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By Zhao Runhua / Jan 23, 2019 01:10 PM / Business & Tech

Fans of shared-bike leader Mobike will soon have to bid the company farewell, or at least its catchy name that has become synonymous with its trademark orange and gray bikes.

That's the word coming from internet services giant Meituan Dianping, which bought Mobike last year for $2.7 billion but has been dragging its feet on its future plans for the company. A Meituan representative told Caixin that Mobike is "very likely" to be renamed Meituan Bike.

Mobike's Chinese name will make a similar change, dropping its familiar title to be replaced with Meituan.

Mobike's standalone app may also be headed for the shared economy scrapheap, and merged instead into Meituan's own app, according to an internal company letter cited by the company representative.

Mobile has emerged as the champion in China’s fierce shared-bike wars. No. 2 player Ofo reported that is bleeding cash and has been laying off staff.

Related: Troubled Ofo Dismisses Its International Business Department

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BUSINESS & TECH

By Tang Ziyi / Jan 23, 2019 12:51 PM / Business & Tech

Photo: VCG

Photo: VCG

ByteDance, the owner of popular video app TikTok, has denied media reports that it has acquired smartphone maker Smartisan.

Bytedance told Caixin Tuesday that it had merely purchased the rights to use some of Smartisan’s technology to explore the education business. ByteDance didn't offer any other details on the deal and said that while some former Smartisan employees had recently joined Bytedance, this was part of the normal turnover process.

Reports of the rumored acquisition were published by Chinese media outlets including tech news site TMTpost after other reports that Smartisan was experiencing a capital shortage and was laying off employees.

Related: Five Things to Know About China’s Smartphone Market Downturn

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By Zhao Runhua / Jan 23, 2019 12:07 PM / Business & Tech

Photo: VCG

Photo: VCG

Chinese telecom giant Huawei will release a 5G smartphone in June, the company’s rotating chairman Hu Houkun (also known as Ken Hu) said at the World Economic Forum in Davos on Tuesday.

Hu said Huawei has deployed 5G networks in 10 countries, with 20 more to come.

The news comes amid tough times for Huawei. Several countries have blocked the company from working on their sensitive network infrastructure, out of national security concerns. The company’s CFO, Meng Wanzhou, was arrested last month in Canada, at the request of the U.S., on charges related to violation of American sanctions on Iran.

Hu said that the pressure Huawei is feeling at the moment could be "the largest among related parties.”

Hu also said 2019 will be a crucial year for the tech sector, as technologies such as the internet of things, artificial intelligence, and blockchain are reaching critical application stages.

Read Caixin’s full coverage of Huawei and the Meng case


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By Bloomberg / Jan 23, 2019 09:38 AM / Business & Tech

Photo: Bloomberg

Photo: Bloomberg

Chinese companies challenged by policy makers’ determination to tamp down leverage in the country’s financial system have found some creative ways to secure funding.

One of the least transparent mechanisms to emerge so far is a tactic where bond issuers are indirectly buying their own bond offerings, according to investors and credit analysts. The idea is to inflate issuance sizes, creating the image of greater access to capital than might otherwise be true -- and leading to lower coupons in subsequent sales.

Market players began picking up on the practice, known as structured issuance, when the deleveraging drive intensified a couple of years back. While loath to name names, some warn that the practice increased late in 2018 as default fears spread. For investors, it’s one more idiosyncrasy in the world’s third-largest bond market to consider when moving beyond government debt.

“The motive of using the structured financing method is to boost market demand for bonds the issuer is selling -- and it will benefit future issuance as well,” said Li Chang, an analyst at S&P Global Ratings in Beijing.

The practice is one of several strategies for debtors to enhance their appeal to creditors, including one where borrowers guarantee each others’ debt.

The National Association of Financial Market Institutional Investors, a regulator of China’s bond market, didn’t reply to an emailed request for comments by Bloomberg. The China Securities Regulatory Commission didn’t respond to faxed enquiries. The National Development and Reform Commission didn’t immediately reply to a faxed request for comment.

Lower rated private companies and local government financing vehicles, or LGFVs, have been the main users of structured issuance, observers say. One popular method is for the borrower to put up the money for the subordinated tranche -- the first to absorb losses -- of the asset-management vehicle that buys the bonds. Li at S&P said this then exposes buyers of the senior tranche to greater risk in case of default.

The overseers of the asset management vehicle benefit from the arrangement because it helps expand their products and boost fees, Everbright Securities Co. analyst Zhang Xu wrote in a research note. The mechanism has been “crucial to restore market confidence” for some weak issuers, Zhang wrote, declining to specify the names of any companies involved.

Related: Chinese Bond Defaulter’s Chairman Offers Personal Guarantee

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By Dave Yin / Jan 23, 2019 04:22 AM / Business & Tech

Photo: VCG

Photo: VCG

Punishments doled out as part of China’s social credit system may grow more severe as China’s top judge pledged to tighten controls barring those who defy court orders from making investments and holding certain jobs, Bloomberg reported.

Supreme People’s Court President Zhou Qiang warned that those who are dishonest should expect punishments in all areas of life, according to the report. Zhou made the remarks at the World Enforcement Conference in Shanghai, with judges and other law enforcement representatives from more than 30 countries.

Zhou said individuals who defaulted on loans were already restricted from traveling, buying homes and holding “high-level jobs,” Bloomberg reported.

China has been ramping up elements of the social credit system, set to go nationwide by 2020, against a backdrop of a sweeping crackdown on corruption.

In 2018, those with a low credit scores were prohibited from a total of 17 million flights, 5 million train trips and 290,000 instances of acting as executives or legal business representatives, according to the Supreme People’s Court. Some high-profile businessmen were blacklisted by courts for debt defaults, including LeEco founder Jia Yueting and Ofo founder Dai Wei.

Related: Ofo Founder Blacklisted by Court Amid Debt Woes

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By Han Wei / Jan 23, 2019 02:51 AM / Business & Tech

Photo: VCG

Photo: VCG

Maoyan Entertainment, China’s biggest online movie ticketing platform, put off the date of its Hong Kong listing to Feb. 4 and introduced new cornerstone investors including smartphone giant Xiaomi Corp.

Maoyan, backed by Tencent Holdings, originally planned to debut in Hong Kong Jan. 31. The company is seeking to raise as much as HK$2.7 billion (US$345 million) in the initial public offering, according to a prospectus released last week.

In a revised prospectus, Maoyan extended the debut date and named three new cornerstone investors, including a unit of Xiaomi, Hylink Investment and Prestige of The Sun. Maoyan has introduced a total of five cornerstone investors so far, lining up a total of $30 million, or as much as 12% of the planned offering. Xiaomi unit Green Better agreed on an investment of $2.6 million, according to the prospectus.

The company is offering 132.4 million shares at HK$14.80 to HK$20.40 apiece. The pricing will be announced Jan. 28, according to the revised prospectus.

Maoyan had 130 million monthly active users in the first half of 2018, according to the prospectus. The company said its revenue in the first nine months of 2018 nearly doubled to 3.1 billion yuan ($455 million). But Maoyan has not been profitable. Losses amounted to 144 million yuan in the first nine months of 2018.

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By Charlotte Yang / Jan 22, 2019 04:35 PM / Business & Tech

Photo: VCG

Photo: VCG

The transaction volume for UnionPay hit an all-time high in 2018, reaching 120 trillion yuan ($17.7 trillion), up 28% from 2017, according to data released by the company today.

The Chinese bank-card operator has been pushing aggressively into mobile payment in recent years. The company said its mobile QuickPass app has attracted over 120 million users since it launched at the end of 2017.

Related: Visa and Mastercard’s Applications for China Entry Drag On

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By Runhua Zhao / Jan 21, 2019 06:59 PM / Business & Tech

The Yidao Yongche ride-hailing app. Photo: VCG

The Yidao Yongche ride-hailing app. Photo: VCG

To-Win Capital will sell its shares in ride-hailing business Yidao Yongche at half the undisclosed initial purchase price, the company announced Monday. To-Win, an institutional investor, acquired the business from embattled Faraday Future founder Jia Yueting in 2017.

To-Win claims it has alleviated roughly 6 billion yuan ($884 million) of Yidao’s debt ever since it took over the company from Jia – even though Jia had originally promised that Yidao’s total debts were no more than 2.3 billion yuan.

Debt has long been a problem, however, according to an earlier statement To-Win released regarding Yidao. 

“To-Win’s power is too small,” the company said. “As funding sectors in China are not performing well in general, it would be hard for To-Win to continue its investment in Yidao.”

Currently, Yidao has 3.4 billion yuan in outstanding debt, according to To-Win. To-Win also cited the difficulty of ensuring safety in the ride-hailing sector.

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By Yang Ge / Jan 21, 2019 06:13 PM / Business & Tech

Photo: VCG

Photo: VCG

Oil major PetroChina was all smiles on Monday, as it informed investors that it expected its profit for 2018 to rise a healthy 123% to 132% to between 28 billion yuan ($4.1 billion) and 30 billion yuan.

Market watchers will recall that 2018 was a banner year for oil, at least the first three quarters of the year, as crude prices crested above $80 per barrel in early October

But it’s been downhill from there, with prices hovering just around the $60 level at the moment.

Despite seeming large, the annual profit rise that PetroChina is forecasting is actually down quite a bit from the 177% profit gain it posted for the first three quarters of the year in its latest quarterly report. That means the company probably suffered a sharp profit slowdown in the fourth quarter, even though it wasn’t focusing on that fact in its just-released annual forecast

"In the first three quarters of 2018, the fundamental supply and demand in the global oil market were generally balanced, while the international crude oil price fluctuated with a general tendency to move upwards,” PetroChina said in its latest profit forecast. “Despite the significant drop in oil prices in the fourth quarter, the international average crude oil price of 2018 experienced a relatively significant rise as compared with the previous year.”

While pricing trends aren’t so good right now, investors don’t seem too worried, at least not yet. PetroChina’s Hong Kong-listed shares are up a healthy 5% so far this year, including a 1.6% rise on Monday.

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By Zhao Runhua / Jan 21, 2019 05:23 PM / Business & Tech

Photo: VCG

Photo: VCG

One of China’s largest private clinic chains said it has completed its privatization process.

Shares of Nasdaq-listed iKang Healthcare Group will be cancelled for $41.2 per share, or $20.6 per American depository share (ADS), the company said.

The deregistration will become effective 90 days after Nasdaq formally notifies the U.S. Securities and Exchange Commission.

IKang’s privatization process started in 2015, just 16 months after the company listed on the Nasdaq, as an attempt to seek higher valuation and increased capital. iKang's chief rival Meinian Onehealth Healthcare made a counter bid after a management-led team made the original offer, but that deal failed. The final investor consortium included Alibaba-backed Taobao China Holding.

“Today is the start of a new milestone,” iKang CEO Zhang Ligang said on Jan. 19. The company told Beijing News that they have no intention to relist on an A-share board.

Related: Alibaba-Led Group Creates New Twist in Clinic Chain’s Privatization Saga

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By Zhao Runhua / Jan 21, 2019 02:42 PM / Business & Tech

China Mobile said it will soon enable eSIM service for Apple Watches, which will allow users to surf the net and take calls without having their phones nearby.

China Mobile is the last of China’s three carriers to roll out the function. China Unicom and China Telecom launched related services in pilot cities last year.

An eSIM also allows users to switch between carrier services without applying for new numbers. China Mobile's new plan will allow Apple Watch users to place and receive calls over different networks, all with one number.

China Mobile rolled out eSIM service for Huawei’s Watch 2 Pro Porsche model last June.

China Mobile's trial of Apple Watch service will start Wednesday in seven cities: Chengdu, Guangzhou, Hangzhou, Nanjing, Shanghai, Shenzhen, and Tianjin.

Related: Five Things to Know About China’s Smartphone Market Downturn

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By Tanner Brown / Jan 21, 2019 09:41 AM / Business & Tech

Chinese tech firms are feeling the chill after years of white-hot expansion. Photo: VCG

Chinese tech firms are feeling the chill after years of white-hot expansion. Photo: VCG

Bad news has been piling up in China’s tech sector since the second half of 2018, with companies rattled by dwindling capital, volatile markets and tightening regulations. 

And as the winter chill falls, firms are bracing for a freeze that may last longer than usual.

Read the full story here.

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By Han Wei / Jan 19, 2019 02:06 AM / Business & Tech

Photo: VCG

Photo: VCG

Internal corruption may have cost DJI Technology Co. Ltd. 1 billion yuan ($150 million) in 2018 for overspending on procurement, the Chinese drone maker said.

Shenzhen-based DJI, the world’s largest consumer drone manufacturer, has set up an internal inspection team to investigate the cases, DJI told Caixin Friday.

An internal company report seen by Caixin showed that about 45 employees have been punished, including some who are being handed over to law enforcement departments. Most of the corruption cases are linked to the DJI supply chain management and procurement department.

According to the report, some employees have taken kickbacks from suppliers or colluded with research people to grant favors to certain suppliers. The investigation has detected large-scale corruption in the company that may involve over 100 people, the report found.

DJI has yet to publish its 2018 results. The company posted 18 billion yuan of sales revenue in 2017, up 80% from the previous year.

Chinese tech giants have stepped up efforts to fight internal corruption. Earlier this month, ride-hailing company Didi Chuxing said its compliance staff found more than 60 cases of corruption within the company last year. A total of 83 people were dismissed for “severe violations” of company rules, Didi said.

Other tech leaders, including Baidu, Tencent, JD.com and Xiaomi have also previously reported cases of employee graft.

Related: China’s Craigslist, 58.com, Fights Internal Corruption

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By Zhang Erchi and Han Wei / Jan 19, 2019 02:03 AM / Business & Tech

Photo: VCG

Photo: VCG

Ren Zhengfei, the founder of Huawei Technologies Co., broke his silence this week on the arrest in Canada of his daughter Meng Wanzhou, as the reclusive billionaire took the rare step of meeting with media twice to defuse suspicions about his company.

Ren provided new details about the Dec. 1 arrest in the second interview Thursday with a group of Chinese media. Ren said Meng was en route to Argentina for a conference that Ren attended.

“Meng and I were supposed to attend a meeting in Argentina, where she was to be a main host,” Ren told media. “Unfortunately, she was detained while transferring in Canada. I departed two days later and transited in other place.”

Previous media reports had Meng changing planes in Canada on the way to Mexico. Flights from Vancouver to Argentina normally need to transit in the U.S. or Mexico.

Ren didn’t detail what meeting the two were to attend. But a person close to Huawei told Caixin it was most likely regarding Huawei’s plan to restructure its overseas units. Huawei has been operating a South America headquarters in Buenos Aires since 2013, and the unit was selected for a pilot program of Huawei’s revamp granting independence to overseas subsidiaries.

Meng, the chief financial officer of Huawei, was arrested in Vancouver on the request of the U.S., which accused her of cheating American banks and violating U.S. sanctions on Iran. Meng’s arrest was a major blow to Huawei, which is under a darkening cloud of allegations abroad over security concerns.

Meng was released on bail 10 days later and is waiting in Vancouver for the extradition procedure, which may lead her to stand trial in the U.S.

Ren thanked the Chinese government for providing consular protection to Meng and said he speaks with her.

“Over the phone, we just make some jokes,” he said. “Wanzhou is also very strong.”

Meng’s arrest set off an international political firestorm involving China, Canada and the U.S. Shortly after her arrest, China’s foreign affairs ministry summoned Canadian and U.S. ambassadors in China to express objections.

Paul Triolo, analyst at Eurasia Group, said that although China and the U.S. have said Meng’s arrest has nothing to do with ongoing Sino-American trade disputes, it is possible that the incident will become an issue to be discussed in trade war settlement talks.

Related: Huawei Founder Speaks Out to Address Doubts

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By Teng Jing Xuan / Jan 18, 2019 02:45 PM / Business & Tech

Photo: VCG

Photo: VCG

Struggling Chinese smartphone maker Coolpad has appointed 27-year-old Chen Jiajun as its new CEO, the company announced Thursday.

Chen is Coolpad’s largest shareholder and previously served as director of commercial real estate at the Shenzhen-based property company Jingji. Chen’s appointment comes after Coolpad’s sudden dismissal of its previous CEO Jiang Chao on Jan. 11. Coolpad didn’t give a reason for dismissing Jiang.

Coolpad, once part of blacklisted entrepreneur Jia Yueting's LeEco business empire, was left in the lurch after Jia's businesses collapsed in 2017.

Read More: The Struggles of China’s Second-Tier Smartphone Firms


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By Bloomberg / Jan 18, 2019 11:59 AM / Business & Tech

People wear 3-D glasses while watch a movie in the Wanda Cinema Line Co. cinema at the Tongzhou Wanda Plaza shopping mall

People wear 3-D glasses while watch a movie in the Wanda Cinema Line Co. cinema at the Tongzhou Wanda Plaza shopping mall

Maoyan Entertainment, China’s biggest online movie ticketing platform, is seeking to raise as much as $345 million in a Hong Kong initial public offering.

The company is offering 132.4 million shares at HK$14.80 to HK$20.40 apiece, according to terms for the deal obtained by Bloomberg. Welight Capital and an affiliate of IMAX China agreed to buy a combined $18 million of stock as cornerstone investors, the terms show.

China’s box office sales hit a record high last year, driven by local films including “Operation Red Sea,” the patriotic story of a Chinese special forces unit battling Somali pirates and terrorists. Ticket receipts rose 8 percent to 56.6 billion yuan ($8.3 billion), data compiled by Maoyan Movie show.

Maoyan is taking investor orders from Friday to Jan. 24, when the offering is slated to price, the terms show. The company’s shares are expected to start trading Jan. 31.

Morgan Stanley and Bank of America are joint sponsors of the listing, while China Renaissance is sole financial adviser, according to a preliminary prospectus.

Related: Arthouse Film Gets Misadvertised as Crowd-Pleaser, Sending Producer’s Stock Tumbling

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By Zhao Runhua / Jan 18, 2019 11:23 AM / Business & Tech

A Tesla Inc. Model S electric vehicle sits on display at a showroom in Hong Kong. Photo: VCG

A Tesla Inc. Model S electric vehicle sits on display at a showroom in Hong Kong. Photo: VCG

Tesla is recalling 14,123 imported Model S electric cars in China, the country’s market watchdog confirmed Friday.

The affected cars were produced between Feb. 4, 2014, and Dec. 9, 2016, and the recall will take effect in April, China’s State Administration for Market Regulation said.

According a filing by Tesla, the company made the decision based on airbag safety concerns. Tesla said it would replace airbags on affected cars for free.

Related: 

Tesla Rival Nio Sold a Record 11,348 Vehicles 2018

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By Han Wei / Jan 18, 2019 03:23 AM / Business & Tech

Photo: VCG

Photo: VCG

A high-profile advertising campaign launched by China Central Television, the state broadcaster, is under investigation by the state market watchdog for allegedly violating the Advertising Law and misleading consumers.

The State Administration of Market Regulation ordered its Beijing bureau to investigate CCTV’s National Brand Program following consumer complaints, the agency said Thursday in a statement published on its website.

The National Brand Program was launched by CCTV in 2016 as a major advertising project to heavily promote about two dozen brands including home appliance makers, e-commerce providers and food producers through TV commercials each year. The program also became a major source of CCTV’s advertising revenue.

However, the program has sparked debates over whether the broadcaster violated the advertising and market competition law by implying state endorsement to brands that bid to be included in the advertising program.

In a separate statement, the market regulation administration said media pitching “national brands” in advertisements misleads customers while hurting fair competition.

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By Zhao Runhua / Jan 17, 2019 05:47 PM / Business & Tech

during the 2010 FIFA World Cup South Africa Round of Sixteen match between Argentina and Mexico at Soccer City Stadium on June 27

during the 2010 FIFA World Cup South Africa Round of Sixteen match between Argentina and Mexico at Soccer City Stadium on June 27

A unit of CCTV is suing an app that allegedly illegally broadcast World Cup content.

The subsidiary of state-run CCTV – which is the exclusive 2018 World Cup broadcasting partner on the Chinese mainland – argued that Chinese app Jike provided unauthorized on-demand gif content involving 52 matches last summer, according to a Beijing court notice released Wednesday.

CCTV International Network said the service caused “illicit competition,” and significantly harmed CCTV’s material interests. The company is also demanding a 5 million yuan ($740,000) compensation from Jike parent company Shanghai Ruoyou Network Technology.

Jike said Thursday it has not yet received any notice from the court or CCTV International Network. The company also claimed that it found only user-created gifs, and no other World Cup-related content, on its platform during an internal check after hearing about the lawsuit from media.

The case is still under investigation.

Related: Prominent CCTV Host Accused of Sexual Assault

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By Bloomberg / Jan 17, 2019 11:41 AM / Business & Tech

A passenger looks at a smartphone on a subway train in Shenzhen. Photo: Bloomberg

A passenger looks at a smartphone on a subway train in Shenzhen. Photo: Bloomberg

Tencent will soon release a test version of a Game of Thrones game for smartphones, after winning exclusive Chinese rights to distribute the title based on the mega-popular TV series.

China’s largest social and media gaming company will be the sole distributor for Game of Thrones: Winter is Coming, developed by Yoozoo, Tencent said on its official WeChat account. It didn’t specify a launch date but said it would dovetail with the show’s final season airing from April.

The game will help jazz up a Tencent pipeline that suffered after Beijing clamped down on game approvals for months, aiming to weed out violence and other undesirable content. The HBO series based on George R.R. Martin’s series of books drew a record 12.1 million viewers for the previous season’s finale. Tencent said its upcoming mobile title is a simulation that will let players assume identities such as that of Tyrion Lannister, relive key moments like the infamous Red Wedding and visit well-known locales.

“When the eighth and last season returns in April, it will definitely cause a sensation and much discussion,” Tencent said. “By releasing the game at this time, the TV series will help attract more players.”

Yoozoo, the developer, was founded in 2009 and helps convert films into games. Tencent needs a boost after a grim year when China froze gaming approvals, curbing its ability to monetize two of its most popular games, including Fortnite. Beijing in December began resuming approvals but the backlog has accumulated to hundreds of titles.

Related: Video Site Censors Male Celebrities’ Ear Piercings

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