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By Ding Yi / Apr 01, 2020 04:00 PM / Business & Tech

Photo: VCG

Photo: VCG

Chinese automaker BYD’s profit tumbled in 2019, in line with a nationwide market contraction that came as the market for gas-powered cars shrank and the government scaled back subsidies for new energy vehicles midway through the year.

Warren Buffet-backed BYD reported 1.6 billion yuan ($227 million) of net profit for the year ended Dec. 31, down 42% year-on-year, the company said Tuesday. Total revenue for the year was 121.8 billion yuan, flat from a year earlier.

The company, which counts electric vehicle sales as one of its major revenue sources, attributed the plummeting profits to Beijing’s cut in electric vehicle subsidies, which has led to falling sales, as well as contraction in the country’s market for traditional gas-powered cars.

In March, China’s Ministry of Finance started slashing subsidies for new energy vehicles and asked automakers to put more emphasis on innovation instead of using the subsidies to simply attract buyers. In 2019, the total sales of new energy vehicles in the country fell 4% year-on-year to about 1.2 million units, according to statistics from the Chinese Association of Automobile Manufacturers.

“In short term, the decline in new energy automobile subsidy will certainly contribute to the profit pressure on related companies,” BYD said in the financial report, while admitting that the policy change will help streamline the industry and make it more competitive and healthier in the long run. It added that advanced technology could also play a key role in helping automakers win market share in the future.

The earnings report comes just two days after BYD announced the launch of a newly designed battery named “Blade Battery,” which it claims has both safety and energy density advantages.

BYD shares were down 5.6% in afternoon trade on Wednesday after the results came out.

Contact reporter Ding Yi (yiding@caixin.com)

Related: BYD Sees Sharp Drop in New-Energy Car Sales in November


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By He Shujing and Mo Yelin / Apr 01, 2020 03:51 PM / Economy

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Photo: VCG

Chinese companies were the big winners in China Mobile’s latest batch of contracts for more than 200,000 5G base stations.

The tenders, for a massive 232,143 5G base stations, were opened in early March and results were published on Tuesday. Huawei won the lion’s share of contracts and will supply 57.2% of the base stations, while 28.7% of the awards went to its smaller domestic rival ZTE, according to statements released by China Mobile Tuesday. Another little-known Chinese enterprise took 2.6% of the awards.

The only foreign company chosen was Sweden’s Ericsson, with 11.4% share.

China Mobile is currently accelerating its 5G rollout with plans to install 300,000 base stations by the end of 2020. At the end of February, it had built a total of 80,000 5G base stations. It has previously said it would spend 180 billion yuan ($25.4 billion) on 5G this year.

Read the full story on Caixin Global later.

Contact reporter Mo Yelin (yelinmo@caixin.com)

Related: China’s Mobile Base Station Monopoly Reports Meager 5G Revenue


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By Ding Yi / Apr 01, 2020 01:31 PM / Business & Tech

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Photo: VCG

Money-losing Chinese e-commerce upstart Pinduoduo has raised $1.1 billion through a private placement, a move that could bankroll its expansion as effects of the Covid-19 outbreak still play out across China, the company said Tuesday.

The placement will be made through issuing new shares representing approximately 2.8% of Pinduoduo’s outstanding total. The placement will go to some of the company’s existing long-term investors, and is expected to close in early April, it said, without providing the investors’ names.

The news comes just weeks after Pinduoduo posted weaker-than-expected revenue for the fourth quarter of 2019. The Nasdaq-listed company’s total revenue nearly doubled to 10.79 billion yuan ($1.55 billion) in the year’s final quarter, but missed the average analyst estimate of 10.93 billion yuan.

Meanwhile, Pinduoduo chairman and CEO Colin Huang also warned during the quarterly earnings call that disruptions linked to the coronavirus pandemic will “have negative impact on our results for the first quarter of 2020.”

Shanghai-based Pinduodou, which competes with Alibaba and JD.com, sells heavily discounted goods to attract consumers in what many industry watchers call a “money-burning” strategy.

The company is still loss-making in spite of a narrowing net loss in the last three months of 2019, when it reduced its net loss to 1.75 billion yuan from 2.42 billion yuan the previous year.

Contact reporter Ding Yi (dingyi@caixin.com)

Related: Pinduoduo and ByteDance Chiefs Were Two of the Three Richest Billionaires under 40 in 2019


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By Bloomberg / Apr 01, 2020 10:40 AM / Business & Tech

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Photo: VCG

Tesla tends to pull out all the stops at the end of each quarter, with Chief Executive Officer Elon Musk often rallying the troops to deliver as many vehicles as possible to customers.

This approach probably didn’t work well for Tesla in March, with shelter-in-place orders and distancing guidelines around the globe limiting how many vehicles the company could hand over. While Musk tried to salvage the quarter by introducing a “touchless” delivery option in select locations, the coronavirus pandemic is expected to have done a number on demand for all automakers.

Analysts on average estimate Tesla delivered roughly 77,400 cars worldwide last quarter, the first to include hand-overs of the new Model Y crossover. While that would be a jump from a disappointing result a year ago, it also would mark a more than 30% drop from the record deliveries Tesla reported for the last three months of 2019.

“Tesla typically delivers a disproportionate share of its quarter’s units in the last two weeks of the quarter,” Adam Jonas, an analyst at Morgan Stanley, wrote in a report Monday. “Given the disruption to production and logistics bandwidth, we would be prepared for a weak number.”

The impact the virus has had on the industry has been far more severe and widespread than many were expecting back in January when Tesla predicted it would comfortably exceed 500,000 global deliveries. Business activity in much of the U.S. and Europe has virtually ground to a halt, and Tesla’s factory in Fremont, California, suspended production on March 23. Countless would-be car buyers are staying home, unemployment is rising and consumer confidence is plummeting.

Tesla is far from alone in idling production in the U.S., and the company now has a second plant, near Shanghai, that restarted assembly lines with the help of government authorities in China. The carmaker typically doesn’t give a breakdown in its deliveries reports of results by country or region.

“Given that China was shut down in February and probably slow in March, plus the U.S. froze in March, I’m expecting horrible numbers from everyone,” David Whiston, a Morningstar Inc. analyst, said in an email. “China and the U.S. were 64% of Tesla’s revenue last year for the full year, so a collapse there will be painful.”

Tesla shares, which closed up as much as 112% for the year in mid-February, briefly gave up all 2020 gains when equity markets reached a low point midway through the month. The stock was back up 25% as of Tuesday’s close.

Related: How China Bent Over Backward to Help Tesla When the Virus Hit


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By Mo Yelin / Apr 01, 2020 03:10 AM / Business & Tech

Photo: Bloomberg

Photo: Bloomberg

Chinese telecom giant Huawei’s revenues in 2019 climbed 19.1% to 858.8 billion yuan ($123 billion) with net profit of 62.7 billion yuan, the company said Tuesday in a statement.

Huawei’s strong revenue momentum defied sanctions imposed by the U.S. government, which early last year placed the company on a blacklist barring it from sourcing critical components from U.S. suppliers.

Two thousand nineteen “was an extraordinary year for Huawei," said Eric Xu, rotating chairman of the company. "Despite enormous outside pressure, our team forged ahead with a singular focus on creating value for our customers. We worked hard to earn their respect and trust, as well as that of our partners around the globe. Business remains solid."

The company’s carrier business accounted for 35% of total revenues, with the segment’s sales increasing 3.8% to 296.7 billion yuan. The modest gain came even as countries around the world raced to roll out the next generation 5G network, for which Huawei is a major equipment supplier.

Huawei’s consumer sales jumped 34% to 467.3 billion yuan as the company shipped 240 million smartphones in 2019, according to the statement.

As the U.S. sanctions are expected to remain in place, Xu projected no relief for Huawei in 2020.

"The external environment will only get more complicated going forward," Xu said. "We need to keep enhancing the competitiveness of our products and services, promoting open innovation, and creating greater value for our customers and society at large.”

Related: Huawei Expects No Relief in 2020


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By Han Wei / Apr 01, 2020 03:06 AM / Business & Tech

Photo: Bloomberg

Photo: Bloomberg

Chinese smartphone maker Xiaomi Corp. said a stronger sales recovery in China is on horizon as it reported higher-than-expected profit in the last quarter of 2019 before the Covid-19 epidemic froze the economy.

"The (Chinese) market has entered a full recovery stage, and the market has already recovered to 80% to 90% of the normal level," Xiaomi CFO Shou Zi Chew said Tuesday on a conference call.

As the pandemic spreads globally, Xiaomi will take a hit in global sales during March and April, but a recovery can be expected in May, Chew said.

Xiaomi reported 2.3 billion yuan ($324 million) of adjusted net profit for the three months ended December, up 27% from the same period a year ago and beating analysts’ estimates. Revenue during the period jumped 27% to 56.5 billion yuan, thanks to growth in internet services and overseas business.

Sales from the smartphone segment rose 23% in the fourth quarter to 30.8 billion yuan, Xiaomi said.

For all of 2019, Xiaomi's profit attributable to shareholders fell 26% to 10.04 billion yuan.

Related: Xiaomi’s Giant New TV Has Price That Will Rattle Its Rivals


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By Ding Yi / Mar 31, 2020 06:19 PM / Business & Tech

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Photo: VCG

U.S. investment company Tiger Global Management has reportedly boosted its stake in TikTok owner ByteDance through a 21-month share purchase at a low multiple of future free cash flow. “Free cash flow” is the cash a company has after subtracting its operating expenses and capital expenditure.

The New York-based investment group began buying ByteDance’s shares when the Chinese unicorn was valued at $37.5 billion and has since increased its investment through share purchases in secondary markets, the Financial Times reported Monday, citing people familiar with the deals.

According to the report, some recent share transactions on secondary markets have given ByteDance an implied valuation of between $90 billion and $100 billion, up at least 20% from two years ago when investors valued it at $75 billion following a $3 billion funding round led by tech conglomerate SoftBank.

The news comes as ByteDance has been seen to be benefiting because of the coronavirus outbreak in China. The virus has helped increase the popularity of its apps as many people in the country are forced to stay indoors to avoid possible infection.

ByteDance’s news aggregator Jinri Toutiao was the second most downloaded non-game app on Apple’s App Store in China in January, when the epidemic began spreading across the country, according to statistics from research firm App Annie. Its short video apps Xigua Video and Douyin, known overseas as TikTok, came in fourth and fifth respectively.

Contact reporter Ding Yi (yiding@caixin.com)

Related: TikTok Establishes Content Advisory Council to Ease Data Security Concerns


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By Ding Yi / Mar 31, 2020 05:11 PM / Economy

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Photo: VCG

China’s major internet companies saw modest growth in revenue in the first two months of 2020 despite the spread of the novel coronavirus, which paused much of the country’s economic activities.

In January and February, the Chinese internet sector and its related services generated a combined revenue of 131.1 billion yuan ($18.5 billion), representing a year-on-year increase of 4.5%, according to statistics from the Ministry of Industry and Information Technology (MIIT). However, the growth rate was 5.5 percentage points lower than the same period of 2019. All firms surveyed had an annual revenue of more than 5 million yuan in the previous year.

The MIIT attributed the revenue growth to virus-driven demand for telecommuting, online education and digital entertainment.

In the January-February period, revenue derived from information services, including streaming music and videos, online games and digital news, reached 96.6 billion yuan, accounting for 73.7% of the total, the ministry said.

It added that the country’s major internet firms earned 1.74 billion yuan by providing internet data services during the period, a result of rapid growth in traffic to apps amid the outbreak. As of the end of February, the number of apps available on app stores in China reached 3.52 million, the statistics showed.

Despite modest revenue growth, the surveyed internet companies suffered a year-on-year decrease of nearly 20% in total operating profit to 9.51 billion yuan during the period. But the profit decline did not dampen the companies’ enthusiasm for research and development spending, which was up 10.6% year-on-year to 8 billion yuan during the two months.

Beijing, Shanghai and the provinces of Guangdong, Zhejiang and Fujian accounted for 86.6% of the country’s total internet-related revenue, according to the statistics.

Contact reporter Ding Yi (yiding@caixin.com)

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


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By Ding Yi / Mar 31, 2020 01:09 PM / Business & Tech

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Photo: VCG

German drugmaker Boehringer Ingelheim (BI) will open a digital laboratory in July in Shanghai as part of efforts to penetrate the Chinese market, where pharmaceutical companies are scrambling to leverage digital technologies to boost their health care services.

With an initial investment of 3 million euros ($3.3 million), the laboratory, officially known as BI X, will look to recruit 20 experts in the field of digital health care to help develop medical products and therapies for the Chinese market, according to a statement published Monday on BI’s public WeChat account.

BI originally built the BI X laboratory at its headquarters in Germany in 2017, setting it up as an independent unit to the rest of the company. The lab works with specialists in the areas of data science, agile software development and user experience design to develop prototypes for new healthcare products and then turn them into applicable digital solutions.

The Shanghai-based facility is BI X’s first overseas branch outside Germany, the company said.

In recent years, foreign drugmakers have sought partnerships with China’s tech giants in a bid to ride the wave of the ongoing health care digital revolution.

Last year, Merck — BI’s German rival — and tech titan Tencent signed an agreement, under which Merck would use the Chinese company’s internet and artificial intelligence (AI) technologies to build a digital platform to improve public disease awareness and provide health care services to patients based in China.

In China, 94% of health care professionals use digital health technology or mobile health apps, while 39% of the general public in China thinks AI technology in health care aids more accurate diagnoses, according to a report by health technology firm Royal Philips published in 2019.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Genome Giant BGI Gets Regulator Approval to Sell Coronavirus Test Kits


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By Yang Ge / Mar 31, 2020 12:54 PM / Economy

Photo: VCG

Photo: VCG

Things were looking sunny last year for JA Solar, one of the world’s top solar panel makers. But investors were more focused on what lies ahead during these uncertain coronavirus times, even as the company reported (link in Chinese) its 2019 profit soared 87% to 1.3 billion yuan ($183 million), even as its revenue rose by a more modest 7.7% to 21.2 billion yuan.

Despite those healthy gains, JA Solar warned that the heavens themselves could prevent a repeat performance in 2020. It used the Chinese term for “act of God” or “force majeure” as a major risk it faces this year due to potential impact from the coronavirus pandemic now sweeping the world.

It gave that outlook as a raft of research houses are ratcheting down their global demand forecasts for solar panels this year, especially in the non-China market that now accounts for about three-quarters of JA Solar’s sales.

Earlier this month BloombergNEF lowered its forecast for new solar installations in 2020 to 108-143 gigawatts (GW) from a previous 121-154 GW — representing a downward adjustment of 7% to 10%. UBS has lowered its outlook even more, by about 13%, to 130 GW.

But UBS analyst Alex Liu said the downward revision isn’t a major cause for concern, since most solar farm builders are saying they still plan to go ahead with their projects. They just may get delayed by several months due to logistical issues created by the virus. Investors seem to be taking the news in stride, with JA Solar’s stock largely holding steady during the last two trading days.

Contact reporter Yang Ge (geyang@caixin.com)

Related: China's GCL to Build World’s Biggest Solar Panel-Making Plant


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By Bloomberg / Mar 31, 2020 09:32 AM / Business & Tech

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Photo: VCG

Hon Hai Precision Industry Co.’s profit fell 6% in 2019, after tepid smartphone demand and U.S.-Chinese tensions depressed sales ahead of the coronavirus outbreak.

Apple Inc.’s most important manufacturing partner posted net income of NT$115.3 billion ($3.8 billion) last year, versus an average estimate for NT$115.02 billion.

Hon Hai, which gets half its revenue from making iPhones and other devices for Apple in China, had grappled with rising U.S. tariffs on its goods even before Covid-19 smothered demand for electronics. Known also as Foxconn, the company has said it’s resolved labor shortages and is now back at normal seasonal capacity, but it remains to be seen how it fared during the March quarter, when the outbreak was declared a pandemic and government lockdowns dealt unprecedented shocks to the global supply chain.

Signs are that Apple’s Chinese-centric manufacturing -- of which Hon Hai is the linchpin -- is slowly getting back on track. The next iPhones with 5G wireless capabilities remain on schedule to launch in the fall, partly because mass production isn’t slated to begin until the summer, people familiar with matter have said. Yet the sort of assembly that Foxconn specializes in is but one part of Apple’s supply chain: the U.S. company and its partners spend months or even years sourcing components around the world and any disruptions to that complex network could delay future devices.

Related: IPhone Maker Projects China Plants to Return to Normal in Coming Weeks


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By Ding Yi / Mar 30, 2020 05:37 PM / Business & Tech

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Photo: VCG

Chinese autonomous truck startup TuSimple has forged a partnership with German automobile parts maker ZF to develop and market self-driving technology for big rigs.

Under the partnership, which is set to begin in April and will cover China, North America and Europe, the two companies will co-develop a central computing platform for self-driving trucks. They will also develop a sensing system consisting of cameras, laser radars and millimeter-wave radars, a key technology needed to create three-dimensional maps of the 360-degree environment around a vehicle in real-time, TuSimple said in a statement on Friday.

As part of the partnership, ZF will also offer engineering support to integrate TuSimple’s self-driving system into autonomous trucks, the statement added.

The agreement comes less than a month after TuSimple doubled the number of long-haul delivery trips it makes with a fleet of about 40 autonomous trucks for American courier UPS to 20 trips every week. That partnership is part of a pilot program aimed at testing TuSimple’s U.S. Society of Automotive Engineers-rated Level 4 technology, which allows a vehicle to run almost completely independently without human intervention.

In 2018, TuSimple was among the first companies to obtain licenses in China to test autonomous trucks in Shanghai. Established in 2015, the company splits its operations between China and the U.S. and has research and development centers in Beijing, Shanghai, Hebei province and the American states of California and Arizona.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Shenzhen Becomes Newest Major Chinese City to Let Self-Driving Cars Carry Passengers in Tests


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By Wang Junhai / Mar 30, 2020 03:43 PM / World

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Photo: VCG

The disruption of international transport and supply chains caused by the global Covid-19 pandemic could create volatility in China’s agricultural commodities markets, especially among areas reliant on imports. These issues could be exacerbated by the reemergence of pests and diseases that could further constrict supply.

As the world’s top importer of soybeans — a key material for edible oil and agricultural feedstuff, China imported 85 million tons of soybeans in 2018, accounting for 85% of its total soybean consumption that year. South America, the main producers of soybeans, has revised up its output forecast for 2020 to 102.4 million tons. The possible increase in supply could see downward pressure on prices.

On the other hand, if countries there fail to control the spread of Covid-19, national lockdowns could be implemented. This would lead to soybean shipments grinding to a halt, and subsequently causing shortages in China later this year and driving prices up.

A similar situation could also play out in corn markets. China’s corn production is expected to drop by 18 million tons in 2020, which could lead to higher prices. The potential reemergence of the fall armyworm, a pest that can devastate corn crops and is widespread in China, would also put upward pressure on prices.

The price fluctuations of both corn and soybean will also be influenced by the recovery of the country’s poultry sector following the stabilizing of Covid-19 on the Chinese mainland, as this would heavily affect demand.

These contradictory and opposing forces could all lead to massive price fluctuations for agricultural produce and goods.

Read the full story on Caixin Global later.

Contact translator Lu Yutong (yutonglu@caixin.com)

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By Ding Yi / Mar 30, 2020 12:54 PM / Business & Tech

Photo: VCG

Photo: VCG

Chinese tech titan Huawei has announced plans to give global developers access to its research papers and algorithm codes related to “computer vision”, as part of its efforts to harness the knowledge of external experts in its research and development of artificial intelligence (AI) technologies.

Computer vision is a kind of AI technology that uses digital images and deep learning models to help machines identify and understand the visual world. The technology is currently used in numerous fields including autonomous vehicles.

Central to Huawei’s computer vision plans is its Ascend AI processor-powered Atlas AI computing platform. The tech giant plans to share related research results associated with this platform on its open-source MindSpore AI computing framework, which is similar to Google’s TensorFlow, the company said Saturday in a WeChat post.

According to the post, the computer vision plan, which was released on the second day of the Huawei Developer Conference 2020 on Saturday, has several goals, such as designing computing models for AI chips with complex inference capabilities and building computer vision models that have the ability to identify and react to the real world.

The Shenzhen-based company launched the MindSpore AI computing framework in August 2019, which it expects to play a key role in helping it develop AI applications.

Contact reporter Ding Yi (yiding@caixin.com)

Related: U.S. Officials Reportedly Accept Proposal to Curb Global Chip Sales to Huawei


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By Shen Xinyue and Mo Yelin / Mar 30, 2020 10:06 AM / Economy

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Photo: VCG

While the Covid-19 pandemic has slowed in China its impact to the economy and job market could be far reaching.

The pandemic delivered a heavy blow to a Chinese economy that was already struggling to manage downward pressures and a weakening job market. Economists widely project that the economy is contracting in the first quarter, dragging projected 2020 GDP growth down to 4% or even lower. Based on 2018 and 2019 data, every 1 percentage point of GDP growth affects more than 2 million jobs.

China’s official urban employment rate jumped to a record 6.2% in February from 5.3% in January. During the first two months of 2020, 1.08 million new jobs were added in China’s urban areas, down 660,000 from the same period last year.

The February surge in unemployment reflects massive business suspensions and workforce cuts, according to Zhang Yi, a senior official at the National Bureau of Statistics. Industries including retail, catering, accommodations, transportation, logistics and entertainment have experienced the biggest job losses, Zhang said.

At two cabinet meetings in March, Premier Li Keqiang repeatedly called for efforts to stabilize the job market.

Compounding the challenge is that the structure of China’s job market has changed profoundly since the 2008 financial crisis. The number of migrant workers, who are mainly employed in construction and manufacturing, has declined sharply over the past 10 years as the older generation retired. In 2019, 2.4 million new migrant workers entered the job market, down from 10 million each year a decade ago.

Consequently, policymakers can’t just flip a switch to spur hiring in labor-intensive sectors such as property and infrastructure as they could a dozen years ago.

Related: Job Openings in China Fall Over 30% Amid Coronavirus


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By Ding Yi / Mar 27, 2020 06:54 PM / Business & Tech

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Photo: VCG

Shenzhen is reportedly planning to greenlight road tests of autonomous vehicles carrying passengers as part of ongoing efforts to build a smart transport system.

The southern Chinese city’s transport authorities are seeking public opinion on an upcoming policy which would allow self-driving cars to test passenger transportation in designated areas including university campuses, industrial complexes and scenic areas, according to a report by the state-run newspaper Shenzhen Special Zone Daily.

Qualified cars must have logged no less than 1,000 kilometers in test drives and have no record of traffic infringements. Eligible cars should also go through a series of further tests to assess their ability to detect and respond to pedestrians, non-motorized vehicles, traffic lights and complex road conditions such as crossroads and roundabouts, the report said, citing the planned policy.

Test operators must install vehicle-mounted monitoring equipment, hire licensed drivers and prepare contingency plans, the report said.

So far, Shenzhen has allowed 120 kilometers of roads to be used for autonomous vehicle tests and granted 12 testing licenses to several companies including tech giant Tencent, according to the report.

The news comes after Beijing and Shanghai moved to allow road tests for self-driving cars carrying passengers last year.

Earlier this month, Chinese autonomous vehicle startup Pony.ai became the first Chinese company to offer passenger-carrying “robotaxi” services, which it debuted in Fremont, California. Local government employees can hail the company’s self-driving cars to travel between the city’s train station and some municipal buildings such as the town hall.

Search giant Baidu and ride-hailing service provider Didi Chuxing also have similar projects.

Contact reporter Ding Yi (yiding@caixin.com)

Related: China’s Pony.ai Among First to Launch Passenger-Carrying Robotaxi Service

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By Ding Yi / Mar 27, 2020 06:41 PM / Business & Tech

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Photo: VCG

Senior officials in the Trump administration have reportedly agreed to accept a proposal aimed at restricting the global supply of chips to Huawei, about three weeks after the U.S. once again extended a reprieve through May to allow American suppliers to continue doing business with the Chinese tech giant.

The proposed new rules would require foreign companies using American chipmaking equipment to obtain a license from the U.S. if they want to sell chips to Huawei, Reuters reported Thursday, citing sources with knowledge of the matter.

One of the sources told Reuters that the proposal, which awaits approval by President Trump, means to create barriers on sales of chips to Huawei’s HiSilicon unit by Taiwan Semiconductor Manufacturing Co., one of its major suppliers. Trump appeared to push back against the proposal last month.

Another source said that the proposal mainly takes aim at makers of sophisticated semiconductors, Reuters reported.

Most major chipmakers, including KLA Corp., Lam Research and Applied Materials, use American-made equipment, according to a report by China’s Everbright Securities.

The sources also revealed to Reuters that top officials from several U.S. government agencies such as the National Security Council and the U.S. Department of State, Defense, Energy and Commerce agreed Wednesday to change the Foreign Direct Product Rule, which subjects some foreign-made products using U.S. technology or software to U.S. regulations.

The news comes as Huawei’s founder Ren Zhengfei said this week in a video interview with the South China Morning Post that Huawei will invest $20 billion, up from $15 billion last year, in research and development in 2020 as part of ongoing efforts to create new technologies that can help the company take the lead in the global race amid U.S. pressures.

“The U.S. will continue to increase sanctions on us, and we will have to complete the new technologies before that happens,” the Post quoted Ren as saying, while acknowledging that complete “de-Americanization” would be “impossible” for Huawei as globalization has become an indisputable reality.

Earlier this month, the U.S. Department of Commerce extended a license allowing American companies to restart component sales to Huawei until May 15. Prior to the March reprieve, the U.S. granted four such license extensions to Huawei.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Trump Signs Law Barring Small State-Supported Telcos from Buying Huawei Equipment

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Ding Yi / Mar 27, 2020 10:56 AM / Business & Tech

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Photo: VCG

Luo Yonghao, the founder of debt-ridden Chinese smartphone brand Smartisan, said Thursday that he will start selling products using the widely used short video platform Douyin via livestreams, just a week after announcing more general plans to move into e-commerce via livestreaming.

The first livestream will take place on the evening of April 1, when some “affordable and fancy products” will go on sale, Luo said in a video published on his personal WeChat account. Previously, the tech entrepreneur said that his team would initially focus on selling digital gadgets, “cultural” and “creative” products, books, groceries and snacks.

In the video, Luo, who describes himself as one of the first-generation of online celebrities, also said that he has confidence in the future of live-streamed e-commerce, a sector that has taken off with sales estimated to reach 440 billion yuan in 2019.

Live-streaming sales are seen as Luo’s fresh business venture after he met substantial setbacks in his previous businesses including the manufacture of e-cigarettes and synthetic shark skins. His new venture also comes as the ongoing Covid-19 pandemic has prompted many of China’s brick-and-mortar retailers to turn to live-streaming to promote and sell their products to offset virus-linked losses.

ByteDance-owned Douyin, which goes by TikTok outside China, is one of the major players in China’s live-streaming e-commerce market along with Alibaba’s Taobao Live and Kuaishou. It was the fifth most downloaded non-game app on Apple’s App Store in China in January, according to research firm App Annie.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Smartisan Founder Announces Push Into E-Commerce With Eye on Livestreaming Sales

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By Liu Yanfei and Tang Ziyi / Mar 26, 2020 04:01 PM / Finance

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Photo: VCG

A guest who attended a gong-striking listing ceremony at the Hong Kong Stock Exchange on Friday has tested positive for the coronavirus, the exchange’s operator said.

Hong Kong Exchanges and Clearing Ltd. (HKEx) is contacting each attendee of the ceremony event and has thoroughly sterilized and cleaned the Connect Hall, where the listing ceremony was held, according to a statement by the operator sent to Caixin on Wednesday. The operator did not hold any activities at the hall after the Friday event, it said.

The incident came before companies were encouraged by HKEx on Monday to hold gong-striking listing ceremonies online due to the virus.

The bourse operator didn’t identify the infected person, although the listing ceremony has been identified as being for SG Group Holdings Ltd. The ceremony was for the Hong Kong-based fashion design company being listed on the exchange’s main board, transferring its listing from the smaller Growth Enterprise Market (GEM) board of the exchange.

It is usual for bankers, accountants, exchange staff, company executives and other guests invited by a listed company to gather at the Connect Hall to witness the ceremonial striking of the gong, which marks the start of the company’s shares trading. The HKEx Connect Hall, with a total area of over 30,000 square feet, is a place where the bourse operator holds important exhibitions and conferences, companies’ listing ceremonies, and other events.

Read the full story on Caixin Global later today.

Contact reporter Tang Ziyi (ziyitang@caixin.com)

Related: Securities Regulator Vows to Keep IPO Money Flowing Despite Epidemic


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By Ding Yi / Mar 26, 2020 02:54 PM / Business & Tech

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Photo: VCG

EHang, the Chinese maker of self-driving “air taxis,” reported strong revenue growth and a narrowing net loss in the fourth quarter of 2019 as sales of its aerial vehicles ballooned.

For the three months through December, the Nasdaq-listed company’s total revenues reached 54.7 million yuan ($7.9 million), more than four times higher than the amount it generated in the final quarter of 2018, according to an earnings report released Tuesday.

Net losses fell to 200,000 yuan from 30.7 million yuan over the same period the year before, the report said. Adjusted net income was 2.9 million yuan, compared with an adjusted net loss of 25.6 million yuan in the fourth quarter of 2018.

Nearly 70% of EHang’s total revenues came from sales of what the report calls “air mobility solutions,” which include aerial vehicles. The cars use “cluster management techniques centralized at a ground-based command-and-control center” to enable unmanned vehicles to travel safely and in an orderly manner, according to a company white paper released in January.

A 2018 Morgan Stanley blue paper estimated that the global urban air-mobility market could reach $1.5 trillion by 2040.

In 2019, EHang sold a total of 61 passenger-grade autonomous aerial vehicles, which are normally used for sightseeing, public transport, medical relief and logistics, according to the earnings report. The company only shifted three such vehicles in 2018.

Experts say that the nascent autonomous aerial vehicle industry still lacks unified standards to assess the security risks of such vehicles. Last year, EHang was approved by the Civil Aviation Administration of China (CAAC) to pilot several programs aimed at exploring the country’s airworthiness standards and management systems for unmanned aerial vehicles.

Contact reporter Ding Yi (yiding@caixin.com)

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