Caixin
Sep 03, 2020 09:20 AM
CX DAILY

CX Daily: China’s New Tech Export Limits Affect More Than TikTok’s U.S. Sale

A DJI drone store in Beijing.
A DJI drone store in Beijing.

Tech export /

Who will be affected by China’s new tech export restrictions?

China’s new tech export restrictions not only add uncertainty to the sale of TikTok’s U.S. operations but also could affect exports of broader consumer tech products such as drones and cellphones.

The new rules, unveiled Friday by China’s Ministry of Commerce and Ministry of Science and Technology, added 23 items—including personal information push services based on data analysis and voice-recognition technologies commonly used in smartphones, robots and wearable devices—to the restricted list. Technologies on the list can’t be exported without a license from the government.

The inclusion of drone technology on the list could also affect China’s DJI Technology, the world’s biggest drone manufacturer with an estimated 70% of the global market. An executive at another robotics company told Caixin that the policy could affect the export of its interactive robots.

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FINANCE & ECONOMICS

Fintech /

In Depth: New breed of fintechs line up to follow Ant Group’s IPO

Following the boom and bust of an earlier generation of financial technology startups, many centered on a peer-to-peer (P2P) lending business model, a new generation of better-regulated fintechs is taking their place. Many of those could be coming to market this year, led by what’s expected to become a world record-setting IPO by Ant Group Co. Ltd., the financial affiliate of e-commerce giant Alibaba Group Holding Ltd.

But Ant Group is just the beginning. Buzz coming from the company’s blockbuster dual listing in Hong Kong and on the Chinese mainland, which could raise up to $30 billion, could encourage some smaller fintech peers to expedite their public debuts as well.

A 2019 report by KPMG showed that seven Chinese fintechs have attained the status of unicorn, meaning they’re still unlisted and valued at more than $1 billion. Two of those, Lufax and JD Digits, are behind only Ant Group in terms of market value, and are both reportedly considering IPOs.

Barley /

China slaps ban on Australia’s biggest grain exporter

China banned Australia’s biggest grain exporter — a cooperative with about 4,000 farmer members — after claims customs authorities found pests in a shipment of barley.

China customs suspended barley imports Tuesday from CBH, based in Western Australia and run by former BHP iron ore boss Jimmy Wilson, based on allegations weeds were found in the grain. The ban, which comes on top of huge tariffs on Australian barley imports imposed in May, was publicized on an official WeChat account. CBH said it was notified of the ban by the Morrison government and would fight to have the suspension overturned.

Digital card /

UnionPay launches digital bankcard

Chinese financial services company UnionPay teamed with 17 banks to launch a digital bankcard, allowing users around the world to apply for the virtual cards without actually visiting a bank and use them through various platforms.

“This is the beginning of UnionPay's transition from traditional physical cards to online cards,” said Guo Yuhang, head of UnionPay’s institution department. In addition to national and regional commercial banks, Tencent-backed virtual bank WeBank is one of the partners of the digital card.

The digital debit and credit card can be linked to apps of banks and merchants, such as JD.com and Baidu’s consumer finance app Du Xiaoman, and allow users to pay with QR codes by tapping the screen. UnionPay already launched a virtual debit card in Hong Kong in cooperation with Livi bank, the virtual bank backed by Bank of China (Hong Kong).

Rare earths /

Lawmakers seek to curb U.S. reliance on China for rare earths

U.S. House lawmakers introduced a bipartisan bill aimed at reducing dependence on China for rare earths used in products from electric vehicles to missiles to wind turbines.

The legislation co-authored by Republican Lance Gooden and Democrat Vicente Gonzalez, both of Texas, is similar to a proposal introduced in May by Senator Ted Cruz. The measure would give tax incentives for companies involved in the mining, reclaiming and recycling of critical minerals and metals from deposits in the U.S. The bill is part of a push in Congress to shift supply chains, particularly in industries critical for national defense, away from China and back toward the U.S. The effort has drawn broad support from domestic rare-earth companies.

Quick hits /

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BUSINESS & TECH

PROPERTY

A residential project of real estate developer Country Garden in Wuhan, Central China’s Hubei province, May 10.

Property /

Developers face new debt limits as property crackdown continues

China’s property developers are preparing for another bleak winter as the government steps up efforts to control debt and risks in a sector that’s become an increasing concern for policymakers.

Regulators are due to test a new financing directive on 12 top real estate firms that will limit their ability to take on more borrowing, according to sources who took part in a meeting Aug. 20 in Beijing involving the People’s Bank of China, the Ministry of Housing and Urban-Rural Development, property companies and other government bodies. Developers subject to the trial include China Evergrande Group, Sunac China Holdings Ltd. and Country Garden Holding Co. Ltd.

The ability of companies in the pilot program to increase their debt will be subject to three red lines: a liability-to-asset ratio (excluding presales) of no more than 70%; a net debt-to-equity ratio of less than 100%; and cash holdings at least equal to short-term debt, according to information circulated online that Caixin confirmed with sources.

Autos /

Geely Auto moves closer to potential $2.9 billion China listing

Geely Automobile Holdings Ltd., the Chinese carmaker controlled by Volvo Cars owner Li Shufu, may raise as much as 20 billion yuan ($2.9 billion) through a listing on Shanghai’s STAR Market.

The debut would represent the first for any automaker on the bourse, a forum for high-tech and innovative companies that started last year. Hangzhou-based Geely, which is already listed in Hong Kong, plans to use the money to help develop new technologies and vehicle models as well as finance mergers and acquisitions and replenish working capital, according to a sales document filed Tuesday. China International Capital Corp. and Huatai United Securities Co. are the lead underwriters on the Shanghai deal.

Airlines /

Chinese airlines’ first-half losses show they can’t shake coronavirus fallout

China’s major airlines nursed huge losses in the first half of this year as revenues plummeted due to the coronavirus pandemic, though narrowing losses in the second quarter indicated the battered industry had managed to stem the bleeding.

The three largest state-owned airlines — Air China Ltd., China Eastern Airlines Co. Ltd., and China Southern Airlines Co. Ltd. — reported a combined loss of 26.1 billion yuan ($3.8 billion) in the first half, according to Caixin calculations based on the airlines’ first-half earnings statements.

Zoom out and the losses get worse. The combined first-half net loss of six of China’s biggest airlines, consisting of the three state-owned majors plus Hainan Airlines, Spring Airlines Co. Ltd. and Juneyao Airlines Col Ltd., came in at 39 billion yuan. The figure is two and a half times more than their combined profits in all of 2019.

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Logistics /

Alibaba invests $967 million more in logistics partner YTO

Alibaba Group Holding Ltd. agreed to pump 6.6 billion yuan ($967 million) into YTO Express Group Co. Ltd., the Shanghai-listed courier announced Wednesday in a statement (link in Chinese).

Two of YTO’s executives — founder Yu Huijiao and his wife — will sell a 12% stake to Alibaba, according to the statement. This will increase Alibaba’s share of YTO to 22.5%, while the couple will remain the company’s controlling shareholders with a combined 42% stake.

The dominant e-commerce giant also holds stake in all three of YTO’s peers — ZTO Express, STO Express and Yunda Express. YTO ranked third behind ZTO and Yunda in terms of transaction volume for the first six months this year, according to data from the companies’ first-half reports.

Quick hits /

Chinese shoppers splash on luxury goods, but still won’t eat out

Netflix to adapt best-selling Chinese sci-fi trilogy ‘The Three-Body Problem’

Realme becomes one of the five biggest smartphone brands in all eight key Southeast Asian markets

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