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BUSINESS & TECH

By Qian Tong and Han Wei / Jul 23, 2019 05:26 AM / Business & Tech

Photo: VCG

Photo: VCG

Chinese ride-hailing giant Didi Chuxing set up a partnership with Mohamed Alabbar’s Symphony Investments to jointly explore opportunities in the sharing economy and internet-based consumer business in the Mideast and North Africa, according to an agreement signed Monday in Beijing.

Didi and Symphony will create a joint venture based in Abu Dhabi, according to the agreement. Abu Dhabi's strategic investment firm Mubadala Investment Co. is also interested in the partnership, Didi said.

The partnership was announced during a visit to China by Mohammed bin Zayed, Abu Dhabi’s crown prince and the deputy supreme commander of the UAE’s armed forces.

The deal underscores Didi’s ambition to expand its presence abroad. Since 2017, the ride-hailing company has made investments or set up partnerships with several overseas rivals including Uber, Lyft, Brazil's 99 and Dubai-based Careem.

Didi completed its most recent round of fundraising of $4 billion from a group of investors including Japan’s Softbank Group and Mubadala Investment.

Related: Didi Forms Electric Vehicle Joint Venture With Hainan State Firms

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BUSINESS & TECH

By Bloomberg / Jul 23, 2019 05:20 AM / Business & Tech

Photo: VCG

Photo: VCG

The developer of the world’s tallest tower in Dubai will venture into China as property demand falters at home.

Emaar Properties PJSC, the United Arab Emirates’ largest publicly traded developer, will partner with Beijing Daxing International Airport to develop an $11 billion project, the UAE’s state-run WAM news agency reported Monday.

The residential and leisure development will be built on a section of the airport’s area and should be completed in 10 years, WAM reported, citing an interview with Emaar Chairman Mohamed Alabbar.

OPEC’s third-biggest producer is deepening ties with China, with Emaar set to open an office in Beijing Monday. The project was announced during a visit to China by Mohammed bin Zayed, Abu Dhabi’s crown prince and the deputy supreme commander of the UAE’s armed forces. No additional details on the financing of the project were released.

The Dubai-based company started some operations in China back in 2018 and plans to expand its Address hotel chain in the world’s most populous country. The developer has been struggling with slow demand for properties at home as prices decline amid a surge in the supply of homes.

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By Isabelle Li and Luo Guoping / Jul 23, 2019 05:08 AM / Business & Tech

Pony Ma Huateng. Photo: VCG

Pony Ma Huateng. Photo: VCG

E-governance, a term used to describe a transformation in public administration that aims to move governmental services online, is one of the latest markets Chinese tech giants look to take on.

But how effective and successful the collaboration between tech companies and local governments can be will depend on authorities’ commitment to such a reform, Tencent Holdings founder and Chairman Pony Ma Huateng said Sunday at an e-governance forum.

Home to the Shenzhen-based internet giant, the South China province of Guangdong is advanced in digitizing public administration. The Guangdong government started a province-wide digital governance project named “Digital Guangdong” in 2009 and has pushed for building shared tech infrastructures across different cities and bureaus since the end of 2017.

The province handed over the project’s operation to a company jointly set up in October 2017 by Tencent, China Unicom, China Mobile and China Telecom. Tencent is the biggest shareholder with 49%, while the country’s three biggest telecom operators share the remaining 51%.

The company is in close coordination with the provincial government. Guangdong’s Chief Governor Ma Xingrui has visited its office three times with dozens of bureau chiefs since its establishment less than two years ago, Caixin has learned.

Another Shenzhen-based tech giant, Huawei, is also involved in the provincial project. Huawei has played a role in planning, constructing and running governmental service platforms including helping to build cloud platforms for 14 cities in the province, according to Huawei’s Chief Information Officer Tao Jingwen, who also attended the forum.

Related: Project to Allow WeChat to Serve as ID in China’s Greater Bay Area

Contact reporter Isabelle Li (liyi@caixin.com)

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By Shen Xinyue and Tang Ziyi / Jul 22, 2019 06:59 PM / Business & Tech

Photo: VCG

Photo: VCG

Upstart Chinese coffee brand Luckin said Monday that it plans to launch a joint venture with Kuwait-based food company Americana Group.

The move aims to expand Luckin’s retail business to the Greater Middle East and India, according to the company’s statement. Luckin did not offer further details about the venture.

Touted as a domestic challenger to market leader Starbucks, Beijing-based Luckin has been rapidly expanding its model of minimalist stores and heavily discounted beverages. Since its establishment in 2017, it has opened over 3,000 cafes in China and plans to roll out another 1,500 by the end of this year, the company said in the statement.

That number would top Starbucks, which has said it aims to have 4,200 locations in China by then.

Americana Group mainly engages in food manufacturing and distribution, according to its website. It currently operates 1,900 restaurants in 13 countries across the Middle East and North Africa.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

Related: Three Things to Know About China’s Starbucks Challenger

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By Tang Ziyi / Jul 22, 2019 05:14 PM / Business & Tech

Photo: IC Photo

Photo: IC Photo

China’s largest automaker said it will expand its ride-hailing service to two major cities, marking its latest move to seek new revenue streams in the booming sector.

SAIC Motor Corp. said it will roll out its ride-hailing brand, Xiangdao Chuxing, in the city of Zhengzhou this Friday. The company already features the service in Shanghai.

SAIC Motor said it will also launch the service in Suzhou, a city of about 10 million people near Shanghai. It did not give a timeframe for that launch.

Despite conventional wisdom that first-tier cities such as Beijing and Shenzhen have bigger markets for such businesses, several automakers have chosen to go outside of top-tier cities, where ride-hailing giant Didi Chuxing has historically dominated the market.

China’s ride-hailing market is bigger than that of the rest of the world combined, according to Bain & Co. But with its 550 million users and more than 30 million active drivers, Didi commands over 90% of China’s ride-hailing market.

SAIC Motor’s ride-hailing service has attracted 2.4 million registered users since the service started in Shanghai last December, according to the statement.

Related: In Depth: Automakers Ramp Up Ride-Hailing Offensive to Unseat Didi

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By Tianyu M. Fang / Jul 22, 2019 04:40 PM / Business & Tech

Photo: IC Photo

Photo: IC Photo

Chinese smartphone manufacturer Xiaomi is now officially a Fortune Global 500 company, according to the latest list of the world’s highest grossing companies released Monday.

With revenues of almost $26.5 billion in the last fiscal year — a 56% increase from the year before — Xiaomi sits at number 468 on the list, which is compiled and published annually by Fortune magazine.

Xiaomi joins a number of other Chinese tech companies on the list. Embattled telecoms company Huawei placed 61st, while e-commerce giants JD.com and Alibaba came 139th and 182nd, respectively.

Beijing-headquartered Lenovo ranked at No. 212, while Tencent — the creator of China’s all-purpose mobile app WeChat — is at No. 237.

China’s state-owned petroleum behemoth Sinopec Group was the country’s highest entry, placing second behind American retail giant Walmart after increasing revenues by 26.8% to $415 billion. Another state-owned enterprise, the State Grid Corporation of China, came fifth, down from runner-up last year.

Other notable Chinese newcomers to the list include the China Development Bank, rolling-stock manufacturer CRRC Group, Gree Electric, and Huaxia Life Insurance, among others.

A previous version of this article mistakenly attributed the compilation of the Fortune Global 500 list to Forbes magazine.

Related: Xiaomi Beats Forecasts With 27% Revenue Jump in First Quarter

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By Tianyu M. Fang / Jul 22, 2019 03:16 PM / Business & Tech

Photo: IC Photo

Photo: IC Photo

China is doubling down on its push toward ultra high-definition video.

On Friday, Miao Wei, Minister of Industry and Information Technology, visited Beijing’s Ultra High-Definition Video Production Technology Collaboration Center to tout its uses and reiterate government support.

A national development and action plan published in March estimates the scale of China’s ultra HD video industry to exceed 4 trillion yuan ($581 billion), with its users reaching 200 million people by 2022.

But to do so, China must strengthen the core technology and product research of ultra HD video, accelerate breakthroughs in sectors such as virtual reality and artificial intelligence chips, and promote the application of ultra HD video in various industries, said Miao.

4G internet has enabled the success of China’s short video and livestreaming industry, which thrived partly due to the high-speed mobile internet. Now that China is stepping into the 5G era, ultra HD video is expected to gain market popularity.

Related: In Depth: China Races Early Into the 5G Era

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By Caixin / Jul 22, 2019 02:11 PM / Business & Tech

Photo: IC Photo

Photo: IC Photo

China Southern Airlines is bringing in new investors as Asia’s largest carrier seeks to comply with government efforts to diversify and enhance the ownership structures of state-owned firms.

The three new investors — Guangdong Hengjian Investment Holding, Guangzhou Urban Construction Investment Group, and the Shenzhen Penghang Equity Investment Fund — will each pour 10 billion yuan ($1.45 billion) into the airline, according to a filing to the Shanghai Stock Exchange dated Sunday.

China Southern is one of 96 enterprises owned and administered directly by the central government.

Related: More State Enterprises Set for Mixed-Ownership Reforms

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By Bloomberg / Jul 20, 2019 05:45 AM / Business & Tech

Photo: VCG

Photo: VCG

Toyota Motor Corp. and BYD Co. agreed to jointly develop electric vehicles in China, the latest in a series of deals between a major global automaker and Chinese manufacturer.

The two companies will work together on electric sedans and sport-utility vehicles with the goal of introducing them during 2020-2025, they said Friday in a statement. The partnership also includes the development of batteries for the vehicles, they said.

The partnership underscores Toyota’s ambitions to use electric vehicles to break into China, the market where the company remains a laggard. The carmaker is seeking to narrow the gap with rivals including Volkswagen AG and General Motors Co. in the next decade, which has fueled a global race to secure battery supplies. This week, Toyota announced a deal to buy batteries from Contemporary Amperex Technology Co. Ltd., China’s largest EV battery maker.

After years of focusing on hybrid and fuel-cell technology, Toyota is embracing all-electric cars. The maker of the Prius is now forecasting annual sales of 5.5 million EVs globally in 2025, after moving up its prior target by five years.

In 2008, BYD became the first company to sell mass-produced plug-in hybrid vehicles. BYD’s sales of EVs have been ranked No. 1 in the world since 2015.

Other global automakers working with Chinese manufacturers include Volkswagen and Ford Motor Co. VW is working with Anhui Jianghuai Automobile Co., while Ford has teamed up with Anhui Zotye Automobile Co. Renault SA this week said it will invest $144 million in a venture with Jiangling Motors Corp. to develop EVs in China.

Related: CATL, Toyota Team Up for New-Energy Vehicle Batteries


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By Matthew Walsh / Jul 20, 2019 05:37 AM / Business & Tech

Photo: VCG

Photo: VCG

Novartis International AG won approval in China to sell its multiple sclerosis (MS) drug Gilenya, Reuters reports, deepening the Swiss pharmaceutical giant's business ties to the huge Chinese health care market and promising to shake up the treatment of what has traditionally been a poorly managed disease there.

MS is the most common autoimmune disease affecting the central nervous system. Around 30,000 people in China live with the condition, according to state news agency Xinhua. That compares with nearly 1 million people in the U.S. suffering the disease, according to a study by the National MS Society.

However, low awareness of MS in China means that the actual number of people with the disease may be significantly higher. In May, Chinese doctors urged both health-care professionals and the general public to learn more about the disease, adding that 95% of people knew nothing about MS before they were diagnosed.

MS occurs when the body’s immune system attacks the fatty sheaths around the nerves, disrupting their ability to send messages to one another. As MS progresses, it causes muscle and cognitive problems and can lead to lasting disabilities.

Although there is no one-size-fits-all cure, a number of treatments can significantly slow the progression of MS. China has long been playing catch-up with Western countries in rolling out such treatments, however, and comparatively few are yet available there.

One such drug, teriflunomide — sold under the trademark Aubagio — was approved by the U.S. Food and Drug Administration in 2012 but gained approval in China only last year.

Gilenya sales earned Novartis $825 million during the second quarter, making it the company’s second-largest source of revenue, Reuters said, adding that the drug has been available in the United States for almost a decade but is now being challenged by generic rivals, spurring Novartis’s push into other markets.

Related: In Depth: Why China’s Drug Review Revamp Is Stalling

Contact reporter Matthew Walsh (matthewwalsh@caixin.com)

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By Matthew Walsh / Jul 19, 2019 06:18 PM / Business & Tech

Photo: VCG

Photo: VCG

China’s e-commerce colossus Alibaba has partnered with Sinopharm, one of the country’s major drug companies, to dispense over-the-counter (OTC) medicines.

Customers at Shanghai-based outlets of Freshippo — Alibaba’s brick-and-mortar retail store, also known as Hema — can now purchase around 120 different medicines through self-service vending machines, allowing them to treat colds, coughs, and other common ailments. The drugs are also available through Freshippo’s smartphone app.

The two companies plan to extend the service nationwide, according to a statement posted to Freshippo’s official public account on WeChat, China’s ubiquitous social messaging app.

Alibaba and Sinopharm’s matchup comes at a time when Chinese health care companies are increasingly turning to e-commerce models to satisfy customer demand.

Online platform JD.com, for example, is partnering with drug stores in major Chinese cities to offer 24-hour OTC medicine delivery services, while food delivery and lifestyle app Meituan also allows delivery staff to purchase OTCs users ordered online from local pharmacies.

Zhao Runhua contributed reporting.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com)

Related: Alibaba Wants a Hema Supermarket in Every Big Chinese City

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By David Kirton and Li Liuxi / Jul 19, 2019 06:07 PM / Business & Tech

Photo: VCG

Photo: VCG

China’s Ministry of Industry and Information Technology (MIIT) is weighing up whether to give more targeted support to developers of core hydrogen car technologies in a bid to pave the road to a greener transport future without racking up a hefty bill, according to domestic media.

Several Chinese cities and automakers have jumped on the hydrogen-powered car bandwagon in recent months, expecting that they might hitch a ride on the back of generous subsidy support like that which powered China to a poll position in electric vehicles over the last decade.

Yet the turbocharged development came at a heavy cost, which the government is trying to avoid this time around, the Shanghai Securities Daily reported Thursday. Instead of blanket subsidy support, it is looking into whether it can spur the hydrogen car industry’s development better by focusing on “core components,” that will bring costs down, the report said.

Hydrogen-powered vehicles are regarded as a promising future technology because their batteries emit only water vapor, in contrast to pollution-emitting traditional combustion vehicles. Their batteries also produce more energy for their weight compared to the lithium-ion batteries that currently drive the electric vehicle industry, making them particularly promising for long-distance vehicles such as buses and trucks.

Yet so far higher production costs have hindered their development, in part because of the cost of platinum, a key component, as well as a lack of support infrastructure for vehicles, and the complexity of storing hydrogen, which is highly volatile.

Contact reporter David Kirton (davidkirton@caixin.com)

Related: Shanghai Scales Up Hydrogen-Powered Car Development

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By Zhao Runhua / Jul 19, 2019 05:28 PM / Business & Tech

Photo: VCG

Photo: VCG

It’s been a big week for BMW’s China unit.

After the German carmaker announced that it is extending its collaboration with high-precision map producer NavInfo, the company is now teaming up with Chinese internet giant Tencent to use big data to research and develop autonomous driving technologies.

That’s the takeaway from a Friday press release by Tencent, which says that the online behemoth will supply BMW with development platforms and tools, ensuring that all data generated and processed during the project meet national safety requirements.

In the same announcement, Tencent also outlined its high-precision mapmaking technology for use in autonomous driving. Although multiple foreign outlets reported that the two companies will also jointly set up a computing center in China for autonomous driving, Tencent made no mention of such a project.

BMW and Tencent are already collaborating in other fields, such as in-car entertainment.  

Related: In Depth: China Races Early Into the 5G Era

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By Peng Yanfeng and Isabelle Li / Jul 19, 2019 03:47 PM / Business & Tech

Photo: VCG

Photo: VCG

Japan Display Inc. (JDI), a major panel-maker and Apple supplier, is in advanced fundraising negotiations with Chinese investors, including Harvest Fund Management and electronics-maker TCL Corp., Caixin has learned through multiple sources familiar with the matter.

The Japanese company has struggled to remain afloat after it failed to follow an industry shift towards organic light-emitting diode (OLED) displays. JDI reported a loss of $2.3 billion in 2018, up from $260 million the year before.

Harvest Tech, the fund firm’s technology investment arm, last week sent delegates to Tokyo for a new round of negotiations with JDI, sources confirmed to Caixin.

“The trip to Tokyo was led by the chairman as well as the general manager of Harvest Tech,” said one person with close ties to the investment firm, adding that the two parties are maintaining a dialogue regarding the price and conditions of the potential deal.

TCL, whose interest in JDI dates back several years, also remains in the conversations, though the company did not have a seat at the table last week. Also a major panel-maker, TCL hopes to become a controlling stakeholder of JDI through another investment, sources told Caixin.

Read the full story on Caixin later today.

Contact reporter Isabelle Li (liyi@caixin.com)

Related: Taiwan’s TDK Withdraws From Bailout of Troubled Japanese Apple Screen Supplier

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By Matthew Walsh / Jul 19, 2019 10:59 AM / Business & Tech

Photo: VCG

Photo: VCG

Google has abandoned plans to launch a filtered version of its search engine in China, according to a company executive.

The tech behemoth’s vice president of public policy, Karan Bhatia, said at a U.S. Senate Judiciary Committee hearing Tuesday that the controversial project, nicknamed Dragonfly, had been “terminated.”

Bhatia’s words marked the first time Google had publicly confirmed Dragonfly’s cancellation, according to Buzzfeed News, which reported the comments. A Google spokesperson later confirmed to the website that the company was in no way pursuing a China-specific version of its search engine.

Initial reports about Dragonfly last summer prompted both a global backlash and a mutinous reaction among certain Google employees, some of whom circulated a petition demanding that the company clarify its aims in returning to the tightly controlled Chinese search market. In December, Google announced that the project had been shelved.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com)

Related: Google Shelves China Search Engine Plan

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By Tanner Brown / Jul 19, 2019 10:17 AM / Business & Tech

Photo: VCG

Photo: VCG

Volvo Cars is stepping up cost-cutting in a bid to reverse a drop in profit as the Chinese-owned company succumbs to pricing pressure from competitors and trade friction that has unsettled global auto manufacturers.

The Swedish carmaker owned by China’s Zhejiang Geely Holding Group Co. aims to reduce costs by 2 billion kronor ($210 million) after first-half operating profit dropped 30%, according to a statement Thursday.

“There are headwinds in most car markets, and combined with tariff costs, that is obvious in our margins,” Chief Executive Officer Hakan Samuelsson said in a phone interview. “We saw this coming a number of months ago and started additional cost actions.”

Volvo Cars has been one of the bright spots of the car industry since it was bought by Geely and revamped its lineup. While it’s selling more cars than ever, the latest results show the group isn’t immune to emerging challenges. Volvo has already unveiled a plan to withhold staff bonuses after profitability declined for the first time since 2012, and margins have continued to deteriorate. The results follow a profit warning last week from German rival Daimler AG as well as Geely Automobile Holdings Ltd.


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By Wu Yujian and Han Wei / Jul 19, 2019 05:58 AM / Business & Tech

Chen Jin. Photo: VCG

Chen Jin. Photo: VCG

China's first internet-only insurer, ZhongAn Online P&C Insurance Co. Ltd., said Thursday its general manager and joint CEO Chen Jin resigned.

Chen stepped down from the posts because of “personal work arrangement,” the Hong Kong-listed company said. He will remain as ZhongAn’s executive director, chairman of the company’s Investment Strategy Committee and president of the Fintech Research Institute, ZhongAn said.

ZhongAn’s board named Deputy General Manager and joint CEO Jiang Xing to assume Chen’s duties, the company said. The appointment is subject to approval by the top banking and insurance regulator.

Jiang, 42, joined ZhongAn in 2014. He previously held senior positions in e-commerce giant Alibaba Group and its affiliate Ant Financial Services Group.

Backed by Alibaba and its rival Tencent Holdings, ZhongAn is China’s largest online insurer. It debuted on the Hong Kong stock exchange in 2017, raising $1.5 billion in the city’s largest-ever fintech company listing.

But the company has reported widening losses, reaching 1.8 billion yuan ($262 million) last year from a deficit of 996 million yuan the previous year. Analysts attributed to the losses to the company’s increasing investment in technology research and development.

Related: Controversial Answer to China’s Health Insurance Needs


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By Shen Xinyue and Tang Ziyi / Jul 18, 2019 05:41 PM / Business & Tech

Photo: VCG

Photo: VCG

Kweichow Moutai, the world’s most valuable liquor company, reported its slowest six-month sales growth in three years as the distiller pivots to a direct-sales strategy in a bid to root out graft.

According to the company’s financial report released Wednesday, Moutai’s profit grew 26.6% year-on-year to 20 billion yuan ($2.9 billion) in the first half of 2019, while total revenue also rose 18.2% to 39.5 billion yuan.

The figures illustrate a slowdown compared with the same period last year, when profit and revenue were respectively 40% and 38% higher than the first six months of 2017.

In fact, the purveyor of several varieties of throat-burning booze posted the slowest revenue growth across the first six months of any year since 2016, according to Bloomberg.

The disappointing sales performance comes as Moutai revamps its deeply corrupt distribution channels, according to a report by Shanghai-based Orient Securities. Since 2018, the company has banned 536 intermediaries from selling its flagship liquor — one-fourth of all dealers once authorized to do so. Ninety-nine were culled in the first half of 2019 alone, according to the financial report.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

Related: In Depth: Graft Underpins Distribution at World’s Most Valuable Liquor Company

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By Zhao Runhua / Jul 18, 2019 05:10 PM / Business & Tech

Photo: VCG

Photo: VCG

After reports the wider company is seeking $2 billion from investors, China’s dominant ride-hailing company Didi Chuxing has held a press conference to convince the public of the safety of its Hitch carpool service a year after two women were murdered by their drivers in separate incidents.

During a Thursday media briefing for Hitch — the first of its kind since the service was suspended after the second killing in August — senior Didi executives outlined new safety features.

The company, which did not give a timeline for resuming the service, said a future version of Hitch will not allow drivers to select which passengers they want to pick up, and will limit both the area in which drivers operate and the number of ride-hailing requests they can accept each day.

"Safety will be Hitch’s only key performance indicator moving forward," Didi CEO Cheng Wei told reporters.

The company said any future relaunch would only take place after a test run, but did not give further details.

Didi president Liu Qing said the new safety system might impact the user experience but was nonetheless necessary. 

The outrage that followed the murders sparked a Chinese government investigation and industry-wide safety inspections.

Contact reporter Zhao Runhua (runhuazhao@caixin.com)

Related: China Regulator Slams Didi Over Safety as Startup Pledges Fixes
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By Tianyu M. Fang / Jul 18, 2019 02:45 PM / Business & Tech

Photo: IC Photo

Photo: IC Photo

Google has removed around 60 apps developed by the Shanghai-based, U.S.-listed software firm CooTek from its Play store and banned the company from its advertising platform, Google Admob, for allegedly engaging in alleged malicious ad practices.

CooTek, whose products include the popular TouchPal Chinese-language keyboard and is listed on the New York Stock Exchange, denies the allegations but confirmed Wednesday in a press release that its apps have been “temporarily disabled” by Google’s platforms.

The move will not affect current users of CooTek’s apps, versions of which will remain available on Chinese app markets, the company added.

“CooTek remains committed to upholding the highest standards in the industry and complying with Google Play developer policies,” the company’s press release said. A spokesperson told Caixin that the company has been negotiating with Google but has not yet received any feedback.

This isn’t the first time Google has taken action against developers with ties to China. Do Global — a developer partly owned by Baidu Inc. — and Cheetah Mobile were both hit with similar bans in April and November, respectively.

Related: Tencent Presses Chinese App Stores for Bigger Cut of Game Sales

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