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Friday Tech Briefing: Alipay, Meituan, Apple

BIG TECH COMPANIES

1. Alipay Makes Big Investment in Mini Apps

What: Ant Financial Services Co. Ltd. has announced it will spend 1 billion yuan ($146 million) over the next three years to speed up the development of “mini apps” for Alipay, one of China’s two dominant mobile-payment apps. The company also announced the launch of a new unit dedicated to mini apps, an emerging area that also has attracted the interest of China’s technology companies and smartphone-makers.

Why it’s important: Mini apps, or mini programs, refer to “apps within an app.” They rid users of the hassle of downloading a myriad of standalone apps and instead allow them access to services such as ride-hailing, takeout delivery and travel bookings through one core app, such as WeChat, Baidu or Alipay.

Big picture: WeChat was the first in the industry to launch mini apps, in January 2017. In July, its parent company, Tencent Holdings Ltd. claimed over 1 million mini apps had been made available on WeChat. (Source: Caixin)

2. With Latest iPhones, Apple Again Bows to the Chinese Market

What: The iPhone Xs models unveiled Wednesday come with an “eSIM” feature that supports two cellular services and easier switching between carriers, but that technology won’t be available in China, Hong Kong and Macau. Instead, it will offer slots for dual physical SIM cards, which identify and authenticate a user’s phone number.

Why it’s important: It’s rare for Apple to tailor its products for specific markets because it likes to maintain manufacturing efficiency. But the U.S. company has much at stake in China, its largest market after the U.S. as well as the main production base for the world’s iPhones and iPads. Its market position there is now under attack from savvy domestic players like Huawei Technologies Co. and Xiaomi Corp., which employ more locally oriented services.

Big picture: The Chinese smartphone market is thoroughly dominated by a trio of state-backed carriers led by China Mobile Ltd. Apple has made concessions in the past to comply with Chinese law and support its business. Last year, Apple was ordered to remove hundreds of applications from its Chinese app store that let people mask their location and circumvent official efforts to block certain websites. (Source: Caixin)

3. Sorry Apple, Nike: Chinese Shoppers Don’t Love You Anymore

What: “The once-coveted brands of multinationals are losing ground to local companies in the world’s most populous country, according to a new report on the country’s 50 most relevant brands. Move over Apple and Nike. Chinese phone maker Huawei and food delivery giant Meituan Dianping have replaced you as some of China’s favorite brands,” Bloomberg reported.

Why it’s important: “Many other big Western brands were booted off the top 10 list favored by Chinese consumers this year. Home-furnishing retailer Ikea of Sweden AB, fourth on last year’s list, didn’t make it among the top 30 this time. Nike Inc. tumbled to No. 44 while Luxury car maker BMW AG fell to No. 46. Estee Lauder Cos. dropped to No. 22, though it remained the top-ranked label for cosmetics.” (Source: Bloomberg)

DEALS AND FUNDRAISING

4. Tencent-Backed Meituan Raises $4.2 Billion in IPO Priced Near Range Top, Sources Say

What: “Chinese online food delivery-to-ticketing services firm Meituan Dianping raised $4.2 billion in the world’s biggest internet-focused IPO in four years as it priced the float near the top end of a marketed range.” Reuters reported. “Backed by Chinese social media and gaming firm Tencent Holdings, Meituan sold about 480 million primary shares at HK$69 ($8.79) each in the Hong Kong IPO, valuing the company at around $52.8 billion, the sources said on Thursday.”

Why it’s important: “The proceeds will help Meituan fortify itself against stiff competition from its main competitor, food-delivery platform Ele.me which is backed by China’s biggest e-commerce company Alibaba Group Holding. Both parties, in a bruising battle for market share, are offering heavy discounts to attract new customers.”

Big picture: “Founded in 2010 by Wang Xing, Meituan which has been likened to U.S. discounting platform Groupon Inc, completed a $15 billion merger in 2015 with its then main rival Dianping, akin to U.S. online review firm Yelp Inc.” (Source: Reuters)

POLICY

5. China Mobile Uses Big Data and AI to Curb Telecom Fraud

What: “China Mobile Communications Corp, the world’s largest mobile carrier by subscribers, is ratcheting up resources to crack down on telecom fraud by leveraging big data and artificial intelligence technologies,” China Daily reported.

Why it’s important: “The move comes as instant-messaging apps and illegal telecom technology are increasingly being used to swindle citizens. In 2017, there were more than 596,000 cases of telecom and internet fraud in China, causing economic losses of 13.1 billion yuan ($1.9 billion), according to data from the Ministry of Public Security.”

Big picture: “The state-owned company's move to curb telecom fraud is part of China’s broader national campaign to target nuisance calls and ensure cybersecurity. In July, 13 top-level authorities jointly rolled out an action plan to ensure people receive significantly fewer prank calls by consolidating law enforcement and technology.” (Source: China Daily)

6. U.S. Lawmakers Ask Google if It Will Rejoin Chinese Market

What: “A bipartisan group of U.S. lawmakers on Thursday asked Alphabet Inc.’s Google if it will re-enter the Chinese search engine market and if it would comply with China’s internet censorship policies upon its return. Sixteen members of the U.S. House of Representatives, including liberal Democrats and conservative Republicans, said in a letter they had “serious concerns” about the potential step and asked Google if it would agree to restrict certain words, terms or events in China. The company did not immediately comment on Thursday,” Reuters reported.

Why it’s important: “Last month Google planned to launch a version of its search engine in China that will block some websites and search terms. The reported plans, which have been criticized by human rights advocates, come as China has stepped up scrutiny of business dealings involving U.S.”

Big picture: “Google, which quit China’s search engine market in 2010, has been actively seeking ways to re-enter China where many of its products are blocked by regulators.” (Source: Reuters)

7. U.S. Imposes North Korea-Related Sanctions on Russian, Chinese Tech Firms

What: “The United States on Thursday imposed sanctions on a China-based tech firm, its North Korean CEO and a Russian subsidiary, accusing them of moving illicit funding to North Korea in violation of U.S. sanctions. The new sanctions target China-based Yanbian Silverstar Network Technology Co, its North Korean chief executive Jong Song Hwa, and a Russian-based sister company, Volasys Silver Star,” Reuters reported.

Why it’s important: “These actions are intended to stop the flow of illicit revenue to North Korea from overseas information technology workers disguising their true identities and hiding behind front companies, aliases, and third-party nationals,” U.S. Treasury Secretary Steven Mnuchin said in a statement obtained by Reuters.

Big picture: “The Trump administration has maintained pressure on Pyongyang through sanctions in an effort to convince North Korea to give up its nuclear weapons, which are a threat to the United States.” (Source: Reuters)

Compiled by Hou Qijiang and Qian Tong


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