CX Daily: Facial Recognition Firm, Potential U.S. Blacklist Target, Seeks HK IPO
Facial recognition firm, potential U.S. blacklist target, seeks HK IPO
Megvii Technology Ltd., an 8-year-old Beijing-based AI company that developed the widely used facial recognition system Face++, filed for an IPO in Hong Kong, according to a prospectus released Sunday night.
Investors have widely speculated that facial recognition companies in China such as Megvii and rival SenseTime Group Ltd. may have been involved with China’s security apparatus, posing a significant risk to their reputation and chances of growing overseas.
Reports surfaced in May that Megvii was among five Chinese video surveillance companies that the U.S. was considering to blacklist after the American government put sanctions on Huawei. Though Washington has not made any official decision, the situation is something of a ticking time bomb. The existing ban on Huawei could have ripple effects for tech businesses such as Megvii, as the startup and the telecom giant are in the same supply chain.
FINANCE & ECONOMICS
A crane transports a China Shipping Container Lines Co. Ltd. container at a dock in Frankfurt, Germany, Aug. 13. 2019. Photo: Bloomberg
Early indicators show China’s growth slowdown deepening in August
China’s economic growth slowed further in August as weak domestic conditions, intensifying tensions with the U.S. and worsening global trade all combined to undermine the outlook.
This could be seen in a Bloomberg Economics gauge aggregating the earliest available indicators from financial markets and businesses. Sentiment among sales managers and the mainland stock market fell, while a leading indicator of China’s exports continued to decline. However, small business confidence improved for the first time in five months, a sign that earlier pro-growth measures may be taking effect.
Hong Kong faces a recession
Hong Kong is on the verge of recession. Government data released Aug. 16 showed that in Q2, the city’s GDP grew only 0.5% from the same period last year — the slowest increase in nearly a decade. Growth was also down 0.4% from the previous quarter. If GDP continues to slow in Q3, the SAR will enter a technical recession.
Tourism and retail have so far borne the brunt of the impact from unrest since June. By Aug. 23, 31 countries and regions had issued travel warnings for Hong Kong. Hong Kong’s commerce secretary recently said the number of people visiting Hong Kong fell almost 50% YOY in the period from Aug. 15 to 20. In our deep dive, we look at the effects recent months have had on Hong Kong’s retail, hospitality, trading and logistics, electronics, and financial industries.
Exclusive: Regulators target P2P lenders' payment service providers
Several local regulators in Beijing and Shanghai told some third-party payment companies to be more prudent about offering payment and settlement services to P2P lending companies and in some cases to cease doing so, sources told us.
The first batch of lending platforms to be cut off from such services is likely to be the handful without custodian banks, we've learned. Regulators ordered every lending platform to appoint one bank as a custodian of investors’ funds back in 2015. Without payment channels and custodian banks, the platforms’ funds won’t be able to flow in and out, effectively shutting them down.
Blown British media deal still weighing down Everbright Securities
A failed British sports media deal is still weighing on Everbright Securities Co. Ltd. although the state-owned brokerage’s profits bounced back in the first half of 2019.
On Tuesday, Everbright reported an additional 300 million yuan ($41.9 million) of provisions for estimated liabilities in the first half year due to its involvement via a subsidiary in a consortium that in 2016 purchased a 65% stake in defunct London-based MP & Silva Holding for 5.2 billion yuan. Everbright booked 1.52 billion yuan in provisions for contingent liabilities and impairment losses related to the deal in 2018.
Coming up /
Sat. Aug. 31: The NBS will release its report on August's official PMI.
Mon. Sept 2: Caixin will release August's Caixin China Manufacturing PMI.
Wed. Sept 4: Caixin will release August's Caixin Services and Compoite PMIs.
The 5th East Economic Forum will take place in Vladivostok, Russia, Sept. 4 to 6. Chinese Vice Premier Hu Chunhua will attend. Caixin Global is an official media partner.
Fri. Sept 6: The PBOC will release August's foreign exchange reserves.
BUSINESS & TECH
Costco’s 14,000 square-meter store in southwest Shanghai was overrun Tuesday. Photo: VCG
Will Chinese shoppers’ frenzy turn into lasting Costco success?
There is no official figure for how many customers were in the 14,000 square-meter venue in southwest Shanghai, but media estimates ranged as high as 10,000 to 20,000 people, who created chaos both in and outside the store, forcing the location to shut down.
Costco’s push into China defies the country's growing trade tensions with the U.S. as well as the trend of rivals retreating from the country. But analysts are skeptical whether Costco’s business model -- membership-based bulk buying -- can succeed in a country averse to fees, where people prefer to shop small and often, private storage space is limited and rents are high.
Check out our feature.
‘American Factory’ first-half profit grows 16.4% to $21 million
The Chinese automotive glass factory in Ohio featured in Netflix’s first documentary film produced by the Obamas reported double-digit growth in revenue and profit less than three years after it was built in an abandoned General Motors site.
Fuyao Glass America Inc., the American arm of Fuyao Glass Industry Group, posted revenue of $2.65 billion for the first six months of 2019, a 13.7% YOY increase, and a net profit of $20.9 million, 16.4% higher than a year ago. The film, meanwhile, shows how Fuyao Glass Industry Group, China’s biggest automotive glass maker, dealt with East-West cultural differences in the revival of the rust belt plant.
U.K. travel giant’s creditors back $1.1 billion rescue led by Fosun Tourism
Debt-laden U.K. travel giant Thomas Cook Group Plc secured the backing of its lending banks and bondholders for a 900 million pound ($1.1 billion) bailout led by Chinese investor Fosun Tourism Group.
Fosun will provide half of the total in return for control of Cook’s tour-operator arm and a stake in its airline, the London-based holiday company said Wednesday. Banks and noteholders will contribute the rest, while converting their existing debt into stock. For Fosun Tourism, the transaction marks the acquisition of its second sizable tourism asset in Europe, after the purchase of iconic French resort company Club Mediterranee in 2015.
Quick hits /
Xiaomi takes another five-year bet from appliance-maker Gree
China train maker gets faster route into Europe with German deal
Didi wants to put passengers in driverless cars soon
Deals, driverless cars, space travel: Highlights from the 2019 World Artificial Intelligence Conference
Shanghai to sign dozens of AI, 5G partnerships at World Artificial Intelligence Conference
China adds Huawei, Hikvision to National AI Innovation Platform
Out of jail, video-streaming pioneer tries his hand at AI
China MerchantsChina Merchants to take over AVIC's shipbuilding assets
Tianma gets government boost for high-tech flexible display plant
First Chinese AI startup hoping to list in Hong Kong faces significant risk: Analysts
Singapore, China ink pact on judicial education
Enlight Media’s profits fade out on China’s movie industry slowdown
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