Thursday Tech Briefing: JD.com, Unicom, SoYoung

BIG TECH COMPANIES

1. U.S. Law Firms to Investigate JD.com for Disclosure Failure

What: Three American law firms, Rosen, Schall and Pomerantz, said that they would investigate on behalf of shareholders whether JD.com issued misleading statements or failed to disclose information related to the arrest of company CEO Liu Qiangdong — also known as Richard Liu — in the U.S. last weekend.

Why it’s important: The company’s Nasdaq-listed shares plunged nearly 6% on Tuesday, the first trading day after Liu was arrested on suspicion of rape in the U.S.

Big Picture: JD.com hasn’t filed anything regarding the case to the U.S. Securities and Exchange Commission. The company’s spokesperson said on Chinese social networking site Weibo Sunday that U.S. police had not found any evidence against Liu — though the police investigation is still underway. (Source: Caixin)

DEALS AND FUNDRAISING

2. China Unicom Unaware as Wireless Merger Talk Gets Louder

What: China Unicom, one of China’s three mobile carriers, said on Wednesday it has not been notified of any plan that would see it merge with similar-sized rival China Telecom, following increasing speculation about such a plan.

Why it’s important: Observers say the country’s telecoms regulator may be pushing for more consolidation to save money and create greater economies of scale for upcoming next-generation 5G wireless services. Such a move would save billions of dollars by requiring the country to only build two new networks instead of three.

Big Picture: Unlike other countries where markets determine consolidation, such moves in China’s telecom sector are dictated by the central government, which holds controlling stakes in all three carriers. Beijing orchestrated a similar consolidation in 2008 when it reduced the number of carriers to the three at present from a previous four by combining two companies to create the current Unicom. (Source: Caixin)

4. Chinese Plastic Surgery Social Network SoYoung Raises $70 Million

What: SoYoung Technology, a Chinese app that connects users to plastic surgeons and allows them to share photos of their transformations, has raised $70 million in its latest stage of financing. The series E funding round was led by Orchid Asia, and other investors included Matrix Partners China and Trustbridge Partners.

Why it’s important: Chinese apps combining plastic surgery services with social media elements have gained popularity in recent years, attracting significant investor interest in one of the world’s largest and fastest-growing plastic surgery markets. iGengmei, SoYoung’s largest rival, raised $50 million in a Series D funding round in July. (Source: Caixin, link in Chinese)

5. Chinese E-Commerce Portal Yunji Weidian Taps Banks for U.S. IPO

What: “Chinese e-commerce portal Yunji Weidian has hired investment banks for an initial public offering (IPO) it plans to launch in the United States early next year,” Reuters reported, citing sources with knowledge of the matter. “Yunji hopes to fetch a valuation of between $7 billion and $10 billion in the IPO, and has mandated Morgan Stanley, Credit Suisse Group AG and JPMorgan Chase & Co. to lead the listing on the Nasdaq stock exchange.”

Big Picture: “The Yunji listing would follow other Chinese e-commerce companies public in the United States, including Alibaba, JD.com and Pinduoduo Inc.” (Source: Reuters)

3. Losses Undermine China News Aggregator’s New York IPO

What: News aggregator Qutoutiao Inc. has slashed the size of its planned New York initial public offering (IPO). Qutoutiao is now aiming to raise up to $165 million through its sale of American depositary shares (ADSs), according to an amended prospectus filed on Tuesday. That figure is just over half the $300 million it had originally targeted in its initial prospectus filed last month.

Why it’s important: Qutoutiao, whose name means “interesting headlines,” did not comment on the reason for the significant reduction in the IPO’s size. But such reductions usually indicate tepid investor demand. Qutoutiao has lost money every year since 2016. It lost 575 million yuan ($84.1 million) in the first half of this year, sharply higher than its 28.7 million yuan loss for the same period of 2017.

Big Picture: Qutoutiao’s IPO downsizing follows a similar move last week by electric-car maker Nio, which cut its fund-raising target by more than 15% to a maximum of $1.52 billion due to investor skepticism about Chinese tech companies. Last year, Nio lost 5 billion yuan. (Source: Caixin)

PRODUCTS

6. Private Chinese Space Company Launches Suborbital Rocket

What: Private Chinese space company iSpace launched its SQX-1Z suborbital rocket into space on Wednesday. The rocket will “provide minisatellite and constellation launch services for clients,” China’s state news agency Xinhua reported.

Big Picture: “China's aerospace exploration was dominated by state-owned companies and institutes until 2014 when private companies were allowed to develop and launch rockets. China has more than 60 private companies in the commercial space industry. They are growing fast and competing for launches of small satellites and rockets.” (Source: Xinhua)

Compiled by Wang Luyao