Chinese autonomous aerial vehicle maker EHang Holdings Ltd. cut the size of its planned U.S. listing by more than half, setting a target of $46.4 million.

According to an updated prospectus filed with the U.S. Securities and Exchange Commission Thursday, the Chinese drone maker plans to sell 3.2 million American depositary receipts (ADRs) at a price between $12.50 and $14.50 apiece. Each ADR will represent two ordinary shares of the company.

The Guangzhou-based company, which produces drones that can ferry one or two passengers at a time, originally targeted raising about $100 million in the offering, according to its initial prospectus released in early November. The downsizing reflects the relatively lukewarm reception that many Chinese tech listings are getting recently.

Major investment banks including Morgan Stanley and Credit Suisse as well as Chinese online brokerage Tiger Brokers are helping to underwrite the deal.

Pre-profit EHang sees nearly 73% of its revenue coming from producing aerial vehicles carrying passengers or cargo. As of the end of September, EHang reported a 47.8 million yuan ($6.8 million) loss this year.

As of Thursday, the company has delivered 38 air taxis that can carry human passengers, mostly for experimental, instructional and demonstration purposes. It has signed orders for 48 more that haven’t been completed, according to the latest prospectus.

Money raised from the listing will be used to expand production capacity, fund research and development and supplement operational capital, EHang said.

Related: Air-Taxi Maker Looks for Lift With Wall Street Listing Plan

Chinese hotel chain Sweetome acquired two other players in China’s burgeoning homestay market, one backed by Airbnb and the other by Ctrip, as China’s fledgling demand for sharing homes grows by leaps and bounds despite broader pessimism.

Shanghai-based Sweetome, which operates its own shared home business, bought 100% of the shares of CityHome and Youjia Meisu and will receive a strategic investment from classifieds platform operator 58.com, according to terms disclosed by capital firm China Renaissance, the deal’s financial adviser, in a public WeChat post (link in Chinese).

Ren Jiao, head of Sweetome’s marketing department, confirmed the deal to Caixin but declined to comment.

In 2018, CityHome received a $5 million investment from Airbnb, while Youjia Meisu raised angel investor funding from travel booking titan Ctrip, Chinese homestay frontrunner Tujia Online Information Technology and 58.com, according to public company listings (links in Chinese). Sweetome itself spun off of Tujia in 2017.

Airbnb will receive Sweetome shares in exchange for its stake in CityHome, a company spokesperson told Caixin.

The size of China’s short-term rental market has more than doubled from $2.5 billion in 2017 to $5.2 billion in 2019, according to data compiled by market research provider Euromonitor International.

The growth defies signs of a bursting bubble in China’s overall sharing economy, plagued by failures including WeWork’s flopped initial public offering, Ofo’s looming bankruptcy, Didi Chuxing’s and even Airbnb’s own safety crises. Euromonitor in a statement attributed the upward trend to a growing willingness among Chinese consumers to experience local life, combined with a favorable regulatory environment.

Still, the value of the China’s industry is a small fraction of its American counterpart, which reached $35.3 billion this year, Euromonitor data showed.

Tujia, considered China’s answer to Airbnb, captured the most market share in 2019 with 24.3%, though growth has stalled since 2018, the data showed. In contrast, Airbnb expanded its share by 9.3 percentage points since last year to 21.6%. Beijing Run Technology Co. Ltd. and Xiamen Zhenguo Holiday Co. Ltd. are also among the top four.

Contact reporter Dave Yin (davidyin@caixin.com)

Related: In Depth: Is the Sharing Economy Bubble Bursting?

IDreamSky Technology Holdings Ltd. is in exclusive talks to buy rival gaming firm Leyou Technologies Holdings Ltd. for about $1.4 billion, according to people familiar with the matter.

IDreamSky, which counts Tencent Holdings Ltd. among its shareholders, is seeking co-investors to help finance the transaction, the people said, asking not to be identified because the deliberations are private. Potential partners could include private equity firms as well as other gaming companies, the people said. The Shenzhen-based company is working with Credit Suisse Group AG on the deal, they said.

Leyou has gained about 16% this year, giving it a valuation of around HK$7.8 billion ($996 million). Shares of iDreamSky have plunged more than 30% since its debut last year, valuing the company at about HK$5.8 billion.

There hasn’t been any final decisions as talks are ongoing and the companies could still decide against a transaction, the people said. Representatives of iDreamSky and Credit Suisse declined to comment, while a representative for Leyou didn’t immediately respond to requests for comment.

Leyou, listed in Hong Kong in 2011, has developed the free shooting games Warframe and Dirty Bomb. It’s also working with Amazon.com Inc. to co-produce a video game based on the popular fantasy series “The Lord of the Rings.” Other coming games are Civilization Online and Transformers.

In September, Leyou said that it was holding preliminary talks with potential investors on possible transactions, which may lead to a public takeover. Bain Capital, CVC Capital Partners and KKR & Co. as well as other gaming companies were among bidders for Leyou, Bloomberg News reported last month.

Last week, Leyou said in a filing that its controlling shareholder Charles Yuk entered into a memorandum of understanding to sell a 69.2% stake to an unidentified potential buyer. The company granted a 21-day exclusivity period to the potential purchaser to conduct due diligence and try to reach a formal agreement.

As part of any potential deal, Yuk would acquire the company’s interests in certain offices in the iconic Lippo Centre in Hong Kong and enter into an agreement to provide financing to help develop certain games, according to the filing.

IDreamSky, listed in Hong Kong about a year ago, had 57 games including 16 role-playing games on its platform as of June 30, according to its interim report. It has exclusive publishing rights in China for popular titles including Subway Surfers and Temple Run.

Michael Chen, its co-founder and chief executive officer, is iDreamSky’s largest shareholder with a 25.92% stake, according to data compiled by Bloomberg. Tencent Mobility, a unit of the Chinese technology giant Tencent, owns about 18.6% as the second-largest holder.

Chinese startup AutoX may become the second company to test fully autonomous vehicles after Google-backed Waymo.

The Hong Kong-based firm has applied for a permit to test self-driving cars without an in-car backup driver in California, Reuters reported Thursday.

If approved, AutoX would be able to test autonomous vehicles with emergency intervention from a remote human operator rather than a human driver behind the steering wheel, according to the report.

AutoX’s chief operating officer Jewel Li told Reuters that its technology "can go in deep" and will be "safe for the public," after three years of efforts.

To date, Waymo is the only company to have been approved by the California Department of Motor Vehicles to test fully driverless cars on the state’s public roads.

AutoX, whose major investors are Alibaba and Dongfeng Motor, is among a group of some 60 companies which have secured permits to test self-driving cars with in-car backup drivers in California.

In September, AutoX announced that it would roll out a self-driving taxi service in Shanghai by the end of the year or early 2020.

Contact reporter Ding Yi (yiding@caixin.com)

In China, it often feels like you can't buy a bowl of noodles without being offered a restaurant membership running to thousands of yuan. 

Large upfront payments which offer discounts or just simple access to services are seen everywhere, from high-end fitness centers to local shoe repair shops. But so too is the phenomenon of startups going up in smoke — and operators disappearing with the money people have already paid.

Now, Beijing’s city authorities are talking about tackling the problem. But some of the proposals they released late last month in a suite of draft consultation papers have raised eyebrows. 

One, dubbed the “3-month rule,” would ban fitness centers from selling memberships which tie people into contracts longer than 3 months, or with a value of more than 3,000 yuan ($425).

And laws made in Beijing often shape those in other jurisdictions. 

Caixin talked to local business owners, as well as some of the victims of defunct startups, to get their take. 

See the full story on Caixin Global later today. 

Contact reporter Flynn Murphy (flynnmurphy@caixin.com)

Tencent-backed short-video platform Kuaishou’s gaming unit saw rapid user growth in the latter part of this year, the company said on Thursday, largely due to the wildly popular esports game League of Legends.

The unit boasted 51 million daily active users (DAUs) of live-streamed games as of the end of November, 16 million more than the figure for June, Kuaishou said. Gaming-related short videos saw DAUs surge to 77 million from June’s 56 million.

The multiplayer battle game, which is operated in China by internet giant Tencent, was one of the biggest driving forces behind that growth. League of Legends’ 2019 World Championship was streamed in China from early October to mid-November, drawing 74 million viewers to Kuaishou’s platform including 25 million on the opening day alone, the company said.

Related: U.S. Game Developer Bans Esports Player After Hong Kong Outburst

The Chinese mainland’s chart-topping scores in a recent high-profile global education study have sparked both pride and no small amount of controversy.

The best and brightest 15-year-olds from four key localities surpassed their overseas peers by ranking No. 1 for ability in the three core subjects of reading, math, and science in the 2018 Program International Student Assessment (PISA), the results of which were announced Tuesday.

The news marked a return to form for a country that languished in 10th place in the results of the 2015 test. PISA, which is coordinated by the Organization for Economic Cooperation and Development (OECD), is held every three years.

But familiar criticisms of the assessment swiftly followed, with some commentators pointing out that the mainland Chinese participants, who were drawn from the wealthy megacities of Beijing and Shanghai as well as the developed eastern provinces of Jiangsu and Zhejiang, are not representative of the true quality of China’s education system.

Others questioned the validity of the data, noting that mainland China’s 2018 scores are significantly higher than 2015, when the southern province of Guangdong was included instead of Zhejiang. The OECD allows China to approve which areas of the country can be subjected to testing.

Read the full story on Caixin Global later today.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com)

Related: In Depth: How a High-Performing Rural School Left Rural Kids Behind

China’s software industry saw strong growth in both revenue and profit in the first 10 months of this year, official statistics showed.

From January through October, the country’s software industry grew its revenue by 15.2% year-on-year to 5.79 trillion yuan ($822 billion), while profit was up 11.9% to 734.2 billion yuan, according to statistics published Wednesday on the WeChat public account of the Ministry of Industry and Information Technology (MIIT).

Revenue generated from software products, information technology services, information security products, and embedded system software increased by 13.6%, 17.7%, 10.3%, and 7.7% respectively from a year ago, the ministry said.

Exports of software-related products rose to $38.6 billion, maintaining a relatively flat year-on-year growth rate of 3%. Within that category, exports of outsourcing services and embedded system software increased by 8.7% and 1.9% respectively, the ministry added.

The number of workers in the software sector rose 6% to 6.55 million.

According to the ministry, China’s more developed eastern provinces remained the biggest revenue source for the software sector, contributing 4.63 trillion yuan over the period.

Contact reporter Ding Yi (yiding@caixin.com)

Related: China’s Major Internet Firms See 10-Month Revenue Grow 21% Year-on-Year

(Bloomberg) — Veritas Genetics, the DNA testing company known for bringing down the price of whole-genome sequencing, is suspending its U.S. operations after a financing crunch tied in part to concern over its Chinese backers.

The Danvers, Massachusetts-based company has cut all of its U.S. staff, which totaled about 50 people, said Chief Executive Officer Mirza Cifric. Operations in China, Latin America and Europe will continue.

“This outcome was unexpected and abrupt,” Cifric said.

Veritas was co-founded by the Harvard University geneticist George Church with the goal of making whole genome sequencing widespread and affordable, pricing the test at $599. Unlike companies such as 23andMe that analyze only a small fraction of a person’s DNA, Veritas sequences all 6.4 billion letters of a genome. The company has raised more than $50 million in venture funding, according to Crunchbase.

That money, however, was running out. Veritas said in a statement on Twitter Thursday that it had “an unexpected adverse financing situation” that led to the shutdown. The company had been in talks for months for additional funding without lining up more investors, according to a person with knowledge of the matter.

Part of the trouble was that Veritas has several backers based in China, and investors were wary of the company’s links to the country in light of recent Trump administration efforts to block Chinese investment in U.S. firms, said the person, who asked not to be named because the details are private.

Earlier this year, the company PatientsLikeMe was forced to find a U.S. buyer after the Committee on Foreign Investment in the United States ordered its Chinese owner to divest its stake. Veritas’s China-based investors include TrustBridge Partners, Simcere Pharmaceutical and Lilly Asia Ventures.

“We’re seeking every and any possibility to continue our mission,” Cifric said Thursday.

Related: This Company Will Clone Your Dog for $50,000

New additions to solar power generation capacity in China plunged more than 50% during the first 10 months this year compared with a year earlier, reflecting waning state support for the new energy source.

Installations of new solar energy totaled 17.5 gigawatts (GW) this year through October, including only 1.5 GW added since the end of September. The 10-month total is just half of the increase in the same period last year, according to Wang Bohua, secretary general of the China Photovoltaic Industry Association.

The slowing pace is likely to lead China to a second consecutive year of decline in new solar power capacity, following a 17% drop in new installations last year. Wang predicted that the addition of solar power capacity will decline more than 30% from last year to 30 GW. Total capacity may exceed 200 GW by the end of this year, Wang said.

Growth is slowing as China moves to phase out solar power subsidies to encourage the industry to become more self-reliant. China has seen the construction of large amounts of poorly planned solar and wind-power farms, with the result that some couldn’t be connected to the grid or produced below their designed capacity.

According to the China Photovoltaic Industry Association, the government will set aside 1.75 billion yuan ($24.8 million) as solar power subsidies next year, down 42% from this year.

Contact reporter Han Wei (weihan@caixin.com)

Embattled Chinese electric vehicle maker Nio Inc. reported a slight uptick in deliveries in November from October as the company struggles with a cash crunch, a cooling electric car market, and a crop of foreign entrants.

Nio delivered 2,528 cars in November, consisting of 2,067 ES6s and 461 ES8s, the company said Thursday. The total represents the fourth consecutive month that sales have risen, but November deliveries were only two cars higher than in October, marking a dramatic deceleration from previous months. In October, Nio’s sales grew 25% month-on-month.

Once considered a domestic challenger to American electric vehicle (EV) giant Tesla, Nio has struggled to secure funding after burning through $5 billion in four years while delivering fewer than 30,000 cars. It also recalled almost 5,000 vehicles early this year over battery safety concerns.

In response to low sales, the carmaker cut its workforce by more than a tenth as of the end of the third quarter compared with the start of the year. Last month, the company hired an analyst as its chief financial officer after the previous one resigned, Bloomberg reported.

In an effort to counter a months-long slump in the industry following steep subsidy cuts, China’s Ministry of Industry and Information Technology (MIIT) raised sales targets for new-energy vehicles including EVs to a quarter of all car sales by 2025 from a previously planned 20%.

As of November, electric car sales fell for at least four months, while China’s overall auto market has sustained a general decline for nearly a year and a half.

Meanwhile, foreign automakers are moving to capitalize on positive signals from regulators. Last month, Tesla said its long-awaited China-produced Model 3 was going on sale; BMW AG’s plan to produce EVs in China received regulatory approval; and General Motors’ Chinese joint venture disclosed plans to invest $4.3 billion in EVs over the next five years.

Contact reporter Dave Yin (davidyin@caixin.com)

Related: China Raises 2025 New-Energy Vehicle Sales Target to 25% of All Cars

MG Motor unveiled an electric sport utility vehicle in India, becoming just the second automaker to launch such a product in a market where clean-energy cars have yet to make a dent.

The iconic British brand also known as Morris Garages, now owned by Chinese giant SAIC Motor Corp., showed off its ZS model Thursday in New Delhi. The vehicle can go as far as 340 kilometers (211 miles) on a single charge, Rajeev Chaba, president of MG Motor India, told reporters.

The vehicle will take on vehicles sold by South Korea’s Hyundai Motor Co., the only other brand with an electric SUV in India. The companies are trying to grab an early mover’s advantage in the world’s fourth-largest automobile market as Prime Minister Narendra Modi pushes the country to adopt cleaner energy.

SAIC Motor is the first Chinese entrant in a notoriously difficult market where the likes of General Motors Co. and Ford Motor Co. have struggled. Electric cars have a particularly steep hill to climb in luring buyers away from more traditional offerings. The nation’s best-selling gas guzzler costs just $4,000, or about double of what an average Indian earns in a year.

The ZS comes with a sky roof and a built-in air purifier, and it’ll initially be sold in five major cities, including New Delhi and Mumbai. While the price will be announced next month, MG previously said it could be about 2.5 million rupees ($35,000).

SAIC will be up against Hyundai, which launched its Kona electric SUV earlier this year, as well as Maruti Suzuki India Ltd., the local unit of Suzuki Motor Corp. Together, they control two-thirds of a market where 3.4 million passenger vehicles were sold in the year through March. In contrast, barely more than 8,000 EVs were sold locally during the past six years, according to data compiled by Bloomberg.

Challenging Hyundai and Maruti, which have a strong network of dealers and maintenance facilities across the country, has proven difficult. Ford in October agreed to move most of its assets in India into a joint venture with Mahindra & Mahindra Ltd. after struggling for more than two decades, while GM pulled out of India two years ago, scrapping a $1 billion investment and stopping sales of Chevrolet models.

Chinese smartphone maker Xiaomi on Tuesday launched an online lending service in India, in an effort to diversify its businesses in the populous country where it is currently the lead handset supplier, Reuters reported.

The service, called Mi Credit, connects smartphone owners with lending platforms, enabling quick loans of up to 100,000 rupees ($1,393) to each user after reviewing his or her credit status.

Xiaomi has established partnerships with five shadow banking and fintech firms to offer the service, Manu Jain, managing director of Xiaomi India, told Reuters. The Beijing-based company initially tested the waters of the Indian financial industry in March, when it launched mobile payment tool Mi Pay to rival similar products provided by Amazon and Google in the country.

Its lending service push into India comes a Chinese authorities have cracked down on the China’s scandal-ridden peer-to-peer (P2P) lending platforms. The number of functioning P2P lending platforms dropped to a record low in China of 456 last month, after several years of regulatory measures saw many big online lenders leave the market due to fraud and problematic management.

Xiaomi has been seeking business diversity overseas as global sales of its smartphones have started to slow. In India, its dominant position is now being challenged by Chinese rivals. In the third quarter of this year, the Indian market share held by Chinese smartphone rival Oppo jumped to 26.1%, compared with Xiaomi’s 27.1%. Xiaomi also recently announced it will be entering the Japanese market on Dec. 9.

Contact reporter Ding Yi (yiding@caixin.com)

Chinese communication giant ZTE has bolstered its 5G credentials with the establishment of a partnership with a major research institute affiliated to state-owned plane-maker Commercial Aircraft Corporation of China (COMAC), ZTE announced Thursday.

The tie-up with the Shanghai Aircraft Design and Research Institute will allow ZTE to apply its next-generation communications technologies to projects involving China’s self-developed aircraft models.

One initiative involves the rollout of in-flight internet services backed by ZTE’s air-to-ground (ATG) technology, in which land-based telecoms stations send signals establishing broadband connections in planes while they are in midair. ATG services are in common use by airlines around the world.

In January, industry information platform China Aviation News reported that COMAC had successfully tested ATG on one of its regional jets, the ARJ21. The report did not specify whether ZTE was involved.

ZTE entered the ATG sector in 2009 and has successfully provided 4G ATG services, the company said.

Related: Chinese Regional Jet Gets Boost From Big Three State Airlines

China’s chip designer Goodix Technology has been approved by the country’s antitrust regulator to acquire NXP Semiconductor’s Voice and Audio Solutions for $165 million in cash, the Chinese company announced on the website of the Shanghai Stock Exchange on Thursday.

The deal will enable Goodix to acquire an industry-leading NXP engineering team, employees based in Europe and Asia as well as relevant intellectual properties. The move should help the Chinese firm to increase its position in the mobile and internet of things (IoT) industries and boost its research and development capabilities in audio applications.

Goodix announced an agreement with Eindhoven-headquartered NXP in an August statement, in which the former company’s CEO David Zhang hailed the pending acquisition as “a strategic move in Goodix’s growth plan". He added that thanks to the deal, Goodix will be able to provide its customers with a more comprehensive portfolio and will have stronger innovation abilities.

Goodix’s Shanghai-listed shares dropped 0.74% to 197.4 yuan as of 1:00 p.m. Thursday.

Contact reporter Ding Yi (yiding@caixin.com)

A former graft buster is under investigation for what is thought to be corruption charges. China’s top anti-corruption agency announced Wednesday that Wang Limin, a deputy head of the financial research institute at government-backed think tank the Chinese Academy of Social Sciences, is under an investigation for alleged “serious violations of (Communist Party) discipline and law.” The statement did not specify what the suspected violations were, but this type of statement commonly refers to corruption. Wang used to be an inspector at the anti-graft agency. He later worked as an official for several local governments, and as a senior executive for state-owned reinsurance or investment companies. 

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

Related: Update: Executive of China’s Largest Bank Accused of Taking Enormous Amount of Bribes

Chinese telecoms giant Huawei said Thursday it is mounting a legal challenge to the ruling by the U.S. Federal Communications Commission (FCC) banning the government’s Universal Services Fund from being used to buy equipment from the company.

Last month, the FCC voted unanimously to forbid American wireless carriers from using the government fund to buy equipment from Huawei and its rival ZTE on the grounds that the two Chinese companies pose national security threats.

Huawei has filed a petition to the U.S. Court of Appeals for the Fifth Circuit demanding a suspension of the FCC order, claiming it is “unlawful on the grounds that it fails to offer Huawei required due process protections,” the company announced during a news briefing in the southern Chinese city of Shenzhen.

Although U.S. carriers have generally steered clear of Huawei equipment for some time, some in more rural and remote areas depend on the Chinese company’s gear for their mobile networks.

Alan Fan, Huawei’s Vice President of IP Strategy and International Legal Policy, again hit back at U.S. claims that the Chinese government could leverage Huawei’s overseas telecoms equipment for espionage purposes, saying no Chinese law required Huawei to deploy such “backdoors.”

Prohibiting Huawei sales would delay the rollout of the U.S.’ superfast 5G wireless network by six to 18 months and cost the country billions in lost GDP, Fan added, citing third-party reports.

“Banning a company like Huawei, just because we started in China — this does not solve cybersecurity challenges,” Huawei’s Chief Legal Officer Song Liuping said at the press conference.

Read the full story later today on Caixin Global.

Contact reporter Mo Yelin (yelinmo@caixin.com)

Related: U.S. Telecom Regulator Bans Carriers From Using Public Fund

Having gained a strong foothold in China, video streaming service iQiyi is now aiming to expand overseas.

The Chinese company is setting a new growth target to make paying subscribers based outside China account for as many as half of its total within the next five years, the company’s founder and chief executive Gong Yu told Reuters.

To achieve this goal, iQiyi, which offers Netflix-style subscriptions for TV shows and movies, has taken tentative steps into Southeast Asia, where it is seeking marketing collaborations with local partners. It is also looking to tout non-branded versions of its streaming platform for sale to overseas clients.

Gong’s statement came after iQiyi saw membership services account for 50% of its total revenue for the first time in the third quarter of 2019. According to a quarterly earnings report released in November, the company’s membership services revenue totaled 3.7 billion yuan ($520 million), representing a whopping 30% increase from a year earlier. It attributed the gain to the solid growth in the number of subscribers during the period.

In November, iQiyi said that it had 105.8 million subscribers.

Domestically, the Baidu-backed company is also mulling price hikes of 10% to 20% in the second half of 2020, taking advantage of its position in what is shaping up to be an oligopolistic market, with the other major players being Tencent Video and Youku, Reuters cited Gong as saying.

Contact reporter Ding Yi (yiding@caixin.com)

Related: iQiyi Looks to AI to Force-Feed Ads to Viewers

(Bloomberg) — Arpita Chaudhary, a newly recruited police constable in India’s western Gujarat state, became an overnight celebrity after posting a clip of her 15-second gambol — clad in her civvies — on the smash-hit social video app, TikTok.

Then she paid the price. A snippet of her gyrating to a Bollywood song against the backdrop of a prison cell went viral and, days later, Chaudhary was suspended from her job. She had danced inside the police station while on duty.

The short video app wildly popular with lip-syncing teenagers around the world has taken India by storm. Police officers, city workers and physicians looking to escape the humdrum of their work lives are finding its lure irresistible. They are regaling their countrymen with at-times cringe-worthy videos, shot inside police stations, public offices and government hospitals.

“Indians are bitten by the TikTok bug as the app makes it easy to create content using nothing more than a phone,” said Prasant Naidu, founder and CEO of the Bangalore-based digital technology consultancy Lighthouse Insights. “But it’s raising apprehensions because it’s Chinese-owned, stores Indian user data overseas and its mass base makes it easy to spread propaganda and porn.”

More than 200 million users in India devour and share videos mimicking Bollywood dancing, movie dialog and comedy, making India TikTok’s biggest global market. ByteDance, the Chinese internet giant behind TikTok, has a separate app called Douyin with similar features in China, where TikTok doesn’t operate. Videos of cavorting public officials highlight the lack of control over its use among government and law enforcement agencies and is lending strength to a backlash in India against the app.

Some even say it’s a security risk. Prominent lawmaker Shashi Tharoor of the main Congress party last summer told Parliament that apps like TikTok are a “national security” threat and Indians are vulnerable to spying through the app because of the country’s lax data protection regulations. He is concerned that like other apps from China, TikTok has too close a relationship with China’s government. Tharoor said ByteDance’s paid influence could affect India’s democratic processes.

Economic groups aligned with the ruling BJP have called for banning the app, saying it’s being used for “anti-national” content including videos advocating religious violence, inciting sentiments against particular social groups, and poor treatment of women.

A Southern court temporarily banned downloads of the app amid complaints that its content was degrading culture and encouraging pornography. In a Mumbai court, a litigant alleged that “unfiltered sexual content” from the app was harming young Indians and leading to crime.

Security experts and lawmakers are more worried that TikTok seeks to access user information such as location, phone contacts, call records, and audio. While other apps seek similar consent, “TikTok is from China with whom we have history and it becomes strategic and sensitive,” said Nikhil Pahwa, founder and editor of Medianama, which tracks the growth of India’s digital ecosystem.

India is still working on a privacy and data protection framework, with the Personal Data Protection bill that regulates collection and transfer of data being considered. As long as rules and regulations regarding data are not robust, “these kind of apps can easily use the loopholes in law to collect user data,” said Tarun Pathak, associate director at consultancy Counterpoint Research.

The world’s most downloaded app is controversial elsewhere. Indonesia had banned TikTok, saying it failed to block pornography and blasphemy. In the U.K., it is being investigated for collecting personal data of young users. The U.S. government has fined the app $5.7 million for collecting data of users under 13 without parental consent and is targeting the app for a national security review.

But TikTok videos have continued to go viral, propelling ByteDance to the No. 1 spot among the world’s most valuable private companies. India, where millions of users continue to come online each month, is vital to its global ambitions. In a regional election earlier this year, the ruling BJP nominated as its candidate a TikTok star whose sole qualification was her massive following on the app, where she lipsyncs to Bollywood songs. She lost the election narrowly.

Police constable Chaudhary, still suspended from duty, has been luckier in parlaying her TikTok fame to success. Her music video TikTok ni Diwani (TikTok Crazy) scored over 2 million views within days of its release.

Contact editor Matthew Walsh (matthewwalsh@caixin.com)

Tencent Holdings Ltd. and Nintendo Co. announced Wednesday the launch of Nintendo’s signature Switch game console in China.

The Nintendo Switch will hit the market in China Dec. 10 for 2,099 yuan ($297), about the same as elsewhere around the world. Consumers now can preorder the device on JD.com and Alibaba Group’s Tmall.

The game console will pre-install a trial-version game of Super Mario Bros., and more games from the popular series will go on sale in coming weeks at a retail price of 299 yuan each.

Tencent said Nintendo is also preparing to introduce Switch Lite ― a cheaper version of the console ― to China at a future date.

Tencent Senior Vice President Ma Xiaoyi said the launch of Switch in China will create conditions for domestic game developers to create games for Switch and will also help more excellent Chinese games to gain awareness among global players.

As the partner in the Chinese version of the device, Tencent will provide localization services. For example, players will be able to use Tencent’s WeChat Pay to buy games on Nintendo’s e-store.

Contact reporter Denise Jia (huijuanjia@caixin.com)