Individuals may be using the guise of selling second-hand air conditioners to buy and sell sexual services on the Alibaba-operated  second-hand goods and services platform Xianyu, according to app users who posted about an alternative use of the keyword “second-hand air conditioners” on Chinese X-like platform Weibo.

Chinese internet users have dubbed  Xianyu “yellow fish” since the case came to light, because “yellow” in Chinese can refer to pornography; users have also made fun of  Xianyu’s meaning,  “leisurely fish.” Xianyu’s customer service department responded on Wednesday that the team will enhance their review procedures to weed out such  transactions, according to a Sina News post on Weibo.

Why it matters: In China, the buying and selling of sexual services is illegal, prohibited under the country’s public morality and social order laws. This issue may reflect a misuse of online platforms, where individuals exploit legitimate categories to facilitate illicit activities.

Details: Terms such as “second-hand air conditioners,” “coins,” “Apple SIM card ejector,” and “Giant bike” have allegedly become code words suspected for selling sex on the online trading platform, according to comments posted on social media.

• A screenshot posted by a netizen shows a page from a seller on Xianyu purportedly listing a second-hand air conditioner in 90%-new condition, with a promise of home installation. In the background of the image is an air conditioner mounted on the wall, while the bottom left-hand corner features small photos of different women. The price displayed ranges from RMB 50 to RMB 600 ($7 to $83), though sellers can edit prices after transactions.
• According to a video posted on Weibo, a one-cent coin priced at over a thousand yuan actually relates to a sexual service, where the production year on the coin indicates the age of the sex worker. For instance, a coin from the year 2000 signifies that the sex worker was born in 2000.
• “Don’t ask why a pin tool is so expensive. Some things are not measured by value,” states the Apple SIM card ejector product description page in another example.
• Some Xianyu users looking to buy a second-hand Giant bicycle came across a local seller on the platform. However, the two sides engaged in a confusing conversation, according to screenshots shared on social media. The bike could be ridden for 90 minutes, the seller allegedly said, implying the duration of a sex service.

Context: Xianyu said its daily GMV (Gross Merchandise Volume) on the platform has exceeded one billion RMB ($138 million), local media outlet 36Kr reported in March. In the past year, over 100 million people posted items for sale on the platform, the company claimed.

• Digital products, ACG (anime, comic, game) products, tickets, vouchers, transportation tools, sports and outdoor equipment, and clothing have been among the top categories.

The 142nd International Olympic Committee (IOC) Session was held in Paris on Tuesday, during which a proposal was approved for the first edition of the Olympic Esports Games to be held in Saudi Arabia in 2025. The IOC stated on its website, “history was made today.”

Why it matters: The Olympic Esports Games represents a major step in legitimizing and mainstreaming esports within the global sports community. The decision of the IOC acknowledges the increasing popularity and competitive nature of this rapidly evolving field.

Details: To organize the Olympic Esports Games, the IOC has entered into a 12-year partnership with the Saudi Arabian National Olympic Committee (NOC), according to the IOC announcement.

• Following the proposal’s approval, both parties are beginning the process to select the host city and venue for the event and finalizing details regarding the event schedule, disciplines, and qualification processes for the participants.
• At the same time, the IOC will establish a new, separate structure for the Olympic Esports Games, distinct from the Olympic Games’ organizational and financial model.
• “With the confirmation by the IOC Session of the creation of the Olympic Esports Games, we are keeping up with the pace of the digital revolution. The esports community, represented in our Esports Commission, has enthusiastically engaged with this initiative. This is further proof of the attractivity of the Olympic brand and the values it stands for among young people,” said the IOC President Thomas Bach.
• IOC member Reema Bandar Al-Saud, who serves on the Board of Directors of the Saudi Arabian Olympic and Paralympic Committee and as President of the Women’s Committee, stated that Saudi Arabia has over 23.5 million gamers, nearly half of whom are female. She said she views hosting the 2025 Olympic Esports Games as a natural progression in opening Saudi Arabia to the world.

Context: Last September, esports made its debut as an official competition event at the 19th Asian Games in Hangzhou, China. The competition included seven esports titles: League of Legends, Honor of Kings, PUBG Mobile, DOTA 2, Dream Three Kingdoms 2, Street Fighter V, and FIFA Online 4.

• On July 3, the first edition of the Esports World Cup kicked off in Riyadh, the capital of Saudi Arabia. Running until August 25, the event features 1,500 athletes from 425 clubs competing in 21 esports events for the honor of being crowned the first group of world champions.

On July 12, the Bilibili World 2024 event opened at the National Exhibition and Convention Center, attracting ACG (Anime, Comic, Game) fans from across China who traveled to Shanghai to become part of the Chinese streaming platform’s annual celebration. 

The three-day event this year featured over 700 exhibitors and 800 ACG-content creators. The Lenovo booth showcased two new AI products: the YOGA Air 14c AI PC and the Legion Y9000P AI PC.

Why it matters: Bilibili World 2024 draws in ACG fans to celebrate shared interests, which meant the AI-powered Lenovo PCs garnered significant attention.

Details: The Lenovo YOGA Air 14c AI PC is designed for work, while the Lenovo Legion Y9000P AI PC is principally marketed to gamers. 

• “In the current wave of AI development, computers are gradually evolving into personal assistant roles. As a leading enterprise in the PC industry, Lenovo will continue to maintain its leadership in this new era,” said Li Weichang, Vice President and General Manager of Lenovo China’s Consumer PC and Tablet Business, at the booth during the event.
• Li said an advanced AI PC should have five features: an embedded personal intelligent agent for natural interaction, a built-in knowledge base, combined CPU+GPU+NPU AI processing power, an open AI application ecosystem, and protection for personal privacy and data security.
• The Lenovo YOGA Air 14c AI laptop is equipped with an Intel Core Ultra 7 155H processor, featuring an advanced 6+8+2 core thread configuration, with a maximum frequency of up to 4.8GHz. The AI model offers up to 32GB RAM and 1TB storage.
• The YOGA Air 14c AI PC integrates an intelligent agent, Lenovo Xiaotian, powered by the firm’s self-developed Tianxi large language model. Lenovo Xiaotian is able to learn user habits and preferences at work and while engaged in entertainment. The AI assistant is then able to offer practical functionalities including AI-powered PowerPoint production, document summarizing, voice cloning, and painting.

• The flagship Y9000P AI features Intel’s i9-14900HX processor and Nvidia’s RTX 4090 graphics card, supporting direct GPU connection technology with a maximum power consumption reaching up to 250W. In terms of display, the flagship model provides a 2,560 x 1,600 resolution 240Hz screen for a detailed gaming experience.
• The Legion Y9000P AI laptop is also equipped with Lenovo Xiaotian, which interacts with users in various scenarios including document summarizing, research question answering, and AI performance tuning.

Context: Held since 2017, Bilibili World is a community-focused annual large-scale in-person event organized by Bilibili, a leading Chinese video-sharing website. On June 29, the first round of the ACG event’s ticket sales saw 27,000 VIP tickets sell out within 30 seconds, with 100,000 general admission tickets gone within one minute, according to the company’s own app.

• Intel’s China District Technical Director, Gao Yu, attended the event and introduced the Intel Core Ultra processor, integrating three types of computational engines — CPU, GPU, and NPU (collectively known as XPU) — for various AI tasks. Yu hinted at an upcoming next-generation AI PC processor based on the Lunar Lake architecture, promising even more powerful AI functionalities.

Since Chinese game developer miHoYo released Zenless Zone Zero, a new action role-playing game (RPG) populated with rogue-like elements last Thursday, the reviews from Chinese players have been mixed. Online communities have seen comments praising its combat mechanics and visual design, but others saying the game is somewhat unengaging. 

As the developer of hit game Genshin Impact and Honkai: Star Rail, miHoYo has caused a stir in the domestic gaming industry with this new release. Less than three days after the game became available to the public, the Shanghai-based firm announced that global downloads had surpassed 50 million, thanking players by distributing in-game rewards.

The free-to-download game is available on Windows, iOS, Android and PlayStation 5, with future versions planned to launch on Switch and Xbox, though there are no confirmed release dates for the latter.

We spent eight hours playing the game to give readers a comprehensive review.

Game background

In the environs of a post-apocalyptic metropolis called New Eridu, the last humans to exist live in a place called Hollows, where monsters roam. New Eridu thrives by extracting resources from Hollows, leading to conflict between monopolistic enterprises, gangs, and conspirators. Players take on the role of a Proxy, a group that links the Hollows and New Eridu.

As players progress in the Hollows, the Proxy recruits new members to their party as they continue to fight the roaming monsters. By combining the abilities of different members in the game, players can cause greater damage and have greater impact on their enemies.

Beautiful visuals and hard-hitting music

Zenless Zone Zero’s visual effects and camera movements are smooth, and the story animations are fluid, in a similar style to Japanese manga.

The game simplifies action elements, making it easy for beginners to pick up, while containing many intricate details for veteran players to master. It employs a three-character team for diverse combat strategies, an intriguing choice when first playing. Players can switch to another character during the battles for an enhanced hitting score, if they seize the right moment.

The game’s visual design has gathered widespread acclaim, especially for its stylized street fashion. Character design and game scene details are so rich I would give them a score above 9 out of ten. The music and sound effects are also fantastic, with high-quality music featuring electronic melodies and high-BPM (Beats Per Minute).

Plodding storylines and mediocre gacha animations

The storyline and dialogue of Zenless Zone Zero occasionally prompted me to speed through them, and may be more appealing to younger players. Meanwhile, the hitting impact sensation during battles is better on a PC, leaving plenty of room for improvement on the mobile version.

Gacha refers to a game mechanic whereby players spend virtual currency (in-game purchases) to receive random in-game items or characters, similar to toy vending machines, often seen in miHoYo’s mobile games. This is a gacha animation screenshot:

The gacha animations in this game are mediocre, and come nowhere near those of Genshin Impact, a game the tester played for two years. Additionally, compared to Genshin Impact, the character pool isn’t very appealing, and there were no characters I felt compelled to invest in.

The tester spent four hours experiencing the game on both mobile and PC. Currently, the variety of monsters in battles is rather limited, which could stifle extended play.

As the game is essentially a gacha pay-to-win system, and due to limited testing time, it could be that we’re yet to uncover its full complexity. However, from a beginner’s perspective, the overall gaming experience falls short of that of Genshin Impact.

Pros: 

• Unique combat experience
• Smooth artistic visuals
• Beginner-friendly mechanics
• Acclaimed music

Cons: 

• Bland storyline and dialogue
• Mediocre hitting sensation on mobile devices
• Characters and gacha animations less appealing than Genshin Impact
• Limited monster variety in battles

Conclusion:

Zenless Zone Zero shows great potential but needs further improvements to captivate players long-term. It doesn’t quite measure up to Genshin Impact, especially in the gacha mechanics, a crucial area that has earned billions of dollars worldwide for the company through its other hit titles.

The game’s greatest strength is its art design, making it satisfactory as a mobile game. However, given four years of development and the success of Genshin Impact, miHoYo was expected to deliver a better game. The current version falls short of our expectations.

“Hello, I will arrange the bread and fruit separately.” Upon hearing the command from the host, the humanoid robot Qinglong extended its arms and gently picked up a piece of soft bread with its steel fingers, placing it down into the basket on the table. 

At the World Artificial Intelligence Conference (WAIC) 2024 in Shanghai, one of the most influential AI events within the global tech ecosystem, the National Local Joint Humanoid Robot Innovation Center on Thursday unveiled the open-source general-purpose humanoid robot Qinglong for the first time. The event marks the debut of China’s first full-sized general-purpose humanoid robot model, along with the release of its related open-source technologies.

Why it matters: The unveiling of Qinglong marks China’s entry into the advanced field of full-sized general-purpose humanoid robots. Its open-source initiative is intended to accelerate innovation, collaboration, and development within the global robotics and AI communities, potentially driving advancements in a range of industries.

Details: During the Summit on Humanoid Robots and Embodied Intelligence Development Forum at WAIC 2024, the National Local Joint Humanoid Robot Innovation Center demonstrated Qinglong’s operation and design concepts on site.

• Qinglong has been independently developed by Humanoid Robots (Shanghai) Limited, a new R&D institution established by leading industry enterprises with a registered capital of one billion RMB ($140 million). The company was designated as the National Local Joint Humanoid Robot Innovation Center by the Ministry of Industry and Information Technology of China in May 2024.
• Qinglong stands at 185cm tall and weighs 80kg, according to the company. It features a highly bionic torso and anthropomorphic motion control, supporting multi-modal mobility, perception, interaction, and manipulation. With 43 active degrees of freedom, Qinglong achieved a maximum joint peak torque of 400 N·m (Newton-meters) and 400 TOPs (Tera Operations Per Second) of computational power.
• The humanoid robot combines mobile lower limbs for agile walking with lightweight, high-precision upper limbs for operations, the on-site presentation stated. The company claimed that the model supports rapid walking, agile obstacle avoidance, stable incline and decline movement, and resistance to impact interference, making it an ideal platform for developing general artificial intelligence software and hardware.
• “In the Year of the Dragon this year, we named our humanoid robot Qinglong [meaning green dragon in Chinese] and initiated an open-source community for humanoid robotics,” said Jiang Lei, Chief Scientist of the National Local Joint Humanoid Robot Innovation Center. “Through open-sourcing, our goal is to introduce a new humanoid robot model annually, each named after one of the Chinese zodiac animals, to foster a humanoid robot innovation community unique to China,” he announced at the forum.
• Jiang also announced the launch of the OpenLoong open-source community website, developed by the Innovation Center. The website includes the release of the robot’s hardware structure and parameters, with the embodied intelligence software package set to be open-sourced soon.

Context: On the same day, Tesla debuted its second-generation humanoid robot Optimus at the Shanghai World Expo Exhibition Hall during WAIC 2024. According to Tesla booth staff, compared with the first generation, Optimus has improved its walking speed by 30% while maintaining upright posture. Its fingers have also evolved to perform delicate tasks such as gripping eggs and handling heavy objects.

• Tesla plans to start limited production of humanoid robots next year, with over 1,000 Optimus units expected to assist in production tasks at Tesla factories, according to CEO Elon Musk.

Plants vs. Zombies Hybrid Edition, a remastered version of the classic tower defense video game published by the American company PopCap Games, went viral in China in June, 15 years after its first release. 

The creator of the Hybrid Edition is blogger Submarine Weiweimi (our translation of 潜艇伟伟迷 in Chinese) who posts on Chinese video platform Bilibili. Chinese netizens nicknamed him Cyber Mendel (father of modern genetics) because of the unique appearances and intriguing abilities he has given the plants and zombies in the new version.

Why it matters: The Hybrid Edition entices users with nostalgia and innovative gameplay, blending classic elements with new twists. In June, China’s live-stream gaming channels were flooded with images of vibrant landscapes and intense plant-based explosives.

Details: Submarine Weiweimi chose not to market this Hybrid Edition as a commercial product but aimed to provide a free gaming experience for players in China. The free strategy brought more players to the game, increasing its influence and popularity in China.

• The Hybrid Edition combines different creatures from the game Plants vs. Zombies, creating new species with dual-layered abilities. For instance, in the original game, Peashooter attacks zombies, and Sunflower produces the sunlight needed to make more plants. In the Hybrid Edition, these two are combined as Peashooter-Sunflower, which can produce sunlight and shoot pea bombs at the same time.
• Players can easily grasp the game with minimal effort to enjoy the thrill of gameplay, as both plants and zombies have multiplied their attack power several times through hybridization, compared to the original version.
• In the past month, Submarine Weiweimi’s Douyin (Chinese Edition of TikTok) account gained 1.47 million followers, while its Bilibili account attracted over 2.45 million followers, making it one of the fastest-growing and most popular KOLs (key opinion leaders) in China, according to market intelligence platform NewRank.
• As of writing, Submarine Weiweimi’s Bilibili account has 3.97 million followers, 18.69 million likes, and 4.3 billion views. On Bilibili, the influencer released a video responding to the popularity of the Hybrid Edition, stating that he had no grand ambitions but is simply trying to make up for the regrets of his childhood. As a member of the post-2000 generation, he has been deeply attached to the game Plants vs. Zombies since childhood, he said. He created the Hybrid Edition to improve on the original game’s components, he added.
• The official Bilibili account for Plants vs. Zombies announced last week that the third-party modified work Plants vs. Zombies Hybrid Edition has been integrated into its mini-program, allowing players to experience it in the game’s creative mode, according to local media outlet IThome.

Context: On November 20, 2023, Submarine Weiweimi released the first video of the Plants vs. Zombies Hybrid Edition series titled Hybrid Plants on Bilibili. Subsequent videos in the Hybrid Plants series have continued to gain video views, with enthusiastic fans actively engaging in the comments section, sharing creative ideas and suggestions to support the game.

• On March 27, the blogger released the downloadable files for the self-developed game Hybrid Edition 1.0 for free. On June 13, the Hybrid Edition version 2.1 was launched.

Level Infinite, the overseas gaming distribution arm of Tencent Games, announced on Thursday that it has launched a global version of its hit mobile game Honor of Kings in a swathe of new international markets including Japan, South Korea, North America, and Europe.

Level Infinite stated that Honor of Kings has now established a global service network and supports 14 languages to enhance the gaming experience for players around the world.

Why it matters: The most profitable title from Tencent Games, Honor of Kings is already the world’s biggest multiplayer online battle arena (MOBA) game according to the company, with a global launch somewhat overdue. Honor of Kings maintains a daily active user base of 100 million, the company said.

Details: TiMi Studio, a subsidiary of Tencent Games, originally released Honor of Kings in China in 2015. The latest development means it is now available globally in more than 160 countries. 

• Honor of Kings is a competitive MOBA title where players choose from a diverse line of heroes, each with unique skills, to engage in strategic team battles. To celebrate the global release, the game introduced Lu Yana, a new hero exclusive to the global edition. Currently, a total of 85 characters, of which 28 are free to use, are available to global players.
• The design inspiration for Lu Yana comes from the mysterious Latin American legend of Boitata, according to the game team. The first region-themed exclusive hero was born after in-depth discussions with local gaming experts, they added. Boitata is a mythical creature from Brazilian folklore, often depicted as a giant serpent or dragon that emerges from bonfires and protects the forests.
• At time of writing, Honor of Kings topped the free-download game chart in 10 countries or regions, securing a spot in the top 10 of 25 countries’ free-download gaming charts, local gaming media outlet GameLook reported today. The ten countries or regions where it tops the charts are Canada, the Philippines, Brunei, Myanmar, Singapore, Cambodia, Malaysia, Indonesia, Bolivia, and Bermuda. Additionally, in terms of free-download mobile games, the game ranked second in the US, fourth in Japan, and eleventh in South Korea.
• Tencent Games has deployed dedicated servers in every country or region to ensure low latency and optimal game performance, the same GameLook report revealed. Due to regulatory constraints, Honor of Kings cannot achieve global cross-server play between Chinese and global versions. However, Chinese players can authorize migration of their data when logging into the global version.

Context: In the first quarter, Tencent’s revenue from the overseas gaming market increased by 3% year-on-year to RMB 13.6 billion ($1.88 billion), while revenue from the domestic gaming market decreased by 2% year-on-year to RMB 34.5 billion ($4.77 billion). 

• In 2023, Honor of Kings reached nearly $1.48 billion in in-game revenue, making it the highest-grossing mobile game of the year for Tencent Games, according to market intelligence firm AppMagic.

Chinese developer Game Science last week invited a group of domestic gaming media outlets and veteran gamers to attend an offline demo event of its upcoming game Black Myth: Wukong, a highly-anticipated self-developed AAA game which has captured widespread attention in China this summer – even before it’s launched.

On Monday, local media released their evaluations of the new title, which is loosely based on the Monkey King character from Journey to the West, and gave their assessments of the game’s visual quality, artistic details, and playability.

Why it matters: As China’s first AAA title in recent years, Black Myth: Wukong is eagerly anticipated among Chinese gamers, with the hype continuing to build toward the game’s global launch on August 20. Major Chinese game companies such as Tencent and NetEase rarely develop single-player PC games due to high development costs and risks associated with return on investment, giving this title extra importance.

Details: The demo of Black Myth: Wukong lasted for two and a half hours. Several domestic gaming media outlets and players shared their impressions of the demo on various social media platforms in the aftermath.

• An action-adventure game based on the classic Chinese literary work Journey to the West, Black Myth: Wukong showcases a rich mythological aesthetic through its art, according to most media feedback. “It’s stunningly gorgeous, the animations are incredibly fluid, it’s steeped in rich Chinese culture, and there’s just something immensely satisfying about playing as a Monkey King and beating up all sorts of mythical creatures with a giant extendable staff,” wrote Mitchell Saltzman, editor of American video game media outlet IGN.
• Each battle is unique throughout the two and a half hours of gameplay, according to local gaming media outlet Youxi Putao. Each boss exhibits distinctive combat styles and tactics, including the Sword Wolf Leader, Spirit Master, and Black Bear Spirit. “Some bosses wield their skills with flair, showing off their prowess with full force. Others may seem simple-minded but excel in using underhanded tactics. Coupled with well-tuned game mechanics that vary spells and abilities, players can enjoy a diverse experience in boss battles,” said the editor from Youxi Putao (our translation).
• However, the game’s main thrill lies in its intense, high-quality boss battles, overshadowing the relatively mundane and unexciting content found between them within a short two-hour gameplay trial, the same Youxi Putao report claimed. 
• “While there are side paths, they frequently lead to dead ends or loop back to the main route. These paths include mobs, item materials, and elite monsters, but the combat lacks diversity and challenge. The absence of unique terrains, traps, or mechanics contributes to a bored monster-clearing experience. Additionally, the rewards are generally underwhelming, making it less appealing to engage with these mobs later on,” the editor from Youxi Putao wrote.
• On Bilibili – a popular Chinese video sharing platform themed around anime, manga, and gaming culture – on Monday, veteran gamers posted trial play videos and commentaries that quickly earned hundreds of thousands of views. The videos show that the combat system of Black Myth: Wukong emphasizes fast-paced and agile battles, particularly highlighting evasion and jumping. 

Context: An AAA game is a high-budget video game developed by major studios, known for advanced graphics, complex gameplay, and extensive marketing. These games involve large teams, long development cycles, and aim to deliver great gaming experiences with broad industry impact and high sales expectations.

• The physical deluxe and collector’s editions of Black Myth: Wukong for PC are priced at RMB 820 ($113) and RMB 1,998 ($276) respectively. In China, the deluxe edition was limited to 20,000 sets at the first round of pre-sales, while the collector’s edition was limited to 10,000 sets. Pre-sales for these editions began on June 10 and June 17, with both selling out in less than a minute. Reservations on the e-commerce platform JD exceeded one million for both rounds of pre-sales. Currently, it is unknown whether Game Science will start a third round of pre-sales for the game.

On Thursday, World of Warcraft announced on Chinese social media platform Weibo that a deletion-based technical test for the Chinese server will begin on June 11, in preparation for the upcoming server launch of the expansion set Wrath of the Lich King. The team also promised players an official China launch later in June.

Why it matters: June 6 marked 500 days since Blizzard’s servers went offline in China and 57 days since NetEase Games announced that a deal had been done to secure their return. Chinese gamers are eagerly following the latest updates on the return of Blizzard games to the mainland China market.

Details: The technical test for World of Warcraft’s domestic servers will last for seven days, with the final launch of the official servers still requiring some time, according to the announcement.

• To celebrate this moment, World of Warcraft’s China team has prepared two rewards for gamers participating in the test: a unique commemorative online pet and an exclusive achievement badge for the Chinese servers.
• On Weibo, some veteran players questioned the need for testing a hit game that has been around for over a decade, while others got emotional at the sight of the login interface of World of Warcraft. Furthermore, many players are urging the prompt return of other popular Blizzard games such as the digital collectible card game Hearthstone and the multiplayer first-person shooter title Overwatch.
• The pressure on servers for relaunching World of Warcraft might surpass that of new game launches, the team said in the announcement. Many players prefer returning to their original servers rather than joining new ones based on server loads. This server preference could result in login pressures on certain servers far surpassing the norm, potentially exceeding the server pressures during the initial launch of a new game, the team explained.
• Testing is also needed for new technology and server capacity expansion, according to the NetEase and Blizzard teams. “Over the past year, the server backend has undergone multiple updates, with new technologies planned for implementation in the future. These upgrades require further debugging in high-pressure environments to ensure smooth operation in the new environment,” the announcement added.

Context: On April 10, China’s NetEase and its US games partner Microsoft announced that they aimed to bring popular Blizzard titles back to China after the former’s falling out with the developer that ended an almost 15-year partnership. The two companies are now working to bring online games from Blizzard Entertainment, a subsidiary of Activision Blizzard which Microsoft bought last year, back to China, starting this summer. 

• NetEase was the publisher of Blizzard games in China from 2008 to 2023.

Two authors behind a Stanford University AI project have apologized to the Chinese team behind open-source AI model MiniCPM-Llama3-V 2.5 after social media users in China outed the former for having plagiarized the latter model, which was developed by Tsinghua University and ModelBest Inc. The incident sparked widespread discussion on the Chinese internet.

Two authors of the Stanford Llama3-V team, Siddharth Sharma and Aksh Garg, today apologized to the MiniCPM team on social media site X for their academic misconduct, announcing they would withdraw the Llama3-V model from use.

Why it matters: Members of the Stanford team acknowledged they had plagiarized Tsinghua University and ModelBest Inc’s work. 

Details: “We sincerely apologize to the authors of MiniCPM for our failure to verify the originality of Llama3-V,” Aksh and Siddharth wrote on X today. “Mustafa, who wrote the code, described exciting extensions that we promoted without knowing about the prior work by OpenBMB (founded by Tsinghua University and ModelBest Inc). We take full responsibility for this oversight. We’ve removed all references to Llama3-V in respect to the original authors.” 

• On May 29, a Stanford AI team claimed online that they could train a multi-modal large model surpassing GPT-4V for only $500, according to local media outlet Quantum Bit. Subsequently, social media users discovered that the team’s Llama3-V model used a model structure and code highly similar to ModelBest’s MiniCPM-Llama3-V2.5, with partial variable name modifications. Llama3-V also features the same tokenizer as MiniCPM-Llama3-V 2.5, including the latter’s newly defined special symbols.
• On June 2, Chinese firm ModelBest Inc confirmed that the Stanford large model project Llama3-V, similar to MiniCPM, is able to identify Qinghua Jian ancient Chinese characters from China’s Warring States Period. Remarkably, the matches also shared identical mistakes. This character data, obtained by the research team through months of scanning and manual annotation of each Qinghua Jian character, had not been publicly disclosed, confirming the act of plagiarism.
• “While it’s good to be recognized by international teams, we believe in building a community that’s open, cooperative, and trustworthy,” ModelBest Inc CEO Li Dahai stated. “We want our team’s work to be noticed and respected, but not in this manner.”
• ModelBest Inc’s chief scientist, Liu Zhiyuan, who is also a tenured associate professor at Tsinghua University, told an Yicai reporter that the rapid development of artificial intelligence relies on the global sharing of algorithms, data, and models. “Two out of the three members of this Llama3-V team are merely undergraduate students at Stanford University, and they have a long journey ahead. If they can acknowledge their mistakes and make amends, it would be a great virtue,” he said.
• Christopher David Manning, the director of the Stanford AI Laboratory, also issued a statement condemning the act of plagiarism and praising the Chinese open-source model MiniCPM.

Context: Founded in August 2022, ModelBest Inc secured a new round of financing worth hundreds of millions of RMB in April. Huawei’s Hubble Technology Venture Capital led the investment, with participation from Chunhua Capital, Beijing Artificial Intelligence Industry Investment Fund, and Chinese Quora-like platform Zhihu. In February, ModelBest Inc launched the open-source model MiniCPM.

On Wednesday, Chinese PC maker Lenovo announced a strategic partnership with Alat, a subsidiary under Saudi Arabia’s Public Investment Fund (PIF) focused on transformative technology investments and sustainable manufacturing, with Alat proposing a $2 billion zero coupon convertible bonds investment in Lenovo. 

Lenovo will establish its Middle East and Africa (MEA) regional headquarters in Riyadh, the capital of Saudi Arabia, which will include a customer center and R&D center for the region. The company will also build a new manufacturing base for personal computers and servers in Saudi Arabia.

Why it matters: As a wholly-owned subsidiary of PIF, Alat aims to leverage this collaboration to drive industrial transformation in Saudi Arabia, positioning the country as a world-class hub for sustainable technology manufacturing. Lenovo will look to increase its presence in the MEA region via the partnership.

Details: Lenovo will issue $2 billion in convertible bonds to Alat, using the proceeds to repay debts and for corporate purposes, according to the announcement. 

• The bonds mature in three years and can be converted to equity at HK$10.42 ($1.33) per share, a 10% premium over the 30-day average VWAP (Volume Weighted Average Price). Issuance is contingent on Lenovo shareholder and regulatory approvals. Currently, Lenovo has approved a proposal to issue 1,150,000,000 warrants at a price of HK$1.43 ($0.18) per warrant, according to the statement.
• PIF, a sovereign wealth fund, manages assets exceeding $700 billion, according to Lenovo. The agreement between the two parties stated that Alat will have the authority to nominate a non-executive director candidate to join Lenovo Group’s board of directors through the customary director appointment procedures of Hong Kong.
• “Through this powerful strategic collaboration, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in the MEA region,” said Lenovo CEO Yuanqing Yang.
• “As Lenovo establishes its regional headquarters in Riyadh and a clean energy manufacturing base in Saudi Arabia, we expect its growth to accelerate in the MEA region,” said Alat CEO Amit Midha.

Context: In the first quarter, global PC shipments increased around 3% year-on-year to reach 57.1 million units after eight consecutive quarters of decline, according to market research firm Counterpoint Research. Lenovo secured the leading position in the global market with a 24% share, reaching 13.7 million units, up by 8% year-on-year.

• The market intelligence firm IDC predicts that the IT and business services market in the MEA region is expected to reach nearly $38 billion in 2027, driven by the continuous increase in large-scale projects and rapid economic development in the region.

On Tuesday, Chinese tech giant Tencent released its earnings report for the first quarter of 2024, which ended on March 31. Tencent’s revenue from the international gaming market increased by 3% year-on-year to RMB 13.6 billion ($1.88 billion) during the period, while revenue from the domestic gaming market decreased by 2% year-on-year to RMB 34.5 billion ($4.77 billion). Tencent attributed the domestic year-on-year decline to the impact of deferred revenue.

Why it matters: Over reliance on older hits such as Honor of Kings and Peacekeeper Elite may have led Tencent Games to stagnation, reduced player engagement, and increased its vulnerability to competitors launching new, innovative games. The lack of new hit titles from Tencent may risk diminishing the firm’s long-term growth and revenue potential in a rapidly evolving gaming market.

Details: Tencent’s gaming revenue totaled RMB 48.1 billion ($6.66 billion) in the first three months of 2024, marking a 17.6% increase quarter-on-quarter and a 0.41% decrease year-on-year. A yearly revenue drop but a quarterly rise may signal seasonal trends and indicate the company’s recent improvement in performance despite broader market challenges, including intensified industry competition, economic instability, and declining consumer demand.

• “During the first quarter of 2024, several of our leading games in China and internationally started to benefit from team reorganizations we put in place,” Tencent CEO Ma Huateng said in the financial report, “resulting in an increase in games’ gross receipts and creating a foundation for our games revenue to resume growth in future quarters.”
• In the first quarter, Honor of Kings and Peacekeeper Elite, two of Tencent’s flagship games, experienced a year-on-year decline in revenue. Tencent blamed this on a high base from the Chinese New Year period last year for the former, and weaker commercial content in the second half of 2023 for the latter. However, both games saw a year-on-year revenue increase in March.
• During the quarter, several domestic games achieved their highest-ever gross totals, with titles such as Fight of the Golden Spatula, CrossFire Mobile, and Arena Breakout leading the way, according to the company. Recently released overseas games, including VALORANT and Lost Ark, both exhibited robust growth, the firm said.
• Supercell, a Finnish game development company that Tencent acquired in June 2016, experienced growth in both usage and gross receipts in the overseas gaming market during the reporting period. The multiplayer online battle arena shooter game Brawl Stars’ daily active users more than doubled compared to the previous year, while gross receipts more than quadrupled year-on-year internationally for the title.

Context: In the first quarter, Tencent’s total revenue reached RMB 159.5 billion ($22.08 billion), reflecting a 6% year-on-year increase, while adjusted net profit amounted to RMB 50.27 billion ($6.96 billion), showing a notable 54% year-on-year growth.

• In the first quarter of 2023, Tencent’s revenue from games reached RMB 48.3 billion ($6.9 billion), up 11% up year-on-year. Tencent’s domestic gaming revenue during the period rose 6% year-on-year to RMB 35.1 billion ($5 billion), while its overseas gaming revenue rose 25% to RMB 13.2 billion ($1.8 billion).

On Tuesday, MediaTek held the MediaTek Dimensity Developer Conference (MDDC) 2024 in Shenzhen, where the Taiwan-based semiconductor company unveiled its latest flagship 5G chipset, the Dimensity 9300+. With a theme of “AI Empowers Everything,” MDDC 2024 delved into the applications and advances in artificial intelligence technology across various domains, and the possibilities it brings to terminal devices.

Why it matters: MediaTek introduced the Dimensity 9300+ less than two months after the launch of Qualcomm’s Snapdragon 8s Gen 3. Amid slow growth in the smartphone industry, MediaTek is aggressively competing for Qualcomm’s market share of mobile chipsets. 

Details: The Dimensity 9300+ chipset and generative AI were the main highlights at MDDC 2024.

• The Dimensity 9300+ has adopted TSMC’s third-generation 4nm process technology, according to MediaTek. The new chip boasts big-core CPU architecture, housing an octa-core CPU comprising four Cortex-X4 ultra-large cores clocked at up to 3.4 GHz, and four Cortex-A720 large cores operating at 2.0 GHz.
• MediaTek claims that the full big-core CPU ensures low power consumption across varying application loads and enables smartphones to deliver sustained high performance over extended periods by combining high speed with energy efficiency.
• The Dimensity 9300+ supports on-device LoRA (Low-Rank Adaptation) Fusion and NeuroPilot LoRA Fusion 2.0 technology that allows developers to quickly introduce new generative AI applications with text, voice, imagery, and music, the company said. This translates to smartphones equipped with the Dimensity 9300+ chip offering enhanced AI functionalities.
• The flagship processor integrates a 2nd-gen hardware ray-tracing engine with an Arm Immortalis-G720 GPU, delivering 60 frames per second (FPS) ray-tracing and console-grade global illumination effects for gamers, according to the official website. MediaTek HyperEngine technologies further enhance the gaming experience, according to the company, with MediaTek Adaptive Gaming Technology optimizing power efficiency for longer battery life. Furthermore, HyperEngine’s Network Observation System improves dual-network concurrency and offers up to 10% power savings and 25% cellular data savings.
• During the event, MediaTek unveiled the Dimensity AI Pioneer Program for global developers, collaborating with industry partners such as Alibaba Cloud, Baichuan Intelligence, Transsion, Oppo, Honor, Vivo, and Xiaomi. The program aims to offer resources, technical support, and business opportunities for global developers to create innovative generative AI experiences on Dimensity-powered devices.
• At the same time, MediaTek partnered with Alibaba Cloud, Baichuan Intelligence, Huya, Kugou Music, Oppo, Tencent AI Lab, and Vivo to jointly release a Generative AI Smartphone Industry White Paper. The white paper defines Generative AI smartphones as devices utilizing large-scale, pre-trained generative AI models to achieve multi-modal generation, context awareness, and evolving human-like capabilities.
• The white paper signals a strong integration trend in generative AI for smartphones and explores the AI strategies of various chip manufacturers, phone makers, large model developers, and developers in the generative AI ecosystem. Industry analysis firm Counterpoint forecasts rapid growth for generative AI phones in the coming years, with a global user base of around one billion expected by 2027.

Context: In the fourth quarter of 2023, MediaTek maintained its lead with a 36% share of the global smartphone chipset market, followed by Qualcomm at 23% and Apple at 20%, according to data provided by Counterpoint‘s Global Smartphone AP-SoC Shipments & Forecast Tracker by Model.

• On March 18, California-based chip firm Qualcomm launched the Snapdragon 8s Gen 3, the company’s latest flagship chipset, equipped with several on-device AI capabilities. The new 4nm chipset arrives as a more affordable version of the top-of-the-line Snapdragon 8 Gen 3 chip launched last October.

Chinese battery manufacturer and technology company Contemporary Amperex Technology Co. Limited (CATL) revealed on Monday that it is committed to the research and mass production of solid-state batteries, with the aim of achieving small-scale production by 2027, according to local media outlet Jiemian. However, overcoming challenges related to cost is essential for realizing large-scale production, the company said.

Why it matters: Presenting a promising solution to conventional lithium-ion battery limitations, producers maintain that solid-state batteries offer enhanced safety, higher energy density, improved performance, increased durability, and reduced environmental impact. They have the potential to transform various industries, including electric vehicles, portable electronics, and renewable energy systems.

Details: The company’s current level of research on solid-state batteries stands at 4, on a scale of 1-9 for technical and manufacturing maturity, CATL’s chief scientist Wu Kai disclosed at a battery technology seminar. CATL plans to achieve a rating of 7-8 by 2027, the year the company plans to be able to produce solid-state batteries on a small scale, Wu told Jiemian.

• Compared to liquid lithium batteries, solid-state batteries demonstrate better performance in terms of energy density. Currently, liquid lithium batteries can reach 350 watt-hours per kilogram, while solid-state batteries are expected to achieve up to 500 watt-hours per kilogram, according to the chief scientist.
• The technological pathways for solid-state batteries primarily include polymers, oxides, and sulfides. Wu claimed that CATL is currently investing more in research and development of the sulfide option, likely to be the first in mass production.
• Sulfide electrolytes exhibit high conductivity and good process ability, but they are also prone to generate toxic gasses when exposed to water and involve high costs due to complex production processes, Wu further explained.
• Wu stated that CATL is striving towards the goal of solid-state batteries representing 1% of the global battery market share. Tech challenges remaining include solid-solid interfaces, lithium metal anodes, solid-state electrolytes, and other manufacturing processes, the scientist added.

Context: Last September, Japanese automaker Toyota announced a development plan for solid-state batteries. Toyota plans to bring electric vehicles equipped with solid-state batteries to market as early as 2027, enabling them to drive around 1,200 kilometers on a charge of under 10 minutes.

TikTok CEO Shou Zi Chew told the platform’s users that “we aren’t going anywhere” after US President Joe Biden signed the sell-or-ban bill targeting the app into law, giving TikTok’s Chinese parent company nine to 12 months to divest.

“The facts and the Constitution are on our side and we expect to prevail again,” Chew said in a video on Wednesday.

Why it matters: The passing of the bill after months of threats is a clear wake-up call for other Chinese apps that see the US as a top destination for their business expansion or have already entered the market there.

Details: The countdown to the forced sale of TikTok began when Biden signed the bill on April 24, but the short video app’s 170 million American users will continue to have access to it during this period. TikTok is expected to robustly challenge the move in the US courts.

• The law comes as US Secretary of State Antony Blinken begins his visit to China, where he expects to meet the country’s foreign minister Wang Yi.
• Former editor-in-chief of Chinese media outlet Global Times, Hu Xijin, who is known for his nationalist stance, wrote on X that TikTok should “fight to the end”, hours after the Senate ruled on the platform on Wednesday. He said he believes it will be “meaningless” if ByteDance founder Zhang Yiming “loses this career and only gets some money.”
• On Wednesday, China’s Ministry of Foreign Affairs commented it had nothing more to add to the country’s stance on the TikTok ban as the government institution said it has already made clear its position that there would be “no fairness to speak of” if the US uses national security reasons to ban foreign companies.

Context: TikTok, along with its Chinese owner ByteDance, spent over $7 million on in-house lobbyists and digital ad campaigns this year in an effort to avert the bill passing, according to lobbying disclosure reports cited by CNBC.

At Huawei’s spring product launch event on Thursday, Consumer BG CEO Yu Chengdong introduced the MateBook X Pro, a slim lightweight laptop featuring cutting-edge technology such as the Intel Core Ultra 9 processor and Pangu AI integration. Huawei did not disclose any information about its next-generation Huawei P70 flagship smartphone at the event however, despite it becoming a trending topic on Chinese social media in recent days.

Why it matters: The MateBook X Pro stands out from other laptops produced by the Chinese tech giant as the first PC to integrate its Pangu large language model. Huawei has collaborated with AI-model partners such as Baidu’s ERNIE Bot, WPS AI, and iFLYTEK’s Spark on the new computer.

Details: The MateBook X Pro is currently the sole laptop weighing less than one kilogram to be equipped with the Intel Core Ultra 9 processor, according to Yu.

• The 2024 slimline model has a thickness of 13.4mm and weight of 980g. An image shown at the event indicated that the 14.2-inch design is lighter than the 13.6-inch Apple MacBook Air (1.24kg). 
• The new model comes in two chip variants: the first generation Intel Core Ultra 9 185H processor and the Ultra 7 155H processor. These variants are paired with an Intel Sharp Graphics card, with options for 16GB or 32GB of RAM, and either 1TB or 2TB of NVMe PCI storage. Notably, the latest Intel Ultra 9 processor can enhance the device’s performance with up to 40W of power.
• The device supports the latest Pangu AI model, which provides artificial intelligence features including AI Minutes, AI Subtitles, and AI Eyes. AI Minutes can make rapid recordings, while AI Subtitles translates texts in real-time. AI Eyes is a photo enhancement software that can analyze and adjust images.
• The 2024 Huawei MateBook X Pro introduces a 14.2-inch OLED screen with a 3:2 ratio and a 3,120 x 2,080 pixel resolution. It boasts a peak brightness of 1,000 nits, a 120Hz refresh rate, and 1.07 billion color display.
• The MateBook X Pro is equipped with a 70Wh lithium polymer battery and supports fast charging at 140W. A 10-minute charge powers the device for up to three hours, the company claimed. 
• It is available in China in three configurations: the Ultra7 model with 16GB RAM and 1TB storage priced at RMB 11,199 ($1,658), the Ultra7 model with 32GB RAM and 1TB storage priced at RMB 12,499 ($1,727), and the Ultra9 model with 32GB RAM and 2TB storage priced at RMB 14,999 ($2,072).

Context: During the nearly two-hour launch event on Thursday, Yu did not once mention “far ahead,” a phrase that he had consistently used at previous product launches and which had gone viral on Chinese social media. Huawei has allegedly stopped him from using this term to describe products, according to local media outlet IThome. 

• Huawei President Ren Zhengfei has allegedly imposed a fine of RMB 10,000 for anyone from the company using the phrase “far ahead,” IThome reported. However, Yu previously denied the existence of such an order.

US sports camera firm GoPro has filed a complaint against Chinese camera maker Shenzhen Arashi Vision (Insta360) with the United States International Trade Commission (USITC) under Section 337 of the Tariff Act of 1930, according to information obtained by Chinese media outlet Jiemian. GoPro is claiming patent infringement and asking USITC to investigate the matter and halt the US sale of certain Insta360 cameras, software, and accessories.

Why it matters: GoPro is seeking intervention from USITC to investigate and prevent the sale of the disputed products in the US.

Details: GoPro has submitted evidence of patent infringements to the commission covering nearly all the consumer products sold by Insta360 in the US.

• The products mentioned by GoPro are Insta360’s ONE X, ONE R, ONE R1-inch, ONR X2, ONE RS, ONE RS 1-inch 360, X3, GO3, Ace, and ACE Pro, according to the Jiemian report.
• The Section 337 investigation initiated by GoPro, also known as an “unfair import” investigation, is an administrative inquiry conducted by USITC under the provisions of the Tariff Act of 1930 and its amendments. It targets intellectual property infringement and other unfair competitive practices by goods importers.
• Compared to normal patent litigation in the US, which can last over two years, 337 investigations generally resolve faster. However, they require companies to swiftly gather evidence, hire lawyers, and bear costs that can total millions of dollars.
• The Jiemian report suggests that GoPro’s market share has declined due to the rise of Insta360, which was founded in 2015. By the end of 2021, Insta360 held a leading market share of 41% in the global market for panoramic cameras, followed by Japan’s Ricoh at 22%, while GoPro ranked third with 19%, according to consulting firm Frost & Sullivan.
• Established in 2002, GoPro’s latest market value is $331 million, over 97% lower than its peak market value of $13 billion in June 2014, when GoPro listed on the NASDAQ. Insta360’s overseas markets account for nearly 70% of its overall revenue, which were around $280 million in 2022.

Context: In 2023, USITC undertook investigations into 72 Chinese companies, of which 48 chose to respond, the Jiemian report said.

• California-based GoPro manufactures action cameras and develops its own mobile apps and video-editing software. The company focuses on the connected sports genre, developing action cameras and video editing software for outdoor activities. 
• Arashi Vision, better known as Insta360, is a camera company headquartered in Shenzhen, with offices in Los Angeles, Tokyo, and Berlin. It makes action cameras, 360-degree cameras, editing software for mobile and desktop and 180-3D cameras.

On March 29, Chinese tech company Roborock hosted its global launch event in Beijing, unveiling two flagship cutting-edge robotic vacuums: the V20 and G20S (S8 MaxV Ultra), both of which are intelligent automatic sweeping and mopping robot cleaners. The V20 features a dual-vision 3DToF (three-dimensional time of flight) solid-state lidar (light detection and ranging) system, giving it advanced navigation and obstacle avoidance capabilities.

Why it matters: A leading brand in the field of robotic vacuum cleaners, Roborock is looking to use technology from China’s rapidly developing self-driving car sector in the hopes that the country’s consumers are ready for robotic home appliances and labor-saving devices. 

Details: At the launch event on the eve of the company’s 10th anniversary, Roborock CEO Quan Gang said the firm’s robotic vacuum cleaner sales revenue has clinched the global top spot, based on data from the first three quarters of 2023, according to market research firm Euromonitor. “Our goal is to bring Roborock robotic vacuum cleaners into one hundred million households worldwide,” he said.

• Currently available only in China, the V20 is the world’s first robotic vacuum cleaner to feature a dual-vision 3DToF solid-state lidar navigation and obstacle avoidance system, which utilizes modulated light reflections to enhance depth accuracy for more intuitive floor mapping.
• Roborock, in partnership with industry leaders PMD Technologies, Infineon, and OFILM, jointly developed this dual-vision 3DToF solid-state lidar system. It emits an instant matrix laser that enables simultaneous far and near field visibility, achieves precise map restoration, and ensures ultra-accurate obstacle avoidance. Alongside this system, the V20 also applies AI to match users with a suitable cleaning method.
• The G20S features the FlexiArm Design Side Brush, an innovative robotic arm designed to clean corners, and an additional side mop for edges. It also includes Reactive AI 2.0 obstacle recognition, a built-in intelligent voice assistant, and RockDock Ultra, which automatically replenishes the robot cleaner using hot water and heated air, as well as intelligent mop re-washing and re-mopping capabilities.
• The company said the Roborock app, which controls the robotic vacuum cleaners, boasts over 11 million users, with one million daily active users. The Roborock app’s room map is designed with intensive color contrast for visually impaired users.
• Catering to China’s animal lovers, the app has recently introduced a Pet Mode that can remotely search for and photograph pets at home with the robotic vacuum. 
• Roborock has developed a case library that covers over 50 wall and baseboard materials and over 200 carpet materials, according to data provided by the company. This library is used to develop and test its products’ mapping and navigating capabilities.

Context: Founded in July 2014, Roborock is a Beijing-based tech company known for its robotic sweeping and mopping devices and handheld cordless stick vacuums. Xiaomi played a key role in the company’s founding.

• From 2019 to 2023, Roborock invested over RMB 1.9 billion ($260 million) in research and development, according to figures provided by the company. The firm currently operates three major R&D bases, with over half of its workforce consisting of highly skilled R&D employees. Currently, Roborock products are available in more than 170 countries, including the US, Germany, France, and Spain.
• According to Roborock’s latest financial earnings report, the brand recorded a revenue of RMB 8.65 billion last year ($1.22 billion), with robot vacuum shipments surpassing 2.6 million units.

On Thursday evening, Apple CEO Tim Cook attended the grand opening of the Apple Shanghai Jing’an store and engaged with a crowd of Apple fans who had flocked to the downtown location. The retail store is the second-largest Apple Store worldwide and the largest in Asia. The Jing’an store’s opening was part of a two-day visit to Shanghai from Cook, which comes amid falling iPhone sales in China. 

Why it matters: Cook’s presence at the opening of the Shanghai store was intended to demonstrate the brand’s commitment to the China market.  The country also plays a crucial role in Apple’s supply chain and manufacturing operations.

Details: During his two days in Shanghai, Apple CEO Cook shared various PR activities on the Twitter-like social media platform Weibo, where “Tim Cook encounters actor Zheng Kai” trended as a hot topic on Wednesday. 

• Cook wrote on his Weibo post, “Nonghao Shanghai! [Nonghao is hello in Shanghainese] Spent the morning walking the Bund with Zheng Kai and enjoying a classic Shanghai breakfast. I’m always so happy to be back in this remarkable city.”
• Cook shared another photo on Weibo on Wednesday afternoon showing him being briefed on gaming products by Papergames staff and accompanied by Papergames CEO Yao Runhao. Known for mobile hits such as dress-up role-playing game Shining Nikki and female-centered romance game Mr. Love: Queen’s Choice, the company is a major developer on Apple’s App Store. 
• Later, Cook met with BYD CEO Wang Chuanfu at Apple’s Shanghai headquarters. During the visit, Apple suppliers BYD Electronics, Lens Technology, and Everwin Precision Technology exhibited advanced manufacturing technologies and manufactured components for Apple products. “BYD, Lens, and Everwin are great examples of companies who are pushing the boundaries of what’s possible every day and we’re excited for the opportunities ahead,” Cook said on Weibo.
• On Thursday morning, Cook visited Shanghai Jiao Tong University’s Xuhui campus to communicate with student programmers. He then posted about meeting winners of the App Contest and Swift Student Challenge, highlighting their use of coding to address challenges and preserve traditional culture. The Swift Student Challenge from Apple is an annual event that invites student developers to showcase their coding skills by utilizing Swift programming. The Swift Student Challenge 2024 introduces a new category to honor 50 outstanding winners who submit exceptional works, according to Apple.
• On Thursday evening, Cook opened the Shanghai Apple Jing’an store, as a crowd of customers gathered in front of the retail space, eager to be among the first to enter. With over 30 years of history in China, Apple has created over five million job opportunities through direct employment, supply chain business, and iOS app related businesses, according to data provided by the company to China Economic Weekly.

Context: In 2023, Apple achieved its highest-ever market share of 17.3% and secured the top spot in the Chinese smartphone market for the first time, according to market intelligence firm IDC. The report revealed that China’s smartphone shipments totaled 271.3 million units in 2023, a 5.0% year-on-year decline compared to 2022, marking the lowest volume in a decade due to sluggish economic recovery and weak consumer sentiment.

• However, in the first six weeks of 2024, China witnessed double-digit declines in smartphone sales for Apple, Oppo, and Vivo, according to Counterpoint Research. During these six weeks, Apple’s iPhone sales in China declined by 24% year-on-year, ranking fourth among Chinese smartphone suppliers.

On March 15, the annual 315 Evening consumer rights TV broadcast co-hosted by state media China Central Television (CCTV) and a number of national government departments, exposed an illegal industrial chain producing motherboards for the mass manipulation of smartphones. In the undercover journalists’ secretly recorded footage, manufacturers boast that their motherboards can be used to assemble multiple smartphone mainboards, allowing one person to control multiple phones to perform identical operations on one computer. These motherboards are touted as being able to participate in and control all the network functions of the connected smartphones via the computer.

Why it matters: CCTV’s 315 show has been broadcast since 1991 and has regularly created headlines with its high profile investigations into companies undermining consumer rights. This latest scandal could have implications for China’s e-commerce, gaming, and social media sectors.

Details: According to CCTV’s exposé, specialized motherboard manufacturers assemble dozens of smartphone mainboards to integrate them into a single motherboard that can be controlled by connecting it to a computer, enabling a single user to control multiple devices, each with its own IP (Internet Protocol) address.

• “You can become a king of controlling everything in the online world,” a company executive told an undercover journalist at one point during the broadcast. Buyers can manipulate various IP addresses for purposes such as placing fake orders, posting fake comments or likes, and manipulating online voting through a large number of motherboard devices. 
• Undercover journalists discovered that clients using motherboard devices engage in various online activities, such as promoting advertisements, gaming and e-commerce related behavior, faking active interactions from different users in livestreaming rooms, and boosting traffic for certain public relations articles.
• The report also mentioned a company planning to build a facility with tens of thousands or more motherboards, which would equate to having hundreds of thousands of fake IP addresses.
• The price of the motherboard devices ranges from RMB 3,000 ($417) to RMB 6,000 ($834), with each set containing 20 smartphone mainboards. In the secretly recorded footage shown on CCTV, an employee of a motherboard manufacturer even invited the undercover journalist to experience the powerful device on-site.
• The customized version of the motherboard violates article 12 of the Anti-Unfair Competition Law of China, which states: “Business operators shall not use technical means to hinder or disrupt the normal operation of network products or services provided by other operators through influencing user choices.”
• The CCTV report mentioned three companies: Yunji Xia Technology, Shenzhen Yuncheng Future Technology, and Hunan Yundou Technology. The data agency Tianyancha indicates that 320 companies are currently engaged in motherboard production in China, according to a report by local media outlet Jiemian. In terms of regional distribution, Guangdong, Jiangsu, and Jiangxi have the highest concentration of companies related to motherboard business, with 230, 14, and 12 companies respectively.

Context: The 315 Evening this year also exposed a range of other illegal activities and disreputable business practices, including fire-resistant glass that isn’t fireproof, fire extinguishers that cannot put out fires, tainted preserved pork, deceptive practices on matchmaking platforms, unsettling sounds from BMW transmission shafts, and the installment of loan lending platform scams via gift cards. 

TikTok’s efforts to continue operating in the US under Chinese parent company ByteDance appear doomed after a majority of House lawmakers passed a bill that aims to force the Beijing headquartered tech firm to divest from the wildly popular short video platform or see it removed from app stores in the country. The bill still needs to pass the Senate, but President Joe Biden has indicated he will sign it into law if it reaches his desk. 

The Republican-controlled House of Representatives voted 352-65 on the bill. Of the 65 legislators who voted against it, 50 were Democrats, casting some uncertainty on whether the bill will pass in the Democrat-majority Senate. The potential legislation is also likely to face legal challenges from TikTok.

Why it matters: If ByteDance agrees to sell TikTok, one of China’s most successful apps worldwide, it would bring the Beijing-based company billions of dollars in immediate income, but the longer-term impact on the firm’s value is uncertain. The tug-of-war over the app also reflects the high-profile tensions between the US and China.

Details: TikTok labeled the House’s voting process “secret” in a statement released after the result. The platform insisted on characterizing the bill as a “ban”, while emphasizing that it hosts 170 million users and 7 million small businesses in the US market in a post on X, formerly Twitter.

• Chinese nationalist Hu Xijin, who previously served as editor-in-chief of the state-run Global Times newspaper, said in a recent social media post that the US’s concern over TikTok’s threat to national security is “grossly exaggerated,” and that this is a fact “everyone in the world knows.” The commentator implored the short video app not to “get weak in the knees,” adding that it will share a bright future if it wins this “war.”
• The video-sharing platform sent local users in the US a pop-up notification last week encouraging them to call their political representatives and urge them to fight against the bill. The average TikTok user in the US is an adult “well past college age,” chief executive Shou Zi Chew revealed in his testimony on Capitol Hill last March.
• While Biden has shown broad support for the bill – despite his election campaign recently joining the platform – his rival in the upcoming US presidential election, Donald Trump, has made a U-turn on the legislation, voicing concerns that banning TikTok would only empower Facebook owner Meta. “There are a lot of young kids on TikTok who will go crazy without it,” Trump said in a recent CNBC interview, despite his administration also previously attempting to force ByteDance to sell the app.

Context: According to OpenSecrets, a nonprofit organization that tracks lobbying data, ByteDance spent a record $8.74 million on federal lobbying last year, nearly double its spending in 2022.

NetEase is expected to announce the return of Blizzard to the Chinese gaming market by late March or early April, sources have told local media outlet CoreEsports. The revival of NetEase and Blizzard’s relationship would be a remarkable turnaround after the World of Warcraft developer ended its long-running agreement with the Chinese gaming giant in January last year. The break-up of the two after 15 years working together resulted in acrimony and lawsuits, but they now seem set to repair relations and enter a new agreement.

Why it matters: The player base for Blizzard’s games in China is substantial, and with the added value of its gaming IP, NetEase stands a good chance of securing the rights to develop mobile versions of Blizzard’s titles if the pair resume collaboration.

Details: NetEase Games will manage operations for Blizzard’s games, while NetEase’s gaming subsidiary Leihuo Technology will handle the marketing, according to CoreEsports.

• The mobile version of Naraka：Bladepoint, developed by NetEase’s Leihuo 24 Entertainment, is scheduled for release on April 1, aligning closely with NetEase’s announcement of Blizzard’s return to Chinese servers, according to the report. This timing suggests the possibility of a coordinated marketing effort.
• As for the specific timing of Blizzard’s return, insiders suggest it will be synchronized with updates to World of Warcraft. In 2024, World of Warcraft has four major updates: version 10.2.5, version 10.2.7, the pre-11.0 version, and version 11.0. Based on this schedule, the earliest potential return of the game to Chinese servers could coincide with the rollout of the 10.2.7 update by the end of March, possibly on the same day as the launch of Naraka: Bladepoint on April 1.
• After the return of Blizzard, NetEase’s Leihuo may look to secure the IP rights for World of Warcraft and develop a new mobile version. NetEase has been eager to collaborate with Blizzard on mobile adaptations, with Diablo Immortal being their only joint venture currently available.
• NetEase will no longer establish a dedicated firm to manage Blizzard games but will integrate them into the NetEase Interactive Entertainment (another name for NetEase Games) operationally, in a similar fashion to other collaborative gaming titles at NetEase. Notably, Diablo Immortal, the sole ongoing collaborative project between the pair, is also developed by NetEase Interactive Entertainment’s Guangzhou team.

Context: On Jan. 24, 2023, Blizzard’s Chinese servers were shut down, marking the end of their 15-year partnership with NetEase Games in China. Last December, news of a potential revival of the cooperation between the two giants surprised many domestic gamers, given the previously sour ending to their relationship.

• Following the shutdown, an estimated three million players of World of Warcraft in China were deprived of access to a game many had enjoyed since childhood, according to US media outlet Rest of World. Additionally, over one million Chinese players sought refunds.

The latest data from Steam‘s monthly hardware and software survey has revealed that Simplified Chinese has become the primary language on the gaming platform, accounting for 32.84% of players in February. The shift may be attributed to a substantial increase in Chinese gamers taking to the site during China’s Lunar New Year holiday (Feb. 9 – Feb. 16). 

Why it matters: The language trend reflects the growing influence of Simplified Chinese-reading players within the Steam community, and highlights strong demand for the Steam platform and PC games in the Chinese market.

Details: Steam conducts a monthly optional and anonymous survey to gather data on the computer hardware and software utilized by its customers. This information aids the platform in determining investment priorities for developing new technologies and offering products. In February, the top five most commonly used languages among Steam players based on this survey were Simplified Chinese at 32.84%, English at 32.12%, Russian at 9.27%, Spanish at 4.10%, and Portuguese at 3.45%. 

• This language ranking marks the second time Simplified Chinese has topped the charts, with the first instance dating back to the popularity of the multiplayer online battle royale game PlayerUnknown’s Battlegrounds in 2017, when Simplified Chinese players accounted for over 60% of Steam’s user base, according to local media outlet IThome.
• Operating system: Windows 10 remains the most widely used system among Steam users, accounting for a significant 54.19%. Despite the release of Windows 11 in October 2021, players may be choosing to continue using Windows 10 due to considerations of stability and compatibility.
• Hardware configuration: 49.04% of players’ computers have 16GB of system memory, making this the most prevalent setup. As gaming hardware demands rise, 16GB of memory has become the standard for ensuring smooth gameplay across a majority of gaming titles.
• Display resolution: The majority of players, some 58.82%, prefer a resolution of 1920 x 1080. This data indicates that 1080p remains the mainstream choice for gamers, despite the gradual popularity of 4K resolution. For most players, 1080p offers a more cost-effective option.
• Graphics card: The RTX 3060 has become the most widely used graphics card with a 6% share, suggesting the widespread popularity of Nvidia’s RTX30 series graphics cards due to their performance and ray-tracing technology.

Context: The US currently leads in the number of Steam users, with 13.7 million people using the platform to share and play games, while China follows closely as the second-highest user base, with 11.4 million users, according to World Population Review.

• The most played Steam games of 2023 (where the peak player count exceeded 300,000) include titles such as Apex Legends, Baldur’s Gate 3, Counter-Strike 2, Destiny 2, Dota 2, Goose Goose Duck, Hogwarts Legacy, Lost Ark, PUBG: Battlegrounds, Sons Of The Forest, and Starfield. While not exclusively a Chinese game, PUBG: Battlegrounds was published and distributed in China by Tencent Games.

Situated in Barcelona, the Mobile World Congress (MWC) 2024 saw Chinese tech companies such as Lenovo and Tecno presenting their latest products from February 26 to 29.

Why it matters: The Mobile World Congress is one of the largest gatherings in the mobile technology sector, attracting industry leaders, professionals, and enthusiasts from around the world. Chinese tech companies often use the event as an opportunity to showcase their new innovations, products, and technologies. 

Details: Below are some of the most compelling new products spotlighted at the four-day exhibition by Lenovo and Tecno, two of the main Chinese firms in attendance.

• Chinese PC giant Lenovo and American electronics manufacturer Motorola co-showcased a concept wrap phone with a flexible screen that users can bend to wear on their wrist. The prototype phone features AI scene recognition capability, which adjusts screen size, recommends applications based on different scenarios and phone bending, and supports automatic phone wallpaper changes according to the user’s outfits.

• Lenovo also introduced the ThinkBook Transparent Display Laptop Concept, the world’s first laptop with a 17.3-inch Micro-LED transparent display. The device features a borderless screen, transparent keyboard area, and a seemingly floating touchpad design. By utilizing AI technology, transparent screens can integrate physical objects with digital information, allowing devices to naturally blend into their surroundings. The display provides a transparency of up to 55% when its pixels are turned off and set to black. As the pixels light up, the transparency gradually decreases and the display appears as an opaque white surface with a peak brightness of 1,000 nits.

• Chinese phone brand Tecno, a subsidiary of Transsion, unveiled an AI-enhanced quadruped robot dog, the Dynamic 1. The dog is inspired by the German shepherd and is able to climb stairs, bow, and extend its paw for handshakes, similar to a real dog. With four microphones and AI algorithms in its head, the robot dog recognizes audio commands for user interaction akin to traditional pets. Tecno envisions its utility in entertainment, assistance, education, and training, declaring it the ideal companion of the future. 

• The Tecno Dynamic 1 features an 8-core ARM CPU powering its AI system, HyperSense Fusion, which corrects its movements during operation. It also includes an Intel RealSense S430 depth camera and dual optical infrared sensors for obstacle recognition and fall recovery.

Context: MWC 2024 hosted around 2,400 exhibitors and 1,100 speakers, with nearly 300 Chinese companies in attendance, according to Chinese state media Xinhua News Agency. 

• Themed around Future First, this year’s MWC focused on the integration of AI across devices and networks, advances in 5G and 6G technologies, and the improvement of connectivity. GSMA, the event organizer, anticipated about 95,000 attendees from various parts of the globe at the Barcelona venue this year.

Alipay hired a significant number of staff with expertise in advertising last year as it seeks a shift away from being a pure payment tool, according to a report by China Entrepreneur. Despite having over 700 million monthly active users, the payment app lacks the features to entice its huge user base to stay on the platform beyond making transactions.

Why it matters: Developing a sustainable content ecology based on short videos, livestreaming, and social engagement would pave the way to new revenue streams for Alipay.

Details: Alipay is reportedly beta testing a social feature called “Community of Interest”, where users with shared interests, ranging from camping, coffee, and hiking to fishing, can join groups to discuss or organize offline activities.

• This year marks the ninth anniversary of Alipay’s “Collect Wufu” (five kinds of fortune cards) campaign, a “digital temple fair” where users attempt to collect all five different fortune cards to share in a total of RMB 500 million worth of cash bonuses. Typically, participants receive anywhere from RMB 2 to RMB 3 each. 
• The platform boosted cash incentives during the recent nationwide Spring Festival holiday, adding an extra RMB 300 million to reward users for watching short videos and livestreams within Alipay while also pouring more than RMB 25 million into rewards for high-quality content creators, the company said in a statement.
• Neither Alipay nor third-party database platforms announced the app’s per usage hours during the eight-day Chinese New Year holiday period. However, according to data from the Ministry of Industry and Information Technology (MIIT), Alipay didn’t make the list of the top five most-used apps during the break, which comprised Douyin, WeChat, Kuaishou, Tencent Video, and news aggregator Jinri Toutiao.
• According to a report by QuestMobile, Alipay’s average daily usage per person only hit 7.8 minutes during the seven-day Spring Festival holiday in 2023.
• Taobao and Alipay are no longer as tightly bound as they once were, another reason Alipay needs to shift quickly to accelerate traffic monetization. It was reported recently that Alibaba’s e-commerce marketplace is gradually introducing an option to pay using rival platform WeChat, something it has long resisted.

Context: WeChat and Alipay were level in 2021 in terms of usage by mobile payment customers, but in 2022, WeChat took a 2.6% larger share of the market after expanding its range of payment scenarios, the latest figure from China’s payment & clearing industry association showed. 

On Thursday, Huawei launched the Huawei Pocket 2, a sleek flip foldable phone seemingly targeted at a young, predominantly female demographic, hitting the shelves after a 16-month gap since the previous generation. The Pocket 2 stands out as the industry’s first foldable flagship to support messaging via China’s Beidou satellite, facilitating communication in regions lacking ground network signal. The device also represents Huawei’s first foldable device equipped with its self-developed Kirin chipset.

Why it matters: Foldable smartphones, an emerging product range in the smartphone industry, have huge market potential in the Chinese market compared to traditional models – although overall phone shipments in China saw a decline in 2023, the foldable category experienced a sharp rise in sales.

Details: Alongside two-way satellite messaging through the Beidou satellite, Huawei claims the Pocket 2 is the world’s first flip foldable smartphone with four cameras on its cover and featuring a self-developed rocket-steel material water-drop hinge.

• The Pocket 2 is equipped with Huawei’s Kirin 9000S chip, a 7nm processor also featured in the company’s latest flagship phones. Paired with 12GB of RAM, it offers storage options ranging from 256GB to 1TB.
• The Pocket 2 boasts a Xuanwu water-drop hinge, which increases its flatness by 62%, and a double-arm lever gear that enhances support force by 41%, according to the company. Huawei states that the rocket-steel design improves drop resistance by 112%.
• Huawei has equipped the interior with a 6.94-inch foldable OLED screen, while the cover features a 1.15-inch circular screen positioned next to the camera island. The 6.94-inch OLED screen offers a resolution of 2,690 x 1,136 pixels and a variable refresh rate from 1Hz to 120Hz, delivering a peak brightness of 2,200 nits.
• The imaging system includes a 50MP main camera (with f/1.6 aperture, OIS), a 12MP ultra-wide macro lens (with f/2.2 aperture), an 8MP periscope telephoto camera (with 3x optical zoom, f/2.4 aperture), and a hyperspectral camera that can detect ultraviolet intensity to provide suggestions on sunscreen protection.
• The Huawei Pocket 2 is available in four color variants: gray, white, purple, and black. The flip phone starts from RMB 7,499 ($1,042) for the standard 256GB model, while the 512GB and 1TB models cost RMB 7,999 ($1,112) and RMB 8,999 ($1,251) respectively.

Context: Chinese consumers are increasingly inclined to try foldable smartphones as related technologies mature and prices become more affordable. 

• In 2023, foldable smartphone shipments in China reached around 7 million units, reflecting a year-on-year growth of 114.5%, according to market intelligence firm IDC. Huawei took the top spot in the domestic foldable market last year with a market share of 37.4%, while Oppo secured second place with an 18.3% market share.

The European Commission has opened a formal investigation into TikTok to assess potential violations of the Digital Services Act (DSA). Companies found in breach of the act could face fines of up to 6% of their global revenue.

Launched on Monday, the investigation into the Chinese-owned platform will involve looking at various aspects of TikTok’s operations including safeguarding of minors, ensuring advertising transparency, facilitating access to data for researchers, and managing the risks associated with addictive and harmful content.

Why it matters: The move extends the EU’s investigation of the ByteDance-led video-sharing app from previous concerns regarding its handling of disinformation related to content around Hamas and its management of children’s accounts, and intensifies the company’s immediate need to address the escalating scrutiny of major tech firms by the EU.

Details: TikTok was defined as a Very Large Online Platform (VLOP) by the European Commission under the DSA in April 2023, following its announcement of 135.9 million monthly active users in the EU.

• The European Commission believes that TikTok’s algorithms in the EU are designed to induce a “rabbit hole effect” on users, referring to the tendency of users to become immersed in online content and potentially distance themselves from real-life experiences.
• In response, TikTok said it will continue to work with experts and the industry to ensure young people are safe on its platform and that it looks forward to explaining this work in detail to the European Commission.
• The investigation comes just days after the short video app lost a court battle to suspend its designation as a gatekeeper, which requires companies with significant economic power and market influence to comply with a series of regulations under EU rules in the areas of advertising, user data, and intermediary services.

Context: In 2023, the Douyin sister app was fined €345 million in Ireland and £12.7 million in the UK by local regulators, who cited violations of the law in the platform’s handling of children’s account data.

Chinese tourists returned to outbound travel during the recent Year of the Dragon break as a range of data showed that the number of overseas transactions and tour bookings by Chinese citizens rebounded to the pre-pandemic levels seen in 2019. 

According to an Alipay email sent to TechNode, overseas transactions by users of the mobile payment platform from Feb. 9 to 12 were up 7% compared to 2019, with Hong Kong, Japan, and Macao being the top destinations for Chinese travelers based upon their Alipay spending.

Why it matters: By the numbers, China’s overseas tourism is making a solid recovery a year after the country’s authorities removed Covid-19 related restrictions on its citizens traveling abroad following more than three years of almost-closed borders. Major Southeast Asian countries loosening visa requirements for Chinese tourists has also had an impact.

Details: Chinese visitors could be spotted in more than 1,700 cities in 125 countries, said Beijing-headquartered online travel agency Qunar, ranging as far as Madagascar and Cuba. 

• Flight bookings to Thailand, Malaysia, and Singapore – three Southeast Asian countries that have recently waived visas for Chinese passport holders – have seen a huge surge on Qunar. Singapore leads the rise with a year-on-year growth of 2,900%.
• The return in popularity of overseas destinations comes as some domestic hotspots experienced travel issues. As the end of the national holiday loomed, a number of tourists found themselves “trapped” on Hainan island, one of China’s most popular tourist destinations, due to high-priced air tickets and congested roads during their return journeys. Many netizens joked, “Can’t afford to go to Hainan, but Southeast Asia is more cost-effective.” 
• Despite the eight-day holiday fueling long-distance outbound trips, overseas consumer spending made through Alipay only recovered to 82% of its 2019 level. Meanwhile, the enthusiasm for using messaging app WeChat to send digital versions of the red envelopes traditionally gifted around Lunar New Year cooled on Chinese New Year’s Eve on Feb. 9, as users sent and grabbed 5.27 billion WeChat red packets, significantly lower than the 14.2 billion sent seven years ago, the last time the Tencent-owned superapp released such data.

Context: The China Tourism Academy predicted earlier this month that the number of outbound tourists from the country in 2024 will reach 130 million, 50% up from the previous year.

TikTok turned against its former cooperation partner Universal Music Group (UMG) overnight after the world’s largest music copyright owner threatened to remove all of the music it owns from the video-sharing platform, which lambasted UMG’s “self-serving actions” and characterized them as putting their interests above those of artists, songwriters, and fans. 

Why it matters: The dispute would reportedly also affect TikTok sibling Douyin, potentially causing both platforms to have to remove Universal songs from the huge number of videos using them as background music. The falling out with UMG may also lead to a similar response from other music companies. 

Details: The collapse of the deal would likely remove the pop songs that myriad TikTok videos use as background music, affecting tracks by Universal artists including Taylor Swift and Billie Eilish, as well as Chinese language singers Stefanie Sun and Eason Chan.

• In an open letter, Universal said the success of TikTok has been largely rooted in the music created by “our artists and songwriters,” but revenue from the Chinese-owned company only accounts for about 1% of Universal’s income, which the letter claimed was a poor rate of compensation.
• According to media outlet Caixin, the three-year authorization contract between both sides signed in February 2021 was also applied to TikTok sister app Douyin in China, meaning Douyin users are no longer allowed to create videos using copyright-protected music from UMG starting from Thursday, unless the two parties reach a new deal addressing Universal’s concerns over higher pay for artists, AI creation, and user protection.
• In response, TikTok claimed Universal’s statement formed a “false narrative and rhetoric,” and blamed the music firm for leaving a platform that had served as a “free promotional and discovery vehicle for their talent.”

Context: This is not the first dispute involving a major tech platform and Universal-signed artists. In 2014, Taylor Swift decided to remove her entire discography from Spotify due to issues around royalty payments, with her boycott of the streaming service lasting three years.

Chinese AR (augmented reality) glasses manufacturer XREAL has recently secured a new round of strategic financing valued at $60 million, bringing its total funding to $300 million, according to an exclusive report by Chinese media outlet 36Kr. The report asserted that XREAL’s current valuation has surpassed $1 billion, as indicated by industry analysts.

Why it matters: As a major player in the global AR device sector, XREAL’s devices are considered potential competitors to Apple’s Vision Pro and Meta’s Quest 3. This strategic financing empowers XREAL to pursue vital growth initiatives, such as expanding its AR glasses production.

Details: The new financing, which is dedicated to product R&D (research and development) and the expansion of the firm’s optical production base, will enable XREAL’s AR glasses production to reach two million units per year by 2025, the 36Kr report said.

• XREAL has not disclosed the specific investors behind the new $60 million financing. Previous major investors in XREAL have included Alibaba, Kuaishou, NIO Capital, Yunfeng Capital, Sequoia China, Gentle Monster, Hillhouse Group, Hongtai Aplus, CICCcapital, Shanghai GP Capital, Shunwei Capital, CPE Asset Management, China Growth Capital, and iQiyi.
• XREAL’s Founder and CEO, Xu Chi, has declared that the company aims to deliver wearable augmented reality displays to global audiences, as AR has revolutionized user experiences in gaming, movies, TV, in-car entertainment, displays, and work.
• From Jan. 9 to Jan. 12, XREAL exhibited its latest XREAL Air 2 Ultra glasses during the 2024 CES (Consumer Electronics Show) in Las Vegas, featuring six degrees of freedom (6DoF) via dual 3D environment sensors with computer vision capabilities. 
• The global release of the Air 2 Ultra glasses is scheduled for March, with a starting price of $699, and pre-orders are already available. Despite the increased cost compared to the previous Air headset, which was priced below 500 dollars, the Air 2 Ultra glasses still present a more budget-friendly option than Apple’s Vision Pro, which is priced at $3,499.

Context: The XREAL Air series of products are compatible with a variety of mainstream gaming and streaming entertainment devices, including Microsoft Xbox, Sony PlayStation, Nintendo Switch, Valve Steam Deck, ASUS ROG Ally, iOS, Android, Windows, and Mac.

• On Jan. 4, XREAL announced a total shipment of 350,000 AR glasses since its establishment in 2017. The company claimed to currently hold a 45% share of the global AR market, a statement that came after market intelligence firm IDC confirmed XREAL secured a 51% market share in the global AR segment during the third quarter of 2023.

The past year has seen Tencent’s TikTok-like short video service “deliver the expected results,” chairman and chief executive Pony Ma said at the tech titan’s annual staff meeting on Monday, while reaffirming his confidence in the company’s long-term development despite the sluggish general market.

Why it matters: In contrast to his sharp-tongued speech a year ago, where the emphasis was on cost-cutting, Ma’s more positive comments this year signal that he seems to think the company has overcome its challenging times.

Details: A year after Ma positioned WeChat Channels as Tencent’s major hope for the future, he said that the short video-sharing function has brought “lots of surprises” and committed to fully supporting livestreaming-based commerce in 2024. 

• In a half-hour speech that struck a positive tone, Ma mentioned recent news of Tencent buying land in the Haidian district of Beijing at RMB 6.42 billion as a “careful and calculated decision” due to the steady growth of the firm’s businesses. 
• Boasting 1.3 billion monthly active users, WeChat stands as the most powerful messaging app in China and comes with a flurry of social connecting features, but the app’s 12-year-old history gives Ma “great pressure,” especially as QQ, Tencent’s once-popular platform, undergoes a crucial transformation after 12 years in operation. Ma has called for WeChat, “the old tree”, to “sprout new shoots”.
• Ma also stated that Tencent’s current holding of the title of the world’s largest game vendor feels like “relying on the credit of our [previous] successes.” This sentiment comes amidst challenges from peers releasing new titles and the company’s relatively underwhelming offerings when it comes to fresh games, according to local media outlet Jiemian.

Context: Tencent shares have suffered in the past year but have not seen as big a slump as those of its Chinese internet peers, with the firm seeing a 16% decline in the value of its Hong Kong-listed shares. The company’s largest shareholder, South Africa-headquartered Naspers, added to the downward trend by cutting its stake in Tencent to less than 25% through frequent share selling in 2023.

The National Press and Publication Administration (NPPA) of China released its first batch of domestic game licenses for 2024 in the early hours of this morning, with its approval of 115 games sparking hope for a stable and positive regulatory environment in the industry this year.

Why it matters: Over the last two years, the average monthly issuance of domestic game licenses was around 80, with January 2023 only reaching 88. Today’s approvals represent the highest number of monthly licenses granted for two years. 

Details: The batch of 115 approved games includes 100 mobile games, eight dual-end (PC and mobile) games, four PC games, one PS game, and one web-page game.

• The main gaming titles are Need for Speed by Tencent Games, Etheria: Restart by X.D.Network, My Three Body: 2277 by YOOZOO Interactive, Call of Dragons by Lilith Games, Wait a Minute by 37 Interactive Entertainment, Anno: Mutationem by Leiting Games, and Youxing Continent by Bingchuan Network.
• The Three-Body Problem is an international award-winning science fiction novel written by Liu Cixin, widely acclaimed for its profound ideas, captivating storyline, and scientific precision. As the first officially licensed Three-Body Problem game, the turn-based strategy title My Three Body: 2277 has consistently garnered attention in China. In October 2023, details of the gameplay were unveiled, accompanied by the opening of online pre-registration, and the game is scheduled for a launch for both mobile and PC platforms in the first half of this year, according to Cailian Press.
• Launched globally in March 2023, Call of Dragons, developed by LEGOU Games and distributed by Lilith Games, is available for overseas markets on Android, iOS platforms, and PC. Call of Dragons is a multiplayer Western-style fantasy strategy game with 3D modeling, initially positioned for international audiences. Currently, the game has gained between 5 million and 10 million downloads on the Google Play Store in the global market, according to market intelligence firm SensorTower. However, it remains to be seen whether the game will find similar success with Chinese audiences.
• Additionally, the NPPA approved a number of previously-licensed games on new platforms for 2024. NetEase’s card collection role-playing game Harry Potter: Magic Awakening and Perfect World’s turn-based role-playing game Persona 5: The Phantom X have both added a PC version, while X.D.Network introduced the Nintendo Switch version for its puzzle adventure game Moncage.

Context: In 2023, the NPPA released 977 domestic game licenses, representing a year-on-year growth of 108.76%. 

• In December 2023, an industry report from The China Game Industry indicated that the revenue of the domestic gaming market reached RMB 3,029.64 billion ($426.83 billion) in 2023, a year-on-year growth of 13.95% and the first time that China’s gaming market has surpassed three trillion RMB. The user base also reached a historic high of 668 million.

Last week’s global launch of Papergames’ Love and Deepspace, a title touted as the first otome game to feature 3D modeling, has sparked a battle over the female-focused romance games market, with China’s major gaming companies weighing in with a raft of special offers and promotional events.

Otome games are typically targeted towards female players, with the Japanese term translating to maiden or young lady. The games often involve a female protagonist who interacts with male characters, and the gameplay focuses on developing romantic relationships with one or more of these characters.

Why it matters: Having previously found success with otome game Mr. Love: Queen’s Choice, Papergames’s new title aims to provide players with a more realistic interactive experience through its iterative improvements in 3D character modeling. The release has sparked intense competition in the sector.

Details: On January 18, the day Love and Deepspace launched, China’s major domestic gaming companies all unveiled new promotional activities within their respective otome games. Light and Night from Tencent Games, HoYoverse’s Tears of Themis, and For All Time by NetEase Games are among the genre’s most popular titles, alongside Papergames’ Mr. Love: Queen’s Choice.

• On the day of the Love and Deepspace’s release, a trending hashtag #0118决战国乙之巅# (Battle for the Peak of Chinese Otome Games on January 18) appeared on China’s Twitter-like platform Weibo. Posts under the hashtag listed the various promotional activities and benefits of domestic otome games, as Chinese players expressed their excitement over the developments.
• In order to compete for potential new players, NetEase’s new otome game Beyond the World, originally scheduled for a public beta release on January 26, announced on January 16 that it would bring its open testing period forward to January 18. NetEase also offered various in-game promotional events and benefits that were similar to those available in Love and Deepspace.
• Also coinciding with the Love and Deepspace’s launch, Tencent Games held its largest celebration event for the Light and Night since its launch in 2022, showering players with free benefits. Players can even receive animated video calls from game characters as part of the new offerings. Furthermore, Light and Night announced an ancient-style gacha event, a gameplay mechanic where players spend in-game currency to obtain random rare virtual characters. 
• Love and Deepspace had already received over 14 million pre-registrations before its official release, according to Papergames. At time of writing, the game is in the top ten iOS free-download games in the Chinese region. The game’s estimated revenue from iOS on the first day reached RMB 5.27 million ($740,000), while iOS downloads amounted to 890,000 during the same period, according to market intelligence firm DataEye.

Context: Otome games are popular in Asia due to culturally resonant narratives, attractive character designs, and targeted marketing towards female players. They align with animated gaming trends in the region, providing escapism through romantic fantasy scenarios.

• According to Qimai Data, Mr. Love: Queen’s Choice, generated a revenue of RMB 760 million ($108 million) in 2023.
• In September 2023, SensorTower released its State of Mobile Games Preferred by Women insights report (in Chinese), stating that the annual revenue for 2023 from female players was expected to exceed $16 billion.

On Thursday, Huawei announced open applications for its developer preview version of HarmonyOS NEXT, with plans to release a more feature-complete developer beta version in the second quarter and a commercial version by the fourth quarter of 2024 as it looks to cut its ties with Android.

Why it matters: While all previous consumer versions of Huawei HarmonyOS have been compatible with Android, HarmonyOS NEXT will break away from Android architecture, establishing itself as a truly independent operating system.

Details: Huawei began the development of HarmonyOS in 2015 and subsequently released different versions from HarmonyOS 1.0 to 4.0. HarmonyOS NEXT will be the Chinese tech giant’s first OS not to accommodate Android applications and will not support the opening of APK files (Android application packages), according to statements made at Huawei’s launch event. Huawei opened recruitment for the HarmonyOS NEXT developer preview version on Monday, allowing users of its Huawei Mate 60, Mate 60 Pro, and Mate X5 phones to sign up.

• Huawei plans to partner with enterprises, universities, and institutions to train over 100,000 HarmonyOS developers each month. The company is introducing the Yaoxing Plan, with an investment exceeding 7 billion RMB ($9.84 billion), to incentivize innovation in the HarmonyOS ecosystem, including native applications and SDKs (software development kits).
• At the time of writing, more than 200 software companies have initiated the development of native HarmonyOS applications, making up 90% of the leading applications in the domestic sector, according to Huawei. Huawei aims to achieve a short-term goal of reaching 5,000 collaborative apps by the end of this year, and anticipates exceeding 500,000 applications to join the native HarmonyOS ecosystem in the long term.
• Huawei’s Consumer BG CEO, Yu Chengdong, mentioned at the event that HarmonyOS has made breakthroughs in core technologies, including AI frameworks, large-scale models, design systems, programming frameworks, programming languages, and compilers.
• Huawei first introduced HarmonyOS to address user experience issues arising from US sanctions. However, the company is now seeking to break free from the constraints of the existing Android framework, and create an integrated architecture that combines software, hardware, and cloud services, according to the president of Huawei Consumer BG software department Gong Ti.

Context: In June 2023, according to local media outlet Zaker, Huawei stated that a 16% market share in the operating system is a critical threshold for success, based on the developmental history of the PC and mobile industries.

• Due to Huawei’s current inability to integrate GMS (Google Mobile Services), the 16% goal primarily refers to the Chinese market, where HarmonyOS has already captured a 13% share, as reported by CounterPoint Research.

On Jan. 13, Tencent announced that its hit game Honor of Kings would resume livestreaming on Douyin (China’s TikTok sibling) five years after it was banned following a copyright infringement case. In 2016, Tencent sued ByteDance for livestreaming the online game on its subsidiary video platform Xigua. In 2019, a court ruling in Guangzhou stated that ByteDance platforms were prohibited from livestreaming Honor of Kings without Tencent’s permission.

Why it matters: The return of Honor of Kings to Douyin signifies a further thawing of the relationship between Tencent and ByteDance. Tencent has been gradually lifting restrictions on ByteDance, as its competitor has begun scaling back its gaming interests in recent months.

Details: Tencent’s Honor of Kings is expected to start livestreaming on Douyin on Jan. 21, with game streamers invited to participate in the splashy return, as announced on the game’s page on China’s Twitter-like platform Weibo.

• Tencent Games plans to conduct testing of Honor of Kings on Douyin from Jan. 14 to Jan. 17, aimed at avoiding technical issues that may arise during the first live broadcast. From Jan. 18 to Jan. 20, Honor of Kings will host various game-themed activities on Douyin, with invited gaming influencers heading livestream sessions and handing out in-game benefits.
• A gaming industry insider said Tencent’s efforts to reconcile with Douyin stem from a noticeable slowdown in Tencent’s gaming revenue growth since 2022, according to Sina. New player growth and revenue for Honor of Kings have been weaker than in previous years, leading to immense pressure on Tencent’s gaming team, the insider said. 
• Another of Tencent’s hit games, PUBG Mobile, has also seen a decline in users, but there are currently no other new hit games to make up for the loss, the same insider added. In December 2023, Tencent released DreamStar, a new party game with the potential to challenge its domestic rival NetEase’s Eggy Party. At this stage it remains uncertain if it will emerge as the firm’s next hit game.
• Both parties may seek further collaboration in the future, as ByteDance has the potential to work with Tencent in areas including joint operations and distribution partnerships, according to the same Sina report. Douyin currently plays a crucial role in the gaming industry in China as a major channel for advertising and new player acquisition, and Tencent cannot afford to ignore it, the Sina report said.

Context: On Jan. 9, TikTok owner ByteDance said it was engaged in discussions with various potential buyers, including Tencent Games, for its gaming assets, according to Reuters. The two giants are discussing a deal involving major games published by ByteDance’s gaming unit Nuverse, as the TikTok owner looks to step back from the gaming industry.

• In November 2023, ByteDance unveiled plans to scale down its Nuverse gaming unit and sell related gaming assets in a strategic shift away from the gaming industry.
• Honor of Kings, a hit multiplayer online battle arena (MOBA) game, generated nearly $1.48 billion in 2023 for Tencent, but saw a notable decline compared to the $1.8 billion achieved in 2022, according to market intelligence AppMagic.

On Tuesday, the world’s largest and most influential consumer electronics show CES 2024 kicked off in Las Vegas. Generative AI, AI-powered PCs, AI chips, emerging display technologies, XR, robots, wearable devices, and smart driving software are among the highlights of this year’s four-day exhibition. There are over 4,000 participating companies at CES 2024, with more than a quarter coming from China, according to CES.

Why it matters: Chinese companies at CES gain global exposure, connecting with international partners and potential investors to showcase their products and expand markets. The premier tech event, which enhances Chinese brand visibility and provides insights into the global innovation ecosystem, fosters a healthy global competitiveness.

Details: Here are some of the most influential Chinese exhibitors and their products:

• Of the Chinese corporations attending, TCL has the largest exhibition space of nearly 1,700 square meters, showcasing the world’s largest 115-inch QD-Mini LED high-end TV as its centerpiece. The technical challenge of the TV lies in its massive screen, which still achieves a high display brightness of up to 5,000 nits. TCL has also introduced a self-developed Mini LED image quality enhancement chip called AiPQ ULTRA, which is expected to enter mass production later this year.
• Lenovo has unveiled more than 10 PC models equipped with AI capabilities, including the ThinkPad X1 Carbon business laptop that features built-in CPU, GPU, and NPU engines. Another notable product is the ThinkBook Plus Gen 5 Hybrid, which switches fluidly between Windows and Android systems. On the software front, Lenovo has also unveiled AI Now, a PC assistant developed on Alibaba’s answer to ChatGPT TongYi QianWen, which the company says enables natural language interaction in scenarios related to work, study, and device management. AI Now is expected to launch in the first half of 2024 and will be integrated into the latest ThinkPad products.
• ASUS launched the 2024 edition of the Zenbook S 13 OLED laptop (UX5304), featuring Intel Core Ultra 5/7 chips and claimed as the world’s thinnest 13.3-inch laptop as part of the show. Thinner than the MacBook Air M2 at 11.3mm, the ASUS Zenbook S 13 OLED laptop is extremely lightweight at just 1kg.
• Asus Republic of Gamers (ROG) also announced its latest gaming smartphone, the ROG Phone 8 series, featuring a Snapdragon 8 Gen 3 processor and AI functions. Its AI Grabber feature can directly extract text from games, while its Semantic Search enables contextual searches within the user’s photo album on their device using keywords.
• Dreame used CES 2024 to release the Robotic-mower A1, a lawn mower that can assess its surroundings and intelligently identify objects it encounters. The A1 saves homeowners hours of time, the company says, and features patented high-precision 3D laser sensor technology, an OmniSense 3D ultra-sensing system, and a U-Path mowing plan program. With centimeter-level positioning, the company claims effective mowing is guaranteed.
• BOE is showcasing its game-changing automotive display technologies, such as the oxide TFT, flexible OLED, 8K, Mini LED, and BD Cell, at the fair. In terms of oxide TFT (thin-film-transistor) technology, the company debuted the world’s first 45-inch 9K oxide TFT Mini LED display. Another innovation is the 14.6-inch 2.5K oxide TFT display, which boasts high transmittance, high contrast ratios, a wide color gamut, slim bezels, and high cost-effectiveness.
• Ecovacs, a robot vacuum company, is presenting a diverse range of products at CES 2024. These include the Winbot W2 Omn (a robot window cleaner), the Deebot X2 Combo (a wireless handheld stick vacuum designed for the Deebot X2 Omni), and a robotic lawn mower. The Deebot X2 Combo comes with upgraded hands-free capabilities and precision for cleaning floors, drapes, ceilings, and more, according to the company, which adds that their products enable users to “enjoy a fully automated era of whole-house cleaning.”

Context: In January last year, 493 Chinese companies took part in CES 2023, less than half the number from three years earlier, according to South China Morning Post. The absence of leading Chinese companies at the time was attributed to geopolitical tensions and pandemic-related travel restrictions.

The US game developer Activision Blizzard, which has recently been in discussions with several domestic game companies regarding the revival of its Chinese service after a one-year absence, has decided to re-establish collaboration with Chinese game publisher NetEase, as reported exclusively by local media outlet 36Kr.

Why it matters: The split between NetEase and Blizzard was a major event in the gaming industry this year. On Jan. 24, 2023, the Chinese servers of Blizzard’s gaming platform were shut down, ending the World of Warcraft publisher’s 15-year partnership with NetEase in China. On Monday, most domestic gamers were shocked to hear about the potential revival of cooperation between the two gaming giants, especially after their previous relationship ultimately ended in acrimony.

Details: The relaunch of Blizzard’s games in China may have to wait for at least six months, as NetEase and Blizzard need to rebuild their domestic operations team and test the new servers after once any new deal is confirmed, according to 36Kr. 

• The return of Blizzard suggests a full restoration of gaming titles under its brand in mainland China, including World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch, the StarCraft series, Diablo III, and Heroes of the Storm.
• News of Blizzard’s return instantly topped the trending topics chart on Twitter-like platform Weibo on Monday, with Chinese players expressing their shock at the quick reunion. NetEase declined to comment on the story, while Blizzard China stated that the company currently does not have any information or updates to share, according to Sina Tech.
• NetEase Dashen, a gaming community app, has begun to gradually update with new content on World of Warcraft since Dec. 20, as reported by Southern Metropolis Daily. Additionally, the app no longer displays previous news items regarding NetEase’s discontinuing of the operation of World of Warcraft.
• Blizzard has also been in contact with several other major Chinese gaming companies this year, including Tencent, ByteDance, and Bilibili, regarding the takeover of its domestic service, according to Cailianpress. Tencent denied the possibility of a deal, while ByteDance is currently preparing to sell its entire gaming sector, making a move highly unlikely. As for Bilibili, the performance of its games business is not very satisfactory at present, the report claimed.

Context: Blizzard announced in November 2022 that it would suspend its game services in China due to the expiration of its licensing agreements with NetEase. However, Microsoft’s acquisition of Blizzard this year and the upcoming resignation of Blizzard’s CEO have brought about a turning point in the relationship between Blizzard and NetEase.

• Bobby Kotick, the CEO of Blizzard, will resign from his position as the leader of the video game company On Dec. 29, as communicated in an internal memo from Phil Spencer, the CEO of Microsoft Gaming. The leadership transition was expected after Microsoft’s completion of the $69 billion acquisition of Blizzard in October, as reported by CNBC.

In the recently released 2023 EU Industrial Research and Development (R&D) Investment Scoreboard put together by the European Commission, Chinese tech giant Huawei has maintained its position among the top five global companies that made the highest R&D investments in 2022.

Why it matters: Huawei has been increasing R&D investment to strengthen its technological self-reliance in the face of US sanctions. This strategic move allows the telecoms behemoth to mitigate the impact of sanctions while preparing itself for long-term development amid geopolitical challenges.

Details: The European Commission’s report provides statistics on research and development (R&D) investment for the top 2,500 ranked companies. It indicates that these enterprises collectively increased their R&D expenditure by 12.8% in 2022 compared to 2021, reaching a record-breaking total of 1,249.9 billion euros. Although Huawei dropped one spot compared to the 2021 list but still secured fifth position, with an investment of 20.925 billion euros.

• In 2022, Huawei, TSMC (Taiwan Semiconductor Manufacturing Company), and CATL (Contemporary Amperex Technology Co. Limited) secured positions among the top ten in R&D investment within the Information and Communication Technology (ICT) sector. The ICT sector covers computing services, semiconductors, telecommunications, and multimedia.
• In 2022, Huawei invested 20.925 billion euros, with a year-on-year growth of 11%, while TSMC invested 4.985 billion euros, demonstrating a significant year-on-year growth of 31%. Meanwhile, CATL invested 3.072 billion euros, an explosive year-on-year increase of 110%.
• The top three countries represented on the list are the US, China, and Japan. The US leads with 827 companies on the list, investing a substantial 526.5 billion euros, while China follows closely with 679 companies who have allocated a total of 222 billion euros to R&D endeavors. Japan boasts 229 companies on the list, with a total R&D expenditure of 116.2 billion euros.
• In terms of distribution of R&D investment across regions, the US, China, and the European Union occupied the top three positions, securing shares of 42.1%, 17.8%, and 17.5%, respectively.

Context: The Chinese Academy of Engineering issued its list of 2023 Global Top Ten Engineering Achievements on Wednesday, with Huawei’s self-developed operating system HarmonyOS being recognized among them. The other nine selected achievements were ChatGPT, the Chinese space station, AMD’s Frontier (a supercomputer capable of 100 billion x billion calculations per second), the Baihetan hydropower station, the double-asteroid redirection test, the RTS,S/AS01 malaria vaccine, Spot & Atlas robots, lithium-ion power batteries, and unmanned aerial vehicles.

• In August 2023, Huawei released HarmonyOS 4.0 as a public beta version, in an effort to compete with Android and iOS. Currently, there are over 400 partners participating in co-building on and sharing of the technical foundation of HarmonyOS, according to Huawei. 
• Huawei plans to commence construction of its first European factory in France in 2024, as reported on Dec. 11. The facility is expected to focus on 4G and 5G equipment production, reinforcing Huawei’s presence in Europe.

Unitop Fitness, a Chinese fitness equipment maker, unveiled the U-trainer Plus in September, at a price of $649. Our team was given a fortnight to review the home gym. 

The U-trainer Plus enables users to exercise on their own schedule with real-time performance tracking and built-in workouts. It eliminates the need for gym memberships and, despite this meaning the lack of a supportive fitness community, the personalized nature of the smart equipment enhances individualized training. 

Assembly at home

The difficulty of assembling home fitness equipment can vary widely depending on the type of equipment, the manufacturer’s instructions, and your own level of experience and comfort with assembling items.

The U-trainer Plus arrives in two relatively large, heavy  boxes.

The entire assembly process, including unpacking, reading the instructions, watching the assembly video, and manually assembling the equipment, took four hours. Although the fitness equipment includes installation tools, the tester, with limited assembly experience, still found the process somewhat challenging. For added convenience, it is recommended to have two people to work on the assembly together, especially since some parts of the equipment are quite heavy.

It’s also worth noting that the equipment takes up a sizable space in the home. Here are some of its basic specifications:

Packaging size: 1,445 x 490 x 275mm
Folded: 702 x 992 x 2,105mm
Expanded: 1,450 x 992 x 2,105mm
Net weight (main parts): 47kg
Gross weight (including accessories): 58kg
Resistance level: 100 levels
Maximum resistance: 50kg on each side
Resistance range: 2-50kg
Maximum weight capacity: 110kg

Customized app for home workouts

The U-trainer Plus comes with an app called Unitop, which features built-in programs and the option to customize workouts according to individual fitness levels and goals.

Through the app, users can establish a Bluetooth connection between their equipment and their chosen device, enabling them to choose from various training programs and set up personalized training plans. 

Different combinations of exercises, repetition rates, and the resistance weight of the equipment are all customizable. Each training exercise in the app comes with instructional videos and detailed explanations, providing assistance for beginners and alleviating concerns about confusion during workouts.

The equipment includes a barbell rod, wrist straps, handles, deltoid ropes, and a waist belt. Users have the flexibility to choose to use the appropriate accessories based on their individual training goals. However, some functions in the app require paid membership, and the one-year membership fee is an additional expense not included with purchase of the equipment.

Motivational partner mode

The U-trainer Plus offers adjustable resistance on both sides, enabling users to exercise together with friends or family members. Although this function was not tested during our two week trial, it is an interesting option for home fitness. Typically, exercising with friends or family is more motivating than working out alone.

Dual electromagnetic motors

The U-trainer Plus is equipped with dual electromagnetic motors, ensuring a friction-free workout experience without any physical wear and tear. It allows independent adjustment for each side, with the motors supporting 100 levels of resistance weight increments, precisely adjustable at 0.5kg per level. This enables users to train with a maximum resistance weight of 50kg on each side, totaling 100kg.

Workout at home with ease

The U-trainer Plus suits individuals who are seeking privacy, convenience, and a focused exercise environment at home. It enables users to engage in personalized workouts without the distractions or potential discomfort associated with public gyms. 

The equipment set seamlessly transitions between different functions, serving as a cable machine, a rowing machine, or a boxing machine. This provides users with the opportunity to engage in a comprehensive, low-impact workout that effectively targets a wide range of muscle groups throughout the body.

While home workouts offer convenience and flexibility, they may lack the social element found in traditional gym settings, which can serve as a significant source of motivation for some individuals. 

Therefore, the potential impact and value for money of this fitness equipment varies completely based on an individual’s personality, as some people may lack the motivation to exercise at home. While it provides virtual coaching and tutorials, it may not be a substitute for in-person guidance from a certified fitness professional, especially for beginners who need more personalized instruction and support.

Conclusion

The choice between using smart fitness equipment at home or going to a traditional gym depends on individual preferences, lifestyle, and fitness goals. It is essential to weigh the advantages and disadvantages to determine the best fit for an individual’s needs.

But the U-trainer Plus is suitable for fitness enthusiasts with a basic level of exercise awareness who enjoy working out at home. Beginners or those who prefer the atmosphere of a gym should carefully consider their purchase.

Pros:

Convenient and flexible at home option
Individualized training to fit different fitness levels
Customized app with built-in programs
Motivational partner mode
Dual electromagnetic motors
Comprehensive workouts targeting all muscle groups

Cons:

Assembly may be challenging for one person
Extra charges for certain features in the app
Lack of social element compared with traditional gyms
Challenging for beginners who need in-person guidance

A recent report by Taiwanese media outlet DigiTimes suggests that Chinese panel manufacturer BOE is facing challenges in expanding its OLED (organic light-emitting diodes) supply for Apple’s iPhone 15 models, primarily due to light leakage issues. 

Why it matters: If BOE fails to address the light leakage problem, there is a high possibility that they may lose potential orders for the iPhone 15 and iPhone 16 from Apple.

Details: The current yield rate of BOE’s OLED panels for the iPhone 15 has dropped to 30% on the back of the issue, causing a decrease in production output, according to the DigiTimes report. 

• BOE has been selected to supply OLED panels for the iPhone 15 and iPhone 15 Plus. However, the supplier encountered a problem with light leakage, specifically in the panels designed for the standard models. The issue revolves around the Dynamic Island on the OLED display, where the hole punch and the pill-shaped cutout housing the TrueDepth camera sensor and FaceID are located.
• Given the light leakage issue and potential impact on iPhone sales, BOE may face challenges in expanding orders from Apple, which in turn would impact its revenue. According to industry analysis, BOE was expected to supply 5 million to 15 million panels for the iPhone 15 this year. However, due to lower production yields, the actual supply may be limited to a range of 2 million to 3 million panels.
• As Apple shifts its focus to the next-generation iPhone 16 series, avoiding light leakage is becoming more challenging, especially with larger panels. The iPhone 16 and 16 Plus are expected to feature OLED panels similar to the iPhone 15 and 15 Plus, while the Pro series may sport larger sizes, according to US media outlet Wccftech. The iPhone 16 Pro is anticipated to come with a 6.3-inch display, larger than the 6.1-inch display on the iPhone 15 Pro.

Context: Samsung also manufactures OLED panels for the iPhone 15 lineup, holding a dominant 91% share of the supply from June to August this year, according to DigiTimes. If the issue of light leakage persists, Samsung’s greater efficiency would become a significant concern for BOE in the short term.

• In terms of the foldable panel market, Samsung is anticipated to uphold its leading position during the third and fourth quarters of this year, commanding a 74% market share, according to Korean media outlet Business Korea. While this represents an increase from the second quarter’s 63%, it marks a decline of 17% from the 91% share it held during the same period last year. 
• BOE, which previously held a 4% market share in the foldable panel market during the third and fourth quarters of 2022, is projected to surge to 18% in the same period this year. This growth can be attributed to its supply to Chinese foldable smartphone manufacturers such as Huawei, Honor, and Oppo.

A federal judge has blocked a law in the US state of Montana that sought to bar the use of TikTok, saying it “oversteps state power”, a month before the ban was due to take effect.

Why it matters: The move suggests efforts to prohibit use of the Chinese-owned video sharing app in the US will face significant legal challenges. Montana was the first state set to implement a blanket TikTok ban.

Details: In a statement, the US District Judge Donald Molloy said the ban targets “China’s ostensible role in TikTok” rather than protects Montana consumers.

• “We are pleased the judge rejected this unconstitutional law and hundreds of thousands of Montanans can continue to express themselves, earn a living, and find community on TikTok,” an account called TikTok Policy posted on social media platform X.
• However, the office of Montana’s attorney general signaled it was not giving up on a ban, saying “the analysis could change as the case proceeds,” and noting that it looked forward to “presenting the complete legal argument to defend the law.”
• The ByteDance-owned video platform filed a federal lawsuit against Montana in May, claiming the law “unlawfully abridges one of the core freedoms guaranteed by the First Amendment,” days after the state passed a law to ban the widely popular app across the state. Senate Bill 419, the initial ruling to ban TikTok in Montana from Jan. 1  2024, outlined a concern that the app accessed data against users’ will and shared it with the People’s Republic of China. An additional consideration for the ban was that it promoted dangerous social media challenges that threatened the health and safety of Montanans.
• TikTok’s Chinese links have been a focal point of running controversy in the US, where the app says it has 150 million users. Inadequate protection of minors’ data is another legal fight the platform has been dealing with.

Context: TikTok has continued to face criticism during its rise in the US, but its popularity and ad revenue point to a continued upward trend in use of the app nationwide. Its parent company ByteDance reportedly generated $54 billion globally in the first half of 2023, a figure close to Facebook owner Meta’s $60.6 billion. The video platform also officially launched an in-app e-commerce feature in September.

Following a year of negotiations, Tencent and Meta have made a deal for Tencent to  exclusively sell Meta’s VR (virtual reality) glasses in China from late 2024, The Wall Street Journal has reported.

Why it matters: As social media platforms Facebook and Instagram are banned in China, the return of Meta to the Chinese market is unexpected. It remains unclear if Tencent requires government approval to sell Meta’s devices due to the absence of VR-related government regulations in China.

Details: The agreement provides Meta with a fresh opportunity to tap into China’s expansive consumer market, a door that closed when access to Facebook was restricted in China in 2009.

• The VR glasses will offer consumers more affordable lenses compared to Meta’s existing Quest 3 headset, which is currently priced at around $500 in the US, according to The Wall Street Journal. The less expensive device is scheduled for sale in various international markets in addition to China in 2024. 
• Insiders told the WSJ that Meta will receive a larger share of hardware revenue, while Tencent will obtain a higher proportion of revenue from content and services. The Chinese version of the VR headset will offer games and apps distributed by Tencent.
• Meta’s current lineup of VR headsets includes the 2023-released Quest 3, the 2022-unveiled Quest Pro, and the Quest 2, which went on sale in 2020. The upcoming VR device from Meta may be named Meta Quest 3 Lite, with an estimated price of $199 for the basic model, according to Chinese media outlet Cailian Press. This new product may feature a modified chip that will impact upon its performance due to its low cost.
• In its third-quarter financial report on Oct. 25, Meta disclosed that its Reality Labs unit, which develops metaverse-related technologies, experienced an operating loss of $3.74 billion. Revenue in the virtual reality and augmented reality division dropped 26% during the reporting period, falling to $210 million from $285 million a year earlier.

Context: Global shipments of augmented reality and virtual reality headsets went through a decline for the fourth consecutive quarter in the second quarter of 2023, dropping by 44.6% year-on-year, according to data from market research firm IDC.

• Meta emerged as the dominant player in the headset market during this period, occupying an approximately 50% market share, according to the same report from IDC. Sony and Pico (the headset division of TikTok parent ByteDance) secured second and third places, respectively.
• On Nov. 7, in response to a decline in global demand for VR headsets, Pico reportedly initiated a significant round of job cuts, marking its most substantial overhaul since being acquired by TikTok’s owner two years ago.

Temu, the e-commerce platform celebrated for its cut-rate prices, has launched a legal offensive against fraudsters who masquerade as the company. These imposters lure customers into downloading bogus apps that infest devices with malware and pilfer personal data, according to lawsuits filed in the US in the past two weeks.

Boston-based Temu, operating under its legal name Whaleco, has filed suit against seven websites accused of deceptively prompting visitors to download a counterfeit app. The aim, the lawsuit claims, is to snatch personal details from Whaleco’s clients, slip malware onto their devices, or hack into them. This legal move, initiated on November 7 in a U.S. court, comes on the heels of Temu’s earlier legal action against twenty websites for trademark violation and orchestrating internet phishing scams to defraud consumers.

“Fraudsters are posing as Temu on fake apps and websites to scam consumers. This not only damages our reputation but also hurts consumers who were deceived into believing they were engaging with genuine Temu platforms,” said a Temu spokesman.” We will take swift legal action to defend our rights and shield our customers from such malicious and unlawful activities.” 

In the year since Temu launched in the US, it has soared in popularity, propelled in part by its “Shop Like A Billionaire” Super Bowl commercial. Now, the e-commerce contender has broadened its reach, serving customers in 48 countries, from the UK to Malaysia.

Sensor Tower data reveals that Temu broke into the global top 10 most downloaded apps list in the second quarter of 2023, surpassing both its rival Shein and the American titan Amazon in downloads. Further, a data.ai analysis reported by CNBC shows that Temu has outstripped Shein in Japan and South Korea, clinching the top spot in shopping app rankings over an extended stretch.

Wendy Chen, a GAM Investments senior investment analyst, points to Temu’s innovative “fully entrusted business model” as the engine of its meteoric rise. This model blends direct retail sales with a marketplace for third-party vendors, drawing on the strengths of both. Temu streamlines its operations by sourcing directly from manufacturers, who are tasked merely with shipping to Temu’s global warehouses. The company then takes the reins, overseeing customer acquisition, pricing, logistics, and customer service.

This strategy affords Temu the quality control, timely delivery, and customer satisfaction of a first-party model, while it still benefits from the extensive selection and scalability of a third-party model. By connecting factories directly with consumers, Temu not only slashes middlemen expenses but also sidesteps the hazards of overstocking, Chen explains.

According to a recent report by Chinese tech media outlet 36 Kr, the US market, the first destination Temu entered, currently contributes 60% of the platform’s overall sales. The same report stated that the platform’s third quarter sales surpassed $5 billion, and the extraordinary pace of growth may allow Temu to exceed its annual GMV target of $15 billion this year.

“We are in a cost-of-living crisis and people are looking for anything to save a bit of money,” Miya Knights, the publisher of Retail Technology magazine, told the Guardian. “Everyone likes a bargain and Temu ticks those boxes.”

To be sure, Temu’s popularity has come at a price, with a small group of scammers capitalizing on the company’s reputation to launch phishing schemes and install malware, according to its lawsuit. Critics have also accused Temu of intrusive data practices, allegations that Temu has sought to dispel by prominently listing the permissions that it seeks from users. 

In its latest lawsuit, Temu accuses websites such as Dltemuapp.com and temudl.net of mimicking Temu’s domain name and describes them as primarily designed to lure consumers into making purchases or to mislead unsuspecting consumers.

“Bogus websites like these serve as a platform for various cybercrimes. They could be used to extract sensitive and financial information from duped consumers. They could be used to install malware on people’s sites (and/or those of their employers) to steal information or install viruses and serve as leverage for large ransoms,” Temu said in its lawsuit.

“In any of these scenarios, the results would be devastating—and the harm irreparable–to (Temu) and the public alike,” according to the lawsuit.

Meanwhile, Temu has intensified efforts to warn consumers about fake Temu promotions and scams. The company has also advised users of the importance of downloading the official Temu app from the Apple Store and Google Play Store, which have stringent vetting controls.

Chinese video giant ByteDance will conduct a new round of layoffs from its virtual reality arm Pico as demand for headsets was not “as fast as expected,” said chief executive Henry Zhou, acknowledging at an internal meeting that projections for VR had been overly optimistic.

Why it matters: This large-scale downsizing is the latest restructuring effort by ByteDance in response to dim prospects in the VR industry. Despite significant investments in technology and marketing over the past two years, which failed to yield satisfactory sales results, the company has stated its intention to keep its hardware team intact.

Details: The biggest overhaul since Pico was acquired by the TikTok owner two years ago was announced in a ten-minute meeting on Tuesday, with staff from sales, videos, and platform operations hit the most.

• Although the exact percentage of layoffs was not disclosed by the company, a source close to Pico told local media outlet VR Tuoluo saying around half of its VR staff would be affected.
• In February, Pico slashed nearly a third of its positions, equivalent to hundreds of jobs, mere months after ByteDance launched the flagship Pico 4 VR headset, benchmarked against Meta’s Quest 2. Recent layoffs will shrink the workforce to only a few hundred employees, down from a peak headcount of over 2,000.
• Affected employees will be compensated based on their years of service plus one month’s salary, according to Tencent News.

Context: ByteDance acquired Pico for approximately RMB 5 billion in 2021, and launched an extensive marketing campaign for the Pico 4 standalone VR headset when it was launched a year later. The company enlisted musician Leah Dou and ping-pong star Sun Yingsha as spokespeople, covering major shopping malls and bus stops with advertisements. 

• The TikTok owner has high hopes for its VR business, as Pico founder and president Henry Zhou said at last year’s launch event, expecting the headset to sell more than 1 million units eventually. However, early this year, the company lowered its sales target to “slightly over 500,000 units” due to disappointing initial results.
• The Pico 4 boasts a total of 561 apps, according to figures compiled by VR Tuoluo, surpassing Quest’s 532. The report quoted a source as saying ByteDance had spent at least several billion yuan on building a content ecosystem within Pico.

On Thursday, China’s Ministry of Industry and Information Technology issued guidelines on developing humanoid robots, stating that the robots may be the next groundbreaking products to reach consumers after computers, smartphones, and new energy vehicles. The government’s “Opinions on the Innovation and Development of Humanoid Robots” outlines goals and timelines for the new sector in China.

Why it matters: Humanoid robots incorporate advanced technologies, including artificial intelligence, high-end manufacturing, and new materials. With the potential to be a new competitive frontier in future industries, the government plans to promote innovation in key technologies by strengthening policies and mobilizing resources, given that China’s humanoid robot industry is in its budding phase.

Details: According to the guidelines, China expects to have a domestic ecosystem for humanoid robots established by 2025. By that time, robotic products are likely to be in mass production, fast catching up with international contenders.

• The ministry’s guidelines outline ambitious goals. By 2025, the country aims to nurture two to three world-beating companies, establish a cluster of specialized small- and medium-sized enterprises, and create two to three industrial development hubs. 
• By 2027, China is expected to establish a reliable industrial supply chain, with products from this sector seamlessly integrated into the real economy, as stated in the guidelines.
• The guidelines propose promoting artificial intelligence technologies with a focus on breakthroughs in key areas such as the “brain”, “cerebellum” and “limbs.” The “brain” encompasses core technologies of humanoid robots based on large AI models, while the “cerebellum” involves the robot’s environmental perception, behavior control, and human-machine interactive abilities. The “limbs” refers to humanoid mechanical arms, hands, legs, and feet. The emphasis is on addressing key technologies, including lightweight skeletons, high-strength body structures, and high-precision sensors.
• The guidance also outlines measures for expanding the application of humanoid robots in specific areas, including electronics, automotive, healthcare, services, agriculture, logistics, and even specialized industrial environments where humans currently undertake dangerous tasks in harsh conditions.

Context: The global market for humanoid robots, valued at $1.11 billion in 2022, is projected to experience a compound annual growth rate (CAGR) of 21.1% from 2023 to 2030, according to a report by Grand View Research. There is already rising demand from public and corporate subsidy funds for specific goals, guiding research in humanoid robotics, as well as progress in various fundamental aspects of this field like improved AI, natural language processing, and robot dexterity.

China’s most populated social media platforms on Tuesday announced they will soon remove anonymity for content creators that have over 500,000 followers, confirming rumors that stirred up heated debate over personal privacy in recent weeks.

Why it matters: The new policy will force bloggers with large fan bases to disclose their real names to the public on social media, in a change to the rules that will likely further deter discussion online in China, especially when it comes to finance news and current affairs.

Details: At least seven social platforms serving hundreds of thousands of users daily issued statements urging influencers to reveal their real identities. These included X-like platform Weibo, messaging app WeChat, video sites Douyin, Kuaishou, and Bilibili, as well as lifestyle-sharing app Xiaohongshu and search giant Baidu. 

• Weibo has outlined plans to first require creators specializing in content related to social affairs, finance, and legal matters, with more than 1 million followers to post using their real names,  before extending the rule to bloggers in other fields.
• Influencers who refuse to show their real names may be limited by account traffic and revenue, according to Weibo and WeChat.
• WeChat said the move will  enhance the credibility of top “self-media” accounts, while Weibo said that as these influencers have a far greater impact on public opinion than ordinary users, requiring real name identification will encourage them to “take on responsibilities that align with the influence of their words.”
• In recent years, China has strengthened the management of social media accounts run by individuals or organizations independent of state-control. Many of those accounts have amassed sizable fanbases.
• Short video apps Kuaishou, and TikTok’s Chinese sibling Douyin, were among the platforms that published simultaneous statements. Accounts with over 500,000 followers will be the first affected by real-name ID disclosure requirements. Kuaishou added that accounts mainly sharing personal daily life stories will be exempt.

Context: On Oct.21, users noticed that Weibo’s CEO Wang Gaofei gave his real name on  his social media page, a move later confirmed by the executive who said he had decided to first test the policy on his own account.

• A year ago, China asked that posts mentioning Russia’s invasion of Ukraine showed the location of the poster, in response to an incident in which a social media user faked his whereabouts, causing a stir in overseas media. Shortly after, the practice of displaying IP addresses was extended to individual users of Weibo and those of other social media platforms.

Chinese telecom giant Huawei has applied to register the trademark Far Ahead in the fields of transportation tools and scientific instruments, according to China’s trademark platform Tianyancha. “Far ahead” became a trending term on the Chinese internet after the surprise early release of Huawei’s Mate 60 series of smartphones in August, which came with advanced chipsets despite the Chinese tech company being a major target of US sanctions. The trademark is currently pending review. 

Why it matters: Having seen its tech capabilities limited by US chip sanctions, Huawei has ridden a wave of nationalist approval in China following the release of its Mate 60 line, which came equipped with a better chip and higher processor power than many industry observers had thought possible. 

Details: Yu Chengdong, CEO of Consumer Business at Huawei, has repeatedly used the phrase “far ahead” to describe the tech gap between Huawei and its competitors during product launches. Huawei fans often use the phrase as a rallying call on social media. Huawei’s detractors have also utilized this term to satirize the company’s advertising and messaging.

• Huawei’s use of the term “far ahead” first came at the launch event of its Mate 40 smartphone in 2020, according to local media outlet ThePaper. During a presentation of the Mate 40’s features, Yu used the phrase 14 times. Last year, Yu again used “far ahead” to describe the advanced satellite messaging function of the Huawei Mate 50 series, further boosting the popularity of the phrase in China.
• In August 2023, Huawei launched the Mate 60 Pro series, featuring the self-developed Kirin 9000s chip, manufactured in China by Semiconductor Manufacturing International Corp (SMIC). Related short videos with the tag “Far Ahead” went viral on the Chinese internet. For instance, videos on Douyin (the Chinese version of TikTok) with this tag have gained 960 million views.
• Huawei reportedly plans to ship between 60 to 70 million smartphones in 2024. Sources have told local media outlets that Huawei has placed sufficient orders from its supply chain to guarantee the fulfillment of this shipment goal for the year 2024.
• On Oct. 27, Huawei released details of its sales performance for the first three quarters of 2023. During this period, the firm achieved sales revenues of RMB 456.6 billion ($62.39 billion), representing a year-on-year increase of 2.4%, with a net profit margin of 16%. Huawei stated that these results were in line with expectations, though the company did not disclose specific figures for its various business streams during the period.

Context: Thanks to the newly launched Mate 60 series, Huawei’s domestic shipments in the third quarter increased by 37% compared to the same period last year, according to market research firm Counterpoint. Huawei’s share of China’s smartphone market has risen to 14%, making it the fifth largest company in the sector. 

• On Monday, Huawei announced that downloads of its HarmonyOS 4, which was unveiled in August, had topped 100 million. One of the key updates in HarmonyOS 4 is the ability to customize the home screen, allowing users to change system fonts, colors, clock styles, and widgets according to their preferences.

Xiaomi Group on Thursday unveiled its new operating system, the Xiaomi HyperOS, and its new flagship smartphone Xiaomi 14 series. CEO Lei Jun said the company’s strategy had moved beyond “smartphone connections to AIoT (Artificial Intelligence of Things)”, and now entailed having the “phone, home, and vehicle all within an ecosystem.”

Why it matters: The Xiaomi 14 smartphone series showcases the Xiaomi HyperOS, an Android operating system that uses Xiaomi’s self-developed Vela system that enables the phone to connect with other AIoT devices. The lineup is touted by Xiaomi as the first flagship smartphone driven by Qualcomm’s latest processor Snapdragon 8 Gen 3, unveiled on Wednesday.

Details: In the next two years, Xiaomi HyperOS will replace its MIUI operating system across every Xiaomi smart device, as the company seeks to build a comprehensive ecosystem.

• Xiaomi plans to invest RMB 100 billion ($13.66 billion) in research and development (R&D) over the next five years, Lei Jun revealed at the launch event. Xiaomi also revealed that in 2022 it had invested RMB 16.2 billion ($2.21 billion), or 0.53% of its national R&D expenditure. 
• Xiaomi HyperOS is a cross-platform operating system that has been in development for seven years, involving 5,000 engineers, according to the company. Aiming to create a “people-vehicle-home” interactive ecosystem, Xiaomi has integrated its self-developed Vela system with a modified Linux system.
• The Xiaomi 14 series comprises the Xiaomi 14 and Xiaomi 14 Pro, both carrying the latest Qualcomm Snapdragon 8 Gen 3 chipset, as well as Xiaomi’s own Loop LiquidCool technology for heat dissipation. Both models feature Leica Summilux optical rear lenses.
• The latest Snapdragon 8 Gen 3, built using TSMC’s cutting-edge 4nm processor, is designed for AI applications and gaming, and comes with enhanced audio and camera features. The Gen 3 offers a notable improvement on its predecessor, being 30% faster and 20% more energy-efficient. Additionally, the chipset supports LPDDR5x memory at speeds up to 4,800 MHz and can accommodate up to 24 GB of RAM.
• Xiaomi has opted for a smaller sensor for the 14 Pro, introducing the Light Hunter 900 coupled with a custom Leica Summilux lens. Despite being approximately 44% smaller than last year’s 13 Pro 1-inch sensor, the new setup is up to 80% brighter, according to Xiaomi.
• Depending on storage requirements, a new Xiaomi 14 will cost from RMB 3,999 ($546) to RMB 4,999 ($683), with the pro version costing between RMB 4,999 ($683) and RMB 5,999 ($820).

Context: At the launch event, Lei also mentioned Xiaomi’s commitment to environmental protection and social responsibility, reiterating a pledge made in August to achieve carbon neutrality and to switch to 100% renewable energy by 2040. 

• According to intelligence firm Counterpoint, Xiaomi ranked fifth place in the Chinese phone market in the second quarter of 2023 with a 14% market share.

Chinese video streaming platform Bilibili has proposed the goal of doubling its current daily active users (DAU), according to local media outlet LatePost. The target was discussed during a mid-year internal meeting, although the company did not specify a clear timeframe for its achievement.

Why it matters: User growth is crucial for content-based Bilibili as an increase in this figure could boost the firm’s advertising revenue and push to create new content, with the company aiming to achieve profitability by 2024.

• In the second quarter, Bilibili’s average DAU reached 96.5 million, marking a 15% year-on-year growth and an increase of 2.8 million compared to the previous quarter. However, its MAU has declined for two consecutive quarters. Despite this challenge, the company successfully reduced its losses by 51% year-on-year during this period, bringing them down to RMB 964 million.

Details: Increasing the supply of high-quality content, and expanding the scenarios available for Bilibili users are the platform’s core strategies for doubling its DAUs, LatePost reported.

• The first strategy aligns with a recent remark made by the company’s chief operating officer Li Ni, during the ANIME MADE BY BILIBILI 2023-2024 event. She emphasized that Bilibili’s investment in original content will “not decrease but only increase” over the next three years.
• Before directing investors to focus on the DAU to MAU ratio in 2022, CEO Chen Rui expressed his confidence during the earnings call over the Q4 2020 financial report that Bilibili could achieve 400 million monthly active users by the end of 2023. The figure exceeded 300 million in the second quarter of the previous year, and reached 324 million in the second quarter of this year.

Context: Bilibili, a long-form video platform primarily favored by Gen Z users, currently offers a wide range of content genres, including anime, TV shows, variety shows, documentaries, and live streaming. Notably, in response to the growing impact of short video platforms, Bilibili has bet big on shorter vertical videos over the past year, aiming to attract new audiences.

• Story Mode, the short video format on the platform, coupled with Bilibili’s pursuit of profitability has led to reduced incentives for content creators who regularly produce long videos with substantial influence on the platform. Several creators publicly announced this April that they would temporarily suspend content updates.
• The Chinese animated series Yao-Chinese Folktales, a collaboration between Bilibili and the Shanghai Animation Film Studio, went live on Jan.1 this year and has already accumulated over 290 million views on Bilibili. The company has announced the commencement of production for the second season of the animation.

The Asian Games 2023 will take place in Hangzhou, China, from September 23 to October 8. Esports (online gaming), included as an official event of the Asian Games for the first time, will offer seven gold medals across seven gaming titles. 

Why it matters: The 19th Asian Games have introduced Esports as a medal event, giving global recognition to this emerging form of sport alongside more familiar physical activities. In recent years, Esports has gained significant popularity worldwide, demanding a comparable level of  skill, strategy, and dedication to traditional sports.

Details: Over 15 days of competition, the Hangzhou Asian Games will award a total of 481 gold medals, including seven gold medals for Esports. 

• A total of 45 countries have registered for the Asian Games 2023, with 31 countries and regions participating in Esports, according to Tencent Games. Over 500 Esport athletes will compete for gold medals at the Hangzhou Esports Center. Completed in 2022, the Hangzhou Esports Center covers an area of 80,000 square meters, and can accommodate up to 5,000 spectators. It was designed specifically for the Asian Games Esports events and resembles a sci-fi spaceship when viewed from above.
• The Esports lineup comprises: League of Legends, DOTA 2, Honor of Kings (also known as Arena of Valor), PUBG, FIFA Online 4, Street Fighter V, and Dream Three Kingdoms 2. Of these, two gaming titles were developed by Chinese game developers. Honor of Kings was developed by Timi Studio Group (a subsidiary of Tencent Games), while Dream Three Kingdoms 2 was published by Hangzhou Electronic Soul Network Technology.
• League of Legends, DOTA 2, and Honor of Kings belong to the multiplayer online battle arena (MOBA) game genre. They involve two teams competing against each other to destroy an enemy base while defending their own base. MOBA games combine elements of strategy, teamwork, and individual skill, offering a wide range of heroes, each with unique abilities.
• PUBG, which stands for Player Unknown’s Battlegrounds, is an online multiplayer battle royale game. Players are dropped onto a remote island along with 99 other players, where they must scavenge for weapons, armor, and supplies while eliminating other players. The ultimate goal is to be the last player or team standing. The game features a shrinking play zone that forces players into closer and more intense encounters as play progresses.
• FIFA Online 4 is a free-to-play online football simulation game, belonging to the popular FIFA series. Players can create and manage their own virtual football teams, compete against other players in online matches, and participate in various game modes, including league play, tournaments, and more. The game includes a wide range of real-life football players, teams, and leagues from around the world.
• Street Fighter V features a roster of diverse characters, each with their own unique fighting styles and special moves. Players engage in one-on-one battles, utilizing a combination of punches, kicks, and special abilities to defeat their opponents. Success hinges on precise timing, strategy, and the execution of combo moves to outmaneuver opponents.
• Dream Three Kingdoms 2 is a strategy game set in ancient China. It challenges players to navigate the intricacies of diplomacy, warfare, and resource management to build their kingdoms and defeat their rivals.

Context: Originally scheduled to take place in 2022, the 19th Asian Games were delayed until this month due to COVID-19 travel restrictions.

• Vivo’s sub-brand iQOO has been chosen as the official Esports gaming phone provider, which means that all contests at the international event will use their flagship smartphones.

Chinese search giant Baidu launched its ChatGPT-like service ERNIE Bot for public use on Thursday, as one of the first batches of companies given permission to allow regular access to generative AI bots, having filed details of its algorithms with the government. The move signals a softening of Beijing’s regulatory stance towards artificial intelligence.

Why it matters: The approval comes two weeks after China’s new AI rules took effect, paving the way for an initial eight companies to cater their generative AI services to over 1 billion Chinese internet users.

• For China’s dozens of homegrown AI large language models, being among the first to launch could potentially bring early player advantages, given the relatively small distinctions between each consumer-facing service.

Details: The first tranche of approvals has been granted to tech companies and research institutes headquartered in Beijing or Shanghai, from Baidu, ByteDance, and SenseTime to the state-backed Chinese Academy of Sciences and Shanghai Artificial Intelligence Laboratory.

• Local media outlet Beijing News reported on Thursday that, in addition to the first eight entities given approval, Shenzhen-based tech giants Huawei and Tencent, as well as Hefei-founded iFlytek, are readying to unveil their artificial intelligence bots to the general public.
• Alibaba, located in Hangzhou, is not listed on the approved entities, but a source from the company’s cloud unit revealed that its chatbot service, known as Tongyi Qianwen, has completed its filing process and is ready for rollout, according to tech outlet China Star Market.
• Baidu’s ERNIE Bot topped the free app download chart of Apple’s App Store 12 hours after its public availability announcement. The company is gearing up to introduce an array of fresh AI-native apps.

Context: China implemented detailed regulations for generative AI services on Aug. 15, making it clear that government approval of algorithms is a threshold that tech companies must cross before offering AI products to the public, as a way to better control content.

• In an earnings call last week, Baidu CEO Robin Li noted that the government “has increasingly recognized” ERNIE and ERNIE Bot, believing that this endorsement stands the company in good stead for a large-scale release.

On Thursday, NetEase announced in its unaudited financial results for the second quarter that it had generated RMB 24 billion ($3.3 billion) in revenue, a 3.7% increase on the same period in 2022. Net revenue from games and related value-added services amounted to RMB 18.8 billion ($2.6 billion), representing a 3.6% year-on-year increase.  Games accounted for 78.3% of the company’s total revenue.

Why it matters: In the second quarter, NetEase’s games, including flagship titles Fantasy Westward Journey series and Eggy Party, performed steadily. NetEase’s two new hits Justice and Racing Master were only launched in late June so their contributions to the company’s gaming revenue will show in the next quarter. With the revenue from the new titles, NetEase Games’ third quarter performance is expected to accelerate. 

Details: According to the financial reports, NetEase’s net revenue from mobile games accounted for approximately 73.6% of its online games income in the second quarter. 

• Eggy Party continues to explore the combination of UGC (User Generated Content) ecology and AI technology. Game makers recently updated the UGC map editing function using AI, drawing in 26 million players to participate in creating new gaming maps, according to NetEase’s WeChat account. Declaring that Eggy Party was China’s most downloaded mobile game in Q2, as reported by local media outlet GameLook, NetEase now hopes to  promote it in the European, North American, and Japanese markets this year.
• Released on June 30, open-world martial arts game Justice gained around 40 million domestic players in July. The game employs AI generated avatars and dialogues. Young players have flocked to the game, generating huge amounts of UGC content on social media. On micro-blogging platform Weibo’s discussion forum, Justice ranked fourth in terms of popularity for mobile games at time of writing, with 544,000 posts from players.
• Racing Master topped the iOS download list in China for 10 days following its domestic debut on June 20. According to the game’s Weibo account, its pre-registered players exceeded 30 million on June 17. The company is expected to start overseas testing soon.
• NetEase took the opportunity of unveiling its latest results to announce a brand new free-to-play open-world RPG title Project Mugen, for which pre-registration opened for players globally on Thursday.
• A trailer for the action-adventure game highlighted its anime stylings and a high-quality open cityscape supported by Nvidia DLSS 3 technology, according to GameLook. Project Mugen reportedly marks the first domestic GTA (Grand Theft Auto) game using AI technology that combines racing, parkour, role-playing, and combat in the open-world of an urban city. The industry is viewing it as an upcoming competitor to HoYoverse’s Genshin Impact in revenue terms.

Context: In July, NetEase’s Justice secured third place in the global mobile game market by revenue with a figure of $113 million, according to analytics firm SensorTower. 

• As for July’s iOS mobile game revenue charts in China, NetEase’s Justice, Racing Master, and Eggy Party ranked second, ninth, and eleventh respectively.

Crystal of Atlan (CoA), the new action role-playing game developed by ByteDance’s video game company Nuverse, was the eighth best-selling mobile game on iOS in China in July, according to local media outlet GameLook, despite only launching on July 14. 

Why it matters: The new game has the potential to be a breakout hit for ByteDance, which has been aiming to develop its own successful mobile title in the wake of HoYoverse’s global success with Genshin Impact. In the second half of July, Crystal of Atlan’s revenue only ranked behind Tencent’s Honor of Kings, NetEase’s Justice Online, and Tencent’s PUBG Mobile, GameLook reported. Fueled by the success of the new game, Nuverse’s July revenue saw a remarkable 109% month-on-month increase.

Details: Based on data from Sensor Tower, CoA’s iOS revenue surpassed RMB 210 million ($29 million) in July. GameLook predicted that the revenue across all platforms amounted to RMB 600 million ($83 million) for the same month.

• Crystal of Atlan is an action role-playing DNF (Dungeon ’n’ Fighter) game that uses 3D graphics and open-world scenarios. Its anime style resembles Genshin Impact and Honkai: Star Rail, both of which were launched by HoYoverse.
• In May, according to CoA’s official Weibo account, the number of pre-registered players reached 8 million.
• ByteDance is actively promoting the game on its short-video platform Douyin (the Chinese version of TikTok), using internal advertising resources to enhance the game’s visibility. A large number of gaming KOLs introduced the gameplay via videos and broadcasts on Douyin to attract domestic players. 
• As of August 8, the hashtags #CoA and #CrystalofAtlant have collectively reached more than 3.5 billion views on Douyin, according to a report by 36Kr. Additionally, ByteDance also recruited KOLs on Chinese broadcast platforms Huya and Betta, to increase publicity for the game. Given the outlay on marketing, some analysts have suggested that maintaining the title’s high profile may prove a challenge in the months ahead.

Context: ByteDance established Nuverse in 2019, announcing its entry into the gaming sector. In 2021, ByteDance acquired game studio Moonton and C4games for RMB 10 billion and equity worth RMB 15 billion, according to 36Kr.

• On July 13, Moonton launched the fantasy role-playing card game Watcher of Realms in the global market. The revenue of this game reached approximately RMB 70 million ($9.6 million) in the first month, according to GameLook.
• In 2023, NetEase’s Justice Online and HoYoverse’s Honkai: Star Rail are the two most prominent new titles in China’s mobile game market.
• In July, Justice Online, the martial arts role-playing game launched by NetEase on June 30, ranked seventh with a revenue of $63.3 million.
• In May, Hoyoverse’s new hit game Honkai: Star Rail earned approximately RMB 1.2 billion ($168 million) in the first month since its global launch on April 26.

Douyin, TikTok’s Chinese counterpart, has established a new department dedicated to entertainment ventures, according to a Monday report by 36Kr citing multiple sources. The move aims to centralize the management of activities ranging from live-streaming programs and variety shows to dramas and music.

Why it matters: Douyin’s emphasis on cultural and entertainment content not only enriches its product ecosystem but, more importantly, helps the platform to further diversify its revenue streams.

Details: Chen Duye, head of the recently established division and previously in charge of Ocean Engine, ByteDance’s marketing platform for business promotions across its various apps, will directly report to Han Shangyou, who now holds a prominent position within Douyin.

• Live broadcasts, particularly sports events and concerts, will take priority within the newly-established department, according to 36Kr, due to Douyin getting a taste for broadcasting major events over the past year.
• Official data reveals that 10.6 billion cumulative viewers tuned in to watch the 2022 Qatar World Cup on Douyin. The leading short video platform reportedly spent over RMB 1 billion to secure broadcasting rights.
• Amid COVID-19 restrictions impacting offline entertainment, Chinese-operated short video platforms recognized online events as a source of growth. Douyin, along with competitors Kuaishou and WeChat Channel, organized various concerts and live events featuring renowned musical artists, which has proven effective in drawing user engagement.
• Variety shows, traditionally confined to television or long-form video platforms, have often been constrained by funding limitations during their pre-project phases in China. Nonetheless, the report highlights Douyin’s current efforts to create more original reality TV and variety shows, subsequently monetizing on an uptick in popularity. This involves various approaches, including live commerce activities on the platform and the introduction of content-charging within the platform.
• Short-form dramas have also become a growing focal point for Douyin and its rival Kuaishou, as they strategically monetize their extensive user base. According to data revealed by Kuaishou, by the end of 2022, short dramas on the app attracted up to 260 million active viewers a day, with paid users for short dramas increasing by over 480% in the first quarter compared to a year earlier. While both companies did not provide specific figures, Douyin reported a 72% year-on-year revenue growth in the same sector in 2022.

Context: As of last December, the China Internet Network Information Center reported that over 70% of the Chinese population had accessed short videos, highlighting the significant reach of these platforms as mainstream entertainment channels across the country. The report also noted that individuals spent an average of 2.5 plus hours on the platforms every day.

The Cyberspace Administration of China (CAC), the national internet regulator, on Wednesday issued new draft regulations aimed at preventing minors from becoming addicted to their phones. The rules seek to create a healthy online environment for minors by broadening the scope of supervision to include smart terminals and app stores. The draft is open for public comment until Sept. 2, 2023.

Why it matters: Safeguarding the online experience of minors is a key concern of authorities overseeing China’s entertainment and internet industries. In 2019 and 2021, CAC introduced laws that curbed the amount of time young people could spend playing video games. If approved, the new regulations would impact a range of industries, including gaming, streaming, hardware, and other internet-connected sectors, confronting companies with a wave of challenges as the government sets increasingly stringent rules for mobile terminals and internet content providers.

Details: The draft regulations require internet companies to create customized designs for minors on different mobile platforms, including mobile smart terminals, apps, and app stores. Content and functions will need to be tailored to different age groups.

• The minor protection mode, initially focused on video, live broadcasts, and games, will soon be an essential built-in setting for mobile phones, smart watches, learning machines, and VR/AR wearable devices. When users set up their mobile devices for the first time, they will be prompted to activate a minor mode based on their ID information.
• Internet content providers will be required to modify their offerings according to different under-18 age groups. The customized designs for minors will be divided into five age ranges: under 3 years old, 3 to 8 year-olds, 8 to 12 year-olds, 12 to 16 year-olds, and 16 to 18 year-olds.
• Minor mode settings should be easy for parents to locate, the draft regulations state. Users will be able to access minor mode via a power-on reminder, desktop icon, and system setting. To exit minor mode, parents will need to verify their ID information by using their password, fingerprint, or facial recognition.
• Mobile terminals are required to provide differentiated time management for minors of different age groups. By default, mobile devices will limit usage to 40 minutes each day for those under 8 years of age, and allow a maximum of two hours for those between 8 and 18 years of age. In minor mode, access to mobile devices will be restricted between 10 pm and 6 am. However, parents will be able to exempt their children from the restrictions if they prefer.

Context: In recent years, the Chinese authorities have implemented strict measures to limit minors’ game-playing time.

• In 2019, CAC passed a law restricting minors to less than 1.5 hours of online gaming time on weekdays and three hours on weekends, with no game playing allowed between 10 pm and 8 am. Additionally, the amount minors could spend on virtual gaming items each month was limited, with maximum amounts ranging from RMB 200 to RMB 400 ($28 to $56), depending on age.
• In 2021, CAC further limited minors to an hour of gameplay from 8 pm to 9 pm on Fridays, weekends, and public holidays.

Chinese tech giant Tencent has acquired Japanese game developer Visual Arts (Kabushikigaisha Bijuaru Atsu), a specialist in galgame (female anime character-based games) and visual novels. The Osaka-based developer announced the news on Chinese social platform Weibo on Thursday. 

Why it matters: With Tencent’s acquisition, Visual Arts has said it will be able to reach a wider audience and explore new growth opportunities. Tencent, meanwhile, will further its aim of becoming a global gaming powerhouse by acquiring another reputable developer after a series of such moves in recent weeks. 

Details: Visual Arts’ announcement on Thursday coincided with confirmation of the retirement of its founder Takahiro Baba, which was initially revealed last year. Baba has reportedly transferred his controlling stake to Tencent, with Genki Tenkumo announced as the new CEO. 

• Founded in 1991, Visual Arts was at the forefront of the Japanese animation style galgame, a subgenre of dating games and visual novels focused on romance, typically marketed to heterosexual men. 
• Visual Arts is the parent company of Key, which is known for creating acclaimed works such as Kanon, AIR, and Clannad.
• Most Visual Arts games are characterized by a sentimental storyline. Kanon, AIR, and Clannad are all titles that were adapted into animations by Japanese studio Kyoto Animation, which has significant influence among ACG (anime, comics and games) groups.
• Heaven Burns Red, the company’s 2022 turn-based role-playing game, once topped Japan’s iOS bestsellers list, according to Jiemian.
• In the announcement of the Tencent deal, Takahiro Baba said the company was “in the best condition ever.” With the help of Tencent’s investment, Visual Arts hopes to create classics that spread across the world, he added.

Context: Tencent, China’s biggest gaming firm, has been expanding its international footprint in recent months, adding to its majority ownership of Riot Games with a series of major deals. 

• On July 5, Tencent invested an unspecified amount in Lighthouse Games, which will support the UK game studio to build an as yet unnamed forthcoming title. Lighthouse Games is a recently-opened triple-A studio from Playground Games co-founder Gavin Raeburn.
• Weeks later, on July 24, Tencent announced that it had become the majority shareholder in Techland, the Polish studio behind the popular game Dying Light. 

China’s biggest travel agency Ctrip on Monday introduced a vertical AI large model designed for the tourism industry. The AI-driven model, called Xiecheng Wendao, allows users to ask Ctrip travel-related questions. The company’s chair James Liang said the model is in its early stages and still “requires a long process of iteration.”

Why it matters: Many companies are fine-tuning existing general large models with industry-specific data to cater to their specific needs. Ctrip, in this case, said its specialized model is built on an undisclosed general model, filtering 20 billion high-quality unstructured streams of tourism data along with its own structured real-time data and search algorithms.

Details: Ctrip’s AI model will offer recommendations on destinations, hotels, and sightseeing, the firm said at the Monday launch event, and also can offer real-time search results for flights and hotels.

• The country’s biggest travel services provider did not reveal the specific number of parameters used to train Xiecheng Wendao, with Liang emphasizing that parameters are not as critical for a vertical model compared to other data integrations.
• Ctrip said users often take up to 11 days to research and decide on travel plans on average, as pre-journey planning is often the most time-consuming and complex part of the process. Liang further claimed that this is an area where generative AI can significantly improve efficiency.
• Although Chinese tech majors have been quick to release their own AI models and services, the country is yet to have a local AI tool as widely popular as OpenAI’s ChatGPT has been outside of China. Baidu, the local search giant, is still restricting its ERNIE Bot service to internal testing after releasing it four months ago. Ctrip’s AI model is also in a testing phase; users currently have to apply to use it.

Context: Chinese companies are increasingly turning to industry-specific models, in a variation on the race to create artificial intelligence chatbots similar to ChatGPT. It seems a safer path for domestic firms to utilize the rapidly-growing technology, especially in a country that has recently taken a major step to regulate generative AI content.

• James Liang, also an economics professor at Peking University and a researcher of demography, expressed his concerns over China’s long-term innovativeness at the press conference, according to local media outlet Caixin. While he said innovative work and emotional work cannot yet be replaced by AI, low fertility rates are hurting China’s future innovation potential.

NetEase’s new mobile martial arts game Justice has rapidly gained popularity after launching in China on June 30. The role-playing game has consistently ranked in the top three of the App Store’s free download game list and best-selling game list since its release.

Why it matters: Justice is being tipped as NetEase’s answer to Tencent’s Honor of Kings and HoYoverse’s Genshin Impact. The Chinese gaming giant also used AI to generate in-game dialogue and interactions with non-player characters (NPCs). 

• NetEase’s flagship game in 2023, Justice achieved 40 million pre-registrations before its launch, according to its official account on social media platform Weibo. A flood of about one million online players crashed the game’s servers temporarily on the first day of its launch. On July 7, it topped the best-selling iOS game charts. 

Details: Set in China’s Song dynasty, Justice’s mobile version integrates diversified elements of imperial Song culture, including martial arts, mythical creatures, and traditional architecture. NetEase has said it will update the game regularly for at least the next ten years in a bid to build an adventurous martial arts fantasy world and serve millions of mobile players.

• Players can customize their characters’ avatar through AI-powered settings, choosing various facial features, graphics, and literal descriptions. For instance, when players upload a portrait of themselves or input the requirements of ideal facial features, the system will generate a unique character in seconds.
• Set in an expansive open world, players can choose from a range of game modes, such as instance dungeon, battles, puzzles, relationships, card collection, architecture building, farming, and map exploration.
• Currently only available in China, Justice’s other significant feature is the use of AI to generate in-game dialogue and enable unique reactions from NPCs. Every action taken by players may have an impact on the game plot, the open world’s order, and NPCs’ behavior, NetEase has said.
• Justice’s advertising budget amounted to RMB 46.2 million solely on June 20, a source from the game project has revealed. The general advertising fee of RMB 170 million ($23.49 million) on all platforms includes RMB 23 million ($3.17 million) on Douyin (the Chinese version of TikTok) and RMB 20 million ($2.76 million) on Weibo.
• According to market analysis platform DataEye, the iOS version of Justice reached an estimated RMB 25.85 million ($3.57 million) in revenue on the first day of its launch.

Context: NetEase’s net revenues from games and related value-added services were RMB 74.56 billion ($10.8 billion) for the fiscal year 2022, with mobile games accounting for approximately 67% of net revenues from the operation of online games.

• On May 20, NetEase unveiled 11 new games and updated 35 existing titles at its annual product launch event. In addition to Justice, the company also plans to launch another wuxia (martial arts fantasy) game called She Diao in the second half of this year.

Asus subsidiary ROG (Republic Of Gamers) launched its first handheld gaming console called the Asus ROG Ally at a summer product launch event on Monday. Equipped with a customized AMD Ryzen Z1 Extreme processor, the company claimed  its new product’s performance was on a par with the PS5 game console. 

The handheld device runs on a Windows 11 system, supporting game platforms Steam, Epic Games, Xbox, and GOG among others. Gamers can also explore Android mobile games through the software Tencent mobile game simulator. Asus initially unveiled a global version of the ROG Ally on May 11, priced at $699; the device will sell at a comparable price point in China.

Why it matters: The Asus ROG Ally is one of the most widely anticipated handheld gaming consoles to launch this year, with the company positioning the device as a rival to the Steam Deck and Nintendo Switch. Asus has been a major player in the PC space for years and will hope to boost the reputation of its new venture by making a positive impact in the world’s biggest gaming market.

Details: With multiple functions, the ROG Ally is essentially akin to a portable Windows 11 PC rather than a handheld gaming console. Players can play games, browse the internet, download files, and run programs. 

• Built on a cutting-edge 4nm processor, the customized AMD Ryzen Z1 Extreme processor features both Zen 4 architecture and RDNA 3 graphics. The Ally boosts high frame rates and strong image quality. 
• The ROG Ally screen features a 7-inch LCD display with 1080p resolution, a 16:9 aspect ratio, 500 nits of peak brightness, and a 120Hz refresh rate. Asus claims a 7ms response time and 100% coverage of the sRGB color space.
• The device weighs approximately 608 grams and is equipped with two fans, allowing better cooling at slower speeds to keep noise to a minimum.
• The new console comes with dual Dolby Atmos speakers and AI Noise Cancellation, which processes both incoming and outgoing audio to filter errant background noises from voice chats.
• The console comes with a 40Wh battery that Asus claims gives it up to two hours of life when playing heavy gaming titles. The ROG Ally comes with 16GB of LPDDR5 memory and 512GB of solid state storage, and can be upgraded with a microSD card. It is fully compatible with Steam, Xbox Game Pass, Epic, and GOG, among other platforms.

Context: Established in 1989, Asus is a Taiwan-based company known for personal computers and monitors. It founded ROG as a gaming brand n 2006. 

• According to market analyst firm Canalys, as global PC shipments declined by 16% year-on-year to 285 million units in 2022, Asus ranked in the top five, albeit also declining on 2021 shipments by 4%. Asus occupied a 7.2% share of the global PC market in 2022, selling 20.61 million units.

On Thursday, Xiaomi released a Disney-themed Civi 3 to celebrate Disney’s 100th anniversary. The limited-edition phone is based on Xiaomi’s mid-range Civi 3, which debuted in China on May 25. The limited edition model incorporates elements from Disney’s classic Mickey Mouse character into the design and features a Disney 100 logo on the back. 

Why it matters: As China faces a slowdown in consumer electronics consumption, phone makers are looking for new ways to encourage sales and brand exposure. 

Details: The limited edition phone marks the first collaborative product between Xiaomi and Disney. It is also the first time that a phone brand has cooperated with Disney on actual device design. Currently, Xiaomi’s Disney 100th anniversary series products are offered exclusively in China, with a global launch yet to be announced.

• In addition to the device design and a Disney-themed phone case, the limited edition Civi 3 offers a built-in Mickey theme, including a charging animation, lock screen clocks, wallpaper, filter, and stickers. In terms of hardware, it sticks with the same specs as the ordinary Civi 3 model.

• The limited edition Civi 3’s back panel houses a triple camera setup positioned at the top-left corner and is encircled by a Mickey Mouse design and the Disney 100 logo.
• The device only comes in a 12GB + 512GB storage and is priced at RMB 2,899 ($407). The whole package includes the mobile phone, customized stickers, exclusive limited certificates, customized card pins, and Mickey-themed phone cases.
• The phone is equipped with a MediaTek Dimensity 8200 Ultra chipset, a 4,500 mAh battery, 67W fast charging, and a 6.55-inch OLED curved screen with a 120Hz refresh rate. Additionally, the camera boasts a 50MP Sony IMX800 sensor with an f/1.77 aperture and optical image stabilization (OIS). 
• In celebration of Disney’s 100th anniversary, Xiaomi also unveiled a range of Disney anime-style products, including Xiaomi true wireless noise cancellation headphones 3, a 10,000mAh charger, Xiaomi smart band 8, and a 20-inch travel case.

Context: On March 28, Redmi, a subsidiary owned by Xiaomi, launched the world’s first Harry Potter-themed smartphone. The Redmi Note 12 Turbo Harry Potter edition comes with customized Harry Potter design elements such as the lightning scar, golden snitch, and the iconic Hogwarts logo.

Five years after a Nasdaq IPO, Chinese video site Bilibili faces mounting pressure to reach profitability. Despite 315 million monthly active users, the user-generated content site well-loved by China’s Gen Z and millennials has yet to find a way to sustain its growth. 

On June 1, Bilibili reported its first quarterly earnings of 2023, showing continued flat growth in revenue but far reduced net losses. It made RMB 5.1 billion ($738.2 million) in revenue, representing 0.3% yearly growth and a 16.39% decrease from the last quarter. The company reported a net loss of RMB 629.6 million, narrowing 72% from the same period in 2022, and 58% less than the previous quarter’s RMB1.5 billion losses. 

Bilibili attributed narrowed losses to effective spending control, specifically a reduction of 8% in revenue-sharing, 16% in server and bandwidth, and 30% in sales and marketing compared to the same period in 2022. 

Despite continued improvements in cutting its losses, Bilibili is facing persistently slower revenue growth over the past several years. In 2022, Bilibili brought in RMB 21.9 billion (US$3.2 billion) in revenue, up 13% from the previous year. To compare, in 2020, revenue grew by 77% in a year, and in 2021, by 62%. 

Bilibili had RMB 19.56 billion left in cash at the end of 2022. Based on Bilibil’s current operating expenses, the cash will be enough to sustain it for another five to seven quarters, or until mid-to-late 2024, according to its earnings report. With a tighter investment sentiment and an increasingly competitive online content space, Bilibili needs to achieve profitability soon, or at least show investors that it is on the right path. 

Bilibili’s plan for commercialization

Compared to other mainstream long-video platforms in China, Bilibili has a competitive advantage: decent quality content generated by users. This makes its video content and style completely different from long-video competitors such as iQiyi, Mango TV, Tencent Video, and Youku, which focuses on professional content like TV dramas, variety shows, and movies. 

Bilibili understands its strength and sees the engagement of users within the community as the foundation of its business. It has taken strong measures to protect that community feeling, such as when founder Xu Yi promised users in 2014 that the platform would never do bumper ads on newly imported anime series. 

But as Bilibili faces a more competitive market and an urgency to make money, integrated marketing and performance-based ads have become greater focus areas. 

Bilibili plans to utilize its creators’ influence and the platform’s community atmosphere to expand customized and in-stream ads, according to the two most recent quarterly earnings calls. 

Li Ni, vice chairman and COO of Bilibili, said in the first quarter earnings call that in order to expand ad revenue, the platform selected six specific industries last year and developed precise advertising models tailored to each industry. These include gaming, online shopping, consumer electronics, fast-moving consumer goods, and automobiles.

Li emphasized Bilibili’s advantages in gaming and e-commerce in particular. For example, Bilibili integrated its internal units to convert more gaming-interested users to spend more on game-related items on the platform, after seeing that more than 40% of mobile users on Bilibili watched gaming content daily. Li said the platform also saw 110% yearly growth in ad revenue growth in the online shopping segment after sharing data and ads with Alibaba, Pinduoduo, and JD. 

Bilibili currently uses Huahuo, an advertising platform established in late 2020, to connect advertisers directly to its content creators. In the past, the platform relied more on highly customized and creative ads (such as known creators making customized scripts and video ads). It may now create more general ads for creators to embed in their videos, speeding up ad execution. 

E-commerce is another place Bilibili is seeing growth, viewed by the platform as “an opportunity for increased advertising and revenue streams for content creators,” according to its first-quarter earnings call. In the first quarter, the platform saw more than 10 million users watch shopping suggestions and other e-commerce-related content on Bilibili daily, surpassing expectations. 

Competing for Chinese users’ viewing time

Two factors have contributed to Bilibili’s revenue slowdown in the past years. The first is short-term: Covid-related hits on ads and e-commerce revenues. The second is more long-term and structural: Bilibili faces increased competition from other rising content platforms — short video platforms like Douyin (the Chinese version of TikTok), Kuaishou, social e-commerce platforms like Xiaohongshu, and others. 

In 2022, like many other businesses, Bilibili was hit by uncertain macroeconomics, as advertisers and consumers scaled back spending during Covid resurgences. The video site saw sharp quarterly declines of 34.42% and 13.33% in advertising in the first quarters of 2022 and 2023, and a recovery in the second to fourth quarters of 2022. As China’s economy continues to recover in the second half of 2023, the company is likely to overcome these setbacks. 

Yet Bilibili faces a more entrenched threat: the rise of short video platforms and social content platforms that increase competition in the content sector, making it harder for Bilibili to grow profits. 

Short video platforms like Douyin and Kuaishou are expanding much faster in the past five years, in terms of market size, than video platforms like Bilibili. 

China’s online video sector has a market size of RMB 600.9 billion ($92.5 billion) and a 32% annual growth rate in 2020, according to China Netcasting Services Association (CNSA). Short video platforms benefited from the widespread success of Douyin and Kuaishou, with astonishing annual growth rates of 179%, 731%, and 172% in 2017, 2018, and 2019. Although the growth rate of short videos has slowed down to 42% in 2021, it still far exceeds the average annual growth rate of around 20% for other long-form video platforms over the past five years. In 2020, short videos accounted for more than a third of the online video industry, exceeding the 20% market size of long-form videos.

Moreover, Xiaohongshu, a content platform known for product reviews and lifestyle blog posts targeting mobile users, is also expanding its own commercialization potential. The private company saw about 200 million monthly active users on its platform in 2022, according to Qian-gua data. 

As Bilibili faces increasing revenue pressures, the company is compelled to explore aggressive advertising strategies. The platform has already suffered public backlashes. In April, some creators complained that the site’s updated incentive system has reduced their income, with some experiencing a significant drop in income. To reach its own goal of becoming break-even in 2024, Bilibili needs to prove to advertisers and marketers it has value and competitive advantage over other content platforms while maintaining its healthy user and creator ecosystem. 

TikTok has announced that it has 8.5 million monthly active users in Australia, in the short video platform’s first disclosure of its user numbers in the country. The platform, owned by Beijing-based tech firm ByteDance, also said TikTok is being utilized by 350,000 businesses as a marketing tool to reach and engage new clients in Australia.

Why it matters: The figure suggests that more than 30% of the Australian population is using TikTok. Australia banned TikTok on government-issued devices in April.

Details: Australia joined more than 10 countries (including the US, the UK, Canada, New Zealand, France, Denmark, and India) in banning the use of the ByteDance-owned short video platform on government devices in April.

• Australia’s Attorney-General’s Department said in April that TikTok poses “significant security and privacy risks to non-corporate Commonwealth entities” due to its extensive collection of user data.
• Lee Hunter, TikTok’s Australia and New Zealand general manager, said the company was “extremely disappointed” by the government-level ban, attributing the decision to “politics” instead of facts.
• TikTok set up an Australian branch office in mid-2020 when the video-sharing platform experienced massive user growth in overseas markets. 
• TikTok announced it had 150 million monthly active users in the US three days before a congressional hearing in the country attended by TikTok CEO Shou Zi Chew on March 23, in an attempt to emphasize the platform’s wide reach across the US and counter a potential nationwide ban. 

Context: TikTok has long been questioned by Western countries on whether it shares users’ data with the Chinese government.

• Over half of US states have announced bans on using TikTok on official devices. Montana authorities have announced their intention to begin blocking all residents from accessing the platform from January 2024. TikTok filed a lawsuit against the Montana government shortly after the bill passed in May.
• TikTok is also under scrutiny in Vietnam. The country’s Ministry of Information and Communications stated on Monday that it is holding probes into allegations of illegal and irregular activities by TikTok, and is expected to make a public announcement in July upon completion of the official investigation.
• The Vietnamese government frequently requests social media platforms such as YouTube, Facebook, and TikTok remove content it considers illegal, and regularly reports on the number of links or videos removed by each platform. In April, the information ministry said that TikTok may face a ban in the country if it fails to comply with instructions to remove content it deems to be in violation of its rules, according to local media outlet VnExpress.

On Monday, Chinese game developer HoYoverse announced its first ever international tournament for hit game Genshin Impact, with an event entitled Astra Carnival: The Prince Cup. The qualifying round for the tournament is already underway, with regional games being played over the next few months in Europe, North America, South America, Japan, South Korea, and Southeast Asia.

Why it matters: This is the first international tournament to be held by HoYoverse and marks the Chinese game developer’s first foray into e-sports. Genshin Impact has been hugely  popular since launching worldwide in September 2020.

Details: Astra Carnival: The Prince Cup will bring together players from across the globe to compete for a prize pool of $270,000. Three cross-regional invitational tournaments are scheduled to take place in June, August, and December.

• The tournament will be based around Genius Invokation TCG, the card game mode of Genshin Impact. Genius Invokation TCG released its  game version 3.3 in December 2022 based on the Genshin Universe, using existing lore, quests, and characters. In the latest Genshin Impact 3.7 version update, released on May 24, over 60 new cards and two game modes have been added.
• The trading card game uses turn-based battles. Players need to build a deck with a combination of three character cards and 30 action cards, and win by knocking down all the opponent’s character cards. 
• The North America regional competition began on Monday. It will run until June 17, with 32 players battling it out in online qualification matches. The top eight will be invited to Los Angeles to participate in offline championship matches, with all travel expenses covered, according to HoYoverse’s announcement.

• HoYoverse has said that the matches will be livestreamed on AstraCarnival’s social media channels, including on Twitter, Twitch, TikTok, and YouTube.

Context: In 2022, there were approximately 50 million players playing Genshin Impact on a monthly basis, according to ActivePlayer. 

• By September 2022, two years after its launch, Genshin Impact had generated $3.7 billion in revenue across the App Store and Google Play, making it the third-highest revenue-generating mobile game worldwide, according to Sensor Tower.
• China’s biggest gaming company Tencent Games has been involved in major tournaments for hit titles such as League of Legends for the past decade. In April, Tencent Games announced the 2023 Honor of Kings International Championship, featuring a prize pool of $10 million, the biggest prize pool ever for a mobile game event.

NetEase Games unveiled 11 new games and updated 35 existing titles at its annual product launch event, held online on May 20. Particularly notable among them were two new wuxia (martial arts adventure) games — Justice and She Diao — based on classic novels by renowned authors Woon Swee Oan and Jin Yong.

Why it matters: In recent years, wuxia games have become a hugely popular genre in China. NetEase is also looking to bring some of its most successful games to international markets and to emulate the recent success of Eggy Party, which saw the highest number of daily active users in NetEase history in February. To increase its global appeal, the event was also streamed in English and Japanese via YouTube and Twitter.

Justice and She Diao: NetEase has invested RMB 800 million ($114 million) over the last four years into the development of Justice, an MMORPG (massively multiplayer online role-playing game) wuxia title. 

• Set in a world of martial arts, magic, and ancient Chinese mythology, Justice sends players on a journey to uncover the truth behind a great conspiracy and fight their way through hordes of enemies. The game is based on the famous wuxia literature works of writer Woon Swee Oan (also known as Wen Rui’an). 
• Justice is being billed as having the first intelligent NPC (non-player character) system in China’s gaming industry. Players can interact with AI-controlled NPCs as they explore the game’s world.
• The game will be launched on June 30, with the number of pre-registration players already exceeding 30 million.
• Another anticipated open-world wuxia game is She Diao, which is based on the famous martial arts novel The Legend of The Condor Heroes, written by Jin Yong. According to NetEase, the game uses classic characters and novel plots, and allows players to explore the landscape of the Song Dynasty with a suite of exclusive martial arts moves. A release date for She Diao has not yet been announced.
• Other new game titles released in the event are real-time simulation racing game Racing Master, role-playing game Raid: Shadow Legends, open-world fantasy game Qi Feng Travelers, competitive survival shooter game Badlanders, basketball game Dunk City Dynasty, 2v4 competitive stealth game Mission Zero, multiplayer online role-playing game Lord of Dragon, geo-strategic simulation game Infinite Borders, and post-apocalyptic shooter game Ashfall.

Context: NetEase’s net revenues from games and related value-added services were RMB 74.6 billion ($10.8 billion) in 2022, compared with RMB 67.8 billion ($9.64 billion) the year before, representing a 10% yearly increase, according to its fourth-quarter financial report.

• In March 2023, Eggy Party demonstrated huge potential by becoming the 18th highest-revenue mobile game globally despite still only being available in the China market.
• Eggy Party is a casual game for mobile devices that involves competing against other players to reach the end of each stage while avoiding various obstacles. The game earned nearly $30 million in March, which helped NetEase become the second biggest Chinese mobile game publisher by revenue, according to Sensor Tower. 
• Recently, NetEase announced the overseas launch of Eggy Party on April 21, starting in the Philippines, with more regions and platforms to follow this year.

Chinese tech giant Tencent reported strong growth in gaming revenues in its first quarter earnings released on Wednesday. Overseas gaming revenue was up 25% year-on-year to RMB 13.2 billion ($1.88 billion), while gaming revenue in the Chinese market rose by 6% year-on-year to RMB 35.1 billion ($5 billion). 

Overall, Tencent surpassed analysts’ expectations with its first-quarter financial results. Total revenue for the company amounted to RMB 150 billion ($21.8 billion), representing an increase of 11% year-on-year. Net profit came in at RMB 33.4 billion ($4.9 billion) on a non-IFRS basis, up 27% yearly. 

Why it matters: The gradual recovery of Tencent’s gaming business was a key factor in the tech major’s upbeat performance, with the unit reversing its trend of negative growth in the last three quarters. Tencent’s release of new games such as Triple Match 3D and updates to existing hit games has helped generate healthy revenues for its overseas gaming business.

Details: In the first quarter of 2023, Tencent’s revenue from games reached RMB 48.3 billion ($6.9 billion), up 11% up year-on-year. The company’s average daily gaming revenue exceeded RMB 500 million ($71 million) in the first quarter of 2023, according to the figures.

• Tencent’s domestic gaming revenue during the period rose 6% year-on-year to RMB 35.1 billion ($5 billion), while its overseas gaming revenue rose 25% to RMB 13.2 billion ($1.8 billion). 
• Revenue from domestic games came mostly from established titles such as Honor of Kings, Dungeon and Fighter, CrossFire Mobile, and Arena Breakout. In the first quarter of 2023, Honor of Kings released new paid-for skins based on Shan Hai Jing (a classic compilation of mythological Chinese geography and beasts) using targeted marketing, which the firm credited with helping Honor of Kings boost its income. In January 2023, Honor of Kings earned $250 million globally from Apple’s App Store and Google Play, ranking first in the global mobile game best-selling list, according to market intelligence firm Sensor Tower. Revenue from iOS downloads in China accounted for 94.1% of this total.
• Fight of the Golden Spatula, Tencent’s self-developed mobile auto battler spin-off of the popular Teamfight Tactics released in 2021, was another highlight for the company, increasing its gross revenue by 30% year-on-year in the first quarter and topping 10 million average daily active users in April 2023.
• Revenue from Tencent’s international games was mainly driven by the strong performance of Valorant and PUBG Mobile. The first-person tactical hero shooter game Valorant increased monthly active users with the release of a new map and a new agent during the first quarter. Tencent’s financial report stated that the title’s gross revenue increased by 30% year-on-year in the first quarter, helped by popular Japanese- and alien-themed weaponry.
• PUBG Mobile ensured its growth in daily active users during the first quarter with new combat features and enhanced multi-player modes. Tencent introduced a map editing tool to facilitate user-generated content, increasing the game’s user engagement and time played.
• The report also provided an update on Tencent’s protection program for underage players. Minors accounted for 0.4% of total time played and 0.7% of total gross earnings for domestic games during the first quarter, down by 96% and 90% respectively from the same period three years ago. The Chinese government introduced a set of regulations in August 2021 ordering gaming companies to ban underage users from playing on weekdays and allow them only an hour of play time between 8 p.m. and 9 p.m. on Fridays, weekends, and public holidays.

Context: At Tencent’s annual gaming conference Spark 2023 this week, the Chinese tech giant introduced updates on 15 previously announced titles and revealed 20 new projects. The previous titles included Honor of Kings, Arena Breakout, Moonlight Blade, and SYNCED. The conference also featured more renowned imported titles, namely Valorant, Lost Ark, and Alchemy Stars. The company was keen to emphasize the “social value” of its gaming arm at the event, as the industry continues to emerge from a lengthy period of regulatory scrutiny.

• The National Press and Publication Administration (NPPA), China’s gaming regulator, announced 86 new licenses for domestic games on April 20 this year. Currently, 347 domestic games and 27 imported games have been issued with licenses so far in China in 2023, compared to 513 game licenses for the whole of 2022. The renewed issuance of licenses is seen as  a significant sign for the recovery of China’s gaming industry.
• In the fourth quarter of 2022, Tencent’s domestic gaming revenue was RMB 27.9 billion ($3.9 billion), a decline of 6% year-on-year. Revenue from international games reached RMB 13.9 billion ($1.9 billion) during that period, representing an increase of 5% year-on-year.

Xiaoice, an AI chatbot brand formerly operated by Microsoft, announced on Tuesday that it is looking for 300 individuals to agree to be digitally cloned as part of a new AI trial.

The process of creating AI clones, which embed the tester’s own personality, voice, and appearance, needs as little as three minutes of data collection, the company claims. Xiaoice has opened registration on WeChat and said it is looking for influencers, experts, and ordinary people. 

Why it matters: Li Di, CEO of Xiaoice and a former Microsoft executive, thinks AI-powered personal avatars can become a major consumer-facing business model for companies. 

Details: The program is open for Chinese and Japanese participants, with the first batch of clones set to be operational within a month. The company plans to expand the scale of GPT clones to 100,000 people by the end of the year if the initial 300 AI clones are controllable, according to Caixin.

• Testers who sign up for the clone program are required to provide links to their social media accounts, such as Douyin, Kuaishou, Bilibili, Xiaohongshu, and Weibo.
• The company’s GPT model was developed and completed half a year ago, according to Xiaoice’s announcement, ranking first in terms of downloads among open-source large-scale GPT models in Japan.
• Using AI technology to create digital clones of real people carries ethical and legal implications. As yet undefined is which party will be held accountable should a clone say or engage in inappropriate or illegal activities. 

Context: AI technology has continued to generate new uses and applications in various sectors. Recently, Snapchat influencer Caryn Marjorie employed the GPT-4 API to develop her own AI clone. For $1 per minute, her fans can interact with the chatbot, Caryn AI, earning the influencer a reported $71,610 in revenue from a week of beta testing.

• In China, users have trained AI on popular Mandarin singer Stefanie Sun’s voice and created AI cover versions of various hit songs, with many going viral on video site Bilibili. Though Sun has not publicly responded to the use of her AI-generated voice in these songs, users have expressed concern about the legality of the practice.
• Microsoft span off its chatbot platform Xiaoice in 2020, having established it in 2014. The self-sustaining startup has since completed three rounds of financing, with the latest round in November securing RMB 1 billion from investors including Sequoia Capital.

On Monday, Tencent Games held its annual gaming conference Spark 2023 online, introducing dozens of new gaming-related titles and projects. The Chinese gaming giant also highlighted a slew of “social value” projects using gaming technology, in an attempt to show that the gaming industry can have a positive impact upon society as it emerges from a lengthy period of regulatory scrutiny in China. 

Why it matters: China’s gaming industry has faced heavy regulation since the summer of 2021 but saw signs of this easing earlier this year as licenses for new games continued to return to regular levels. Tencent Games, the leading company in China’s gaming sector, is eager to prove to the regulators that the industry can provide value to society, outside of just producing popular entertainment. 

Details: Tencent introduced a series of new projects using gaming technology for “social value,” including a flight simulator, a game-driven robot-learning project, a 3D online tour of the Great Wall, and games related to clinical research. The gaming unit also announced 26 updates on its more traditional gaming titles, including new games and new updates on hit titles such as Honor of Kings.  

• Tencent will launch a full-motion flight simulator next month. The simulator is based on a gaming engine developed by Tencent Games’ CROS (Common R&D and Operation Systems) unit and was created jointly with Nanhang Xiangyi, a subsidiary of China Southern Airlines. Tencent said during the event that the simulator aims to create a more realistic and efficient training scenario for pilots.
• A new robot-learning project initiated by Tencent Games’ START Team and Tencent Robotics X Lab was also announced. It uses AI to generate the actions and decision-making of the robots, combining gaming and robot development. Tencent claims that the training efficiency of a single robot is improved by 20 times after CPU optimization via the project.
• Tencent’s online tour of the Great Wall combines photo-scanning modeling, game engine, and cloud gaming technologies. The project uses gaming technology to achieve fine-detailed rendering and immersive digital imagery usually seen only in AAA games rather than cultural heritage projects. The tour is accessible through a mini-program on WeChat and has received more than 40 million views since it was launched last June. The project won one of the 2022 Global Awards for World Heritage Education Innovative Cases awarded by the United Nations Educational, Scientific and Cultural Organization. The gaming giant also unveiled a similar project featuring detailed scans of the historic Buddhist artworks at the Unesco-protected site of the Mogao grottoes near Dunhuang.
• Another “social value” project came with the showcasing of narrative puzzle game Pavlov: Brain’it On, which looks to harness clinical research to “help players exercise various cognitive capacities, such as attention, thinking speed, memory, inductive reasoning, and spatial imagination,” according to Tencent. The title was developed by the Chinese tech giant’s Social Value Exploration Center in collaboration with NExT Studios and the Tianqiao and Chrissy Chen Institute (TCCI).
• The firm’s Social Value Exploration Center also worked on Room 301 NO.6, which aims to help the public better understand the world of Alzheimer’s patients. The narrative game “allows users to experience, feel, and understand the lived experience of patients with Alzheimer’s,” Tencent claims.
• In terms of new out-and-out gaming titles, Valorant and Lost Ark attracted significant attention at the event. Valorant is a first-person tactical hero shooter game developed and published by Riot Games in 2019, but which will now be available in China for the first time after Tencent announced a distribution deal. Valorant hit a new record with an estimated total of more than 20 million active players throughout April 2023, according to Tracker Network. The China version will start beta testing in June.
• Lost Ark is a 2019 MMO (massively multiplayer online) action role-playing game co-developed by Tripod Studio and Smilegate. Lost Ark will be launched for the Chinese market this summer, with unlimited pre-release reservations now open. In February, Lost Ark recorded more than 1.3 million concurrent players on Steam, according to Studio Loot. With this number, it overtook CS:GO to claim second place in the all-time concurrent peak charts, behind leader PUBG.

Context: The National Press and Publication Administration (NPPA), China’s gaming regulator, announced 86 new licenses for domestic games in April, the latest sign that the licensing freeze that spanned August 2021 to April 2022 has now thawed. But despite a return to relative normalcy, many gaming companies are still feeling the pressure of a tighter approval environment. 

• Facing heavy regulation and stagnant growth at home, Tencent Games has been accelerating its expansion in overseas markets in recent months. In March, it brought its highest-grossing mobile game in China, Honor of Kings, to Brazil, where it quickly became the most downloaded mobile game in the country.

Following the global success of Genshin Impact, Chinese game developer HoYoverse published new title Honkai: Star Rail on April 26. The game is an anime-styled science-fiction gacha title. Players of gacha games, a reference to Japanese toy vending machines, use in-game currency to purchase virtual boxes that contain a randomized selection of characters, weapons, and other rewards. 

Honkai: Star Rail is available on PC, PlayStation 4 and 5, iOS, and Android devices. In this new title, HoYoverse blends open-world and turn-based mechanics to create a different type of anime game to its famous predecessor. At first glance, Genshin Impact players might find some familiarity due to style and user interface, but a deeper exploration of Honkai shows it offers a genuinely alternative experience. 

An unskippable storyline

Honkai: Star Rail is the fourth instalment of the Honkai series, drawing on characters from Honkai Impact 3rd and Tears of Themis, and gameplay elements from Genshin Impact. New players who are not familiar with the previous titles in the series might be a bit overwhelmed to start, with novices needing some time to digest wordings and worldview settings. But the game’s narrative becomes simpler after the prologue, as the story transitions into the stage of planetary adventures.

The game is set in a fantasy universe where humanity follows in the paths of godlike beings called “Aeons,” in an attempt to stop a pervasive corrupting force, the “Fragmentum.” In the game, players take on the role of “Trailblazers,” waking up without memory aboard a space station. You discover your body contains a destructive matter called “Stellaron” and join a band of adventurers, traveling between planets aboard the “Astral Express,” a space-train.

The game’s characters have distinct personalities and the main story is fast-paced. Humor is a key feature of HoYoverse’s game, with NPCs messaging you to lighten the mood while the main storyline unfolds. Some players may feel like the asides, seen in props and messages, waste time or aren’t especially funny, preferring pure combat. Others will enjoy chatting to NPCs to deepen the sense of immersion.

The game’s plot and script have room for improvement. Not being able to skip along in the plot and having to wait for a character’s action to finish before clicking on the next line of dialogue can be frustrating. Additionally, players can only obtain the first accessory character gifted by the system after several hours of story, by which time an impatient beginner may have abandoned the game due to perceived lack of progress. 

An array of gacha characters

Honkai: Star Rail currently offers 28 characters, categorized in the following seven elements: lightning, ice, fire, wind, imaginary, quantum, and physical. Thus, players have plenty of choice when it comes to building a team. 

Desired characters and weapons acquired through the gacha system are called Warps, and you need to spend specific types of in-game currency to get a Star Rail Pass. With this, players can unlock four or five star characters. In-game lolly accumulates the more you play, or you can choose to accelerate the process with fiat currency.

It’s possible to complete the entire game without spending a cent, but it’s hard to ignore the temptation of in-game purchases. It is especially difficult to resist the urge to buy Star Rail Passes if you’re obsessed with character collection or weapons upgrading.

The alternative is putting in long hours and putting up with a degree of drag in the story. 

Strategy over action

The major difference between Genshin Impact and Honkai: Star Rail is how combat works. Genshin Impact is a third-person real-time action game, whereas Honkai is a turn-based strategy game. Players build up and control a team of four characters in turn-based combat. 

When in combat, you take turns attacking each character and performing actions one by one. The same rules apply to your enemies. You therefore have to rely more on strategy to win your battles. Different character skills, elements, and order of play may have a different impact. The battle scenes are compelling, but there’s also an option for double-speed and automatic mode for these scenes, enabling you to speed the battles along if you want.

Players can move around various locations to explore tasks, but it is not a fully open-world game. There are various locations where you can teleport from one region to another but they are not interconnected.

Stunning visuals

The aesthetics and immersive worlds that HoYoverse has previously built have been major factors in the company’s  success. Like Genshin Impact, Honkai has stunning graphics, with detailed character designs and lush environments, making it a treat for the eyes. The exquisite surroundings and backgrounds keep you engaged in the anime sci-fi world. 

Each location is markedly different from the others, again keeping exploration enticing. The treasure chests in the anime world are abundant as well, continuously motivating you to find out more. 

Conclusion

Overall, Honkai: Star Rail has done its makers proud, meeting the high standards set by Genshin Impact. With an intriguing sci-fi narrative, high-quality visuals and an addictive gameplay system, its players should be satisfied for some time to come. In terms of content optimization, HoYoverse needs to put its mind to work if the company wants to emulate its most famous title’s popularity and keep active players hooked for the foreseeable future.

HoYoverse, the developer behind smash hit Genshin Impact, has seen its latest game, Honkai: Star Rail, leap to the top of Apple’s App Store download charts following its launch on April 26. Initially teased on April 23 and now available worldwide in beta mode, the game has already garnered high expectations, amassing more than 30 million pre-download reservations after it was first announced. 

HoYoverse is also exploring the use of AI tools to achieve a better immersive game experience for the new title, according to National Business Daily. For example, the team has been trying to incorporate AI technology into the behavior patterns of NPC (non-play characters) in Honkai: Star Rail. 

Why it matters: HoYoverse’s Genshin Impact, an anime-style role-playing game (RPG), has consistently brought in sizable revenue for the company. This new game has the potential to widen HoYoverse’s lead in anime RPG games. On April 23, Honkai: Star Rail topped the free download list in Apple’s App Store in more than 113 countries and regions including the US, Japan, and South Korea, according to Chinese media outlet National Business Daily. 

Details: The fourth installment of the Honkai series, Honkai: Star Rail is a space fantasy game featuring fantasy elements with myths and legends integrated into a sci-fi storyline. Players can control up to four characters and form a team by themselves. The game includes elements of open-world, dungeon exploration, and turn-based strategic combats.

• HoYoverse is keen to emphasize that Honkai: Star Rail is not a direct sequel to its previous title Honkai Impact 3rd. While the two games share themes, elements, and characters, the producer says the new title is an independent game and players don’t need previous knowledge of other Honkai titles. 
• Honkai: Star Rail and Genshin Impact do share some similarities, but the two games differ in their combat scenarios. Genshin Impact is more of a third-person action RPG, whereas Star Rail is a turn-based RPG.
• Honkai: Star Rail released an official trailer called Interstellar Journey on YouTube on Tuesday, reaching 1.3 million views in around 24 hours. 
• HoYoverse plans to widely market the game in the following months, introducing the new title at  events including LA’s Anime Expo, Japan Expo, Germany’s Gamescom, and Tokyo Game, according to an official press release. 

Context: Genshin Impact ranked third on the global list of highest-earning mobile games in March 2023, according to Sensor Tower. The same data showed that 50.2% of the title’s revenue comes from the Chinese iOS market, with the Japanese market accounting for 20.2% and the US market accounting for 9%.

Extended reality chip startup GravityXR has completed a pre-A+ worth millions of dollars, according to local media outlet LatePost. The round of financing was led by Goertek’s Tongge Fund and joined by ByteDance’s VR headset maker Pico and gaming companies HoYoverse and 37 Interactive Entertainment, among others. These companies are leaders of the XR industry chain, with Goertek the world’s largest manufacturer of XR glasses.

GravityXR has plans to expand its team, develop next generation XR chips, and carry out another round of financing. Combined with previous fundraising, the company has raised nearly RMB 1 billion ($1.45 billion) in total since its founding in September 2021.

Why it matters: Extended reality (XR) is a catch-all term for augmented, virtual, and mixed reality. The technology combines with or mirrors the physical world via a digital twin world, and enables interaction between them. Many consumer tech giants see XR devices as having the potential to become the next-generation of ubiquitous computing platforms, a role dominated by smartphones today. 

• Devices equipped with XR have already started mass production in the games and entertainment industries. Last year, 8.8 million VR devices were sold worldwide, alongside 42 million game consoles. Some of the better-known firms are Oculus, acquired by Meta in 2014, and Pico, acquired by ByteDance in 2021.

Details: GravityXR develops metaverse interfaces, hardware chips, and related algorithms, offering new XR user experiences. 

• GravityXR claims its first generation product will be in mass production by the end of 2024. The firm is currently developing a co-processing chip for XR devices, which can optimize the display, sensor, and other components of an XR device. The new chip will provide real-time image rendering, sensor data processing, and mixed-reality interaction functions, according to LatePost.
• GravityXR’s first XR co-processor chip will adopt 14nm or above advanced technology. Its core function is to help render and reduce the load of the main chip, as the GravityXR chip can coordinate with the customized XR device chips made by semiconductor giants Qualcomm and Mediatek. GravityXR’s self-developed algorithm reduces motion sickness during the XR experience and improves display quality, the company told LatePost.
• GravityXR has previously received investment from Gaorong Capital, Sequoia Capital, IDG Capital, GSR Ventures, Lenovo Capital, and Incubator Group. A core member of GravityXR’s founding team previously worked in Apple’s XR team for eight years, while other co-founders came from leading companies such as Huawei, Meta and Amazon, and specialize in chips, displays, optics, and algorithms. The company has about 200 employees.
• Goertek, a Chinese manufacturer and an Apple supplier of electronic components, launched its Tongge Fund in May 2022.

Context: The global extended reality market reached $35.14 billion in 2022 and is projected to hit around $345.9 billion by 2030, growing at a compound annual growth rate of 33.09% from 2022 to 2030.

• In the fourth quarter of 2022, the top three XR manufacturers globally were Meta (with 81% of the market), DPVR (7%), and Pico (7%), according to a report from market research firm Counterpoint. 
• Apple originally planned to launch its VR headset in 2021, but delayed the move until this year. The California-headquartered tech giant plans to equip its forthcoming headset with games, fitness apps, and even a virtual reality reading function, according to a report by Bloomberg. 

Major Chinese microblogging platform Weibo is set to launch an artificial intelligence-powered creation assistant in the second quarter, executives announced at the firm’s annual creator festival in Changsha on April 15.

One of China’s largest social platforms, Weibo plans to unveil a host of incentives aimed at helping creators monetize their content during the two-day festival held in the central Chinese city.

Why it matters: Weibo has been under significant pressure from lifestyle platform Xiaohongshu as well as short video apps, with the platform recording falling total revenue and advertising income for several consecutive quarters. Its upcoming AI assistant and a series of monetization incentives for creators aim to improve efficiency in content creation while increasing creators’ earnings, a move the company hopes will help it stay competitive.

• “We want more growth to secure revenue for content creators on our platform,” said Cao Zenghui, senior vice president of Weibo, at the creators festival.
• Creators from Weibo saw their ad endorsements fall 6% year-on-year to RMB 1.5 billion ($220 million) in 2022, which Weibo claimed was down to the impact of Covid-19 and falling customer demand.

Details: Weibo plans to invite 100 creators with more than 5,000 original blog posts to be the first to use the AI assistant when it launches in the second quarter.

• Cao called AI-generated content a new trend and opportunity in content creation, saying “AI will not replace human creators but become their assistant,” according to local media outlet IThome.
• The number of Weibo creators with over 10,000 followers hit 1.4 million in the quarter ending in December, of which 11% had more than 100,000 followers and 24,000 had more than 1 million followers.
• The AI tool will learn creators’ writing styles and assist them in picking titles and suggesting special effects, according to IThome. It will also help them with topic selection when creating articles and videos, and with setting up a livestream.
• Weibo creators currently get a 20% share for posting original graphics and 15% for creating original videos as advertising endorsements, National Business Daily reported on April 17. Weibo noted at the festival that it will implement a 5% cashback incentive policy by the end of this year with the aim of boosting creators’ incomes.

Context: Weibo had 586 million monthly active users by the end of 2022, which the latest earnings reports show was twice the number of Xiaohongshu. However, Xiaohongshu users have been recorded as spending nearly 20 minutes longer every day on the app than users on the Weibo app. As of last July, the average daily use time of Weibo was 36.43 minutes, according to statistics from analytics company Qianguan and cited by local media outlet 21Jingji.

China’s largest gaming firm Tencent can finally advertise on ByteDance apps, according to online gaming analytics platform DataEye, a new milestone in the two companies’ relationship. ByteDance and Tencent have competed fiercely over the years, barring each other from cross-promotion and regularly engaging in legal wrangles. As a result, Tencent games have had limited exposure on ByteDance platforms, while ByteDance’s apps have had little publicity on Tencent platforms. 

The latest advertising data shows that Tencent’s war game Return to the Empire and multiplayer role-playing game Naruto have been advertised on Bytedance’s Douyin (China’s TikTok twin), news app Toutiao, and Xigua Video in the past seven days. 

Why it matters: The relationship between Tencent and ByteDance has long been tense due to their rivalry in content, video, and gaming. Recent developments show the two companies are moving toward a reconciliation after years of bitter competition. 

• On Feb. 7, Douyin and Tencent Video announced an unexpected cooperation, in which the two parties will jointly explore the promotion of videos and the secondary creation of short videos. Tencent has issued a long-term video copyright authorization to ByteDance and clarified secondary video creation rules. On Tuesday, Tencent was able to register the official account of Tencent Video on Douyin. The partnership deal between the two companies has even become a hot topic on microblogging platform Weibo. 
• Such reconciliation was unthinkable a few years ago. In the second half of 2021 alone, Tencent sued Douyin 168 times for video rights infringements, with compensation reaching almost RMB 3 billion (or $430 million). 

Details: Tencent’s game Return to the Empire has started to place advertisements on ByteDance’s Toutiao and Xigua Video in recent days. The game had previously been advertised mostly within Tencent’s platform, according to DataEye statistics. In addition, ByteDance’s Douyin accounted for about 15% of the gaming ads distribution for another Tencent game Naruto.

• The reconciliation will potentially benefit both sides. Traffic from ByteDance platforms may head in Tencent games’ direction. At the same time, Tencent’s ubiquitous app WeChat could open up to ByteDance and introduce new users to ByteDance apps.
• The promotion of bestselling Tencent games (like Honor of Kings) in Douyin may enrich ByteDance content.
• The move will have repercussions in livestream gaming too. In the future, ByteDance-based games may also enter the WeChat network and WeChat video channel.

Context: Sharing a focus on content and entertainment, Tencent and ByteDance were the top-grossing publishers in global mobile app stores in the first half of 2022. Tencent was the top-grossing publisher in the game and non-game categories, earning about $3.3 billion in the first half of 2022. The figure is almost 153% higher than ByteDance, which came second with $1.3 billion in revenue. Their disputes have been long-lasting: 

• In January 2023, Tencent super app WeChat temporarily blocked users from accessing links to ByteDance-owned short video app Douyin. 
• In June 2021, ByteDance criticized Tencent’s practice of blocking links to its products on WeChat and QQ in an online post, attaching a 59-page PDF file chronicling incidents of blocking in the past three years. 
• In May 2019, Tencent filed two lawsuits against ByteDance, requesting the owner of Douyin stop streaming Tencent’s hit titles CrossFire and Honour of Kings.
• In June 2019, Tencent filed six new lawsuits against ByteDance, demanding the company delete all Honour of Kings gameplay videos from the accounts of six specified users on Toutiao and Douyin. It demanded  ByteDance pay RMB 10.8 million (around $1.56 million) in damages.

Several popular content creators on the Chinese video site Bilibili recently announced they were taking a pause in updating their channels, citing a decrease in income as the main reason. The news soon spread on Chinese social media and developed into a wider discussion on the relationship between Bilibili and its video creators, with some claiming a creator exodus while others seeing it more as an individual phenomenon. 

Similar to YouTube, Bilibili largely relies on user-generated videos. The loss-making platform is facing increasing pressure to turn a profit and has promised to reach break-even by 2024. 

Why it matters: With profitability goals in sight, Bilibili has been adopting multiple strategies, including reducing incentives for some creators and introducing a short video format called Story Mode. These new strategies have hit creators with fewer followers and clout the most. 

• In 2022, the Shanghai-based company spent RMB 9.1 billion ($1.3 billion) on revenue-sharing with creators, its latest filing showed, accounting for half of Bilibili’s cost of revenues. Bilibili had more than 3.8 million video creators by the end of 2022. 

Details: Back in January 2018, to spur growth, Bilibili launched a creative incentive program to encourage creators to “make high-quality videos,” whereby the streaming site provides cash bonuses to creators based on views and engagements. Since last year, in an effort to reduce losses amid an economic downturn, Bilibili has reduced creator incentives, and prioritized commercial advertising and other integrated marketing. 

• Those changes have hit some regular creators hard. Creators with more than 1 million followers mainly rely on business advertising to generate income, while those with fewer fans depend more on creative incentives.
• Some Bilibili creators have previously expressed dissatisfaction with reduced incentives publicly. In March 2022, a creator named Shudashi, who produces knowledge-related content, wrote that his earnings from the platform had been reduced by over 40% for a video. Before the adjustments, the creator said one of his videos with more than 100,000 views on Bilibili would earn him about RMB 1,600. Shudashi has 47,000 followers on the platform as of writing.
• A creator who once considered Bilibili a major source of income published a post on Monday and said that the creators who announced they were stopping updating content in the last few days were mostly working full-time with a team to support. The decline in commercial advertising partnerships and the high cost of creating long-form videos are the main reasons several creators chose to take a break, according to the creator.

Context: Bilibili launched a TikTok-like service called Story Mode in 2021 in an attempt to expand profits. Despite the effort, the YouTube-like video platform is facing increasing competition from short-video platforms such as Douyin and Kuaishou, as well as other grassroots online platforms like Xiaohongshu. 

Chinese tech giant Tencent has launched an AI-powered video editing tool called Zenvideo, integrating a variety of features for short-form video creators, such as text-to-video generation and digital narration.  

Why it matters: With its growing emphasis on short video, Tencent is looking to further challenge current market leaders in the sector such as Kuaishou and ByteDance’s TikTok sibling Douyin. Tencent’s new offering comes with similar capabilities to ByteDance’s CapCut, which recently surpassed 200 million monthly active users in the US.

Details: Zenvideo is available to use both through web browsers and WeChat’s mini-program, but is more powerful as a web app. The version within Tencent’s superapp has comparatively limited AI features, only supporting AI painting and digital narration. 

• The video editing tool allows users to create short-form videos, with a range of editing options such as filters, visual effects, and digital avatars.
• Unlike ByteDance’s video editing toolCapCut (Jianyin in the Chinese market), Tencent’s new tool can be operated on the web without the need to download an app. Furthermore, users can import Tencent licensed video and audio clips and use them as long as the final work is published on Tencent’s open content platforms. For example, users are able to use music from Tencent’s streaming platforms and take clips from popular Tencent Video TV shows such as The Three-Body Problem and Red Sorghum and edit them for free within Zenvideo. 
• According to a notice within the tool, Tencent plans to share revenue with video creators as an incentive to attract more content creators.

Context: This week, Tencent’s super app WeChat also announced several changes to its ecosystem, especially for its short video section WeChat Channels. 

• WeChat Channels has an average daily user time of about 40 minutes, which is less than one-third of the two leading short video platforms Douyin and Kuaishou. The latter reached a new high of 134 minutes in the fourth quarter of last year, its latest financial results showed.
• Regarded as “the hope of the whole company” by Tencent CEO Pony Ma, WeChat Channels is planning to launch a paid subscription service and share revenue with creators of short videos. This move is likely to heat up the competition among similar platforms.

Kai-Fu Lee, former president of Google China and now CEO of Sinovation Ventures, announced on Monday that he’s building a new AI company called Project AI 2.0 that will focus on developing ChatGPT-like apps, as well as an ecosystem for AI-powered productivity tools. 

Lee shared his thoughts on the latest AI trends, including the concepts of AI 1.0 and 2.0 on March 14, at Sinovation Ventures’ headquarters in Beijing. He said he considers ChatGPT to be a major breakthrough in deep learning, driving AI into the 2.0 era.

Why it matters: As a renowned AI expert and venture capitalist, Lee said he sees AI as providing an opportunity to reconstruct almost all existing applications, just as Microsoft redesigned Microsoft Office into Copilot, giving Word, Excel, and other mainstream productivity tools AI and generative capabilities.  

• Lee founded Sinovation Ventures in 2009. One of its AI startups, AInnovation, was founded in 2018 to develop artificial intelligence products for manufacturing, telecommunications, and finance industries, and went public in Hong Kong last January.

Details: Lee is currently seeking global talent in the fields of large language models (LLMs), natural language processing (NLP), multi-modality, AI algorithm, and infrastructure. The newly established company is also seeking fundraising.

• Sinovation Ventures has confirmed that multiple technical experts with experience in leading teams in major tech companies have expressed interest in joining the project, according to Chinese media outlet Yicai.
• “Every field can rewrite their existing apps with the aim of creating a more profitable model,” Lee said in his Sinovation Ventures speech, adding that the generative capabilities of AI 2.0 will ultimately reduce costs to almost zero.
• Lee sees three phases of AI application development. The first phase of popular AI apps is more likely to appear in content, where the margin for error is more tolerable. AI would then be used in more demanding fields such as finance and education, to assist automatic trading and language teaching for example. The third phase would be automatic AI, with AI capable of being applied wherever it’s needed.  
• Lee also sees AI providing opportunities to companies that are ten times bigger than those of the mobile internet era, and accessible to Chinese participants for the first time. 
• During the speech on March 14, Lee indicated that if he were at Microsoft, he would prioritize transforming Office tools first rather than just focusing on embedding GPT into search, a piece of advice that coincided with Microsoft’s announcement of Copilot, a reworked Office with AI ability, three days later. 

Context: Lee is the latest tech leader in China tech to turn his attention to launching AI startups. Meituan co-founder Wang Huiwen is setting up an AI startup Guangnian Zhiwai to develop an alternative to ChatGPT, with his closest ally Wang Xing, who is also a co-founder of Meituan, committing himself to invest in Series A financing of the startup.

On March 8, the highest-grossing mobile game in China, Honor of Kings (HoK), launched in Brazil, marking the Tencent TiMi Studio Group game’s first foray into the global market. The number of pre-registered HoK players in Brazil before the MOBA (multiplayer online battle arena) title’s launch exceeded 2 million, quickly making it the most downloaded free mobile game in the country, according to a report from Chinese financial media outlet Baijing.

Why it matters: The Brazilian launch is a key part of Tencent’s global expansion as the Chinese gaming giant looks to overseas markets amid continued uncertainty at home due to heavy regulation and sluggish consumer spending. The team behind Honor of Kings hopes its experience in Brazil will lay a solid foundation for its future launch in other regions, such as Mexico, Egypt and Turkey, according to Tencent’s overseas game distributor Level Infinite.

• Tencent is increasingly relying on the overseas gaming market for growth. In its 2022 third-quarter financial report, Tencent’s global market revenue reached RMB 11.7 billion, more than one-third of its domestic game revenue RMB 31.2 billion.

Details: HoK released a series of high-quality cinematic trailers on YouTube ahead of its Brazilian launch. The pre-registration trailer Hey Brazil received 2.3 million views on YouTube in its first month.

• Tencent has set up dedicated servers in Brazil for a smoother gaming experience in the country. The firm also employed well-known Brazilian voice actors for the characters in the Brazilian version of Honor of Kings, alongside localization of in-game text, user interfaces, and character designs.
• HoK was released in Brazil on the iOS App Store, Google Play Store for Android, and Samsung Store, with the title offering 5v5 Matchmaking, 5v5 Quick Mode, 5v5 Ranked Match, 1v1 Solo Mode, and a newly created Casual Mode called the Infinite Brawl.
• Level Infinite first announced on Twitter last June that HoK would be launched globally by the end of 2022. However, this was later postponed until this year, with the company partly blaming the Covid-19 pandemic. 

Context: In February 2023, Tencent’s Honor of Kings remained the highest-grossing game app in China, earning about $113 million in monthly revenue. In 2022, Honor of Kings generated over $2.2 billion in revenue, making it one of the top-grossing mobile games of all time.

• At an event celebrating Honor of Kings’ seventh anniversary held in November 2022, Tencent provided new details on its plans to build a “universe” around the hit game, teasing a range of spin-off titles including chess and Street Fighter-style battle games.
• According to Chinese media outlet Sina, Brazil is the largest gaming market in Latin America, generating $1.84 billion in revenue in 2022. Among the gamer population in Brazil, the proportion of young players aged between 18 and 24 is relatively high, accounting for more than 20%, which benefits MOBA games that need a high level of DAUs (daily active users) and appeal to this demographic.
• In recent years, Chinese gaming companies have increasingly looked to overseas markets for growth. In the top 100 list of highest-grossing mobile games in the global market, Chinese game publishers account for 40% of the US market, 43.1% of the Japanese market, and 49.1% of the Korean market, according to Chinese data research firm CNG’s Global Mobile Game Market 2022 report.
• Chinese gaming giant Tencent doubled its stake in AAA game title developer and publisher Ubisoft to around 10% in 2022, a move it followed by taking a 20% stake in Korean studio Shift Up.

READ MORE: Chinese gaming companies go overseas as home growth slows

Chinese video streaming site iQiyi achieved an annual profit for the first time in 2022, according to its earnings report posted on Wednesday. The Baidu-backed long-video platform posted a non-GAAP net profit of RMB 1.3 billion ($186.2 million) and a 5% fall in revenue from the previous year to RMB 29 billion.

The Nasdaq-listed company is eyeing “high-quality growth” in 2023, aiming for simultaneous growth in operating profit and revenue, its CEO Gong Yu said in a related earnings call.

Why it matters: iQiyi has been losing money since its founding in the early 2010s. Its current profitability is largely thanks to aggressive cost-cutting since the end of 2021, fine-tuning content production, and new subscriber growth. Its competitors Tencent Video and Youku have yet to turn an annual operating profit.

Details: iQiyi managed to decrease its revenue costs by 19% in 2022. The platform produced a number of widely popular original video series, and grew its members to 120 million, offsetting some of its losses in ad revenue as the content business as a whole saw less ad expenditure last year. 

• Membership service revenue — the primary revenue source for iQiyi, accounting for 60% of its revenue — increased by 6% to RMB 17.7 billion. Meanwhile, the company’s revenue generated by online advertising services and content distribution decreased by 25% and 14%, respectively.
• The continuing cost-cutting measures have contributed to a significant reduction in iQiyi’s expenses, with both administrative expenses and R&D expenses falling more than 20% in 2022.
• iQiyi’s subscription membership grew by more than 10 million in the fourth quarter of 2022, and its total number of subscriptions was close to 120 million by the end of December.
• Some of iQiyi’s video series that reached a wide audience in 2022 include A Lifelong Journey, Love Between Fairy and Devil, New Life Begins, and Wild Bloom.
• Earlier this year, the video site also received acclamation for its original series The Knockout. Executives believe the success of the hit drama is replicable, saying leading original content production ability and operational capability are key to iQiyi’s competitive strengths. Streamed last month, The Knockout followed a fictional hunt for corrupt local officials and has garnered more than 300 million views. 

Context: Although The Knockout has proven an early 2023 hit for iQiyi, the steaming site has faced multiple controversies over membership rights in recent months.

• The growth in iQiyi’s membership service revenue is due in part to subscription fees rising over the past three years, with increases ranging from RMB 3 to RMB 20, a move that spurred rivals Tencent Video, Youku, and Mango TV to follow suit.
• Facing criticism from a government-backed consumer council and a lawsuit by one of its users, iQiyi dropped a plan to restrict access to high-definition screens among its paid members unless they paid an extra fee for the service.
• On Feb. 15, iQiyi announced that it would incorporate Baidu’s artificial intelligence chatbot Ernie Bot into its content search, promotion, and novel creation services.

MOSS, a ChatGPT-style chatbot platform developed by Fudan University’s Natural Language Processing Lab, crashed a day after its launch on Monday due to high demand, forcing the lab to set up an invitation-only waitlist to use the AI tool.

The model, similar to OpenAI’s ChatGPT, was named MOSS after a quantum computer in the hit Chinese science fiction film Wandering Earth. Rolled out on Monday, MOSS was seen as ChatGPT’s first Chinese rival, but its server crash means it will no longer be directly available to the general public. 

The team at Fudan University apologized for disappointing users of the experimental software, issuing a statement on the chatbot platform that read, “MOSS is still a very immature model and has a long way to go. Our academic research lab is unable to make a model with similar capabilities to ChatGPT.” 

Why it matters: Amid a wave of excitement in the Chinese tech sphere around ChatGPT, MOSS’s overwhelmed server illustrates the technical and modeling challenges that Chinese research teams and tech companies will need to overcome before they can successfully develop and operate their own ChatGPT-like tools.

• MOSS has followed in the footsteps of ChatGPT almost entirely, a core member of the Fudan University team Zhang Qi told local media outlet Yicai. Zhang stated that gathering real data from users to enhance the model and assist in subsequent research was the team’s main incentive for opening MOSS to the public.  

Details: MOSS is able to perform a variety of natural language tasks based on user instructions, ranging from answering questions to text generation and summarization, as well as code reviewing and generation, according to examples posted by the Fudan MOSS team on GitHub.

• ChatGPT has up to 175 billion parameters, while MOSS has only 16 billion.
• Currently, MOSS performs better in English than Chinese because its model base has learned over 300 billion English words, and only about 30 billion Chinese words, The Paper reported on Tuesday, citing the research team.
• The Fudan team is set to make MOSS’s code and model parameters open-source after their initial validation is completed, and said on Github that this could be as soon as March. 

Context: At least ten Chinese tech companies are competing to develop large-scale conversational language models like the ChatGPT, but none have launched products yet. Baidu’s ERNIE Bot is expected to launch as soon as March.

• ChatGPT is estimated to have reached 100 million monthly active users in January, and is said to have crashed its servers several times in its first week due to mass user demand.

READ MORE: Alibaba, Baidu, NetEase, iFlytek…Chinese companies rushing to prove they have tech similar to ChatGPT

Baidu is weighing whether to embed its ChatGPT-like service Ernie Bot into its main search platform, similar to Microsoft’s Bing, or launch it as an independent service, local media outlet 36Kr has reported, citing multiple Baidu employees.

Why it matters: Baidu’s reported indecision on Ernie Bot reflects the unpredictability surrounding the launch of artificial intelligence-powered chatbots, as the search giant looks to avoid some of the missteps seen with Bing and Google’s recent projects.

Details: Baidu, which has increasingly put AI capabilities at the heart of its strategy in recent years, announced in early February that its Ernie Bot tool would go live in March.

• Led by Baidu’s chief technology officer Wang Haifeng, the Ernie Bot team includes Wu Tian, supervisor of the company’s deep learning platform PaddlePaddle, as well as Wu Hua, technical leader of Baidu’s natural-language processing department.
• Ernie Bot is currently Baidu’s highest-priority project, according to 36Kr. The report cited Baidu employees as saying that all of the “scarce resources” being used to train deep learning models have now been diverted to its large-scale machine-learning Ernie system, which will power Baidu’s version of ChatGPT.
• The company is reportedly also seeking to combine AI-generated content with its blog-style platform Baijiahao as well as with short video content.
• Nearly 300 leading companies from sectors spanning internet, media, insurance, and auto have announced their inclusion in Baidu’s ChatGPT-style Ernie Bot ecosystem.

Context:  Baidu is part of a crowded field of Chinese companies to have announced their own AI chatbot projects in the wake of the huge popularity of ChatGPT.

• The search giant has also announced that its first electric vehicle model will launch using its new conversational artificial intelligence technology, with the intention of providing a ChatGPT-like experience that enables natural conversation between owners and their vehicles.
• AI-powered chatbot services rely on large and diverse data sources to train. Based on PaddlePaddle and the Pengcheng Cloud Brain II computing power system, Baidu launched the largest single model in the Chinese language at the end of 2021 with 260 billion parameters, a parameter figure that has exceeded GPT-3’s total by 50%, Baidu said.
• Meanwhile, Baidu has built a knowledge database of over 5 billion entities and 550 billion facts in recent years as the company’s largest business – search – has generated a huge pool of resources.

READ MORE: Alibaba, Baidu, NetEase, iFlytek…Chinese companies rushing to prove they have tech similar to ChatGPT

On Thursday, Chinese tech giant Tencent dismissed reports claiming that it was disbanding parts of its XR team, with the Shenzhen-based company saying that it is set to change the hardware development path of its XR business by making some personnel adjustments.

Why it matters: Tencent is the latest tech company to overhaul its metaverse-related activity, a move that comes less than a year after the company established its XR unit and follows its failed attempts to acquire AR hardware maker PICO and gaming phone maker Black Shark. XR hardware usually requires large amounts of capital over a long period of time, but as Tencent continues to cut costs and focus mainly on software, the company has been more cautious with its investments.

Details: Local media outlet 36Kr first reported on Thursday that Tencent was disbanding part of its XR team, which was established in June 2022. The report said that employees in the unit would be given two months to find new opportunities inside or outside of the company. However, Tencent later dismissed the report, saying it was simply making personnel adjustments within the unit.

• As of January 2023, there were still about 300 employees working on Tencent’s XR business, including tasks related to basic platform, content, Vision Labs, media technology, art and design, business decision, and spatial audio technology, according to 36Kr.
• Shen Li, previously the head of Tencent’s XR project, left the company in November 2022, with part of Tencent’s XR business suspended in January, 36Kr reported. 
• Shen, previously head of Tencent game studio NExT Studios, was one of the few people in the company’s XR unit with experience in VR hardware development, due to his work at French video game developer Ubisoft and at Epic Games before joining Tencent in 2013.
• Sources told 36Kr that Tencent’s XR project has few employees with hardware backgrounds and that the tech giant is hesitant about developing its hardware business.
• In early 2022, it was reported that Tencent intended to acquire gaming phone maker Black Shark, but the plan was abandoned a few months later, seemingly after the deal failed to get approval from the authorities.

Context: The global metaverse frenzy, kickstarted in 2021, caused Chinese tech firms to race to become front-line players in the sector, but lower-than-expected sales and user metrics are making them reconsider and adjust their investments.

• Tencent’s founder Pony Ma warned all employees at the end of 2022 that any business unit within the company could be cut if it isn’t self-sustaining.
• Pico, a Chinese VR headset maker acquired by ByteDance in 2021 and reportedly a one-time Tencent target, has also cut hundreds of jobs, with some teams reduced by as much as 30%, South China Morning Post reported on Thursday, citing two unnamed sources.
• ByteDance rolled out new VR headsets Pico 4 and 4 Pro last September, with Pico founder and president Henry Zhou saying he expected to eventually sell more than 1 million headsets. While the TikTok owner is yet to reveal sales or shipment figures, International Data Corporation (IDC) shows Pico’s market share reached about 15% in the third quarter of 2022; Meta’s market share fell to about 75% from 90% a year ago according to IDC.
• Microsoft ended its industrial metaverse project recently with the company reportedly shifting its focus to prioritize short-term projects instead. Redundancies at its metaverse team were part of the firm’s broader layoff of 10,000 employees announced in January, The Information reported on Feb. 9.

On Feb. 10, China’s National Press and Publication Administration (NPPA) released its approval list of domestic online games for February 2023 on its official website, with titles by Tencent, ByteDance, and NetEase among those given the green light.

Why it matters: The new list is the ninth batch of games approved in China since the NPPA resumed its issuing of licenses in April 2022 following an eight month pause. As with January, the number of new licenses this month exceeded 80, higher than any month in 2022 and a sign that China’s gaming regulators may be returning to a more consistent approach to approvals after months of uncertainty. 

Details: Some 87 new domestic games have been granted licenses by the NPPA, including 79 mobile games, seven PC titles, and one game for Nintendo Switch. 

• Tencent’s high-profile new game King Chess, a strategy battle mobile game that is part of the company’s attempts to build an Honor of Kings “universe,” was among those gaining approval. The official WeChat account for the game claimed on Feb. 10 that it is still in development and will undergo beta testing in the near future. 
• NetEase, another Chinese gaming giant that has struggled for new title approvals in the past 18 months, saw the mobile version of its massively multiplayer online role-playing game Fantasy Westward Journey make the list of February approvals.
• ByteDance has three new titles on the list: The Leader of the Battle from its publisher Ohayoo; Matrix: Out of Control by wholly-owned subsidiary Nuverse; and Hyper Instant Connection by its newly acquired company C4Games (all titles our translations). 

Context: China’s gaming industry has been sluggish over the past year due to tightening regulations on the industry and strict limits on young gamers.

• The total revenue of the video games market in China slumped 10.33% to RMB 265.9 billion in 2022, while game users declined slightly, down 0.33% year-on-year to 664 million, according to a report by the country’s semi-official games industry association.
• In August 2021, Chinese authorities restricted the weekly gaming hours for minors under the age of 18 to one hour a day on Fridays, weekends, and public holidays.
• China’s eight-month gaming license freeze was lifted in April 2022, but new approvals remained limited throughout the year. Just 513 game licenses, including 468 domestic games and 45 imported games, were issued over the course of 2022, 38% fewer than in 2021 and only a third of those approved in 2020, according to Caixin’s calculations. Tencent, one of the biggest gaming companies in the world, didn’t receive its first major approval of the year until November.

Chinese search engine giant Baidu is working on a ChatGPT-like bot service to embed in its search engine. Baidu’s CEO Robin Li believes that artificial intelligence tech has reached a tipping point and will produce “a generational revolution in the search experience,” China Star Market reported Monday, citing unnamed sources. 

Why it matters: With its own deep-learning platform (PaddlePaddle) and large-scale pre-trained model (Wenxin or Ernie in English), Baidu is one of the few Chinese tech companies investing heavily in generative AI as the technology becomes more mainstream. 

• Led by Baidu’s mobile eco-business group as well as the technology platform group, the development of an AI-powered chatbot tool project started last December, but the gap between its current performance and ChatGPT is still obvious, a staff member from Baidu told local media outlet Caijing.

Details: ChatGPT, an artificial intelligence chatbot service debuted by OpenAI last November, is built on OpenAI’s large-language model GPT-3, and can output human-like responses in seconds. The aim is for Baidu’s version, which is using its large-scale model Ernie as a foundation, to do the same. Baidu’s upcoming chatbot is being trained with both Chinese and English sources, according to the Wall Street Journal.

• Robin Li is confident that Baidu will be able to embed ChatGPT-like technology into its search engine, admitting that integration is more complicated than the chatbot technology itself, China Star Market wrote, citing a speech by Li given at an internal talk.
• The implementation of a ChatGPT-style service embedded in search services still depends on Baidu’s subsequent research and development investments, a source close to the firm told the outlet.
• For years, Baidu’s research expenses as a percentage of total revenue have remained at around 20%. The company also saw its new AI businesses account for an increasing share of its revenue in the last three years.
• Baidu declined to comment on the chatbot service when reached by TechNode on Tuesday.

Context: Since launching in late 2022, ChatGPT quickly sparked wide discussion, attracting 1 million users in just five days, and pushing many tech companies to prepare for the revolutionary potential of artificial intelligence technology.

• On Jan. 23, Microsoft announced it would offer a multi-year, multi-billion dollar investment in OpenAI, and plans to integrate ChatGPT into its own search engine, Bing.

Editor’s note: China is on holiday for the Lunar New Year, or Spring Festival, from Jan. 21 to Jan. 27. For the week, TechNode has prepared three yearly summary reports. They include a list of the most-read articles, an in-depth feature on the rising Chinese EV sector, and an analysis of the growth of China’s overseas shopping apps. 

In 2022, many Chinese tech companies struggled to keep growing amid slowing demand, drastic Covid control policy changes, and heightened geopolitical tensions. 

TechNode looked back on articles published in this tumultuous time and saw readers gravitate toward several topics: new Chinese consumer tech products, the rise of Douyin and Shein in e-commerce, the US’s chip sanctions on the entire Chinese semiconductor sector, and key moves from China’s tech giants. 

Below are the 10 articles read the most by TechNode readers in 2022: 

1- A guide teaching programmers “to live longer” goes viral on GitHub among Chinese tech workers

A Chinese-language guide on GitHub entitled “HowToLiveLonger” was trending within the Chinese tech community in late April. Despite its serious and scientific tone, the new “guide” appeared to be a pointed joke, taking aim at ongoing overwork practices in China’s tech industry and their impact on employees’ mental and physical well-being. Its popular reception in Chinese tech circles reflected the community’s mood. 

2- ByteDance acquires two new entertainment companies

Chinese tech unicorn ByteDance acquired cinema ticketing platform Yingtuobang and online comics service Yizhikan Comics to further ramp up its push into the entertainment market, Chinese media outlet Tech Planet reported in mid-January. 

With the new acquisitions, the Beijing-based TikTok developer further expanded the reach of its entertainment empire, which already consisted of short video apps, short- and long-form video platforms, news aggregation services, online novels, gaming, music streaming, idol management, and virtual idols.

3- Tencent reported to be cutting 20% of its workforce

Chinese tech giant Tencent reportedly planned to lay off around 20% of its staff in mid-March, joining a lengthy list of tech firms trimming their workforces since 2021. 

Deep-pocketed tech titans such as Tencent and Alibaba, which are generally less vulnerable to small market fluctuations, have largely maintained their headcount until recently. The two giants have not been immune to China’s ongoing economic downturn, regulatory curbs, and international trade tensions.

4- China’s NFT market: Who are the major players, and what makes them different?

In China, the NFT digital art market is bustling with new players and projects. That may come as a surprise for people familiar with China’s strict approach to cryptocurrency, with the country having fully banned crypto trading and mining in 2021. However, China has also embraced controlled versions of blockchain technology, such as the digital yuan, encouraging its growth in various sectors. So far, China has allowed NFTs but banned people from speculating and trading them. 

NFTs are viewed more as a derivative of blockchain technology rather than a tradable asset in China. Tech majors such as Alibaba, Tencent, and JD have built their own platforms where users can buy and collect NFTs but are prohibited from trading or reselling their purchases. Most Chinese tech giants don’t even use the term NFT, hoping to stay on regulators’ good side and avoid association with the global crypto market. Instead, they use the term “digital collectible.” 

5- The US’s moves to contain China’s semiconductor industry: a timeline from July

In early October, the US announced a new set of semiconductor export restrictions aimed at cutting China off from accessing certain high-end chips and further limiting the country’s ability to make advanced chips themselves. 

The US Department of Commerce’s Bureau of Industry and Security issued nine new rules, imposing export controls on advanced chips, transactions for supercomputer centers, and transactions involving certain entities on the Entity List. The rules also imposed new controls on certain semiconductor manufacturing equipment and on transactions for certain integrated circuit end uses. 

6- Chinese semiconductor firms bear heavy fallout of US chip sanctions

After the US issued one of the broadest export controls on semiconductor technology to China in a decade in October, China’s semiconductor industry saw its market value tumble. At least 13 China-listed semiconductor firms saw their market value decline more than 10% in less than a week, and five saw a more than 20% decline. 

Issued by the US commerce department, the comprehensive restriction bars companies from shipping advanced chips and chipmaking tools to China unless they obtain a special license. More specifically, the restrictions aim to cut off China’s access to and ability to make advanced chips under 16nm or 14nm, DRAM memory chips of 18nm or more advanced, and NAND flash memory chips of 128 layers or more. These technologies are essential to supercomputing and artificial intelligence. 

7- Gadget review | Oppo Watch 3 Pro: a high-end Android watch that lasts for days

Chinese phone maker Oppo released its new generation of smartwatches, the Watch 3 series, in August with a price tag of RMB 1,599 – RMB 2,099 ($228 – $300). The company first entered the watch market in 2020, updating its range annually since then.  

The latest series has a new look and offers more premium features such as long battery life, and an always-on feature supported by a LTPO OLED display. 

The version TechNode tested, the Watch 3 Pro, is currently only available in mainland China and Oppo has yet to reveal any plans regarding overseas markets, but there is an expectation that it will eventually be sold internationally. 

8- Gadget review | Xiaomi 12S Pro review: Flagship made for photographers and gamers

Xiaomi launched the 12S Pro in China in early July. The phone is the mid-range offering in Xiaomi’s new 12S lineup (including the 12S, 12S Pro, and 12S Ultra), which updates annually and targets a broad range of mid-end to high-end users. The series is also the first set of Xiaomi phones to use Leica lenses. TechNode got a hold of the 12S Pro and spent a week using and testing it. 

The phone is a solid choice as a primary daily device. The Leica-branded cameras can lure photography lovers, and the 12S Pro’s specs offer a quality entertainment experience. We would also recommend it to avid gamers and video watchers.

9- Douyin sees e-commerce sales more than triple in the past year

TikTok’s Chinese version Douyin announced in late May that its online sales had more than tripled for the year ending in April 2022, an impressive growth rate for the e-commerce up-and-comer when other majors were slowing down due to an economic downturn in China.

Chinese short-video platforms such as ByteDance-backed Douyin and Kuaishou are quickly eating into the market shares of e-commerce giants such as Alibaba, JD, and Pinduoduo, thanks to their widely popular social content.

10- How Shein became China’s ‘TikTok for e-commerce’

Shein was among hundreds of thousands of Chinese startups that tapped into the country’s emerging cross-border e-commerce industry when it was founded in 2008 in the eastern city of Nanjing. 

More than a decade later, it’s a Chinese fast fashion decacorn (a private technology company worth more than $10 billion) with a market cap of $100 billion. Only three other tech juggernauts — ByteDance, Alibaba’s Ant Group, and SpaceX — have surpassed that benchmark, according to Crunchbase’s private unicorn list.

Shein is a much lesser-known name than its local peers, such as Alibaba and JD. Its relative anonymity is largely due to its unusually low profile, typified by the lack of public information on its mysterious founder Xu Yangtian, also known as Chris Xu. However, Shein is a name that is increasingly difficult to ignore, as its extraordinary growth has people comparing it with big-name rivals like Amazon and Zara.

All businesses under Tencent’s content unit achieved profitability at the end of 2022, according to a report by local media outlet LatePost. The platform and content group (PCG) unit includes Tencent Video, which turned profitable for the first time according to the report, and Tencent News, which saw a turnaround in the October-December period after a difficult first three quarters.

Why it matters: The division’s profits are largely thanks to Tencent’s ongoing and widespread cost-cutting measures and provide a key insight into how the tech giant intends to weather the macroeconomic slowdown. The several billion in profit from the unit is likely to provide a bright spot in the tech giant’s 2022 annual financial report. However, it does not mean PCG employees can rest easy, with continued profitability remaining far from certain and Tencent CEO Pony Ma previously warning he would cut any part of the business that was unable to sustain itself.

Details: LatePost reported that reaching profitability across the PCG will enable Tencent to “increase its annual profit to several billion yuan” for 2022. Established in 2018, the platform and content division integrates Tencent’s online video business unit (including long-form video platform Tencent Video, short-video app Tencent Weishi, Tencent app store Yingyongbao, and Tencent Comics), Tencent News, instant messaging app QQ, QQ Browser, Sogou search engine, and Sogou Pinyin Input. 

• In 2022, Tencent conducted at least three large-scale layoffs, with the PCG, which has the largest workforce, being the hardest hit. LatePost’s report said employee numbers were down from over 20,000 to less than 10,000 in the division.
• At the same time, the PCG has significantly tightened its requirements for the setting up of new projects. New initiatives, such as an original video project, must now be able to prove they can make five times their cost in revenue to be approved; previously, this requirement was set at twice the cost, a PCG employee told LatePost.
• Brands’ reduced advertising budgets amid a broader economic slowdown are hurting Tencent’s media ad revenue, with LatePost citing a source as saying that variety shows produced by Tencent Video, which rely heavily on such advertising, are essentially now losing money. The long-form video platform is trying to save money on buying original show concepts by shifting to a payment model based on an initial fee followed by performance-related incentives to copyright holders and developers.
• Tencent News, one of the tech giant’s best-known units, has seen a major turnaround after losing money for most of 2022. The unit reportedly returned to profitability in October after it adjusted to focus on high-quality content and algorithm recommendations following Jonathan He’s arrival to head up the team in May.
• The report says that QQ Browser, another unit within the PCG, finally turned profitable after it reduced promotional costs by over RMB 2 billion. The browser holds a small market share of just 4.87% in China, compared to Chrome’s 41.65%, according to traffic analysis website Statcounter.
• “PCG has made a solid step forward in its survival,” Tencent COO Ren Yuxin reportedly told an internal year-end conference, adding that this didn’t mean the unit could slacken off.

Context: Tencent recorded year-on-year declines in both its domestic gaming revenue and advertising revenue in the first three quarters of 2022, after Chinese regulators tightened time limits on young gamers and effectively froze the issuing of new game licenses. 

• There are signs for optimism however, as the government focuses more on the economy after the loosening of Covid control policies, and regulators granted more gaming licenses at the end of 2022.
• In a year-end speech to staff on Dec. 15, Tencent CEO Pony Ma reportedly lambasted areas of the business he deemed to be underperforming, saying “there would not be much time left for them.” 
• The tech giant undertook multiple job cuts earlier last year, with Tencent’s earnings showing that it had 108,836 employees by the end of September, 6.3% lower than in the first quarter of this year.

Tencent’s short-video product WeChat Channels reported impressive growth at its annual flagship event on Tuesday. The unit saw a 200% yearly growth in the total number of video views, and an 800% growth in total gross merchandise value (GMV) from livestream shopping content. 

Why it matters: WeChat Channels’ strong growth in creator numbers and view counts offers a wider basis for monetization plans. Tencent will likely see the short-video unit play a bigger role in its advertising revenue, with CEO Pony Ma recently declaring it “the hope of the whole company.”

Details: The total time users spent on WeChat Channels exceeded 80% of the time they spent on WeChat Moments (a feature similar to Facebook timeline) in 2022. The messaging app hasn’t revealed the amount of time users spend on the Moments feature since 2019, when WeChat founder Allen Zhang said the figure had been roughly the same over the years at an average of 30 minutes per day.

• WeChat saw the total view counts of its video unit increase by 200% from last year, and the number of creators with over 10,000 followers was up 308%.
• WeChat also posted significant growth in its live-commerce business, saying GMV grew more than eight times from last year, and the average unit price exceeded RMB 200 ($29.5), similar to last year’s.
• For livestreaming, executives said the number of users and time spent watching jumped 300% and 156%, respectively. The video unit has already livestreamed multiple concerts by popular singers, speeches by public figures, and major sports events to the public. Last April, the Chinese rock star Cui Jian’s livestreamed concert attracted more than 46 million viewers, setting a viewing record for live online concerts at the time. 

Context: Tencent urgently needs to find a new revenue growth point as it faces slow growth in video games and advertising operations. The company’s overall revenue has declined in the last two quarters. The company’s CEO Pony Ma sees WeChat Channels as a major source of hope for the future of Tencent, with the unit already initiating various attempts to monetize.

• Similar to rivals Douyin and Kuaishou, WeChat’s short-video unit have attempted to accelerate the commercialization process in multiple ways: livestream e-commerce, in-feed ads, encouraging users to tip livestreamers, and charging merchants a 1% to 5% commission fee, which started on Jan. 1.
• Launched in 2020, WeChat Channels positioned itself as a short-video platform for personal video content, largely thanks to its integration with Tencent’s WeChat super app.

China had a rough ride in 2022. 

Throughout the year, the economy was plagued by the frequent resurgence of Covid and the related containment measures that disrupted daily activities. In the first three quarters, China’s GDP grew by 4.8%, 0.4%, and 3.9% from last year, falling far short of its own 5.5% annual growth goal. 

The country’s tech industry was, of course, not immune to the overall sluggish economy. Chinese companies (many of which are in the tech sector) on the Hurun Global 500, a list that tracks the world’s most valuable companies, lost $2.9 trillion in 2022, more than half of their value from last year. 

The e-commerce and content sectors, in particular, saw the most damage as consumers and advertisers cut spending. Industry leader Alibaba reported a steep drop in revenue growth, while budget retailer Pinduoduo saw rapid growth as people became more sensitive to prices. Content giant Tencent also reported quarterly revenue declines, and advertising revenue dropped significantly. 

Meanwhile, green energy vehicle sales had been a rare growth point in China, and Chinese shopping platforms were rising rapidly in overseas markets despite challenges at home. 

It might be too early to tell whether the country is nearing a turning point. After three years of battling the highly mutable and transmissible Covid-19, the Chinese government suddenly relaxed its Covid control policies in early December, exiting from its previously strict measures in less than a week. Such drastic change has resulted in rapid Covid infections across China, triggering drug shortages and causing many people to stay home to recover. 

China’s earlier-than-expected reopening could bring an economic recovery in 2023. But the country might also need some time to learn to live with Covid after three years of strict controls.

Goldman Sachs expected China to reopen in the second quarter of 2023 in their annual China outlook report published in November and forecasted China’s GDP growth to “accelerate from 3.0% this year to 4.5% next year.” The first quarter after reopening might see negative growth, due to Covid case surges and people temporarily reducing travel, the report said. However, China might see accelerated growth once people adjust to the new reality, as experiences from other East Asian countries that have implemented strict Covid controls show. 

EVs drive automaker growth, BYD claims dominance

In a year of lackluster consumer confidence, new energy vehicles (NEVs, including plug-in hybrids and electric vehicles) have been a rare bright spot in China. The country’s car buyers showed a strong preference for NEVs over traditional gas cars. The share of NEVs in the new car sales reached 36.2% in November, growing from last year’s 22.5% and surpassing China’s goal of 25% by 2025, three years ahead of schedule. 

And no Chinese automaker had a better year than BYD. The local EV and battery maker climbed to a dominant position in the new energy vehicle segment. At the same time, China’s leading EV trio — Nio, Xpeng, and Li Auto — faced various problems and lost some of their shine.

BYD managed to capture market share from other strong rivals this year. In a year, BYD grew its share of NEV sales from 19.5% to 31%, while Wuling’s went down from 14.4% to 8%, and Tesla China went down from 10.7% to 7.9%. 

As of November, BYD more than doubled its sales from last year, selling more than 1.57 million NEVs this year in China, taking more than 31% of the market share, ranking first and way ahead of the trailing pack of automakers. Wuling, a state-owned mini EV maker, is second, selling more than 400,000, growing 7.1% from last year, and accounting for more than 8% of the market. Tesla’s China operation came in third, with more than 397,800 cars sold, a 59% annual growth, and a 7.9% market share. Li Auto, Xpeng, and Nio ranked 10th, 11th, and 12th, each taking less than 2.3% of the market, down about 1% from last year. 

Other local automakers, such as Geely, GAC’s Aion, Chery, Changan, and Hozon, also had a good year and grew their market share, though the speed and scale of BYD’s growth were unrivaled. Hozon made it into the top ten EV brands by sales for the first time this year, squeezing out the state-owned joint venture SAIC. Geely also saw impressive market share growth, rising from 2.7% last year to 5.3% this year. 

BYD has two main advantages: competitive pricing and an integrated supply chain. BYD’s popular models — BYD Song Plus and BYD Qin — have been frequent bestsellers in their categories in the last six months. Priced between RMB 150,000 and RMB 220,000 ($21,470 to $31,490), these models are known for affordability and fuel efficiency. Unlike many other automakers hit by supply chain crunch and price hikes of source materials, BYD was able to keep its competitive price as a major battery maker in its own right (and one that is reportedly set to supply its blade battery to Tesla). BYD is also expanding outside China, systematically entering Japan, Southeast Asia, and Western Europe, with more overseas pushes planned ahead. 

However, such impressive growth could slow in 2023. Multiple automakers in China gave conservative outlooks for the first half of 2023, citing the end of EV purchase subsidies at the end of 2022. Many brands also cut prices and gave out promotions to attract buyers to place orders before the end of 2022, boosting their year-end sales and capitalizing on the last subsidy run. These moves are likely to overdraft 2023’s sales in advance. 

Pinduoduo wins in China, competition heats up in overseas markets 

In the economic downturn, budget retailer Pinduoduo outrivaled established platforms like Alibaba and JD. In the third quarter, Pinduoduo reported 65% growth in revenue and a whopping 388% growth in operating profit, contrasting with Alibaba’s relatively flat growth of 3% in revenue and 68% in operating profit, and JD’s 11.4% growth in revenue and 276% in operating profit. Alibaba fared worse than JD, seeing a steep drop in revenue growth, with yearly growth hitting below 10% for the first three quarters of 2022, a major departure from the 20% or 30% plus growth rates it has been accustomed to in the past few years.

Although Pinduoduo’s vice president of finance, Liu Jun, said at a third-quarter earnings call that the company was “unlikely to maintain” that level of profitability, the temporary strong growth still showed the broad appeal of a well-run budget retailer during lean times. 

China’s year-end shopping festival Singles Day was also increasingly losing its appeal. Industry leaders Alibaba and JD didn’t release their overall sales data for the first time in a decade. Moreover, these established retailers were also facing serious threats from ByteDance’s Douyin as the short-video platform continues to see strong growth in live commerce. 

In contrast to the slow growth back home, outside of China, competition has been heating up for Chinese overseas retail platforms. In March, Shein, the Chinese online fashion platform known for its ultra-cheap prices, managed to expand its market share of fast fashion sales in the US to 40%, continue to widen its lead over H&M’s 27%, Zara’s 17%, Forever 21’s 9% and Fashion Nova’s 6%, a report from Bloomberg Second Measure said. Shein became the largest fast-fashion retailer in the US in the second quarter of 2021 and grew its US sales more than 5.6 times between March 2020 and March 2022. 

Seeing Shein’s success, Pinduoduo also launched an overseas retail platform Temu in September. The platform surpassed $1.5 million in average daily gross merchandise value (GMV) in its first month. Although the figure fell slightly short of internal expectations, the platform was spending heavily on ads to capture new customers, even becoming the most-downloaded shopping app in the US, surpassing Amazon, Walmart, and Shein. Nevertheless, it remains to be seen whether such growth is sustainable. 

A somber year for China’s semiconductor industry

Since Chinese tech giants ZTE and Huawei began to be hit by US sanctions five years ago, the Chinese tech industry has wondered about the evolution of US sanctions. This fall, the multi-year effort hit a new level. 

In October, the US announced a sweeping set of restrictions on semiconductor exports to China, aiming to cut China off from accessing high-end chips and the tools to make them. Instead of putting individual companies on blacklists, the new restrictions took aim at the entire Chinese semiconductor sector and related industries. 

In particular, the Biden administration is trying to limit China’s ability to make advanced chips under 16nm or 14nm, DRAM memory chips of at least 18nm, and NAND flash memory chips of 128 layers or more. Meanwhile, the US is also pursuing chipmaking toolmakers in the Netherlands (ASML) and Japan (Tokyo Electron), pressuring them to stop selling China the tools to make high-end chips. There aren’t many ways around these curbs. Unless advanced chipmaking technology changes or undergoes a fundamental evolution, China’s dream of making its own advanced chips in the next few years might be limited. 

Content platforms see ad revenue winter 

The content and entertainment sectors have seen significant blows in the past year, not just in China, but also worldwide. According to the Hurun Global 500 list, media and entertainment companies suffered the most significant drop in value in 2022, followed by retail, software, and services, while the biggest gainers were in energy and insurance. 

Major content platforms in China saw dwindling advertising dollars as companies cut marketing budgets to weather the economic downturn. Worse, whatever budget was left was increasingly going directly to e-commerce platforms such as Pinduodou and JD rather than content platforms like Tencent, Baidu, and Weibo. 

Content giant Tencent saw yearly revenue decline by 3% and 2% in the second and third quarters, with advertising revenue down almost 18% in the second quarter. In late December, Tencent’s CEO Pony Ma said in an internal speech that the company could cut Tencent News, the company’s signature news website established in 2003, if the site can’t break even by itself. 

Search engine giant Baidu also saw revenue decline by 5% in the second quarter, and a flat 1.9% growth in the third. Microblogging site Weibo saw heavy losses too, reporting 22% and 25% revenue declines in the second and the third quarter. 

Gaming companies in China saw a few signs of easing conditions. In April, China began issuing gaming licenses again after an eight-month freeze. But heavy regulation on the sector in 2021 has continued to have ripple effects, and video game companies were projected to see a 2.5% annual revenue decline in 2022. Many smaller studios had to lay off staff or even shut down their companies while waiting for their new games to be approved by the authorities. The worst might be over, but the pain is still being felt throughout the industry. 

Related reporting from TechNode

Auto 

• BYD makes expansion moves in Southeast Asia and Europe

• Meet the Chinese carmakers racing to get a larger share of the global markets

E-commerce

• How Shein became China’s ‘TikTok for e-commerce’

• Shein surpasses Amazon in downloads for the first time in the US

Semiconductors

• The US’s moves to contain China’s semiconductor industry: a timeline from July

• Chinese semiconductor firms bear heavy fallout of US chip sanction

Content

• China resumes issuing new gaming licenses after 8-month freeze

• Tencent’s overseas gaming revenue helps lead Q3 recovery

China’s media regulator released its December game licensing list for domestic and imported games on Wednesday. The National Press and Publication Administration approved 84 China-made games and 44 imported overseas games. Among those winning approval, Tencent got a green light for Pokémon Unite, part of the famous franchise co-developed with Nintendo. NetEase also scored several approvals. 

Why it matters: Despite the resumption of gaming licenses in April after an eight-month freeze, China again skipped approvals this year in May and October, and overall approved far fewer games than in previous years. The country approved 468 domestic games this year, 38% less than in 2021 and only a third of those approved in 2020, according to Caixin’s calculations. 

Details: Tencent received approval for one domestic game and five imported games. NetEase got one domestic game and two imported games approved. Alibaba’s Lingxi Game and ByteDance’s Nuverse won approval for one imported game each. 

• Tencent’s NExT studio got its third-person shooting game Synced: Off-Planet approved. The world-leading game developer also won approvals for five imported games: Pokémon Unite, Valorant, Don’t Starve Newhome, The Age of Navigation: Sea Overlord, and Crossfire developer Smile Gate’s Lost Ark.
• NetEase’s Racing Masters, a racing game co-developed with British car game developer Codemasters, also won approval. NetEase also gained licenses for Raid: Shadow Legends and Fantasy Life, two imported role-playing games. 
• Chinese gaming firm Perfect World also won approval for two imports: Two Point Hospital and Dorfromantik.

Context: Although the Chinese regulator has shown signs of loosening the crackdown on the gaming industry that began in August 2021, it is still handing licenses to fewer games and doing so with less frequency than before. 

• This round of approvals was the first time in 17 months that the Chinese regulator gave nods to imported games developed overseas. Last year, the regulator handed out imported game licenses in June, approving 76 games, 42% more titles than on this year’s approved list.

Major Chinese tech companies like Xiaomi and Baidu are increasing their offerings in fictional short video series, an area in which established short-video platforms Douyin and Kuaishou excel. These short dramas are typically low-budget, under 10 minutes per episode, made for verticle viewing and target mobile users. Many of these short video dramas are adapted from web fiction, some are original content. 

Local online media Tech Planet reported on Monday that ByteDance, Baidu, and Xiaomi have recently increased their offering in short video series and are looking to “deeply cultivate the online literature and short drama industries”.

Why it matters: The adaptation of web fiction and online literature into new “mini-dramas” offers Chinese internet companies a new model for monetization amid sluggish advertising growth – potentially attracting new users and increasing time spent on the app. Tencent, Kuaishou, and Alibaba are all considering expanding their presence in the sector according to the report.

Details: The report said that Baidu, Xiaomi, and ByteDance are keeping the production cycle for these short video series within 10 days, with production costs mostly within hundreds of thousands of yuan (under $1,400). 

• The report said Xiaomi has recently launched an app called “Duohua short video (our translation)” allowing paid users to watch short video series, which are still mainly provided by third parties. The Chinese phone vendor acquired e-reader service provider Duokan Technology in 2012 and now offers third-party web novels through the app.
• Baidu’s online free novel app Qimao also plans to start a short video business, and has been hiring related talents recently, the report said.
• TikTok’s parent company ByteDance started its online novel business in 2015. Its free literature app Tomato Novel has reached 93.27 million monthly active users as of December 2021, and the Beijing-based firm also has at least eight paid novel apps. The company uses Douyin, which has more than 600 million active daily users, to distribute short video series.
• Douyin also sees the online novel business as a new way to tap into more potential users, with TikTok’s sister platform testing a dedicated novel channel on the homepage of its tablet app this June, which allowed users to select and read e-books. 
• Short-video platform Kuaishou also excels in short video series. There are more than 2,000 series with over 100 million views on the platform, with genre spanning from romance, country to animation.
• Kuaishoul also launched its first novel app Kuaishou Free Novel this September.
• Kuaishou and Douyin have already launched numerous short series, with the former stating in its creator meeting held in July that the number of daily users watching Kuaishou mini-series has surpassed 260 million, and half of these users watch more than 10 episodes on the app every day.
• Chinese long-form video platforms, including Youku, iQiyi, and Tencent video, have also invested in short series productions and added a quick link to this content type on their apps’ home pages.

Context: China’s web literature market size has exceeded RMB 30 billion with 502 million users by the end of 2021, according to a report conducted by the Chinese Academy of Social Sciences.

• Major internet companies recorded a slowdown in advertising growth amid sluggish macroeconomic environment, for example, Kuaishou posted a 6.2% growth in advertising revenue in the third quarter, compared to a 32.6%, 10.5%  growth year-over-year in the first and second quarter this year, respectively.

Chinese tech giant Baidu recently showed off its AI capabilities with the unveiling of a newly “completed” ink painting by Chinese painter Lu Xiaoman (1903 – 1965), which was finished by the firm’s deep learning-based art generation platform. 

As part of the presentation of the artwork, Baidu held a roundtable discussion with local auction house Duo Yun Xuan on Nov. 16 in Shanghai. The two partnered on the completion of Lu’s work, which the beloved 20th-century cultural figure had left unfinished.

This discussion presented two attempts to complete Lu’s original unfinished work: one is from famous Chinese artist Le Zhenwen, and the other is from Baidu Wenxin Yige, an art generation platform developed on Baidu’s deep-learning framework PaddlePaddle. The intention is to offer a comparison between the AI interpretation of the work and that of a human artist.

According to Baidu, its version of the work went through four phases: AI learning, AI painting, AI coloring, and theme poem composition. During the process, Baidu partnered with Duo Yun Xuan to collect public ink paintings to train models and reach a better outcome.

The twin artworks will be sold on Dec. 8 at Duo Yun Xuan’s 30th-anniversary auction event.

Below are comments on the project from Xiao Xinyan, chief architect of Baidu Wenxin Yige. His words have been translated, edited, and condensed for clarity. 

How does AI generate such artwork?

In short, AI will shuffle and compose the concepts and datasets it has learned previously, which is somewhat of a knowledge presentation.

From a technical point of view, AI learns before it paints, just as human beings do. It is trained from a vast amount of data in image-text matches. Every painting has a text description. Al can learn the association between languages and images, as well as multiple corresponding concepts related to the images. 

For instance, the concept of mountains could have a wide variety of image styles. So then how do people use AI to paint? They need to provide it with a text description, such as “a pine tree on a mountain.” AI will call on its learned experience and knowledge to generate a vague initial version randomly and then modify and perfect it continuously. There could be hundreds of rounds in the modification process, with the overall outline becoming clearer and clearer during the process, enriching the details. The work will be finally completed when it meets people’s esthetic requirements.

How is Baidu exploring art generation tech?

We [Baidu] adopt self-developed technology. There are two main points to our AI painting tech. Firstly, the image quality is high and looks delicate. We utilize a powerful diffusion model, which is a major technical innovation. Via multimodality of text and image, we can [give AI] a deep understanding, enabling it to create delicate artworks. 

Also, we have a better understanding of Chinese culture, and we will build a relevant dataset to feed it for generations in such a style. For the training datasets, we also developed algorithms to evaluate the aesthetics to ensure they meet the criteria. 

And considering users’ descriptions can be inaccurate, we enhanced the inputs system via a knowledge graph to provide related keywords for a better user experience.

So far, the feedback from users is quite positive; the platform has greatly improved their efficiency. For most casual users, they find the AI generator quite helpful. Looking ahead, we plan to explore a wider range of usage scenarios, for example using AI to assist children to practice painting. 

What is the position of human beings in AI art generation?

The human being is of great importance in AI-driven paintings. In my opinion, human is the mentor of AI. We need to develop the neural network of the AI painting model: there are different models with various effects [and we need to choose ideal ones from them].

The human also has to feed AI some material to learn and determine how the AI should be trained. For example, Baidu Wenxin Yige was fed with traditional Chinese elements and cultural data to have a better understanding of this genre. 

[The platform] can generate an image within minutes. On the first version of the piece drafted by Lu Xiaoman, the Baidu team consulted artist Le for advice. He then provided more training samples for a better outcome.

At the very beginning, AI needs people to teach it to generate the image: what content should appear in the picture and what styles should be presented.

Humans are also the ones to make a final decision despite the machine having an automatic algorithm to tell if the generated work is good enough because AI is not as accurate as human beings in this case.

Chinese tech giant Tencent posted its results for the third quarter of 2022 on Wednesday, reporting RMB 140.1 billion ($19.7 billion) in revenue, a 2% year-on-year decline. The figure missed analysts’ average estimation of RMB 141.6 billion, according to Reuters. Profit attributable to equity holders of Tencent for the quarter was RMB 39.9 billion, a 1% year-on-year increase and a significant achievement considering the company saw a more than 50% yearly fall in that figure for the first and second quarters of 2022.

The data follows a number of “adjustments” that Tencent has made to its multiple businesses, and also reveals that its gaming sector, which accounted for 31% of the company’s overall revenue in the third quarter, recorded consistent growth overseas. 

Why it matters: Even as one of China’s most influential technology giants, Tencent is still struggling to fight against the macro downturn. As with other Chinese tech firms, it’s gaming arm has been increasingly looking overseas for growth, investing in international assets and working with partners to develop more titles for global publication. The return on this strategy is now evident in the company’s financial results.

Details: According to Tencent’s financial results, revenue from domestic games continues to fall this year, but international games have consistently contributed to revenue growth. In the past two years, Tencent’s domestic gaming business peaked at RMB 33.6 billion in revenue for the third quarter of 2021. Since then, it has dropped each quarter, mainly due to China’s gaming regulations aimed at minor protection, which include time limits for those under 18 and took effect in Sept 2021.

• For the reported quarter, revenue from Tencent’s domestic gaming business declined 2% quarterly and 7% yearly to RMB 31.2 billion, according to the company’s financial results and our calculations.
• According to Tencent, time spent on gaming by under 18s in China saw a sharp 92% drop in July compared with the same month last year. In July 2022, gameplay time by minors accounted for just 0.7% of the domestic total, the firm said.
• The situation was made more complex by the unpredictable nature of gaming license approvals in the country (the National Press and Publication Administration did not issue any licenses last month). However, Tencent executives struck an optimistic tone on Wednesday’s earnings call, saying that the company had acquired a license in September and believed that there would be more licenses approved soon.
• By contrast, revenue from Tencent’s international games saw steady quarterly growth. For the reported period, there was a 9% quarterly and 4% yearly increase in revenue for the company’s overseas gaming business, generating RMB 11.7 billion. In its most recent financial report, Tencent attributed the data to “robust growth from Valorant, the successful launch of Tower of Fantasy, and an expanded game portfolio at Miniclip, versus decreased revenue from PUBG mobile.”
• Regarding Tencent’s other businesses in the third quarter, CEO Pony Ma stated that “we started to benefit from the adjustments that we have made to reposition ourselves for a new industry paradigm. We activated in-feed advertisements in Video Accounts, and executed cost efficiency initiatives which re-focused us on core activities and controlled our cost growth.” He added that the firm had seen “a growth in non-IFRS earnings after four quarters of decline” due to these achievements, while also highlighting the breakthrough in international games publishing.

Context: Tencent is the largest video gaming firm in China and the second largest in the world by market cap. The tech giant also built a social network empire with QQ and WeChat (Weixin in China).

• Tencent faced mounting challenges relating to policy uncertainty and a macroeconomic downturn in 2022. The company’s stock price dropped to a five-year low by the end of October, according to data from Google Finance. 

• The company announced on Wednesday that it would divest over 90% of its $20.4 billion valued stake in Meituan to shareholders as a special dividend, following a similar divestment from JD.
• In the gaming sphere, the firm made major investments directly or indirectly this year in notable developers and publishers such as Ubisoft, Elden Ring developer FromSoftware, and Subway Surfers developer Sybo.
• Tencent is also building out content universes for its most popular titles Honor of Kings and League of Legends, as an additional means of increasing profit.

Chinese gaming giant Tencent held a special event on Nov. 12 to celebrate the seventh anniversary of its hugely popular TiMi Studio-developed title Honor of Kings. At the event, the firm provided new details about expanding a “universe” of productions related to the hit game.

Honor of Kings became China’s most profitable mobile title in January 2022, taking the crown from another mobile title developed by Tencent, PUBG Mobile. The game generated $190 million in September alone, according to US data firm Sensor Tower. Launched in 2015 in China, Honor of Kings recorded 50 million daily active users in 2016 and then hit 100 million in 2020, according to official data. Tencent brought the game to overseas markets for the first time this year. 

The game’s success has spurred Tencent to pursue a similar strategy used successfully with League of Legends: building and expanding the game’s universe by adding related titles and spin-off products for greater revenue growth.

While the titles shown at the event did not come with specific launch dates, the update was still a positive sign that the projects remain in progress despite the recent challenging regulatory environment for the Chinese games industry.

The event showcased new developments on three gaming titles – Honor of Kings Chess, Honor of Kings: World, and Code: Breaking Dawn – and one animation entitled Brothers Baili (all names are our translations). We’ve outlined the details (that we know of so far) for each below.

Honor of Kings Chess

At the release event, Tencent announced a new chess title based on Honor of Kings. Judging by the computer graphics preview, Honor of Kings Chess is either an auto chess or auto battle gaming title, with gameplay similar to League of Legends’ Golden Shovel (our translation). Players use strategies on the cards dealt to them or chess combos to fight with other players. The title was developed by a unit from the main Honor of Kings title, according to ITHome (in Chinese). 

Honor of Kings: World

First revealed in October 2021, Honor of Kings: World is an open-world RPG title. At the event, Tencent released a new demo video of the gameplay, presenting more details about character skills and the gaming world. Based on this, the title features a stylish art design similar to The Legend of Zelda: Breath of the Wild, with stunning visual effects during combat scenes. The general gaming scenes are also of high graphic quality and look close to an AAA-level title. Some details, such as clothes and grass, display surprisingly realistic physical effects.

The title will be published globally on multiple platforms, according to the description of a previous video released through Tencent’s official Bilibili account.

Code: Breaking Dawn

Code: Breaking Dawn is a fighting game that was first announced in 2020. The game title brings major “kings” from Honor of Kings to a stage for Street Fighter-style player-versus-player battles. At the event, Tencent released a new teaser trailer, demonstrating the skills of some of the characters, including Sun Wukong, Diaochan, and Kai.

However, the title is still in development, and no specific launch date has been set.

Brothers Baili

In addition to the aforementioned gaming titles, Tencent also provided an update on its Honor of Kings feature film series. The first movie, named Brothers Baili, will focus on the stories of the two popular characters Baili Shouyue and Baili Xuance. The movie will dive into the brothers’ childhood, building out the characters’ backstories. 

Based on the trailer, the animation could be presented in a 3D style. According to the description, the trailer involved Huang Chengxi, a notable director and animation artist who worked on 2017’s Boruto: Naruto Next Generations.

TikTok owner ByteDance launched its Pico 4 VR headset in China on Tuesday, following its unveiling to the overseas market on Sept. 23, offering more exercise content and incorporating a number of entertainment deals with local partners. The Pico 4 has a price range in China of RMB 2,499 – RMB 3,799 ($352.76 – $536.27), based on different storage options (128 GB – 512 GB).

Why it matters: VR and AR devices are increasingly popular in consumer markets, but affordable, high-spec options in China remain scarce.

• Meta’s Oculus dominates the market globally, but its services and content are inaccessible in China, giving Pico a huge advantage when it comes to building up local content.

Details: Pico will work with Chinese content providers to offer a range of services, including virtual concerts, exercise courses, and interactive narrative work.

• There are three major Pico partnerships in the sports and exercise fields and the brand plans to release over 50 related apps. Pico will work with a Shenzhen-based startup, Supermonkey, to bring users customized exercise classes in virtual reality. The brand has also revealed a partnership with notable fitness coach Pamela Reif for fat-burning plans, which it said will not require extra equipment.
• Pico also has a new app named Chao Ran Yi Ke, with over 500 minutes of workout classes in three intensity levels.
• Ling Cage (Ling Long, in Chinese), a popular sci-fi animation series produced by YHKT Entertainment and Bilibili, will have a VR version available on Pico’s devices. Users will be able to play as the main character from the show, exploring the story in an immersive way.
• Pico has also reached agreements with the copyright owner of The Three-Body Problem, the famous sci-fi novel written by Liu Cixin, to bring an interactive narrative work to its platform based on Liu’s work.
• Moreover, Pico has revealed two virtual concerts coming this year. One is for ByteDance-backed virtual idol group A-Soul in November. Another is a Mandarin-language singer whose virtual concert will be held by the end of this year, but the firm has yet to reveal the artist’s name. According to Pico, the concert will feature a Chinese fantasy style mixed with retro disco elements.

Context: Pico has been working with partners in the content industry to enrich the experience of its devices. The firm launched Pico Video in March with an in-depth partnership with over 30 VR video-creating firms and major Chinese streaming platforms.

• Pico has so far hosted three VR concerts this year with famous artists, including Elvis Wang, Michael Zhen, and Wang Feng.
• ByteDance acquired the firm last year at a cost of RMB 9 billion ($1.27 billion). The company has since expanded aggressively, with employee headcount growing from 300 to over 1,000 (in Chinese), and 70%-80% of the workforce engaged in development and research, according to Chinese media outlet 36Kr.

Chinese tech majors Tencent and ByteDance were the top-grossing publishers in global mobile app stores for the first half of 2022, according to a report by business insight firm Sensor Tower.

The global mobile app market is highly centralized, with 91% of revenue coming from the top 1% of publishers. Over the years, such centralization has been shrinking; the market share of the top 1% has hit its lowest point since 2019.

Why it matters: Tencent and ByteDance have dominated the global mobile markets for years with their trending game titles and the internationally phenomenal video app TikTok. The two majors have invested heavily outside of China, launching new services and acquiring studios in recent years.

• Despite the highly centralized nature of this market, top players are losing shares and creating more space for newcomers.

Details: By analyzing 900,000 publishers on the Apple App Store and Google Play, Sensor Tower found that the top 1% of publishers accounted for 79% of all downloads and 91% of revenue on the two platforms in the first half of 2022. The remaining 99% shared 21% of the market.

• Tencent was the top-grossing publisher in game and non-game categories, earning about $3.3 billion in the first half of 2022. The figure is almost 153% larger than ByteDance, which came second on the chart with $1.3 billion in revenue.
• Tencent was also the most profitable gaming app publisher in the same period, generating over $2.6 billion, thanks to its popular titles like Honor of Kings and PUBG Mobile​​. Tencent accounted for around 10% of revenue from all top game publishers.
• In the gaming category,106,000 publishers introduced new titles in the first half of 2022. While the top 1% of gaming publishers took over 79% of the market globally with 22 billion downloads.
• In non-game apps, ByteDance’s TikTok remains the global app bestseller and most downloaded in the first half of 2022, helping to boost the company’s revenue growth. 
• In August, TikTok and Douyin, two short video apps owned by ByteDance, pulled in more than $306 million from the global Apple App Store and Google Play, contributing to the first-place ranking in the global mobile non-game revenue list, a figure 1.8 times that of the same period last year.

Context: Revenue from mobile apps saw a 2.2% decrease semi-annually (in Chinese) in the first half of 2021, a total of $65 billion less than in the second half of 2021. It is the first fall in revenue since 2019, according to Sensor Tower.

• The fall was mainly due to a revenue decrease from mobile games, which hit $41.3 billion in the first six months of 2022. The US, Japan, and China are the top three markets for mobile games, with the former two seeing over 8% less revenue compared to the second half of 2021.
• Tencent has been ambitious this year, making major moves in the overseas gaming market. The firm announced new progress with its partner Ubisoft, which just doubled its holding shares in new mobile titles. It also invested in notable publisher and developer FromSoftware, and acquired Sybo, maker of popular game title Subway Surfers.
• TikTok also has great expansion plans in the overseas market, with a particular focus on e-commerce business. Since it launched TikTok e-commerce in Indonesia in February 2021, it has expanded local and cross-border business in Thailand, Vietnam, Malaysia, the Philippines, and Singapore. TikTok also cooperated with e-commerce giant Shopify last August, allowing users from the US and Britain to buy goods directly through the app.

Chinese video platform Bilibili reported on Thursday revenue of RMB 4.9 billion (US$732.9 million), a 9% yearly increase for the second quarter of 2022, continuing its trend of slowing growth. The firm’s net loss narrowed and saw an increase in monthly active users (MAUs).

Why it matters: Bilibili continued to operate on a loss since it went public on the Nasdaq in 2018. The pandemic resurgence and month-long lockdown in Shanghai, where Bilibili is based, have hit the company’s income. Slowing growth will make it harder for the company to achieve its goal of turning a profit in 2024.

Details: Bilibili has seen revenue growth slowing since the second quarter of 2021, even as its MAU numbers during the same period have stayed strong, with about 30% yearly growth each quarter.

• A decrease in its mobile gaming business contributed to the platform’s slow growth in the second quarter, with revenues decreasing 15% compared with the second quarter of 2021 to $156.2 million. Bilibili attributed this to a “lack of popular new exclusively distributed game releases” in their financial report for the second quarter of 2022.
• Value-added services (VAS) revenues were $314.0 million, an increase of 29% from the same period of 2021. Other services, such as advertising and e-commerce, saw slower yearly growth in the second quarter of 10% and 4%, respectively.
• Bilibili’s net loss in the second quarter of 2022 expanded 79% compared with the same period of 2021 to $300.2 million. However, the figure narrowed by 17% from last quarter’s $360.3 million.
• “We believe the largest impact of the pandemic is behind us, and we are poised to regain our growth momentum and improve our margins in the second half of 2022,” said Chen Rui, chairman and CEO of Bilibili. He added that the firm is confident of hitting 400 million MAUs in 2023.
• “The primary listing on The Main Board of The Stock Exchange of Hong Kong Limited is expected to be effective on October 3, 2022,” according to Sam Fan, CFO of the firm. Fan detailed that “our binary approach will further expand our investor base and provide us with more flexibility in the capital market.”
• Bilibili’s stock prices fell more than 15% on the Nasdaq and Hong Kong stock exchanges after its financial results were released.

Context: Bilibili has a strong user retention rate due to its heavy focus on catering to a community feeling. CEO Chen Rui said at a company anniversary event in June that 65% of the first batch of users registered in 2009, when the platform was launched, are still active on the platform. 

• Yet it has struggled to become more profitable and underwent major internal restructuring in an attempt to boost income in July. 
• The platform also introduced a new TikTok-like story mode last year in the hopes of increasing advertising income and video views. Daily views for the vertical mode grew four times (in Chinese) in the second quarter compared with the same period of last year.

Editor’s note: Two years ago, the term “NFT” would have elicited a confused look from all but the most dedicated crypto or Web3 enthusiasts. Today, it is very much a part of the mainstream marketing lexicon, with everyone from Taco Bell to Tiffany jumping aboard the non-fungible token bandwagon. But in a world where The Wall Street Journal is declaring the “collapse” of the NFT market one moment and Eminem and Snoop Dogg are performing as Bored Ape characters the next, should brands be steering clear or investing in NFTs for the long-term?  

In this article, I would like to discuss the new scenarios of combining NFTs with brands. There are two reasons that inspired me to write about this. Firstly, since last year, there have been multiple discussions about new scenarios regarding NFTs. Discussions were heated after the advent of the crypto assets bear market, which brought more expectations and reflections about what NFTs can be used for. Secondly, as a Web3 builder, I interact with various NFT projects and creators, and many brands have come to me for advice and solutions on NFT marketing. So I’d like to put my thoughts into one coherent article. In short, brands are aware of the possibilities of NFTs as a new marketing approach, but they lack the understanding and systematic thinking about how and why it can be done.

Over the past 10 years, the traditional marketing approach of building a strong brand to attract repeated purchases gradually stopped being universally applicable. Brands are losing their effectiveness as they are faced with a series of outstanding problems: the high cost of new acquisitions, low user retention and loyalty, low conversion rates, low activity, and low repurchase rates. These changes are largely due to the diversification of the market as consumers become smarter and more powerful in selecting brands.

The failure of old experiences has led brand owners to wonder: is it still useful to invest a lot of resources in building brand power? Along with the rise of skepticism, brands have evolved in terms of marketing approach. First, in the past, brand marketing was regarded as a separate business module, while today more emphasis is placed on the integration with the brand and the effectiveness of marketing. Second, having seen the potential of big data, more brands have become obsessed with precision marketing, emphasizing ROI. Third, whether it is livestreaming, ad placement, or other factors, consumers with more simple and direct benefit perceptions are focusing on the price instead of the brand. Fourth, as the traffic dividend disappears, brands are focusing on the continuous operation of stock customers rather than the acquisition of incremental customers.

All these new changes have left brand marketing practitioners feeling lost. The word I hear most in my conversations with marketers is “difficult”: budgets are being slashed, ROI for advertising/events is low, and bosses are more focused on actual output – all of which means internal resistance to their efforts.

Branding is still important, but it’s not as important as it used to be. As one marketer told me, “Brands need to find a new narrative to fall back on, not only to win the hearts and minds of consumers but also to win internal recognition.” It is against this backdrop that many brand practitioners are now looking to NFTs as a breakthrough in solving the brand narrative crisis.

NFTs: A combination of asset value and individual expression value

When we talk about NFTs, it’s important to find out what an NFT is. The dominant feature of NFTs, or “non-fungible tokens”, is that they are indivisible and unique, compared to other crypto assets. These days, one can use NFTs for art collections, game props, social identities, and stores of financial value.

Although many use cases consider NFTs assets, there is another advantage for NFTs from the creator economy – in the world of Web3, NFTs blow the trumpet of individual self-expression.

How do we understand this value? From Rare Pepes to Crypto Kitties, Crypto Punks to BAYC, Azuki, Doodles, Moonbirds, and MEME representatives such as mfer and Goblintown, the NFT projects using their own narratives to attract people who identify with them are creating a community to express their values, emotions, preferences, and positions to the outside world.

The world is becoming increasingly more divisive, with the regression of globalization, the rise of populism, the widened gap between the rich and the poor, the invasion of privacy brought about by the monopoly of internet giants, the intensification of regional conflicts and wars, the fierce rivalry between major powers, the impact of the pandemic, and many other factors that continue to threaten the stability of international order and the global system. In the midst of such turbulence, decentralization has become increasingly more acceptable. Individuals are more motivated to express themselves and build followings through their expressions.

In addition, the rise of Gen Z has made self-expression even more important. Compared to their parents’ generation, young people are more independent and more willing to express their opinions and ideas. Today, on social media platforms such as YouTube, Instagram, and TikTok, we see more and more young people expressing their personalities, ideas, and values through text, video, and music.

Some might say that self-expression doesn’t seem like a novelty, as it is already mainstream in the traditional creator economy. I agree with this statement; however, I think that NFTs will give people the desire and ability to express their rights more than in the past. The reason is that NFTs are an important part of Web3, and the values advocated in Web3 such as decentralization, de-trust, privacy protection, affirmation of rights, putting revenue back in the hands of creators, and respect for individual expression will all be reflected and recognized in NFTs. Whether you have an NFT avatar or create your own NFT (profile picture, music, video, etc.), you will realize that you have a unique identity – an expresser that can make your voice heard by the world and win your own users and fans.

This also convinced me of something else: just as today everyone is able to make TikTok videos and earn money that way, the threshold for NFT production and creation will be just as low, which means that everyone will have the opportunity to produce and create their own NFTs. In other words, in the future, one can be a consumer of NFTs, as well as a producer.

READ MORE: Web3 in China: Will it happen, and what form will it take?

The combination of NFTs and branding: brand as a service

After talking about the value of NFTs, it’s time to return to the central theme of this article: what are the new scenarios in which NFTs and brands can be combined? The relationship between brands and consumers is that of benefit exchange, with brands providing certain goods or services and consumers paying for what they enjoy. Once the transaction is concluded, the relationship is weakened, which is why every brand wants to strengthen its brand power to continuously maintain or enhance its relationship with consumers. But in the era of Web3, the emergence of NFTs has the potential to essentially change the relationship between brands and consumers, where the transaction is not the end of the relationship, but the beginning of it. In other words, this new approach is Brand as a Service.

How can this be done? Let me explain through a hypothetical case.

Problem to be solved: A fashion brand offers a series of 10,000 T-shirts priced at $80, and the customer gets an NFT after spending $80. How could this brand increase sales and enhance consumer loyalty through NFTs?

Possible approach:
Step 1: This brand should make its NFT a CC0 project, i.e. give up copyright and allow consumers to remix and recreate the NFT after purchasing the brand’s T-shirt. One small note: the CC0 statement only waives copyright, but no other rights are mentioned, such as trademark rights and patent rights.

Step 2: In addition to giving consumers the opportunity to create their own products, the brand could launch a community competition for recreations and let the community vote on them. For example, the top three winning designers could cooperate with the brand to sell NFTs and clothes, and the proceeds from the sales could be shared to an extent.

Step 3: Each consumer will interact with the brand and the brand can award additional NFTs with different levels of rarity according to different contribution levels (the weighting can be a certain amount of consumption + recreation activity + sales of recreation NFTs and clothes, etc.). The NFTs are programmable and the rarity will be enhanced with an increase in consumer contribution. The rarer the item, the more valuable it is to collect and distribute.

Having said that, for the above example to be realized, several prerequisites need to be in place:

1. An NFT creation tool with a low threshold that enables every consumer to recreate the NFT.
2. A change in the brand’s perception: the brand needs to transition from the single interest relationship of the past to the Brand as a Service relationship.
3. Web3 becoming more widespread among consumers.

Today, more and more brands are trying to use NFTs to connect with users. Examples include Starbucks’ upcoming coffee-themed user loyalty program, Coca-Cola’s Pride Collection NFT in collaboration with Rich Minsi, and Tiffany’s limited NFT “NFTiff”.

But in general, the combination of NFTs and brands at present is more of a marketing gimmick aimed at low-cost acquisitions and new membership, and is still essentially at the level of benefit exchange. I propose Brand as a Service in the hopes of exploring and redefining the relationship between brands and consumers via NFTs or Web3, i.e. consumers and brands are no longer corresponding subjects to each other – consumers can become designers for brands, and can also own their own sub-brands based on existing brands. Of course, this does not mean that every consumer will become a designer or own their own brand, just as we all have the ability to become an influencer, but not everyone would choose to be a TikTokker. Yet this is where Web3 is most meaningful, not only presenting the value of decentralization, de-trust, privacy protection, and empowerment but also making it more possible for the masses to have a voice and be creative (as evidenced by DAO), an opportunity that is more inclusive and open to all.

I have always believed that Web3 and Web2 cannot be two separate worlds and that Web3 should be rooted in real life and solve real-life problems. The new scenario of combining NFTs with the brand is an evolving topic and is a focus for me. I look forward to building a new way of marketing with more brand owners as Web3 gradually develops. 

Chinese gaming giant Tencent announced this year’s winning indie games from its Game Without Borders Game Awards (GWB) in mid-August. In its fourth year, the Award is organized by GWB, Tencent’s indie game incubator, and grants cash prizes (up to $72,982) and other benefits to promising Chinese indie game developers. 

Developed by small teams, indie games tend to be less profit-oriented because some developers make them out of passion. Nonetheless, some Chinese indie games can become a hit, such as horror titles like Paper Dolls and Firework, which contain traditional Chinese horror story elements. 

The Award selected 21 titles this year. TechNode highlights five notable games from the list. None of the five titles has an approved gaming license, but Chinese players still have a chance to play them via Steam on desktop. 

Yi Xian: The Cultivation Card Game

Gold Award in card game

The title is an online deck-building game that allows players to become “ancient Chinese gods” as they progress in the game. 

The game is designed with ancient Chinese styles and fictional characters. Previously, a famous Chinese card game called Legends of the Three Kingdoms became a big hit for referencing the Chinese historical novel Romance of the Three Kingdoms, a war period towards the end of the Han dynasty (A.D. 220 to 280). The Yi Xian game is a new attempt to explore different storylines from ancient China. 

Players need to build a new deck from scratch in every game. Decks can be strengthened by changing cards, with the goal of building more powerful routines to defeat opponents and win. The gameplay looks like a combination of auto chess and traditional card games – while it is based on cards, it also includes strategic aspects similar to auto chess, like eliminating players through selection or competition to enhance the gaming experience in multiplayer. 

Hangzhou-based Mo Ri Studio (our translation) developed the game, which also won the Award for games with the most business potential. 

The game also has a notable publisher, GameraGame, which has introduced many well-known gaming titles that have previously excited the gaming community, including Firework and Dyson Sphere Program, two famous indie games. The title has closed its public testing. Tencent told TechNode that the game is coming to Steam in the fourth quarter of this year. 

Murders on the Yangtze River

Silver Award in puzzle game

Murders on the Yangtze River is a detective game set at the end of the Qing dynasty (1912) and developed by OMEGames Studio. Players will find out the hidden truths by solving fictional cases.

The gameplay seems similar to its rivals. Players must find clues and solve riddles to figure out the whole picture of the story. The game art incorporated Chinese artistic style, with characters designed using ink painting.

OMEGames Studio is owned by a Beijing-based gaming firm, Beijing Unifly Culture Innovation, which was founded in 2012. The studio starts developing games in 2019. The title is the studio’s first piece, according to the studio’s page on multiple gaming platforms. The game title launched a demo in July, according to its Steam page. Tencent told TechNode that the title would launch in the first quarter of 2023.

Nobody – The Turnaround

Silver Award in roleplaying game

Nobody – The Turnaround is a roleplaying game that challenges players trying to survive in cut-throat city lives. Players will navigate the game as a newcomer to a metropolis, attempting to make a living. 

According to its official introduction, the game is “set in a parallel world that echoes modern society.” It challenges players to manage resources and time in difficult situations. It also quantifies the main character’s health and emotion, with both requiring complex strategies to maintain good condition.

Developed by a lesser-known team at U.Ground Game Studio, founded in 2020 in Chengdu, the game is their first title and was announced in 2021. The game will also come to Steam in the autumn of this year, according to Tencent.

Mercury Abbey

Bronze Award in puzzle game

Mercury Abbey is another puzzle-solving game. Its pixel art design and anthropomorphic animals might set it apart — a combination that is popular among people who like animation, comics, and games.

Players can roleplay two characters in the title to unravel the secrets behind the nursery by collecting clues and solving puzzles. The pixelated look offers a unique texture and feel. The game is also dialog-heavy, with much of the plot driven by the narrative. 

Founded in 2020, the game’s developer YiTi Games was based in Chengdu. The developer launched a demo of this title in April and will officially introduce it sometime in 2023, according to Tencent. Mercury Abbey is also the developer’s first game listed on Steam. Like Yixian, it is also published by GameraGame.

Five Dimensions

Nomination in puzzle game

Five Dimensions is a puzzle-solving game with simple plots. The core gameplay is designed around the use of highlights and shadows to explore different dimensions on the screen. Players can manipulate the lighting and view angles to control the dimension changes and advance through the game.

The art style uses doodles and sketch looks, using a primarily monochromatic color scheme with a bright yellow accent. 

The developing team comprises six members from top Chinese universities like Tsinghua University and the Central Academy of Fine Arts. The title is in a private testing phase and is estimated to launch on Steam in December of 2023, Tencent told TechNode.

Read more: Chinese indie game developers recreate experiences of Alzheimer’s patients

Editor’s note: A version of this article was first published on RADII.

China is the biggest market for esports globally, having more than 400 million people into it, and 30% of its esports fans are women. In 2020, the country’s domestic esports market was worth approximately RMB 147 billion ($23 billion), which accounts for about 30% of global revenue. 

Elsewhere in the world, women made up 22% of esports fans worldwide in 2019. South Korea has the world’s biggest female fan base, with 32% of its esports followers identifying as women. The United States lags behind with only 17%.

In South Korea, top players such as Lee Sang-hyeok, aka Faker, can earn as much fame and fortune as K-pop idols. And just as K-pop has had a significant impact on China’s pop culture, esports fandom in China is also greatly affected by South Korea’s. When China’s top-level professional league for League of Legends, The League of Legends Pro League (LPL), introduced a few Korean players to the team in 2015, it also brought fan culture to China’s esports industry.

What exactly drives esports fandom in China? We picked the minds of three female fans and discussed their experiences and opinions on today’s esports world.

Devoted esports fans

When the mobile game Honor of Kings was released in 2015, Jessica Wang had zero interest in playing it. Even when her five roommates gathered in her college dorm to play it every night, she kept her eyes fixed on her K-pop idols BTS and turned a deaf ear to the noise around her.

Seven years later, her roommates have all but forgotten about the game, while Wang has picked it up and now considers herself an avid esports fan.

Now a legal assistant based in Hangzhou, Wang watches esports livestreams almost every night. She even subscribes to notifications so she won’t miss out on anything. Wang started by following the King Pro League (KPL) and then switched to LPL this year for an improved viewing experience.

“It’s just like watching any sports. It’s all about excitement, uncertainty, the comebacks, teamwork, strategies, operations, and the interaction and chemistry between people, ” Wang told RADII. 

Even if she finishes watching a game at 3 a.m., Wang wakes up to head to work feeling cheerful and content. She says it’s rare to find a passion outside of work, and she’s grateful to have one. She’s so dedicated that even the music she listens to was discovered via esports livestreams or video cuts.

“I’m always a committed and devoted fan, no matter in which field,” Wang says. “My biggest gain is happiness. Pursuing my passions leaves me full of power and energy. It’s rare and precious to find things that make you relaxed and happy.”

Her current favorite team is Edward Gaming (EDG), which won the world championship last year. She even bought a down jacket with EDG’s winning score emblazoned on its back. It means nothing to most but serves as an insider reference that other fans will understand.

Aside from watching livestreams, Wang also checks her social media daily for the latest game results and live ranks. She fondly describes her actions as “checking my kids’ grades.”

Whenever the Covid situation allows, Wang prefers watching offline matches in venues to experience the exciting atmosphere and stronger fan reactions.

Jia Yubi has a similar relationship with esports. A fan since 2014, she still watches livestreams and attends offline events regularly. Though Jia also plays video games herself, she says she’s a totally different person when she watches esports.

“I don’t like to talk when I play games, but when I watch a game, I become exuberant and emotionally invested, and I really relate to my team.” 

She adds, “I think most esports fans enjoy the exhilaration and thrill of the game, and the emotions you feel from watching it on a screen are completely incomparable to being in the scene.”

After being a fan for eight years, two unforgettable — and sad — memories come to Jia’s mind. Once, she and other fans waited in a parking lot to bestow gifts upon their favorite players. Her favorite gamer Xiye and his team had not performed well, and it broke her heart to see them frustrated and sit sluggishly on their bus.

The second time, a semi-final event was held in Guangzhou, not far from Jia’s college. She had already bought tickets and thought to herself it was “an opportunity that I must not miss in my life.” However, she couldn’t go at the last minute because her final exam had suddenly been rescheduled.

“Missing the event is still my biggest regret,” she says.

Esports fandom vs. pop fandom

“Esports and pop fandom have a lot in common,” said an esports analyst in a 2020 post. “Both groups consist of Gen Zers who are true digital natives. They’re open-minded individualists.”

Wang has retained some of her pop music fangirl habits while pursuing esports. After years of following K-pop, she has learned Korean well enough to conduct Korean-Chinese translations.

And still, like with K-pop, her favorite element in esports fandom is also ‘coupling.’ Coupling or ‘shipping’ are terms commonly used among fan communities to describe the desire to see two individuals in a romantic relationship.

“I can’t stop pairing them up — I love coupling. It’s my biggest source of happiness,” Wang says delightedly.

She likes to watch her current favorite ship, male gamers Meiko and Viper, play games together. Wang often views video cuts or text documentations of every little interaction between the two on social media, even mundane activities like chatting, ordering takeout, or eating dinner together.

“I like observing human chemistry,” Wang explains excitedly. “Meiko and Viper cooperate so well. It’s like they’re playing with the same brain. It’s like there’s a bubble around them, and nobody else can break in.”

However, Wang has also learned to stay calm and not to get too emotional over esports. She knows that esports players frequently switch teams, and her ship may part ways at any time:

“I’ve learned to accept separation and just enjoy the moment. It’s like I’m a fan of a boy band that’s destined to break up.” 

Wang also recognizes that fandom in esports differs from that found in other entertainment fan cultures. “Fan economy is everything for pop stars,” she says. “But fans are useless to esports players. We can’t do anything to affect their competition results, although that’s the only thing that matters.”

Fangirl Jia agrees that she is also in two different modes when following esports and pop culture. “Esports players are more real and vibrant,” she explains. “Stars are beautifully packaged whereas esports players aren’t celebrities or commodities but athletes.”

Qingdao-based college student An Wanwan doesn’t worship idols and thinks most esports fans understand that players are different from K-pop idols and other celebrities. “They’re just some men who play games really well. But outside of the arena, they’re literally a group of internet addicts who didn’t finish their compulsory education,” she said. 

Like most fandoms these days, some esports fans are also ill-mannered and cyberbully each other, An says. She once experienced an online attack by extremists after she commented on a few players.

Toxic elements aside, there are good apples among the bunch, and An has formed meaningful friendships with other fans. She even travels and watches games with another fan she met online.

“Many esports fans have cliques with whom they watch games and discuss esports. Making close friends this way has been an unexpected gain,” says An, who grew up watching the NBA with her dad, a core memory that has fed her current love of esports.

“At the end of the day, I just love competitive sports,” she says. “I love the story of young people fighting side by side, going through failures and setbacks, and then reaching the top together. The process is fascinating. We are all witnesses to this story.”

Since last week, several major Chinese social media platforms, including the Twitter-like Weibo and TikTok sister app Douyin, began to test displaying the names of commercial agencies responsible for content production on influencer accounts’ profile pages.

Why it matters: The move comes three months after platforms began displaying users’ IP locations. It is part of Chinese authorities’ declared aim of building a “healthy online environment.” 

Details: Douyin began displaying details of multi-channel network (MCN) on influencers’ profile pages on July 21. Weibo made the same move on Monday, showing the name of MCN responsible for commercial content. MCNs are third-party organizations that provide assistance and production services for online content creators and are a booming part of China’s digital economy. 

• In June, Douyin released a note saying that the platform would display the names of MCN agencies on the profile page of any affiliated accounts, according to an article posted on 36Kr on July 22. This week, Android users with the latest version of Douyin will also see this feature.
• A Weibo influencer first reported that the platform will display MCN information on profiles on July 23. Weibo officially rolled out this feature on Monday.
• Neither Douyin owner ByteDance nor Weibo responded to TechNode’s inquiries regarding this issue.

Context: The MCN market in China recorded revenue of RMB 33.5 billion ($4.96 billion) in 2021 and is predicted to exceed RMB 54.5 billion in 2023, according to iiMedia Research.

• There were over 30,000 MCN agencies in China last year, with that figure set to reach 40,000 in 2022, according to data from iiMedia Research. An analyst from the agency attributed such growth to the rise of the country’s influencer economy in a report.
• On March 17, the State Council Information Office of China announced that regulating online content would form a major part of its work in 2022, naming the review of multi-channel network operations as a key area of its focus.
• Zhang Yongjun, head of a government department under the Cyberspace Administration of China, said at a conference in March that platforms “should publicize lists of MCNs and their client accounts in an appropriate way, and display the MCN name on account profiles.”

Chinese tech giant Tencent is reportedly in the process of closing its digital collectible platform Huanhe after launching in August 2021, as Jiemian (in Chinese) reported, citing unnamed sources familiar with the matter. 

Why it matters: Digital collectibles are China’s version of NFTs with some key differences, such as restrictions on the resale of these NFTs. Huanhe is supported by blockchains managed by Tencent and its partners. The end of Huanhe may also mean the end of collectibles bought on the platform, which has drawn buyer concerns.

Details: Chinese new platform Jiemian reported that Huanhe closed its external service earlier this month, citing an unnamed source.

• However, another Chinese media China Times reported on Thursday that Huanhe told them that “the platform hasn’t received any notice and they are operating as usual.”
• Tencent didn’t respond to TechNode’s inquiry for comments.
• In May, Wang Shimu, head of Tencent News, joined the “social platform and applications line,” which includes the Huanhe unit. Tencent News subsequently shut down purchase links for NFTs on July 1 (in Chinese) and released an announcement to guide users to turn to Huanhe.
• Huanhe is also seeing some slow down in sales. For example, there are 20,245 pieces of NFTs of Master Hong Yi’s calligraphy that hasn’t been sold in the limited time offering in late June. Huanhe is closing the sales for these items. 
• In early 2022, Tencent’s Huanhe unit told Jiemian that they were developing a metaverse product. Yet, key employees of the unit left in April, Jiemian’s report said.

Context: Since last year, major Chinese tech firms have launched NFT-related platforms.  Apart from Tencent’s Huanhe, Ant Group launched a digital collectible platform called Topnod (JingTan in Chinese) on its AntChain in late 2021, while e-commerce giant JD launched an NFT platform called Lingxi last December.

Chinese video platform Bilibili is restructuring its business units to boost profit growth, Chinese media outlet LatePost reported on Monday.

Why it matters: Despite strong growth in users and content offerings, Bilibili has been facing more pressure to turn a profit since it went public in New York in 2018. The extensive restructuring is aimed at helping the company become profitable by 2024, a goal first revealed by the company CEO Chen Rui at the fourth quarter earnings call in 2021.

Details: The overhaul mainly affects three core business units: commercialization, streaming, and content-related business. Six executives have either assumed new roles or left the company. In addition, Bilibili has also set up a new data center.  

• Bilibili’s commercialization unit will have a new leader Liu Zhi, who previously worked in the unit before joining Bilibili’s operations unit. He helped expand the user base of the main site. Liu will directly report to Bilibili’s CEO Chen Rui. The unit’s previous leader Liu Binxin will leave the company. 
• Head of Bilibili’s streaming sector Wang Yuyang will also take over the operations sector. Wang is a young executive and former founder of the notable Chinese esports agency Dae Culture (our translation).
• LatePost cited a source at the company as saying that some previous experimental reforms – such as the combining of its video and streaming businesses – had been positive, and Bilibili is now looking to implement such reforms in other parts of the company.
• The restructuring will also see Bilibili’s animation business become a new independent unit, separate from the site operations unit where it previously belonged. The new unit and the firm’s entertainment, film, and TV series business will now belong to the Occupationally Generated Video (OGV) department. 
• Bilibili is also establishing a new data center. Zhang Zecong will lead and report to the firm’s COO and vice chairman Li Ni.

Context: Bilibili has continued to maintain user growth but is still a long way from turning a profit. In the first quarter, Bilibili had a 25% yearly growth in subscribers, while its net loss has widened 152% from last year to RMB 2.3 billion ($340 million). The firm is prioritizing commercialization as a critical task for this year, said its first-quarter earnings report. 

• The firm’s streaming business has 60% more paid users in the first quarter than in the same period last year. Active streamers also saw an 88% growth in the first quarter from last year.
• Bilibili’s gaming revenue grew 16% year-on-year during the same period to reach RMB 1.4 billion.
• The video streaming platform introduced “Story Mode” in 2021. The new feature displays short vertical videos for mobile users and aims to increase commercial performance and user engagement. The feature contributed 20% of its total video plays in the first quarter, according to the firm’s earnings call. In April, the company launched commercial services on the new feature.

A Chinese video creator on Bilibili recently built a 3D virtual museum of Chinese memes featuring popular Chinese internet memes from the past 20 years. The museum is accessible on VRChat with VR headsets or on PCs.

Siji, the museum founder, said he wanted to build the virtual institution to expose ordinary Chinese people to the metaverse concept and help them understand the next iteration of the internet. He decided to build the museum around memes due to their broad accessibility and existing popularity among Chinese internet users.

“The museum is not only for entertainment. It’s also an exploration of future online consumption trends, ” Siji wrote in the opening dedication for the museum.

The virtual museum took Siji, his friends, and volunteers three months to build.

The project has seven sections, arranged in chronological order to show 20 years of Chinese internet memes. They comprise the photo-heavy memes of the early 2000s, video-focused memes of the 2010s, and memes in a variety of formats from the last 10 years.

The collections on display take the form of pictures, text descriptions, and immersive 3D demonstrations that “restore” some famous memes.

One of the first items in the collection is a desktop computer from the 90s running on Microsoft Windows 95, a highly recognizable symbol to the first generation of Chinese internet users.

The museum also features some memes that originated in English language cultures and made their way to China, such as Rickrolling. The museum presents a localized version – “Gotcha” (“pian dao ni le” in Chinese) – by displaying an image that, in classic Rickrolling style, plays pop star Rick Astley’s hit “Never Gonna Give You Up” when a user clicks on it.

Another notable meme in the museum’s collection is “Are you ok?” This emerged from a phrase in a speech given by Xiaomi CEO Lei Jun in India in 2015. Lei spoke in English at the event, with his delivery leading to widespread amusement among Chinese internet users. Creators on Bilibili created a host of video memes based on Lei’s idiosyncratic phrasing. One of the main videos that helped spark the outpouring of Lei Jun memes now has over 41 million views (in Chinese) on Bilibili. Xiaomi ultimately embraced the meme, even using it as kind of slogan in the brand’s marketing (in Chinese).

Although the memes museum is built on VRChat, it first gained traction on China’s video platform Bilibili. An introduction video to the museum already has over 655,000 views on the video streaming site. The platform is popular with Chinese youth and has been a fertile breeding ground for internet memes due to its large fanbase of animation, comics, and gaming enthusiasts. Many of the memes from the museum originated from Bilibili and subsequently spread across the Chinese internet. 

Editor’s note: A version of this article was first published on RADII.

Three college students in Beijing developed an indie game that put players in the consciousness of Alzheimer’s patients, hoping they will walk away with a better understanding of Alzheimer’s and have sympathy for those who live with the disease. 

The game, titled “Room 301, Building 6”, is an immersive game in which players would experience what it is like to lose a grip on their memories. “This is my home; I’ve always lived here. But even this place is unfamiliar to me,” is the opening line of this meditative indie video game. 

Developed by three students from the Communication University of China in Beijing and published by Gameragame, Room 301, Building 6 started as an experiment on immersion in different states of consciousness. While an official release date has yet to be announced, a free trial of the indie video game is available for PC users on Steam.

Huang Yuhan, one of the game’s developers, told RADII they had several ideas initially but eventually settled on Alzheimer’s, as some of their loved ones have suffered from the disease.

“We have very personal memories, and it was very smooth to express them through the creation of the game,” Huang said.

In the game, players step into the shoes of a retired grandmother on a five-day-long quest to retrieve her memories by finding objects scattered around her apartment. Just as in real life, Alzheimer’s medication can boost the character’s ability to remember, helping players advance in the game. 

“We pondered over it for a long time, but we eventually reached a consensus to prioritize a faithful and unadorned reproduction over conventionally fun gameplay,” Huang said.

The game is split into two screens to simulate the cognitive limitations that plague Alzheimer’s patients. 

On the right, players can only catch glimpses of their character’s apartment instead of seeing the complete picture. This limited visual field serves as a reminder of patients’ shortened attention spans and the difficulties they face in organizing logical thinking. Signifying memory loss, players sometimes need to revisit the same objects. Using the left panel, players must navigate a maze using their keyboards while constantly exploring the same room and seeking familiar elements and shapes.

The game’s developers hope that, in addition to imbuing gamers with a better understanding of Alzheimer’s, Room 301, Building 6, will have a broader emotional impact on the public.

“This story simulates just one out of millions of patients in the world, but if there is even one small facet of the game that evokes memories or feelings for our players, we’ll have achieved our goal,” Huang added.

On Monday, Tencent held its annual gaming conference Spark 2022, introducing 44 new gaming-related titles and projects. The event provides a useful outlook on gaming industry trends and the world-leading gaming company’s future plans.

Tencent is expanding its existing advantage in popular titles and mobile games while developing more expensive blockbuster projects and exploring new technologies. 

As the largest gaming company in China and the second-largest in the world after Microsoft by market cap, Tencent’s domestic gaming business is plateauing while its overseas gaming business continues to grow. 

Tencent’s financial results for the first quarter this year showed the firm’s game revenue in China decreased by 1% to RMB 33 billion ($4.9 billion) compared to the same period last year. In comparison, its international game revenue saw a 4% year-on-year growth to RMB 10.6 billion. Tencent attributed the results to an increase in revenues from games including Valorant and Clash of Clans, partly offsetting a decrease in revenues from PUBG Mobile as user spending normalized in the post-Covid period.

These factors are also influencing Tencent’s current thinking, as Spark demonstrated. Here are four major strategies in gaming that Tencent appears to be pursuing: 

Bringing proven gaming titles to mobile

• Tencent has partnered with firms like Microsoft (in Chinese) that own popular gaming titles or series IP, repurposing existing titles for phones and tablets. 
• The company brought the Microsoft Xbox title Age of Empires, a real-time strategy game, to mobile platforms for public testing in June (in Chinese). The firm has also revealed a plan to work with 20th Century Studios to develop a mobile game based on the sci-fi movie Avatar. At Spark 2022, Tencent also announced further expansions to its existing League of Legends universe, including a new esports-themed title, having previously launched three titles related to this game on mobile platforms.
• Tencent is experienced in operating mobile game titles, with stand-out successes such as Honor of Kings and PUBG Mobile in their gaming portfolio, so this move makes a lot of sense for the company. Additionally, the global mobile gaming market made up over half of the overall total gaming market in 2021, according to gaming insight firm Newzoo. 

Ambitions in AAA games

• One of the most notable titles revealed at Spark was the still-in-development open-world game Code: To Jin Yong, produced by Tencent’s LightSpeed Studios. This appears to be a move to marry a hugely popular yet largely untapped (in gaming terms) trove of material from one of China’s most famous authors with Tencent’s gaming capabilities. 
• Since last year, Tencent has sped up attempts to establish an AAA game development studio (in Chinese), TiMi F1. At Spark 2022, Tencent also announced that it would operate Ubisoft’s AAA-level title Tom Clancy’s The Division 2. 
• However, China’s gaming approval body the National Press and Publication Administration (NPPA) rarely approves overseas AAA-level titles, with the organization having failed to issue any new gaming licenses for overseas titles for over a year (in Chinese). Developing its own AAA title may allow Tencent to bypass such uncertainty.

Taking gaming tech into other fields

• Spark saw Tencent announce several projects where it will use its gaming prowess in new fields, ranging from scientific research to cultural heritage to tourism. 
• One notable example was the company’s confirmation that it will join a program initiated by the Institute of High Energy Physics at the Chinese Academy of Sciences, to power satellites to explore outer space using the firm’s gaming algorithms. 

Building universes around its most popular titles 

• At Spark 2022, Tencent revealed a series of programs and new add-in gameplay options to some of its biggest operating titles, including Honor of Kings, League of Legends, and The Magic Sword.
• For League of Legends, Tencent has a routine to add new characters and renew the gameplays. Generally, there will be a new “champion” every one or two months, and the gameplay strategies will have a significant change twice a year. Similar moves are also adopted in titles like the Honor of Kings and the mobile version of League of Legends. 
• Additionally, Tencent will release cross-game events based on games’ background stories for promotion, drawing players’ attention and building a stronger connection between its titles. For example, Tencent introduced the Arcane program in late 2021 after bringing League of Legends: Wild Rift to the domestic market. Players from the desktop must download the firm’s other related titles and have a try to earn awards. Tencent even partnered with Netflix to release a TV series with the same name to promote.

Chinese gaming giant Tencent announced on Monday that it is working on an ambitious new AAA-level title based on the work of Chinese wuxia martial arts literature titan, Jin Yong, during its annual game release event.

Why it matters: The news that Tencent will attempt to adapt Jin Yong’s work as a video game shows the firm’s ambition to create popular AAA titles with original work. A legendary writer, Jin Yong (also known as Louis Cha) and his vast literary creation in martial arts fantasies have often been compared to J.R.R Tolkien and The Lord of the Rings. Jin was one of the world’s bestselling authors and is hugely popular in the Chinese-speaking world.

• Tencent’s LightSpeed Studios will oversee the development of Code: To Jin Yong. The studio was behind the development of the successful global hit, PUBG Mobile.

Details: Code: To Jin Yong is the first video game adaptation of the works of Chinese wuxia writer Jin Yong. The video game is authorized by Ming Ho Publications, which owns the rights to Jin Yong’s work, and will be based on popular stories like The Legend of the Condor Heroes.

• Code: To Jin Yong will be an open-world game in which players will explore a China set in ancient times, with popular martial arts characters featured in Jin Yong’s books, such as Yang Guo and Qiao Feng. 
• The title is powered by Unreal Engine 5, a highly-rated game engine that offers good render quality and will enable developers to recreate intricate martial arts movements. Tencent released a trailer demonstrating a fight scene with various visual effects and swordplay powered by Unreal Engine 5.
• To build the immersive gameplay, the game studio recreated a digitized Mountain Hua, an attraction in real life known for its challenging hikes and a major game setting. The studio used a technology called photogrammetry to scan pictures and real-life scenes of the mountain.
• Tencent said in the release event that the title will be available worldwide “in the near future.”

Context: The game may compete with Black Myth: Wukong, another promising upcoming new title based on ancient Chinese myths and characters and developed by Chinese game firm Game Science. The story is based on Sun Wukong (or The Monkey King), the protagonist in the Chinese classical novel Journey to the West.

• Jin Yong’s novels present Chinese game developers an opportunity to create a video game universe that incorporates hundreds of popular fictional martial arts characters into serial projects. Previously, Chinese animators and movie makers have been bringing Chinese mythological stories to life in a sprawling universe, with the likes of Sun Wukong, Nezha, and others, with mixed results.

Editor’s note: A version of this article was first published on RADII.

As the world’s largest video game market, China used to have a reputation for producing mediocre mobile games emphasizing microtransactions and profit over exciting and engaging gameplay. But in recent years, Chinese game developers have stepped up their games, producing numerous excellent titles, with many more in development. 

Here are 10 games developed by Chinese companies that every video game aficionado should check out. They are lesser-known compared to other Chinese video game phenomena such as Genshin Impact and Honor of Kings.

1. Naraka: Bladepoint

Platform: PC, with Xbox and PlayStation 5 versions coming this year

If you’re into the wildly popular battle royale genre (think titles like Fortnite, Call of Duty, and PlayerUnknown’s Battlegrounds), this might be the game for you. 

Developed by Hangzhou-based 24 Entertainment and first published by NetEase Games Montreal on August 11, 2021, Naraka: Bladepoint is your classic battle royale in many ways. Expect a host of weapons, superhuman characters, and an encroaching arena that shrinks until a single player remains.

In other ways, however, this Chinese video game is wholly its own. For starters, whereas in the aforementioned titles you can kill a competitor from a distance, Bladepoint emphasizes close-contact combat. You can still attack from afar, but a winning strategy will require some up-close-and-personal virtual violence. We’re talking swords, daggers, nunchucks, and something called a ‘bloodripper,’ which looks a bit like a demonic chainsaw fitted with a buzz saw on the end. Not particularly practical in real-life, but certainly ready to get the job done in the fantasy realm. 

The intimate combat style reminds us of arcade fighting games like Tekken and Mortal Combat, with movements and an aesthetic that bring the films Crouching Tiger Hidden Dragon and House of Flying Daggers to mind. The characters, or ‘heroes,’ as they’re called, are all refreshingly unique in their fighting style and weaponry. You can also customize fighters, leading to some mildly uncomfortable renderings of Squidward, Yoda, and more. 

Prepare to be hacked to bits repeatedly in the beginning, as there is a bit of a learning curve to the gameplay. 

2. Lost Soul Aside

Platform: PC, PlayStation 4 and 5

Remember when Lost Soul Aside was first announced in 2016? By now, you’ve probably completely forgotten about it or been driven crazy by the wait. Half a decade ago, the game had only one developer, Yang Bing, and audiences were flabbergasted about how a solitary endeavor could look so damn cool. 

Although the development team has grown considerably since the game’s announcement, it is still being helmed by Shanghai-based UltiZero Games. Based on the gameplay trailer released in April 2021, audiences have likened it to Final Fantasy XV and Devil May Cry for its fast-paced play and epic visuals.

The main character has a seemingly endless suite of superhuman abilities, and he’s accompanied by a floating robo-dragon (of sorts). The game will have open-world capabilities, and the combat is said to be rather challenging. While there’s no release date yet, we’re anticipating a 2022 arrival.

3. Bright Memory: Infinite

Platform: PC, Xbox

No list of games would be complete without including a good ol’ first-person shooter (FPS). Enter Bright Memory: Infinite, an FPS that also includes combat with a variety of swords. Players start with a single blade and machine gun and are armed with a few cool battle moves — a metaphysical pull feature, block, and dodge. As the game progresses, you can collect several additional weapons with their own feel and function. 

The game is a remade and expanded version of the original Bright Memory, which came out in early 2019. Both were developed by FYQD, originally a one-person studio run by Zeng Xian Cheng. It’s still quite a small operation, making the noticeable improvements to the second game all the more impressive. 

Bright Memory: Infinite was released on November 11, 2021, and so far, the response has been great. The title follows the story of Shelia Tan, a Science Research Organization agent tasked with investigating a mysterious force in the sky that is sucking in its surroundings. You probably won’t get too caught up in the narrative, though, as it’s almost nothing but action after the intro, which we’re okay with. 

4. Black Myth: Wukong

Platform: PC, Mainstream consoles

One of China’s most well-known folkloric characters is the Monkey King, Sun Wukong. Sun appears in countless ancient and contemporary texts but is most associated with the 16th-century novel Journey to the West, in which he is a traveling companion of Tang Sanzang, a character based on the real-life Buddhist monk Xuanzang.

The Monkey King has also appeared in numerous theatrical productions, films, TV shows, and more than a dozen video games (even the anime television series Dragon Ball contains elements from the story). But that’s not to say that Black Myth: Wukong isn’t something special.

Developed by Shenzhen-based indie studio Game Science, Black Myth: Wukong is a third-person action-adventure game where players step into the shoes of the protagonist Monkey King. It is easily the most hyped Chinese game that has yet to be released, and for good reason: The diverse landscapes and characters are laden with nods to Chinese history and cultural esthetic, with stunning visuals and combat scenes that are nothing short of badass. 

Small details in the game hold true to the original Monkey King mythology. Take, for instance, the scene in a gameplay teaser where Sun extends his staff and balances on end to defeat a massive white dragon. He can extend the magical golden staff to any length in the original mythology.

Daniel Ahmad, a senior analyst with Niko Partners, says Sun will have 72 abilities in total. So expect to see more mystical moves reflective of the original folklore — things like shapeshifting and splitting into infinite versions of himself.

No specific release date has been set yet, but gamers are anticipating its release in 2023. 

5. F.I.S.T.: Forged in Shadow Torch

Platform: PC, PlayStation 4 and 5

Welcome to Shadow Torch, a colonized city of anthropomorphic animals known as ‘furtizens.’ This is a Metroidvania, which, for the uninitiated, is a subgenre of action-adventure games where players navigate an open world, unlocking skills and new areas of the map as the game progresses. 

Rayton, a juiced-up rabbit and a former soldier in the war against the occupying Machine Legion, plays the main character. He carries a massive, multipurpose ‘fist,’ a gadget recycled from an old war machine that Rayton once piloted, containing his primary weapons. The city is distinctly steampunk-inspired, and different districts have their own appearance and atmosphere.

The game is two-dimensional and utilizes left-right scrolling to navigate the map. It has a fantastic storyline — albeit with some sub-par English-language voice acting — and features cameos from a host of fascinating humanoid animals, from cats to rats and bears to red pandas, but not forgetting robotic canines. 

F.I.S.T was developed by Shanghai-based TiGames and came out in October 2021 via Antiidelay. With relatively easy and user-friendly gameplay, it serves as a great introduction to the oversaturated Metroidvania market. 

6. Conqueror’s Blade: Paragons

Platform: PC

If you’ve ever wanted to control the whims of a maniacal warlord conquering foreign lands, you may want to do some soul searching. Alternatively, lean right in and give Conqueror’s Blade a try.

Like many popular games produced in China, this Massively Multiplayer Online Game (MMO) is free to play. While there are some pay-to-play elements, most of these are cosmetic, fortunately, and not necessary to succeed in the game.

Developed by Hangzhou-based Booming Games, Conqueror’s Blade is a turn-based game that incorporates action and tactical gameplay elements. What’s incredibly cool is the fact it includes both Eastern- and Western-style medieval warfare. Released on March 17, 2022, the latest update — Conqueror’s Blade: Paragons, as seen in the video above, was inspired by medieval France.

It is classified as a ‘sandbox game,’ meaning players have a high degree of control and creativity where gameplay is concerned and don’t necessarily have to follow predetermined objectives or goals (think Minecraft and Grand Theft Auto).

7. Wuchang: Fallen Feathers

Platform: PC, unspecified next-gen consoles

Set in imperial China during the collapse of the Ming Dynasty, Wuchang: Fallen Feathers combines history, folklore, and otherworldly dystopian elements that make for a surprisingly fresh take on the ancient era. 

Inspired by the turbulent period, players are dropped into a land plagued by unrest. Warlords, banditry, and violence abound. Adding to the mayhem is a mysterious condition causing people to grow feathers and lose touch with their humanity. The protagonist is tasked with unraveling the cause of the strange illness. 

This is the first title created by Chengdu-based LenZee Games, formerly Recano Chengdu Hurricane Zone. An action RPG, Fallen Feathers draws influence from games like Bloodborne, Dark Souls, and Sekiro. Don’t hold your breath for a quick drop, though: The game is scheduled for release in 2024.

8. Let’s Hunt Monsters

Platform: Mobile

We were hesitant to include this on the list, given its striking resemblance to Pokemon Go (and we don’t want to be responsible for any avoidable deaths). Still, the animated creatures are too cute to overlook!

To be fair to developers TiMi Studio Group (owned by Tencent Games), Pokemon Go was never available in China, which explains their urge to fill a much-needed gap in the niche market. After all, how many mobile games require the player to literally be mobile. 

Like Pokemon Go, Let’s Hunt Monsters is an augmented reality (AR) game where players catch digital creatures using their real-life geolocations. Instead of Pokemon, however, the hunt is on for creatures inspired by Chinese mythology. To catch all 302 monsters, players use ‘spirit orbs’ (basically yin-yang pokeballs) sourced from ‘Prayer Drums.’ 

You can also build structures within the game, mirroring gameplay in MMOs. Using the Tencent-developed blockchain, players can even trade digital ‘kittens’ in a feature not dissimilar to the Ethereum blockchain game CryptoKitties.

Let’s Hunt Monsters was first announced by Tencent in April 2018 and has been available on Chinese app stores since April 11, 2019. While there have been numerous attempts to recreate the success of Pokemon Go, none quite measure up, although Let’s Hunt Monsters has come closer than the rest. Five months after its release, the game generated more than $50 million in revenue just on iOS.

9. Tower of Fantasy

Platform: Mobile, PC

Tower of Fantasy is an action RPG infused with narrative elements and open-world gameplay. If you think that sounds a little too Genshin Impact-y, well, you’re not the only one; the game’s developers have even dubbed their creation a ‘Genshin Impact killer.’ 

Smack talk isn’t the only scandal they’ve been caught up in, though: They were previously busted using plagiarized content in a promotional video, and later, clearly not learning from their own mistakes, allegedly used reviews for Genshin Impact to boost their own game’s ratings.

Nonetheless, Tower of Fantasy has been in China for a year and is set for worldwide release in 2022, much to global gamers’ excitement. In March of this year, it was reported that the title is undergoing closed beta testing in the United States, Canada, the United Kingdom, and Germany. 

While Tower of Fantasy is in many ways similar to Genshin Impact, the former takes place in the future and combines elements of science fiction with anime-inspired characters. It also allows character customization and the use of various weapon types irrespective of which character you choose, further setting it apart from its rival. 

Released by Hotta Studios and published internationally by Perfect World, the game is set on the post-apocalyptic planet Aida. Once flourishing and technologically advanced, the planet’s energy source, Omnium, has become its undoing, as the radioactive material has caused some of the planet’s remaining inhabitants to mutate.

10. Icey

Platform: iOS, MacOS, PC, Android, Nintendo Switch

Initially developed by Shanghai FantaBlade Network in 2017, Icey is a two-dimensional side-scrolling action game — with a few twists. Led by an omnipotent narrator called the ‘Developer’ who guides your every move (should you choose to obey), the goal is to control the eponymous humanoid robot Icey.

In this hack ‘n’ slash melee-style adventure, Icey is armed with a sword and tasked with defeating a powerful enemy called Judas, all while unraveling the meaning of her existence. From start to finish, the Developer aggressively urges you to follow his every direction, but much of the fun lies in defying his overbearing, sometimes passive-aggressive commands.

The game is cheap to purchase, and the story takes no more than a couple of days to complete, though you can start again and unravel the story differently in subsequent sittings. As such, it’s the perfect game for the casual gamer or anyone who wants a few pleasant hours of digital distraction.

Honorable Mention: Stray (Formerly HK_Project)

Platform: PC, PlayStation 4 and 5

Carving out a new niche, Stray is not technically a Chinese video game but takes place in a dystopian future in Hong Kong. It was developed by BlueTwelve Studios and will be published by Annapurna Interactive, respectively based in southern France and California. The game is set for release in July 2022.

Players assume the role of a stray cat tasked with navigating the chaotic streets and buildings of a once-flourishing megacity now inhabited solely by robots. Its ultimate goal is to reunite with its family. 

The game aesthetic is heavily influenced by the Kowloon Walled City, which was destroyed in the ’90s at the behest of Hong Kong authorities. Once upon a time, it was the most densely packed place on Earth and operated independently from the British colonial government and law enforcement.

Needless to say, it was a fascinating place and one that we regret not having visited before it came crumbling down. But thanks to Stray, a Kowloonesque adventure is still possible. Navigating the city as a furry feline offers players a unique perspective on the digital world and allows for mobility and challenges that a clunky bipedal human simply can’t pull off. 

On Wednesday, China’s media regulators released a new regulation to tighten scrutiny on livestream hosts’ behaviors. 

Why it matters: The rules require online streamers to adhere to a set of similar standards applied to the country’s tightly regulated traditional media hosts, a sign of further tightening the fast-growing and lucrative industry. 

• Livestreaming e-commerce and entertainment have become part of Chinese people’s online shopping routine. Recently, education companies New Oriental have been able to utilize livestreaming to make a major comeback after China’s new rules on private tutoring cut off the bulk of its income.

Details: The new rules are jointly released by China’s National Radio and Television Administration and the Ministry of Culture and Tourism. It consists of 18 guidelines for livestream hosts.

• The guidelines emphasized that livestream hosts must uphold correct political values and social values, create and promote more “positive” stories and maintain a “wholesome” taste. In addition, it advised hosts to self-regulate and avoid content that only focuses on viewing traffics, has morbid aesthetics, caters to fandom culture, or promotes money worship. 
• Livestream hosts in professional fields like law, medical health, education, and finance must obtain relevant qualifications and approvals from the streaming platform. Tencent’s WeChat told the Chinese media outlet The Paper (in Chinese) late Wednesday that it will draft punishment measures for people who disobey these new rules.
• The rules also mention that streaming platforms should take responsibility for their implementation, giving positive encouragement to rule-followers and punishing those who break the rules. Users who severely violate the new rules will be put on a blacklist and will receive a permanent streaming ban.
• The rules also apply to virtual hosts and the human vocalists behind virtual hosts.

Context: Since earlier last year, China has been pushing to further regulate the livestream industry. In late last year, several top livestream hosts stopped their streams due to inappropriate or illegal behavior.

• One of the country’s top e-commerce streamers, Viya, was banned for tax evasion in 2021 and was fined RMB 1.3 billion ($270 million). Before she was banned, her livestreaming generated RMB 8.3 billion in sales on the first day of the Singles’ Day shopping holiday in 2021.
• China’s 315 Gala this year, an annual event highlighting consumer rights abuses, spotlighted fraudulent promotions and scams in the livestream industry.

With one of the world’s largest LGBTQ populations, China has many social apps to meet the varying needs of the community. Homosexuality is legal in the country, but LGBTQ people have no access to many legal rights such as marriage and discrimination protection. However, those social apps often provide a much-needed space for the community.

This list is an update to TechNode’s similar compilation five years ago. We’ve seen considerable changes in China’s LGBTQ online social market in the past five years. Some apps have stopped operations; others paused for a while but managed to come back with new brandings. 

Blued

Launched in 2012, Blued is a dating app primarily for gay users. The app is available in 13 languages with over 60 million registered users in 2020, according to its official website.

Similar to Grindr, Blued helps users find interesting matches nearby. In 2016, the app introduced a live streaming feature, and within two days of launching, the feature brought in over RMB 100,000 ($14,306) in income, Chinese media outlet 36Kr reported (in Chinese).

The app launched a “Community” feature in 2020, allowing users to build deeper connections through group chat functions.

Blued is owned by BlueCity, a Chinese tech firm that focuses on LGBTQ+ users. The firm went public on Nasdaq in 2020. However, the firm has a hard time turning a profit. Its net loss has expanded 39.5% year-on-year to RMB 309.6 million in 2021 due to local regulations and other factors, according to the company’s financial report. BlueCity is also in the process of going private, according to a company statement sent to TechNode.

Finka (Aloha)

Finka (formerly known as Aloha) is a Tinder-like dating app for gay users. Like Tinder, users can choose to like, dislike, or pass on algorithm-generated recommendations. Matched users can chat privately. Finka also offers live streaming features.

Compared to Blued, Finka focuses more on young users. The app has a youthful user interface, allowing users to upload more profile pictures than Blued.

The app is developed by Beijing Asphere Interactive Network Technology and acquired by BlueCity (in Chinese) in 2020 for RMB 240 million, 36Kr reported.

According to Qimai Data (in Chinese), the app began to trend upwards from the end of 2020, as its downloads grew threefold to 47,628 in December compared to numbers from November. In May of this year, the app had 90,948 downloads in App Store’s China mainland region.

the L (Rela)

Launched in 2012, the L (formerly known as Rela) is a social platform for lesbian and bisexual female users. Unlike traditional dating apps, the L offers an Instagram-like social platform. Users can post and react to other users’ posts in the app, offering a deeper social experience.

The app also features a public voice chatroom section, with users able to talk together about a variety of topics under labels like dating, gaming, and casual chatting, similar to the model used by social audio companies like Clubhouse.

Chinese startup Hangzhou Rilan Technology developed Rela, which was banned and pulled off from all app stores in June 2021 due to unknown reasons. Seven months later, the app came back online with new branding.

LesPark

LesPark is another dating app used by lesbians in China. It uses a model similar to Tinder and Finka. According to its official website, the app has over 12 million users globally. 

The app generally has a lot of the common dating app features, like speed matching, group chat, voice chat, live streaming, and an open platform for posts. One of the standout components of LesPark is the ability for users to start a random chat with strangers.

Qingyuan Park Culture of Media, a Guangdong-based company established in 2017, owns the app.  It also owns another reading app called Ji Hua Le Du featuring mostly lesbian-themed writings.

Douban

As one of China’s most respected book and movie review platforms, people usually don’t think of Douban as a dating platform. But over the years, the site has quietly become a go-to place for many LGBTQ+ members, especially lesbians, to find friends, thanks to Douban’s openness and friendly attitude towards the community.

The app combines book, film, and music reviews with a Reddit-like community, offering group functions for all kinds of interests and social activities. Many Douban users often post their profiles and seek dates and friends on LGBTQ+ groups.

For example, the largest lesbian group on Douban has 69,151 members. Douban also has a diverse range of lesbian groups, some are location-focused, and others focus on more specific topics. The site has no English language versions, so it’s usually catered to Chinese-language users.

Major Chinese gaming companies Tencent and NetEase partnered with Microsoft’s gaming department to bring some of their games to Microsoft’s gaming subscription service Xbox Game Pass, which Microsoft announced at a Monday showcase event.

Why it matters: Chinese developers like Tencent and NetEase are facing an economic slowdown and a tightened regulatory environment in their home market. The partnerships with Microsoft, home to dominant global gaming platforms and a vast userbase, can broaden the appeals of Chinese-developed games and Xbox’s service.

• The partnership is a good opportunity for NetEase to launch its PUBG-like title Naraka: Bladepoint on a console platform, a format that is vital in the overseas markets.
• Microsoft will be able to give players access to popular titles from Tencent and NetEase, making Microsoft’s Xbox Game Pass a more attractive investment for gamers.

Details: The partnerships will bring titles from Tencent’s US-based developer Riot Games and NetEase’s trending PUBG-like title Naraka: Bladepoint to Microsoft’s gaming subscription service, Xbox Game Pass.

• Each of Riot Games’ five titles, League of Legends, Wild Rift, Legends of Runeterra, Valorant, and TeamFight Tactics, will be available through the subscription service. For instance, subscribers can now unlock all characters in League of Legends and Wild Rift for free. Some other bonus paid content will be free for subscribers later this year. 
• NetEase’s Naraka: Bladepoint, which has already sold 10 million copies (in Chinese) globally on desktop platforms, will be free to Xbox Game Pass subscribers. The title will premiere on Xbox on June 23 before any other console platform. NetEase plans to launch the game on Xbox rival PlayStation at a later date.

Context: Microsoft is making a push to promote its game pass subscription service, in a similar way to the likes of Spotify and Netflix, with users paying a flat monthly fee for access to a gaming library.

• Launched in 2017, Xbox Game Pass had over 25 million subscribers this year, as Microsoft revealed in a January 18 press release.
• Most AAA-level game titles cost around$39 to $49. Xbox Game Pass offers a variety of games for a monthly subscription fee of $9.99, which is significantly different from the traditional games’ buy-to-play business model.
• Apple and Sony have also launched their subscription services, Apple Arcade in 2019 and PlayStation Plus this year.

Chinese regulators released a list of 60 newly approved domestic titles (in Chinese) on Tuesday after another approval pause in May, including titles from notable gaming firms like HoYoverse (formerly known as miHoYo) and Perfect World. In April, the regulators resumed approving new games for the first time in eight months. 

Why it matters: China’s National Press and Publication Administration (NPPA) usually releases a list of approved gaming titles monthly. With no games approved for May, gaming firms seeking to bring new titles online continue to face uncertainty. 

Details: The NPPA, China’s government department for publishing news, films, and games,  gave licenses to 60 new games in June.

• 58 of the 60 listed titles are for mobile platforms (including tablets). The other two are a web game and a client game targeted mainly at desktop users. In comparison, 40 of the 45 approved titles in April were made for mobile platforms.
• The list also didn’t include any titles for console platforms like Xbox, Playstation, and the Nintendo Switch.
• A new title from HoYoverse, developer of the globally popular game Genshin Impact, was approved for June. In addition, Perfect World, the operator of Dota 2 on the Chinese mainland, received a license for an Otome game, a story-based game targeted at women.
• Of the titles approved, 16 are designated as being in the “beta” phase, indicating that a new policy issued last August that allows local governments to approve games in the beta phase has come into effect.

Context: The NPPA’s eight-month halt on the issuance of new gaming licenses had major ramifications for the gaming industry in China, causing a sharp decline in the growth rate of the industry, as well as the downsizing of major players in China’s gaming sector.

• As a result of this uncertainty and stricter policies around teenage gamers in China, gaming companies like Tencent and NetEase began more aggressive expansion overseas as their local business slowed.
• There are still no signs of relief for overseas titles in China to get approvals; the last batch to be licensed was June 2021.

Bilibili has started a round of layoffs in mid-May, according to a report by Chinese media outlet Caixin, citing multiple sources at the company. The layoffs reportedly have affected 20% of staff working with the video platform.

Why it matters: Bilibili has yet to turn a profit since it went public on Nasdaq in 2018. This layoff highlights the company’s urgency to reach its goal of becoming profitable in 2024, as mentioned by CFO Fan Xin in a March earnings call.

• Bilibili’s financial results from 2021 showed that its net loss expanded119% to RMB 6.8 billion ($1.1 billion) throughout the year, a much higher rate than the 62% growth in revenue during the same period. 

Details: The layoffs will mainly affect three departments: streaming, gaming, and commercialization, Caixin reported. A spokesperson from Bilibili told TechNode that the “workforce adjustments were due to business adjustments” and that they had not implemented large-scale staff cuts.

• These three departments will primarily take the brunt of the cut, and Bilbili’s main business units are less affected by the cuts, two laid-off staff from Bilibili told Caixin.
• Some employees that passed the company’s annual performance review were also cut, according to Caixin’s report.
• Some of the staff affected by the layoffs had recently joined Bilibili from other tech giants, with such employees generally negotiating for higher pay and tend to be targeted in layoffs, according to the report.
• The firm offered laid-off employees the “N+1” compensation commonly used in China. “N” is the working years. The company will compensate monthly salary based on the working years plus one more month. 

Context: Major Chinese tech firms like Tencent and JD had expanded layoffs as they are heavily affected by the new Covid-19 outbreaks and subsequent pandemic control measures. Chinese tech firms have expanded the scale of layoffs, even in crucial business arms like Tencent and JD. 

• While layoffs at Tencent began in late 2021, the tech firm expanded layoffs in May, cutting about 20% of staff, including those in the gaming departments, Tencent’s core business units.
• In March, major Chinese e-commerce firm JD also expanded its layoffs, downsizing nearly every business unit, including core retail businesses at the company.

Chinese tech giant Tencent is undergoing another round of layoffs across the company to counteract worsening financial results, Chinese media outlet Caijing reported (in Chinese) last Friday.

Why it matters: Tencent’s reportedly new layoff round indicates that Chinese tech’s “great layoff” is far from over.  

Details: Tencent initially began a headcount reduction at the end of last year, with an estimated 20% of employees at the firm affected. However, continued redundancies at the company, including its core business unit like gaming, in the wake of disappointing financial results may suggest that the cuts will go even deeper. 

• Caijing reported that Tencent has expanded layoffs, focusing on five sectors: cloud computing, gaming, advertising, and content, citing unnamed sources at Tencent.
• The gaming sector appears to be one of the worst-hit, with 10% of the unit’s workforce reportedly let go. The Cloud and Smart Industries Group (CSIG) is another sector that has been heavily impacted by the company’s cutting of staff, having already lost 15% downsizing of its team in March this year.
• The cited sources added that “the layoffs are due to the pressures of business performance” and attempts to “decrease costs.”
• When contacted by TechNode about the report, Tencent declined to comment.

Context: Tencent’s continuing layoff came against the backdrop of a slowing Chinese economy, a widespread regulatory crackdown in the tech sector, and several major hurdles in the gaming realm (including a seven-month pause in new game licenses), where it is an industry leader. 

• Tencent earned RMB 135.4 billion ($21.3 billion) in the first quarter of 2022, a 6% quarterly fall in earnings. The company’s net profit also plummeted by 23% to RMB 25.5 billion compared to the same quarter last year.
• Martin Lau, president of Tencent, said in an earnings call on March 23 that “the entire industry is focused on core businesses, more efficiency, and more cost rationalization.” He also noted that the firm will “streamline for the non-core businesses, or may exit [business areas] in some cases.”
• However, the firm has stated that it will continue to hire more staff than it has dismissed. Tencent’s employee count increased 3% in the first quarter of 2022, according to its financial reports.
• Tencent’s gaming business may also see more growth outside of China. Although revenue from domestic games in the first quarter of 2022 dropped by 1% compared to the same quarter last year, international game revenues grew by 4% to RMB 10.6 billion.
• Tencent is not the only Chinese tech major to have laid off staff in recent months. Since Didi’s US IPO sparked a cybersecurity review and industry-wide crackdown in July 2021, at least 216,000 people in the tech sector lost their job from last July to March, according to the Cyberspace Administration of China. 

A Chinese virtual idol group called A-Soul, backed by ByteDance, has found itself embroiled in a social debate after it canceled the livestream of a virtual member named Carol.

Why it matters: By canceling a virtual member, A-Soul inadvertently prompted a debate on the working condition of the often invisible artists behind virtual idols. Virtual idols are often supported by teams of real human artists who provide voices and dance moves through motion captures and other technology. 

• China’s virtual idol sector has seen a boost after many high-profile stars fell from grace with scandals, such as Kris Wu arrested for rape charges in July 2021.

Details: A-Soul announced on May 10 that it will cancel the daily livestreams of Carol, a leading virtual vocalist of the five-member group. The announcement said Carol will enter a dormant period due to “schoolwork and medical issues.” 

• Fans were shocked by the sudden announcement and expressed feelings of loss on social media platforms. 
• Soon, suspicious fans dug up old social media posts of the actual artist behind Carol, finding that the person has complained about being overworked and has developed multiple illnesses, according to a May 15 report from Chinese media outlet PEdaily (in Chinese).
• On May 11, A-Soul denied in an announcement published on Bilibili (in Chinese) that the artist behind Carol had been overworked and rebuked the base salary of RMB 11,000 ($1,619), which was revealed by social media discussions. However, many fans said they weren’t convinced in the announcement’s comment section. Three days later, A-Soul followed up with another announcement (in Chinese), apologizing for causing trouble to all parties, and published contract termination files of the artist behind Carol. The announcement also denied any “bullying or oppression” in the workplace.
• A-Soul promised that they will not introduce a new member to the idol group and won’t hire another person to control Carol either. The group also said in the announcement that they pay artists with a base salary, benefits, and a 10% commission of livestream income, without revealing exact numbers.

Context: A-Soul was launched in November 2020 by ByteDance and Beijing-based firm Yuehua Entertainment, which manages notable Chinese artists like Han Geng and Wang Yibo. The group’s most popular video has 5.3 million views on Bilibili. Dismissed member Carol’s top 10 videos each have more than 1 million views each on Bilibili.

• Virtual idols have become incredibly popular on Bilibili, a Youtube-like platform for video creators and fans of animation, comics, and gaming content.

Chinese video platform Bilibili announced on Wednesday that it is implementing new rules (in Chinese) to combat the rise of hateful speech and inappropriate content on the platform.

Why it matters: This is another self-cleaning act from China’s video platform. Bilibili has made at least seven announcements to remove inappropriate content since January to comply with tightening content control from Chinese regulators. 

Details: Bilibili said it had noticed an uptick of videos that make unethical jokes about the dead and attacks others based on their gender, occupation, and age. The platform said such disrespectful content is “plaguing the community.” Bilibili will start implementing the rules by deleting such content for the first month. After that, content creators will face account suspension if they continue to create such content.

• The new rules banned three main types of content. The first one is mocking death, sickness, and disability. The second is jokes about disasters and tragic social events. Last, is hateful content directed toward a particular gender group and other groups. 
• The platform gave a few examples: videos making fun of tragic events such as the deaths of NBA star Kobe Bryant and former US President John F. Kennedy, and misogynistic and misandrist content.

Context: As of 2021, Bilibili had 271.7 million monthly active users and 10 million newly uploaded videos per month. The platform has become a thriving community for vloggers and fans of animation, comics, and games. 

• Following Chinese regulators’ scrutiny of toxic and negative content online in January, Bilibili went through a large-scale content moderation to crackdown on content involving cyberbullying, softcore porn, online frauds, and others.

Amid slowing growth and regulatory uncertainty at home, China’s gaming companies are increasingly eyeing overseas markets. Many of them have had impressive growth figures in international markets for some time, but the situation at home is driving them to view foreign gamers in a new light. Established players such as Tencent and NetEase – both of which are in the top five gaming firms in the world – are giving international growth new emphasis, while rising upstarts such as HoYoverse (formerly known as miHoYo), FunPlus, and 37 Interactive Entertainment are seeing surging interest in their titles outside of China.

The diversity in terms of the size of Chinese gaming firms finding success abroad shows that there’s something of a relatively level playing field outside of a domestic market that is dominated by a handful of majors – even small indie game makers are able to strike it big when they look beyond their own backyard. Yet there’s no cheat code for doing well internationally and Chinese game firms face new modes of competition and significant cultural challenges when they venture outside of China. 

READ MORE: The Chinese gaming startup outperforming Tencent overseas

Powering up internationally 

To reflect the increasing scale of its global gaming growth, Tencent started to disclose revenues from domestic games and overseas games as new sub-segments in the third quarter of 2021. 

In a challenging 2021, Tencent’s overseas games saw an impressive 31% yearly growth, while the domestic gaming sector grew by only 6%. Tencent made RMB 25 to 30 billion ($3.79 to $4.55 billion) in overseas games in the first three quarters of 2021, accounting for about 20% of its gaming revenue. Overall, the company saw its slowest revenue and profit growth in five years, 16.2% and 11%, respectively, underlining the international gaming division’s eye-catching performance. 

NetEase first revealed its overseas gaming performance in the third quarter of 2018, saying incomes from overseas markets accounted for 10% of the total net profit in its gaming business that year. The latest figures show that overseas gaming revenue accounted for 11% to 15% of NetEase’s gaming revenues in the first three quarters of 2021. However, the company didn’t reveal a detailed breakdown of overseas gaming revenue in its 2021 annual report.

Although the growth in NetEase’s overseas gaming revenue has been steady rather than spectacular in the last three years, the company has set a goal of expanding earnings outside of China to 50% of its gaming income, with a focus on markets in Japan and North America, according to Chinese media outlet Jiemian. NetEase also dramatically increased its research and development expense ratio in the past two years, hoping to win with better gaming developing skills. The report added that the ratio doubled from 8% in 2017 to 16% in the first three quarters of 2021. 

Chinese gaming companies taking it to the next level overseas 

In March of this year, of the top 10 highest-grossing mobile games globally, four came from Chinese gaming companies, according to Sensor Tower: Tencent’s Honor of Kings and PUBG Mobile, HoYoverse’s Genshin Impact, and Alibaba’s Three Kingdom TacTics. Lilith’s Rise of Kingdoms also made it into the top-grossing list on the App Store. Among the Chinese titles, HoYoverse’s Genshin Impact was the most profitable. Tencent’s PUBG Mobile was second, with Lilith’s Rise of Kingdoms ranked third.

Genshin Impact is a sprawling multiplayer online role-playing game (MMORPG). Launched in 2020, it hit 115 million downloads in its first 18 months, according to Data.ai, a US insight firm focusing on app stores. According to Data.ai, Genshin Impact’s success was so big it helped  put a positive spin on figures for the whole category, pushing MMORPG revenue to grow 17% year-on-year in 2021, despite other titles in the same category showing a slow and even negative increase in revenue.

Tencent’s PUBG Mobile, in many ways, has followed the success of its PC version. The title has found popularity with a new game mode called battle royale, whereby players fight to be the last one standing amid a mass competition with hundreds of other players. Its primary competitor is Call of Duty Mobile, also developed by Tencent and published by Activision, which ranks seventh on Sensor Tower’s list.

Challenging times at home 

Chinese gaming companies are having a tough time getting new games approved and making money in the domestic market due to tightening regulations around young players’ gaming habits and strict limits on new game licenses. 

Late last August, Chinese regulators asked all companies to limit minors’ access to games (in Chinese), with the aim of protecting them from gaming addiction. As a result, those under the age of 18 can only play games one hour a day on Fridays, weekends, and holidays, according to the rules, with no gaming time allowed on weekdays.

Tencent said in its 2021 annual financial report that the new regulations hit the company’s domestic games revenue due to “less spending by minors” and the company allocating developer resources “to implement new measures.”

Around the same time, China also stopped issuing licenses to new games. The regulator only resumed issuing licenses in April, eight months later. This wasn’t the first time the regulator withheld its licensing power. In 2018, the issuing of licenses was halted from March to December. Game publishers in China need a license from the National Radio and Television Administration (NRTA), the state’s regulator for news, print, and publications, to be listed in app stores or to be downloadable on their websites within the country. 

The extended freeze has forced many Chinese gaming companies to downsize. Since last year, major Chinese gaming companies such as NetEase, Lilith, IGG, and Perfect World have had to cut off projects and lay off staff.

READ MORE: China’s gaming industry is downsizing as regulators halt new game licenses: report

What’s next for Chinese gaming companies going overseas?

Amid such problems, many are forecasting another grim year at home for Chinese gaming companies in 2022. DataEye, a Shenzhen-based industry insights firm, wrote in their 2021 annual report that they foresee another slow year ahead. “The domestic market won’t see major growth. 5% growth is optimistic; no growth is also likely,” said the report. Instead, they noted, “The main growth in the industry will most likely come from the overseas market.”

It’s easy to see the allure of international sales given the picture back home. Yet, despite some major success stories so far, achieving sustained growth internationally comes with its own set of difficulties for Chinese game developers. There have been some surprise hits, such as indie outfit Coconut Island’s crossover success Chinese Parents, but for large-scale, longer-term growth, a sophisticated understanding of international markets is required.

“Localization in overseas markets goes way beyond just translating the content in local languages. The key is in cultural localization,” Wang Yangbin, CEO of DataEye, wrote in the firm’s report. “These are problems all top Chinese firms — Tencent, NetEase, and Alibaba — and second-tier companies have to solve quickly.”

How quickly they do so may well determine how soon and to what extent international markets can provide the kind of salvation that many Chinese gaming companies appear to be looking for by heading overseas.   

Chinese startup PopuMusic launched a new portable digital piano called PopuPiano earlier this month. It’s the company’s latest smart instrument after releasing a smart guitar called Poputar and a smart ukulele called Populele.  

The company aims to attract new music learners seeking a fun, flexible way to learn piano and professional composers looking for a portable piano. 

Details: PopuPiano is said to be as capable as a full-size digital piano, featuring 29 keys and a removable chord pad. The early pre-order option is priced at $199.

• The device also comes with a standard musical instrument digital interface (MIDI) keyboard used in note composing and can be used with professional software like Logic Pro X and Cubase.
• The keys are designed to light up in bright colors as a finger guide while playing, helping new players to follow along with a song quickly.
• PopuPiano’s multifunctional chord pad allows players to control drumbeats and trigger chords with one key.
• PopuPiano’s battery life lasts between 10 and 12 hours. The device supports Bluetooth. 
• The PopuPiano can be linked to the PopuMusic app, which offers free tutorials to learners at all levels.

Context: Founded in 2015, PopuMusic is headquartered in Beijing and is backed by well-known investors, including ZhenFund and Shunwei. 

• PopuMusic has over 200,000 users globally and has reached 10,000 monthly shipment units as of August 2021, according to the company.

Chinese tech giant Tencent announced on Wednesday that it will close a gamer-focused accelerator service that allows Chinese gamers access to overseas games. Due to “an adjustment in business operation strategy,” Tencent’s accelerator service will only support domestic games from June onwards.

Why it matters: This move by Tencent has caused players to worry that accelerator services for overseas games may soon become inaccessible in mainland China.

• It is difficult for Chinese players to play overseas Player-versus-Player (PVP) titles like the popular Apex Legends and PUBG: Battlegrounds without accelerator services. These games are popular among Chinese players. For example, more than 1.4 million comments on PUBG: Battlegrounds are in Chinese-language, a sign of wide popularity. Thus, major gaming companies Tencent and NetEase have traditionally offered accelerator services to users. 
• Many popular overseas games are unable to operate in China without a gaming license and a local operation company, making it difficult for Chinese players to enjoy these games due to network issues. 

Details: Tencent announced that its accelerator service called Tencent Jiasuqi will undergo a major update and be renamed Tencent Gaming Assistant. The service will no longer offer users access to overseas gaming networks. Instead, Tencent will offer refunds to users who have already paid for Tencent Jiasuqi. 

• Due to network blocks and the physical distance between Chinese players’ devices and overseas host servers, it is difficult for Chinese players to play video games with foreign players. Tencent Jiasuqi has allowed players to bypass these blocks and build a steady virtual private network.
• One Chinese Apex Legends player told TechNode that the suspension of Tencent’s accelerator service for overseas gaming will greatly limit their gameplay experience. While PVP games with servers in Hong Kong and Taiwan will still be available for users, titles in other regions outside of China will be completely unavailable. 
• The player also noted that NetEase’s UU Jiasuqi is one prominent alternative that is still in operation.

Context: There are over 100 gaming network accelerators in China for players, but many have less tech stability than Tencent’s and NetEase’s services.

• To enter the Chinese market, foreign gaming firms are required to cooperate with local Chinese operators, and each game must have a gaming license from China’s National Press and Publication Administration (NPPA). However, the NPPA has not issued any licenses for overseas games in more than nine months.
• Playing games directly from overseas platforms is still a gray area for Chinese players. Overseas gaming platforms like Steam are less accessible to Chinese gamers, with network “accelerating” services the only way to bypass these measures.

On Monday, China resumed issuing new gaming licenses (in Chinese) after pausing it for eight months when the country began a broad crackdown on content, gaming, and the education sector last summer. 

Why it matters: The halt on new gaming licenses led to an 8-month-long winter for the gaming industry in China, forcing many game makers to downsize, cutting down on development projects, and laying off staff. 

• Small studios took the heaviest hit during the license freeze. About 14,000 small gaming companies and gaming-related firms reportedly went out of business by the end of 2021, according to the South China Morning Post.

Details: On Monday, China’s National Press and Publication Administration (NPPA)  released a list of licensed games for April, made up of 45 Chinese games. It’s the first list of licensed games released by the administration since last July, with new licenses put on hold since August.

• Major Chinese gaming companies like 37 Interactive, Lilith, and Baidu were all granted new licenses this month. However, the country’s two largest gaming companies, Tencent and NetEase, were absent from the list.
• 89% of the approved games are made for mobile platforms, while 9% are for desktop devices. The list of newly licensed games also includes one indie title for the Nintendo Switch, called “Clocker.” The game was initially released on the desktop gaming platform Steam and received a favorable rating of 84%.
• The list of newly licensed games does not include any overseas games, which have become increasingly attractive for Chinese players as they face tighter regulations at home.

Context: China has strict rules for publications, which apply to video games. Companies must apply to NPPA for gaming licenses to publish new games. In the seven months of 2021, before the freeze, China issued 675 gaming licenses, averaging 96 per month. 

• Chinese authorities had initiated long periods of gaming license freeze in the past. In late 2018, the gaming industry saw 80 new licenses approved after a 9-month hiatus. 

• In addition, stricter rules for Chinese gaming companies at home pushed NetEase, Tencent, and others to focus more on developing games for the overseas market.

After China’s ride-hailing giant Didi was put under a cybersecurity review by the Chinese authorities last July, the country’s internet sector quickly entered a period of painful adjustments. Companies began closing unprofitable units and cutting staff wherever they could. Layoffs have since become so widespread that some Chinese tech majors have been attempting to soften the blow by telling fired employees that they have “graduated,” but it has become increasingly difficult to put a positive spin on such moves, as China’s consumer-facing tech companies go through a significant upheaval. 

Since July 2021, major Chinese tech companies have laid off at least 72,779 employees, TechNode research has found. After compiling news reports, company statements, and other sources from the past nine months, TechNode found 27 instances where major Chinese tech companies were reported to be making significant layoffs, with at least 10 such instances affecting more than 30% of employees at their respective companies. Some firms dismissed entire departments almost overnight.

After combing through the statistics, it is clear that layoffs have become a regular occurrence at Chinese tech companies. In the past nine months, there has been an average of two rounds of layoffs per month. Moreover, in the same period, ByteDance has had five separate rounds of staff reductions alone, making it the top cutter among the major tech companies in the country.

China’s “great layoff” first hit the edtech sector, prompted by a surprise national regulation barring all private curriculum tutoring, which took effect in July. It then hit less profitable units in the e-commerce sector, and most recently, it spread to Meituan, Alibaba, and Tencent, powerful leaders of their own sectors that had previously proven largely immune to the effects of any regulatory changes or downturns. 

Education, e-commerce, and the content and entertainment industry are the three sectors to bear the main brunt of this wave of layoffs. But just how far-reaching have the cuts been?

Cloud services, social platforms, and more

In March, Tencent, a major cloud service provider in China, started a 20% layoff of its team in the sector, affecting an estimated 12,000 employees. ​​The firm’s Cloud & Smart Industries Business and Platform and Content Group took the biggest hit.

Twitter-like microblogging service Weibo, one of the biggest social platforms in China, laid off at least 200 employees and introduced a stricter performance review standard in February 2022. Weibo has declined to describe the moves as a layoff, saying they were “structural adjustments.”

ByteDance also cut numbers at its customer service unit in October 2021, removing somewhere between 30% and 70% of the team due to what it termed “business adjustments.” 

Didi, which is still going through a national cybersecurity review that launched nine months ago and is looking to delist from the US stock market, reportedly cut 20% of its employees in February. 

Content and entertainment

The content and entertainment industry is another area where players large and small have been handing their employees grim news. Since last July, four major companies in the sector have undergone six rounds of dismissals and restructuring. 

ByteDance laid off at least 179 employees in two rounds last year, one of which was mainly focused on its gaming development business, Ohayoo. The company said that recently-hired college graduates would be reassigned to other vacancies as part of the round. The TikTok parent company followed this with another round of layoffs on October 20, aimed primarily at its commercialization and gaming businesses.

TikTok’s major rival in China, Kuaishou, started to lay off staff at the end of 2021, first in its commercialization team and then across multiple sectors. The company reportedly removed somewhere between 10% and 30% of its employees.

iQiyi, a Netflix-like streaming platform backed by Baidu, was reported to have cut between 20% and 40% of employees in December 2021. The company promised to compensate these unlucky employees, offering them bonuses based on how long they had worked at the firm.

While it’s undoubtedly been impacted by the overall economic downturn, the content and entertainment sector has also been hit by regulatory scrutiny, with crackdowns targeting celebrity culture and related idol content as well as the gaming sector. Pop Idol-like shows on platforms such as iQiyi have been banned and China put a pause on issuing new gaming licenses last year, essentially stopping companies from releasing new games. In addition, China has introduced strict controls targeting teenage players, limiting their playing time and payment for games. In response, Chinese gaming companies have shut down numerous development projects and turned to overseas markets, with their China workforces naturally being affected. 

E-commerce

E-commerce, a longtime booming sector in China, has also seen contractions. From July 2021 to March of this year, at least 11 major tech companies in the industry have downsized their workforces, according to TechNode statistics. 

Most recently, Meituan began on April 8 with an up to 20% cut across its business lines, including its core food delivery and hotel booking businesses.

Chinese e-commerce giant Alibaba has been through two rounds of layoffs in the first quarter of 2022 alone. The first round was in January this year, when it cut headcounts at its food delivery platform Ele.me and local shop review business Koubei. Two months later, Alibaba’s layoff expanded to the entire local service sector, with 30% of its employees losing their jobs.

Tencent also announced that it was making 30% of the staff at its e-commerce platform Mogujie redundant in late 2021, blaming the unit’s poor market performance. 

Community group buy, a subsector that caught on during the height of the first wave of the coronavirus pandemic in 2020, has seen deep cuts as part of the ongoing layoffs. The cash-burning sector quickly cooled down after the State Administration for Market Regulation (SAMR) demanded companies stop price dumping and other unfair competition practices in December 2020.  

Smaller players in this subsector have been hit hard, with one example being Tongcheng Life, which filed for bankruptcy last July. Those backed by bigger companies have also been forced to make adjustments to remain competitive. Didi’s Chengxin Youxuan cut about a third of its staff, while Alibaba-backed Nice Tuan stopped operating in several cities. 

Fast forward to late March, and JD was reportedly planning company-wide cuts of between 10% and 30%. Its community group buy unit Jingxi is thought to see the deepest cuts.

Other tech companies offering local services, such as apartment rental platform Ke.com and farm-to-table grocery startup Meicai, have followed suit. Ke.com cut its entire development team in October 2021, while Meicai laid off nearly half of its workforce around September 2021.

Dian, a Chinese startup offering rental charge packages for phones, was reported to have laid off 40% of its employees on March 1. According to Chinese financial media Lanjing, the company dismissed at least 2,000 employees. However, the company denied the news, saying it was merely making “adjustments in employee structure.” 

In addition, popular milk tea brand HeyTea, which makes heavy use of e-commerce and online promotions to support its business, was reported to have cut its workforce by 30% in February this year.

Education

After China’s new regulation on education agencies took effect in July 2021, there were at least five rounds of layoffs in tech companies focusing on education. More than 5,400 people lost their jobs.

Companies in the sector saw their stock prices crash after July 24. Within a day, Gaotu fell by 54%, New Oriental by 63%, and TAL Education saw more than 70% wiped off its share price.

Gaotu was reported to have laid off more than 10,000 employees in early August 2021. Another education giant New Oriental reportedly dismissed over 40,000 employees in mid-September. It wasn’t just the leading names in the industry who were hit, however,  Acadsoc, a Chinese company offering courses by foreign teachers, laid off 90% of its workforce on July 29, 2021.

Chinese tech unicorn ByteDance was also forced to make cuts. The company went through a series of downsizings in its education sector, with a first round in early August followed by a second round in December, shedding more than 1,000 employees. 

Looking ahead

On April 8, China’s internet regulator, the Cyberspace Administration of China (CAC), confirmed in a statement that 12 major Chinese tech companies (Tencent, Alibaba, Ant Group, ByteDance, Meituan, Pinduoduo, Kuaishou, Baidu, JD, NetEase, Weibo, and Bilibili) have laid off 216,800 staff from last July to March. However, CAC said “the number of employees in internet companies has remained stable,” disputing the layoff trend, adding that these companies have also hired about 295,900 new employees during the period. 

As painful as these adjustments have been to date, it seems unlikely that Chinese tech majors are in the clear just yet. Regulatory scrutiny will continue (perhaps in a more predictable fashion as the government prioritizes economic growth), rising geopolitical concerns mean that firms listed on US exchanges, in particular, will come under pressure, and China’s ongoing attempts to pursue a ‘zero Covid’ policy may mean further disruption for businesses. 

Since early March, China has extended lockdowns in the key growth city of Shanghai and introduced new control measures across the country to adhere to its zero Covid policy amid a resurgence in the number of coronavirus cases. As China’s economy takes a hit, the country’s tech sector is likely to come under more pressure. China’s State Council executive meeting on April 6 also acknowledged the challenge ahead, admitting that the country’s economy faces “complexity and uncertainties” that have exceeded expectations, and that “the recent Covid-19 outbreak in China has increased difficulties for market entities, and increased new downward pressure on the economy.”

There are some glimmers of hope, however. Although Didi’s investigation put a pause on Chinese tech companies seeking overseas listings, there appear to be moves to help Chinese businesses raise money more easily on foreign stock markets. Chinese Vice Premier Liu He said in a mid-March meeting that “China continues to support companies seeking to go public overseas,” offering the first major positive signal on the issue in nine months. Moreover, China’s securities regulator has proposed changes to long-standing rules in an attempt to avoid US-listed Chinese companies being delisted by American regulators.  

Nevertheless, the big picture remains unpredictable for China’s tech powerhouses. After years of unbridled growth, it’s clear that the industry has been through a turbulent period of late. Whether the widespread “adjustments” made across multiple sectors will be enough to stave off further disruption remains to be seen.

Chinese video platform Bilibili introduced a new earphone brand called Bilipods with a first product on Wednesday, as it attempts to expand its business in the consumer electronic market.

Why it matters: In the past, Bilibili has partnered with consumer electronic companies to release products with its branding. The launch of Bilipods indicates that the video platform wants to go a step further and utilize its large user base (about 270 million in 2021) to benefit from the booming earphones market.

• In 2021, earphone shipments in China rose to 78.98 million units, a 55.4% yearly growth, according to market intelligence firm IDC.

Details: On Wednesday, Bilibili officially promoted the new earphone brand and its first product to the public. The video platform previously released its earphones and headphones through BEMOE, a sub-brand focusing on various animation-related merchandise.

• Bilipods was first announced on the social media platform Weibo on March 24, saying the brand will focus on products themed in animation, comics, and gaming (ACG), a key focus area of Bilibili.  
• Two days after the announcement, Bilipods released its first product: a wireless earphones themed after the popular Japanese manga Demon Slayer: Kimetsu no Yaiba, one of the most popular animation series on Bilibili, with more than 1 billion views. 
• The newly released earphones support high-resolution audio with bluetooth version 5.2. Users can also enjoy special UI animation effects while watching videos on Bilibili. It costs RMB 249 ($39.2), targeting the mid to low-end market.

Context: This isn’t the first attempt by Bilibili to get into consumer electronics, as the company has previously joined forces with a variety of consumer electronics manufacturers to launch products using Bilibili’s branding. 

• To celebrate Bilibili’s 10th anniversary in 2019, the company collaborated with keyboard maker Cherry to launch a Bilibili branded keyboard.
• Founded in 2009, Bilibili has become one of China’s largest video platforms and animation communities, with a vast collection of original animated content. 

ByteDance, the creator of hugely popular short-video apps Douyin and TikTok, is reportedly internally testing a new news aggregation social app called Shiqu.

Why it matters: Unlike ByteDance’s other more popular offerings that rely on algorithm-based recommendations, Shiqu offers an algorithm-driven news feed that also allows customized RSS imports. The app looks to target well-educated readers, judging by screenshots of the test versions reported by the Chinese outlet iFranr. 

• The new app could put ByteDance in competition with other Chinese apps that focus on creating a thinking community, such as the social and review platform Douban and Quora-like Zhihu. 

Details: Shiqu has two main features: topic-based reading boards and discussion groups, similar to Flipboard plus Reddit. Users can subscribe to their favorite topics or accounts, which routinely offer new content. The app’s other main feature offers a Reddit-like community, where users can join or create new groups related to specific topics and start discussion threads, according to the iFanr report. 

• The app was first reported by the Chinese media outlet Tech Xingqiu in January. The outlet said the app is invite-only and selects high-quality content from ByteDance’s news aggregator Jinri Toutiao. At the time of publication, the app still hasn’t been opened for public registrations.
• ByteDance declined to comment on the app when reached by TechNode on Wednesday.

Context: ByteDance first won mainstream success with a Chinese news aggregator called Jinri Toutiao, a mobile-first app that curates news based on algorithms. Shiqu looks to be catering to a more sophisticated user base that wants a customized reading experience and communities to discuss ideas. That target puts Shiqu in competition with established players like Douban.

• First launched in 2005 as a website, Douban is known as the spiritual home of Chinese hipsters. It is a book and movie review site with robust group discussion features,  akin to a combination of Goodreads, Rotten Tomatoes, and Reddit.
• Douban has received increased attention from Chinese regulators since late last year, prompting the platform to close certain groups and implement stricter oversight of users’ posts.
• ByteDance is not the only Chinese tech company vying for a Douban-like user base. Last week, Douban sued Twitter-like Weibo for imitating its community content, including copying group names and approaching Douban community leaders to work for Weibo.

TikTok’s Chinese rival Kuaishou posted better-than-expected financials for the fourth quarter of last year, but the company’s shares dropped more than 6% as regulators signaled a tightened scrutiny of livestreaming e-commerce.

Why it matters: Kuaishou’s share drop reflects market concerns over further potential regulatory measures aimed at the livestreaming industry. The Chinese government has already stopped some of the top livestreaming celebrities, such as Viya and Cherie, from livestreaming and removed their public social media profiles due to their tax evasion behaviors.

READ MORE: The Big Sell | Tamed livestreamers and Tencent stake cuts 

Details: Kuaishou’s revenue increased by 35.0% in a year to RMB 24.4 billion ($3.8 billion) in the fourth quarter of 2021, exceeding the high end of forecasts ($3.76 billion) compiled by Yahoo Finance. The company’s total revenues for 2021 grew by 37.9% year on year to RMB 81.1 billion.

• However, the company’s shares dropped 6.24% today on the Hong Kong stock exchange despite opening high this morning after its Tuesday earnings report. A commentary posted by China’s state-backed China Taxation News may have triggered a change in market sentiment, according to local media. The state tax media called for stricter taxation policies for livestreamers.
• Analysts remain bullish on the long-term prospects of the company. Thomas Chong, analyst of investment bank Jefferies, said he expects “market share gains to continue in online marketing and e-commerce GMV with solid user growth trends and rising engagement” in the first quarter of 2022. 
• The company’s annual report also revealed a major change in its revenue structure. Online marketing services overtook livestreaming to become the firm’s largest revenue source in 2021. Kuaishou’s online marketing services recorded RMB 42.7 billion of revenue last year, a 95.2% yearly increase. That’s 52.6% of the company’s total revenue, up from 37.2% a year earlier. Meanwhile, livestreaming revenue decreased by 6.7% in a year to RMB 31 billion in 2021. Its share of the company’s total revenue dropped to 38.2% in 2021 from 56.5% in 2020.
• E-commerce is another revenue driver for the company. Revenue for the company’s other services, mainly e-commerce, doubled to RMB7.4 billion in 2021. The company attributes the growth to “optimizing supply, content, services, technology and user experience.”
• The company’s globalization initiative, a move to compete with ByteDance on the international market, started to show “positive effects” in the fourth quarter after boosting operational efficiency and implementing more disciplined budget plans. The company said it saw increased daily active users, user time spent, and retention rates in the overseas market without further details.
• Kuaishou’s average monthly active users hit 578.0 million in the fourth quarter of 2021, growing 21.5% in a year.

Context: After a high-profile IPO in March 2021, Kuaishou has been fighting an uphill battle amid fierce domestic competition from TikTok sister app Douyin. The Beijing-based company recently underwent massive layoffs alongside other Chinese tech majors downsizing in the economic downturn. 

• Kuaishou made its overseas business a priority in March by creating a new department for international commercialization.

Additional contributions by Ward Zhou

The annual meetings of the National People’s Congress (NPC) and the advisory Chinese People’s Political Consultative Conference (CPPCC) being held this week are most important for the windows they provide into the government’s economic targets and policy priorities in the coming year. 

But the so-called “two sessions” meetings also enable some top private enterprise executives who are members of the two bodies to present recommendations for policy directions publicly. This year, airing perspectives from tech industries were founders of Tencent, Baidu, NetEase, Xiaomi, and Geely. Their recommendations perhaps won’t be taken up by government authorities this year but might merit serious official consideration in future years.

READ MORE: China’s Two Sessions 2022: More 5G, rural e-commerce, semiconductors, and other tech priorities

Risky new technologies

In his ninth year as an NPC delegate, Pony Ma, founder and CEO of Tencent, urged more emphasis on the digitalization of pillar industries, standardized processes, and customized support for specialized high-tech enterprises. He also warned about the market risks inherent in the emerging sectors of the metaverse, non-fungible tokens (NFTs), and Web 3.

With regulatory risks remaining a major concern for tech giants, the billionaire’s comments largely aligned with the government’s bigger picture initiatives ranging from digital transformation to the call for large enterprises to fulfill their social responsibilities and work toward carbon neutrality. Ma made no comments about online gaming, a key revenue source for his company and an area in which many other delegates advocated for harsher regulation.

Ma also called for the government to build a social emergency network for sending disaster warnings and coordinating rescue resources by learning from the flood relief experiences in Henan and Shanxi last year. He suggested mobilizing local groups like community volunteers, food and package delivery workers, and ride-hailing drivers to be trained for natural emergencies.

Green transport and cultural IP

Robin Li, founder and CEO of Baidu, focused his remarks on autonomous driving and green computation. He urged the government to give more support so China can take the lead in commercializing fully autonomous driving. Specifically, he suggested government support for companies testing autonomous cars without safety drivers, preparing roads for automated cars, and building smart transportation infrastructure.

Li also proposed the creation of more green AI services as a way to achieve China’s goal of reaching carbon neutrality by 2060. China should optimize AI algorithms to minimize carbon emissions and develop big models that cut energy consumption. He also recommended public data centers set up ways to measure their carbon emissions.

According to NetEase founder and CEO Ding Lei, building a global intellectual property (IP) platform for exchanging cultural IP, digital video, and musical content should be a national priority. It’s an area that NetEase, the parent of popular music and video streamer NetEase Cloud Music, has already tapped this year with the launch of the beat trading platform BeatSoul in January.

Ding also called for more research on sodium-ion batteries as an alternative to the more popular lithium-ion ones to lower the price of batteries. In addition, recycling and rental services for lithium-ion batteries were also proposed as possible measures to address the issue.

Recycling, recharging, swapping 

Lei Jun, co-founder and chairman of Xiaomi, recommended the government improve consumer electronic waste recycling and set unified standards for monitoring carbon emissions of new energy vehicles (NEVs). Not coincidentally, the smartphone maker made plans to build its own electric vehicles last year.   

Lei called to consolidate three core processes (trading of used products, reproducing, and scrap dismantling) into one recycling system. Government should pay more attention to safeguarding former owners’ privacy in the recycling process, Lei said, by setting up third-party organizations to erase personal data found in second-hand devices. 

Lei urged the government to build high-voltage fast-charging stations for NEVs on a large scale. He also suggested the government build a national platform to help different companies jointly develop fast charging and other essential techs.

Li Shufu, founder and chairman of automaker Geely, proposed that battery-swapping stations be built across the country, so more people could adopt NEVs without worrying about finding charging stations. 

Li called for regulators, industry groups, and market players to establish unified and generalized standards for swapping technologies. The government should green light rules to speed up approval for swap stations’ land use and cut red tape involved in getting permits to sell swappable electric vehicles (EVs), Li said. 

Although Tesla CEO Elon Musk views battery swapping as an “unlikely” solution and many others worry about the technology’s scaling problems, Chinese companies are jumping into the market in the hope that the service can work at scale in the world’s biggest EV market. Separation of the battery from the vehicle, along with battery-leasing options offered by carmakers, could also reduce the upfront purchase price of EVs, which could increase competitiveness and boost adoption. Beijing showed its support for the technology by defining swap stations as complementary to charging facilities in its “new infrastructure” investment plan for 2020.

China’s IT regulator urged tech companies to stop forcing users visiting web versions of their services to download apps in a Thursday meeting.

Why it matters: The suggestion could cut profits from major internet companies as they might see app users and data decrease. Chinese internet companies often use their web applications to attract new users to mobile apps, from which they can collect users’ information and promote products more easily, especially after browsers start to set a stricter countermeasure to protect users’ privacy.

• Chinese tech companies such as Baidu, Weibo, Zhihu, and Sohu, often require users who visit the mobile web version of the services to download their apps, or else, limiting their access to the mobile web services or trick them into clicking an adjacent button to download the apps.
• Compared to Chinese social media companies, global service providers like Facebook, Twitter, and Reddit have focused on building more app-like features into their websites, making the web experience more pleasant.

Details:  The regulators made the urge following a public complaint. On Feb. 11, a user complained that many tech companies forced people to visit a mobile web version of their services to download apps, according to a complaint posted on state media People’s Daily’s leadership message board. The board allows users to post suggestions for leaders of relevant ministries in China. The Ministry of Industry and Information Technology (MIIT), China’s administration for the IT industry, responded to the complaint, promising they would conduct in-depth research on forced app installation.

• MIIT asked service providers to stop forcing users to download apps without their approval and add a prominent option to cancel downloads. 
• MIIT also asked service providers to provide better mobile web users’ experience, avoiding using techniques such as folding web pages, pop-up windows encouraging app downloads, and frequent alerts. 
• At the time of the publication, Zhihu and Sohu have gotten rid of their app install walls, while Baidu Tieba still requires users to download apps to read full threads.

On March 2, Chinese regulators published a new draft of rules on notifications and pop-ups. The rules hope to stop Chinese apps’ excessive use of the tools and control what content gets shared in the notifications. 

Why it matters: Chinese tech companies widely use notifications and pop-ups to promote their services. New rules curtailing their use could hurt service providers such as Baidu, Tencent, and Meituan, which rely on such methods to promote their products and generate profit from advertisements.

• The new rules also indicate tighter controls on content. Article 5.3 of the draft proposal said that unauthorized platforms aren’t allowed to send news information in notifications.  

Details: The Cyberspace Administration of China (CAC), the country’s internet regulator, has published the draft rules as part of a public consultation period until March 17.

• The draft rules require service providers to not “abuse” notifications and pop-ups to sensationalize trending social issues or entertainment topics. 
• They also dictate that notification and pop-up pushing service providers must publish content that adheres to the government’s “core values.”
• Advertising via pop-up windows would be required to show a visible close button and carry a clear notice to users about the paid nature of the content, according to the draft regulations.
• Service providers that don’t qualify for an internet news license (our translation) by CAC would be barred from pushing news notifications and pop-ups under the proposed rules.

Context: The draft regulations appear to be part of a coherent effort to “clean up” the Chinese internet content offerings after CAC’s new algorithm rules took effect at the start of March.

• Chinese tech companies have been accused of abusing notifications and pop-ups and using them to excessively push commercial promotions or sensational content. Chinese Android phone users receive 100 notifications every day on average, according to an industry group Universal Push Association.
• Such notifications and pop-ups can mislead people, according to Sina’s consumer complaints platform Heimao, especially the young and elderly who are susceptible to downloading unnecessary apps or committing to spending money on such platforms.

NetEase plans to seek further partnerships with Microsoft and Activision Blizzard as it eyes overseas expansion, the company’s CEO Ding Lei said on a Thursday earnings call. 

Why it matters: NetEase is looking to expand its gaming business overseas as its domestic business faces regulatory uncertainty. As China’s second-largest gaming company, NetEase’s move is indicative of an industry trend.  

• NetEase develops and operates many popular games in China, such as Minecraft, Onmyoji, and the phenomenally popular game Harry Potter: Magic Awakened. The company has a 17.5% share of the Chinese gaming market, while market leader Tencent has 51.5%, according to a 2019 Q1 dataset from iResearch, a Chinese consultancy firm.

Details: NetEase said it plans to expand its games outside of China. The company is also seeking to diversify its gaming offering, promising to build new games in the metaverse and for established consoles.

• NetEase, a long-time partner of Microsoft and Activision Blizzard, said it hopes to further build on these relationships this year. NetEase has operated Minecraft, a sandbox game owned by Microsoft, in China since 2017. The company also plans to release Diablo Immortal, the world-famous game developed by Blizzard, in China this year. 
• The company has focused more attention on foreign markets in recent months, cooperating with foreign game studios and hiring international talent. It also plans to release an international version of Harry Potter: Magic Awakened targeting foreign players this year. 
• The company has also spoken of plans to develop games for consoles, a format less popular in China where most users play on mobile devices and PCs.
• NetEase also plant to build metaverse features, hoping to harness its experience in building multiplayer online role-playing games to create immersive, 3D games for the much-buzzed online ecosystem.

Context: NetEase’s online game services reported RMB 17.4 billion in net revenue for 2021, a 29.8% yearly increase, making it the company’s fastest-growing unit, according to its Q4 earnings released on Thursday. The Q4 growth rate is almost double the gaming unit’s annual growth rate of 15%. 

• Online game business accounts for 86.7% of NetEase’s profits, while Youdao, a translation service, accounted for 6%. 
• China’s gaming industry is downsizing as regulators have frozen new game licenses. NetEase cut projects and laid off staff last year.
• Microsoft announced mid-January that it will acquire Activision Blizzard in a $68.7 billion deal, the biggest merger in gaming history.

China’s gaming companies are cutting off projects and staff as the industry still lacks permission to release new games, Chinese media outlet Hongxing News reported on Tuesday. 

Why it matters: China’s gaming industry has achieved steady growth despite increased regulation, with the actual sale revenue of self-developed games in the domestic market reaching RMB 255.8 billion ($40.4 billion) last year. However, the growth rate dropped sharply from 26.7% to 6.5% since 2020, according to a China Audio-video and Digital Publishing Association report.

• China’s National Press and Publication Administration (NPPA), the state’s regulator for news, prints and publications, stopped issuing new game licenses since July last year, without which new games cannot be released legally.
• Gaming companies have been forced to cut projects and lay off staff. About 14,000 small studios and gaming-related firms went out of business in 2021, South China Morning Post reported late last year. 

Details: News about Shanghai gaming industry leaders laying off workers and cutting projects began to circulate on the Chinese internet in the past few days. Companies like Netease, Baidu, Lilith, IGG, and Perfect World have made cuts, Hongxing reported. 

• Insiders from Lilith, one of China’s largest gaming companies by revenue, said that it has canceled the game Apocalypse Eden due to licensing problems. Members of the project team had been transferred internally.
• Another insider from Netease told Hongxing that the company had begun pausing developing projects as early as August last year and reassigned employees internally. Some staff have chosen to leave.
• An unnamed internal employee at IGG, a Chinese gaming company focused more on the foreign market, confirmed that it has cut staff in its Shanghai and Fuzhou offices, while continue to keep the lights on international gaming projects.
• Perfect World, the official operator of Dota 2 in mainland China, had already streamlined hundreds of employees in the fourth quarter of 2021.

Context: The last batch of games approved by the NPPA were granted licenses last July, seven months ago. The Chinese gaming industry was hit with a similar freeze in 2018, when new game approvals were stopped for nine months.

• Companies like Tencent and Netease were summoned to talk with regulators last year about “profit-making practices” as new regulations restricting playtime for minors were implemented. 
• Last September, new rules restrict minors playing video games to just one hour on Fridays, Saturdays, and Sundays, as well as on holidays.

Most popular Chinese female-oriented online games released new content to celebrate Valentine’s Day and attract new players. 

Why it matters: So-called otome (“maiden” in Japanese) games target female players and are predominantly designed as role-playing games (RPG) or simulation games. Gaining in popularity in China since 2017, these online games cater to female players’ emotional needs by offering various romantic fantasies. Valentine’s Day has become the most popular annual event for these game makers.

Details: Eight out of the top 10 otome games listed on TapTap, a game review platform and player community, released special content for Valentine’s Day.

• For example, I Should Be a Rich Lady (Wo Ben Qian Jin, in Chinese), the most downloaded otome game in Apple’s Chinese app store, unveiled a Valentine’s Day contest on Feb. 10. Players are asked to vote for their favorite romantic characters. The game maker, Tomato Games, will produce customized stickers for the winning character based on the votes, according to the announcement (in Chinese). The game’s app ranks fourth overall in Apple’s RPG category.
• Mr. Love: Queen’s Choice, produced by Papergames, also released an update, adding more holiday plots and scenes. One of the most popular female-oriented games, this game provides a simulated romance experience. Players have the chance to win cash and other game content rewards  (in Chinese) during the time-limited update.

Context: Valentine’s Day has become the most popular and profitable holiday for Chinese otome game makers. It is followed by May 20, a date which sounds like “I love you” in Chinese. Third-ranked is the Qixi Festival, China’s traditional Valentine’s Day. It falls on the seventh day of the seventh month of the lunar calendar. All three are lucrative holidays. 

• As in the world’s other top 10 games markets, the majority of Chinese otome participants play on mobile platforms such as smartphones and tablets, according to Newzoo.
• Otome games will constitute a $151 million market by 2023, according to Chinese consultancy Intelligence Research Group (in Chinese).

Only three days after China’s metaverse social app Zheli topped the App Store in China, an impressive feat for a newcomer, the app’s owners pulled the platform from app stores across the country to address various controversies.

Zheli, which means “gel” in English, is a 3D avatar maker that allows users to share their daily lives with friends and shows users’ approximate location and mode (at school, at work, or near a shopping mall). 

The app provides fashionable characters and outfit options to create a customized avatar. It became an instant hit in China after its launch in January. Zheli allows users to add up to 50 friends via the app.

Why it matters: The quick rise of Zheli, less than one month since its launch, is a rare success story in China’s social networking industry, which has been long dominated by Tencent’s super app WeChat. Zheli’s emergence has further fueled the ongoing metaverse frenzy in the country, which has been building momentum since last year.

• On Feb. 11, Zheli replaced WeChat as the most downloaded app in the App Store in China with a record high of 435,000 downloads. It’s the first time an app has taken the top download ranking from WeChat since 2019.
• Chinese tech giants Baidu, Tencent, and ByteDance have been investing and developing metaverse features and services in the wake of the global metaverse craze.
• China’s metaverse social networking companies also includes Soul and ByteDance’s Party Island.

Details: Beijing Yidian Digital Entertainment Co., Ltd, the operator of Zheli, said in a Feb. 13 announcement that it had removed the app from app stores and suspended new user registration voluntarily to improve the experience for existing users.

• The firm cited various stability issues (slow loading time, constant crashes) as the major reason for the removal. But it denied having collected user information without permission when users made friend referrals through third-party messaging tools like WeChat and QQ. Last week, users claimed that the company violated users’ privacy. 
• “I like the app for its designs and youth culture, but there’s still a lot of room for improvement functionality-wise,” Echo Gong, an analyst from research agency Coresight, told TechNode. 
• Users can invite new friends on the app either through phone contact list or WeChat. But it could be a time-consuming experience as WeChat doesn’t support direct link invites and users might have to open browsers to complete the process. 
• Zheli’s communication functions are still limited to photos and microblogging, less diversified compared with mainstream social platforms, which offer formats such as long texts, short videos, and emojis, Gong added.

READ MORE: Metaverse in China: Investors and tech leaders say they are prepared

Chinese tech giant Tencent has launched a major reshuffle in its entertainment and content production business, setting “social responsibilities” as the primary goal for film production arm Tencent Pictures.

Why it matters: Tencent is the latest among China’s tech giants to make changes to their business to stay safe amid wider regulatory crackdowns.

• Tencent, along with Alibaba and Meituan, have taken the brunt of China’s regulatory wrath over the past year.
• Chinese tech companies are scrambling to show their willingness to comply with the country’s broad goal of lessening inequality (reaching “common prosperity”) to stay on the safe side of an intense period of regulatory changes. 

READ MORE: Insights | Why Chinese tech giants are becoming very generous

Details: Tencent has merged Tencent Pictures, a unit under the company’s Platform & Content Group, with its Corporate Development Group, Chinese media outlet Jiemian reported on Thursday. Cheng Wu, vice president of Tencent Group and CEO of e-publisher China Literature, will oversee the business.

• After the adjustment, Tencent Pictures will focus on producing content that promotes Chinese core values to “take more social responsibility,” according to the report.
• Tencent Pictures affiliates such as television and film production company New Classics Media and China Literature’s film production unit will lead the development of the group’s existing commercial IPs.
• An anonymous source told Jiemian that commercialization will no longer be the top priority for Tencent Pictures, which has a new commitment to producing content promoting mainstream values, such as A Lifelong Journey, a TV series now airing on state broadcaster CCTV.
• Tencent could not be reached when contacted by TechNode on Friday.

Context: In 2014, Chinese President Xi Jinping called on local artists to present socialist core values in their works.

• In January, Tencent replaced the dystopian ending of the cult classic movie “Fight Club” with a happy ending and cut all nude scenes in a version streamed on Tencent Video. The company later restored the ending after a global backlash.

Chinese tech unicorn ByteDance is internally testing a new social app as well as three other new products and services, Chinese media Tech Planet first reported on Thursday. The three other offerings are a search app, a gaming community platform, and a near-distance automated delivery service.

Why it matters: Called Paiduidao in Chinese, meaning “party island”, the social app marks a new attempt from ByteDance to build its own rival to Tencent’s ubiquitous WeChat. Frustrated with competitors’ link blocking behavior, the short video giant has been trying to develop its own communication platform since 2019 but failed several times. 

Details: ByteDance is testing Paiduidao internally at a small scale, and users can only try it with an invitation, a company spokesperson confirmed with TechNode on Thursday. The company is also testing several other products: a search app called Wukong Sousuo (meaning “Wukong search”; Wukong is the name of beloved mythical figure the Monkey King); a gaming community and ranking service called Lingxuan (meaning “soul choices”); and a robotic delivery service for short-distance orders. 

• It’s currently unclear what ByteDance’s new social app has to offer. Tech Planet tested the offering and called it “a metaverse social app,” saying it allows users to create customized avatars and enjoy immersive experiences such as having virtual musical parties and chatting with other users. A ByteDance spokesperson contested Tech Planet’s definition, saying the app “has nothing to do with the metaverse.” 
• The search app will allow users to search videos and novels, among other things. ByteDance has robust offerings in the two categories. 
• The gaming service aims to build a gaming community where users can download games, share social posts about games, and see the latest releases’ rankings, among other features. 
• ByteDance is also testing a robotic delivery service that completes orders within a short distance. Tech Planet said the service will open shortly after China’s upcoming Lunar New Year holiday (Jan. 31 to Feb. 6). 

Context: ByteDance has previously launched social apps Duoshan and Feiliao in an attempt to build its own messaging platform to counteract Tencent blocking users from directly sharing ByteDance’s short video content over the WeChat messaging app. Both ByteDance apps have failed to gather momentum. 

• ByteDance launched Doushan, a Snapchat-like video chat app, in January 2019. The app didn’t find lasting success. In May that year, the company launched a chat app called Feiliao (Flipchat in the global market). The app and the team behind it was disbanded in December.
• In June, ByteDance accused Tencent of blocking links to its short-form video apps Douyin, Huoshan, and Xigua, for three years. Since late last year, Chinese authorities have asked tech majors to stop blocking links from competitors and to open up the walls around each’s ecosystems.

Chinese tech unicorn ByteDance has acquired cinema ticketing platform Yingtuobang and online comics service Yizhikan Comics to further ramp up its push into the entertainment market, Chinese media outlet Tech Planet reported on Monday.

Why it matters: With the new acquisitions, the Beijing-based TikTok developer is further expanding the reach of its entertainment empire, which already consists of short video apps, short and long-form videos, news aggregation, online novels, gaming, music streaming, idol management, and virtual idols.

• Although both acquisitions are focused on early-stage startups, ByteDance’s purchases come as tech peers such as Tencent and Alibaba are distancing themselves from portfolio companies in response to mounting pressure from antitrust regulators. 

Details: ByteDance acquired Yingtuobang — a Shanghai-based ticketing startup that supports online purchases, seat reservations, and coupon redemption in more than 8,000 cinemas and theaters across China — last month, Tech Planet reported today.

• Following the deal, Yingtuobang will maintain its enterprise-focused ticket business. Douyin will help to promote the company’s consumer-facing ticketing services, the report added. Yingtuobang is now marked as a recommended ticket purchasing channel on the short video app, along with Tencent-backed Maoyan and Alibaba’s Taopiaopiao, two of the largest players in the field.
• ByteDance’s acquisition of Yingtuobang is in line with the company’s push toward local lifestyle services, the home turf of Meituan.
• Additionally, ByteDance recently acquired Yizhikan Comics through wholly-owned company Beijing Dingzhen Technology Co., Ltd, Tech Planet reported. Yizhikan is an online marketplace that allows users to buy e-comic books and web cartoon services.
• A ByteDance representative didn’t immediately respond to TechNode’s inquiries on the matter when contacted on Monday.

Context: Both online ticketing and comics are important, expanding verticals in the entertainment field in China.

• China’s e-comics industry has grown at a rate of more than 20% in the past five years, and the market was expected to reach RMB 4.6 billion ($780 million) in 2021, according to a 2020 report from iMedia Research (in Chinese).
• ByteDance’s bet on ticketing platforms comes just ahead of China’s week-long Spring Festival national holiday, which saw a record RMB 7.8 billion in box office revenue last year.  
• ByteDance was once an investor in popular online comics platform Kuaikan but exited in 2019 after Tencent stepped in as a stakeholder.

On Tuesday, China’s search giant Baidu opened internal testing of a major update for Xirang, the company’s virtual reality app. The app will host the company’s AI developer conference next week, kick-starting Baidu’s effort to become an infrastructure platform in the metaverse. 

Why it matters: Baidu hopes the upgraded app and the conference will showcase the company’s AI capabilities and draw in developers to create content and help build a virtual world. 

• In the past decade, Baidu has been transitioning from a search company to an AI company. The tech giant sees the metaverse as an opportunity to further commercialize its AI capabilities, such as cloud computing, voice and visual intelligence, natural language processing, and knowledge graphs. 

Details: The Xirang upgrade will allow the app to host a three-dimensional virtual conference that can accommodate 100,000 concurrent online attendees. Initially, the pandemic pushed the company to develop the app as a virtual alternative to hosting large in-person tech conferences, but Baidu has further developed the app amid the rise of the metaverse this year. 

• Baidu started working on Xirang in December 2020. It released the first version at the hackers’ conference Def Con in March 2021, and an upgrade at Baidu’s World Conference in August. 
• Baidu plans to roll out at least one major upgrade every year, Baidu’s Vice President and manager of Xirang Ma Jie told a Beijing press conference on Tuesday. Baidu is calling the about-to-be-released version a “-6.0”, saying the app needs at least six more years to be fully ready, but it wants to work to that point openly. 
• Ma added that Baidu “doesn’t plan to do everything ourselves… We have left many unsolved issues in this version and want to invite everyone to help us fill in the imperfections.”
• Baidu will release the upgrade on Dec. 27. It will also host a conference and a developer contest at the same time. Winners will get to display their work in one of the app’s spaces. 

READ MORE: Metaverse in China: Investors and tech leaders say they are prepared

Context: Baidu is on track to become the first major Chinese tech company to release a metaverse-focused application. Tencent, Alibaba, and ByteDance have also expanded and invested in the metaverse this year. 

• Xirang is named after a concept in the Chinese mythical story collection called Classic of Mountains and Seas (Shan Hai Jing in Chinese), thought to have been first written some 2,400 years ago. In the book, xirang was a small piece of land used by the mother of a goddess (Nüwa in Chinese) to repair a pillar of heaven. The land could grow infinitely.

China’s audio-visual content regulator on Wednesday banned short video creators from unauthorized editing and spreading of content taken from other platforms’ long-form TV dramas. 

Why it matters: The development gives legal backing to the claims of Chinese video streaming platforms, including Tencent Video and iQiyi. Both have accused short video platforms of copyright infringement and unfair competition by copying video clips from their hit long-form TV dramas. 

Details: China Netcasting Services Association (CNSA), a government-affiliated association with regulatory power, updated a comprehensive set of guidelines (in Chinese) for short video content on Wednesday.  

• The updated rules are intended to “remove vulgar and pandering content” and “counter the spread of illegal and pirated content,” according to the statement.

New rules: Under the new regulations, industry players are required to ban a wide range of content on their platforms, including:

• Content edited or adapted from films, TV dramas, or online TV series without authorization from the original producers.
• Films, TV dramas, online TV series, and foreign content that is banned or hasn’t been approved by state broadcasting authorities.
• Content that encourages users to participate in cryptocurrency mining and trading.
• Content that harms the growth of minors, such as drinking, violence, and drugs.

Context: The CNSA, which has more than 600 industry members, first released short video guidelines in 2019 to regulate the rapid growth of the short video industry. The association includes state-owned broadcasters such as CCTV and internet media companies from Alibaba and Tencent. 

• More than 70 TV and film institutions and 500 actors signed a joint statement in May, calling on short video and social media apps including Douyin, Kuaishou, and Weibo to respect copyright and stop re-editing and spreading pirated content.
• Short video apps, which have a heated rivalry with the longer video platforms, also screen their own homegrown content, especially short dramas. 

When explaining what “the metaverse” might look like, many Chinese investors and tech entrepreneurs refer to the Oasis — a fictional virtual world where people “can do anything, go anywhere” after donning a virtual reality headset: like, “surf a 50-foot monster wave in Hawaii, ski down the Pyramids, or climb Mount Everest with Batman,” as depicted by the protagonist Wade Watts in the 2018 science fiction movie “Ready Player One.”

A combination of “meta” (a prefix from Greek for “after” or “beyond”) and “universe,” the term metaverse was originated by US science fiction writer Neal Stephenson in 1992. It was a niche term favored by techies and gamers to illustrate the next iteration of the internet, an immersive, sensory 3D online experience. But in 2021, “metaverse” may have become the buzzword of the year, much thanks to tech companies like Roblox and Facebook (now Meta), as they paint a future in which people play games, shop, exercise, work, learn, and do other things in various virtual spaces. 

The concept caught on in China this year as well, with companies quick to invest in the metaverse. But the Chinese market has its own set of tech giants, internet culture, and regulatory norms. TechNode talked to several investors and tech companies in the metaverse-related fields, hoping to provide some clues on how China reacts to the popular concept.

A few takeaways: Chinese venture capitalists (VCs) have for years been investing in technologies central to the metaverse, making the country well-prepared for developing its own leaders in the space. The VCs agree that technologies that serve to build the infrastructure of the metaverse are probably the smartest investments since it’s too early to tell which app or companies will dominate. 

Moreover, China may become the first place in the world to have a full metaverse experience. The Chinese government is watching the phenomenon closely and talking to companies to learn more about the metaverse, Chinese tech executives told TechNode. 

How did the metaverse concept become popular in China?

In March, US gaming platform Roblox went public in New York, quickly hitting a $38 billion market cap. In its prospectus, Roblox said, “some refer to our category as the metaverse, a term often used to describe the concept of persistent, shared, 3D virtual spaces in a virtual universe.” 

Roblox’s successful IPO debut popularized the metaverse, and over the ensuing months, it became a buzzword in the US. At the same time, some communities in China started similar discussions but kept most within the investing, tech, and gaming circles.

Metaverse entered into the Chinese mainstream conversation in August when TikTok’s owner ByteDance acquired Chinese virtual reality (VR) gear maker Pico for a reported RMB 5 billion ($783.6 million) (in Chinese). Pico accounts for 33.6% of the market in the second quarter of 2021, according to IDC’s Augmented and Virtual Reality Headset Tracker.

In the first 10 days following the ByteDance acquisition news, searches and interest in the metaverse surged on the Chinese internet. On superapp WeChat, the popularity of “metaverse,” based on published articles and videos, rose 13-fold, according to WeChat’s trend index. Searches of the term rose 19 times on top search engine Baidu, Baidu Index showed. 

Aside from ByteDance, other Chinese tech giants like Tencent, Alibaba, and Baidu have shown interest in metaverse-related projects. 

“We felt that we have a lot of tech and capability building blocks that will allow us to approach the metaverse opportunity” through multiple pathways, Tencent Chairman and CEO Pony Ma said in the company’s third-quarter earnings call on Nov. 10. Specifically, metaverse can be an opportunity to add growth in gaming, social networking, and business applications, Ma said in the call.

Alibaba Cloud, a subsidiary of the e-commerce giant, announced a “metaverse” solution in November. An Alibaba spokesperson said the solution integrated many of the company’s proven technologies to provide support for metaverse-related applications. The solution includes services such as remote rendering, blockchain as a service, and data analytics.

Baidu Vice President Ma Jie said at a Nov. 2 Baidu AI event (in Chinese) that the company plans to lower the production cost for content creation in the metaverse by developing VR content platforms and VR interactive platforms, leveraging the company’s AI technologies. “Baidu would love to work with customers, developers, and users to create a multi-person interactive world of the metaverse and develop new applications,” Ma said.

What do Chinese investors and tech leaders think of the metaverse concept?

The following four interviews have been edited for clarity and brevity. Quotes from Feng Zheng of Shunwei Capital, Yang Ge of Sky Saga Capital, and the two co-founders of Reworld were translated from Chinese:

1. Chinese investors have invested in tech that would be useful to the metaverse for years

Feng Zheng, vice president of Shunwei Capital

Note: Shunwei Capital is a Beijing-based venture capital fund that focuses on the tech sector. It has been investing in technologies that would be useful in the metaverse for years. 

“Metaverse is a very distant concept,” Feng said. “I think it’s a vague conceptual term, leading many people to come up with different interpretations. Shunwei doesn’t have a metaverse-specific investment bracket. We have just been investing in things in the virtual direction because we were following the natural evolution of technologies.”

For example, in 2014, Shunwei invested in Agora, a company that allows other applications to embed real-time audio and video communications. The company provides tech backend for the live audio platform Clubhouse. In 2017, Shunwei led in pre-Series A of Style3D, a virtual apparel design platform, providing clothing companies with 3D clothing and virtual fashion concepts. In 2018, Shunwei invested in Kujiale, a 3D interior design platform, providing 3D design templates for home construction and renovation companies. Last year, Shunwei exclusively invested in the pre-Series A of Next Generation, a startup focusing on creating AI-generated virtual humans and virtual idols. 

Feng said Shunwei “has been seeing brand new opportunities and trends in the past couple of years, thanks to gradual tech advancements in AI, 3D rendering, video, audio, computing power, and the next-generation 5G network. The improvements are like new Lego bricks. With these new bricks, we can create and build things that weren’t possible just a few years ago. Internally, we call the space ‘the virtual world sector.’ We are investing in companies that provide 3D infrastructure, such as virtual humans, which we believe will be the core of communications in the virtual world. 

“I think virtual humans might be the apps in the virtual world. For example, a fitness app in the virtual world won’t be what it is today. We may have a cool-looking avatar guiding us and interacting with us. Most Chinese firms’ investment logic will be similar: starting from infrastructure and then looking for applications that can be implemented today. Shunwei might invest a bit more on the applications front, such as 2D, 3D applications. But we aren’t looking for an all-encompassing app that will dominate a large part of the virtual world. It’s too early for that kind of app, and no one can imagine what that will be like.”

2. ‘We prefer to invest in the infrastructure of the metaverse’

Yang Ge, co-founder of Sky Saga Capital (SSC)

Note: Yang said SSC, a Beijing-based venture capital firm focusing on smart manufacturing, internet tech, and AI, chose to invest in companies that provide the infrastructure to the metaverse, such as AI and virtual human-related companies. 

“We prefer to invest in companies that are building underlying tech infrastructure and the environment of the metaverse,” Yang said. For example, in 2018, SSC invested in the seed round of a company called Rct AI, which provides AI solutions and AI-generated content. In 2019 SSC invested in Xianyi Numa, a company that specializes in providing facial expressions to computer-generated virtual humans. It also helps design storylines for these virtual humans.

Yang said “the metaverse will require a large number of environments to be built and a large amount of content. So this year, a very important term is ‘AIGC,’ meaning content generated by artificial intelligence. The crucial thing in the metaverse is to use AI engines to create various types of content and form a communication environment, which serves as the base layer of the space. You can think of AIGC as the infrastructure of the metaverse.

“The next generation of internet giants will be different from the current ones. But most differences will lie on the surface level, on the presentations. The company structures and fundamentals will stay the same, such as their operational management, maintenance, and internal concept of the community. People’s needs will remain the same. They will still need to make friends, communicate and commerce online. But all those actions will look in a very different form than what we have now.”

3. China might be the first place where people get to have a full metaverse experience

Alvin Wang Graylin, China president of HTC. 

Note: Taiwanese electronics maker HTC runs a virtual reality (VR) brand called HTC Vive, offering mid to high-end VR headsets, VR hardware, and open app stores for VR games and applications. In the high-end VR headset market in China, HTC accounted for 70% of the market share in the third quarter, according to data shared by GfK, a market research firm based in Germany. A high-end VR headset usually costs more than RMB 5,000 ($784). 

“Metaverse is not something where you go from zero to one. I was on the internet yesterday. Tomorrow, I’m in the metaverse. No, it’s not going to happen like that. It’s going to develop over the next five to ten years. I think within the next few years, we will see pieces of this becoming more mature…It will for sure happen within 10 years, and a lot of it will happen within five years. 

“I don’t know if in China it makes sense to copy the Western models (i.e., Facebook, Roblox). Maybe when the internet started, that’s how we developed some of the initial internet applications or mobile applications. But I feel like in some ways, China may be ahead and may have different models to develop and progress the industry faster. One of the things that’s a little bit different in China versus the rest of the world is that in China, the government supports the virtualization and digitization of its economy and encourages various industries to adopt more advanced ways to utilize new technologies. Whereas you look at the rest of the world, private businesses are left on their own trying to create that.

“It’s difficult to get 1,000 companies and 200 countries to agree. But, if you get one country that is much more centrally managed, I think it’s easier for the government to say, okay, you will use the Chinese digital currency and they will work across all of these worlds, or you will use the resident identity card as your key ID system, but we will let you change your avatar, right? I mean, this is an example. It’s more so the fact that the country can say that and then all the companies in the country will have to follow. So, you may have the first full metaverse experience happen in China.”

4. The Chinese government is paying close attention to the metaverse 

Yao Guangshi, CEO and co-founder of Reworld, and Dong Yupeng, co-founder of Reworld. 

Note: Founded in 2018 in Beijing, Reworld offers a platform for users to play, and design their own 3D games and other content. Reworld experiences are often compared to those on the US gaming platform Roblox. In April, Reworld raised RMB 100 million ($15.7 million) in a strategic round from ByteDance. Before the ByteDance investment, Reworld had raised $56.8 million in two rounds from lead investor Joy Capital. To compare, Roblox had raised $856.7 million in 10 rounds from 2005 to this year, before it went public this March. 

“Games often have a clear structure and model. They would incentivize players to chase the goal and reward players once they achieve the goal…But metaverse requires a greater degree of openness. It’s more like a social space. It will provide you with all kinds of scenes, and you have the freedom to choose which to interact with. Gaming would be one of many scenes to choose from. 

“In the future, apps in the metaverse may borrow some features from games. For example, if I build a 3D supermarket with tens of thousands of square meters. I may build different sections for electronics, produce, and others. I may also build some gamification scenes to incentivize people to buy, like giving you more enhanced details of the things you want to buy. But you won’t call the supermarket a game. 

“We recently attended a metaverse-related forum discussion organized by a Beijing municipal government agency of economic and informatization. They were very enthusiastic about the trend and had a few projects that wanted companies to take part in. They also see this as a new competition area in the tech and internet industry around the world. I can sense that the Chinese government is very quick to react to new tech trends like the metaverse. It’s probably a good thing for China.” 

Update: The article was updated to include four paragraphs about Chinese tech giants’ metaverse-related moves in the second section.

Chinese tech giant Tencent announced Thursday it was ending its content creator incentive plan called “Project Dawn” after prompting wide backlash from content creators.

Why it matters: The competition among tech giants for quality content is reaching a fever pitch in China, but creators are pushing back against what they see as attempts to devalue their work.

Details: Tencent’s open content platform said in a Thursday statement (in Chinese) that it has terminated its content creator incentive program “Project Dawn,” which aimed to lure original content creators with monetary rewards for their work. On top of that, the company apologized to creators that were affected by the program.

• Tencent launched the project in July, pledging to give RMB 10 million ($1.5 million) in subsidies to empower and attract more video content creators to its platform. The project aimed at creators from various popular platforms such as Bilibili, Xiaohongshu, and video apps like Kuaishou, promising to help the creators promote their content across platforms and increase their revenue. 
• Several creators on the Chinese video platform Bilibili began to voice their discontent (video, in Chinese) last week, claiming Tencent tricked them into joining the program, which failed to deliver its promises. 
• The creators claimed that Tencent ran the program through a number of multi-channel networks (MCNs), which would take as much as 90% of the one-off incentive fee of RMB 200 promised to each creator by the platform.
• Bilibili creators who gave their ID information to MCNs after joining the program found their videos, which had already been uploaded on Bilibili, were copied to the Tencent platform and labeled as exclusive content there. As a result, their accounts were subsequently blocked on other sites for alleged piracy. Tencent refuted these claims in its statement, saying that it has never labelled content exclusive, “nor has it tried to obstruct creators’ profile on other platforms.”
• Tencent said content creators that want to leave their platform can cancel their account, an option that only became available on Nov. 9. Those who want to stay will now get the promised income from Tencent directly, instead of through MCNs, the company said.

Context: This is not the first time Tencent has faced a content creator backlash. The company’s online reading arm China Literature was subject to an author revolt due to what they saw as exploitative rules in 2020.

READ MORE: INSIGHTS | Who owns ‘internet literature’?

Update: The story has been updated with Tencent’s statement on exclusive content complaints.

China’s annual Singles Day online shopping festival has yet to officially kick off on Nov. 11, but its “pre-sales” events already hint that the hot sales trend will again be live e-commerce.

“Lipstick King” Li Jiaqi generated an estimated gross merchandise value (GMV) of RMB 726 million ($113.5 million, or EUR 97 million) for L’Oréal during a Taobao livestreaming event on Oct. 20, according to Ashley Dudarenok, founder of China trends watching company ChoZan.

European brands L’Oréal and Guerlain jumped on the country’s live e-commerce bandwagon early on back in 2016, hiring Chinese influencers to promote their cosmetics to Chinese viewers. Now, fueled by the pandemic, European companies are embracing livestreaming as well as promotional techniques from China as they target online European shoppers. They still have a lot to learn. 

Since its first appearance, live e-commerce has exploded in China and the market recorded triple-digit growth over the past three years. In China, the online shopping format is expected to be worth RMB 4.9 trillion in 2023, according to the China’s 2021 Live-Streaming E-Commerce Industry report released by market research firm iResearch on Oct. 27.

European brands in China’s live e-commerce scene

L’Oréal and Guerlain were followed in China a few years later by Givenchy, Unilever, Procter & Gamble, Pandora, La Mer, Nestlé, and many others. Today, few big European brands with a strong Chinese presence have not run at least one live shopping show. Italian pharmaceutical skincare brand Rilastil gets 35% of its total China sales from live e-commerce.

But success in China’s competitive livestreaming market shouldn’t be taken for granted. Dudarenok explained that it is very easy to make mistakes, such as choosing the wrong KOL, the wrong platform, or the wrong presentation style. 

The pandemic spurred European retailers into live e-commerce 

While European players in China have long been hiring Chinese KOLs, celebrities, and their own staff to host live shows on the most popular Chinese livestreaming platforms, they were slow to transfer the format to Europe, assuming it was only fit for a Chinese audience. 

A February 2021 study by Forrester and AliExpress rejected this assumption, finding 70% of 14,460 consumers surveyed in the UK, Spain, France, and Poland were interested in this new form of online shopping.

Livestreaming experiments in Europe started at the end of 2019 and increased in frequency in 2020, as the pandemic forced shops to shut down throughout the continent.

Italian apparel brand Motivi leaned into livestreaming right at the onset of the pandemic, engaging its own shop assistants to present collections and answer questions from customers in real time on its website, replicating the real shop experience.

Another example is Lancôme, which in November 2020 worked with live shopping platform Livescale to run a show with Italian influencer Chiara Ferragni. 

Monki, a fast-fashion brand of the H&M Group, also launched several live broadcasts featuring experienced sellers, again with the shows accessible directly from the brand’s website. 

Europe’s approach to live e-commerce

Still, when it comes to live e-commerce, China is about five years ahead of Europe. China’s experience may give us precious lessons to refer to. It took China a couple of years to transform live e-commerce into a popular format used regularly by both brands and consumers. Europe is now in the study and exploration phase, but we can predict some major differences in style and approach: 

Live e-commerce in China versus Europe

Will livestreaming be big in Europe?

Years 2021 and 2022 will tell whether live e-commerce in Europe has been just a temporary pandemic-driven boom or if it is here to stay. But numbers so far point in the right direction.

In 2020, Western brands saw 15 times more engagement in live e-commerce than with traditional social media, from three to five times more sales, and a 50% increase in the number of customers, according to Madison Schill, marketing and communications director at Livescale. According to Schill, the average sales conversion rate across all clients and platforms at Livescale was 9.5% in 2020. The rate this year is running about 18% in a sign that customers are reacting well.

Live shows in Europe might remain selective experiences, highly focused on content, reflecting the philosophy of the brand and the shopping habits of local customers. Sales people will likely continue to act as the main hosts, together with micro-influencers. Chinese tech players like Xinxuan, Alibaba’s AliExpress, and ByteDance’s TikTok with expertise in training and incubating livestreamers might serve as guides for European brands desiring to improve the live selling skills of their local hosts. 

If China’s growth trajectory is taken as a model, by 2024, Europe has the potential to reach around 160 million live streaming e-commerce users, of which approximately 100 million people might also make purchases while watching live streams, Leah Wang, Chief Marketing Officer of Xinxuan Group, said at the launch of the iResearch report.

In Europe, livestream shopping and e-commerce in general will probably never replace the in-store experience, but they will become part of a broader omni-channel marketing and sales strategy, in which physical shops remain at the center, sometimes serving as temporary livestreaming studios. Looking forward, we might see the expansion of live e-commerce into new verticals, maybe also into the B2B sector. 

Less than six months after Ayayi first popped up on the Twitter-like social network Weibo in May, she had attracted more than 512,000 followers, many of them millennial female office workers. A hashtag of her name has pulled more than 5.5 million views on lifestyle platform Xiaohongshu. A fashion-forward, white-blonde 20-something with flawless skin, Ayayi is still relatable.

She posts about mundane matters like commuting on the Beijing subway or watching grandpas play chess on the sidewalks. Soon a powerful influencer, she snagged deals to promote upscale brands like Louis Vuitton and Givenchy. Somehow, she even has time to work as the digital manager of Alibaba’s Tmall Super Brand.

But then, Ayayi is not human. She is a virtual idol developed by Shanghai-based Ranmai Technology. She is one of over 20 virtual characters trending on Xiaohongshu, receiving lots of attention from fashion names searching for new channels to engage with consumers. With multiple job titles from NFT artist to fashion brand manager, Ayayi has worked with brands such as Sandro, Bose, and Fila. Ranmai Technology, a startup that develops digital human images and storylines, reportedly has a net worth of RMB 600 million (around $93.9 million).

Xiaohongshu, often referred to as China’s Instagram, already embraced an active KOL (key opinion leader) community as an efficient marketing vehicle for brands to promote their products on the social commerce platform. The company is now taking a virtual turn for its KOL strategies.

Xiaohongshu is among a slew of Chinese tech firms scrambling to capitalize on China’s virtual idols boom of the past two years. Early on, virtual idols caught the attention of tech giants like Alibaba and ByteDance.

But will the current buzz prove to be a high watermark for the industry? Or are the virtual idols here to stay?

Bottom line: Virtual idols remain a niche market targeting only a small group of ACGN (animation, comic, game, and novel) fans, although Chinese companies have been developing digital characters for the past decade. The sector is on the upswing this year thanks to technological developments, the coming-of-age of teenage ACGN fans as independent consumers, and China’s recent crackdown on the fan economy due to scandals involving human idols.

“Because China’s digital landscape is rapidly changing, it’s difficult to predict whether virtual KOLs born in the current ecosystems will be able to keep up with the way the digital ecosystem will evolve. But one thing is certain: major Chinese tech companies are all jumping on the virtual KOL bandwagon.”

— Pablo Mauron, partner and managing director of Digital Luxury Group

What are virtual idols?

Virtual idols are computer-generated animated images. Developers use advanced animation and rendering technologies to produce characters with finely detailed facial expressions and body movements. 

While they resemble real human beings to varying degrees, the virtual figures in the “metaverse” may boast even greater diversity. Different forms fulfill different roles. In addition to hiring virtual idols from the West like the fashionista influencer Noonoouri (created by German designer Joerg Zuber) and the freckled “musical artist” Lil Miquela (the brainchild of little-known Los Angeles media startup Brud), China is creating plenty of its own popular and profitable virtual personas.

• Virtual idols have various personas such as singers, bands, KOLs/influencers, and broadcasters. Some are derivatives from existing IPs, virtual counterparts of human idols (e.g., pop star Jackson Yee with his virtual counterpart Qianmiao), or avatars of consumer brands.
• Virtual singer Luo Tianyi is one of China’s most famous virtual idols. The 9-year-old singer with elongated anime-style limbs has more than 5 million followers on Weibo. She has represented such companies as Chang’an Automobile, Huawei, and Shanghai Pudong Development Bank.
• Ling is a persona that combines classical Chinese beauty with contemporary style. She has 422,000 followers on Weibo, and has promoted brands such as Tesla, Vogue, and hip tea chain Nayuki.
• A-Soul, a virtual pop girl group, became an instant hit on Chinese video-sharing site Bilibili after its launch in late 2020. The group, developed by Chinese celeb agency Yuehua Entertainment and Bytedance, has more than 3 million fans across platforms, mostly China’s young anime fans.
• With the development of technology, computer-generated figures have acquired  increasing resemblance to human beings over the years, evolving from 2D animated figures like Luo Tianyi to 3D virtual figures such as Lil Miquela. 
• The trend got another boost due to the growing global interest in the metaverse, an online world where people exist and communicate in shared virtual spaces. (Stay tuned for TechNode’s metaverse feature next week).

Virtual idols as a business

Virtual idols are deployed for various lines of business such as brand endorsements, live broadcasts, and even offline marketing campaigns.

Reggie Ba-Pe is the co-founder of Club Media, an entertainment agency that created virtual punk artist Ruby 9100 and a few months ago launched Shanghai-based virtual persona Maie. Ba-Pe reckoned that virtual humans are expensive, production heavy, and time-intensive.

Virtual idols as a marketing tool: As members of China’s Gen Z grow into independent consumers, they are bringing their tastes and wallets with them. And it’s no surprise that the brands are adapting the latest fads to tap consumers.

• Tie-ups with brands are a main revenue source for virtual idols. The fact of the matter is that brands need to be where their audiences are and audiences are flocking to virtual spaces, said Ba-Pe, speaking from the experience of cooperating with Adidas for a co-branded sneaker “designed” by Club Media’s digital artist and stylist Ruby 9100m. 
• “Younger audiences are shying away from traditional social media and gravitating towards video games and virtual spaces. These virtual spaces will need content, culture, and entertainment just like physical spaces and that’s why we are seeing a global migration into what is being coined “the metaverse,” he explained.
• For the entrepreneur and music producer, virtual humans and idols are a “critical portal” for brands to enter and navigate the metaverse and will be “more important to brands than the other way around.”

A rising industry in figures:

China’s Gen Zers, the country’s digital natives who show a great appetite for  ACGN content, are the major force driving this boom.

• The market size of China’s virtual idol industry increased 70.3% year on year to RMB 3.46 billion in 2020, according to a report from iiMedia Research. The consulting agency expects the market to be worth RMB 6.22 billion by 2021.
• Meanwhile, the scale of virtual idol-related markets, including AR and VR, will reach RMB 107.5 billion in 2021, up from 64.7 billion in 2020, the report says.
• Around 80% of the more than 2,000 netizens who joined the survey have the habit of following celebrities or idols from time to time, and 63.6% of them support and pay attention to the related developments of virtual idols. 
• A dozen virtual idol startups, like Yunbo AI, DeepScience, and Wanxiang Culture, have received fundings this year. Most of the companies are still in early stages, either angel or A round, with investments in tens of millions RMB (about $2 million to $5 million).

Tech giants jump on the bandwagon

Tech giants are among the most avid advocates of the virtual idol trend, together with companies along related lines such as entertainment companies, brands, and media startups. By building virtual idol IPs or cooperation with existing idols, the tech giants try to enrich their existing e-commerce, gaming, and short video businesses with more interesting content.

• Tencent, which already made big bets in the metaverse, launched a virtual idol men’s group based on their game Honor of Kings.
• Bilibili, the acclaimed “spiritual home” of Chinese ACGN fans, is the controlling shareholder of startup Shanghai Henian Information Technology,  developer and operator of Luo Tianyi. Bilibili is also one of the earliest platforms in China to broadcast virtual idol concerts.
• ByteDance got rights to singing girl group A-Soul after entering an alliance with Beijing-based celeb agency Yuehua Entertainment through a strategic investment. A-Soul is the first virtual addition to ByteDance’s pool of celebrity marketers that includes famous singer Wang Yibo. With advanced interactive capabilities, A-Soul has been employed for livestreaming e-commerce duties. 
• Along with ByteDance, Alibaba invested in Yuehua. Alibaba also rolled out virtual livestreamers such as Xiao Dangjia to boost its booming live e-commerce business. The e-commerce giant named virtual influencer Ayayi as “digital manager” of Tmall Super Brand. She launched an NFT digital mooncake with Alibaba for this year’s Mid-Autumn Festival.
• IQiyi is the owner of Dimension Nova, a virtual idol variety show, and Rich Boom, a virtual idol group featuring trendy culture and pop music.

A better choice than human celebrities for brands?

Human celebrities and virtual idols do not cannibalize each other, according to Mauron. Ba-Pe of Club Media agrees: “Virtual idols are about as much a threat to human KOLs as Coke Zero is to Diet Coke … Virtual idols are not threats to human ones at all.” 

Still, virtual idols as influencers have pros and cons for marketers.

Pros:

For brands, a less risky choice than real idols:  The volatility of working with humans has been on full display this year after several celebs fell from grace due to scandals ranging from alleged tax evasion and sexual assault to sharing opinions out of step with ruling Party ideology. This leaves virtual idols as less risky choices. 

Full tailoring: The content to be broadcast can be tailored to meet the needs of brands on every level. Idols can achieve things that real people cannot, and their images can be wholly controlled.

Extensive application scenario: The application scenarios for virtual idols are more extensive. Virtual figures are more accessible to fans for one-on-one interaction, usually of the chatbot level of complexity. Moreover, they can be present 24/7 on multiple sites.

Cons:

Legality for business endorsement: Virtual idols’ partnerships with brands work under cooperation agreements similar to endorsements. However, China’s Advertising Law bans endorsers, legal persons or organizations, from endorsing goods or services they have not used or received. 

• There are still questions about whether virtual KOLs can be classified as endorsers, or whether brand-virtual KOL collaborations fall within the scope of advertising.
• “There’s still room for interpretation when it comes to the legality of the matter,” said Mauron. 

Relatability: While virtual KOLs sound good on paper, DLG’s Mauron notes that digital personas may not have the same kind of personalities and color as human KOLs, making it harder for consumers to relate to them. “Without that element of relatability, it might also be more difficult to generate conversions with these virtual KOLs,” he said.

The virtual world is not immune to real-world problems. The data-faking issue that’s prevalent in human celebs’ metrics is also applicable to virtual idols. A Deloitte report reminds all organizations that wish to deploy avatars of the need to pay great attention to privacy and ethics issues.

Conclusion

It’s still too early to say whether virtual people will be marketing mainstays or passing fad.  But given the digitization of almost every cultural touchpoint, experts we talked to expect it is here to stay in some form. 

“Clearly, we are moving towards an increasingly digital future, rich with entertainment in these digital worlds. Regardless, if you’re an idol or a fan, the only way to engage with these new digital realms will be via an avatar.” said Ba-Pe.

Chinese server maker Inspur on Tuesday released Yuan 1.0, one of the most advanced deep learning language models that can generate coherent Chinese texts. 

The model is trained with 245.7 billion parameters—the number of weights in an artificial neural network, according to the company. This is more than the Elon Musk-backed GPT-3 language model for English, which has 175 billion parameters. Inspur said the Yuan model was trained with 5 terabytes of datasets.

The release of Yuan is a milestone for the Chinese natural language processing (NLP) industry. NLP is an important branch of artificial intelligence (AI) and a backbone for computers to understand human language.

Inspur said in a statement that its AI Research Institute had to develop “a unique development approach compared to English” to train the model, including addressing challenges such as “the lack of a prior high-quality Chinese-language corpus.” A corpus is a collection of texts used to train language models.

Inspur said the language model is “extremely adept” at natural language generation (NLG) tasks—the processing of generating natural language text using computers. The company said in a paper published in October that “only less than 50% of the time” human testers could distinguish between text generated by the model and human-written ones.

Inspur said in a press release that Yuan can be used to generate texts including news articles and poems.

In May 2021, a group of US researchers at Georgetown University found powerful NLG tools can be used to fuel disinformation. Inspur acknowledges such a possibility and vows to oversee the appropriate use of the model.  

“Since the model can generate articles that are difficult to detect whether they are human written or not, the risk of misuse becomes higher,” an Inspur spokesperson told TechNode on Tuesday. “Therefore we need to regulate the application of the model in the future.”

The company is planning to open the model as an application programming interface (API) to developers, meaning that they can access Inspur’s platform and utilize the language model in their applications, the spokesperson said.

Jinan-based Inspur is the world’s third-largest maker of servers, according to market research firm IDC. The 72-year-old state-owned company used to be a manufacturer of electronic devices. It first entered the server market in 1995 as a partner of US chipmaker Intel. 

Clarification: The last paragraph of the previous version of this article has been removed upon Inspur’s request.

Chinese tech giant ByteDance is developing a music streaming platform for the Chinese market and plans to launch the app later this year, Chinese media 36Kr reported (in Chinese) Thursday, citing sources with knowledge of the matter.

Why it matters: ByteDance is upping its ante in the domestic music market after antitrust regulators ramped up supervision of the increasingly centralized industry. Regulators began by ordering bellwether Tencent Music to give up its exclusive music deals in late July. The move will give other players more opportunities to obtain licenses from major music labels.

Details: Dubbed “Feiyue,” the streaming product is managed by teams from Douyin, ByteDance’s domestic short-video unit. It has now entered into “a key developing stage,” the report said. 

• ByteDance’s music business is led by Alex Zhu, a company vice president. The algorithm and marketing teams from Douyin have also played a role in supporting the operations.  
• A ByteDance spokesperson declined to comment on the report.

Context: ByteDance made a foray into the music arena back in 2019, when it tested a music streaming app named “Yinyuebang” among company employees. However, the program’s development was stalled by a severe shortage of music copyrights. Yinyuebang was ultimately shuttered in mid-2020, according to the 36Kr report.

• China’s digital music market is dominated by tech heavyweights and is highly consolidated. In 2020, Tencent Music accounted for 73% of the market share, while NetEase’s Cloud Village accounted for 21%, according to Cloud Village’s IPO prospectus.

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode, the guys are joined for the second time by John Artman, tech editor at the South China Morning Post. They go over some of the SCMP’s 4th annual China Internet Report released recently, and talked about the four areas of China tech regulations: antitrust, fintech, data security, and cryptocurrency. They also go over China’s recent crackdown on overseas IPOs and what that means for overseas investors.

Hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• Bilibili
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping
• Kuaishou

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:

• John Artman – @knowsnothing

Editor:

• Peter Isachenko

Podcast information:

• iTunes
• Spotify
• RSS Feed
• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

Kuaikan, a popular online comics platform in China, has raised $240 million in a new round of funding, the company announced on Monday. Kuaikan claims the round is the largest ever in China’s online comics industry, according to its WeChat statement. 

Why it matters: Kuaikan, which offers digital comics in its app and website, has managed to attract investors’ attention in the competitive online comics sector.

• Founded in 2014, Kuaikan has become a leading digital content hub for readers of Chinese comics.

Details: Investors include existing backers Tencent, Coatue Management, and Tiantu Capital, and newcomers like CCB International, the investment arm of China Construction Bank, and One Store, a South Korean app market operator co-owned by Naver, which runs the world’s largest digital comics platform Naver Webtoon.

• Chinese media AI Caijing reported that One Store planned to invest around RMB 223 million ($34.4 million) in Kuaikan and take approximately 3% of its shares, citing sources from South Korean media. Kuaikan’s market value will be around RMB 8 billion after the round, the report said. 
• The proceeds from the round will be used to cultivate the platform’s content ecosystem. The company said it will spend a total of RMB 2 billion to subsidize its authors and produce animated comic book adaptions, according to the company’s statement.
• Kuaikan’s CEO Chen An’ni said in an internal memo (in Chinese) to employees that the firm’s comics business has turned a profit and maintained revenue growth of more than 50% in the past few years.

Context: Kuaikan is the largest Chinese online comic platform. In February, the firm ranked first in the most popular comic apps list with about 29 million monthly active users, according to Bigdata-Research (in Chinese), a Chinese market consultancy. 

• The company received $177 million in Series D funding in 2017, and $125 million from Tencent in 2019. ByteDance was once an investor of the company but exited after Tencent stepped in.
• China’s e-comics industry has grown at a more than 20% rate in the past five years, and the market is expected to reach RMB 4.6 billion by 2021, according to iMedia Research (in Chinese).

Chinese video-streaming platform Tencent Video said it has filed a lawsuit against ByteDance’s short-video app Douyin for copyright infringement and unfair competition over clips from a hit TV drama, seeking RMB 100 million ($15.4 million), Chinese media reported Wednesday.

Why it matters: Tencent Video’s legal action is the latest attempt by a streaming platform to control the spread of clips on short-video platforms. Streaming platforms fear that widespread posting of clips will undermine the value of expensive content.

Details: In the complaint, Tencent Video accused Douyin of circulating clips of “Crime Crackdown,” a hit TV drama, without consent. Claiming ownership of exclusive right to the online dissemination of the drama, Tencent said Douyin had allowed users to upload clips from the show and failed to take any measures after receiving a notification letter from Tencent. 

• In a response, Douyin claimed that it had signed a cooperation deal with the co-production company of the drama, under which the company will open an official account on the platform while Douyin will be responsible for curating promotional activities. Douyin also said that it had taken down clips immediately after receiving complaints from Tencent.    

READ MORE: ByteDance rages against Tencent over link blocking. Here’s why

Context: Tencent won a similar case against Douyin over clips of “Honor of Kings,” a hit Tencent game, earlier this month. ByteDance was fined RMB 600,000.

• Mainstream video-streaming platforms have recently ramped up criticism of their short-video peers over alleged copyright infringement practices. Tencent vice president Sun Zhonghuai lashed out at short video content, comparing it to “pig’s feed” and complaining of widespread copyright violations at an industry conference held in June.

Chinese video platform Bilibili hit a record of more than 65 million daily active users (DAUs), making it China’s third-largest long-form video site, following iQiyi and Tencent Video, Late Post reported (in Chinese) on Wednesday.

Why it matters: Despite slowing growth, the figure marks a milestone for Bilibili, which has surpassed Alibaba-owned Youku to take the third spot. 

Details: Bilibili’s DAUs still lag behind short video platform rivals Douyin (TikTok’s Chinese version) and Kuaishou, which recorded 580 million in February and 295.3 million in the first quarter of this year, respectively. 

• Bilibili’s DAUs rose 8.1% from 60.1 million in the first quarter.
• The report also revealed that the average amount of time users spend on Bilibili exceeds 80 minutes, trailing Douyin’s 100 minutes.

READ MORE: CHINA VOICES | ‘Bilibili is becoming Chinese YouTube’

Context: Founded in 2009, Bilibili initially attracted young Chinese internet users interested in animation, comics, and gaming. The company has since evolved into a mainstream video site as it diversified its content offerings and expanded its user base in recent years.

• In 2020, the company set up a special department to expand its users base and scaled up investments in long-form video content, including TV shows, films, and documentaries.
• The growth effort is partly driven by the company’s forecast of future trends. Bilibili’s CEO Chen Rui told Late Post in 2019 that he thinks Chinese content platforms with a market cap of less than $10 billion may face market elimination within the next three years. Bilibili was valued at $7 billion at the time. Now, the company is valued at more than $30 billion. 

Chinese social media and gaming giant Tencent vowed to further limit minors’ access to video games on Monday, the same day state media’s criticism of the industry spooked investors and caused Chinese game stocks to lose at least $57.6 billion.

Why it matters: Tencent’s announcement is a quick response to an article by state media that compared video games to drugs. 

• The Economic Information Daily, an affiliate of the state news agency Xinhua, called online video games “spiritual opium,” singling out Tencent’s top game “Honor of Kings” as “the most popular video game” among Chinese students. The article was published on Monday morning, pulled in the afternoon, and republished in the evening without those phrases.

Details: Tencent said (in Chinese) in a Monday announcement that it will set stricter limits on minors’ access to games, intensify its crackdown on minors using fake identification to circumvent restrictions, and promote industry-wide systems to prevent gaming addiction. The company also said it will start implementing the new measures in “Honor of Kings” and gradually extend them to other games. 

• On Wednesday, Tencent released new rules that limit underage players’ access to “Honor of Kings.” 
• The rules bar minors from playing the game from 10 p.m. to 8 a.m. Minors will also only be allowed to play one hour a day, and two hours on national holidays, down from previous limits of one and a half hours and three hours, respectively. 
• The new rules also prohibit children under 12 from making any in-game purchases.
• Tencent promised to re-verify suspicious accounts and crackdown on minors using fake identification to play games for longer periods. 
• Tencent also said it will encourage other gaming companies to build anti-addiction systems and discuss whether children under 12 should be completely banned from playing video games.

Context: The Economic Information Daily pulled the article on Monday afternoon after major game stocks in China and Hong Kong plunged more than 10%. The company later republished the article without the drug comparison on Monday night. Tencent and NetEase’s stock prices fell by 6% and 8%, respectively, and CMGE Technology, a mobile game publisher, lost 13%. 

• Chinese state media has consistently lashed out at video games over the past few years. In July 2017, multiple state-owned media companies, including People’s Daily, state broadcaster CCTV, and Xinhua News Agency, published op-eds criticizing video games and gaming companies for their bad influence on Chinese school children.
• Despite official pushback, the gaming industry has maintained growth in the past five years. The market reached RMB 136.6 billion ($ 21.1 billion) in 2020, according to CGIGC, a state-affiliated game publishing authority. In early 2018, Chinese officials started an almost year-long freeze on online game approval.

Douyin, ByteDance’s Chinese version of TikTok, launched a web version of the short video app on Monday. The mobile-focused content giant is seeking more growth on desktop.

Why it matters: Douyin is hitting the ceiling in user numbers. In September 2020, the short video app’s daily active users reached 600 million, which is more than 60% of China’s overall 986 million mobile users in the same period.

• The web version of Douyin extends the app’s reach to desktop users and potentially poses a threat to established video sites like Bilibili and Tencent Video.

Details: Douyin’s web version lacked a couple of crucial features that may have laid the groundwork for its success on mobile. For example, the mobile app starts playing videos automatically as soon as it is opened. While on the website, users need to click on the video for it to start playing.

• The homepage of Douyin’s web version features an endless video scroll. On Douyin’s mobile app, users see only one video at a time and have to swipe down to get to the next one, similar to the TikTok app.
• Like the mobile app, the website also allows users to post videos, make comments, and like videos. The website largely hosts the same content that appeared on the mobile app. The site features more horizontal versions of the video, while the mobile app shows more vertical versions.
• Douyin’s mobile app is powered by ByteDance’s flagship recommendation algorithm, partly contributing to its success. The algorithm provides users content based on their preferences and viewing history. It’s not clear if the algorithm is implemented on the web version.
• The web version was created to host better educational content, which usually runs at least 5 minutes, ByteDance said in a statement to TechNode, making it much longer than the 15-second short videos that Douyin helped popularize. 
• ByteDance said the website is still in testing phases, and it will continue “optimizing its features.”

Context: ByteDance said last week that the company booked RMB 236.6 billion ($36.8 billion) in revenue in 2020, up 111% from the previous year, Chinese media Yicai reported. 

• The total monthly active users of ByteDance apps reached 1.9 billion as of last year’s end, the company said.

ByteDance, the owner of the viral video platform TikTok and Douyin, briefly attacked Chinese tech giant Tencent in a long, strident online post on Friday. The tussle between two Chinese tech heavyweights comes amid increased governmental scrutiny on anti-competitive behavior in the tech sector.

ByteDance criticized Tencent’s practice of blocking links to its products on messaging platforms WeChat and QQ in an online post, attaching a 59-page PDF file chronicling the blocking activities in the past three years. The company has since deleted the post and the file.

“More than 49 million people were stopped from sharing Douyin content to WeChat and QQ every day on average,” said ByteDance’s post. The company didn’t specify how they calculated the number.

ByteDance complained that Tencent has been blocking links to its short-formed video apps Douyin, Huoshan, and Xigua, for three years, “affecting more than 1 billion users.”

ByteDance’s high-profile complaint came as Chinese regulators crack down on tech companies’ anti-competitive behavior. ByteDance could benefit if regulators take action against Tencent’s link blocking practice. The company competes with Tencent on multiple fronts, including news aggregation and online games.

In March, Reuters reported that China’s top antitrust regulator was looking into Tencent’s WeChat for monopolistic practices, and how the popular messaging app had possibly squeezed smaller competitors.

ByteDance declined to comment on the situation when reached by TechNode. Tencent also declined to comment. Chinese media saved a copy of ByteDance’s post.

Widespread practice

Tencent is not the only company that tries to stop users from clicking into rival ecosystems. Tencent has banned links of ByteDance’s Douyin and productivity tool Feishu on WeChat. It also prohibits users from opening links to e-commerce giant Alibaba’s Taobao and Tmall online marketplaces.

Alibaba also bans (in Chinese) merchants from listing their WeChat contact information on the platform.

In August, ByteDance’s Douyin said it would ban links to third-party e-commerce sites, including Taobao and Tencent-backed JD.com, on its live-streaming channels in October. However, it also relies (in Chinese) on selling ads with links to those e-commerce sites for its short video feature.

ByteDance wrestles with Tencent

ByteDance wrote that the post was a response to a comment made by Tencent executive Sun Zhonghuai last Thursday at an industrial forum. Sun compared short-form videos to food for pigs.

Sun, a Tencent vice president and chief executive officer of the company’s online video department, said short-video apps were feeding users vulgar content. “Because the personalized recommendation [algorithms] are so powerful, if you like pigswill, all you see is pigswill, nothing else,” Sun said.

Sun is responsible for Tencent’s video-streaming platform Tencent Video and short-video app Weishi, according to Chinese media reports.

ByteDance defended short videos in the post, saying Sun’s remarks were “arrogant and unfair.” “As a new form of communication, short videos help countless ordinary people record and share their lives, allowing more people to see a larger world.”

ByteDance also hinted in the post that Tencent’s criticism of short videos was insincere, pointing out that Tencent had tried various times to make short video apps while calling them “pigswill.”

In the attached PDF file (in Chinese), ByteDance listed evidence that Tencent had blocked links to ByteDance’s short-video apps Douyin, Xigua, and Huoshan on WeChat, while allowed Tencent-backed Kuaishou and Weishi to share links on the social media platform.

The file mainly consists of annals of news coverage of Tencent and ByteDance’s conflicts from 2018 to 2021 and ByteDance’s summary of those events.

“We see this pamphlet as a standing reference to the [link] blocking and monopoly. It always reminds us that time may erase memories, but time cannot erase facts,” wrote ByteDance in the now-deleted post (our translation).

Suing companies for link blocking

ByteDance sued Tencent in February for blocking Douyin’s content on WeChat and QQ, citing China’s Anti-Monopoly Law.

Bytedance accused Tencent of violating Anti-Monopoly Law and “misusing a market-dominant position,” “excluding and restricting competition.”

The lawsuit is still awaiting a first hearing date at the Beijing Intellectual Property Court. Tencent has requested (in Chinese) the case be transferred to a court in Shenzhen, where the company is headquartered.

In 2019, a Chinese lawyer sued Tencent for blocking Alibaba’s Taobao links. He dropped the case in early 2020 for “a lack of evidence.” But since then, anti-monopoly enforcement has taken off.

Zhang Zhengxin, the lawyer who sued Tencent, told TechNode in December that his odds to win the case would “increase by a lot” if the case had gone to court then.

In December, China fined a batch of tech companies over antitrust violations for the first time. A month before that, China’s top antitrust regulator proposed new guidelines targeting anti-competitive behavior to include internet companies.

ByteDance co-founder and CEO Zhang Yiming said he will step down as the chief executive officer of the TikTok owner at the end of this year, according to a statement published Thursday. Company co-founder and head of human resources Liang Rubo will take his place.

Why it matters: Zhang’s departure comes after the Chinese internet upstart dodged a threatened US ban on TikTok amid geopolitical tensions last year. 

Details: Zhang said in a letter addressed to the company’s to staff Thursday that he will focus on long-term strategy, corporate culture, and social responsibility.

• “After several months of thinking about this, I came to the conclusion that transitioning out of the role of CEO, with all of the related day-to-day responsibilities, would enable me to have greater impact on longer-term initiatives,” he wrote.
• Zhang said the success of ByteDance since its foundation in 2012 had been based on “our ability to innovate at just the right moment in the development of the industry,” including “applying machine learning to mobile and video products.”
• He said that hadn’t had time to make progress in digging into machine learning since 2017 because of his daily duties as CEO. 
• Zhang will take on a new role at ByteDance to drive innovation by “drawing on my strengths of highly-focused learning, systematic thought, and a willingness to attempt new things.” He will remain a board member.
• Liang, who will take Zhang’s place, previously held leading roles at the company as the head of research and development (R&D), and head of ByteDance’s productivity software team.

Context: ByteDance reportedly planning to send its global hit TikTok public as it named former Xiaomi chief financial officer Shou Zi Chew as the app’s CEO.

• However, ByteDance is facing increasing regulatory strain at home as China deepens crackdown on tech companies’ monopolistic practices.
• Many of ByteDance apps including TikTok and news aggregator Jinri Toutiao are driven by machine learning algorithms, which are considered the “secret sauce” of the company’s success.

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode, James and Elliott are joined by Protocol’s Zeyi Yang. Zeyi shares his thoughts on Zhihu, the popular Chinese information-sharing platform that recently IPOed in New York. The guys discuss the company’s strengths and weaknesses, and how investors view the company’s potential.

Hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• Bilibili
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping
• Kuaishou

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:                   

• Zeyi Yang – @zeyiyang

Editor:

• Peter Isachenko

Podcast information:

• iTunes
• Spotify
• RSS Feed
• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

Xiaohongshu, a Chinese social media and e-commerce platform, has hired a former Citigroup executive to oversee its financial management as the company eyes a public listing in the US, according to a report by The Information.

Why it matters: Xiaohongshu, the $6 billion firm backed by Alibaba and Tencent, may be joining a growing list of Chinese tech firms heading to the public markets.

• An early pioneer of China’s content-driven e-commerce trend, Xiaohongshu, also known in English as Red, faces intensifying competition from short-video platforms like ByteDance’s Douyin and Tencent-backed Kuaishou.

Details: Xiaohongshu has named Yang Ruo, a former Citigroup investment banker, as its chief financial officer overseeing the compilation of financial strategies as well as financial management and internal control, a company spokeswoman told TechNode on Friday.

• The Shanghai-based company is considering a US listing as early as this year, The Information reported citing people familiar with matter. Investors said the IPO could value Xiaohongshu at more than $10 billion, according to the report, up from a valuation of $6 billion in early 2020 according to sources cited by Bloomberg.
• The company is in discussion with several banks, but has not settled on a target raise, according to The Information.
• A Xiaohongshu spokeswoman denied that the company is planning an IPO when contacted by TechNode on Thursday morning.

READ MORE: Xiaohongshu bids to reinvent itself, again

Context: In a similar move, TikTok parent ByteDance hired former Xiaomi executive Shou Zi Chew as chief executive, a sign that has been widely interpreted as preparation for its highly anticipated IPO.

• Founded in 2013 , Xiaohongshu gained popularity among China’s young, middle-class, and mostly female consumers hungry for insight on lifestyle and fashion. Users can also buy products directly through the platform.
• The company defines its model as B2K2C, where key opinion leaders help merchants to promote their product to customers. 
• Xiaohongshu had over 100 million monthly active users as of June, 70% of which were born after 1990, according to company data.
• After surging in popularity early on, the content-driven app has struggled to land on a scalable monetization model while maintaining its community feel. It battled user trust issues and competition for user attention from other platforms.
• The app was reportedly raising a Series D of at least $400 million at a valuation of $6 billion in January last year, following a $300 million round at $3 billion valuation in 2018.

Chinese mixed reality glasses maker Nreal is preparing to launch its products in the US and Europe, less than a year after a California court dismissed a lawsuit brought against the company by Google’s Magic Leap.

Why it matters: Nreal is one of China’s most promising MR startups; it is backed by major Chinese tech venture capital (VC) firms and has set up partnerships with global heavyweights, including Qualcomm and Korea’s LG.

• In the US and EU, it will be competing primarily with Microsoft, Magic Leap, and perhaps Apple in the augmented and mixed reality fields, but also with Facebook and HTC in the entertainment-focused virtual reality market.

Details: In partnership with Vodafone and Deutsche Telekom, Europe’s most prominent telecom carriers, the company will launch its Nreal Light MR glasses in the EU in the spring, according to a statement sent to TechNode on Tuesday.

• The glasses will also be available in the US by April 2021, in collaboration with an undisclosed local telecommunications provider.
• Nreal is also launching an enterprise edition of its MR glasses, which users can wear over an existing pair of glasses. The enterprise edition is shaped like a halo, circling the user’s head. Both Microsoft and Magic Leap have already launched their own enterprise-oriented smart glasses.
• The startup is working with automakers, universities, and tourism organizations who want to use the enterprise MR glasses in the workplace, or to offer them to end users.
• Several new apps designed for the smart glasses were revealed at the Mobile World Conference held in Shanghai on Tuesday, including a weather app, games, and a 3D live soccer experience app.

With the initial success we’ve seen with our carrier partners, we’re scaling this strategy and excited to get Nreal Light into the hands of American consumers by April of this year.

—Nreal CEO and founder Xu Chi, in the statement

Context: In fall 2020, Nreal launched its Light MR glasses in Japan in partnership with KDDI, and in Korea with LG.

• Nreal closed a $41 million Series B in September led by TikTok competitor Kuaishou, bringing its total funding to $70 million.
• Other Nreal investors include Sequoia Capital China, video-streaming platform iQiyi—which operates its own VR venture—as well as Shunwei Capital, a VC firm founded and chaired by Xiaomi’s co-founder Lei Jun, and state-backed GP Capital and CCEIF fund.
• The company was accused of stealing technology from Magic Leap in June 2019.

READ MORE: US court rejects IP theft claims against Chinese mixed reality firm

Catalyzed by the explosive popularity of Clubhouse, several Chinese Clubhouse-like apps are picking up steam. 

The invite-only audio app’s selling point is access to celebrities. But many users joining Clubhouse’s Chinese equivalents—Two, Dizhua, Yalla, and Tiya—weren’t looking to meet celebrities. They were after casual conversations and online dating.

These apps saw an uptick in downloads starting early last week, around the time that Elon Musk appeared on Clubhouse. China’s block of Clubhouse on Monday evening hasn’t changed the overall download trend as of the time of writing, according to data shown on app data provider Chan Dashi. 

READ MORE: Clubhouse no longer accessible in China

While the Clubhouse-like apps saw a jump in interest compared to their own histories, none of these networks are exactly topping the charts. On Feb. 7, Dizhua peaked as the 153rd most popular app in the social category in the Chinese iOS app store, according to Chan Dashi data—a big step up from its January place in the 700s and 800s—while Two hit 421st as of Feb. 9. Clubhouse is not listed in the Chinese app store, so TechNode could not make a direct comparison.

Clubhouse was not easy to access in China even before the ban, requiring an iOS device, an overseas Apple ID and an invitation. According to web analytics service Statcounter, Apple’s iOS only accounts for 20% of the market share in China as of January, 2021.

Clubhouse-likes

Justin Sun, founder of the cryptocurrency platform TRON and known for shelling out $4.57 million on a lunch date with Warren Buffett, announced on Twitter the launch of a Chinese version of Clubhouse called “Two.” The app is available to download in China on both the Apple and Android app stores. 

Although Sun described Two as a new app, TechNode has found 482 user reviews on the Apple store dated as far back as August 2020. As of the time of writing, on the Android app store alone, Two has 2,892,031 total downloads, according to Chan Dashi Data. New downloads saw a jump on the Apple app store on Feb. 2.

Tiya, an audio chat social network app backed by China’s leading podcast platform Lizhi, also gained significant market share in the west and users in more than 200 countries. Catalyzed by the popularity of Clubhouse, Lizhi share prices soared by more than 300% in a five day period in the beginning of February, reaching a historic high.

Clubhouse’s celebrity affiliation has made membership in the app a token of status. “Clubhouse brings true KOLs, celebrities, elites, and industry leaders into the conversation, instead of live-streamers and influencers who accumulated fans and followers over time,” Rui Ma, China media and tech analyst Rui Ma told TechNode.  

Prices for a Clubhouse invitation on Alibaba’s secondhand marketplace range from RMB 180 ($28) to RMB 500.

READ MORE: Clubhouse invites for sale on Alibaba’s used goods app

The homegrown networks offer a different vibe to the KOL-heavy Clubhouse. “A lot of the existing apps focus on connecting strangers and providing a place for them to socialize,” Ma said. 

Dizhua, an audio social networking app launched by the knowledge sharing community guokr.com in August, 2019, has seen a significant leap in downloads since late January, according to Chan Dashi data.

A few users who reviewed the app in the Apple app store comment that they found their romantic partner on Dizhua. 

“I found lots of interesting people and there are always things to talk about. Audio chatting is very efficient; you know right away who you get along with,” user Miaoeima commented (our translation). 

“It’s nice to talk to strangers willing to listen to your stories, whether it’s silly or sad things in your life, they are patient and supportive,” another user said (our translation). 

Many comments on the Apple app store said that Tiya is a good place for socially awkward people to make friends. 

“Personally, I am socially afraid,” user “Brooks Heg|mann” wrote in a review on the Apple app store on Nov. 24, 2020. “I meet like-minded people here.”

The clone

Another developer created a clone platform as a performance. Huancheng Bai wrote in a blog post that he wanted to create a clone app to better understand the software and show that it wasn’t hard to replicate. 

Bai successfully completed it within 55 hours, less than his original goal of 72 hours.  He used the Agora API, the platform-as-a-service technology underlying Clubhouse. He livestreamed the entire cloning process on Bilibili.

Bai named the project NESHouse and made its source code available to anyone interested in building a Clubhouse-style platform or studying the logic of the network. 

“NESHouse is not a commercial project, but more of an experimental product for programmers and geeks,” he tweeted on Feb.4. 

“I made it just for fun,” he told Technode.

Prospects 

A number of homegrown apps offer audio chat rooms in China, but none have captured the same kind of KOL-heavy user population. Clubhouse essentially paved its way to success by combining the rising popularity of podcasts with a real time social network allowing 5,000 people in a conversation.

It wouldn’t be surprising if more players—perhaps Chinese podcast platforms such as Xiaoyuzhou FM—try to bottle the Clubhouse lightning by throwing in a livestream chat room feature into its app. 

TikTok bets on social shopping

TikTok, Beijing-based ByteDance’s short video app, is reportedly planning several new features for its e-commerce expansion in the US. The move builds on the success of a similar push from its Chinese version Douyin, now a major player in China’s livestream e-commerce market.

Livestream shopping has become widely popular in China. Another features allows TikTok users to share links to products and automatically earn a commission. The viral short video app piloted a shoppable experience with Walmart in December. (Financial Times)

Luckin bankruptcy

Luckin Coffee filed for bankruptcy protection in the US on Friday to fend off US creditors during a liquidation process that is already underway in the Cayman Islands, where it is registered. The company will continue its China operations, “including paying suppliers, vendors, and employees.” The filing comes almost a year after the company admitted falsifying RMB 2.2 billion ($310 million) in 2019 sales. (TechNode)

Regulator scrutiny

Beijing has imposed a RMB 3 million fine on the operator of Vipshop.com for unfair competition, just a month after the flash sale online retailer was penalized RMB 500,000 for irregular pricing. (TechNode)

Didi boosts group-buy unit

Ride-hailing giant Didi Chuxing is planning to raise $4 billion for its community group-buying unit, doubling down on the rising sector to diversify its revenue streams amid slowing growth in its core business. Didi could chip in $3 billion while seeking about $1 billion from external investors. (Bloomberg)

READ MORE: Friendly neighbors are the key to China’s community group-buying craze

Fresh produce e-commerce

Suning Logistics, part of omni-channel retailer Suning Group, rolled out Su Xian Da, a new fully linked cold chain solution from warehousing to distribution. The service offers cold-chain delivery service to consumers within 48 hours. Suning, along with a group of online sellers and delivery services, will continue its logistics and delivery services during the weeklong Spring Festival holiday, generally a low season for China’s logistics industry. (Tencent, in Chinese)

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode, James and Elliott are once again joined by regular guest Michael Norris to discuss Kuaishou’s blockbuster IPO. They cover what it is that Kuaishou does as a business, its financial situation, and where its growth prospects are going forward. Is Kuaishou a good company? Or is it the fast-growing short video segment which is drawing the investor interest?

Hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• Bilibili
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:              

• Michael Norris – @briefnorris

Editor:

• Peter Isachenko

Podcast information:

• iTunes
• Spotify
• RSS Feed
• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

The hit audio-only social network Clubhouse appears not to be accessible in mainland China as of 7:30 p.m. Monday evening. As of writing, TechNode reporters and contacts opening the app receive an error message reading “An SSL error has occurred and a secure connection to the server cannot be made.” The main field of the app, which normally displays a list of conversations and activity, is empty except the suggestion to “Start a new room to get a conversation going!”

Why it matters: While Chinese internet regulation can be unpredictable, Clubhouse is probably gone for good from Chinese networks.

Context: The hit app has provided a rare, unfiltered space for online discussion mainland China. In recent days, thousands of users flooded into Chinese-language groups discussing normally off-limits topics, leading many to predict that it was only a matter of time before the app was blocked.

China on Sunday put into effect new antitrust guidelines targeting internet platforms, subjecting the country’s tech industry to tougher rules on competition.

Why it matters: The guidelines formalize earlier draft rules announced by China’s State Administration for Market Regulation (SAMR), the nation’s top trustbuster.

• Some of the country’s top internet-based services, including Ant Group’s Alipay, food delivery app Meituan, Tencent’s instant-messaging app WeChat, and online marketplace Taobao, will be subject to the new guidelines. 

Details: The new rules forbid internet platforms from forcing merchants into exclusivity deals, offering different prices based on user data, and using algorithms to manipulate the market.

• Pricing products or services differently according to customer purchasing power, consumption history, or user preference is now considered monopolistic behavior, according to the guidelines.
• The guidelines widen the parameters for determining a firm’s “market-dominant position” to include factors such as transaction volume, user base page views, and technological barriers. 
• SAMR, which issued the rules, said the guidelines will provide a legal basis (in Chinese) for the country to tighten antitrust regulation of internet platforms.

Context: In December, SAMR issued fines to Alibaba and affiliates of Tencent and logistics giant SF Express over three separate acquisition deals, a move that legal experts described as the country’s first batch of antitrust enforcements against tech firms.

• SAMR in January 2020 proposed an overhaul of the country’s Anti-Monopoly Law to include internet firms in the scope of antitrust regulations.
• Last week, Douyin, ByteDance’s Chinese version of TikTok, said it had sued Tencent for monopolistic behavior including blocking Douyin’s content on WeChat.

Savvy Chinese netizens are looking to capitalize on the booming success of US-based Clubhouse by selling invitations to the invite-only live audio app, just a day after Tesla CEO Elon Musk broke audience records with an appearance on the platform.

Details: TechNode counted dozens of listings for Clubhouse invites on Idle Fish, Alibaba’s secondhand marketplace.

• Prices range from RMB 180 ($28) to RMB 500 per invitation. Sellers are from a number of different locations in China. On eBay, Clubhouse invites are selling for around $50 at the time of writing.
• The overwhelming majority of the Idle Fish listings were posted in the last 24 hours. TechNode has not been able to verify the authenticity of the listings.
• The homonymous hashtag had been viewed 6.65 million times on Weibo, China’s Twitter-like social media platform, in the 24 hours preceding Tuesday afternoon, Feb. 2. It peaked around 5 p.m. China Standard Time on Monday.
• “What is this? Am I out of touch with the times?” (our translation) one flabbergasted Weibo user wrote around 5 p.m., posting screenshots of chatter on the social media platform. The post had been liked 6,700 times.
• At 5:43 p.m., a Weibo user with 2 million followers noted that Clubhouse invites were sold on eBay for $97. The post attracted 4,000 likes.

Context: The Clubhouse app lets users join in rooms and listen to conversations between hosts and guests. It has been buzzing in Silicon Valley the last month or so, but reached new heights of popularity after tech superstar Elon Musk’s appearance on Monday.

• The Tesla executive debuted on the audio app, giving news writers around the world plentiful headlines: He broke the app’s audience limit, said he is a “supporter of Bitcoin,” and grilled the CEO of Robinhood about the app’s decision to stop investors from trading GameStop.

TikTok’s Chinese owner has rolled out an e-wallet feature on its Douyin video-sharing app, a move that could pose a significant threat to the Alipay and WeChat duopoly in China’s mobile payment sector.

Why it matters: Douyin, the domestic version of TikTok, is one of China’s most used apps with 600 million monthly active users as of September.

• Bytedance’s ambition to tap into the payment sector have long been hampered by China’s strict finance regulations. The company in September inherited (in Chinese) a payment license from a small payment firm based in the central province of Hubei it acquired two years ago.
• E-commerce behemoth Alibaba’s Alipay and internet firm Tencent’s WeChat Pay, a feature inside the instant messaging app WeChat, are the two dominant players in the market. Together they hold nearly 95% of China’s online payment market, according to iResearch (in Chinese), a market research firm.

Details: Douyin recently added Douyin Pay onto its checkout page, Chinese media reported Tuesday. The payment method allows users to buy virtual gifts for livestreamers and pay for goods on the app’s e-commerce platform.

• Bytedance said in a statement to TechNode that Douyin Pay was rolled out by the company to “supplement the existing major payment options.” A Bytedance spokesperson said the feature had been available for a while and was previously in test mode.
• The app previously supported WeChat Pay and Alipay. Douyin Pay allows users to link cards from 10 banks including Bank of China and China Merchants Bank.
• Payments are processed by Ulpay, the Hubei-based firm it acquired in 2018.

Context: An in-house payment tool is essential to many of Bytedance’s offerings, including e-commerce and lending services.

• Bytedance is building an e-commerce platform on Douyin around its active livestreaming community. The business model, known as livestreaming e-commerce, has seen massive growth in China since 2019.
• The company in October 2019 launched a lending app, providing users with consumer credit, installment payments, and credit card services. Douyin had also recently launched Dou Fenqi (literally translated as Dou Installments), a feature that allows users to pay their bills in monthly installments, Chinese media reported.

Dalian, China—“1411 hours. The station is back in crisis. Once again, we cannot use the printer.”

A railway depot in the northeastern city of Dalian held China’s technically savvy readers in suspense—or, perhaps, stitches—with a minute-by-minute bulletin of its 20-hour “battle” to revert a Flash update on Jan. 15, which achieved brief viral fame before being deleted. Screenshots are still available on programming forum Github.

Depot staff were confused when their computers lost access to the local dispatch system on the morning of Jan. 12, according to the bulletin. The reason: Adobe’s last update to its Flash Player included a kill-switch set to go off that day, when the company ended support for the notoriously virus-prone web standard. Flash was little missed—except in the Chinese government, where it remains in widespread use. 

“0816 hours: After calls and online searches, we confirmed the source of the issue is American company Adobe’s comprehensive ban of Flash content.” 

So began the “insurmountable challenge of updating Flash”—a process the depot chronicled on its WeChat public account in the style of a military thriller, written with all the self-awareness of Dwight from “The Office.” As journalist Tony Lin, who first flagged the post in English, wrote on Twitter, it was “the Y2K content the world owes us for 20 years.”

The post was later deleted after catching on with technically minded online wags, many of whom asked why the depot didn’t plan for the retirement of Flash despite three years’ advance warning. 

The staff divided into hardware and software task forces, and attempted to restore an older version of Flash from a backup “GHOST system,” an effort marked by triumphs and defeats. By 10 p.m., they had mostly restored computers to backup states—when, suddenly, automatic updates caused the systems to disable Flash again.

According to a brief statement which later replaced the viral post, the issue was limited to newer computers in the depot and no trains were affected.

After midnight, the team began to chalk up lasting victories:

“Jan. 13, 0113 hours: ‘Wan Jia Ling station is fixed! Ling Ma shouted…we all gathered and confirmed. The room burst with cheers and applause.”

Finally, after 20 hours, the team had Flash up and running again on all its computers. Flush with victory, the author of the bulletin reflected on what they’d learned:

“During more than 20 hours of fighting, no one complained and no one gave up. The slim hope motivated each and every one and turned into the fuel to push forward. In the solving of the Flash malfunction, the depot displayed true initiative, innovation, and brilliance.”

All translations are TechNode’s own. Featuring contributions from hardware and regulations reporter, Wei Sheng.

Chinese video-sharing app Kuaishou has asked all employees to work on every other Sunday starting Jan. 10, according to media reports.

Why it matters: The changes came as Beijing-based Kuaishou prepares for a Hong Kong listing as soon as January. The company is under tremendous pressure as it struggles to compete with rivals such as Douyin, the domestic version of TikTok, and Bilibili in the online entertainment sector.

• Chinese tech firms are known for encouraging or sometimes compelling employees into overtime work schedules. One schedule known as “996”— where employees work from 9 a.m. to 9 p.m., six days a week, sparked a widespread online protest last year. 
• Kuaishou’s new work schedule, known as “big/small weeks,” also triggered backlash on Chinese social media on Wednesday. The hashtag #KuaishouStartsBigSmallWeek became a trending topic on social media site Weibo with more than 12 million views. “The labor law never fails to give way to capitalists,” wrote one user.

Details: Kuaishou human resource head Liu Feng announced the new shift will be implemented beginning Jan. 10 during a staff meeting on Tuesday, Chinese tech news outlet Tech Planet reported Wednesday.

• The South China Morning Post on Wednesday confirmed the news with two anonymous Kuaishou employees. 
• Liu told Kuaishou staff that “a week starts on Sunday in the West” and that around 70% of the company’s employees had already adopted the big/small week schedule, according to Tech Planet. “For the sake of closer cooperation between all teams, Kuaishou will fully implement the big/small week schedule,” he told employees.
• TechNode could not independently confirm Liu’s remarks. A Kuaishou representative did not respond to TechNode’s request for confirmation on Wednesday. Liu cannot be reached for comment.

Context: In November, Kuaishou was caught in the crossfire of public criticism after Chinese media reported that it had installed timers on top of toilets in its headquarters.

• In November, Kuaishou filed to go public in Hong Kong. The company said it had amassed a total of 302 million daily active users as of June 30 with users spending over 85 minutes on average on its platforms.
• Kuaishou recorded annual adjusted net profits from 2017 to 2019. However, it booked an adjusted net loss of RMB 6.3 billion (around $964 million) in the first half of this year.

On Dec 10, TechNode Global and TechNode co-hosted five sessions on Day 4 of Singapore’s SWITCH conference. 

Jointly organized by the Monetary Authority of Singapore, Enterprise Singapore, and IPI Singapore, the Singapore Fintech Festival (SFF) x Singapore Week of Innovation and Technology (SWITCH) took place from Dec. 7-11. 

In line with this year’s theme “People and Talent,” TechNode and TechNode Global spotlighted the faces of the Chinese tech innovation ecosystem, inspiring budding entrepreneurs and innovators.

The following are the highlights of each panel co-hosted by TechNode Global and TechNode:

The Southeast Asia dynamic with Chinese investments and partnerships

At SWITCH Connect, Elliott Zaagman, co-host of the China Tech Investor Podcast, moderated a panel discussion with Kay-Mok Ku, Managing Partner for Gobi Southeast Asia, and Yi Pin Ng, Co-Founder and Managing Director at Yunqui Partners.

On the topic of Chinese investments and partnerships in Southeast Asia, the panelists went over several dynamics in the region, including maturity of markets, fragmentation, barriers to innovation, localization, bifurcation, and the future of innovation in the region.

Notable is the difference in maturity of markets between China and Southeast Asia. China is considered to be mature in terms of infrastructure and innovation, while Southeast Asia is host to emerging markets, which are rapidly catching up. This leads to so-called “low-hanging fruits” or markets ripe for innovation, particularly with a fast-growing internet base.

“In Southeast Asia, I see a lot of these startups actually focus more on policy and execution side of technology. So, for example, the infrastructure side, a lot of logistics companies are being funded and more and more private equity will start to come into this market as well,” shared Kay-Mok. “The question is: What are some of those barriers and what are the ones that have been overcome and what are the ones that are still not yet overcome fully.”

Read more.

Mobility insights in China – Is China’s EV industry thriving or diving?

China has done all it can to encourage manufacturers and consumers to consider electric vehicles (EVs). EV manufacturers such as Xpeng Motors have been planning to take it a step further and bring their EVs to global markets. In this panel, moderator Simon Hui of Baker McKenzie discussed the current market positioning and different opportunities for EVs in China and unchartered waters with Brian Gu, the Vice Chairman & President of Xpeng Motors.

Hui said that EV sales in China have regained momentum in the past couple of months after suffering a drought earlier this year, and Gu credited this rebound to a couple of different factors that have been in play for a while now.

Over the past couple of years, the Chinese government has offered subsidies and favorable policies for manufacturers and consumers to bring more growth to the EV industry. Players who have entered the industry early on were able to foster the environment, and this has definitely played a big role over the past couple of years in building the infrastructure needed and convincing consumers to make the change.

Even with everything the government has done to push EVs and what the pioneering companies have done to foster a more appealing environment and product, people remain doubtful about making the change from Internal Combustion vehicles to EVs. The two biggest hindrances were range anxiety and the general cost of an EV.

Read more.

China’s shoppertainment craze: Is the social commerce livestream hitting its ceiling?

We have seen e-commerce grow and reach places and heights that we would never have imagined. One of the more recent strategies that have been integrated with e-commerce is adding a social aspect to your online shopping. In this panel, Chinaaccelerator Managing Partner Oscar Ramos moderates a conversation on Social Commerce Livestreaming with Pinduoduo Executive Director for Sustainability and Agriculture Impact, Xin Yi Lim.

Pinduoduo is the pioneering interactive e-commerce platform that brings a social aspect to your online shopping experience. They aim to give you a fun experience and with friends as all of you save money together. Founder Colin Huang Zheng said that they want Pinduoduo to be like CostCo and Disney combined: savings and fun put into one package.

Social commerce livestreams open up a channel for consumers to reach merchants. One of the more significant hindrances for people to buy online is not seeing the product in person. This allows the merchant to answer any questions or concerns these consumers may have. Lim brings up clothes as an example, wherein customers are always unsure about what size they should get. Having this livestream channel allows the customer to see how it actually looks and how big a small would look next to a medium.

In the bigger picture, consumers who were foreign to e-commerce were forced to adapt due to the lockdown. The pandemic has brought an entirely new wave of users who rely on e-commerce platforms to get products such as daily essentials from FMCGs and fresh produce, which consumers would usually purchase in physical stores. Lim does not see this as a trend and explains how the sales for fresh groceries in e-commerce have been steadily increasing. This sudden boom in sales for these necessities is most likely here to stay, and some physical stores may have to restructure in the future to include fulfillment of online sales as one of their new services.

Read more.

Up close with tech veteran Lei Ming: The Baidu and Kuwo Music Founder on the next breakthrough

Lei Ming was one of the first senior engineers for one of China’s biggest social media platforms, Baidu. He joined the team early on, right after graduating, to work with Baidu’s research and development team. He described his experience back then as very different from his classmates, who decided to join big corporations. With start-ups, you would be learning on your feet and based on experience rather than learning from elsewhere. Fresh from graduation, he was forced to step up and handle teams of engineers and develop products and features from prototypes to final release products. This is where he realized that he was truly an entrepreneur at heart.

With the experience and success under his belt, Lei Ming decided to take on completely new challenges in the tech world after letting go of Kuwo. His next focus was investing in the future and artificial intelligence. Lei Ming is one of the founding partners of AIBasis Ventures. He has invested heavily in artificial intelligence and has multiple incubation and innovation centers focused on developing AI products.

Lei Ming emphasized that the opportunities come with change. One of the biggest game-changers that we have seen is the continuous advancement of the internet. From slow and expensive, the internet has suddenly become fast, cheap, accessible, and reliable. These conditions made opportunities for new businesses ripe for the picking. We have seen how our means of communication have changed from text to voice, to picture, to video, and even live high definition video chats. This is all made possible due to faster internet connections.

When deciding what to do, Lei Ming advised that entrepreneurs consider finding the right thing to do at the right time. You need to make sure that you are addressing a problem, and you need to see whether or not you have missed your window to enter that opportunity. He mentioned that as early as 2005, there were thousands of video streaming and e-commerce sites competing with each other. Unless you can guarantee that your product can deliver the best quality compared to the rest, then you might end up experiencing more problems than you would like.

Read more.

HealthTech innovations post-COVID-19

Healthcare systems are changing really fast. Christopher Udemans, TechNode Senior Reporter, moderated a conversation on innovation in healthcare delivery and how COVID has changed the landscape with Chang Liu, ACCESS Health International Regional Director for Greater China & Southeast Asia.

One of the biggest tools that have been utilized to help ease the burden on the healthcare system is telemedicine. Through these platforms, users or patients can access healthcare by accessing an app and receiving consultations from a doctor remotely. However, it isn’t as simple as just putting up an app. Healthtech, as a whole, has to be applied to the entire system. This means access to essential medicine, proper training, sufficient financing, government support, and health data.

COVID-19 has definitely played a critical role in adding attention and value to integrating technology when it comes to healthcare delivery systems. Liu enumerated three magic ingredients to ensure that health tech will work: social acceptance, government support, and enterprise innovation. Cooperation between private companies and the government needed to come together to generate a holistic solution that would address the problems COVID had brought out.

Liu said that there is a lot that other countries can take note of when it comes to how China, as a whole, has handled the virus so far. Several low/middle-income countries have already studied and adapted systems and protocols that China has already put in place.

Read more.

Apple has told developers worldwide it would remove any remaining paid games that are not approved by Chinese authorities after Dec. 31, ending a six-month-long purge of unlicensed games.

Why it matters: The move means it will be almost impossible for international mobile games makers to access the Chinese market if they don’t comply with the country’s strict content rules. Chinese Android app stores have long required game makers to obtain such licenses if their apps contain paid features.

Details: In an email to developers on Dec. 2, Apple said that games without a valid game license number will be removed by Dec. 31, according to a report shared with TechNode Wednesday by AppInChina, a mobile services company that helps foreign apps enter the country.

• “As you may know, Chinese law requires games to obtain an approval number from China’s National Press and Publication Administration,” Apple said in the email. “After Dec. 31, your game will no longer be available on the App Store in China mainland until an approval number is provided with your next submission.”
• Apple did not reply to TechNode’s request for comment on Wednesday.
• It is unknown how many titles will be affected. Apple has removed more than 90,000 games from the China App Store since July, according to AppInChina, though these may include removals for other reasons.

READ MORE: Apple purges 3,300 games from China App Store in 2 days

Context: The purge of unlicensed games kicked off in July when Apple started to act on a February warning to developers to submit a valid license number or face removal. The company removed some 1,571 and 1,805 games from its App Store in China on July 1 and July 2, respectively, versus an average of around 200 titles removed in June.

• Since 2016, Chinese regulators have required all paid games or games that offer in-app purchases to obtain a publication license before they can be uploaded to app stores.
• Foreign companies are not allowed to apply for the license. They have to partner with local companies to legally launch their paid games in China. So far, only 97 foreign games were issued game licenses this year, according to AppInChina.

Like all Chinese, I’m on social media a lot. I check Wechat every other minute, I read Linkedin and Twitter from time to time, and then I post on Weibo and Douyin occasionally. (One minute—let me just check Wechat).

But even as Wechat—which recently claimed 1.1 billion global active users and Douyin (the Chinese counterpart to Tiktok) continue to gain new users in China, I have been wondering if there is space for a new social network in China, especially for the Generation Z, native to mobile Internet and known to be fickle, and maybe even for everyone.

We do have a very competitive landscape of social apps in China. There are three types of social apps here:

• Close-knit social apps where people can communicate with the friends, family, and acquaintances they already know offline. Examples include Wechat and QQ. As a result of the instant message focus of the apps and the extensive contacts most users, people don’t post user generated content in Moments tab as enthusiastically as a few years back. In addition, these apps do not provide an open platform for meeting new people.
• Content and media-driven apps. Examples include Little Red Book, Tiktok, and most of the apps that host online influencers. Users put out a lot of content, often quasi-professionally made, on these apps, and other people can comment or leave messages about the content and follow such influencers or each other. The downside, however, is that there is usually only one-way communication. There are few opportunities for meaningful two-way discussions. Often only influencers receive significant attention and quality feedback.
• Tool-type social apps like Momo or Tantan—known as the Tinder of China. These types of apps are highly effective for meeting new people, but are often hormone-driven and focus on appearances and social status more than any other attributes. This type of app tends to be limited to one-on-one conversations, with almost no content creation (other than profiles filled with photoshopped selfies) or opportunities to meet and interact with groups of people.

So is this the endgame for Chinese social networks? My answer is NO.

There are plenty of things you don’t want to share on Wechat Moments because you don’t want your friends, family, or colleagues to see them, and you don’t want to want share on Weibo because you may not get quality responses at all. You may ask yourself—when you click the “like” button on Wechat Moments, do you do that because the content is truly fascinating, or just because you want show some respect to the person who shared it?

This is why this app called Soul really gets my attention. It is quite a special one, unlike all others social apps in the market.

In fact, Soul is not that new. Founded by veteran consultant Zhang Lu, Soul went online in November 2016.

Soul promises an oasis in the complicated social media landscape, by promoting content based on users’ interests and lifestyle, and allowing users to express themselves and interact with one another in a stress-free, largely anonymous, environment. Users, which the platform calls “Soulers,” build a brand new virtual identity for Soul, with avatars and develop extendable virtual relationships without disclosing personal information.

The app encourages users to connect with strangers based on shared interests. Much like Bilibili, you need to take a survey while registering to be a user. But unlike Bilibili, where you have to answer 100 questions about online pop culture, on Soul you dig deeper into yourself by answering questions ranging from your personality to your daily habits, from your biggest fears to your pet cat’s favorite snack. And a personal profile is set up, tagged with your NERIS personality type as a tag, among other interests you have. Profile photos, locations, ages are not required, even discouraged, and never disclosed on the platform. You then leave the rest to an algorithm, which suggests friends and posts that may interest you based on the data you have entrusted to the platform. 

Soul is already a popular app among China’s Generation Z population, who use it to publish UGC, ranging from diary, voice clips to photos, short videos of their own performances. According to data from Iresearch, Soul is more focused on Generation Z than any other major social network in China, with 35.6% of the app’s users falling in the age group.

Much like Snap was to Facebook, Soul is a complementary platform for young people. Like Facebook, Wechat is all based on real-name, real-life relationships. Soul provides a home for the type of UGC that you don’t want people in your usual social circle of offline relationships to see. Soul users also foster and maintain relationships on the platform based on their interests and engage in interactive features such as giving each thumbs ups, commenting on posts, or discussing specific topics through tagging their posts à la Pinterest.

Soul has positioned itself as the “next generation social playground for Gen Z” in China. But to me, Soul app is potentially not limited to only the Gen Z audience. Everyone, no matter what age they are, is sometimes lonely and wants an opportunity to express themselves with authentic interaction.

I don’t know how far Soul will go, but definitely in China, the social networking space is NOT done yet.

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts

Elliott and James welcome back Matthew Brennan to the show to discuss his new book: Attention Factory: The Story of Tiktok and China’s Bytedance. Matthew shares insights into the company’s beginnings as well as its meteoric rise, the people and personalities that define its culture, and how Tiktok came close to failing in the US.

Hosts may have interests in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• iQiyi
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping
• Luckin Coffee

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:             

• Matthew Brennan– @mbrennanchina

Editor:

• Peter Isachenko

Podcast information:

• iTunes
• Spotify
• RSS Feed
• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

In 2018, Chinese internet giant Bytedance decided to go where no Chinese company had gone before—the heart of the US social media market. Chinese companies have always struggled to understand Western consumers, and, when it launched short video app Tiktok in the US, Bytedance didn’t even try. Instead, it let an algorithm spend billions on bizarre ads that looked straight out of Tumblr. What was Bytedance thinking?

In an excerpt from his new book “Attention Factory: The Story of Tiktok and China’s Bytedance,” TechNode contributor and Managing Director of China Channel Matthew Brennan looks back at Tiktok’s cringeworthy US debut, explaining how furries played their role in jumpstarting the mainstream content juggernaut.

Tiktok hadn’t paid anything to Pewdiepie. The A-list global internet mega-celebrity was creating video after video about Tiktok because his audience loved it. This should have been the kind of authentic influencer promotion that online marketers dreamed of. Every video was essentially a free ten-minute advert for Tiktok distributed out to a loyal 80 million follower base. Yet, at the same time, Pewdiepie wasn’t exactly endorsing the app.

Tiktok was bizarre. An endless stream of people posting weird con­tent with almost a total lack of self-awareness. Mindless comedy skits, lip-syncing, and just outright wacky oddball creations. The kids making these videos could be forgiven; they were just kids. But the adults posting on the app came off simply as creepy and weird. Countless numbers of Tiktok cringe compilations started appearing on Youtube, many with mil­lions of views. Criticism of the app became widespread, with the sham­ing of Tiktok users becoming a regular occurrence on Twitter and Reddit.

In China, Douyin, the domestic version of Tiktok also operated by Bytedance, had first garnered attention as a popular app for ur­ban youths, associating itself with art students and fashionable hip-hop lovers. Yet in America, it was the absolute opposite. Tiktok had entered the public consciousness as a cringe app for losers and misfits. What was going on?

The answer was Bytedance’s truly massive advertising campaign across major Western social media platforms such as Youtube, Instagram, and Snapchat. The advertising campaign’s budget was reported by the Wall Street Journal to be over $1 billion in 2018. Bytedance became Facebook’s biggest Chinese customer as it grew Tiktok’s footprint with app-install ads. Many Americans suddenly found Tiktok ads were eve­rywhere they looked online.

The company also spent heavily on traditional billboard ads and out­door advertising. They ran an expensive TV advert right after the New Year’s Eve ball dropped in New York City’s Time Square. Adverts for Tiktok popped up at famous landmarks around the world from the Burj Khalifa in Dubai to the London underground through to the Las Vegas strip.

The initial warm reception towards Tiktok across various Asian mar­kets was highly encouraging —it seemed Douyin’s success really could be replicated globally. Yet the more successful Tiktok became in Asia, the more attention it attracted from competitors; all major internet compa­nies had advanced systems in place to keep track of new trends and changes in mobile usage habits. Bytedance had to move fast to grab the window of opportunity to leverage its advantage. In general, Western in­ternet companies look down upon directly cloning competitors. Even so, if an established giant like Google or Facebook chose to promote a simi­lar product to Tiktok vigorously, it could significantly hamper their pro­gress.

This meant speed was of the essence, and the most effective way to scale up fast with a combination of massive spending on online app install ads matched with build­ing brand awareness through offline ads.

These Tiktok ads are disturbing!

Usually, when a company wants to spend big on online advertising and introduce a brand to a new market, they will work with a creative agency. Expensive consultants will be hired, and veteran advertising professionals with years of industry experience will create smart concepts. The process will involve carefully crafted brand messaging, extensive Gen Z focus groups, professional actors in expensive recording studios, crews of video editors, and graphic designers to ensure everything is perfect.

When it came to advertising Tiktok and newly acquired Musical.ly, Bytedance found a shortcut, but the strategy was somewhat unor­thodox—it would simply use videos from the app itself. The platform’s terms of service gave it the right to do so.

After manually identifying and removing potentially inappropriate con­tent, the company implemented a systematic process to experiment with various videos. The adverts didn’t actually say anything about what Tiktok was or why anyone would want to use it; they simply needed to pique people’s interest. The goal was simple: find the clips that got the most people to click on a big blue “install” button.

This ad buying process was run from Beijing by the company’s experi­enced growth teams. There was just one issue—the teams had a laser-like focus on conversion metrics but little understanding of the ac­tual video content. Whatever converted best would be used more, regard­less of what the actual video showed. It turned out that wacky, outlandish, downright weird videos worked really well at getting people to click the button.

Many of these weird ads were attracting social misfits. When these peo­ple started using Tiktok, they, in turn, made strange videos that would attract more social misfits and so on.

Tiktok’s video classification systems were highly sophisticated and able to accurately identify and classify all kinds of subculture content—automatically. The system was also able to tag users more effectively based on their actions and precisely match them with content in a way that Musical.ly had never been able to do.

A prominent example were “Furries,” a stigmatized and misunder­stood community of people who derive enjoyment from dressing up as animal characters in large fursuits. Furries were big early adopters of Tiktok in the US. Many built significant followings as the colorful car­toon-like animal costumes proved attractive to the app’s large pre-teen user base, bringing the subculture to a new audience.

Other notable early Tiktok adopter communities included cosplayers and gamers. The animosity between these groups led to the “Furries Vs. Gamers War” meme (This video gives a feel for what early Tiktok content was like in the US.), a lighthearted imaginary conflict which saw gamers pretending to have been kidnapped by furries and roleplaying acts of es­pionage, feigning to have infiltrated the ranks of the furries.

Tiktok contained a “duet” feature, which allows two videos to appear side by side, splitting the screen. Duet had previously been restricted in Musical.ly, but now users could respond to any video by recording one of their own. With many weird niche subcultures like furries on the plat­form, “duet” became popular, quickly transforming into a bullying and harassment tool. As a countermeasure, settings were later added, allowing users to disable duets.

Since merging Musical.ly with Tiktok in August 2018, the platform was moving in a vastly different direction—and not everyone was happy. “Tiktok’s early (unintentional) positioning in the States basically was cringe,” explained an early Tiktok employee who wished to remain anonymous. The app had an awful image problem. It was widely per­ceived as being only for misfits and kids making lip-syncing videos.

“I haven’t seen one piece of content on there made by an adult that’s normal and good. To be a grown adult doing a cute karaoke video on an app and trying to make it go viral is odd behavior.” was the brutal assess­ment of Instagram influencer Jack Wagner, interviewed in one of the ear­liest American media articles covering Tiktok.

The colossal spend on adverts was effective at getting downloads, but they were also ruining the reputation of the platform, leading the then small US based Tiktok team to express concerns to the China head offices. In China, Douyin had never had such a problem. The seed group of early adopters had been carefully selected, and the app had built an outstanding brand image with carefully crafted glitzy cinema adverts, savvy viral marketing campaigns, and sponsorships of hit talent shows.

“If you look at history, a lot of inventions first started with a toy, with things that seem to be irrelevant, but have the potential to become some­thing much bigger.” postured Musical.ly co-founder Alex Zhu in an inter­view, echoing an observation previously made by many industry practi­tioners. Tiktok’s early reputation for wacky cringe videos had made it seem like a toy and hard to take seriously. The situation had echoes of the initial characterizations of Snapchat being written off as an app solely for college students “sexting” each other with disappearing pic­tures. Widely criticized and with retention rates in the US rumored to be as low as 10%, Tiktok was not seen as a threat to anyone but itself.

Chinese video-sharing app Kuaishou filed Thursday a prospectus to the Hong Kong stock exchange, paving the way for a listing in the city.

Why it matters: The Beijing-based platform, backed by Chinese internet giant Tencent, is the second most popular short-video app in the country, trailing Bytedance’s Douyin, the domestic version of global hit Tiktok.

• Kuaishou also faces fierce competition in the saturated short video market from new entrants and entertainment incumbents including Nasdaq-listed Bilibili. Kuaishou is known to be popular among users living in China’s lower-tier cities and rural areas.
• China’s online entertainment industry is heavily regulated. Kuaishou said in the prospectus filed with the Hong Kong exchange on Thursday that it may “lose licenses we need to operate our business and suffer reputational harm” if it failed to comply with China’s laws and regulations regarding content moderation.

The prospectus: The preliminary prospectus to the Hong Kong bourse did not specify a timetable or size for the offering. However, it was the first disclosure of Kuaishou’s key financial details.

• Kuaishou’s revenue for the first six months grew by nearly 48.3% year on year to RMB 25.3 billion (around $3.8 billion), according to the filing.
• The company booked RMB 39.1 billion in revenue in 2019, and RMB 20.3 billion in 2018.
• Kuaishou recorded positive annual adjusted net profits from 2017 to 2019. However, it booked an adjusted net loss of RMB 6.3 billion in the first half of this year.
• “The time it will take for us to achieve profitability hinges on our ability to effectively monetize our product and service offerings and continuously grow revenues in a cost-effective way, which we may not successfully achieve,” it said.
• Kuaishou products, including its short video apps and mini programs running on Tencent’s Wechat, amassed a total of 302 million daily active users as of June 30 with users spending over 85 minutes on average on its platforms, according to the prospectus.
• Livestreaming is a major source of Kuaishou’s revenue. The business generated RMB 17.3 billion in revenue in the first six months of 2020, accounting for 68.5% of the company’s total revenue in the same period. The company said its live-streaming business had experienced “significant growth” in recent years, but warned that growth may slow, citing a decline in user demand.
• Kuaishou’s revenue structure has been diversified in the past few years. Revenue generated from livestreaming accounted for more than 90% of its total revenue in 2018. In the first half, the company generated 28.3% of its total revenue from online marketing services.

Context: Reuters reported in September that Kuaishou aimed to raise up to $5 billion in the Hong Kong listing, citing people with direct knowledge of the matter. The company planned to list in January, according to the report.

• Founded in 2011, Kuaishou has received investment from both Tencent and Baidu, two of China’s biggest tech companies. Su Hua, Kuaishou’s co-founder and chief executive officer, used to work for Google and Baidu.

In China’s tech context, livestreams are inextricably linked with e-commerce. Its sales-boosting effect is enticing more brands to integrate livestreams into their digital marketing and brand communication strategies in order to deliver compelling content for a strong brand connection, according to experts at TechNode’s Emerge 2020 conference held in Shanghai on Thursday.

Livestream-driven sales, though still important, is no longer the sole metric used to gauge its value. It is increasingly becoming a branding and marketing tactic that allows brands on various e-commerce platforms to show their products, build consumer rapport, and influence purchasing decisions. Tmall has integrated livestream replays to its product pages, for example, and Chinese millennial brand Shein launched a virtual livestream festival.

More livestream applications

Applications for livestream are various and it is a matter of what merchants or brands want to achieve by leveraging the format, Pablo Mauron, partner and managing director of Digital Luxury Group (DLG), said during the panel discussion. He cited a recent example from Louis Vuitton which staged and streamed its Spring/Summer 2021 Show in Shanghai as a typical non-sales-driven approach for livestreaming.

Michael Norris, research and strategy manager of Agency China, agreed. “Larger brands, such as SK-II and Aptamil, use elaborate branded sets to broadcast their livestreams. These broadcast studios become the home of product information, Q&A with the audience, celebrity cameos, as well as special offers and promotions.”

With this shift, Mauron said that companies should adjust their strategies accordingly. “Strategy around [livestreaming] is not the same as… a sales associate that is going to stream to a closed audience of existing clients to generate impulse buying and selling them new products,” he said.

However, changing the consumer’s perception of livestream could take time, because “the industry matures with other channels developing specific approaches… Also it requires brands and marketers in general to build the right understanding and framework around it, and to tackle it the right way,” Mauron explained.

Brands—particularly luxury brands once considered conservative in adopting new marketing strategies—are signaling they are ready to relinquish total control. “Livestreaming is a perfect example where it is going to be hosted by someone that is different from [the brand], that the codes according to which that performance that is going to be delivered is going to be different from what a brand would stage,” Mauron said.

What makes a great livestreamer

The livestream e-commerce boom has catapulted livestreamers to the center of the spotlight.

Speaking from her own experience, Maggie Fu, an internet influencer and co-founder of social media brand Melilim Fu, said livestreaming allows users to get a sense of being close to hosts. “People can see what you are doing, feel your personality through real-time interactions.”

Fu said that the key is to actually understand what the consumers want, rather than forcing consumers to buy. The entertainment aspect of watching the livestream and nice discounts are also crucial factors to attract eyeballs.

For Mauron, livestreamers’ success also depends on the ability to generate an element of credibility. “One of the key recipes of successful livestreaming if you talk about sales-driven livestreaming, is the fact that that raw format delivers something that somehow appears as more trustworthy than highly staged and polished and somehow artificial communication.”

Top livestream hosts like Viya and “Lipstick King” Li Jiaqi have become known worldwide. But they have not appeared out of nowhere. “They actually gone through many business cycles with ups and downs from a long time ago,” helping them to build their personality, and therefore strong connections with the users, Fu said.

Search giant Baidu is reportedly nearing a deal to acquire US-listed Chinese video-streaming social platform Joyy’s China operations in an attempt to boost its livestream business.

Why it matters: Baidu’s expansion to the red-hot livestream sector is a move to diversify its revenue streams as its core advertising business loses ground to rivals like Bytedance.

• Baidu, along with Alibaba and Tencent, was known as “BAT,” the three biggest tech companies in China. But the company has seen the gap between its market valuation and those of its two peers widen as tech upstarts like Bytedance and Meituan catch up.
• Baidu’s current $46 billion market capitalization has fallen far short of Alibaba’s $860 billion and Tencent’s $734 billion valuations.

Details: Baidu is nearing a deal to acquire Joyy’s Chinese operations for a deal worth $3 billion to $4 billion, local media Jiemian reported citing people with knowledge of the matter.

• Baidu will take over Yy, the entertainment show livestream app targeting Chinese audiences, the app’s content operations, technology, and team after the deal, according to the report.
• China operations play a much lesser role for Joyy, which is increasingly focused on the global market. Overseas users represent 91% of the company’s 457.1 million monthly active users, according to the company’s second quarter earnings report.
• The deal could be a win-win cooperation for both companies. Joyy’s livestream business provides Baidu the necessary technologies and user base to start with and Joyy can narrow its focus on global expansion.

Context:  Baidu began testing out the livestream space this year. In April, it began recruiting livestream hosts and merchants in preparation for the launch of an live-stream e-commerce platform. At the same time, it added live-stream features to its main search app, its video-streaming app Haokan, and communication platform Baidu Tieba.

• Baidu’s ad revenue shrank 8% in the second quarter of this year compared with the same quarter a year earlier.
• Joyy sold its controlling interest in game-streaming platform Huya to Tencent in August. Tencent merged Huya with its rival Douyu to form a single dominating player in the e-sports market.

Bilibili wants companies in China to use its livestreaming feature to recruit university students and fresh graduates, as the Covid-19 pandemic has complicated campus recruitment.

Why it matters: The streaming platform has been looking for ways to expand beyond its core business in anime, comics, and gaming (ACG) streaming.

• Through ACG, Bilibili has amassed a base of young Chinese users, which employers could potentially tap as a big pool of fresh candidates.

Details: Campus Recruitment Express is a form of content collaboration with employers, a Bilibili spokesperson told TechNode.

• The platform also guides employers through the livestreaming format and provides other free resources, such as banner display ads and live-steaming channel homepage recommendations, the spokesperson said. The livestreams are saved on a dedicated page.
• During the livestreams, employers try to recruit students by giving information about their company and position, and answering questions from the audience.
• “Starting from the end of August, we noticed that due to Covid-19, many companies were independently using livestreaming as part of their recruitment efforts,” the spokesperson said.
• Tencent, Huawei, Meituan, Didi, Geely, L’Oreal, and New Oriental have experimented with livestreamed recruitment on the platform, the company said.
• Users have also started uploading video resumes on Bilibili, the spokesperson said.

Context: In the second quarter of 2020, Bilibili had over 171.6 million monthly active users, 12.9 million of which are paying users.

• The company is backed by both Alibaba and Tencent, and received a $400 million investment from Sony in April.
• Bilibili is also expanding into online education. More than 86 million people used Bilibili to study using its large collection of educational videos in 2019, the company said. This is more than eight times the number of people who sat China’s university entrance exam, known as the gaokao.

READ MORE: CHINA VOICES | ‘Bilibili is becoming Chinese Youtube’

There’s just one thing wrong with this story—Douyin and Kuaishou aren’t really short video apps anymore.

Douyin supports videos anywhere between 15-seconds and 15 minutes, livestream content that may stretch over an hour, as well as mini-games. Kuaishou’s in the same boat, with a vibrant video game streaming scene to boot. The label “short video platform” has outlived its usefulness. 

Let’s take a quick look at why the term “short video platform” is less helpful than before and why it matters.  

What’s wrong with calling them ‘short video platforms’?

When short video apps first rose to prominence in 2013, they really were about short video. The Chinese term duanshipin (“short video”) was used to highlight the difference between an emergent content format (snackable video) and an established content format (tv-style streamed programming).

“Short video” wasn’t meant to stick around. It’s the type of term that should have gone away once everyone got the memo that online video doesn’t have to be a mobile-friendly version of 21- or 42-minute made-for-television programming.

However, the term persisted.

The term was easier to understand than alternatives, such as the alphabet soup of UGC, PGC, and PUGC (User Generated Content, Professionally-Generated Content, and Professional User Generated Content—don’t ask). Further, “short video” was easier to build a working, commonly-accepted definition around, becoming the default nomenclature for video content anywhere under five minutes.  

Without question, Douyin and Kuaishou are the most successful platforms built on short video content. Both boast eye-popping numbers of daily active users and increasing impressive shares of users’ internet time.

Note: The Douyin figure in the table above is a total for all mainland apps belonging to parent company Bytedance. Douyin is Bytedance’s most popular app. 

However, in 2019, these platforms started supporting different content types. Today, short video remains a platform staple, but it’s far from the only type of video available on Douyin and Kuaishou. A report released by Kuaishou earlier this year illustrates this nicely. 

Kuaishou has 300 million daily active users, of which 170 million watch livestream and 100 users engage in livestream e-commerce each day. (That, by the way, makes Kuaishou China’s fourth-largest e-commerce platform.) As Kuaishou further broadens its capabilities in e-commerce and cloud gaming (in Chinese), the range of on-platform activity will become even more diverse.

Given this range of activity, it’s no longer accurate to call Douyin and Kuaishou “short-video platforms.” 

Why does it even matter?

It might seem a little academic to object to the term as a catch-all for Douyin and Kuaishou. 

However, as these companies prepare to go public, names matter. 

Kuaishou is reported to be considering a $5 billion IPO next year. Bytedance, as part of its judo-wrestling match with the Trump Administration, may IPO TikTok, Douyin’s overseas cousin. Getting frames of reference right is an important part of each company’s dance with public markets. 

That’s because company valuation is an interplay between stories and numbers: Every number that makes up a valuation has a story behind it, just as every story about a company has a number attached to it. Terms like “short video” straitjacket stories these companies can weave and narrow potential investors’ appreciation of what Douyin and Kuaishou really are. The onus is on Douyin and Kuaishou to develop and field-test nomenclature that conveys their platforms’ depth, content diversity, and what they might offer in the future. 

Bilibili sets an instructive example. In its investor overview, it states “[W]e have evolved from a content community inspired by anime, comics and games (ACG) into a full-spectrum online entertainment world, covering a wide array of genres and media formats, including videos, live broadcasting, and mobile games.” That’s the sort of framing required to fight mischaracterizations like “the closest thing China has to Youtube.”

What would be a better name? “Online entertainment world” is a little too Rick and Morty for my taste. I’d stay away from hackneyed riffs on “super-app” and go with “entertainment hub,” encompassing video, gaming, and, increasingly e-commerce. 

Whichever way Douyin and Kuaishou decide to frame themselves, you can be sure they’ll steer clear from the term “short video platform.” Kuaishou, probably first in line to IPO, already calls itself a “platform.” That’s apt. The only reference to short video in the company’s online introduction is in the company timeline (Chinese). That highlights the degree the term “short video” is a relic. It’s outlived its usefulness, and sells these rich, diverse entertainment platforms short.     

From Washington to Berlin, New Delhi to Shanghai, Chinese tech companies remain entangled in geopolitical conflicts this week. In the US, the Chinese-owned video-sharing app Tiktok just won an initial success in its legal challenge against the Trump administration. White House officials renewed pressure on Europe to ban Huawei from their next-generation 5G networks after German Chancellor Angela Merkel refused a full ban on the Chinese telecommunications equipment maker. A new round of export bans were imposed on China’s largest chipmaker SMIC by the US. In India, banned Chinese apps are trying to re-enter the market with revised names and logos.

Tiktok’s initial win

On Sunday, a US judge halted a looming Tiktok ban at the last minute. The ban, announced by US President Donald Trump last Friday, would have removed Tiktok from American app stores starting from midnight Sunday.

• The injunction granted by US District Judge Carl Nichols gave Tiktok a temporary reprieve amid ongoing deal negotiations to meet with Trump’s demand to sell Tiktok’s US operations. 
• However, the judge didn’t consider Tiktok’s appeal to block an executive order from Trump demanding the company to divest from its American assets, according to court documents. The order, requiring Tiktok parent Bytedance to either spin off or sell the app’s US operations within 90 days, will go effect on Nov. 12.
• Bytedance has applied to the Chinese government for a deal that would give American software maker Oracle and retail giant Walmart a combined 20% stake of Tiktok’s proposed US business. Beijing hasn’t yet made a final decision, but smoke signals from state media indicate opposition.
• In the past week, the party mouthpiece People’s Daily published three editorials commenting on the Tiktok deal. One of which (in Chinese) reads: “The ‘Tiktok deal’ is based on unfairness… If the forced deal finally goes that way, American stakeholders would earn tens of billions of dollars…then why do they need venture capital and entrepreneurship in the country when they can just mug Chinese companies?” (our translation).
• “China won’t swallow its tears when its core interests are endangered, and Chinese companies are not lambs to the US slaughter,” said another editorial (in Chinese).

US renews campaign to ban Huawei in Europe

On Tuesday, Keith Krach, the US undersecretary of state for economic affairs, said Finland’s Nokia and Sweden’s Ericsson were the only companies that European governments should choose for the 5G network rollouts. Huawei is “an arm of the CCP surveillance state and a tool for human rights abuse,” Reuters quoted him as saying.

• Krach’s remarks came as Germany and Italy are deciding whether to allow Huawei to participate in building their 5G networks. Last week, Merkel refused to compromise on her position that Germany shouldn’t single out Huawei with a targeted ban, Bloomberg  reported. Her government finalized draft regulations for the security of Germany’s 5G network, which would tighten the government’s scrutiny over equipment vendors.
• Before Germany made its 5G decisions, the UK and France had adopted a de-facto ban on Huawei, vowing to phase the company’s products out from their 5G and 4G networks in the next few years.

SMIC on Huawei’s heels

Shares of Semiconductor Manufacturing International Corp (SMIC) tumbled more than 6% this week after reports that the US had imposed restrictions on exports to the Shanghai-based chipmaker. The decision was made by the US Commerce Department on Friday upon the conclusion that SMIC’s products could be used for military purposes and therefore pose “unacceptable risk,” Reuters reported Saturday.

• The Commerce Department said in a letter to some suppliers of SMIC that they will now have to apply for individual export licenses to ship to the Chinese company.
• On Monday, the Shanghai-listed company said in a statement (in Chinese) filed with the Shanghai bourse that it had not received any official notifications about the restrictions from the US government. The company also said it had no relationship with the Chinese military and had never produced products for military end-users.
• Chinese Foreign Ministry Spokesman Wang Wenbing told reporters Monday that China opposes (in Chinese) US restrictions on SMIC and that the country would take necessary measures to safeguard the interests of Chinese enterprises.

Chinese apps launch second offensive into India

In India, several Chinese apps previously banned by New Delhi are trying to reenter the market with rebranded versions, local newspaper The Economic Times reported.

• Chinese video app Kuaishou has launched video-sharing app Snack Video, a Tiktok lookalike. Kwai, an international version of Kuaishou, as well as Tiktok were both banned in India in June.
• Hago, another Chinese social media app banned in June, has been replaced by an app called Ola Party, which allows users to log in using their Hago credentials, according to The Economic Times.
• The Indian government has banned a total of 177 Chinese apps from the country in two rounds of app bans imposed in June and September. The most high-profile apps banned including Bytedance’s Tiktok, Kuaishou’s Kwai, Tencent’s instant messaging app Wechat and the popular mobile game Player Unknown’s Battlegrounds, or PUBG.

A federal judge on Sunday temporarily blocked US President Donald Trump’s ban that would have removed Tiktok from American app stores starting from midnight Sunday, court files showed.

Why it matters: The court order grants the popular video-sharing app a reprieve amid ongoing deal negotiations to settle a US regulatory dispute. However, it doesn’t cover a broader ban to spin off Tiktok’s business in the US which will take effect in November, meaning the Chinese-owned company’s struggle in the US has not yet concluded.

Details: US District Judge Carl Nichols granted in part Tiktok and its Chinese parent Bytedance’s motion for an injunction of the Sunday ban, but he denied Tiktok’s appeal to block an executive order from Trump demanding the company to divest from its American assets, according to court documents. The order will go effect on Nov. 12.

• Tiktok said in a statement Sunday that the company is “pleased” that the court agreed with its legal arguments. “We will continue defending our rights for the benefit of our community and employees,” the company said.
• “At the same time, we will also maintain our ongoing dialogue with the government to turn our proposal, which the president gave his preliminary approval to last weekend, into an agreement,” it said in the statement.
• The US Commerce Department, one of the defendants of the case, said in a statement that it would “comply with the injunction and has taken immediate steps to do so, but intends to vigorously defend the executive order and the secretary’s implementation efforts from legal challenges,” according to The New York Times.

Context: Tiktok and Bytedance on Wednesday afternoon filed for a preliminary injunction to halt the Sunday ban. On Thursday, Judge Nichols ordered the Trump administration to postpone the ban or file court papers to defend the move by Friday afternoon.

• The executive order mentioned in the filing was first issued by Trump on Aug. 14, which gave Bytedance 90 days to either spin off or sell Tiktok’s US operations.
• The company is close to a deal with US software maker Oracle and retail giant Walmart to set up a new company called Tiktok Global in which the two American companies own a combined 20% stake to settle Trump’s demands. Trump has said he had approved the deal “in concept.”
• The deal is still subject to opposition from Beijing after the Chinese government revised a set of restrictions on technology export.

READ MORE: Bytedance to obey China tech export rule as Tiktok sale nears

A US federal judge ordered the Trump administration to postpone a ban on US downloads of Tiktok set for Sunday or file court papers to defend the move by Friday afternoon, according to court files released Thursday.

Tiktok’s Chinese parent Bytedance filed for a preliminary injunction to prevent the ban on Wednesday afternoon. The ban is set to take effect at midnight Sunday and will remove the popular video-sharing app from US app stores.

US District Judge Carl Nichols said in an order Thursday that the defendants, including US President Donald Trump, US Secretary of Commerce Wilbur Ross, and the US Department of Commerce, must respond to Tiktok’s motion for a preliminary injunction or file a notice describing the delay of the effective date of the ban.

A similar move: The Trump administration said last Friday that it would ban from US app stores Tiktok and Wechat, a Chinese instant messaging app, starting the evening of Sept. 20. The Commerce Department delayed the ban against Tiktok for one week because Bytedance is close to a deal with Oracle and Walmart to set up a new US company.

• On Saturday, a US federal court halted the ban against Wechat. The court said in an order that the plaintiffs, a group of Wechat users, had shown there are “serious questions” related to their First Amendment claim.

The mysterious deal: Oracle and Walmart said Saturday that they will set up a new company called Tiktok Global with Bytedance as part of the deal that will meet the Trump administration’s demands to divest Tiktok from its Chinese owner.

• The US software maker would hold 12.5% of the new company, and retail giant would own 7.5%. Bytedance will own the remaining 80%.
• Trump said Saturday he had approved the deal “in concept.”
• However, the deal still needs to gain approval from the Chinese government after it revised in late August a list of technologies that are restricted for export.

Analysis: At the moment, all signs are showing that Beijing will block the deal. Even though there is no direct objection from Chinese officials, state media has started delivering the message that the deal harms China’s interests and dignity.

• The policy changes on technology export gave Bytedance more bargaining chips when negotiating with potential buyers and the results turned out to be better for the company than an outright sale of Tiktok.
• But now the problem is that Beijing doesn’t seem to be satisfied. Chinese authorities said Thursday that it had received applications from Bytedance to export certain technology. If Chinese officials really see the deal as detrimental to China, they won’t approve Bytedance’s applications.
• If Beijing finally decides to block the deal, Tiktok will be removed from US app stores as planned.
• In this case, turning to the court is Bytedance’s last resort. The court order from Thursday is an initial win. But if the end result is that the ban is allowed, Tiktok will be cut off from new US users, which will cause “irreparable damage.”

China’s Ministry of Commerce spokesman Gao Feng said that the Beijing Municipal Commerce Bureau has received an application from Tiktok parent company Bytedance to export certain technology, local newspaper National Business Daily reported (in Chinese).

The company is close to a deal with Oracle and Walmart to set up a new company to operate Tiktok in the US after US President Donald Trump ordered Bytedance divest the video-sharing app. It needs Beijing’s permission to confirm the deal.

In August, China’s Ministry of Commerce and Ministry of Technology added 23 items to a list of “prohibited or restricted export technologies.” They include two types of technology that are used in Tiktok.

Bytedance said Monday that neither the algorithm nor the company’s technology will be transferred in the deal but Oracle would have the permission to review its code.

There was twist after twist in the Tiktok drama over the weekend. US President Donald Trump said Saturday he had approved a deal that involves software maker Oracle and retail giant Walmart, but it falls short of an outright Tiktok divestment. Chinese parent company Bytedance denied some of Trump’s claims that the new Tiktok company would have nothing to do with China. Meanwhile, Chinese officials criticized the US for lacking “internet freedom.”

The deal: Bytedance, Oracle, and Walmart will form a new company called Tiktok Global as part of the deal, CNBC reported Saturday.

• Oracle was chosen as Tiktok’s secure cloud provider and will hold a 12.5% stake of Tiktok Global.
• Walmart said it would purchase a 7.5% stake in the new company and its CEO Doug McMillon would serve as one of the directors of the five-member board.
• Bytedance will own the remaining 80% of Tiktok Global.
• Walmart and Oracle said in a joint statement that Tiktok Global will pay more than $5 billion in new taxes to the US Treasury Department.

Trump’s blessing: Trump said Saturday that he had approved the deal “in concept.” But the deal still needs formal approval from his administration. “I give the deal my blessing,” Trump told reporters.

• Trump also said the deal would involve “about a $5 billion contribution toward education.”
• “It will be a brand-new company,” said Trump, who also said that Tiktok Global would “have nothing to do with China.”
• Trump’s remarks seem to contradict the facts, but as CNBC pointed out: “Because 40% of Bytedance is owned by US venture capital firms, the Trump administration can technically claim Tiktok Global is now majority owned by US money.”

What Bytedance says: In a slightly different narrative, Bytedance said in a statement (in Chinese) Monday on its Jinri Toutiao news aggregator that it currently owns 100% of Tiktok Global, and that the company plans to launch pre-IPO fundraising which will give investors—Oracle and Walmart—a combined 20% stake.

• Neither the algorithm nor the company’s technology will be transferred in the deal, said Bytedance. Oracle would instead have the permission to review its code.
• Bytedance also said the reported “$5 billion new taxes to the US Treasury Department” is an “estimate of taxes Tiktok will pay over the next few years” and that it has nothing to do with the deal.
• Bytedance denied Trump’s statement that the deal involves a $5 billion contribution toward education. “We heard from the news as well that there would be a $5 billion education fund,” Bytedance said in the statement.
• Zhang Yiming, the CEO and founder of Bytedance, will be one of the directors on Tiktok Global’s board, the company said.

Are apps still getting banned? On Friday, Reuters first reported that the Trump administration would ban Tiktok and Wechat from US app stores starting Sunday night. However, with Trump saying he approved the Tiktok deal, the Commerce Department said it would delay the plan of barring the video-sharing app from US app stores for one week.

• A US federal court halted a ban against Chinese instant-messaging app Wechat late Saturday, the Washington Post reported. 
• The US District Court in San Francisco said in an order that the plaintiffs, a group of Wechat users, had shown there are “serious questions” related to their First Amendment claim.
• In August, TechNode reported that the group, called the US Wechat Users Alliance, filed a lawsuit against Trump’s executive order to ban transactions between US citizens and Wechat.
• “Where [Judge Laurel Beeler] came down was essentially on the side of the Chinese-speaking communities in the US, and said that the ban was too broad,” Greg Pilarowski, founder of tech advisory firm Pillar Legal, told TechNode on Tuesday.
• “I think Wechat is safe, unless Trump wins” the US presidential election in November, Pilarowski added.

Chinese media takes: On Monday, most major Chinese media outlets reprinted an article titled “Does Tiktok really harm US national security? Why did Oracle fail in the Chinese market? Chinese enterprises storms overseas” (our translation), authored by the National Supervisory Commission of China and Central Commission for Discipline Inspection of the ruling Communist Party. It was first published on a website that the two government agencies share.

• The article is a rare direct comment from Chinese government agencies on the recent Tiktok drama. 
• “As a matter of fact, the United States, which promotes ‘internet freedom,’ never neglects its regulation of the internet,” the article said. “We can say that the US has the world’s strictest regulation on the internet.”
• Chinese newspaper Securities Times reported that a number of companies listed on China’s A-share markets which investors believe stand to benefit from Bytedance’s business activities, called “Bytedance concept stock,” had risen around 3.4% on Monday morning with one of the best performers jumping nearly 12%.
• International Financial News, an arm of party mouthpiece People’s Daily, wrote Monday that the upshot of the Tiktok drama “has yet to come.”
• The newspaper pointed out that while Trump had approved the deal, it still needs to gain approval from the Chinese government, because, it said, the algorithms Tiktok use are now subject to China’s new export restrictions.
• Hu Xijin, editor-in-chief of state-run tabloid Global Times, wrote on Twitter Monday that he knows that the Chinese government won’t approve the deal. “…because the agreement would endanger China’s national security, interests, and dignity.”
• Chinese financial magazine Caixin named the three other Tiktok Global board members. They are Arthur Dantchik, founder of Susquehanna Growth Equity (SIG); William Ford, CEO of General Atlantic; and “an executive from the American operations of Sequoia Capital.” SIG, General Atlantic, and Sequoia Capital are all Bytedance investors.

Bytedance is planning to list Tiktok Global, a joint venture set up to operate the short-video app in the US, pending approval of the proposed deal by the US government, Reuters reported.

Details: The joint venture, dubbed Tiktok Global, will have a majority of American directors, a US chief executive, and a security expert on the board, according to Reuters, citing people familiar with the matter.

READ MORE: 8 things to know about the Chinese tech giant behind Tiktok

• Oracle has agreed to ultimately take a 20% stake in Tiktok Global.
• According to a proposed deal to settle the Trump administration’s order to divest Tiktok, Oracle and possibly Walmart would hold at least 60% of Tiktok’s US operations.
• The White House and Bytedance have agreed to a term sheet on some aspects of a deal but US President Donald Trump hasn’t yet approved it.

Go deeper: ByteDance plans TikTok IPO to win U.S. deal as deadline looms: sources – Reuters

China’s tech world consists of multiple and loosely connected empires or ecosystems, led by three tech kings collectively known as BAT (Baidu, Alibaba, and Tencent). While the old kings expand the scope of their kingdoms to capture more and more of our daily lives, a fourth fiefdom is quickly expanding its boundaries: Bytedance. 

In the last two years, the rise of a new kind of online retail has created an opportunity for Bytedance to jump into the biggest arena in all of China tech: e-commerce. While livestreaming e-commerce is still small relative to overall e-commerce, the QVC-like format has seen massive growth since last year. With an edge in video, Douyin, the Chinese version of Tiktok, is riding the e-commerce livestream wave into the rich home waters of Alibaba, JD, and Pinduoduo.

The short video giant first got involved in e-commerce by referring traffic to e-commerce giants like Alibaba and JD. It was being paid for sharing the traffic, and kept its hands off the more lucrative e-commerce business.

But as shoppers began buying directly from livestreamers, the app integrated shopping features and got some traction in 2019, reaching RMB 10 billion in gross merchandise volume (GMV) for the year. With livestream e-commerce booming in the wake of Covid-19 lockdowns, the company has set a far more ambitious GMV goal for 2020: RMB 200 billion. 

Now, Douyin is moving to pocket all the revenue from selling goods during livestreams. To achieve this goal, Douyin has announced a series of e-commerce updates starting at the beginning of this year. With the most recent announcement on Aug. 26, the company is breaking alliances with e-commerce giants.

Starting Sept. 9, all the orders placed during Douyin’s livestream sessions to third-party e-commerce platforms have to go through Douyin’s service Star, according to the Aug. 26 statement. Then, on Oct. 9, the platform will block all third-party e-commerce referral links on livestream sessions.

“Douyin’s recent move shows its ambition in the lucrative e-commerce market, which saw greater growth driven by Covid-19,” Eliam Huang, analyst at retail research company Coresight Research told TechNode.

Douyin’s e-commerce push

Douyin started its push into e-commerce in late 2018, mainly through partnerships with e-commerce platforms to provide refer traffic. But as the app launched its own retail features, it began to favor stores running on its own platform. Its new moves, especially those rolled out in the past few months, are throttling referral traffic to existing retailers such as Alibaba’s Taobao and Tmall, and JD.

• Mar. 2018: Douyin announces e-commerce deal with Taobao, and added a shopping cart icon to the app, linking users to Taobao stores.
• May 2018: Douyin introduces Douyin shops, online stores only accessible via the app.
• May 2019: Douyin rolls out product search feature within the app.
• June 2020: Owner Bytedance consolidates control of retail-related functions across Douyin and other apps under new e-commerce department.
• Aug. 2020: Douyin says it will charge a 20% commission fee for orders transacted on third-party platforms. The rate for Douyin stores is only 5%.

Douyin is still playing catch-up in the livestream e-commerce sector. Taobao Live, the clear champion, sold GMV of around RMB 200 billion in 2019. Runner-up Kuaishou reportedly (in Chinese) reached GMV of RMB 35 billion in 2019. The Douyin rival originally set its 2020 GMV goal at RMB 100 billion, but upgraded the target to RMB 250 billion after Douyin released its goal.

Where the money is

E-commerce, gaming, advertising, and the emerging membership model are the most lucrative and popular monetization channels for Chinese internet companies.

Until now, Douyin had mostly been focused on ad revenue, holding audience attention with entertainment content. Bytedance has seen phenomenal growth in this area. Its share of ad spend nearly doubled to 22% (estimated) in 2019—trailing only Alibaba, which holds 33% of the ad revenue pie.

But the company needs more to support its $100 billion market valuation, under fire as it grapples with the potential sale of a large share of its most valuable overseas asset: Tiktok. Adding a robust e-commerce business could do the trick.

Tiktok alone is reportedly valued at $50 billion. Bytedance, meanwhile is facing headwinds overseas amid rising China-US trade tensions and political tensions with India. Under adverse global business conditions, the company might be forced to shift its attention to the domestic market, where it needs new revenue sources other than the ad businesses of flagship apps Douyin and Toutiao.

Ads are the minor leagues in China’s internet economy: Digital ad spend in China is forecast to reach $74.33 billion in 2020, while China’s e-commerce market was worth $1.94 trillion in 2019, according to Emarketer.

The company expects to generate income beyond ad revenues by leveraging the 400 billion plus daily active users on its platform. Expansion to China’s e-commerce sector, a coveted revenue source for tech firms, is a logical next step, both because of the market’s massive size in China as well as the close ties between livestreaming and its core short video business.

More importantly, e-commerce is a crucial link in creating a closed loop online ecosystem in China. Its absence would ultimately hurt the company’s ad revenue, said Zhuang Shuai, founder of Beijing-based consulting firm Bailian.

Zhuang “E-commerce and advertising are inseparable,” Zhuang told TechNode. If Douyin lets platforms like Alibaba and JD have its traffic, it runs the risk that they will capture all the revenue, he says—and the same goes for other ad platforms like Weibo and Sina.

The content platforms get paid for sharing their traffic with e-commerce sites, but once users have switched to browsing deals their attention often stays in the e-commerce app. This shift of attention ultimately costs the advertisers the resource they’re selling.

My colleague Sheng Wei, who covers content and entertainment topics including Bytedance for TechNode, says that e-commerce is an important business for Douyin as it searches for revenue sources in addition to advertisement. 

“Douyin is competing with e-commerce platforms for ad revenues and a homegrown e-commerce business could bring more value for the company,” he told me.

To complete its business loop, Bytedance has obtained a payments license (in Chinese), which is an important link in e-commerce transactions.

Douyin is not the only Chinese tech firm that has looked to e-commerce to boost growth. Companies like Baidu and Weibo all have tried to expand into e-commerce over the past decade, though neither achieved much success. 

Is Douyin ready?

Bytedance has conquered new fields before. But success in the hyper-competitive world of e-commerce is far from assured.

E-commerce is a complicated system, requiring companies manage a range of links from supply chain, operating system, membership, performance evaluation, and after-sales services. Douyin, a latecomer to the field, has a basic infrastructure in place, but it still has a lot to work on.

Before blocking links, Douyin’s own retail channel was already taking a larger share of sales. From May to August 2020, Douyin shops’ sales rose from RMB 50 million to RMB 100 million per month, while third party sales through Douyin fell from 63 million to 43 million per month, according to data from Chanmama.

In addition, it formed a partnership with Suning.com in July, under which the omnichannel retailer opened its products, logistics, and after sales services to Douyin store operators. The deal allows Douyin to capitalize on Suning’s offline retail and supply chain resources while keeping users in the Douyin app. 

The partnership was tested during Suning’s 818 shopping festival held on Aug. 18. A Douyin livestream session hosted by celebrities Jia Nailiang and Guan Xiaotong drew 51 million viewers (in Chinese). GMV for the 10-hour session hit RMB 230 million.

In a similar deal, short video rival Kuaishou partnered up with JD, allowing its users to purchase JD-held inventories without leaving the short video app.

However, there is more to do. “Douyin will need to invest and make sure its infrastructure will enable its users to enjoy a smooth shopping experience, such as managing supply chain and logistics which are e-commerce giants’ strength,” said Huang.

Next step: building a loyal user base

The new policy will not only change the dynamic between Douyin and its e-commerce rivals, but pose new questions to merchants, social media influencers known as KOLs (key opinion leaders), and users who are accustomed to using Taobao or JD.com for deal transactions.

Merchants on e-commerce sites will have to either give up Douyin as a traffic source, or build a Douyin store from scratch in addition to running their existing stores, increasing operation costs. 

It will also take time for KOLs (key opinion leaders) and MCNs (multi-channel networks), or content creator agencies, to adapt to the change, used as they are to focusing on Taobao and JD. In addition, some KOLs are contractually obligated to send traffic to third-party e-commerce platforms. This is risky for Douyin, as KOLs may switch to rival platforms rather than adapt.

For users, purchasing from in-app stores is a more streamlined shopping experience. Removing the additional step in the customer journey may result in better user retention rates for third-party links. But customers have lots of things to consider when choosing a platform, from pricing, product quality control, to logistics, to after-sales services. Douyin will have to compete on all these fronts to retain users.

Frenemies for the near future

Chinese shopping and video platforms are increasingly becoming frenemies as e-commerce and content blend together. For Bytedance and Alibaba, the push-and-pull dynamic will continue. Even though Douyin is competing with Taobao in livestream e-commerce, it still has a deep interdependence with the e-commerce platform for its classic short video business. 

Douyin is both an advertising distribution platform that sells its traffic to Taobao, and a content platform that sells products directly. Alibaba is a major client of Douyin, representing around a quarter of Douyin’s annual ad revenue. which was estimated to be RMB 80 billion in 2019, a source close to Alibaba told local media. 

Douyin’s blocking of referral links does not apply to short video posts, only livestreams. In 2019, Douyin and Taobao signed a RMB 7 billion cooperation agreement that covers RMB 6 billion ad revenue and RMB 1 billion e-commerce commission revenue. On Aug. 21, just a week before the livestream link block, the two companies renewed their advertising and commission agreement, reportedly almost tripling the deal’s value (in Chinese) to RMB 20 billion in 2020.

Zhuang thinks it’s too early to say whether Douyin will take a step further to block referral to short videos. “It still depends on how well the market responds to its e-commerce business and growth of revenues.”

“Douyin’s move, in the long run, will facilitate the development of the e-commerce sector, especially in the area of creating curated content to engage consumers. In the context of [the] rising cost of customer acquisition, platforms who are able to deliver content that drives conversion will win,” Coresight’s Huang said.

Chinese company Bytedance has chosen Oracle over Microsoft for a deal involving Tiktok, Bloomberg reported Monday, which will resemble a partnership involving Oracle purchasing a stake in the company rather than an outright sale of the app’s US operations.

Why it matters: Bytedance had no intension of selling Tiktok’s key asset—the algorithm behind the popular video-sharing app. A deal with Oracle, whose executives have a close relationship with the US President Donald Trump, was viewed as a way to increase the company’s odds of winning approval from the White House.

Details: While the talks are ongoing, a deal with Oracle could, for example, take the form of a corporate restructuring rather than an outright sale. In this case, the American software company would take a stake of a newly formed US business while housing Tiktok’s data on its cloud servers, according to Bloomberg.

• The two parties valued Tiktok’s US business at around $25 billion before Beijing announced new rules on limiting technology exports, said sources cited in the report.
• Bytedance reportedly decided not to sell or transfer the algorithm powering Tiktok’s content recommendation function in any sale or divestment deal, the South China Morning Post reported Sunday.
• Microsoft, the other suitor along with Walmart, confirmed in a statement Sunday that Bytedance had turned its offer down. “Bytedance let us know today they would not be selling Tiktok’s US operations to Microsoft… We are confident our proposal would have been good for Tiktok’s users, while protecting national security interests,” the company said.

Context: In late August, officials in Beijing updated a Chinese technology export regulation to ban the export of limited technologies, potentially including those used by Tiktok. Bytedance soon pledged to comply.

• Companies must seek approval from the two ministries before exporting limited technologies, and the decision-making process can take up to 30 days, according to a set of technology export regulations the State Council issued (in Chinese) in 2001.
• Trump ordered a ban barring US companies from doing business with Bytedance after Sept. 15, and is requiring that Bytedance sell or spin off Tiktok’s US operations by Nov. 12.

Chinese microblogging platform Weibo pulled its newly launched social and lifestyle app Oasis Wednesday from Android and iOS app stores after a user posted about a striking similarity between its logo and another created by a South Korean design firm for a music festival.

The removal is a preemptive move from Weibo, according to an announcement posted Wednesday on the Oasis official Weibo account. The company did not immediately respond to TechNode’s requests for comment on Thursday.

Why it’s important: Weibo’s latest project marking its push into the image-based social network sector, Oasis garnered widespread public attention immediately following its launch, ranking at the top of Apple China App Store’s free app list.

• Weibo opened Instagram-like Oasis to public testing on Monday, positioning itself in direct competition with rival platforms including Xiaohongshu.
• The move is seen as a push for future growth. Net revenue for Weibo, which had 211 million daily active users as of June, remained flat in the second quarter of this year and net profits declined more than a quarter to $103 million in Q2 from $140 million the same period a year ago. The account with the most followers topped 50 million, while this number is more than 200 million Instagram followers for celebrities like Kim Kardashian on competing social media platform Instagram.
• Xiaohongshu was removed from Chinese app stores in August after complaints about misleading content.

Details: A Weibo user named Wang Yuan pointed out on Wednesday that the Oasis logo shares a striking similarity with one that a South Korean design firm, Studio Fnt, created for the country’s Ulju Mountain Film Festival in 2015.

• Weibo CEO Wang Gaofei commented Wednesday on a tech blogger’s post which shared Wang’s initial discovery, saying “Noticed, and it’s been pulled from shelves.”
• The app also posted an apology for technical problems caused by user requests inundating its servers despite the invitation-only testing phase.
• It is unclear when the app will be made available again for download.

Weibo testing new social lifestyle app, Oasis

Context: The app does not have e-commerce functionality at this stage, though an industry expert TechNode spoke with on Tuesday said that he expects that the app will add an e-commerce function in the future to tap on the social e-commerce rise in China.

• China’s social e-commerce market is expected to be worth up to $180 billion by 2021 according to China Internet Watch, a digital consulting company.
• Instagram, along with a series of popular services like Google, Facebook, and YouTube are blocked in China.
• Similarly, Chinese tech firm Sohu also hit bumps in the road in its push into social media. The firm’s social app Huyou was pulled from app stores a few days after launch in June before returning to stores in August.

India on Wednesday banned another 118 Chinese-made apps, including Tencent’s popular video game PlayerUnknown’s Battlegrounds, as border tensions between the two nations continue to escalate.

Details: The Indian Ministry of Electronics and Information Technology announced it had decided to block 118 apps that it said were prejudicial to India’s sovereignty, integrity, and national security, the ministry said Wednesday in a statement.

• The newly banned apps include Chinese search engine giant Baidu’s two mobile search apps, smartphone maker Xiaomi’s Sharesave, Ant Group’s mobile payment apps Alipay and Alipay HK, as well as Tencent’s cloud-storage app Weiyuan and Wechat Work. Tencent’s Wechat was banned in a similar crackdown on Chinese apps in June.
• Tencent’s PlayerUnknown’s Battlegrounds had more than 50 million players in India as of April 2019, local media reported.
• The ministry said it had received many complaints about these apps for “stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India.”
• “This move will safeguard the interests of [tens of millions] of Indian mobile and internet users. This decision is a targeted move to ensure safety, security and sovereignty of Indian cyberspace,” the ministry said in the statement.

Context: The ban follows a standoff between Indian and Chinese troops earlier this week and media reports that a Chinese land mine killed an Indian soldier during the confrontation.

• In June, India banned 59 Chinese apps on national security concerns following a deadly border clash with China.

Is a company worth $65-billion the big brother China’s melancholic youngsters need? Netease thinks so. 

Netease Cloud music is a freemium music streaming service geared towards the younger end that allows users to leave comments under every song. 

The platform, which boasts over 800 million registered users as of April 2020, believes the comments section is one of its strongest features. In 2017, the company covered the walls and floors of Hangzhou’s metro line 1 with 85 million of comments from the platform as part of an ad campaign. 

But the company is not happy with the mood of its comments section. Young people increasingly use the comments section to pour out personal pain, anonymously expressing grief, sadness, and day-to-day struggles. Comments have turned so bleak that Netease now wants to moderate its platform’s emotional content, but some users think this could destroy the therapeutic value of the comment section. 

‘Net Depression Cloud’

Netease Cloud’s association with gloom and misery is so well known that it’s been dubbed “Net Depression Cloud.” 

The nickname is a pun in Mandarin where the character for depression has the same pronunciation (yi) as the character for “ease” used in the company’s name. 

In the comment sections under songs, users share stories of breakups, personal tragedies, anxiety, and loneliness. Some reference specific songs lyrics, or link their own story to a song’s meaning. 

If it wasn’t for my family, I would have wandered away a long time ago.

Netease cloud user comment on Bob Dylan’s ‘On the Road’

Users express support with each other through “likes” and encouraging comments, and music listeners find comfort in discovering others who have been through similar experiences. Such interactions are the foundation of a mutually supportive community of teenagers and young people that is unique to Netease.

Downers and haters

An increasing number of users, however, complain the amount of negativity in the comment sections is stopping them from listening and enjoying music.

Music should just be about music.

Netease cloud user comment

Some also complain that too much attention is given to users they accuse of fabricating trauma to gain likes and promote their own personalised playlists. 

The forlorn comment section has even become a joke on other Chinese social networks. Memes and stickers that make fun of Netease Cloud’s melancholic users have gone viral on platforms like Bilibili and Weibo. “Some people die at age eight even though they will only be buried at age 80” is a common comment criticizing music listeners who share sad stories. 

Not all users accept this view of the platform. “Let’s reject the name Net Depression Cloud; it’s a warm and bright community!” commented another user on Netease. 

Adult supervision 

With the launch of the Cloud Healing Center in early August, Netease will employ mental health experts to provide around the clock counseling and a “cloud police” to moderate comments that attack those who express sorrow, as well as reviewing potentially fabricated stories.

In a statement on Weibo (in Chinese), Netease announced, “Although we are sometimes troubled by sorrows, there is always a space that can accommodate our true emotions. A group of healing magicians in the cloud will comfort every stranded heart in the comment area… We will also resist malicious intentions; the new cloud and cloud police will work together to do so.”  

“Cloud police” are not the platform’s only response to what is perceived by Netease as a growing need. Users that search words related to an unhappy mood are directed to songs that can help relieve stress. Zhang Jingnian, a cultural analyst observing the phenomenon, told TechNode that users now receive supportive and motivational messages in the form of push notifications from Netease. The initiative has been applauded by many who believe providing free professional help is a good move. 

In the announcement, Netease said that it aims to “to create a more positive and friendly atmosphere” and to bring its comments section back to what it was originally intended for: music discussion.