terms of units sold, with cheap models supplied by Xiaomi and other Chinese brands, such as Vivo Communication Technology Co. and Oppo Electronics Corp., reeling in consumers.
Big Picture: India is not alone in its concern about foreign firms storing data overseas. China has also made rules to ensure data localization and foreign players such as Airbnb Inc. and Apple Inc. have complied with such moves. (Source: Caixin)
2. JD.com Leaves Profit-Hungry Investors Wanting More
What: Despite JD.com’s success in stealing significant market share from e-commerce industry leader Alibaba, the company has had difficulty on its bottom line. The company’s latest quarterly report saw it move deeply into the red with a net loss of 2.2 billion yuan ($322 million) for the three months to June, much wider than the 287 million yuan loss it reported a year earlier. It reported the loss even as its revenue rose 31.2% to 122 billion yuan for the period. By comparison, Alibaba reported a profit of 8.7 billion yuan on revenue of 80.9 billion yuan for the period.
Why it’s important: The company’s Nasdaq-listed shares have fallen 28% since the start of this year, and are down by an even larger 38% from a peak in late January. It now trades at lows not seen since early 2017. JD.com’s stock price may fall if founder Richard Liu is convicted after his recent arrest for alleged sexual misconduct.
Big Picture: After going public in 2014, JD.com didn’t post its first quarterly profit until the first three months of 2017, and has only posted sporadic profitable quarters since then, usually swinging back into the loss column in between. (Source: Caixin)
3. China Starts Developing Civilian Passenger Airship
What: The Aviation Industry Corporation of China Ltd. has begun the development of a civilian passenger airship, according to state news agency Xinhua. “The 3,500-cubic-meter airship will have a large load capacity of 840 kg, with the ability to hold a maximum of 10 passengers. The flight duration will reach 24 hours, with a maximum range of 1,000 km and a flight altitude of 3,050 meters.”
Why it’s important: “The airship will be widely used in tourism, surveying and prospecting, ocean monitoring, freight transport and emergency rescue. The airship's first flight is expected to take place in 2020.”
4. Alibaba-Backed Used Car Platform Souche Raises $578 Million
What: “Souche.com, operator of a used car trading website, raised $578 million to fund its research and development and expand its leasing program. The round was led by Primavera Capital and Morningside Venture Capital. Other investors include Alibaba Group Holding Ltd., Dreamfly Capital and ClearVue Partners,” Bloomberg reported.
Why it’s important: “While China was once known largely as a market for new vehicles, demand for used cars has increased as the quality improves and allows them to last longer. This has led to a rise in internet marketplaces such as Souche selling hundreds of different makes and models.” (Source: Bloomberg)
5. Movie Ticketing App Maoyan Seeks Hong Kong IPO
What: Maoyan Weying, China’s biggest online movie ticketing platform, submitted its application on Monday for a Hong Kong initial public offering.
Why it’s important: The company counts Tencent and Shenzhen-listed film producer Beijing Enlight Media Co., among its backers.
Big Picture: China’s entertainment market is the second-largest in the world, after that of the United States. It was worth 1.23 trillion yuan in 2017, and is expected to more than double to 3.22 trillion yuan in 2022, according research by iResearch cited in Maoyan’s application. (Source: HKEX)
6. China’s English Learning App Liulishuo Files for $100 Million U.S. IPO
What: “Chinese artificial intelligence firm LAIX Inc., creator and operator of AI-powered English language learning app Liulishuo, filed with the Securities and Exchange Commission to raise up to $100 million in an initial public offering in the US,” Deal Street Asia reported.
Why it’s important: “ As of June 30, 2018, LAIX said it had 83.8 million cumulative registered users in China and globally.”
Big Picture: “ According to an iResearch Report, the size of the English language learning market, as measured by revenues, reached approximately Rmb228.8 billion ($33.5 billion) in 2017. The market size is expected to continue to grow to Rmb548.8 billion ($80.5 billion) in 2022.” (Source: Deal Street Asia)
Compiled by Wang Luyao
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