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.

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.

Chinese automakers will over time become a dominant force worldwide despite the US and Europe imposing extra duties on their electric vehicles, consultants AlixPartners said on Wednesday, highlighting that China’s vehicle makers are on track to grab over 30% of the global market by 2030.

Chinese brands’ market share in Europe is unlikely to reach the previously anticipated percentage of 15% by 2030, as forecasted a year ago, instead doubling from 6% to 12%, but stronger growth is expected in other regions. Chinese brands could claim market shares 31% and 28% in Southeast Asia and Latin America respectively by the end of the decade, up from the 19% in each estimated last year, figures from the consultancy’s annual Global Automotive Outlook showed.

Many Chinese auto majors have pivoted their focus to overseas markets beyond the EU in recent months, taking advantage of fewer regulatory barriers in, for example, Southeast Asia and the Middle East. Geely subsidiary Zeekr plans to expand its footprint from 25 to more than 50 global markets by the end of this year, despite retaining “very big ambitions” for Europe, executives told investors last month. Great Wall Motor is shutting down its European headquarters in Munich, Germany, but says it still has plans to set up a factory in the region.

“Chinese automakers will definitely lose some competitive edge in EVs as they move to implement localized manufacturing and sales operations in Europe,” Stephen Dyer, a co-leader for AlixPartners’s Greater China business and head of its Asia automotive practice, told reporters on Wednesday in Shanghai. “However, they still have cost advantages over foreign competitors thanks to a shortened vehicle development time, a much lower labor cost, along with an intense corporate culture,” Dyer added, speaking in Mandarin Chinese (our translation).

An employee from a Chinese EV maker works as many as 140 hours in a month when a new car is launched, compared with only 20 hours worked by a counterpart at a global auto major, AlixPartners told clients in its latest outlook. Meanwhile, the average vehicle development time for a Chinese EV model has been cut in half to 20 months compared with legacy brands, mainly by reducing the number of physical tests and sending out software updates to fix problems.

The European Union’s additional tariffs on Chinese-made EVs are forcing Chinese majors to set up their own assembly operations on the continent. BYD on July 4 opened its first overseas passenger car factory in Thailand while planning to invest $1 billion in another one in Turkey and to establish a $30 million battery plant in Hungary. Chery in April reached a joint venture deal with Spain’s EV Motors to produce cars at a former Nissan plant in Barcelona later this year, Reuters reported. At least 12 new regional plants are being planned by Chinese car manufacturers, Dyer said.

“What we see is we’ve had a brand premium that is comparable to or even slightly more than global automakers in some overseas markets, such as Southeast Asia,” Wang Hui, a vice president of Changan Automobile, told this year’s China Auto Forum in Shanghai on Friday (our translation). The state-controlled automaker last October announced plans to build a $241.7 million plant in Rayong, Thailand, aiming to commence operations later this year with a capacity of 100,000 EVs annually. 

Wang added that Chinese firms should take a long-term mindset of “being humble and cautious” while making efforts to increase tax revenue and boost job growth for the local economies in where they operate.

READ MORE: EU anti-subsidy EV probe: What Chinese automakers have done in Europe and what’s next

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.

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.

China’s Great Wall Motor is poised for its big entry into Southeast Asia, as the automaker said on Monday it would begin manufacturing its cars in Malaysia and Indonesia as early as July, in addition to its planned entry into Vietnam, local media reported.

Why it matters: The news comes as Malaysia surpassed Thailand to become the second biggest car market in the region after Indonesia in the first three months of this year, according to sales figures released by industry groups and compiled by Nikkei. This makes it another attractive market for Chinese car manufacturers given its growing economy and large population.

• Total vehicle sales increased 5% year-on-year to 202,245 units in Malaysia from January to March, in part driven by the government’s economic stimulus package, figures from the Malaysian Automotive Association show. Meanwhile, Thailand’s car sales, including internal combustion engine cars and EVs, fell 24.6% to 163,756 units from a year earlier, partly because of tightening rules around car loans, said the Federation of Thai Industries.

Details: Great Wall Motor will start operating a pure assembly plant with Malaysia’s EP Manufacturing in Malacca in July at the earliest, Cheng Jinkui, president of the company’s ASEAN operations, told the Business Times.

• The two companies said in January they would commence assembly of two of Great Wall Motor’s popular Haval models – the Haval H6, a five-seater sports utility vehicle, and the Haval Jolion, a compact crossover. The cars will be made from “completely-knocked-down (CKD)” kits comprising major parts with the goal of producing 20,000 units a year by 2028.
• Another CKD facility in Indonesia is also set to come into production in July or August, while the Chinese automaker is aiming for local assembly in Vietnam in 2025, according to Cheng. Great Wall Motor said last June that it was exporting the Haval H6 hybrid EVs to Vietnam from Thailand, where it operates a car plant it acquired from General Motors in September 2020.

Context: Chinese automakers are ramping up their investments in emerging EV markets overseas, especially in regions such as Southeast Asia, the Middle East, and Latin America, at a time when competition remains intense at home and the US and Europe are imposing punitive tariffs on China-made EV imports.

• Geely and Malaysian automaker DRB Hicom last year reached a $10 billion deal that will transform the country’s Tanjung Malim area into an “automotive high-tech valley” with an annual production capacity of 500,000 vehicles by 2035, China Daily reported. Sales of Geely-backed local automaker Proton more than doubled to roughly 154,000 units last year, while Smart, a brand co-owned by Geely and Mercedes Benz, began exporting cars to Malaysia last year.
• Indonesia said four Chinese automakers, namely Chery, Neta, General Motors’ China joint venture Wuling, and Dongfeng’s Sokon, have agreed to expand their global manufacturing footprints to the country. The deals were announced when Indonesian Industry Minister Agus Gumiwang Kartasasmita visited Beijing earlier this month, Caixin Global reported. Neta, also known as Hozon Auto, shipped 16,458 EVs overseas from January to May, more than a third of its total deliveries.
• China recorded exports of roughly 519,000 new energy vehicles, mainly all-electrics and plug-in hybrids, for the first five months of this year, representing a 13.7% growth from last year, according to figures from the China Association of Automobile Manufacturers (CAAM). BYD and Tesla were the largest exporters, with shipments of more than 130,000 units. Great Wall Motor exported 9,646 units but said last month it would shut down its European headquarters in Munich, Germany.

The European Union announced on Wednesday it has taken a case-by-case approach to deciding how much tariffs could increase on Chinese electric vehicles. In a move that surprised many industry professionals, the preliminary duties set to hit Chinese EV imports will rise from the general 10% basis on all of them to between 27% and 48%, with SAIC and those deemed incompliant with EU standards facing the hardest hit. The tariff hikes are relatively moderate for the likes of BYD and Geely, which have either committed to growing deep roots within the EU or have already done so in the past.

Broadly speaking, the additional duties are still in line with what many analysts had expected, despite the possibility of a massive but temporary plunge in China’s EV exports to Europe. Chinese battery EVs are priced in general around 80-100% higher in Europe than in their domestic market, creating room for price adjustments, said Jefferies analysts led by Johnson Wan. There could be very limited benefit for major European players, as the high-volume EV segment would remain intensely competitive with subdued margins, said Patrick Hummel, Head of European Autos Research at UBS.

Although Bernstein analysts expect the provisional tariffs to be a serious turn-off to smaller Chinese brands, prompting them to focus on other export markets, bigger Chinese players are likely to step up their localization efforts. Paul Gong, UBS’s head of China Autos Research, also wrote in a note to clients, “Localization of production may become an increasingly appealing option over longer run compared to direct shipping from China for exporters to take shelter from trade conflicts and geopolitical tensions.”

Below, we take a look at what the key Chinese players have been doing in Europe and their respective prospects in a continent home to some of the world’s most important automakers.

BYD

China’s top EV maker is widely considered the least affected by the newly announced tariffs, with the strength to still break even on an import model thanks to its significant cost advantage versus peers. BYD’s EVs would still be priced lower than the similar models launched by European rivals, even if the company raises prices by 17.4% to fully pass on the additional tariff to customers, although the measure could effectively prevent its dominance in destination markets.

The leading Chinese player would also have a 25% cost advantage over European counterparts even after localizing the production of its popular sedan in the region, according to UBS’s previous findings. Set to be the first major Chinese automaker with a production base in Europe, BYD expects its Hungary plant to begin operation before 2026, with an annual capacity of 150,000 units. Although exports to Europe only account for a single digit percentage of its total sales, it aims to “be in a leading position” in the regional market by 2030.

SAIC

China’s biggest car manufacturer got relatively unfavorable treatment, and analysts expect the measures will significantly curb its competitiveness in Europe. The European Commission will impose tariffs of nearly 50% on EVs from the Chinese state-owned automaker, along with those deemed to be the least compliant with the nine-month anti-subsidy investigation announced last September. The company, which owns the iconic MG brand of British origin, said earlier it had “fully cooperated” with the investigation and hinted that the EU regulators misused their investigative powers in order to view sensitive business information related to its supply chain.

SAIC responded on Thursday by saying, “As SAIC MG’s sales in Europe continue to grow, we are planning to introduce China’s new energy vehicle (NEV) technologies and green factories to the continent” (our translation). The firm also called for more cooperation between China and the EU. China’s top car exporter to Europe, with shipments of nearly 243,000 units to the region last year, revealed plans last July to build a manufacturing facility plant on the continent.

Geely, Chery, and Dongfeng

Volvo parent Geely was among the three Chinese companies selected for further scrutiny and saw a relatively moderate tariff increase of 20%, another individually calculated duty rate. The impact is likely to be very marginal to China’s third biggest car exporter, thanks to its ownership of Volvo and the currently limited scale of its own brands in the region. Geely’s EV brand Zeekr said on Tuesday it is looking to establish a presence in six to eight European countries by year-end.

Chery, as well as its state-controlled peers such as Dongfeng and Chang’an, faces an extra 21% charge in a category for those cooperating with the probe but not sampled. Jaguar Land Rover’s Chinese manufacturing partner in April reached a joint venture deal with Spain’s EV Motors to produce cars at a former Nissan plant in Barcelona later this year, Reuters reported previously. Meanwhile, Dongfeng’s Voyah brand, previously planning to enter Germany, France, and Italy, has for now been selling EVs mainly in Nordic countries.

NIO, Xpeng Motors, and Leapmotor

Like their bigger peers, Chinese EV makers NIO, Xpeng Motors, and Leapmotor are also set for extra charges of 21%. NIO, which currently sells four models from more than €60,000 ($64,361) in Europe, higher than most domestic competitors, said on Wednesday its commitment to the regional market remains unwavering and it will continue to explore new opportunities within the EU despite protectionism.

The company is still looking to introduce its lower-priced vehicles, including an upcoming third brand codenamed Firefly, in Europe, but the plan is now being adjusted based on the current situation. Delivery of the first model, a well-designed boutique car, will begin in the first half of 2025 in China at a price cheaper than the BMW Mini, CEO William Li recently told investors during an earnings call.

Zhejiang-based Leapmotor, which has Stellantis as its largest shareholder, is also making pivots. Chief executive Carlos Tavares said on Thursday the European auto giant will shift the output of some Leapmotor products to Europe due to the tariff hikes, having reportedly explored the potential of building EVs jointly in Italy. A similar scenario could unfold for Xpeng Motors and its European ally Volkswagen. President Brian Gu last September revealed plans to enter Germany, Britain, and France, with Italy also being included earlier this year.

The demand for advanced process chips has surged, as AI servers and high-performance computing (HPC) applications transition to AI phones. Taiwanese media outlet Economic Daily News reported on Tuesday that Apple, Qualcomm, Nvidia, and AMD have almost booked TSMC’s 3nm process to full capacity, leading to a queue of customers extending to 2026.

Why it matters: The rapid evolution of AI technology across multiple sectors has driven a surge in demand for advanced process chips. Increasing orders from major clients is expected to further push TSMC to innovate and develop advanced manufacturing processes. 

Details: Currently, TSMC’s 3nm lineup includes N3, N3E, N3P, N3X, and N3A, according to the Economic Daily News report.

• N3E, which entered mass production in the fourth quarter of last year, primarily serves AI accelerators, high-end smartphones, and data centers. N3P is expected to enter mass production in the latter half of this year and will become the preferred chip process for mainstream applications including mobile devices, consumer electronic products, base stations, and networking by 2026. N3X and N3A are designed for customized demands such as high-performance computing and automotive clients.
• The latest high-end chips this year are all adopting the 3nm process, according to Chinese media outlet Icsmart. Apple will introduce the M4 series processors this year and is set to release the next-gen A18 series processors for its new iPhone16 series this September. Later this year, Qualcomm will launch its flagship mobile platform Snapdragon 8 Gen 4, while Nvidia is set to unveil the RTX 50 series graphics cards. AMD will release the fifth-gen EPYC Turin processors in the second half of the year, with plans to launch the MI350 series next year.
• TSMC, as the exclusive supplier of Apple’s A-series processors for the new iPhones, will see a significant increase in demand for related 3nm orders. Apple’s iPhone 16 series this year is expected to increase sales volume by 5% year-over-year to 92-95 million units, the Economic Daily News report forecasted.
• To ensure stable supply over the next two years, TSMC’s strategy is to convert some of its 5nm equipment to support 3nm production. Industry sources indicate that TSMC is likely to up its production of 3nm wafers to between 120,000 and 180,000 a month.

Context:The total production value of the top ten semiconductor foundries in the first quarter reached $29.2 billion, a decrease of 4.3% compared to the previous quarter, according to market research firm TrendForce.

• In the first quarter, TSMC led with a revenue of $18.85 billion and a market share of 61.7%, followed by Samsung with $3.36 billion and an 11% market share. Shanghai-based chip foundry SMIC took third place with $1.75 billion in revenue and a 5.7% market share.

China’s major southern city of Guangzhou unveiled its action plan on May 31 to boost the development of the so-called “low-altitude economy,” vowing to become China’s first city to commercialize aircraft for passenger transport in low-altitude airspace over the next three years, and it is not alone. Nearly 30 Chinese major city and provincial governments have brought similar initiatives into their work plans for this year as of writing, according to public records.

Chinese regional authorities are responding to Beijing’s call to establish a number of strategic emerging industries as some traditional economic pillars of the country are in recession. Beijing also wants to replicate its success story of electric vehicles from land to sky, as part of its ambition to become a global leader in technological innovations. Among various aircraft from drones to traditional helicopters, flying cars are likely to be a bright spot, and southern China could offer what it takes for that to happen, industry experts said.

What is a low-altitude economy?

Although there is no official definition of what constitutes a “low-altitude economy,” it usually refers to various businesses centered around civil-manned and unmanned aerial vehicles below 3,000 meters in altitude, including manufacturing, flight operations, and services for agriculture, logistics, and tourism.

The idea was first mooted by China’s State Council with an outline for establishing “a national comprehensive transportation network” back in February 2021 and was later listed as one of the strategic emerging industries at the central economic work conference in December.

Compared with China’s traditional general aviation sector, which includes military and commercial flights, a low-altitude economy is characterized by the elements of vertical take-off and landing, green energies, and intelligent piloting, said Burt Guo, CEO of Aerofugia Technology, a subsidiary of Geely.

“EVs in the air”

Electric vertical takeoff and landing aircraft (eVTOL), also known as flying cars, are considered the most promising application, garnering particular attention from investors and entrepreneurs, due to their potential for both passenger and cargo delivery at a presumably lower cost than helicopters. That is not the only reason, though. China is looking to leverage the capabilities that already exist within its EV industry, from supply chain to charging infrastructure, bringing the global competition for emerging technologies from the ground into the air.

“So is it almost like EVs in the air?” “Yes, you get the point,” Guo said when asked by Zheng Junfeng, an anchor of Chinese state television news services CGTN, at the recent BEYOND EXPO 2024 tech event last month in Macao. Guo added that eVTOL could share around 70%-80% of the materials and components with EVs, with the rest being sourced from the suppliers for traditional aircraft, while there is always room for collaboration with its parent company in fields such as manufacturing and charging.

“It’s kind of an ecosystem for new energy transportation,” Guo said. Geely led a €50 million ($55 million) funding round into Volocopter in 2019 and the German air taxi startup set up a joint venture with Aerofugia two years later.

It also represents a more cost-effective solution for urban transportation compared with subways and bypasses. Each parking garage and building rooftop in the city could be “ideal” for flying vehicles to park and refuel, according to Jian Dan, executive vice general manager of Civil Aviation Investment Fund, led by the parent of Beijing International Airport Co Ltd (our translation). “It is totally different from helicopters,” Guo echoed, saying the landing space would be “considerably smaller” than what a traditional helicopter uses.

Although consulting firm McKinsey in 2020 estimated it would cost $200,000-$400,000 to build a takeoff and landing area along with two spots for parking or vehicle maintenance, Jian believed the smallest location of such kind could be as cheap as “several thousand RMB.” Guo said a flying car would cost 30% of a helicopter, even as the technology is still in the early stages, and in the end, the cost of a trip by eVTOL could plunge to roughly two to three times that of a taxi.

Still a distant future

Although the industry is growing at a faster pace, it could take at least three to five years before flying vehicles get commercialized, mainly because most players are still navigating technological challenges and regulatory hurdles, experts said. The International Air Transport Association (IATA) expects 5% carbon emission reductions globally by 2030 through the use of sustainable aviation fuels, innovative new propulsion technologies, and other efficiency improvements.

Electric planes are definitely the future of aviation, but the technology is not ready yet, and the battery is one of the key issues, Zhou Lisha, CEO of Chinese battery startup Montavista, told the audience at the BEYOND EXPO 2024. “Companies have to prove every inch of their aircraft is safe, and one of the tests is to make sure the batteries won’t catch fire, because you can’t stop or pull to the side of the road when something goes wrong,” said Zhou.

For that reason, governments are implementing highly stringent rules and safety standards for electric and autonomous aircraft. China has set a goal for businesses to mass produce lithium-ion batteries that meet aviation safety standards with an energy density of 400 watt-hours per kilogram (Wh/kg), as part of a development plan through 2035 released by four top government bodies late last year. For comparison, CATL’s latest Qilin battery reportedly has an energy density of 255 Wh/kg.

Operating air taxis in low-altitude urban airspace may also encounter many conflicts with high-rise buildings within a volatile electromagnetic environment. There has to be new telecommunication infrastructure facilities and a new air traffic control system to support the operation of those unmanned aircraft, according to Jian. “It is definitely not feasible for those machines to communicate with air traffic control via radio,” Jian said at this year’s BEYOND EXPO.

Guangdong: a major staging ground

The Chinese government is jumping in to offer some help. Guangzhou said it will keep “close connections” with eVTOL makers and provide “necessary assistance” to them, when it comes to issues related to research and development, and airworthiness certification, among others. The capital city of southern Guangdong province also plans to build at least five eVTOL airport terminals, known as vertiports, as well as 100 takeoff and landing spots by 2027.

Headquartered in Guangzhou, US-listed Ehang said in October it received an airworthiness “type certificate” from the Civil Aviation Administration of China, CNBC reported, while Xpeng AeroHT, an affiliate of local EV maker Xpeng Motors, followed suit by submitting its application in March. AutoFlight, another Shanghai-based startup, reportedly hit a milestone early this year when its five-seater Prosperity aircraft completed a low-altitude flight between the southern cities of Shenzhen and Zhuhai in the Guangdong province.

Guo expects the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to be the first region in the country where its flying vehicles will be available. “If you take a taxi from here (Macao) to Shenzhen it takes one to two hours. That will be only around 15 minutes if you use a flying vehicle,” Guo said.

READ MORE: Beyond Expo | Self-flying cars are closer to being realized than self-driving cars: Geely executive

Shanghai-based chip foundry Semiconductor Manufacturing International Corporation (SMIC) on Thursday unveiled its first quarter financial results, revealing that the state-owned company achieved a revenue of $1.75 billion, representing a 19.7% year-on-year increase. This result marks the first time that SMIC surpassed both United Microelectronics Corporation (UMC) and GlobalFoundries in quarterly revenue, with the two Taiwan-based firms reporting revenues of $1.71 billion and $1.549 billion respectively for the same period.

The ranking does not include IDM (Integrated Device Manufacturer) companies such as Intel and Samsung.

Why it matters: Amid US sanctions on Chinese chip development, SMIC’s growth signals China’s efforts to strengthen its domestic semiconductor capabilities and reduce reliance on foreign suppliers.

Details: Its first quarter financial results place SMIC second among the world’s wafer foundries, albeit with a considerable gap to TSMC, which reported a revenue of $18.262 billion for the same period.

• In the first quarter, SMIC shipped 1.79 million units of 8-inch wafers, a 7% increase compared to the previous quarter. The company’s capacity utilization rate reached 80.8%, up by 4% quarter-on-quarter.
• Revenue distribution across chip-related business segments is as follows: smartphones account for 31.2%, computers and tablets for 17.5%, consumer electronics for 30.9%, IoT (Internet of Things) and wearables for 13.2%, and industrial and automotive for 7.2%. 
• Revenue from China makes up 81.6% of the firm’s total, while the US contributes 14.9%, and the EMEA (Europe, Middle East, and Africa) region accounts for 3.5%.
• However, SMIC’s net profit for the quarter plummeted by 68.9% compared to the previous year, to $71.8 million. The semiconductor industry as a whole witnessed a substantial decline in profits in early 2024 due to product price drops and inventory backlog, according to local media outlet Jiemian. SMIC told Jiemian that this net profit decline was primarily due to shifts in product assortment, depreciation, and diminished investment returns.
• SMIC CEO Zhao Haijun disclosed that the company received urgent orders from customers in the smartphone and computer sectors in the first quarter, the same Jiemian report said. Efforts are underway to coordinate orders from lower-priority customers for delayed processing, and the 12nm chip production line is almost at full capacity, Zhao said.

Context: Thanks to the AI-related needs of Nvidia and AMD, orders of TSMC’s advanced packaging capacity, including Chip-on-Wafer-on-Substrate (CoWoS) and System-on-Integrated-Chip (SoIC), have been fully booked for 2024 and 2025, according to an Economic Daily News report from last week. TSMC predicts a compound annual growth rate of 50% for AI chips over the next five years. By 2028, AI chip orders are expected to contribute over 20% to the company’s total revenue.

An increasing number of automakers are looking to make their vehicles compatible with the battery swapping standard NIO is pushing for in China, as GAC Group said on Wednesday it will partner with NIO to expand swapping infrastructure for electric vehicles across the country. 

Why it matters: The collaboration highlights increasing efforts by carmakers, along with various stakeholders such as battery suppliers and energy firms, to tackle the issue of range anxiety – fear of an EV running out of power – which has hindered greater EV adoption. The move is also expected to allow NIO to cut expenses further as it opens the money-losing power network to other automakers. 

• GAC and NIO have a collaborative history that dates back several years. They set up a joint venture for EV manufacturing in April 2018 with a registered capital of RMB 2.5 billion ($350 million), although the following few years brought lackluster sales results for their joint brand Hycan. NIO completely retreated from the JV in the summer of 2022.

Details: According to a Wednesday release, the two automakers plan to develop a standardized battery module that would facilitate the roll-out of swap station-compatible passenger EVs from both sides. 

• They also expect to establish scale advantage by creating an extensive, unified power infrastructure network, as well as capture more value from repurposing used EV batteries throughout their lifespans. 
• Although a detailed timeline has not yet been released, owners of both brands’ vehicles will be able to use their own apps to access and pay for charging at a fast charger from either company by the end of this month. 
• ”With this as a starting point, we hope to build more battery swap stations with which our GAC Aion users will have a better swapping experience,” said Feng Xingya, president of GAC Group. 

Context: Guangzhou-headquartered GAC is the latest Chinese automaker to announce that its EV owners will have access to NIO’s nationwide infrastructure network, following deals with Changan, Geely, JAC, and Chery, as well as the company’s link-ups with state-owned utilities Wenergy Group and China’s Southern Power Grid. 

• State-owned manufacturer GAC, a manufacturing partner of Toyota and Honda in China, said it operated a network of roughly 1,000 battery refueling facilities nationwide as of December, of which dozens were swap stations. It has sold an undisclosed amount of Hyper-branded EVs with swappable batteries. 
• NIO operates 2,413 battery swap facilities as of Wednesday, already the country’s biggest network of its kind, and 3,828 charging outlets mostly for non-NIO cars. The company’s upcoming brand Onvo, with plans for an official debut on May 15, will share its latest-gen battery swap stations with those partners. 
• Battery heavyweight CATL and ride-hailer Didi are also jointly building battery swap stations in a move to answer Beijing’s call to further increase EV penetration, especially in lower-tier Chinese cities and the country’s rural areas. International carmakers are reportedly embracing Tesla’s EV charging system or forging their own alliances meanwhile.

READ MORE:  Drive I/O | Big bets on battery swap

Chinese universities and research institutions were still able to purchase servers equipped with the restricted GPU (Graphics Processing Unit) chips as of Feb. 28, despite US export restrictions on the chips being in place since October 2022 and tightened in November 2023, according to an exclusive report by Reuters.

Why it matters: The Reuters report reveals loopholes in the US export restrictions on high-performance GPU chips to China. The findings have raised concerns within the US government about the efficacy and enforcement of these regulatory measures.

Details: Ten Chinese entities acquired advanced Nvidia chips integrated into server products produced by Super Micro Computer, Dell Technologies, and Taiwan’s Gigabyte Technology after the US tightened licensing rules for chip exports on Nov. 17 2023, the Reuters review of tender documents revealed.

• In China, trading in GPU chips coming from the US is not illegal. Chinese retailers may have fulfilled orders using stockpiles acquired before the US tightened chip export restrictions in November.
• The buyers included the Chinese Academy of Sciences, the Shandong Artificial Intelligence Institute, Hubei Earthquake Administration, Shandong and Southwest universities, a tech investment firm owned by the Heilongjiang provincial government, a state-run aviation research center, and a space science center.
• Nvidia responded by stating that the relevant tenders were for products exported and widely used before Nov. 17 2023. Sales may have included inventory previously exported to Chinese distributors, and the documents did not indicate that any of its partners violated export control regulations, Nvidia said. The US chip giant added that it would conduct further investigations into the matter.
• Dell told Reuters it had not seen any evidence of servers containing restricted chips being shipped to China after the embargo was implemented. “If we become aware of a distributor or reseller that is not complying with these obligations, we take appropriate actions, including termination of our relationship,” a Dell spokesperson said.
• Gigabyte said in an email to Reuters that the company consistently complied with related laws and international regulations. It did not reply to inquiries regarding tenders that identified its products as a source of banned Nvidia chips.

Context: Last October, the US government announced new export regulations to prevent the sale of advanced artificial intelligence chips to China, impacting on sales for US companies such as Nvidia, Broadcom, AMD, and Intel.

• Last December, Nvidia unveiled a Chinese version of the RTX 4090 graphics card to adhere to US regulations, in an effort to maintain its market presence. The Chinese version of the graphics card has a 12.8% smaller CUDA core (down to 14,592 from 16,384) and consumes 5.9% less power (425W from 450W) compared with the standard RTX 4090.

Chinese automaker GAC Group said on April 12 that it had broken through several obstacles regarding the durability and safety of “all-solid-state” batteries, and expected its future rollout of the technology to offer drivers a range of over 620 miles per charge by 2026. 

GAC, which made the announcement at its annual Tech Day, is among the few Chinese automakers to have offered specific plans in the race to market for next-generation advanced electric vehicle batteries. Toyota’s long-time partner has opted for a solid electrolyte system that sets it apart from the Japanese giant, by far the world’s leading holder of solid-state battery patents, according to Nikkei’s study. 

Why it matters: The development is the latest example of liquid-state lithium-ion pack leader China ramping up efforts to master the technology, as global auto giants expect solid-state batteries to give them an edge over competitors in the EV transition. 

• Global auto majors and battery makers have been adopting three highly promising solid electrolytes in place of a liquid one, a key element that allows the movement of lithium-ions between cathode and anode during charge and discharge cycles. Japanese and Chinese manufacturers primarily focus on sulfides and oxides, respectively, while Western makers are betting on both candidates and paying additional attention to polymers, according to market intelligence provider TrendForce.

Details: GAC claims its batteries offer better safety compared with not only liquid-based batteries but also solid-state alternatives, while achieving an energy density of 400 watt-hours per kilogram (Wh/kg), a roughly 60% rise compared with CATL’s highly advanced Qilin battery. It features a hybrid solid-state electrolyte based on both oxides and sulfides, among other materials. 

• The automaker said it developed a thin interphase film over the solid electrolyte surface, formed by a highly dense composite material in a special design that enhances structural durability and battery mechanics. This largely protects the battery from metal filaments known as “dendrites,” which may penetrate the solid electrolyte and eventually short the battery cell, allowing it to maintain thermal stability at 200°C above operating temperature. 
• GAC is also bringing out solid-state batteries with high-loading silicon anodes, adding that it has largely stopped extreme volume expansion and contraction of the anodes during electrochemical reactions, which harms solid electrolytes and often results in a poor overall battery cycle life. The latest prototype of GAC’s solid-state battery has undergone more than 100 charging cycles, retaining over 60% of its initial energy capacity, according to figures released by the company on April 12. 
• One of the major challenges for the large-scale use of oxide-based batteries is that their production is expensive and has fewer synergies with conventional manufacturing processes, according to an analysis published by Spanish research center CIC EnergiGUNE last May. And yet, the automaker said it can produce 30 Amp-Hour (Ah) battery cells while reducing costs in a push for volume production. GAC’s Hyper EVs are expected to travel more than 1,000 kilometers (621 miles) on a single charge in 2026, thanks to the technology.

Context: Experts say there is little agreement for now on which solid-state battery technologies will win out, and the timeline for their mass production and deployment remains uncertain. TrendForce generally projects that solid-state batteries may enter mass production between 2030 and 2035, with an energy density of 500 Wh/kg, offering a driving range two to three times greater than existing offerings. 

• Some early efforts at the game-changing technology are underway in other parts of the world. Toyota is aiming to market all-solid-state batteries as early as 2027, which could enable a range of 1,200 km and a charging time of just 10 minutes for its EVs, reported Reuters. Samsung SDI is looking at a similar timeline, saying last month that its plan for mass-producing such batteries in 2027 is well on track, while Nissan and BMW are aiming for 2028 and 2030, respectively.
• Several Chinese auto and battery majors, including Changan and CATL, are making semi-solid-state batteries, a more gradual alternative that uses a small amount of fluid or gel electrolyte in addition to a solid-state electrolyte. SAIC said last month that its upcoming EV under the Intelligence in Motion (IM) lineup will feature a semi-solid-state battery pack, with liquid accounting for 10% of the battery’s weight. The IM L6 sedan is scheduled for launch in May. 
• State-owned GAC has operated a plant to produce conventional lithium iron phosphate (LFP) batteries for its Aion-branded EVs in its hone base of Guangzhou since last December, which is expected to have an annual capacity of 36 gigawatt-hours by 2025. It also invests in technologies such as autonomous driving and flying cars, planning to roll out an advanced driving system for city roads using cameras, rather than high-precision maps and lidar sensors, in 2026. 

Intel is preparing to launch modified Gaudi 3 chips for the Chinese market when it releases the new generation AI accelerator chip this year, according to British technology media outlet The Register. Intel has disclosed the existence of the two China-exclusive models in its Gaudi 3 white paper, with HL-328 set to launch on June 24 and HL-388 on September 24.

Why it matters: Intel’s launch of customized Gaudi 3 chips for China is part of the American chip giant’s efforts to work within US sanctions on chip exports to China.

Details: Based on the information provided in Intel’s Gaudi 3 white paper, the Chinese editions of the Gaudi 3 models may ultimately require a reduction of around 92% in AI performance to comply with US export controls. 

• Due to US export restrictions, high-performance AI chips need a computing performance below 4,800 TPP (total processing power) to be eligible for export to China. This implies that the 16-bit performance of the Chinese editions of the Gaudi 3 chips will not exceed 150 teraflops.
• Similar to the Nvidia’s Chinese-edition H20 chip, the two modified Intel chips will offer a 148 teraflops of FP16/BF16 performance, just below the permitted limit.
• According to Intel, the original version of the Gaudi 3 chip can achieve 1,835 teraflops in FP16/BF16, formats used in computing to represent a balance between accuracy and efficiency for chips commonly used for AI to process large amounts of data quickly and efficiently. 
• Compared to the original version, the HL-328 and the HL-388 versions have the same 96 MB cache, 128GB of HBM2e memory with a bandwidth of 3.7TB/s, PCIe 5.0 x16 interfaces, and decoding standards. However, both models are capable of just 450 watts of thermal design power (TDP), while the original versions of respective models have a higher TDP of 600 watts and 900 watts.

Context: In the first quarter of 2024, Nvidia strategically re-entered the Chinese market with the H20 AI chip. In terms of performance, the modified-for-China H20 chip’s AI computing power is slightly less than 15% of the H100, the original version of the chip available in the rest of the world.

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.

China’s Zeekr and Xpeng Motors will begin delivering their electric vehicles to Thailand later this year while eyeing expansion to other Southeast Asian countries, as they seek further overseas growth amid slowing opportunities at home.

Why it matters: The news comes after Chinese car brands’ combined market share reportedly swelled by six points to 11% in Thailand in 2023, thanks to growing demand driven by favorable subsidies and tax breaks for EV purchases. 

• Southeast Asia’s largest car producer and exporter, Thailand has also become a strategic location for Chinese automakers wishing to diversify their operations and reduce geopolitical risks, according to researchers from the Global Policy Institute.  
• EVs accounted for around 10% of car sales in Thailand last year, and the government has aimed to increase that percentage to around 30% of its annual production of 2.5 million by 2030, making the country a regional manufacturing hub for EVs. 

Debut in Bangkok: Xpeng named on Monday three major dealer groups to sell and service its EVs for Southeast Asia: Neo Mobility Asia for Thailand, Premium Automobiles for Singapore, and Bermaz Auto for Malaysia. 

• The Volkswagen-backed EV maker announced the partnerships ahead of the opening of a major auto show in Bangkok, with plans to start delivering a right-hand drive version of its G6 crossover in the three countries in the third quarter of 2024. 
• In the meantime, Zeekr has put forward a similar timeline for its compact crossover X and multi-purpose vehicle 009, with plans to open its first store in Bangkok later this year. The company began Thai pre-sales on Monday. 
• The Geely-owned brand said it will expand its retail network with distributors in Chiang Mai, Phuket, and Pattaya by year-end. It has also signed contracts with car dealers in Laos, Myanmar, and the Philippines, Reuters reported on March 12. 

Local production ramp-up: Chinese automakers are making deeper inroads in Thailand by setting up plants in the country, as the Thai authorities required the firms to offset imports with local production at a ratio of 1:2 starting from 2026, in order to qualify for government subsidies. 

• BYD told investors last month that its $491 million car plant will begin operations in Rayong later this year, with an annual output of 150,000 units for both Thailand and the wider Southeast Asia region. The EV giant captured 4% of the country’s auto market with sales in 2023 of about 30,000 EVs. 
• Aion’s first overseas plant is set to begin production in July. The EV maker, an affiliate of China’s GAC Group, said on Jan. 31 (in Chinese) it will invest 2.3 billion baht ($63.2 million) in the project for an annual output of 50,000 units, not long after it started exports to the country in September. 
• Changan also hopes to begin exporting EVs from Thailand to nearby ASEAN countries and beyond next year, as it builds up capacity at a $241.7 million facility with a maximum output of 100,000 vehicles annually in Rayong. Rivals such as SAIC, Great Wall Motor, and Hozon Auto are also making their EVs locally. 

TSMC’s first Japanese plant began operations in the southern prefecture of Kumamoto on Feb. 24, as the company confirmed plans for a second factory in the country within the year. TSMC’s 92-year-old founder, Morris Chang, attended the opening ceremony in Kumamoto, and Japan’s Prime Minister Fumio Kishida sent a congratulatory video message.

Why it matters: TSMC’s decision to build factories in Japan was hastened by incentives provided by the Japanese government, aiming to accelerate the growth of the local semiconductor industry by fostering collaborations with international foundries. Additionally, TSMC was enticed by Japan’s abundance of water resources and concentration of related tech companies that the firm needs to thrive in the sector, as suggested by industry analysis.

Details: TSMC founder Morris Chang, Chairman Mark Liu, CEO C.C. Wei, and other senior executives attended the opening ceremony of its majority-owned subsidiary JASM (Japan Advanced Semiconductor Manufacturing), according to a company announcement.

• Japan’s Prime Minister Kishida said in his video message broadcast at the event that the Japanese government has chosen to support the expansion of JASM in the context of the Domestic Investment Promotion Package announced in December 2023. Other distinguished attendees included Japanese Minister of Economy, Trade and Industry Ken Saito, and Chairman of the Liberal Democratic Party’s group on semiconductor strategy Akira Amari.
• Representatives from key partners such as Sony CEO Kenichiro Yoshida, Denso President Shinnosuke Hayashi, Toyota Chairman Akio Toyoda, and Kajima President Hiromasa Amano also leant their support to the chip-maker’s Japanese subsidiary by attending the factory opening.
• In his speech, TSMC founder Morris Chang recalled being invited to establish the chip factory in Japan back in 2019. Five years later, he said, the factory was a reality, with JASM expected to enhance the resilience of the chip supply chain and contribute to the revitalization of the local semiconductor industry, he said.
• The first plant, backed by a JPY 476 billion ($3.16 billion) subsidy from the Japanese government, will produce chips using 28/16/12-nanometer processes, while the second plant will specialize in 7/6-nanometer processes, according to Taiwanese media outlet Economic Daily News. JASM is expected to start construction of the second plant by the end of this year and be making chips there from the end of 2027.
• TSMC claims that the Japanese government’s investment in JASM will surpass $20 billion, and the establishment of the two fabs will provide at least 3,400 jobs.

Context: Sony, Denso, and Toyota also invested in JASM. Building of the first plant in Kumamoto began in April 2022, as reported by the media outlet Jiwei. 

• TSMC holds around a 70% stake in JASM, with Sony, Denso and Toyota as secondary investors. The plant expects to ramp up to a planned monthly production capacity of 55,000 12-inch chips.

NIO Capital, a venture capital firm founded by Willliam Li, chief executive of the namesake electric vehicle maker, has raised a new China-focused fund of more than RMB 3 billion ($416.8 million), despite a global market lull and domestic economic challenges. 

Why it matters: The fundraising milestone will allow NIO Capital to further explore the “transformative potential of innovative technologies in the automotive and energy sectors,” said Ian Zhu, a managing partner at NIO Capital, in a Monday announcement. 

• The NIO-related growth-stage investor has backed some of the rising stars in the Chinese automotive world, from battery material manufacturer Ronbay to self-driving car startups Momenta and Pony.ai. It has also invested in battery giant CATL. 

Details: The deal shows the strength of NIO Capital’s ties with its limited partners, which include venture capital investment guidance funds set up by Chinese regional governments, national funds, family offices, and listed companies, according to the announcement, which did not provide further details. 

• The Shanghai-based venture firm said it will maintain its focus on areas such as auto tech and sustainable energy with the new RMB 3 billion fund, which brings the total assets under its management to about RMB 15 billion. 
• Speaking to Chinese reporters, a NIO Capital representative stressed the fund’s independence from NIO in its final investment decision-making. “We don’t require that a parts maker only supplies to NIO,” the person said as an example of its open-mindedness, 36Kr reported.

Context: The deal comes as global private investment remains soft due to interest rate hikes and economic headwinds. 

• Fundraising totals were on track to drop 28% in 2023 compared with 2022, and the number of funds could decline by almost half, US management consultancy Bain & Company said in a note dated July 17. 
• In China, roughly 5,300 private capital funds raised a total of RMB 1.35 trillion during the first nine months of 2023, down 2.1% and 20.2% from a year earlier, according to consultancy Zero2IPO (in Chinese).

Nvidia is making a strategic return to the Chinese market by introducing its China-specific H20 AI chip, a move that comes after US policies affected the company’s sales in China. Nvidia has begun taking pre-orders from distributors for its H20 AI chips, priced almost on par with Huawei’s Ascend 910B, according to Reuters.

Why it matters: To address challenges posed by the US’s bans on the sale of certain GPUs (Graphics Processing Units) to China, Nvidia has launched cut-down variants compliant with American export policies. Amid concerns about potential limitations on accessing Nvidia’s products, Huawei’s chip is widely acknowledged as the leading alternative AI offering in China.

Details: Prior to the US curbs, Nvidia held over 90% of the AI chip market in China, according to the Reuters report. However, it is now facing growing competition from local competitors such as Huawei. The H20 AI chip is priced at $12,000 to $15,000, positioning itself as a competitor to Huawei’s Ascend 910B. 

• In October 2023, the US government imposed new restrictions on the export of advanced AI chips, leading Nvidia to immediately halt shipments of high-performance AI chips including the A100, A800, H100, H800, and L40S products. Subsequently, Nvidia initiated the development of new AI chips specifically designed for the Chinese market, including the H20, L20, and L2. All three chips are modified versions of Nvidia’s H100 AI chip.
• While the H20 is expected to provide less computing power than Nvidia’s flagship H100 AI chip, specifications suggest its performance is also inferior to Huawei’s Ascend 910B in certain key aspects. Notably, the H20 may lag behind the 910B in FP32 performance, a critical metric that measures processing speed, and is rated at less than half of its competitor’s capability, the source behind the Reuters report told the news agency.
• However, the H20 is likely to have an edge over the 910B in terms of interconnectivity speed, with the H20 being competitive in applications that require the connection of a large number of chips to function as a system, the report explained.
• In terms of performance, the H20 chip’s AI computing power is slightly less than 15% of the H100, according to US media outlet Wccftech. The H20 AI chip features 96GB memory capacity operating at up to 4.0 Tb/s, 296 TFLOPs computing power, and a performance density of 2.9 TFLOPs/die, compared to the H100’s 19.4 TFLOPs/die.
• Distributors have reportedly informed clients that they can start deliveries of H20 products in small batches during the first quarter of 2024, with larger quantities available from the second quarter. Last month, it was reported that Nvidia intends to mass produce the H20 in the second quarter of this year.

Context: On Jan. 20, Nvidia CEO Jensen Huang visited the company’s offices in Shenzhen, Shanghai, and Beijing for the annual parties held in celebration of China’s Lunar New Year holiday, with the company clarifying that the visit did not involve business operations.

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.

China’s SAIC Motor Corp will spend $1.4 billion building 12 fossil liquefied natural gas (LNG)-powered ships to export cars, as Chinese electric vehicles spread overseas and the European Union tightens its climate and trading policies to reduce greenhouse gas emissions.

Why it matters: The move is the latest example of how EU regulations are pushing Chinese automakers to make changes to the way they operate, and adds to the challenges they face in expanding to overseas markets with their EVs.

Details: China’s biggest automaker said on Wednesday that the SAIC Anji Sincerity has begun its maiden trade voyage from Shanghai to Europe. The ship spans 200 meters (656 feet) in length and boasts capacity for 7,600 cars, making it the world’s largest ro-ro vehicle transport vessel partly powered by sustainable fuel. 

• The container carrier is powered by both diesel and LNG, a form of natural gas that has been cooled to a liquid for easier storage and transportation, providing as much as a 30% reduction in carbon dioxide (CO2) emissions compared to similar-sized, diesel-only vessels, according to an announcement on China’s Twitter-like platform Weibo. 
• SAIC expects to spend RMB 10 billion ($1.4 billion) on building 12 LNG carriers and lease two more for the next three years. The biggest of them will be able to carry as many as 9,000 cars, Zhao Aimin, vice president of SAIC Motor International, told financial media outlet Caixin (in Chinese). 
• Volkswagen’s Chinese manufacturing partner expects its carriers to have a total combined capacity of 1.8 million cars per year by 2026. Its wholly-owned subsidiary Anji Logistics currently operates a fleet of 31 carriers on seven routes to Europe, Southeast Asia, and Latin America, and works with automakers Dongfeng and Great Wall Motor among others. 
• Zhao also mentioned SAIC’s goal to sell 1.35 million cars overseas in 2024, which would mark a growth of more than 11% from the 1.2 million units it achieved last year. That number could be further increased to 1.5 million in 2025, with at least 14 new energy vehicles, including plug-in hybrids and all-electrics, set to go on sale globally over the next two years. 

Context: SAIC is not the only Chinese carmaker to build its own fleet and set its sights on going global. Its move takes place as China recorded exports of 5.2 million cars last year, meaning a 57.4% annual growth rate, and is set to dethrone Japan to become the world’s largest car exporter. 

• BYD’s first roll-on, roll-off, chartered vehicle carrier, named BYD Explorer No. 1, set sail towards Germany and the Netherlands from its base city of Shenzhen on Monday. Carrying more than 5,000 EVs, the vessel is reportedly managed by London-based Zodiac Maritime Ltd. and is being rented to BYD. 
• The EU began mandating shipping companies, among other businesses, to buy CO2 permits for 40% of the CO2 generated by their fleets from January, a percentage that will grow to 70% and 100% over two years from 2025, Reuters reported. 
• Meanwhile, the European Commission launched an anti-subsidy investigation of China-made EVs last October.

US chip giant Nvidia is gearing up to mass produce a range of AI chips including its H20 model for China in the second quarter of 2024, with Taiwanese electronics manufacturer Wistron picked as the major supplier of these GPU (graphics processing unit) substrate orders, according to US media outlet Wccftech.

Why it matters: Despite the US government’s ban on high-performance AI chip exports, Nvidia has developed modified AI chips for the Chinese market and is ready to ship limited sales of less powerful AI chips to China as long as they adhere to regulatory standards.

Details: Nvidia is modifying its latest AI chips specifically for the Chinese market, including the HGX H20, L20 PCle, and L2 PCle. The three chips are based on the Nvidia H100, but allow the company to comply with the latest US export control policies announced last October.

• Nvidia originally planned to start selling a modified version of these AI chips by the end of 2023, but postponed the launch to early 2024 as the China-US chip war escalated, the Wccftech report said. 
• Since then, the US government has adopted a softer stance on commercial sales in China, and Nvidia has assured the government that their chips will fully meet compliance guidelines established by US trade and commerce authorities. Last week, Nvidia launched its China-exclusive GeForce RTX 4090D, a less powerful version of the flagship RTX 4090 GPU it sells elsewhere.
• The H20 AI chip is a scaled-down version of the H100 GPU, equipped with 96 GB memory capacities that operate at speeds of up to 4.0 Tb/s, according to Nvidia. It offers computing power of 296 TFLOPs and a performance density of 2.9 TFLOPs/die, in contrast to the H100’s 1,979 TFLOPs and 19.4 TFLOPs/die.

Context: Last October, the US government issued a new ban, further restricting the export of high-performance AI chips by Nvidia. Subsequently, the chip giant announced an immediate halt to the shipment of its A100, A800, H100, H800, and L40S products.

• In December 2023, during an interview with Reuters, US Secretary of Commerce Gina Raimondo stated that the government was in discussions with Nvidia about allowing the chip firm to sell AI chips to China under certain conditions. Raimondo emphasized that the government would stop Nvidia from exporting its most complex and powerful AI chips, but would not curb its chip sales to China altogether. 

China imported 42 lithography systems (chip-making equipment) with a total value of $8.168 billion in November, mostly from the Netherlands and Japan, according to South China Morning Post. Included among them were 16 lithography machines imported from the Netherlands valued at $7.627 billion, representing a year-on-year increase of 1,050% in value of such equipment from the European chip machinery powerhouse.

Why it matters: Lithography machines are a core type of equipment in chip manufacturing, with advanced models available only at extremely high cost. The Chinese demand for lithography machines is increasing rapidly as the domestic semiconductor industry is being boosted in an effort to offset the impact of tighter US chip export controls. At the high end, only a few companies worldwide are capable of producing them.

Details: China aims to stock as much advanced lithography equipment as possible before the Netherlands’ export restrictions come into full effect in January 2024. 

• Among the 42 lithography machines imported by China in November, 16 are from the Netherlands’ ASML, the world’s largest lithography machine manufacturer, as reported by SCMP. 15 machines are from Japan’s Canon and Nikon, while the remaining 11 are reported to have come from second-hand equipment dealers in other countries.
• Although the quantity of lithography machines imported from the Netherlands in October was higher at 21 units, the total value was only $672.5 million, significantly lower than the total value of $7.627 billion for the 16 lithography machines imported in November, an average 46% more.
• The monthly unit price difference suggests that Chinese companies are continuing to acquire more advanced chip-making systems despite the US’s attempts to limit such purchases, according to SCMP. 
• Most of the equipment shipped in November obtained approval from the Dutch government by the end of 2022 or early 2023, said Jan-Peter Kleinhans, director of technology and geopolitics at Stiftung Neue Verantwortung, a German non-profit think tank based in Berlin. ASML’s lead time in 2023 was around 18 months, indicating that equipment shipped in the fourth quarter of 2023 would have been ordered in either the second or third quarter of 2022, he added.

Context: In June this year, the Netherlands announced export controls, placing restrictions on the shipment of ASML’s chip-making machines to China. Starting from September 1, ASML has been required to acquire a license for the export of its deep ultraviolet (DUV) lithography systems to China.

• Following the new rules, ASML announced that its existing licenses allowed it to continue shipping DUV lithography machines to China until the end of 2023, despite export restrictions in the Netherlands taking effect from September. 
• ASML’s export licenses necessary for shipping these systems to Chinese customers will become invalid from January 1, 2024, and are unlikely to be renewed.
• As of 2021, domestically manufactured lithography systems made up less than 5% of those used in Chinese fabs, according to SCMP’s report.

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.

Chinese EV brand Zeekr on Thursday announced the launch of a fast-charging, affordable, lithium iron phosphate (LFP) battery capable of running 500 kilometers (310 miles) on a 10-minute charge, becoming the latest automaker to seek more self-reliance and better cost control over the critical EV component.

Claiming to be the world’s first LFP battery with an 800-volt electrical system for fast charging, the so-called Gold Brick battery features a faster recharging speed than some of the most advanced offerings from established battery suppliers such as CATL and BYD. CATL’s latest Shenxing battery adds 400 km on a 10-minute charge. 

The decision by Zeekr to make its own EV batteries is one of the clearest examples of the Geely-owned brand’s determination to have greater control over its EVs’ core technologies, Chief Executive Andy An told a press conference in the eastern city of Quzhou on Thursday. 

Here’s what Zeekr’s management said about the battery and its production plan: 

Gold Brick battery: The blade-shaped LFP battery will be first equipped for the entry-level version of the Zeekr 007, the brand’s first battery electric sedan with a pre-sale price of RMB 224,900 ($31,059), offering a driving range of 688 km on a single charge. 

• Zeekr’s new batteries have a cell-level energy density of 250 watt-hours per kilogram (Wh/kg) and reach 128 Wh/kg at a system level. The company said it can fit more battery cells into a given space, which enables more energy density and requires fewer connection components. 
• For comparison, CATL’s other most recent battery, Qilin – which is packed with more expensive nickel and cobalt-based cells – reaches 255 Wh/kg at a system level and can power an EV for 1,000 km. The next-generation Qilin will give 500 km of range after 12 minutes of charge. 
• In what An described as a “very important” strategic partnership (our translation), Zeekr continues to source batteries from CATL. The long-range 007 sedan, offering a driving range of 870 km, will be powered by CATL’s nickel-manganese-cobalt (NMC) batteries.

Quzhou production base: The Quzhou factory, which also produces NMC batteries for other Geely-owned marques such as Smart and Galaxy, will have an annual capacity of 24 gigawatt-hours (GWh) next year. This will allow the automaker to achieve an annual production run rate of 840,000 EVs. 

• An mentioned the likelihood of supplying the battery type and module assembly to other Geely-affiliated brands, especially those that share the SEA vehicle platform Zeekr builds its cars on, as well as rivals’ models. 
• The facility started operations last month after being constructed in 15 months. The company is targeting a yield rate, which measures the number of satisfactory units coming out of all produced items, of 93% in Quzhou, Vice President Xie Shibin told reporters during an interview on Thursday. 
• Zeekr’s parent company Geely, which owns the facility, has deployed a set of solar arrays on the rooftop with a long-term goal of making it a zero-carbon plant, the executives added.

Context: Geely is the latest in a range of Chinese automakers from GAC to Changan that has turned to making its own electric vehicle batteries in order to lower production costs and gain control over its supply chain. An original equipment manufacturer (OEM) could recover its investment and make a profit if it produces more than 15 GWh worth of batteries, McKinsey & Company has estimated.

• The global EV battery market is currently led by CATL, with the Chinese giant accounting for more than a third of the market from January to October, according to figures compiled by industry tracker SNE Research.
• Among automakers, BYD made an early bet on in-house battery making, launching its blade-shaped LFP batteries in 2020 and recording shipment of 87.5 GWh during the first nine months of this year.
• Zeekr has been partnering with CATL, with the latter’s Qilin battery first equipped by the Zeekr 009 luxury van and the completion of a $750 million financing round partly backed by the battery giant early this year.
• The EV brand filed for an initial public offering in New York last December in the hope of raising more than $1 billion at a valuation of more than $10 billion. It has also made a foray into the European market, currently selling EVs in the Netherlands and Sweden.

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.

Chinese automaker Geely on Oct. 27 unveiled its biggest bet ever on intelligent vehicles with the launch of the first Jiyue-branded model, which the company says is capable of driving itself on busy urban streets in partnership with search engine Baidu. 

The automaker stated its vehicle relies heavily on a camera-based approach to capture detailed visual information and then respond appropriately, removing expensive laser sensors from its hardware suite to keep costs down. Tesla is reportedly a rare advocate for using the so-called vision-only approach, while most other brands opt for multiple sensors to mitigate safety concerns of their self-driving technologies. 

“I believe we provide users a better self-driving experience [than existing players] in most major Chinese cities,” Luo Gang, Jiyue’s chief operating officer, told reporters during an interview, adding that the Jiyue 01 outperforms Tesla’s offerings in digital services such as its AI assistant (our translation). Tesla’s full self-driving (FSD) function is currently unavailable in China. 

The Jiyue 01, a battery sports utility vehicle, comes in two versions with a price range between RMB 249,900 and RMB 339,900 ($34,148-$46,446), slightly lower than its pre-sale price and differing based on acceleration, driving range, and number of electric motors, among other specifications. Customers are also encouraged to pay RMB 19,900, a 60% cut from its sticker price, for all the premium functions of its self-driving software. 

Here are some of the news and highlights from the launch event held in Shanghai by Jiyue, formerly known as Jidu before Geely and Baidu set up a new venture in August. 

Self-driving tech: Jiyue said its advanced driver-assistance system, the Robo Drive Max, is already available to drivers in Shanghai, Hangzhou, and Shenzhen, meaning the cars can navigate complex urban streets in the three big cities with autonomous features such as overtaking, lane changing, and on-ramp/off-ramp driving. The firm is targeting nationwide availability for the software by 2024, which would mean it matched rival Xpeng. 

• Chief executive Joe Xia claimed the car could drive itself from point to point without many user interventions by using less costly high-definition maps and training multiple neural networks such as occupancy networks in big data sets, rather than relying on lidar. Rival Xpeng is also removing two radar sensors for its upcoming MPV model but retaining lidar technology for enhanced safety, TechNode has reported.
• The five-seater Jiyue 01 is equipped with 11 cameras and 17 ultrasonic sensors and radars. The company believes it is building public confidence in autonomous car safety, as Baidu has tested its autonomous car fleets without accidents for more than 70 million kilometers (43.5 million miles). Baidu has been handling various corner cases over the past decade, which greatly improves the safety of the system, said Luo. 

Smart cabin: The Jiyue 01 also boasts the most advanced voice recognition software on the market for in-car services, which can respond intelligently in milliseconds without losing its connection, as the company deploys artificial intelligence models and moves data analytics from cloud computers to the vehicle. The system is also set to evolve and become more alert to the needs of its owners, powered by Baidu’s ChatGPT-like chatbot, Ernie Bot. 

• Notably, the automaker is bringing voice activation outside the car, saying it is the world’s first model that allows autonomous valet parking via just a spoken command without the driver sitting in the car, from as far as two kilometers away, according to an announcement. A company employee demonstrated the feature with several reporters joined by TechNode in an indoor parking lot on the sidelines of the event. 
• Xia added that the vehicle’s in-car system is powered by Qualcomm’s most advanced smart cockpit computing platform, the SA8295, which provides a processing power of over 60 trillion operations per second (TOPS), compatible with that of flagship smartphones available on the market. This would allow users to play the hit racing game Asphalt with a 35.6-inch display across the dashboard, as would NIO owners do with their handsets and a smaller screen. 

READ MORE: Baidu’s EV firm Jidu aims to take on Tesla

China’s Changan Automobile on Tuesday signed an agreement with Thailand’s Board of Investment in Beijing to build a $241.7 million electric vehicle factory in the country’s coastal Rayong province, the latest development by Chinese automakers to expand their reach in the global car market. 

Changan’s move to Thailand: The announcement was made during the two-day Belt and Road Initiative Summit which ended Wednesday as the Chinese government celebrates the 10th anniversary of its massive global transportation and infrastructure project in an effort to consolidate relations with Asian, African, and Latin American countries.

• The deal is part of an ambitious plan by the state-owned manufacturer, also a Chinese partner of Ford, to sell 1.2 million vehicles annually in overseas markets by 2030, which would represent a fivefold increase from last year’s 250,000 units. 
• The plant will consist of approximately 600 acres of land and is located in the Eastern Economic Corridor Special Zone. It will be able to produce 100,000 units of battery EVs and plug-in hybrids annually once construction is completed next year and allow further expansion to 200,000 units to meet demand.
• The carmaker expects the 8.8 billion Thai Baht ($241.7 million) facility to become a regional production hub from which right-hand drive EVs will be shipped to nearby Southeast Asian countries, as well as Australia, New Zealand, and the UK, among others. 
• Changan in April pledged to invest a total of RMB 4 billion ($550 million) in the facility in the next few years, according to chairman Zhu Huarong, while planning its entry to Europe next year with an annual sales goal of 300,000 units in the region.

Thailand, an emerging battlefield: Thailand, a premier trade ally of China, has been promoting the adoption of green energy vehicles, currently offering each EV with a subsidy of up to 150,000 Baht along with other incentives such as import tax reductions. It is positioning itself as a regional hub for EV manufacturing and has attracted investment from some of China’s biggest automakers. 

• BYD last September revealed plans to establish a 17.9-billion-baht plant in Rayong with the country’s industrial estate developer WHA Group, which will have a maximum output of 150,000 vehicles annually and is scheduled for operation in 2024. 
• SAIC, China’s biggest automaker, in April began constructing a 500 million baht component factory in the Bay of Bangkok, having produced MG-branded cars with local conglomerate CP Groups at a factory in Chon Buri with a capacity of 100,000 units per year since 2014. 
• Chery Automobile, China’s second biggest car exporter, is readying for entry to Thailand with an electric car model in the first half of 2024, while planning to establish a facility in the country, one of its strategic markets other than Malaysia and Indonesia.
• Great Wall Motor opened a factory in the country in mid-2021, which it acquired from General Motors a year earlier, and can churn out up to 80,000 hybrid and electric cars annually. It has targeted a 50% annual growth rate to sell 18,000 cars this year in the country, Nikkei reported.
• Aion, the EV unit of state-owned automaker GAC, began exporting cars to Thailand in August, SCMP reported, after reaching a partnership with local dealership Gold Integrate in June. The company said it would set up its regional headquarters in Thailand this year and look to build a plant in the near term. 
• Hozon in March broke ground at its first overseas plant on the outskirts of Bangkok. Mass production is set to begin next January with an annual capacity of 20,000 units. Hozon’s Neta V was the country’s third best-selling EV model last month, and the startup aims to sell 10,000 units in Thailand this year. 

Chinese electric vehicle battery maker Gotion High-Tech announced on Sept. 16 that it has begun production at its first European plant in Gottingen, Germany, and expects to begin supplying local markets next month. The move represents a major overseas market milestone for the firm, which counts Volkswagen as its largest shareholder with a 24.77% stake.

Why it matters: The move has made Gotion the second Chinese battery supplier after CATL to set up an overseas production base in Europe, which could help strengthen the development of a local battery supply chain on the continent.

• European legislators recently passed new rules that would require businesses to label the carbon footprints of their batteries and use a minimum amount of recycled raw materials eight years after the law comes into effect, Reuters reported. 

Details: Gotion has operationalized its first production line at the Gottingen factory and received a large number of orders from local clients, with plans to begin supplying local markets in October, Peter Willemsen, chief operating officer of Gotion Global said in a statement. The Chinese enterprise took over the plant from German auto supplier Bosch in 2021. 

• Gotion will mass produce battery packs for both commercial and passenger vehicles, as well as those for energy storage in the new facility, which will have an annual capacity of 5 gigawatt hours (GWh) by mid-2024. It aims for a total capacity for batteries equivalent to 20 GWh when construction is completed, which is anticipated by 2025. 
• The Chinese battery maker also announced battery development and supply partnerships with European enterprises including German chemical giant BASF and Swiss engineering company ABB on Sept. 16. The plant will serve as a regional research and development center and a logistics hub at a projected annual output value of €2 billion once it comes into full operation. 

Context: The world’s ninth largest battery maker by shipments, Gotion is already facilitating the establishment of a battery plant scheduled for operation in 2025 with Volkswagen in Salzgitter, a city close to Wolfsburg where its major shareholder is headquartered.

• Gotion also plans to build a $6.3 billion factory in Morocco and is considering setting up a joint facility for making battery cells at an annual capacity of 40 GWh with Slovakian battery startup InoBat in the eastern European country. Construction of two US factories in Illinois and Michigan is also in the pipeline. 
• Rival CATL initiated efforts to build its first European plant in Thuringia, Germany in 2018 and kicked off production last December. Another battery giant, BYD, is mulling local production of EV batteries in Hungary, while Great Wall Motor-backed SVolt recently announced ambitious European expansion plans. 

Xpeng Motors chief executive He Xiaopeng said on Monday that he anticipates annual sales for an upcoming model, co-developed with Didi Chuxing under a new brand, to reach 100,000 units, in an unexpected partnership between the electric vehicle maker and the ride-hailing platform.

Why it matters: The move marks Xpeng Motors’ latest effort to expand its product lineup and extend its brand reach into the fleet market. The alliance is expected to help Xpeng significantly reduce costs and generate economies of scale in the production of highly autonomous cars, said He.

• While the deal will help Xpeng accelerate its EV manufacturing growth and facilitate the development of self-driving technologies with more driving data, it can help Didi monetize its smart auto segment and attract drivers with vehicles suitable for ride-hailing, Bernstein analysts wrote on a Monday note.
•  Nonetheless, doubts were voiced over Xpeng’s ambitious sales goal, citing limited market size and fierce competition. “BYD was the only OEM (Original Equipment Manufacturer) to deliver more than 100,000 units, and the remaining top players all have their own ride-hailing affiliates,” wrote Bernstein analysts.

Details: Speaking to Chinese reporters during a media briefing, CEO He expressed confidence in the forthcoming A-class sedan, scheduled for production next year. He believes the model will enhance Xpeng’s performance, but does not specify a timeframe for his annual sales volume goal. The company delivered 41,435 EVs for the first half of this year with six namesake-branded models on sale.

• The EV startup is currently developing the model with assistance from Didi under a project codenamed Mona. He believes that this could become “a hit product” featuring Xpeng’s self-driving technology at an expected price tag of around RMB 150,000 ($20,594). 
• The compact sedan will also be the first model under a new mainstream sub-brand, which He said will be positioned to target the Chinese consumer EV segment while also facilitating Xpeng’s expansion within the fleet market segment.
• As part of the collaboration, Xpeng will acquire Didi’s smart EV business, which comprises the design, research, and development of EVs with intelligent features. This acquisition will be accomplished through the issuance of approximately HK$5.84 billion ($744 million) worth of new shares to Didi.
• China’s biggest ride-hailing service will become a strategic investor in Xpeng with a stake of 3.25% after the deal,  helping take Xpeng’s newly branded EVs nationwide via its strong shared mobility market, according to a statement. 
• In Hong Kong, Xpeng’s shares surged 10.9% to HK$72.2 on Monday following the announcement. 

Context: The news comes a month after Guangzhou-based Xpeng announced a collaboration with Volkswagen to jointly launch two VW-branded B-class EVs in 2026. B-class vehicles are normally larger than A-class vehicles and have larger engines.

• Xpeng is not the only Chinese EV maker exploring new brand options to reach a wider customer base. Rival Nio has recently made notable progress in the development of two entry-level brands codenamed Alps and Firefly, with both scheduled for launch in 2024. 
• Didi initially had ambitious plans for its carmaking business, assembling a team of 1,700 employees dedicated to working on the project, with the aim of releasing a consumer EV in mid-2023, multiple Chinese media outlets reported. It even launched a battery-electric hatchback tailor-made for ride-hailing in collaboration with BYD in November 2020, Bloomberg reported. 
• However, the ride-hailing giant had been under an 18-month investigation for alleged national security issues which began right after its mega-public listing on the New York Stock Exchange in June 2021. Meanwhile, Chinese authorities have imposed strict regulations on the release of EV production licenses in recent years.

READ MORE: What to expect from Volkswagen and Xpeng’s new partnership

Xingji Meizu, a smartphone company controlled by Geely founder Eric Li, has decided to discontinue its chip development business for cost-saving reasons. The move is expected to result in layoffs of dozens of staff members, including some fresh graduates, local media outlet Meiren Auto reported on Tuesday.

Why it matters: Xingji Meizu is the latest company to abandon its pursuit of critical and emerging technologies in the Chinese auto and tech industries, reflecting the challenges of a faltering economy and intensifying competition. 

• The news comes just days after electric vehicle maker Nio delayed the development of its own batteries to ease cashflow constraints. Similarly, in May, rival phone maker Oppo announced the closure of its chip design unit Zeku after five years of operations.

Details: In a statement sent to financial media publication CLS on Tuesday, Xingji Meizu said the company is closing down its in-house chip design program in the face of global economic uncertainties, and will instead sharpen its focus on product innovation and user experience.

• Xingji added that it will offer compensation as required by law, along with internal job transfer opportunities, to ensure the rights and interests of employees, especially fresh graduates, without revealing further details. Geely did not respond to TechNode’s request for comment. 
• The company’s chipmaking institute employs approximately 200 people, and dozens of recent graduates are likely to be impacted by the layoffs, according to Meiren Auto. “[The news] came just three weeks into the job,” one of the new employees told the outlet. 
• Development has mostly stalled since the launch of the institute, according to a person with direct insight into the company’s operations. Chief executive Shen Ziyu told Chinese reporters in March that emerging technologies, including chipmaking, were at the center of Xingji’s strategic efforts, alongside smartphones and in-car systems.

Context: Geely’s other affiliates have reported progress in semiconductor technology. The most recent example is the Lynk & Co 08 SUV featuring an in-car operating system built upon a supercomputing platform provided by Ecarx, another auto tech firm founded by Shen Ziyu and Geely’s Eric Li. 

• Siengine, Ecarx’s joint venture with Arm China, was responsible for designing seven-nanometer chips intended for use in computers in partnership with leading global chipmaker TSMC, Shen told Reuters back in March 2021.
• Xingji Technology, a company established by Li, acquired nearly 80% shares in beleaguered smartphone maker Meizu last summer, which preceded the establishment of Xingji Meizu and the release of Meizu’s first high-end handset series in two years this March.
• Xingji Meizu is also leading the business development of Geely-owned Swedish automaker Polestar in the Chinese market, having set up a joint venture with the EV maker in June. 
• Geely founder Li first revealed his plans to enter the smartphone market back in 2021.

China said on Monday that it will impose export controls on certain high-performance drones with both commercial and military potential applications to prevent their use by armed forces, in a setback for strong exporters such as Shenzhen-based drone maker DJI.

Why it matters: The measure is an extension of an existing export ban on unmanned aerial vehicles (UAVs) for military use imposed on drone makers by Chinese regulators since August 2015.

• It comes after Beijing faces accusations from the US that China may supply Russia with military technology for its conflict against Ukraine, Reuters has reported. 

Details: Drones with radio power exceeding the limit set for civilian products globally, will be subject to export controls from September “to protect national security and interests,” China’s Ministry of Commerce said in an announcement on Monday (our translation). 

• This will also apply to drones that are equipped with sensors such as multispectral cameras in a wide wavelength range, and those that can determine their position and navigate beyond certain distances using lasers, as well as those capable of carrying “unauthorized” payloads. 
• The two-year order requires drone exporters to apply for an export license with the submission of proof documents that show how their products will be used and who will be the end users. 
• The ministry will also impose export controls on drone components ranging from engines to radio equipment, according to another document published Monday. It has not specified when the restrictions will be lifted. 
• China is concerned that certain high-end civilian drones could be repurposed for military use, and insists that its proposed measures are not against any specific country or region, China Daily cited a ministry spokesperson as saying.  
• DJI has always opposed the use of its products for war-related purposes and will strictly adhere to the temporary export control policy to ensure full compliance, Zhang Xiaonan, a senior director at DJI, posted on the Twitter-like platform Weibo. 

Context: DJI, with the lion’s share of the global consumer drone market at over 70%, suspended sales and after-sales services in Russia and Ukraine in April 2022. Its products have, however, been available from third parties in the two countries, Chinese media outlet Caixin cited industry insiders as saying.

• Beijing on July 3 released restrictions on exports of gallium and germanium, two precious metals used in making chips and radars. Earlier this year, Japan and the Netherlands decided to limit the sale of certain types of chip making equipment to China. 

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. 

In a historic development, Volkswagen said on Wednesday it will make electric vehicles in a joint effort with Chinese EV startup Xpeng via a $700 million investment plan. The news sent Xpeng stock rocketing as much as 40% during trading on Nasdaq. 

The move is expected to create a win-win situation that will help the two automakers secure their market shares in a brutally competitive market. However, analysts expect big challenges for the partnership. 

Both Volkswagen and Xpeng are in a relatively weak market position when it comes to EVs and face sluggish sales in the world’s largest EV market. Also, cultural clashes and different mindsets could potentially lead to friction in the partnership. 

TechNode spoke to various analysts on the ground about what lies ahead. While some saw the collaboration as being beneficial to both automakers, most saw challenges in the unprecedented deal between a German auto giant and a rising Chinese EV maker. 

A happy union?

The Volkswagen-Xpeng partnership makes perfect sense as they complement each other’s strengths, according to Yale Zhang, managing director of Shanghai-based consultancy AutoForesight. “Xpeng’s vehicle platform is state-of-the-art compared with rivals, while Volkswagen definitely needs a helping hand in making intelligent EVs,” Zhang said.

Elliot Richards, a correspondent at the Fully Charged Show, believes Volkswagen knows how to build good quality affordable cars and has an advantage in terms of economy of scale, while Xpeng has top-of-the-line software stacks with a more lively, fun, and risk-taking brand image. He expects the collaboration to help both “efficiently grow together” in China by pooling their resources.

Volkswagen could accelerate the launch of new EV models with the latest tech in the Chinese market through the alliance, predicts David Zhang, a visiting professor at Huanghe Science and Technology University. Volkswagen has had a relatively late start in electrification and its ID series lacks competitiveness in China, despite a decent performance in Europe, added Zhang.

Looming challenges

Daniel J. Kollar, head of Automotive & Mobility Practice at business development consultancy Intralink Group, said the problem is that neither has been able to effectively differentiate themselves in the market, so it is unclear whether teaming up will allow them to change that. Both foreign and younger Chinese original equipment manufacturers (OEMs) are having a rough time lately, experiencing trouble with penetrating the mid-tier and entry-level markets and gaining the trust of average Chinese consumers, Kollar added.

Meanwhile, cultural fit will remain a challenge in this collaboration. Pitting a rigid process-oriented culture from Germany against a fast and furious startup culture in China, has the potential for problems, according to Lei Xing, former chief editor at China Auto Review. As Xing put it, “Is VW willing to sacrifice certain things for speed?” 

Tu T. Le, founder of business intelligence firm Sino Auto Insights, also expects culture clashes as VW’s careful checks and balances are challenged by Xpeng’s much faster pace. “Volkswagen will have to let go of its want to centrally control everything and do its best to learn from Xpeng if it truly wants success,” according to Le.

There might also be wounded pride on Volkswagen’s part, as global carmakers that used to enjoy the upper hand are now acquiring technologies from newcomers, rather than licensing to them, AutoForesight’s Zhang stated. “This could become an invisible barrier and lead to tension in day-to-day collaboration,” he added.

Reasons for skepticism

Experts have voiced concern about the sales prospects of the two automakers given a relatively late launch date of two new models.

“By virtue of the investment, VW is hopeful that its EV sales can be turned around with these two new products, but the 2026 launch dates could be too little too late,” said Le. His comments were echoed by Xing: “The tie-up does nothing to guarantee the success of VW badged EVs with Xpeng tech ‘inside.’ Also for the time being, at least until 2026, it does nothing to influence the market performance of Volkswagen and Xpeng as each controls their own destiny.” 

Meanwhile, they do not foresee the tie-up with Volkswagen as having a significant impact on Xpeng’s sales and presence in the market, although licensing its technologies is potentially a recurring revenue stream for Xpeng.

Volkswagen will likely have to shell out a huge amount of money as a transfer fee for accessing Xpeng’s technology, which has been a common practice in such collaborations, said David Zhang. “Chinese auto manufacturers used to pay tens of thousands of RMB per unit to their foreign counterparts for localizing a vehicle model that came from abroad.”

Zhang added that the collaboration with Volkswagen could be a significant endorsement of Xpeng to boost its credibility in the European market. Aware of Xpeng’s recent momentum following the launch of its G6 crossover last month, Le also believes the cooperation with VW could help it more in Europe than in China. “Xpeng is still two or three successful products away from becoming a sales leader in the Chinese market,” added Le.

“The game has changed”

Kollar sees the Volkswagen-Xpeng partnership as the latest sign that the Chinese market is now ready for consolidation, which means more young, domestic EV makers are either going to go bust or be acquired. The best way for foreign OEMs to regain their previous standing and catch up in the EV sector is to become an acquirer of some of the promising players, Kollar predicts.

The tie-up ushers in a new era where foreign legacy automakers now depend upon Chinese EV makers for their technologies and speed to market, noted Lei. In this context, Volkswagen can be seen as playing a “pioneering” role yet again, having been one of the first major foreign car brands to enter China, and has now opened the floodgates for similar deals involving other foreign legacy automakers and local firms in the future. The German giant on Wednesday also announced an extended partnership between its Audi brand and China’s SAIC.

Global brands are recognizing that Chinese EV companies have progressed to the point that foreign companies have something to learn from them, said Stephen Dyer, a co-leader for AlixPartners’s Greater China business. “We can expect to see more Chinese auto players become part of the global community of strategic collaboration going forward.”

Richards added that, “They now need their local partnerships more than ever, but the shoe is on the other foot.” 

READ MORE: Experts bullish on Chinese automakers’ global push as SAIC seeks EU foothold

Chinese EV maker Nio will roll out a single-motor version of its first mass-market Alps model, as part of a lineup scheduled for delivery in the second half of next year, Chinese media outlet 36Kr reported. 

Why it matters: The plan to produce a more affordable single-motor car marks a rare shift for Nio, which has so far insisted on a dual motor on all its offerings to date, as this is responsible for Nio’s impressive acceleration and premium performance. 

• The move is expected to help the Chinese electric vehicle maker adapt and appeal to a wider group of customers as the country’s months-long EV price war pushes down prices. 

Details: The upcoming sedan under Nio’s mass market Alps marque will come with the company’s self-developed electric powertrain featuring a next-generation induction motor, the 36Kr report said, citing people familiar with the matter. 

• The car, priced between RMB 200,000 and RMB 300,000 ($27,951-$41,927), will be built on the third generation of Nio’s NT vehicle architecture, which features an 800-volt battery system that allows much faster recharging than existing offerings, the report said. 
• The decision was, says the report, made after Nio announced an RMB 30,000 price cut across its lineup on June 12 in a move to defend market share as rivals reduce prices to boost sales. 
• Nio did not respond to TechNode’s request for comment. 

Context: Nio’s chief executive William Li on June 9 told investors that the company is on track to launch the first model under the Alps marque in the second half of 2024. 

• It is also reportedly in the development phase for another lower-end, budget sub-brand codenamed Firefly. The car has a target price range of between RMB 100,000 and RMB 200,000 ($13,985-$27,969) and is expected to first launch in Europe later next year. 
• Year-to-date deliveries of the Shanghai-based EV maker reached 54,561 units as of June, representing a year-on-year growth rate of 7.3%. It currently has eight models on sale, all equipped with dual motors. 
• China recorded sales of more than 3 million new energy passenger cars (a combined total of pure battery EVs and plug-in hybrids) over the same period, up 37.3% from a year ago, according to figures from the China Passenger Car Association. 

A Chinese joint venture between Volkswagen Group and SAIC Group will start building its own plug-in hybrid electric vehicles in a move to follow the growing adoption of PHEVs in the world’s biggest car market, Chinese media outlet Caixin has reported.

Why it matters: The move marks Volkswagen’s efforts to become more localized and step up its introduction of new electric vehicle (EV) models in China, where it is losing ground to electric rivals such as BYD and Tesla. Its premium brand Audi is also looking to develop EVs with the purchase of partner SAIC’s electric vehicle platform.

• The current offerings from global automakers’ JVs in China are not competitive on the EV and software side, resulting in continued market share loss and prices that remain under pressure amid overall lackluster demand, UBS analysts wrote in a June 16 note.

Details: According to the July 22 report by Caixin, SAIC-Volkswagen has yet to reveal detailed plans on any specifications or launch information for the new model.

• And yet, the move is expected to “unleash the power” of the joint manufacturer, and employees were fed a free meal to celebrate the decision, the report said, citing people familiar with the matter. SAIC-Volkswagen did not respond to TechNode’s request for comment.

Context: SAIC-Volkswagen currently has two PHEV models on sale, namely the popular Tiguan sports utility vehicle and the mid-sized Passat sedan, with a starting price of RMB 261,050 and RMB 233,150 ($36,268 and $32,392), respectively, according to its official website.

• Retail sales of the company declined 0.1% year-on-year to 532,509 units for the first six months of this year, while those of rivals such as BYD and Tesla grew 82.2% and 48.9% from a year earlier.
• Sales for FAW-Volkswagen, another China joint venture formed by the German automaker, were down 2.8% to 838,723 units in the same period, figures from the China Passenger Car Association (CPCA) show. VW Group delivered 321,600 battery EVs (BEVs) globally over the period, according to its filings.
• PHEVs have continued to gain momentum over the past few months in China, with year-to-date sales nearly doubling to around 995,000 units in China from a year ago, compared with a 19.8% annual growth rate of BEV sales, according to CPCA figures.
• A PHEV normally carries a smaller battery pack than BEVs with similar specifications, which could mean a lower purchase price. It also reduces owners’ concerns about their EVs running out of power by using both a battery pack and a gas-powered engine.

Nio announced on Thursday that it has updated its battery leasing program to allow drivers to replace their battery packs with a higher energy density one daily rather than after months or years, as was previously the case.

The Chinese EV maker also reaffirmed an earlier commitment to expanding its battery swapping and supercharging network, as a way to showcase what it sees as the superior experience offered to Nio owners, including easy access to recharging ports.

Why it matters: The daily package may present new challenges for Nio, given its already large and dispersed power infrastructure deployment across China. Despite this, it is expected to draw in revenue as it offers greater convenience to users and lowers the purchase prices of Nio’s EVs, senior company executives told reporters at a press briefing in Beijing. Nio has recently experienced cashflow pressure amid slowing sales.

Details: Customers who currently have a 70/75 kilowatt-hour (kWh) battery pack for their Nio EVs may now swap the battery for a so-called “long-range” one (100kWh) for an extra fee of RMB 50 ($7) per day and will be able to return it to any Nio swap station in China.

• The service option is part of Nio’s Battery-as-a-Service (BaaS) leasing program, which was launched in August 2021 and has since allowed Nio owners to upgrade their batteries for longer driving ranges with a monthly and yearly fee of RMB 880 and RMB 9,800, respectively.
• In the last two years to Thursday, Nio has provided 80,000 upgrades, according to the company’s president Qin Lihong. He added that number could surge by “several hundred thousand” over the next year, as customers take advantage of the flexibility afforded by a longer driving range at a relatively low cost.
• Still, senior vice president Shen Fei acknowledged that the move could put the company under “exponential” pressure to operate its consistently growing swapping network when it comes to the transport and allocation of battery packs across the nation (our translation).
• He cited an extreme case in which 100 kWh battery packs could be in short supply during hot weather in Beijing as owners travel to summer resorts. “I believe we’re well prepared, but we haven’t foreseen all the potential problems with this,” said Shen.
• Qin reaffirmed Nio’s efforts to double its number of swap stations to more than 2,300 by the end of the year, adding that the company has established 500 ultra-fast chargers since April, with a maximum power output of 500 kW and a maximum current of 660A.

Context: Nio owns and operates one of the largest recharging networks in China with 1,564 swap stations and 16,745 public chargers as of Thursday. It has swapped over 25 million EV battery packs, meaning a Nio car is starting up with a replenished battery pack every 1.6 seconds, said Qin.

• The automaker faced cashflow issues until recently when Abu Dhabi’s CYVN Holdings provided relief with a $1.1 billion investment. As a result it has scaled back production of its proprietary EV batteries. It cut prices of its vehicle lineups by RMB 30,000 ($4,199) on June 12, with year-to-date deliveries growing by 7.3% to 54,561 units as of June.

READ MORE: Nio bets big on battery swap stations amid growing EV price war

Renowned computer scientist and venture capitalist Kai-Fu Lee on Monday unveiled his new artificial intelligence startup, 01.AI (Lingyi Wanwu in Chinese), providing long-awaited details about his plans to “build an AI 2.0 platform and applications”. In an official announcement shared on theWeChat account of Lee’s VC firm Sinovation Ventures, the Beijing-based company said it had chosen “the most difficult path” of developing its own large language model (LLM).

Why it matters: In the lengthy official post, Lee wrote that he believes AI-powered LLMs present a “historical opportunity” that China cannot miss. Lee hopes the startup will develop a domestically-grown model capable of producing products similar to OpenAI’s ChatGPT. 

Sinovation Ventures quoted Lee as saying China will see a variety of high-quality and creative applications once the country has truly native, high-quality LLMs, much like the era of mobile internet. 

Details: 01.AI details its model training strategy in seven major modules, including pre-training, post-training, AI infrastructure, and multi-model technology. The firm hopes to equip each module with top-notch technical experts to build an LLM with greater capabilities.

• Within three months, the company has already achieved model testing of tens of billions of parameters, and is currently in the process of expanding to 30 to 70 billion parameters. Launched in March, rival Baidu’s ERNIE Bot has recorded 260 billion parameters.
• “Many of the current batch of open-source models in China claim to have similar capabilities to ChatGPT, yet are limited to simple conversations. They tend to struggle with complex tasks,” the startup stated in the WeChat post. Lee emphasized the need to develop homegrown LLMs by extensively incorporating Chinese language data in order to keep competitive in this field.
• 01.AI was formally founded on May 16, according to corporate database Qichacha, with Ma Jie, former head of Baidu’s metaverse unit, holding a 99% stake, and Sinovation the remaining 1%.

Context: The vast success of OpenAI’s ChatGPT has prompted Chinese tech majors, startups, and research institutions to join the race to create something similar. Data from a state-backed scientific institution shows that China had at least 79 LLMs with parameters exceeding 1 billion as of late May.

• In February, a month before Kai-Fu Lee announced his plan to found an AI startup, Wang Huiwen, co-founder of Meituan, surprisingly entered the market and stated his intention to build China’s version of OpenAI. However, at the end of June, Meituan announced the acquisition of Wang’s fledgling AI company, Light Year, for $234 million in cash and RMB 367 million in debt assumption, shortly after Wang left Meituan’s board of directors citing “personal health reasons.”

Chinese automaker GAC Group on Monday showcased an electric, unmanned flying car prototype, a product it says can move both on the ground and through the air, in a futuristic plan to take its urban mobility to another dimension.

Why it matters: The debut makes GAC the latest Chinese automaker to promise riders flying taxis, a still immature technology, after the Toyota manufacturing partner began recruiting for a number of aircraft research and development engineering roles a year ago.

Details: The prototype, dubbed Gove, is being built on a modular system in which the flight and automobile components can be separated, meaning passengers could drive away the concept once it lands.

• GAC envisions a future where passengers can easily access multi-dimensional mobility services ranging from electric air taxis to ride-hailing platforms, according to Wu Jian, president of GAC Research Institute, who spoke at the company’s annual tech day event in Guangzhou.
• The automaker did not reveal many production details about the flying car, with Wu only mentioning that passengers within the Greater Bay Area where GAC is headquartered  would prefer a driving range of at least 200 kilometers (124 miles), Chinese media outlet Caixin reported.

Context: Several Chinese automakers have been working on electric vertical take-off and landing (eVTOLs) air taxis, but none have yet received approval for commercial use from local regulators.

• Aerofugia, an affiliate of Volvo’s parent Geely, said it had filed an application for operations of its prototype test aircraft with the southwestern bureau of the Civil Aviation Administration of China last year. Aerofugia’s AE200 eVTOLs have reached the airworthiness review stage, Caixin reported on April 7.
• Xpeng Aeroht, a startup backed by Chinese electric vehicle maker Xpeng Motors, said in January that it had been granted a regulator-issued certificate to pilot test its Xpeng X2 two-person flying car which has a battery life of 25 minutes. The company plans to start selling the next generation of its flying car with a price tag of around RMB 1 million ($138,596) as early as 2025.

Update: Xpeng Aeroht said on Tuesday that it would not sell its fifth-generation flying car, the Xpeng X2, which was previously referred to in this article as the Traveler X2, but has plans to sell the next generation of its aircraft as early as 2025.

China’s government on Wednesday announced a detailed plan to provide a full exemption of electric vehicles from purchase taxes in the next two years, an exemption that will be gradually rescinded from 2026. Beijing is also planning a pilot scheme to regulate passenger cars with partially and highly autonomous functions for potential large-scale operation, according to a deputy minister.

Why it matters: Industry players have responded positively to Beijing’s recent efforts to stabilize the EV market, where competition has heated up significantly in recent months.

• The extension of the EV purchase tax credit is “a big positive” from the market perspective, since automakers will be able to plan for new models and cost control going forward following Beijing’s early disclosure, BYD said on Wednesday (our translation).
• The government also underscored its strong support for EVs with swappable batteries, as battery prices will not be included in the dutiable value if a customer purchases an EV with a battery lease scheme, Nio’s chief executive William Li said on microblogging platform Weibo.

Analysts’ take: Bernstein analysts have voiced cautious optimism about the prospects for the world’s biggest EV market, as consumer confidence and credit impulses could be supportive of auto demand in the next few months after a slow recovery in car sales early this year.

• The long-term growth outlook for EVs “remains intact” as demand has shifted from government policy-led to consumer-driven, although EV sales growth is set to decelerate amid growing competition and overcapacity issues, Bernstein analysts wrote in a June 21 note.
• Jefferies analysts also hailed Beijing’s longer-than-expected tax credit as a positive sign, on Thursday forecasting China’s new energy vehicle sales, including all-electrics and plug-in hybrids, will reach 830 million units this year, up 27% from the 654 million units sold last year.

Details: EV buyers will be entitled to a 10% purchase tax exemption, or a credit of up to RMB 30,000 ($4,178) until the end of 2025. From 2026 to 2027, they will be taxed by 5% of the purchase price of their EVs, and the reduction amount will not exceed RMB 15,000 per vehicle, according to a government filing published Wednesday.

• The move is intended to maintain Beijing’s efforts to sustain the development of the EV industry and underpin China’s advantage in green car technologies, Xu Hongcai, deputy minister of finance said during a media briefing on Wednesday in Beijing.
• The Chinese authorities have put a limit on the amount of EV tax relief in an aim to ensure fair play and avoid luxury EVs, with some priced as high as RMB 1 million, taking extra resources, Xu said. He estimated total tax breaks to reach RMB 520 billion by 2027, up from RMB 200 billion as of last year.

L3 deployment: Meanwhile, the central government is planning a pilot scheme to officially lift the barriers to entry of passenger cars with semi-autonomous functions, or with the so-called Level 3 automation, said Xin Guobin, deputy minister of industry and information technology.

• Regional government authorities will also issue more permits for the commercial adoption of highly autonomous cars to operate in pilot projects, according to Xu, an endeavor that has been undertaken by a number of Chinese tech companies such as Baidu.
• Automakers are currently not allowed to market cars with L3 capabilities by Chinese regulators. In Level 3, or the partial autonomous level, the driver is required to take over the vehicle in emergencies, according to the definitions set by the Society of Automotive Engineers (SAE).

US electric vehicle startup Fisker is planning to enter the Chinese market. The company has announced plans to establish its first regional delivery center in Shanghai, with deliveries scheduled to begin in early 2024, its China board member Daniel Foa told Chinese media outlet Yicai on Tuesday.

Why it matters: EV newcomer Fisker is trying to enter China at a time when some traditional global auto majors are struggling to maintain their market share in the country due to their slow transition to EVs. The move also highlights Fisker’s ambition to succeed in the world’s biggest auto market, following in the tracks of its US peer Tesla.

Details: Foa declined to comment on whether Fisker would deploy a direct sales model in China, as it has been doing in the US and Europe, or sell its vehicles through franchised dealers when interviewed by local media outlet Yicai.

• The report added that Fisker’s CEO Henrik Fisker held talks with Lingang Group during his recent visit to China earlier this month. Lingang Group is a state-owned industrial park developer that facilitated the establishment of Tesla’s Gigafactory Shanghai back in 2019 in the city’s Lingang New Area.
• Meanwhile, Fisker on June 9 revealed its plans to build a manufacturing plant in China with an annual capacity of 75,000 units as early as 2024.
• “We expect China to be an important growth market for EVs in the future and believe our vehicles will be very appealing,” said Fisker in a statement.
• China’s premium and affordable luxury segment is growing faster than general segments, Foa told investors on June 6, “This presents a vast opportunity for Fisker in China.”

Context: Fisker currently has two models on sale, the Ocean and the Pear crossovers, with starting prices of $37,499 and $29,900, respectively. It started making the Ocean sports utility vehicles with contract manufacturer Magna Steyr in Austria late last year and began delivery in Denmark in May, while rushing to hand the model over to US customers on Friday.

• Another US EV maker Lucid is also exploring a foray into China. The company hired Izzy Zhu, a former vice president at Nio and Baidu’s EV arm Jidu, to oversee its China business development. It has been recruiting for roles including supply chain and charging infrastructure management based in Shanghai since late last year.
• Chinese auto majors led by BYD are extending their lead over traditional foreign counterparts as a growing number of local customers favor EVs over gas-powered cars. Sales of FAW-Volkswagen and GAC-Toyota shrank 4.3% and 12.2% year-on-year in May, according to figures from the China Passenger Car Association.

China’s biggest deepfake scam to date has led to warnings of a rise in fraud cases using AI tools such as face-swapping and voice mimicking. In the widely-discussed case, a Fuzhou tech firm’s legal representative was allegedly defrauded of RMB 4.3 million ($610,000), after receiving a video call from a “friend,” who turned out to be a fraudster using AI face-swapping technology. The case became a hot topic on social media after police confirmed its details, highlighting how AI can be used to con well-educated adults within minutes. 

Why it matters: AI regulation is still a developing subject in China. In mid-April, the country’s internet regulator issued a draft regulation on the use of generative AI and sought public feedback on the proposed measures. Initial excitement around the potential of ChatGPT and similar AI products in China has given way to concerns over how AI could be used to supercharge criminal activity.

Details: According to disclosures by police in the eastern Chinese city of Fuzhou, on April 20, a fraudster stole an individual’s WeChat account and used it to make a video call to a businessman, an existing contact on the individual’s WeChat app. They used AI to deepfake the individual’s face and told the businessman they needed to make a bank transfer. The businessman subsequently transferred RMB 4.3 million to the fake friend’s bank account without verifying their true identity.

• After the fraud victim alerted the authorities, Fuzhou and Baotou police helped intercept some of the stolen funds, however multiple media outlets have reported that around RMB 1 million is yet to be recovered and that the case is thought to be biggest such scam to date. The police’s investigations are ongoing. 
• The fraudster utilized tools that could steal audio visual information to generate  convincing AI voice and image material, police said. 
• The fraud sparked widespread discussion on Chinese social media. On Tuesday, the trending hashtag #AI crime overwhelms the country#, which had a total of 180 million views, was seemingly removed from the social media platform Weibo amid fears that the case may inspire copycat crimes.
• China Youth Net, a Communist Youth League of China-backed media outlet, was among those to later post a warning to the public about the dangers of AI scams.
• Face-swapping technology has also been used by online livestreamers to produce deepfakes of popular celebrities, according to local media outlet China Economic Network, raising related issues around fraud and intellectual property rights.

Context: The global buzz surrounding the launch of ChatGPT has seen a spate of AI-related product launches in China, with the country’s tech majors rushing to prove they can offer similar technology. However, the Fuzhou fraud case has combined with other high profile deepfake incidents to remind people of the potential downsides to such advances in artificial intelligence.

• In a much-reported incident that is testing the boundaries of China’s copyright laws, famous Mandopop singer Stephanie Sun has seen an AI version of her voice used to produce new covers of popular songs in recent weeks. “AI Stephanie Sun” has nearly a thousand videos on Chinese video-sharing platform Bilibili, with the Singaporean star’s voice being used on everything from folk songs and nursery rhymes to anime theme tunes. Some covers, like ‘Rainy Day’ and ‘Hair Like Snow‘, have garnered over a million hits.
• On Monday, Sun responded on Chinese social media by asking fans to stay true to themselves and recognize the futility of “arguing with someone who releases an album every minute.” AI “poses a threat to thousands of jobs, such as the legal, medical, accounting, and other industries, as well as the one we are currently discussing, singing,” Sun added.

Chinese battery maker Gotion High-Tech on Friday unveiled an “affordable,” iron-based electric vehicle battery called Astroinno, saying it offers a more than 1,000 kilometer (620 mile) range on a single charge without using expensive materials such as cobalt and nickel.  

Why it matters: The battery, which uses a manganese-based cathode, is a potential offering to a group of automakers for their mainstream models. The new battery could mean a higher energy density than conventional lithium-iron-phosphate (LFP) batteries and come at a lower cost than ones which rely mostly on nickel and cobalt.

Details: The Astroinno battery has a cell-level energy density of 240 watt-hours per kilogram (Wh/kg) and reaches 190 Wh/kg at a system level. By comparison, larger rival CATL’s latest Qilin battery reaches around 255 Wh/kg systematically, while giant maker BYD is working to increase the energy density of its blade battery to 180 Wh/kg from 150 Wh/kg before 2025.

• The new battery provides a driving range of over 1,000 km to EVs powered by a 140 kilowatt-hour (kWh) battery pack, Cheng Qian, Gotion’s executive president of the international business unit, said at a press event in the eastern city of Hefei. This points to a performance similar to that of CATL’s Qilin battery, Bloomberg has reported.
• Cheng added the batteries could be charged from a low-level to 80% in 18 minutes and maintain an 88% yield rate when the temperature drops to minus 20 degrees Celsius, which would ensure EVs maintain their ranges in cold weather. 
• The company plans to start manufacturing the battery as early as 2024, but did not reveal any client names.

Context: Gotion said on May 10 that it had signed a new contract to be Volkswagen’s primary supplier of cobalt-free, unified LFP battery cells outside China, catering to all of its EV series. It has yet to reveal how many batteries it plans to make for Volkswagen’s vehicles under the contract.

• The company signed a pilot deal a year ago to mass produce both energy-dense nickel-containing battery cells and economical LFP ones for Volkswagen in the Chinese market.
• The Chinese battery supplier told investors it will be ready to begin delivering its products to VW during the first half of 2024, which would be applicable to the vehicles built upon the Scalable Systems Platform (SSP), VW’s next-generation platform for smart electric cars.
• Volkswagen has been Gotion’s largest shareholder following a $1.2 billion investment deal announced in 2020. China’s fourth biggest battery maker, Gotion shipped 14.1 gigawatt-hours (GWh) of batteries last year, following CATL, BYD, and CALB, according to SNE Research.

Correction: an earlier version of this article included Volkswagen as a potential automaker that might use the Astroinno battery. Volkswagen has since reached out and said the current cooperation between Volkswagen and Gotion is focused only on unified cell, and no other type of battery is involved.

iFlyrec, a sub-brand of Chinese speech recognition company iFlytek, demonstrated its new AI-powered product — iFlyrec AI Writer — on Wednesday at the BEYOND Expo 2023 in Macao. 

Why it matters: iFlytek is following in the footsteps of Chinese tech majors Baidu and Alibaba in releasing its own AI language models and related applications, continuing Chinese tech companies’ contribution to the global AI development drive ignited by ChatGPT. 

Details: The iFlyrec AI Writer is an artificial intelligence writing tool that helps people quickly produce articles based on provided materials and prompts. The product was first launched at iFlytek’s May 6 press release event.  

• iFlyrec, the sub-brand as a whole, focuses on speech-to-text transcription; this newly launched AI writing product focuses on providing AI writing, rewriting, smart summarization, language polishing and proofreading, multi-language translation of text, and keyword extraction. It can be used in various writing scenarios, such as news writing, official document writing, marketing promotion, and project planning.
• On Wednesday, Wang Wei, vice president of iFlytek and general manager of iFlyrec, demonstrated at the BEYOND Expo product release event that on day of the product launch (May 6), some media outlets were able to produce a complete news articles using the AI writing tool. They uploaded a 15-minute voice recording that was around 5,000 words long, and the tool generated a news article of around 500 words. 

Context: iFlyrec relies on iFlytek’s AI speech recognition tech for its products and services. The latter has been making moves to demonstrate its AI capability in recent weeks. On Monday, iFlytek launched an AI language model called SparkDesk. Liu Qingfeng, iFlytek’s chairman said at a May 6 product release event that the model has surpassed ChatGPT in Chinese long-text generation, medical knowledge, and mathematical abilities, but still lags behind ChatGPT in natural language understanding.

• Liu added that the model will have three upgrades in the near future. On June 9, the model will increase its capabilities in answering open-ended questions, multi-round dialogue, and mathematical ability, and on August 15, it will be improved with code and multimodal interaction abilities. He further stated that by October 24, the model will surpass ChatGPT’s current level in Chinese, while becoming equal to ChatGPT’s current level in English.
• Founded in 1999, iFlytek is a leading Chinese technology company specializing in voice recognition and AI. The firm has become one of the largest providers of intelligent speech and language technologies globally, focusing on developing voice recognition and natural language processing solutions. Some of iFlytek’s most popular products include voice assistants, speech-to-text translation software, and smart recorders. 

The Chinese government has approved an action plan to push for the buildup of charging infrastructure across the country, a move Beijing says will step up the adoption of electric vehicles especially in the country’s vast rural regions, state broadcaster CCTV has reported.

Why it matters: The plan could pave the way for a sales boost of green energy cars in Chinese lower-tier cities and rural areas where EV penetration has so far remained low, according to Cui Dongshu, secretary general of the China Passenger Car Association (CPCA).

• China’s countryside is expected to provide a new source of growth for what is already the world’s biggest EV market, Cui wrote in a May 7 article (in Chinese). Less than 20% of new car sales were EVs in small-sized Chinese cities and towns in March, compared with 34% in first-tier cities, official figures showed.

Details: The plan will adopt a “forward-thinking and moderately progressive” (our translation) strategy to scale up the number of charging stations for EVs across the country, state broadcaster CCTV reported on May 5, citing a meeting of China’s top executive body, the State Council.

• The cabinet said it would also release measures that would facilitate businesses’ expansion of their EV sales and service networks in less developed regions, as well as boost the training of technical workers for EV maintenance from vocational schools.
• The Council said these efforts would allow it to step up its focus on removing the major bottleneck for EV popularity in rural areas. Policymakers expect a nationwide charging network to sustain at least 20 million EVs traveling on Chinese roads by 2025.

Context: China’s EV market has seen slower growth this year, after being partly disrupted by a major price war amid fierce competition and Beijing’s scrapping subsidies for EV purchases in December.

• Sales of new energy passenger vehicles, mainly all-electric cars and plug-in hybrids, increased 22.4% year-on-year to 1.3 million units during the first three months of 2023, significantly slower than the 93.4% growth last year, CPCA data shows.
• China operated an EV infrastructure network of more than 1.9 million public chargers as of March, of which nearly 60% were less powerful AC chargers with the rest being DC ones, according to figures from the Chinese Electric Vehicle Charging Infrastructure Promotion Agency.
• Multiple automakers have pledged to expand their EV charging networks. Nio and Xpeng Motors have set goals of making 2,300 swap stations and 500 fast charging stations available nationwide this year, respectively, while Li Auto opened its first batch of charging facilities last month.

The global hype surrounding ChatGPT has sparked a rush among Chinese AI experts and internet entrepreneurs to launch their own startups, each with a claim of working on the transformative potential of ChatGPT-style models.

Here is a list of Chinese tech specialists who have recently made announcements regarding new ventures in AI technology:

Meituan co-founder Wang Huiwen

Meituan co-founder Wang Huiwen started an AI startup called Guangnian Zhiwai (meaning beyond light years) in February and quickly secured support from Meituan’s current CEO Wang Xing. The startup will acquire AI Infrastructure company OneFlow Technology, through a stock swap, local media outlet Caixin reported on Monday.

OneFlow is both the name of the acquired company and the product name of its deep learning framework, whose competitors include Baidu’s PaddlePaddle and Facebook’s PyTorch.

The acquisition demonstrates the Chinese tech executive’s openly-stated ambition to create the Chinese version of OpenAI, ChatGPT’s parent company backed by Microsoft.

Despite only publicly announcing his entrance into the artificial intelligence field less than two months ago, Wang has already secured a commitment from Meituan CEO Wang Xing, his long-term ally, to invest in the A-series round of fundraising for Guangnian Zhiwai, and take a seat on its board.

“I do not understand AI technology currently, and I’m trying to learn,” Wang Huiwen wrote in a social media post on the microblogging platform Jike in February. He later updated his social media platform with news that the newly-launched company has three co-founders, including a co-creator with an infrastructure background, a co-creator with an algorithm background, and himself.

Ex-ByteDance AI Lab head Wang Changhu

Wang Changhu, former director of ByteDance’s AI Lab, is also reportedly starting a new venture that will specialize in generative AI using a visual multi-modal algorithmic platform for generative AI. 

The visual-related direction aligns with Wang’s expertise. He had previously developed visual, pan-AI, and business solutions during his time at ByteDance, which were applied to the company’s news aggregation app Jinri Toutiao, as well as to short video platforms Douyin and TikTok.

While at the Beijing-based firm, Wang also played a significant role in launching an AI tool called Lingquan, which supports image and text recognition to combat “vulgar content” on apps.

After working at ByteDance for four years, he left in late 2021 to join major Chinese property developer Longfor Group, where he was appointed as general manager in charge of the AIoT artificial intelligence engine team.

Former Google China president Kai-Fu Lee

Kai-Fu Lee, a renowned AI talent and entrepreneur, has founded a new AI startup called Project AI 2.0 to build not only a Chinese version of ChatGPT but an ecosystem for AI-powered productivity tools.

The former president of Google China sees ChatGPT as a major breakthrough in deep learning, with AI offering the opportunity to reconstruct almost all existing applications.

Several technical experts who have led teams at major tech companies have reportedly expressed interest in joining Lee’s newly-launched project.

Ex-Alibaba AI expert Jia Yangqing

Jia Yangqing, a prominent figure in the AI field and author of the deep learning framework Caffe, has resigned as vice president of Alibaba to pursue his own startup venture. Jia’s entrepreneurial direction will focus on AI infrastructure.

A well-known expert in AI and cloud computing, Jia previously worked for Google and Meta before joining Alibaba. He also led the development of PyTorch and TensorFlow during his time at Google and Meta. While studying for a computer science doctorate at UC Berkeley, he wrote Caffe, a widely adopted open-source deep-learning framework, used by multiple major tech companies including Adobe, Microsoft, and Nvidia.

Former Kuaishou exec Li Yan

In 2022, Li Yan, ex-lead of Kuaishou’s multimedia understanding unit, left the short video company after seven years and founded Yuanshi Technology to develop a large multimodal model. The AI start-up confirmed this to local media outlet 36Kr earlier this month.

Li was seen as the core of Kuaishou’s AI tech development, having formed a deep learning team in late 2015 with the support of the then-CEO of the company Su Hua. 

The initial goal of the team was to use algorithms to detect pirated and offensive video content and later expanded its focus to include the development of algorithmic models for various types of speech, text, and images.

Former JD Cloud & AI chief Zhou Bowen

Zhou Bowen, the former president of JD’s Cloud & AI unit, wrote on Feb. 26 that he was looking for talented individuals with a strong belief in “AI’s ability to change the world” to join his startup, Xianyuan Technology. 

Three days later, the Beijing-based company, which was founded less than two years ago, announced it had secured hundreds of millions of yuan in an angel round led by Qiming Venture. 

“China’s answer to ChatGPT doesn’t necessarily need an OpenAI imitator, but it certainly needs a team with a clear vision to help accelerate the development of AI technology and industry digital intelligence,” Zhou wrote in his WeChat post announcing the financing.

Geely’s high-end car brand Lynk & Co will be the first sub-brand from Geely to incorporate an in-car operating system called Flyme Auto in its upcoming sports utility vehicle called the 08, the brands announced on March 24. Flyme is developed by Xingji Meizu, a company established by Geely’s founder after Geely acquired smartphone brand Meizu last July. 

Why it matters: Lynk’s use of the Meizu operating system is the result of Geely’s long-term effort to develop more car technology in-house. The collaboration will be a test for both brands — Geely and Meizu — with the former focusing on building its software self-sufficiency and the latter looking to revive its diminishing smartphone business by testing its system on its new owner. 

Details: The operating system, Flyme Auto, is built jointly by Meizu and Ecarx (an auto tech startup backed by Geely). It is an all-new digital cockpit and infotainment system based on the electronic architecture of Meizu.

• The news was made public by Ecarx’s chief executive Shen Ziyu who made the announcement at a corporate event on Friday in the central city of Wuhan. He also added that Lynk & Co’s 08 crossovers would be the first model to use Flyme and Ecarx’s Antora 1000 Pro supercomputer platform.
• Shen said he expected the Lynk & Co 08 crossover, scheduled for release Thursday, to be a flagship example to automakers of how Ecarx could empower the development of in-car technology ranging from autonomous driving to video streaming.

Context: Geely made its first foray into the Chinese smartphone market in late 2021, hiring talent from domestic electronics companies such as ZTE and Xiaomi, and setting up a venture called Xingji Shidai in which chairman Li holds a 55% share. Xingji Shidai acquired the majority stake in Chinese phone maker Meizu last July, TechCrunch reported.

• Many Chinese automakers have been using high-performance chips from US chip giants Nvidia and Qualcomm for their automated driving systems and car dashboards. Some models of Geely’s Lynk have also used Qualcomm. These supply routes are now threatened by US restrictions on chip exports to China. EV upstarts Nio, Xpeng Motors, and Li Auto are also developing chips in-house to ensure their supply of the key components.

As internet companies in China transition to less heady development in light of stricter regulations, new approaches that are green, low-carbon, and equitable are in the driving seat. Agriculture, a key industry less sprinkled with tech stardust than others, is now accumulating resources from real estate, internet, and venture capital investors.

Online shopping company Pinduoduo is already heavily invested in agritech. In August 2021, it established a “10 Billion Agriculture Initiative” to support groundbreaking research in the industry. Alibaba and JD.com also have ambitious plans in agricultural technology and are increasingly involved in the agricultural industry chain. Douyin, TikTok’s Chinese sibling, encourages farmers across the country to livestream the sale of agricultural products.

Compared with other advanced economies, agriculture in China is mainly still a small farm business. There is plenty of room to improve agriculture’s grasp of marketization, technology, and economies of scale. But what is really behind the enthusiasm of China’s internet giants to enter the industry?

Policy orientated: rural revitalization

While many industries are approaching competitive saturation in China, farming is still a “blue ocean” open to innovation. Long returns on investment and low levels of centralization in the industry may put investors off, but agriculture is a promising industry that chimes with the country’s theme of “common prosperity,” as well as on national targets on carbon peaking and neutrality. With diverse players ranging from global companies to privately owned small businesses and self-employed workers, agriculture is suitable for broad participation.

In 2022, the Ministry of Agriculture and Rural Affairs proposed, in light of a campaign to promote rural revitalization, a focus on building a number of key industry chains and model counties that would showcase advanced production of staple foods and specialty goods. These are all part of the long-term plan for China to modernize its vast rural areas.

Professor Li Ganghua, a doctoral supervisor at Nanjing Agricultural University, has presided over and participated in many national-level projects. In his opinion, the country has two priorities in agriculture: food security and a clean ecology. Agriculture may well give long-term and slow returns, but each crop has its own characteristics. Rice, which is controlled by the state, is a universal crop with stable prices and yields. High-tech vegetable growing is a labor-intensive industry in which yields have increased several times over the past decade while prices have fluctuated widely, impacted by numerous factors.

Apart from aligning themselves with the Chinese government’s development goal, Chinese tech giants are also looking into agriculture for potential untapped growth. Gao Kangping, editor-in-chief of the agricultural service and news platform VCearth.com, believes that in addition to fulfilling social responsibilities, internet companies entering farming are motivated by technology spillover and market development. “Technology in major companies is relatively mature and digital technology is ready to help farm products and rural scenarios, both in hardware and services,” Gao says. “First- and second-tier markets are saturated, but rural market penetration remains low, and there is a lot of space for development. Getting into the industry early will likely bring benefits.”

Leveraging e-commerce to assist farmers

E-commerce promotional events are the mode most used by internet giants to support agricultural sales, and they’ve brought billions of consumers to participating farmers, driving prosperity.

E-commerce shopping festivals in June (6.18 festival) and November (Singles Day festival) support farmers and small enterprises in achieving multi-dimensional benefits. Last year’s Singles Day shopping festival saw JD.com launch a drive to promote 300,000 high-quality agricultural specialties from 2,000 localities and industrial zones across the country. Alibaba’s Tmall issued a “buying one more agricultural product” initiative, urging sellers to put an agricultural product on the shelf of every livestream. Pinduoduo directed online traffic to high-tech agricultural products, subsidizing some of them as part of its 10 Billion Agriculture Initiative.

Besides national shopping festivals, the platforms have also launched farming-specific events. September’s China Farmers Harvest Festival was the first such event established at the national level specifically for farmers. E-commerce companies now all have their own versions of promotional events to support farmers, such as JD.com’s Shopping Festival of Agricultural Specialties, Douyin’s Rich Field Harvest Season, Alibaba’s Hot Land Harvest Season, and Pinduoduo’s Golden Autumn Consumer Season (all our translations). This has enabled each to play to its core strengths, and help sell more farm products and grow the industry.

VCearth’s editor-in-chief Gao Kangping is optimistic that the strategy will work. “Creating festivals is how internet companies gather online traffic and marketing resources and use them efficiently. This is good for brands, platforms, and farmers.”

Medium-term strategies

As listed companies, China’s internet giants need to make money for their shareholders. Participating in agriculture is not only a question of social responsibilities but also one of returns. The capital markets will have serious doubts if long-term financial prospects are bleak.

In a recent conference call, a Credit Suisse analyst asked about the impact of the company’s agricultural development strategy on Pinduoduo’s financial statements and the latest developments of the 10 Billion Agricultural Initiative. Chairman and CEO Chen Lei told the bank that agriculture was part of the company’s long-term strategy, and although it was still in its infancy, “we already see a lot of areas to create value.” The company plans to improve product circulation efficiency through technology and help bring more agricultural research products to the market.

Internet giants have a medium-term strategy for the industry, editor Gao says. He explains that their logic and market plans are relatively certain for the next five to ten years, although the measures firms plan to take differ according to the product, service, and capabilities of each company. “In general, they follow their core industry and engage in a moderate extension of the industrial chain.”

Gao thinks internet companies have “three main advantages,” based on his interactions with Alibaba, Tencent, JD, Pinduoduo and other firms making agriculture moves. First, organizational management. As a talent-intensive industry, organization, goal achievement, and execution are much better than in traditional agricultural companies. Second, most internet companies have user numbers in the billions when combining their various products, as well as the technology to solve complex problems. With more understanding of traditional agriculture, these large companies will make for powerful players in the sector. Third, they have the resources — brands, traffic, channels, and capital — that can be leveraged to agriculture’s advantage when needed.

Pinduoduo is one of the most heavily invested and committed internet companies in the agricultural field. This is demonstrated by chairman and CEO Chen Lei’s focus when answering questions at finance meetings. He constantly reminds observers that agriculture is a major part of the platform’s long-term strategy. Some foreign investors already see Pinduoduo as an agriculture-tech enterprise. As for Alibaba and JD.com, their investment in agriculture is in the balance, along with social responsibility issues such as supporting the real economy and carbon neutrality.

Technology companies that get involved in agriculture tend to set up similar initiatives. They help with e-commerce, empower supply chains, engage in technological research and development, and carry out personnel training. As they delve deeper into the agricultural industry chain, they work more extensively with local governments, agricultural universities, and international food and agriculture organizations.

In addition, companies have distinctive projects based on their own business advantages, such as Pinduoduo’s new brand plan, Alibaba’s Red Soil Plan, Douyin’s Rich Domain Plan, and JD.com’s March to Rich Plan.

JD.com launched its March to Rich Plan in October 2020, with the aim of establishing a modernized circulation system with a smart supply chain, to encourage high-quality agricultural products and upgrade consumption habits. The plan vowed to drive RMB 1 trillion output value in rural areas in China in three years. As of August 2022, more than RMB 620 billion worth of goods were sold. Millions of farmers benefited as their income shot up. The plan even developed brands in cooperation with local authorities. For example, JD worked with the local government in Suqian in eastern China’s Jiangsu province to incubate the Suqian king crab brand, which was featured on the annual Spring Festival Gala TV show, becoming an overnight hit.

Known for its low prices, Pinduoduo is now also getting a name in agriculture. It reaches deep into the source of the agricultural supply chain, helping sell more agricultural products, while meeting consumer needs. Moreover, it has gotten investors interested. Pinduoduo launched its new brand plan in 2018 to help small companies meet demand via the platform at low cost. Pinduoduo also helped cultivate new brands in step with producers. The company has said it will carry on with this model, expanding to more regions, and incubating up to 500 brands across the agricultural supply chain.

In May 2021, Alibaba upgraded its poverty relief fund to the Red Soil Plan for revitalizing rural areas in terms of technology, industry, and talent. In its 2021 ESG Report, Chairman and CEO Daniel Zhang explained how Alibaba’s investment and exploration would help rural development. Talent development and capacity building were to be a core focus. Alibaba planned to station senior digital managers across the countryside, relieving “pain points” that restricted local development by linking local needs with company resources in a way that “reflects our in-depth thinking and full preparation for the complexity and long-term nature of rural revitalization.”

One expert from Wageningen University, who declined to use their name on the record, explained how they saw the role of agricultural talent in rural revitalization and how China differed from foreign agricultural economies. “When studying in the Netherlands, the most impressive thing to me was the number and quality of farmers. They came to study techniques to solve industrial problems related to their family’s greenhouse, for example.”

Digitizing farming

China’s internet giants are exploring ways to use the platform mindset to change traditional models and enter the upstream of the agricultural industry chain, participating in agricultural production and operations, quality control, and the supply chain. Professor Li Ganghua believes that companies entering the agricultural domain each have their own advantages. “The more assets a company has, the more willing it is to participate from production onwards, so that product quality can be better controlled.”

Organized by China Agricultural University and Pinduoduo, the Duoduo Smart Agriculture Competition has benefited from the guidance of the United Nations Food and Agriculture Organization (FAO). The competition gives young researchers a platform to showcase their talents and improve standardization and digitization in the agricultural process. Similarly, Tencent and Wageningen University launched an Autonomous Greenhouses International Challenge, in which teams use AI and Internet of Things (IoT) technology to plant cherry tomatoes remotely.

The unnamed Wageningen University expert focuses on crop growth models and greenhouse automation. They said “the interest of internet companies lies in digital agriculture or unmanned cultivation. Essentially, it is to use machines to farm, make and implement decisions. External companies can empower agricultural practitioners in training machine learning and big data analysis.”

Alibaba’s digital agriculture initiatives have focused on plant cultivation. In 2019, Alibaba integrated the agricultural units of Taobao, Tmall, Hema, Cainiao, and Alibaba Cloud to establish a Digital Agriculture Division. In 2020, it released a Digital Rural Operating System. According to the Alibaba 2022 ESG Report, together with the Chinese Academy of Agricultural Sciences Institute of Crop Sciences (ICS), Alibaba launched a 3T Smart Cultivation platform, digitizing the cultivation process.

Gao Kangping points to digital farming as the most advanced field for agricultural innovation, with smart cultivation and management having reached all parts of the process, giving rise to many applications and best practices. Data collection and processing were two pain points. The application of agricultural sensors and IoT applications remains low, so it is hard to collect systematic, high-quality data. The second area needing improvement is data application and business modeling. Digital agriculture has the most value when applied to reducing costs and increasing efficiency, but this is difficult to quantify, resulting in a lack of stable models and sustainable profitability.

Baidu will launch its first electric vehicle model using its new conversational artificial intelligence (AI) technology, with the intention of providing a ChatGPT-like experience that enables natural conversation between owners and their vehicles, an executive from the company said on Tuesday.

Why it matters: This is the latest move by the Chinese technology giant to improve its core search engine business and drive widespread adoption of AI for a range of uses.

Details: Jidu Auto, the electric vehicle arm of Baidu, will be the first company to adopt AI technology at this level of sophistication for smart EVs, chief executive Xia Yiping told reporters at a corporate event in Beijing on Tuesday.

• Xia reaffirmed the company’s plan to deliver its first production model, the Robo-01 sports utility vehicle (SUV), in the third quarter of 2023 with a “very competitive” price tag (our translation).
• Launched in October, the crossover can travel around 600 kilometers (373 miles) on a single charge, as TechNode previously reported. Pricing details have so far only been revealed for a special edition version of the vehicle, which will start from RMB 399,800 ($55,245).
• Xia said he was optimistic about the company’s sales growth in light of Tesla’s significant price cuts, adding that the sudden move reflected the US automaker’s waning competitiveness in the Chinese market.

READ MORE: Baidu’s EV firm Jidu aims to take on Tesla

Context: Baidu said on Feb. 7 that it has been pushing internal testing of its ChatGPT-like chatbot tool called ERNIE Bot, or Wenxin Yiyan, and intends for it to make a public debut next month.

• OpenAI’s ChatGPT bot has sparked a craze in the Chinese internet space, prompting dozens of Chinese tech companies, including Alibaba, NetEase, and JD.com, to announce their own AI chatbots over the past month.
• Media outlets and traditional businesses are also lining up to incorporate the latest AI technology into their services. Trip.com Group, China’s biggest travel services provider, announced today it is among the first batch of partners listed to integrate Baidu’s chatbot technology into its service platform.

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

Nio Capital plans to incubate a separate brand called Zhixing (our translation) that focuses on making luxury off-road EVs and could launch its first model at a price of around RMB 1 million ($150,000) in 2025, local media outlet LatePost reported.

Why it matters: The move could help Nio to enter a more expensive segment and extend its market reach by managing a growing portfolio of targeted brands. The Chinese electric vehicle maker already has a strong reputation among China’s upper middle class. 

Details: Zhixing, an EV startup formed in early 2022, will raise a seed round of “dozens of millions of dollars” from Nio Capital, a venture capital firm founded by William Li, chief executive of the namesake automaker, LatePost reported on Monday citing unnamed sources.

• Zhixing will target affluent, adventurous Chinese customers with luxury off-road electric vehicles, planning to launch its first model at home and internationally in 2025. The sports utility vehicle will be priced at around RMB 1 million and built on the third generation of Nio’s NT platform, the report said.
• Zhixing will also collaborate with Nio for supply chain and charging infrastructure. The partnership could help the firm save a significant amount on development costs. 
• The vehicles will feature an 800-volt battery system for ultra-fast charging and a swappable battery pack to access Nio’s recharging network.
• Founded by Zhao Lei, a former senior director of user experience operation at Li Auto, Zhixing is establishing teams across China, Europe, and America. It has hired Roger Malkusson, a former vice president of vehicle engineering at Nio, as head of Europe.
• On Sept. 27, Zhao officially set up Zhixing (Beijing) Information Technology Co., Ltd. with registered capital of RMB 100 million, according to the Chinese corporate information platform Tianyancha.
• Representatives of Nio and Nio Capital declined to comment when contacted by TechNode on Tuesday. Malkusson did not respond to TechNode’s request for comment.

Context: Experts say that there remains strong demand from wealthy individuals for luxury EVs in the coming years despite broader economic challenges, with several Chinese automakers venturing into the booming segment. Luxury cars priced above $80,000 will expand at a compound annual growth rate of 8% to 14% through 2031, while the markets for cars priced below $80,000 could remain relatively flat from a global standpoint, McKinsey & Company said in a report on July 8.

• BYD has made a similar move by showcasing its first two luxury car models under its new Yangwang brand on Jan. 5 and will open separate showrooms for the brand in several Chinese cities in the first quarter. GAC also said its first sports car under the Hyper marque will have a starting price of RMB 1.29 million.
• Geely completed its majority acquisition of the British sports car brand Lotus in 2017. Last October, the carmaker launched its first electric SUV, the Eletre, with a starting price of RMB 828,000. Nio Capital also has a minority stake in Lotus.
• Nio is also entering the affordable EV segment with plans to launch two sub-brands to target more price-sensitive buyers with a budget under RMB 300,000, while Nio’s namesake brand sits in the middle with a price category between RMB 300,000 and RMB 500,000.

Although billions of dollars have been spent on pursuing breakthroughs in electric vehicle batteries, global automakers General Motors, Hyundai, and Honda believe there is still a long way to go to bring next-generation battery technologies to the market.

Speaking on Dec. 14 during an online conference held by SES, a New York-listed battery maker, executives from the world’s major automakers said they are still looking for a pathway to scaling lithium-metal batteries, which could offer higher energy density at a lower weight than existing batteries.

Backed by a list of big auto names that includes GM, Hyundai, and Honda, SES now expects its lithium-metal batteries to be mass-adopted first in drones for freight delivery services over the next three years, according to chief executive Hu Qichao. He added that the company would not introduce EV batteries until after 2025.

Lithium-metal batteries have pure metal lithium in the anode and come without the carbon materials that existing lithium-ion batteries use. Their adoption could allow automakers to develop EVs with a longer driving range and more cabin space.

Industry players are also racing to develop solid-state batteries with a lithium-metal anode, which has a solid electrolyte to enable charging and discharging and is viewed as being safer than those currently in use. SES’s products use liquid materials like today’s lithium-ion batteries and therefore have been considered “a bridge” between existing offerings and solid-state ones.

Other than the challenges in commercializing the newest battery technologies, representatives from the three automakers, SES, Canadian mining group Ivanhoe Mines, and Chinese lithium producer Tianqi Lithium talked about the ongoing US push for supply-chain decoupling from China at the Dec. 14 event.

The text below has been condensed and edited for clarity.

Timothy Grewe, director of electrification strategy, General Motors

We’re very excited about the lithium-metal battery and accelerating it into the marketplace. General Motors has a dedicated EV architecture that we call Ultium, and we specifically designed it to accept this new technology with minimum disruption in the manufacturing process. 

We’re aggressively pursuing this technology and trying to accelerate it as fast as possible. We think we’ve proven the durability of SES’s battery samples with 150,000 miles demonstrated in the lab. The next step is: “How do we get it into people’s hands?”

As we expand into this light-duty, high-volume application, there’s going to be a natural localization. That’s true for anything that we do in a high-volume automotive business. And now we have some of these accelerants, such as the Inflation Reduction Act or some of the other moves by the miners to make the supply chain more local where people use products and we can develop the whole ecosystem.

One of the most important things in high-volume manufacturing is always securing a stable supply. That’s always high value to us and fundamental in our business model. How do we make sure we never get a production interruption? We have numerous processes and contracts to make sure that happens.

Yongjun Jang, global R&D master, Hyundai

To make a battery with higher energy density, lithium metal could be the next-generation material for the anode, and there are two different pathways within it: the liquid approach and the solid-state approach.

Lithium-metal batteries use high-concentrated liquid electrolytes, so it is necessary to induce stable redox reactions to prevent excessive depletion of the liquid electrolyte and the lithium-metal anode at the interface. On the other hand, all-solid-state batteries use solid electrolytes, and it is necessary for solid electrolytes to maintain continuous close contact with lithium metal and prevent short circuits of the battery.

For these reasons, both electrolytes are important factors in determining the long-term durability of higher energy density batteries. It becomes even more sensitive and important in large-format batteries than in smaller ones. We should solve these issues before the commercialization of these new batteries.

SES is developing lithium-metal battery technology rapidly with the manufacturing completeness of large-format, 50Ah high energy density battery cells. If the long-term stability of the battery is secured by applying artificial intelligence technology, it will greatly help automotive companies.

Yoshiya Joshua Fujiwara, expert engineer, Honda

Honda focuses on safe, reliable, and low-cost technology, such as all-solid-state battery technology with lithium-metal anode. We think that’s the holy grail of low-cost battery technology due to its high energy density. We hope to realize commercialization within this decade, before 2030.

The approach SES is making is a more hybrid-based, lithium-ion-like manufacturing process. Honda is working on both technologies simultaneously. We don’t know which one is a cheaper way at the moment, but all-solid-state technology is new compared with what SES is utilizing.

Localization is one of our principles. We have been operating facilities and building supply chains locally in the US since the beginning of the last century. Honda will do the same for electric vehicles, and we are focusing on the US and China, the two major markets where we need to establish our supply chain individually. In particular, it is urgent for us to establish a supply chain in North America due to the Inflation Reduction Act. We believe it is important for us to control and integrate our supply chain locally.

Alice Lei, senior analyst, Tianqi Lithium

As an upstream player in the battery supply chain, Tianqi focuses a lot on lithium-related material innovations, such as lithium sulfur and lithium metal. That’s why we invested in SES, as we are trying to work with downstream battery cell makers to ensure we know what kind of lithium materials they want. We are quite excited about introducing new battery technologies to the market, but it will take a lot of courage and time to commercialize a disruptive technology like full solid-state battery.

We believe that the globalized battery supply chain that has been built in the past decade will probably be changed to be more localized in the next few decades. The Inflation Reduction Act has clarified that most of the critical minerals and materials could be produced in the US and we think it’s a trend that Europe will probably have its own battery act in the future. Therefore, it is important to choose our next location of expansion to comply with the trend and deal with geopolitical tensions.

Hu Qichao, founder and CEO, SES

Regarding ramping up the supply chain for new technology, our lithium-metal battery shares a lot of the supply chain with the current lithium-ion batteries, such as the cathode and manufacturing process. However, there are different parts and the current supply chain for lithium anodes is very fragmented and insufficient.

So we are working with partners to make the process, from mining to the final anode, as simple, streamlined, optimized, and with as few players involved as possible. I think that could be a really key factor to ramp up the supply chain for lithium-metal batteries. 

On geopolitical issues, we do recognize this manufacturing renaissance in North America where there is a lot of potential for battery manufacturing: abundant raw materials, fairly low-cost electricity, and access to well-trained labor and high technology. So we are preparing to build this entire supply chain in North America, for example, electrolyte, anode, and battery cell. This trend offers a lot of opportunities.

Robert Friedland, founder and executive co-chairman, Ivanhoe Mines

Every action begets an equal and opposite counterreaction. When you Balkanize the world economy, you stress the integrated world economy on the supply side. That means the critical raw materials we need to enable this energy revolution become even more important and that’s why we call this the revenge of the miners.

We’ve identified very important lithium resources in the US that can produce lithium metal quickly and efficiently. We’ve been looking at new ways to make lithium metal foil and the types of deposits that will enable us to actually do that. All of these instruments will be part of the orchestra that’s required for the US to have its own secure domestic supply chain for new battery technologies.

Lithium metal has the highest energy density on the anode side of the battery. So we will be a very low-cost lithium-metal producer and solve part of that problem. For the copper, nickel, and cobalt, that’s what we’ve been doing for the past decades. We intend to ensure that the entire supply chain can be audited, carefully studied, and done in a better and more responsible way.

Chery, a Chinese automaker and a manufacturing partner of Jaguar’s Land Rover, will launch a new electric vehicle brand in March in the hope of getting a slice of the country’s growing premium EV segment, local media reported.

Why it matters: State-owned Chery is the latest automaker to partner with Huawei for an electric car manufacturing project, following similar moves by BAIC, Changan, and GAC. The new brand could give it the potential to challenge market leaders and help Huawei expand its in-car reach.

Details: The EV-only brand will target high-end car segments and will have a similar relationship to parent Chery as Zeekr has to Geely, sources told Chinese trade media Yiche on Monday.

• Chery plans to build the first two models, including a sports sedan and a large-size crossover, based on its new EV platform E0X and use Huawei’s in-car software and Qualcomm’s 8295 processor, the report said.
• Scheduled to debut in March and for delivery by the end of 2023, the new models will have a driving range of at least 700 kilometers (435 miles) on a single charge and be powered by CATL’s latest “Qilin” battery pack, financial media outlet Caixin reported, citing people familiar with the matter.
• The vehicles will also utilize artificial intelligence chips from Horizon Robotics, which allow users to access advanced driver assistance capabilities such as automatic lane switching on Chinese highways. Chery is an investor in Horizon, alongside Volkswagen and its partner SAIC.

Context: In September, Chery announced plans to make EVs in collaboration with Huawei under the latter’s Zhixuan (“smart choice”) model, by which the smartphone giant not only supplies key components but also allows partners to sell EVs through its retail sales channels. The companies said that one of the first two models would be priced above RMB 300,000 ($42,944).

• Last week, Huawei and Chery also revealed respective partnerships with battery giant CATL, making this a three-way partnership, similar to that between Huawei, CATL, and Changan for the launch of premium EV brand Avatr last November.
• Huawei and Seres, a smaller manufacturing partner, have made impressive sales gains with deliveries of more than 66,000 Aito-branded EVs in the nine months that ended in November. The two companies plan to launch their third production model late next year, Chinese media LatePost reported Tuesday.
• Known as a brand of budget cars, Chery reported sales of more than 221,000 new energy vehicles, mainly all-electrics and plug-in hybrids, for the first 11 months of this year. This represented a 148% year-on-year increase and accounted for around 20% of its total sales.

Chinese battery makers Svolt, Sunwoda, and Ganfeng are rushing to raise funds as prices for key raw material lithium more than double in a year. The country’s regulators are also rolling out a set of new measures in the electric vehicle battery market, including a crackdown on illegal hoarding, as high lithium prices have threatened the profit margins of automakers and could further slow EV adoption in the country.

Why it matters: The spot price of battery-grade lithium carbonate was up 201% in a year, rising RMB 200,000 per ton to RMB 590,000, according to Nov. 11 figures from the metal research institute Shanghai Metals Market. 

• Analysts said supply and demand have been imbalanced thanks to booming EV sales since 2021. Meanwhile, an output cut of lithium salts due to weather issues in China’s northwestern Qinghai province, as well as advanced orders for next year from battery and material producers, are among the short-term reasons for the skyrocketing lithium prices.
• An enormous increase in lithium prices over the past few months could also create long-term structural problems such as industrial overcapacity, as companies from battery makers to lithium producers rush to raise cash for manufacturing capacity expansion.

Funding rush: Svolt, Sunwoda, and Ganfeng are among the Chinese battery makers and material suppliers rushing to raise cash as wider EV adoptions open a window of opportunity to sell bonds and shares.

• Svolt, a battery maker backed by BMW’s manufacturing partner Great Wall Motor, filed for an initial public offering on Nov. 18 in the mainland market to fund the construction of three plants with a combined annual capacity of 106.65 gigawatt-hours (GWh) of batteries.
• On Nov. 14, Shenzhen-listed Sunwoda completed a share sale in Switzerland, raising $450 million, months after Volkswagen-backed Gotion raised $685 million on the Swiss exchange. A supplier to Xpeng Motors, Sunwoda is building two facilities with a capacity of 80 GWh of batteries annually, an investment of RMB 33.3 billion (nearly $4.7 billion).
• Ganfeng Lithium plans to spin off its mining subsidiary, Ganfeng LiEnergy, for a possible listing on the Shenzhen stock exchange, according to a security filing published on Wednesday. In August, China’s biggest lithium compounds producer announced a partnership with state-owned automaker GAC for raw material supply and joint development in battery technologies.

New rules: In a document released publicly on Nov. 18, two Chinese government agencies — the Ministry of Industry and Information Technology and the State Administration for Market Regulation — asked local regulators to do more in their crackdown on illegal acts such as hoarding and price-gouging of battery raw materials.

• The two agencies also jointly urged regional authorities to break down local protectionism, build an open, fair, unified national lithium-ion battery market, and help businesses to address supply chain problems.
• The central government also voiced concern about “blind development” in battery manufacturing, calling on battery makers and material producers to expand their production capacity “in a scientific and orderly manner” under the supervision of local governments (our translation).

Slimming margins: Rising costs for battery raw materials have hurt the profitability of Chinese EV makers. Nio’s vehicle profit margin declined from 18.1% to 16.4% over three consecutive quarters this year. Meanwhile, the number for Xpeng Motors fell from 12.2% to 9.1% in the first half of 2022.

• Speaking to analysts during an earnings call on Nov. 10, Nio’s chief executive William Li expected the company’s vehicle margin to remain relatively stable in the current quarter, adding that an increase of RMB 100,000 in lithium carbonate would cut its car margin by 2%.

Major Chinese phone vendor Vivo launched its flagship series X90 on Tuesday for the home market, partnering with optical giant Zeiss for camera sensor and lenses.

Why it matters: The phone came with a 1-inch camera sensor, the latest phone vendor to do so since Sony introduced the new 1-inch CMOS camera sensor. Sharp and Xiaomi also adopted the large camera sensor in their high-end phones earlier this year. Phone makers are embracing this new trend of beefing up camera functions, indirectly replacing entry-level compact cameras.

• X90 is the first phone series available with the latest high-end processor from Qualcomm and MediaTek.
• Vivo aligned its in-house imaging processing chip with the new V2 chip, which can work together with MediaTek’s latest chipset – Dimensity 9200.

Details: The X90 series contains three models: X90 Pro+ with Qualcomm’s flagship processor Snapdragon 8 Gen 2; X90 and X90 Pro with MediaTek’s high-end processor Dimensity 9200. Available in three colors, the series is priced between RMB 3,699 to RMB 6,999 ($517 to $979).

• For X90 and X90 Pro, Vivo introduced five major technology offerings to better utilize MediaTek’s chipset, including improving CPU performance, network connectivity, and power efficiency. It also features adaptive gaming frames for the popular Chinese mobile game Honor of Kings for the first time.
• The three models all have a 6.78-inch display with a 120 Hz refresh rate. X90 and X90 Pro are equipped with BOE displays, which are made of the new Q9 illuminating components, with 20% higher peak brightness (up to 1300 nits) and 15% less power consumption, according to BOE. The Pro+ model has a display that can reach a peak brightness of 1800 nits.
• X90 and X90 Pro come with a 4810 mAh and 4870 mAh battery, separately. Both support 120 W speed charge tech. X90 Pro+ has a 4700 mAh battery, with an 80 W charging speed. Except for X90, the other two models support wireless charging with a wattage of 50 W, it also supports reverse charging for other devices.
• For the camera system, X90 Pro+ has a qual-camera combo from 14 mm to 90 mm. X90 and X90 Pro come with a triple-camera combo, lacking the 90 mm lens. For the primary back camera, Pro and Pro+ models have Sony IMX989, a 1-inch COMS sensor. The series also features a Zeiss T* lens coat for better image quality at the optical level.
• The series is open for preorders, providing up to 12 GB RAM and 512 GB storage volume. 

Context: Vivo took 9% of the global smartphone market in the second quarter of 2022 ranking fifth after Oppo, according to Counterpoint Research.

• Vivo is celebrating its 10th anniversary of the X series, which focuses on camera and imaging tech, according to its website.
• The firm claimed that it had served over 400 million users globally till August this year.

Bosch said on Monday it is co-developing a new generation of its advanced driver assistance system (ADAS) with Chinese self-driving car company WeRide, aiming for delivery in late 2023. The system has also secured the first pilot customer, which the German auto parts maker has yet to disclose. 

Why it matters: This is the latest example of German auto firms strengthening their in-car software offerings in the face of competition from Tesla and local peers like Huawei. 

Partnership with WeRide: Delivery of Bosch’s advanced driving technology is scheduled for late 2023 to an undisclosed Chinese car manufacturer. The tech will be similar to Tesla’s Autopilot system and enable cars to operate on both Chinese motorways and busy urban streets.

• The two companies hope to secure two to three new clients by that time. Engineers are currently training and fine-tuning the automated driving algorithms running on production cars, Zheng Xinfen, a senior vice president of Bosch China, told reporters during a media event on Monday.
• Bosch revealed its investment into WeRide in May when Tony Han, chief executive of the autonomous vehicle unicorn, told Chinese media that the collaboration would be the largest of its kind in terms of order volume in China.

An indispensable market: China has been leading the world in electric vehicle adoption and in-car technology development, said Xu Daquan, executive vice president of Bosch China, citing examples such as strong demand from local customers for automated driving software.

• Xu noted that the auto parts maker has been facing urgent requests from local clients to deliver products as quickly as six months as a result of the rising consumer preference. “Accordingly, it makes sense for us to localize research and development with partners to meet the trend.”
• Xu added that German Chancellor Olaf Scholz’s recent trip to Beijing reflected the stance of German industries on business relations with China. “China is such a big market, and it’s vibrant. In that sense decoupling from China should not be a pursuit of German businesses.”

Cash-burning competition: Looking to generate revenue from intelligent and connected car services, industry players have placed their cash on future areas such as autonomous driving and digitalization.

• In April, Volkswagen opened a China subsidiary of its standalone software unit, Cariad, as the German automaker looks to develop products tailored for local customers. This was followed by a $2.3 billion investment to set up a joint venture with Chinese auto tech unicorn Horizon Robotics a few months later. Cariad recorded 978 million euros (roughly $1 billion) in losses for the first half of 2022.
• US-listed Chinese EV trio Nio, Xpeng Motors, and Li Auto favor an in-house strategy. On Friday, Nio’s CEO William Li told analysts that he expected the company’s research and development expenses to remain steady at around RMB 3 billion ($430 million) each quarter, with no significant contribution from automated driving software to its gross margin.
• Huawei has partnered with state-owned automakers BAIC and Changan in automotive software, in addition to selling EVs with automaker Seres. Meanwhile, big automakers SAIC and General Motors have turned to Chinese startup Momenta for partial automation technology.
• Volkswagen in January announced a partnership with Bosch to develop automated driving software and use them on its vehicles since 2023, Reuters reported. Speaking to analysts during an earnings call on Oct. 28, Volkswagen’s CEO Oliver Blume said the partnership with Bosch will be “more for the Western world.”

Foxconn’s facilities in the Chinese city of Zhengzhou have made headlines around the world in recent weeks, as Covid outbreaks and control policies have hit the world’s largest iPhone assembly line. The city recorded 1,043 new Covid-19 cases on Tuesday, according to public data revealed by the local government, and at the time of writing, much of Foxconn’s operations in the city remain under strict control. The disruption has led many to predict stock shortages and longer delivery times for iPhone models in the near future.

Foxconn is Apple’s biggest iPhone assembler, accounting for 70% of global iPhone shipments. iPhone production accounts for 45% of Foxconn’s revenue, according to analysts from Fubon Research.

The affected Foxconn plant has 200,000 workers, and more than 10% of global iPhone production capacity is currently impacted by the Zhengzhou Covid outbreak, according to Ming-Chi Kuo, an analyst for TF International Securities.

The incident could be the catalyst that pushes Apple to move more production from mainland China to other regions such as India to reduce uncertainty and supply line dependency. According to Kuo, Foxconn will speed up its expansion of production capacity in India for the iPhone in the wake of the Zhengzhou Foxconn lockdown. He predicted that India-produced iPhones will increase more than 150% yearly in 2023 and that the share of global iPhone production in the country will increase sharply, from 2%-4% to 40%-45% in the next few years.

Below, TechNode summarizes the primary moments surrounding the Zhengzhou Foxconn lockdown since late October.

Oct. 26 – Covid cases detected at Zhengzhou Foxconn

• iPhone assembler Foxconn reportedly recorded Covid-19 cases at its assembly plant in Zhengzhou, its largest facility in mainland China.
• Foxconn confirmed the cases but claimed that production was still stable in an announcement released on Oct. 26.
• The announcement also noted that “Foxconn, in compliance with local epidemic prevention policies, is providing the necessary guarantees for livelihoods, including material supplies, psychological comfort, and responsive feedback.”

Oct. 28 – Closed-loop policy enacted as workers flee

• The Foxconn facility in Zhengzhou affected by the Covid outbreak began using a “closed-loop” system, only allowing workers to move between factories and dormitories and not allowing them to leave the site, according to an announcement on Oct. 28.
• Short videos purporting to show Foxconn workers bypassing security and Covid checks to climb out of the Foxconn facility went viral on Chinese social media.

Oct. 30 – Local government responds; analyst projects decline in iPhone production

• The Zhengzhou government released an announcement saying that the pandemic in the Foxconn facility was controllable as there were no cases with severe symptoms.
• The local government also stated that they would offer assistance with transporting workers who wished to return home.
• “More than 10% of global iPhone production capacity is currently affected as Foxconn’s Zhengzhou iPhone plants suddenly entered closed-loop production without warning,” wrote Ming-Chi Kuo, an analyst for TF International Securities.
• He added that the accident would have a limited impact on iPhone shipments for the fourth quarter of 2022, as the facility’s production capacity could gradually recover in the coming weeks.

Nov. 1 – Foxconn increases salaries to steady production

• Zhengzhou Foxconn announced that they would raise daily salaries from RMB 100 to RMB 400 (from $13.8 to $55.21) in November.
• The firm also adjusted its attendance award scheme from RMB 1,500 for 13 accumulated working days to RMB 5,000 for 25 accumulated working days.

Nov. 3 – Zhengzhou government forms unit to help Foxconn workers

• The Zhengzhou municipal government held a press conference on Nov. 3, saying they had formed a unit to enter the affected Foxconn facility to assist with Covid prevention work.
• A senior official from the local government stated at the conference that Foxconn was still operating normally.

Nov. 6 – Apple warns of iPhone production decline 

• Apple released a statement on Nov. 6, warning that its iPhone 14 Pro and Pro Max would see a production drop due to the Covid restrictions in Zhengzhou.
• The statement noted that the facility was “currently operating at significantly reduced capacity.” 
• Apple projected ongoing strong demand for the two Pro models, which led the company to warn that there would be longer delivery times for consumers.

Nov. 7 – Foxconn hires hourly paid workers

• In an attempt to revive production, Foxconn started to hire hourly paid workers on Nov. 7, with an hourly salary of RMB 30.
• The firm also encouraged former employees to come back with an extra subsidy of RMB 500.
• A source from Foxconn told Caixin that the Zhengzhou outbreak is expected to be controlled after this week, and Foxconn is preparing to return to full production later this month.

Singles Day, China’s biggest year-end shopping event, kicked off its pre-sale period across platforms on Monday. Sales data from e-commerce giant JD, a platform known for consumer electronic offerings, showed sizable growth in consumer electronic sales.

Why it matters: Although JD’s sales data showed growth, the data still suggests some cause for cautious optimism as the platform only revealed the percentage change in sales – not the exact number of units sold. This year’s Singles Day comes amid a backdrop of a global slowdown in consumer electronics due to weak demand, especially for smartphones and PCs. Brands are hoping that the mega e-commerce event can offset some of the losses in recent months. 

Details: Within the first second of Monday’s shopping event, smartphone sales from Apple, Xiaomi, Honor, and iQOO hit RMB 100 million ($13.76 million) cumulatively on JD, according to data from the platform. Oppo, Vivo, Samsung, OnePlus, Motorola, and Meizu saw 100% growth in sales in the first ten minutes compared with the same period last year. Foldable phones also had a 400% yearly growth in sales within the first ten minutes of the promotion. High-end gaming laptops equipped with a display with over 2k resolution and ultra-light laptops saw smaller 70% yearly growth in sales within the first ten minutes.

• These figures include both pre-booked purchases and real-time ones. 
• Meanwhile, sales of XR glasses were up eight times over the same period last year. 
• Nvidia’s newly released RTX 40 series graphics cards made by original equipment manufacturers (OEMs) sold out in the first three seconds on JD. The cards are built with new Ada Lovelace Architecture, which Nvidia says is two times better than the last generation on a range of critical specs.
• Other devices like compact printers and portable power generators also witnessed significant growth, rising 165% and 2,000% year-on-year, respectively.
• Home appliances from all brands achieved RMB 1 billion in sales within the first ten minutes of the sales event, a 40% year-on-year growth on JD. Midea, Haier, TCL, LittleSwan, Gree, Hisense, Rongsheng, and Sony all saw a 50% yearly growth in sales.

Context: Major e-commerce giants Alibaba and JD have started their yearly Singles Day shopping event with a major promotion of RMB 50 discounts for every RMB 300 spent.

• For last year’s Singles Day, JD and Alibaba’s Tmall accounted for 92.15% of the total GMV generated, according to BBC, quoting the e-commerce data platform Dianshubao.
• Last year, on the first day of Singles Day pre-sales, the high-end smartphone sales of Xiaomi, iQOO, Oppo, Honor, Huawei, and Vivo were four times those made during the same period in 2020, according to a report by Huaan Securities.

South Korean memory chip maker SK Hynix reported less promising than expected quarterly results on Oct. 25, with net profits dropping 67% year-on-year in the third quarter of 2022. Comments from a senior executive during a subsequent earnings call demonstrated concern for the firm’s business in China.

Why it matters: US authorities issued new export controls on Oct. 7, aiming to limit China’s semiconductor industry, measures that have had a ripple effect on international firms like SK Hynix operating plants in mainland China.

• SK Hynix’s factory in Wuxi comprises 13% of the global DRAM production capacity, according to an October report from Taiwanese consultancy TrendForce.

Details: On a Tuesday earnings call, Kevin Noh, chief marketing officer at SK Hynix, expressed concern over the firm’s plants in China and said the company could “face difficulties” in operating fabrication plants in the country when the one-year exemption from US restrictions authorized by the American Department of Commerce comes to an end.

• Noh indicated that SK Hynix could have difficulty equipping cutting-edge extreme ultraviolet lithography (EUV) for its fab in Wuxi. 
• One extreme outcome, Noh suggested, would be the possibility that the firm has to sell its China-based equipment or ship it back to South Korea.
• However, he also said that the firm doesn’t expect major disruption at the plant until the late 2020s unless the US refuses to extend its exemptions for shipping chipmaking equipment to Chinese plants.
• SK Hynix claimed that its plants in mainland China are in operation “without issue” and it hopes their operation will continue, according to a statement the firm sent to Chinese media outlet Caixin on Wednesday.
• The statement also said that “comments on the possible transfer of the Chinese facilities are based on extreme cases with low possibilities” and that it hasn’t “reviewed such options in detail and seriously.”

Context: China is an important market for SK Hynix. It had invested more than $20.3 billion in Wuxi by the end of 2020, and the firm has four factories and seven offices in China, according to Caixin.

• In addition to SK Hynix, international primary memory chip makers such as Samsung and Intel also have fabrication plants in China. Samsung, for example, has two plants for NADA storage chips operating in Xi’an, contributing 42.5% of the firm’s production capacity and 15.3% of the world’s total, according to a report released in late 2021 by TrendForce.
• The US’ new chip export controls on China target a broad range of operations. For example, equipment for making 128 layers of NADA chips, 18nm DRAM chips, and 14nm logic chips or more advanced chips can not be shipped to plants in mainland China under the new restrictions without a license from the American Department of Commerce.

Since the US issued one of the broadest export controls on semiconductor technology to China in a decade last Friday, China’s semiconductor industry has seen its market value tumble for days in a row. At least 13 China-listed semiconductor firms saw market value decline more than 10% since Monday, 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. Those technologies are essential to supercomputing and artificial intelligence. 

The Biden Administration cites China’s advances in military systems as part of the reasons for the measure. In mid-September, US National Security Advisor Jake Sullivan emphasized the importance of “preserving our edge in science and technology” at a speech and said the US must “maintain as large of a lead as possible” on certain technologies like “advanced logic and memory chips.”

A day after the US issued the restriction, China’s foreign ministry spokesperson Mao Ning said the measure “runs counter to the principle of fair competition and international trade rules” and “deal a blow to global industrial and supply chains and world economic recovery” at a press conference. China Semiconductor Industry Association (CSIA) made an announcement on Thursday, saying they are “troubled with applying the concept of national security and foreign policy interest to each action of the discriminating trade policy.”

To assess the immediate damage of the US’s measure, TechNode selected five Chinese semiconductor firms that took a major hit, including three chipmakers, a chip gear vendor, and a server provider.

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

Storage chip maker Yangtze Memory Technologies (YMTC)

• Major Chinese memory chip maker YMTC saw its essential US suppliers, KLA and Lam Research, withdrawing supporting units, according to the Wall Street Journal and Chinese media outlet Caixin. The two suppliers have paused support for the installed equipment, sources told Wall Street Journal.
• Applied Materials, a chipmaking equipment supplier of YMTC, which generated 27% of its sales from China in the second quarter of this year, said it was applying for export licenses.
• YMTC managed to ship 128-layer storage chips last year and just released more advanced chips this year that could be built with 232-layer tech, according to Chinese state media Global Times.
• Founded in 2016, YMTC is a state-owned firm with major funding from China’s semiconductor “Big Fund.”

Server vendor Sugon

• Sugon, a major Chinese high-performance computing servers vendor, has been on the US Entity List since 2019 and is one of the 28 entities affected by the new bans.
• Under the new ban, chips with a processing performance of 4,800 or above TOPS will be restricted. The firm has turned to AMD for authorized chips due to the previous CPU ban, which could be cut off by the new ban, according to a Wednesday report from TrendForce, a Taiwan-headquartered intelligence provider. The report also mentioned that major Korean memory chip providers Samsung and SK Hynix have stopped supplying to the firm, which is also important for machine learning.
• The firm’s history can be traced back to 1993, when its first computing system, Shuguang-1, came out. In 2019, the firm has launched servers with domestic Loongson chips in 2019. Its stock price has shrunk by 38.4% from the peak in August to its lowest point the day after the new bans were released, with stock price recovering slightly as of Tuesday.

Chip manufacturer SMIC 

• Semiconductor Manufacturing International Corporation (SMIC), a major Chinese chip maker, was previously banned from acquiring chipmaking tools for 14 nm or more advanced ones.
• The new measure now expanded the ban to 16 nm, a mature tech node, which could slow down SMIC’s strong growth.
• “SMIC’s revenue could grow at a 50% slower pace vs. our expectations in 2023 on the US’s stricter equipment export license requirements, as 48% of its new capacity to be installed by next year is in 28- or smaller nanometer node advanced chip manufacturing,” analyst Charles Shum told Bloomberg.
• The firm has seen a 10.8% stock price decline since Monday.

Memory maker CXMT

• ChangXin Memory Technologies (CXMT) is a major Chinese dynamic random-access memory (DRAM) maker that has shipped double data rate 4 (DDR4) chips built with 19 nm tech.
• The firm planned to make 17 nm DDR5 samples in the second quarter of this year, according to DigiTimes. Such a plan could be hobbled by the new measure, which bans export to Chinese facilities that make DRAM chips below 18 nm. As a result, CXMT may be unable to obtain new chipmaking tools.
• Similar to YMTC, CXMT is the “hope” of China’s memory chips as it managed to ship mid-end memory chips for devices like smartphones, watches, VR headsets, and servers, according to its product list.
• The firm’s stock saw over a 20% fall within a month. Since Monday, its stock price is down 9%.

Chipmaking equipment vendor AMEC

• Advanced Micro-Fabrication Equipment China (AMEC), a major equipment vendor for chipmaking, could also take a hit from the ban as it doesn’t allow “US persons” to support development or production.
• Gerald Yin, founding chairman and CEO of the firm, as well as many senior executives of the firm, are US citizens, according to Nikkei Asia. These people meet the ban criteria mentioned above and might need to leave the firm.
• AMEC’s stock prices have fallen by 26% since the release of the new bans.
• Founded in 2004 in Shanghai, AMEC has seen a focus in etch tech and shipped dielectric etch for producing 7 nm chips in 2016, according to its website.
• Another local rival, Naura, is also stuck in a similar situation, as the firm has informed US employees to stop taking part in component and machinery development, according to SCMP.

China’s electric vehicle market continued to trend upwards in September, with year-to-date sales already surpassing last year’s total of 3 million, according to the latest figures compiled by the China Passenger Car Association (CPCA). However, the growth rate of overall car sales in China hit its lowest point in the last two decades owing to an economic slowdown, the industry group said.

Why it matters: The industry-wide sales figures released Tuesday further indicate a broader recognition among Chinese consumers of locally-made EVs, as well as a rising trend of Chinese automakers growing their international business.

• Retail sales of new energy passenger vehicles, mostly all-electrics and plug-in hybrids, soared by 82.9% in a year to around 611,000 units in September, bringing the total sales number for this year to nearly 3.9 million units as of last month, according to CPCA.
• Meanwhile, the overall industry reported a monthly growth of only 2.8% in new passenger car sales in September, reaching its lowest level since 2002, as the pandemic hit some of the most populous provinces, such as Sichuan, weakening demand.

Details: Last month, domestic auto majors, such as BYD and Geely, enjoyed a 67% share collectively in the passenger car market, up 9.2% from a year earlier, while those numbers for both younger EV startups and Tesla declined to 14.6% and 12.7%, respectively. The share of the market for traditional overseas carmakers further narrowed by 3.3% from a year ago to only 5.7%, CPCA figures showed.

• BYD ranked top with an annual growth of 144.3% to reach more than 191,000 EVs last month, taking nearly 10% of China’s auto market. It was followed by FAW-Volkswagen and SAIC-Volkswagen (two joint ventures of the German carmaker) at 165,000 and 122,000 automobiles, respectively.
• Geely reported its September retail sales of passenger cars increased by 24.4%  from last year to around 109,000 units, followed by Changan at roughly 107,000 units. Zeekr, a premium EV unit of Volvo’s parent company, delivered 8,276 vehicles last month, up from 7,166 units a month earlier. Changan is set to begin delivery of its first car model under the Avatr marque with partner Huawei in December.
• Meanwhile, Tesla China achieved a new record by selling 83,135 vehicles, of which 5,522 were overseas exports, bringing the year-to-date number to 483,074. The US automaker has an annual capacity of over 750,000 vehicles at its Shanghai facility, according to its second-quarter financial report.
• Chinese EV startup Li Auto delivered 11,531 plug-in hybrid crossovers last month as production of its second model, the L9, began to ramp up. Nio recorded a monthly delivery of 10,878 vehicles, with its new crossover ES7 making it to customers since late August.
• However, the numbers for Xpeng Motors declined 18.7% year-on-year and 11.6% month-on-month to 8,468 units, as the EV maker faces stiff competition from bigger names such as BYD in the mainstream EV segment. The company also reduced the prices of its first premium crossover, the G9, just two days after launch.

Context: The CPCA has maintained its sales projection of 6.5 million new energy vehicles (NEV) this year, with EVs expected to make up 28% of the country’s new car sales. The central government previously set a sales target of 25% of all new car sales to be NEVs by 2025.

• Nearly 14.9 million passenger cars, including internal combustion engine vehicles and EVs, were handed over to customers from January to September, a bit higher than the 14.5 million units during the same period of last year.
• Speaking to reporters on Tuesday, Cui Dongshu, secretary general of the CPCA, said he expected China’s general car market to recover with “explosive growth” over the last two months of this year, buoyed by easing Covid restrictions and tax breaks for vehicle purchases.

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

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

These rules will be less strict on firms “owned by multinationals,” according to the file. Twenty-eight Chinese entities on the US’s Entity List are affected by the expanded rules, most of which are supercomputer institutions and AI firms. Some new rules take effect immediately, with others effective before Oct. 21.

The US’s Bureau of Industry and Security adds 31 new Chinese entities to an “Unverified List,” including major Chinese memory chip maker YMTC. Firms that tend to export or transit products listed on the Commerce Control List to China now have to ask permission from the US. Entities listed on the Unverified List are one step away from being added to the Entity List if they do not meet the US’s requirements within 60 days.

These new rules follow a months-long effort of the US trying to contain China’s ability to obtain advanced chips and chipmaking tools. Since July, the Biden administration has barred Chinese chipmaking firms from acquiring tools for 14 nm and more advanced chips, focusing heavily on central logic chips like CPUs and GPUs. Since August, the US has also considered broader restorations in fields such as memory chips as major Chinese chipmakers YMTC and SMIC continue to develop their own chips. 

Below, TechNode summarizes the key moments from the US’s attempts to hobble China’s semiconductor industry since July.

July 6 – Lithography machinery

• US authorities talked to their Dutch counterparts to ban the Netherlands-based chip equipment supplier ASML from selling older deep ultraviolet (DUV) lithography machinery to China (the equipment can be used to make chips as advanced as 5 nm), people familiar with the matter told Bloomberg.
• The US also pressured Japan to stop shipping lithography equipment to China, Bloomberg cites an unnamed source as saying.

July 30 – Tools to make 14 nm chips

• The US further restricted China’s access to chipmaking equipment, expanding from previous restrictions of tools that make 10 nm chips to those involved in producing 14 nm chips.
• Two primary semiconductor suppliers – Lam Research and KLA Corporation – said that the US Department of Commerce had notified them not to ship products to mainland China for making 14 nm or more advanced chip nodes.
• People familiar with the matter told Bloomberg that all US equipment makers had received notification of the ban in the past two weeks.

August 2 – Memory chips

• The US was considering containing Chinese memory chipmaker YMTC by banning exports of equipment to make storage chips with more than 128 layers, Reuters reported. 
• Unnamed sources from two leading US-based chip firms, Research Corp and Applied Materials, told Reuters that the ban could also affect other chipmakers like Samsung and SK Hynix, which operate factories in mainland China.
• According to the sources, discussions were still in the early stages, and no draft regulations have yet been filed.
• Layer number in storage chips is as essential a metric as logic chips’ build processes. YMTC managed to develop 128-layer storage chips in 2020 and put them into volume production a year later. 

August 12 – EDA software

• The US announced a new export ban on electronics design automation (EDA) software for China’s advanced chipmaking. 
• The ban specified that US firms should not provide EDA for 3 nm or more advanced chips to mainland China.
• The ban’s immediate effect on China was limited but might curb further development in the future, an analyst told Caixin.

August 31 – High-performance GPU chips

• US officials issued a new ban on the export of high-performance GPU chips to China, concerned at their apparent use by the Chinese military, according to GPU giant Nvidia’s SEC filing.
• Nvidia’s major rival AMD told Reuters that the firm has also been notified of the new ban and a computing card produced by the firm will be affected.

September 21 – Nvidia looked to bypass US ban, providing alternative GPU to China

• Major GPU maker Nvidia told Caixin and other media outlets that they will supply alternative GPU products with their latest Hopper architecture to Chinese clients, bypassing the US ban and ensuring the product can meet the new regulations.
• The firm claimed that the new alternatives can fulfill most of the needs in the Chinese market and that they will try to apply for a license from the US if Chinese clients need the banned products.

Gotion High-Tech, a Chinese electric vehicle battery supplier for Volkswagen and other big auto names, will build its first major American factory in Michigan as the company gears up to meet growing demand in the US.

Why it matters: The investment is a big boost for Michigan, a state heavily focused on the automotive industry,  and an encouraging signal following US president Biden’s executive order to pass the Inflation Reduction Act into law, which could make China-made EVs and components ineligible for federal tax credits.

• On Aug. 16, US president Joe Biden signed a $430 billion climate and energy bill, or the Inflation Reduction Act, into law which offers buyers up to $7,500 in tax credit for EVs with critical battery materials produced in the US.

Details: Gotion will build a $2.4 billion facility in Big Rapids, Northern Michigan, to produce up to 150,000 tons of lithium-ion battery cathode material and 50,000 tons of anode material annually, according to a Wednesday briefing from the governor’s office.

• Gotion will be deemed eligible for $175 million in financial incentives due to its creation of 2,350 jobs, along with a designated tax-free property for 30 years, estimated to be worth $540 million.
• Investments like these are “game changers” as Michigan looks to maintain global leadership in vehicle manufacturing, Governor Gretchen Whitmer told the Associated Press.
• The facility will “possibly have enough capacity to sell these two critical components to other North America based battery manufacturers,” Bloomberg reported, citing Chuck Thelen, vice president of Gotion Global.

Context: Meanwhile, Michigan is also offering $236 million in economic incentives as Our Next Energy, a US EV battery startup backed by BMW, is set to invest $1.6 billion and create 2,100 jobs at a planned battery facility near Detroit.

• Backed by Volkswagen (the biggest shareholder with a 24.77% stake), Gotion announced plans late last year to provide a public-listed US automaker with 200 gigawatt-hours (GWh) of lithium-iron-phosphate batteries from 2023 to 2028. Gotion did not give the name or other information on the automaker.
• Gotion’s rival and top Chinese EV battery maker CATL is also in final discussions to build its first US battery facility, probably in South Carolina and is aiming for operations beginning in 2026, according to a May 6 report by Reuters.  
• The Fujian-based company reportedly delayed the announcement of the plan after US House Speaker Nancy Pelosi visited Taiwan in early August. Ford and BMW are among the expected clients.

Chinese electric vehicle maker Nio will invest 12 million Australian dollars ($7.8 million) to buy a 12% stake in Australian miner Greenwing Resources, the latest investment in overseas battery mineral resources by Chinese companies hoping to secure a reliable supply of materials.

Why it matters: The move also reflects growing concerns among Chinese automakers, who are moving upstream in the supply chain to secure critical battery materials amid rising supply constraints.

Details: The investment will give Blue Northstar, Nio’s wholly-owned subsidiary, a 12.2% stake in Greenwing Resources. More than 80% of the proceeds will be used to step up the mining firm’s efforts on its San Jorge Lithium Project in Catamarca province, Argentina, according to a Monday filing.

• The filing also said Nio would nominate a director to sit on Greenwing’s board. Nio also holds an offtake right, which means the company can purchase a certain share of the company’s lithium, without providing further details.
• The San Jorge Lithium Project is still at an early stage of exploration and drilling is scheduled to start later this year. Greenwing said in the filing that it will release a detailed reserve report by the end of 2023.

Context: The deal comes at a time when surging lithium prices have hit automakers hard as they struggle to secure the supply of the key EV battery component. Battery makers and material suppliers have also negotiated prices with automakers to pass the costs on to the latter, cutting vehicle margins.

• Lithium carbonate prices reached a new high of RMB 500,500 ($71,315) per ton on Sept. 16 in China, Bloomberg reported, citing figures from Asian Metal Inc, and analysts expected prices to maintain at this level at least until the end of 2022.
• Nio has been looking to bring battery development and production in-house, with plans to set up a $32.8 million research facility near its Shanghai headquarters.
• The eight-year-old EV maker reported a vehicle margin of 16.7% from April to June, down from 18.1% during the first quarter of this year and 20.3% a year earlier.
• That number for Nio’s peer Xpeng Motors declined to 10.9% from 12.2% in the previous quarter and was 1% below last year’s figure for the same period. Both companies blamed the drops mainly on rising battery costs.
• State-owned GAC Motor is another automaker connecting with mining companies to ensure a stable supply of EV batteries; in August, announcing a strategic partnership with Ganfeng Lithium, Chinese media reported. According to the plan, China’s biggest lithium compounds producer will invest in GAC’s premium EV subsidiary Aion. GAC, a state-owned carmaker and partner of Toyota and Honda, plans to begin making batteries by itself after 2025.
• Chinese EV giant BYD remains the world’s third biggest EV battery supplier as of July, following Chinese rival CATL and South Korea’s LG Energy, according to SNE Research. 

Top GPU maker Nvidia told Caixin (in Chinese) on Wednesday that they will provide alternative GPU products to Chinese clients as many of them face imminent supply issues after the US government recently announced export bans on cutting-edge chips. 

Why it matters: The export ban from the US was aimed at limiting China’s expansion in AI and other tech fields that need high-performance GPU chips. 

• California-headquartered Nvidia is one of two major GPU makers (the other being AMD) that are particularly affected by the ban. 

Details: Jensen Huang, CEO of Nvidia, told Caixin and other media outlets that the alternative GPU chips will be built with their new Hopper architecture for Chinese clients, which enables them to sell the hardware without violating the export ban.

• The Hopper architecture is adopted in the coming 4nm H100 GPU, which is nine times more powerful in large-scale training than the previous generation, the A100, according to Nvidia. However, the company has yet to reveal what it will do to bypass the ban and ensure the product can meet the new regulations.
• The alternative chips can “fulfill most of the needs in China,” while for those clients who absolutely need the banned products, Nvidia could attempt to apply for licenses, Huang added.
• Huang emphasized that China is an important market to Nvidia and many important partners and clients are based in the country, saying he believed “the market will still bring increased opportunities to the firm.”

Context: The mainland Chinese market accounted for 26% – or $7.11 billion – of Nvidia’s global revenue during its 2022 financial year, which ended on Jan. 30, 2022.

• Nvidia’s revenue from the mainland Chinese market is more than 1.5 times that of the US market during the same period.
• Last week, Taiwanese media outlet UDN reported that Nvidia had sent urgent orders to TSMC for banned GPU chips, including A100 and H100.

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 telecom giant Huawei introduced its new high-end Mate 50 phone series at a Tuesday product release event. The series features camera and glass upgrades and supports satellite texting.

Why it matters: Huawei’s new lineup offers several surprising features, with a notable breakthrough in cameras and satellite communication.

• Satellite features could be a new selling point for smartphones. Other firms are considering bringing satellite video calls to phones, including SpaceX, T-Mobile, and Chinese auto giant Geely. 

Details: Huawei’s new Mate 50 lineup is priced from RMB 3,999 to RMB 12,999 ($573.53 to $1,864.3), covering a wide market range. The Mate 50 standard, Pro, and the luxury RS model (with a Porsche-inspired design) are built with the newest high-end processor, Qualcomm Snapdragon 8+ Gen 1 4G. The lowest-priced Mate 50E model comes with a mid-end processor, Qualcomm Snapdragon 778G 4G. The standard, Pro, and E models have 8 GB RAM, while the RS model has 12 GB RAM. 

• All models in the Mate 50 series allow users to send texts over satellite, a feature powered by the Chinese satellite navigation system BeiDou. However, the option is only available in mainland China and does not support receiving texts.
• Devices are equipped with a 50 million pixels main camera with adjustable mechanical aperture, offering ten levels from F1.4 to F4. Additionally, thanks to the large aperture and new RYYB sensor (Red, Yellow, Yellow, Blue), the camera can take in 24% more light, according to Huawei. Sony and Samsung previously released phones with adjustable mechanical apertures, but both had a shorter range.
• Huawei also introduced new Kunlun Glass for the display, which offers 10 times more drop resistance than ordinary glass. In addition, the firm allows over ten older phone models to upgrade to the new glass, with prices starting at RMB 589.
• Chinese display makers BOE and Visionox supplied the Mate 50 series. A significant difference between models is evident in their display design. Standard and E models have a punch-hole display, while Pro and RS models have a wide-notch design for facial recognition sensors. 
• The E model does not support wireless charging, but all other models support 50 W wireless charging with the same 66 W charging speed.
• Mate 50, Pro, and RS will be available on September 21, and the Mate 50E will be available in October.

Context: Huawei is the fourth largest mobile vendor after Xiaomi, accounting for 6.03% of the global smartphone market as of August 2022, according to StatCounter, an analysis website started in 1999.

• Although Huawei’s market share has declined in recent years due to US sanctions, the company still accounted for 25% of all the owned and actively used smartphones in China in June 2022, according to QuestMobile, a Beijing-based data provider. However, when it comes to the number of newly activated devices, Huawei sits in fifth place with 7.75 million units in China during the first six months of this year, only half the number of Xiaomi phones activated in the same period.

BYD on Monday reported better-than-expected profits for the first half of 2022, buoyed by strong demand for its electric vehicles and a stable supply of much-needed car components when many peers are struggling with the economic slowdown and persistent supply-chain challenges. 

Despite these rosy figures, the auto major saw its stock price slide after Warren Buffett’s Berkshire Hathaway reduced its stake in the company.

Why it matters: Analysts have pushed for significantly higher stock prices, given BYD’s all-around strength in the EV operations and battery business.

• Credit Suisse analyst Wang Bin on Tuesday retained his bullish thesis on BYD’s stock and raised the price target to HK$400 ($60) from HK$380, anticipating that sales in the third quarter could reach 480,000 vehicles with profits hitting a new record-breaking figure of RMB 5 billion.
• Meanwhile, Chinese car expert Zhang Xiang said in a virtual conference that he sees  BYD as a “Huawei of autos” in the making, pointing to its diversified business model that covers consumer products, components, and various technologies.

Details: On Monday, BYD reported a record half-year profit of RMB 3.6 billion ($521 million), hitting the upper end of its forecasts released in July of between RMB 2.8 billion and RMB 3.6 billion, as well as surpassing last year’s total of RMB 3.04 billion.

• Despite this, revenue in the six months ending in June missed estimates of RMB 166 billion, hitting RMB 150.6 billion instead, still up 65.7% over last year, according to figures compiled by Bloomberg.
• The earnings were driven by success in BYD’s EV manufacturing and car-related businesses, which account for more than 72% of its total revenue. Revenue grew 130% to RMB 109.3 billion from a year earlier.
• With its in-house supply of batteries and some of the microchips required for its vehicles, the Shenzhen automaker has been able to maintain production with relatively little disruption at a time when many of its competitors have been hit by multiple problems, including Covid restrictions and supply constraints, Zhang added.
• Meanwhile, the automaker said its dual strategy of betting on both all-electrics and plug-in hybrids had offered consumers a vast selection, boosting sales and profitability.
• BYD has identified a general concern among Chinese buyers about the lack of wide EVs charging infrastructure and then addressed their needs with mature plug-in hybrid technologies, Zhang told reporters during an online conference on Tuesday.
• A wide portfolio of vehicles also allows BYD to target different consumer segments. For example, its DM-i series is designed to provide reliable and energy-efficient transportation to the working class, while its DM-p series targets the wealthier middle class with better performance, according to Zhang.
• BYD stock nevertheless ended down 0.86% to HK$310.85 on Tuesday, before slumping 7.1% during Hong Kong morning trading on Wednesday. The sell-off came after Warren Buffett’s Berkshire Hathaway trimmed its holdings in BYD’s Hong Kong-listed shares from 20.49% to 19.92%, selling a near $47 million stake in the carmaker, Reuters reported on Tuesday.

Context: BYD’s market share in the Chinese EV market reached 24.7% for the first six months of this year, representing an increase of 7.5 percentage points from last year, thanks to strong delivery numbers.

• The auto giant sold the equivalent of 24 gigawatt-hours (GWh) of batteries from January to June, taking an 11.8% share of the global EV battery market, according to figures compiled by SNE Research.
• Some of its rivals are starting to catch up by deploying similar strategies. GAC and Nio plan to bring some battery manufacturing in-house, while both Xpeng Motors and Li Auto have promised to launch two new vehicle models in 2023 targeting different consumer segments.

Major Chinese chip maker SMIC announced on August 26 that it will invest $7.5 billion to build a new plant in Tianjin, the neighboring city of Beijing, to produce 12-inch silicon wafers at a rate of 100,000 pieces per month.

The new factory will focus on mature nodes, ranging from 28nm to 180nm, widely used in fields like electric vehicles.

Why it matters: As a major contract chip maker in China, SMIC could help northern Chinese regions develop in the semiconductor industry by building a new factory in the area. The eastern city of Shanghai and its adjacent Yangtze River Delta region traditionally have a strong advantage in semiconductor supply chain and talents. 

Details: SMIC reached an agreement with Tianjin authorities to build the 12-inch wafer factory, a primary size for chipmaking. 

• According to the agreement, SMIC will set up a new sub-firm in the development area of Tianjin, with registered assets of $5 billion. Following the agreement, the new firm will buy land for factory construction.
• SMIC stated in an announcement on the Hong Kong exchange’s website on August 26 that the newly invested project caters to the firm’s development plan and will benefit the firm in the long term. The firm also said all funding for the new plant comes from SMIC or was raised by the firm, and that the investment won’t have a notable impact on SMIC’s financial condition or hurt shareholder benefits.
• SMIC has not revealed when the new factory will start production, according to Nikkei Asia.
• For the plant, the company worked with Tianjin’s Xiqing Economic-Technological Development Management Committee and a state-owned developing firm in Tianjin — Tianjin Xiqing Economic Development Group. These local partners will also support SMIC in talents, land, infrastructure, and others.

Context: SMIC has three 12-inch wafer factories under construction in Shanghai, Beijing, and Shenzhen. The company also has four 12-inch fabrication facilities under construction in Tianjin, Shanghai, Beijing, and Shenzhen, according to the firm’s website.

• Beijing’s factory is estimated to begin operation in 2024, while the Shenzhen factory will be completed by the end of this year, according to SCMP.
• According to its financial report, the utilization rate of the firm’s production volume was 97.1% in the second quarter of this year. The figure fell slightly due to the building of new factories that count towards capacity but need time to contribute to production, according to Zhao Haijun, CEO of the firm.

CATL and BYD are facing the prospect of cutting electric vehicle battery production after authorities in China’s southwestern province of Sichuan extended the power cuts from six days to 11 days, local media reported.

Why it matters: The extended duration of electricity outages has forced multiple Chinese auto firms to idle production for a week and sparked concerns about worsening supply-chain disruptions to the industry following the country’s strict Covid-19 control measures.

Battery production taking a hit: On Aug.20, Sichuan province extended its six-day power cuts by five days and ordered all factories to remain shuttered until this Thursday, according to a notice issued by the provincial government and obtained by financial media outlet Yicai.

• Tesla’s supplier CATL has a production facility in Yibin, Sichuan, which currently produces 30 gigawatt-hours (GWh) of batteries annually. The city still faces an electricity supply crunch with no likelihood of local factories resuming operations in the coming days, Chinese media outlet Caixin reported on Aug. 21, citing people with knowledge of the matter.
• Manufacturers from several districts in the neighboring Chongqing municipality, where BYD has a battery plant with an annual production capacity of 35 GWh, are being forced to slow assembly lines or completely halt production on the back of extended power cuts. The Chinese auto major develops and builds batteries mainly for its vehicles at the facility.
• BYD has turned to Shaanxi authorities for help, after the latter sent a letter to their Chongqing counterparts last Thursday requesting Sichuan to prioritize electricity supply for the battery maker’s local facilities, the Caixin report said. The Shenzhen-based automaker has a regional headquarters in Shaanxi.

LCD production also taking a hit: Sichuan’s expansion of power cuts will also lead to a 20% decrease in large-sized LCD production for TVs worldwide, Li Yaqin, an analyst from Sigmaintell, told Yicai. 

• Li said that the extended 11-day power cut has had a notable impact on this industry. Production is estimated to decrease by 45,000 LCD base plates, based on production lines at BOE and BHK both being affected. 
• Production of widely used LCD screens will take a larger hit than OLED, which is mainly used in smartphones. As Chongqing, a municipality next to Sichuan, follows suit by limiting power supply, conditions for the industry are expected to worsen due to BHK’s LCD production line. According to Li, that 20% estimate may even be conservative. However, the analyst also highlighted the positive side of this issue, saying that the power cuts would help to clear factories’ inventory and stabilize prices.

Context: Sichuan’s weeks-long power restrictions have had a spill-over impact on the Chinese auto industry, with Tesla and Volkswagen’s partner SAIC having difficulties getting enough supply from local parts makers. Sichuan-based automakers Changan and Seres have also idled production facilities since Aug. 15.

Ward Zhou contributed to the reporting of this story.

Regional authorities in China’s central province of Sichuan said they will cut power supply to industrial factories for six days as the region suffers from heatwaves unseen in 60 years. The province saw a 25% surge in power consumption this year. 

Why it matters: More than a dozen notable electronics and semiconductor manufacturing firms, including BOE, Foxconn, CATL, and Texas Instruments, have factories in Sichuan. The power cut will directly impact their production, affecting downstream firms like Apple, Tesla, and Nio.

Details: The power cut will go into effect from Monday to Saturday, with all factories in the 19 cities of Sichuan province asked to suspend production, including those listed on the so-called “protected whitelist.” But the level of impact seems to vary between companies.

• Major Chinese display maker BOE confirmed that their factories based in Chengdu and Mianyang would “reduce their power usage to a minimum level” during the period, according to an announcement from the firm yesterday.
• Foxconn also shut down its factories in Sichuan temporarily. Ming-Chi Kuo, an analyst at TF International Securities, said the cut would “affect iPad assembly plants in Chengdu.” He added that “impacts should be limited if the power outage can end on August 20” and that flexible production scheduling would help to lower the effects.
• However, some semiconductor firms, including Chengdu Silan Semiconductor Manufacturing, Chengdu CORPRO Technology, and Square Route’s Chengdu sub-firm, told 21st Century Business Herald they are less affected by the policy.
• CATL, a major Chinese battery maker, also paused production in its Sichuan-based factory yesterday, sources familiar with the matter told Jiemian.

Context: Sichuan is a top area for producing electronics in China’s midwestern region. It brought in RMB 1.5 trillion ($215.6 billion) in revenue in 2021, according to 21st Century Business Herald.

• There are currently 717 registered firms in Sichuan focusing on hardware and smart devices, according to Qichacha.

Chinese ride-hailing service Xiangdao Chuxing announced on Monday that it has raised more than $150 million in Series B from investors, including self-driving car startup Momenta, and said it plans to prepare for a potential initial public offering.

Why it matters: The deal marks the latest example of a partnership between a self-driving vehicle developer and a ride-hailing company.

Details: Xiangdao said it raised more than RMB 1 billion ($150 million) in a funding round, with participation from SAIC, China’s biggest automaker and Volkswagen’s Chinese partner, self-driving car company Momenta, and private equity firm Gaoxing Investment. Xiangdao is valued at $1 billion.

• Xiangdao plans to use the proceeds in various ways, including expanding an autonomous taxi-hailing fleet co-operated with Momenta and also backed by SAIC, among other investors.
• The companies began offering robotaxi services with 40 self-driving cars in limited areas in Shanghai and the nearby city of Suzhou in late 2021 and plan to expand the fleet to 200 vehicles by the end of the year.
• Formerly a wholly owned subsidiary of SAIC, Xiangdao will consider selling shares publicly “when the time is right,” according to an announcement (in Chinese) published Monday.
• Gaoxing Investment has ties with Alibaba, with its executive director Zhou Haijing being the legal representative of three Chinese firms owned entirely by Amap, Alibaba’s online mapping service, according to the Chinese corporate database portal Tianyancha.

Context: Xiangdao was founded by SAIC in Shanghai in 2018 and later raised RMB 300 million in Series A from external investors, including Alibaba and battery giant CATL in December 2020.

• The ride-hailing company said it has a base of 30 million personal users and 2,200 business clients from more than 150 domestic cities as of last year, but did not reveal its ride volume figures.
• Other Chinese ride-hailing firms exploring IPOs include T3, a three-year-old company launched by automakers FAW, Dongfeng, and Changan, as well as Geely’s subsidiary Cao Cao, which partners with self-driving unicorn Pony.ai, and OnTime, backed by GAC and WeRide.

General Motors’ minicar joint venture in China, SAIC-GM-Wuling (SGMW), has launched Air EV, a fully electric, entry-level car in Indonesia. The automaker hopes to expand its footprint outside China amid strong global demand for electric vehicles.

Why it matters: The Air EV is the company’s first electric vehicle launched outside China and built on Global Small Electric Vehicle, a dedicated EV platform for global markets. The automaker expects to play a role in a market dominated by Japanese auto majors.

Details: Launched at this year’s Indonesia International Auto Show on Thursday, the Air EV comes in two battery pack options – 17.3 kilowatt per hour (kWh) and 26.7 kWh – delivering a driving range of about 200 and 300 kilometers, respectively.

• The automaker includes an in-car voice assistant and priced the minicar in the range of Rp 238 million ($16,162) to Rp 295 million ($20,033), targeting the country’s middle-class looking for a second vehicle.
• Wuling claims it has received “several thousand” pre-bookings for the affordable minicar, with plans to roll out the vehicle to more overseas markets such as India and Egypt. The automaker also made Wuling Mini EV, China’s top-selling EV model last year. 

Context: On July 6, Wuling announced plans to launch the Air EV in India. The automaker plans to export parts and assemble them at a manufacturing plant of MC Motor India, a subsidiary of Chinese automaker SAIC Motor.

• SAIC was China’s biggest car exporter in 2021, recording sales of nearly 700,000 vehicles abroad last year. SGMW took almost 20% of the total volume, covering over 40 overseas countries.
• Indonesian car sales grew 66.7% in a year to roughly 887,000 vehicles last year. Japanese automakers, including Toyota, Mitsubishi, and Honda, dominated the market with a combined share of around 95%, according to figures compiled by Statista, a market and consumer data provider.

Chinese smartphone maker Xiaomi revealed a new foldable smartphone, the Xiaomi Mix Fold 2, at a product launch event on Thursday, boasting a folded thickness that is close to that of a regular phone, thanks to its new screen and hinge design.

Why it matters: The Mix Fold 2 is also intended as a challenge to foldable phone giant Samsung, which launched its new Galaxy Z Fold 4 this week. Xiaomi’s model is cheaper, has a larger battery and screen, and a much faster charging speed.

Details: With a price range of RMB 8,999 to RMB11,699 ($1,336 to $1,736), the phone adopts an inner folding design with a 6.56-inch outer display and an 8.02-inch inner screen. Both displays support 120 Hz refresh rate, 1,000 nits maximal brightness, and Dolby Vision. 

• The phone uses Samsung for its inner display, offering a resolution of 2160×1914 pixels and POL-LESS technology, which Xiaomi claims gives the phone’s inner display 33% more light transmittance and 25% less battery consumption.
• The phone is equipped with a self-developed micro waterdrop hinge, which allows for a smaller bending radius and thinner screen modules, enabling a lighter and thinner hinge design.
• The Mix Fold 2 is 5.4 mm when unfolded and 11.2 mm when folded and weighs 262 grams.
• The device also features Leica-branded cameras, a partnership that was first introduced in Xiaomi’s recent 12S series. It has a 50-megapixel main camera, a 13-megapixel ultra-wide angle camera, and an 8-megapixel telephoto camera with two times optical zoom.
• In the core performance specs, the phone is built with Qualcomm’s new high-end 4nm processor Snapdragon 8+ Gen 1 and UFS 3.1 high-speed storage chips with a large vapor chamber panel for cooling. 
• The foldable phone comes with a 4,500 mAh battery with a 67 W charging speed. For comparison, the Samsung Galaxy Z Fold 4 only has a 4,400 mAh battery with a 25 W charging speed.

Context: Xiaomi introduced its Mix Fold 1 in early 2021, with the model becoming the seventh highest-selling foldable phone in the world in 2021, just behind Huawei’s Mate X2, according to a report from Omdia.

• Samsung dominates the international foldable phone market, with a 88% share in 2021, according to Omdia’s report. But in China, Huawei accounted for 53.7% of all foldable phone sales in the second quarter of 2022, shipping 351,000 units, while Xiaomi took 4.6% of the market during the same period, according to CINNO Research. 

BYD has started supplying electric vehicle batteries to Tesla’s factory in Germany, Chinese media outlet Sina Tech reported on Wednesday.

Why it matters: This is the latest development in the partnership between Tesla and BYD, two of the world’s biggest EV makers. It comes two months after a BYD executive confirmed to state broadcaster CGTN that the Chinese manufacturer would supply batteries to Tesla “very soon.”

Details: For the first time, BYD begins supplying its “blade battery” to Tesla’s gigafactory in Berlin, with the first batch of Model Y vehicles with BYD batteries expected to roll off assembly lines by early September, Sina Tech reported, citing people familiar with the matter.

• It is unknown whether Tesla plans to equip its EVs with BYD batteries at its Shanghai facility, the sources said. Tesla and BYD did not respond to TechNode’s request for comment.
• BYD’s blade battery comes with a lithium-ion phosphate (LFP) makeup and boasts better thermal stability and stronger resistance to collisions than lithium-ion batteries that use cobalt or nickel and which enable longer range but at a higher cost.

Context: A growing number of Chinese automakers are preferring LFP battery chemistry to traditional cobalt- and nickel-based batteries due to lower costs, better safety, and improving energy density, a trend analysts expect to accelerate globally.

• During an online media briefing on Wednesday, UBS analyst Paul Gong said that the Swiss investment bank expects LFP batteries to capture more than 40% of the global EV battery market by 2030, an increase from its previous estimate of 25%.
• The blade battery cells cost $136 per kilowatt-hour (kWh), at the same level as that of Panasonic’s lithium-ion cells with nickel-cobalt-aluminum (NCA) cathode chemistry and lower than the $142 kWh of the cobalt-based batteries sourced from LG Energy Solution, according to Gong.
• However, CATL’s LFP battery cells for Tesla’s Model 3 are currently more competitive cost-wise than its rivals’ offerings at $131 per kWh, Gong added, as per the recent teardown results of CATL and BYD battery packs presented by UBS.
• Tesla has been sourcing nickel-manganese-cobalt (NMC) batteries from CATL for its China-made vehicles to date, while Panasonic and LG Energy Solution are major battery suppliers to Tesla globally.
• BYD sold the equivalent of 7.9 gigawatt-hours (GWh) of batteries in the first half of this year, surging 206% year-on-year and taking an 11.8% share of the global EV battery market, according to figures compiled by the South Korean industry tracker SNE Research. CATL is the dominant player with a 34.8% market share, followed by LG’s 14.4%.

On Monday, Chinese officials published a set of draft rules that will allow self-driving companies to offer rides and charge fees for fully autonomous vehicles (AVs). The move is part of the country’s ongoing efforts to become a global leader in artificial intelligence. The same day, Baidu announced it was to launch a fully driverless robotaxi service in two major Chinese cities.

Why it matters: The release of China’s first guidelines for commercial robotaxi services could establish a state framework for the rollout of self-driving technology and increase the number of AVs on Chinese roads.

Details: Published by the Ministry of Transport on Monday, the draft regulation said that authorities would “encourage the deployment of autonomous buses on limited access highways, as well as allow paid taxi-hailing services using self-driving cars for low-traffic, controllable scenarios” (our translation).

• The government did not outline detailed criteria for the environmental conditions under which an automated vehicle is designed to operate but said that driving routes must be selected to avoid highly populated sites such as schools and supermarkets.
• Also, the rules emphasized that robotaxi companies must deploy their automated vehicles with drivers based on different levels of vehicle automation. The rules stipulated L3 and L4 level cars need a human operator, while L5 (fully automated cars) cars need either a remote driver or an in-car safety driver. The rules also asked all cars to suspend operations in adverse weather conditions.
• In addition, the companies are obliged to record and share with the government the data logs generated by cars and drivers at least 90 seconds before and 30 seconds after any self-driving malfunctions. These logs must include in-car video footage and pictures of the surrounding environment.
• The draft will be open to public feedback until Sep. 7.

Context: China first began allowing autonomous driving road tests on designated streets in April 2018 and then expanded the testing scope to general highways in early 2021. 

• Several major cities, including Beijing, Shanghai, and Guangzhou have greenlighted self-driving car tests for passenger transport services over the past several years.
• Earlier this month, the city government of Shenzhen also passed new legislation that addresses the liability issues in accidents involving cars with self-driving capabilities.
• The central city of Wuhan and the southwestern municipality of Chongqing are the latest Chinese megacities to take a significant step towards the driverless car era, recently allowing Baidu to charge fees for rides using its driverless vehicles.

In 2021, Chinese automakers sold more than 1.85 million units in the overseas market, hitting a significant milestone just two decades after China joined the World Trade Organization in 2001.

Beijing’s efforts to make China an auto superpower and the long-term strategy of betting on electric vehicles are starting to pay off. China made up almost 60% of the electric vehicles exported globally in 2021, with the annual shipment of passenger EVs nearly tripling to more than 310,000 units. Analysts expect this momentum to continue, with China on course to surpass Germany as the world’s second-biggest exporter of automobiles by volume this year, just behind Japan.

However, with European and American automakers catching up to China’s success in an increasingly crowded EV field, convincing global consumers to buy China-made vehicles continues to be an uphill battle. Chinese manufacturers, known for churning out cheap, humble cars for developing regions, are struggling to move upscale and compete head-to-head against long-established European car giants for a share of the premium segment in the latter’s home market.

A look at a few carmakers that have been ushering in a wave of EV adoption in China gives a sense of how the global auto landscape might be transformed in the next couple of years. As the world, particularly Europe, reaches a critical period in its energy transition, the localization of an entire EV industrial value chain will be vital for Chinese carmakers to become a global force that upends existing significant players, according to analysts.

State-owned manufacturers

State-owned brands SAIC and Chery are China’s most significant car exporters, with the pair jointly accounting for nearly half of the country’s vehicle sales to overseas markets in 2021.

Morris Garages (MG), the iconic British car brand acquired by SAIC in 2008, is currently the most significant contributor to SAIC’s success. Birmingham-based MG booked sales of over 470,000 vehicles globally last year, at least 10% of which were delivered in Europe.

Another SAIC’s sub-brand, Wuling, is also increasingly gaining popularity globally. Wuling produced the top-selling EV model in China last year, the Hongguang Mini EV. Wuling’s overseas shipments reached an all-time high of 146,000 vehicles to over 40 nations in 2021.

Anhui-based Chery is one of several Chinese carmakers that made early moves to explore global markets, exporting 10 sedans to Syria back in 2001, when China was just about to join the World Trade Organization. Having established a presence in more than 80 countries with 10 manufacturing plants and 1,500 dealership stores, the country’s top passenger car exporter mainly operates in Brazil and Russia, with sales of over 37,000 and 40,000 vehicles, respectively in the two countries last year.

Chery is also the Chinese manufacturing partner of Jaguar and Land Rover. It has plans to expand its reach in Europe and the US by selling its own-branded vehicles in the two regions, chairman Yin Tongyue said in May 2020. Although few details related to this move have been revealed thus far, the company expects its car exports to nearly double to 500,000 vehicles by 2025.

Private auto giants

Great Wall Motor and Geely are the only two homegrown private automakers in China who ranked in the top 10 by export volume in 2021, with shipments of over 143,000 and 115,000 vehicles overseas, respectively. The two automakers are pioneers of Chinese assemblers’ overseas expansion in the era of gasoline-powered cars. They have been expanding their sales networks and manufacturing presence abroad significantly in the last two years, focusing on Europe and countries connected to China’s Belt and Road Initiative.

One of China’s top-selling SUV manufacturers, Baoding-based Great Wall Motor, posted significant growth overseas last year, with shipment volume rising 104% from 2020 and accounting for about 11% of the firm’s total sales, a result of its accelerating push into overseas markets. The Chinese automaker sped past several milestones in 2021 amid a rush of positive news, such as the acquisition of a former Daimler plant in Brazil last August, followed by the launch of its regional headquarters in Munich, Germany three months later.

Great Wall also saw its second overseas plant begin operations in Rayong, Thailand, in June 2021 with a capacity to build 80,000 vehicles annually, two years after the automaker started production of its popular Haval-branded crossovers locally in Russia. The company is on track to launch an electric compact car under its Ora marque, which targets young female buyers, and a plug-in hybrid SUV under its premium EV brand WEY in Europe this year, Reuters reported last September.

The export volume of Geely’s domestic plants increased by 58% year-on-year and accounted for 8.6% of its annual sales in 2021, compared with a growth rate of 25% and a 5.5% share of total sales in 2020. The company’s footprint now covers 28 countries, with entries into Laos, Egypt, and three other states last year.

Like SAIC, the Zhejiang-based automaker expanded in Europe through partnerships with locally-based players, launching a car brand called Lynk & Co in late 2016 and forming a joint venture with subsidiary Volvo to sell the vehicles globally a year later. Reporting deliveries of 25,167 Lynk-branded vehicles overseas in 18 months as of June, the automaker operates eight retail stores in Germany, Italy, Belgium, Sweden, and the Netherlands, with plans to enter France and Spain this year.

Rising EV upstarts

Chinese EV upstarts Nio and Xpeng are still a long way from catching up in overseas sales with traditional Chinese auto giants, but they have pioneered new approaches to going global. For example, the Chinese EV startups are opening direct stores and service centers in European countries to build a strong brand image with quality service, something that has never been done before by a Chinese car brand on the continent.

Located at Oslo’s center of commerce and culture and opening to the public last October, Nio’s first showroom in Norway is as much planting of the company’s flag as an entry into the European market. Called Nio Houses, the two-story, 2,100-square-meter location is not only built for potential customers, but also serves a range of functions with a café, a library, and a living room for car owners on site, hoping to win over wealthy local customers.

So far, the eight-year-old EV maker is seemingly on the right track with deliveries of 327 ES8 crossovers, priced above NOK 609,000 (around $69,300), in Norway in the first four months of this year, which means the brand has already surpassed last year’s total of roughly 200 cars. The company also has plans to enter Germany, the Netherlands, Sweden, and Denmark with the same strategy later this year and to expand its footprint to 25 countries by 2025.

Xpeng has also aggressively pushed ahead in Europe’s booming EV market and currently operates three flagship showrooms – located in Denmark, Sweden, and the Netherlands – in addition to selling vehicles through local car dealerships in Norway since December 2020. The company delivered 486 units of its P7 sedan and G3 sports utility vehicle in Europe last year, while that number reached 426 units for the first four months of this year.

However, multiple supply chain disruptions, including semiconductor shortages and soaring battery material costs, are hitting the company’s growth trajectory. The Alibaba-backed EV maker stopped taking orders for its mainstream P5 sedan in Europe in late June, citing supply chain issues.

Conclusion

The world’s transition to clean energy and carbon neutrality – and China’s head start in EV production –  has opened up new opportunities for Chinese carmakers to become globally competitive players in electric mobility. European Union countries reached a deal in June to completely phase out internal-combustion vehicles by 2035, a target that Japan and Canada have also set; the timetable for the UK is 2030.

Experts have urged Chinese automakers to invest more to build their own supply chain networks overseas along with parts suppliers and, therefore, better leverage their technology and expertise globally, rather than just offering direct exports.

There is no easy route to performing successfully on the global stage, but it would be wise to seize the chance when it comes – and China’s EV makers seem well poised to do so. 

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.”

The US has stepped up its restriction on China’s access to chipmaking equipment, expanding it from tools that make chips of 10 nm to 14 nm process technology, effectively cutting China’s ability to produce advanced chips.

Why it matters: A further ban on the Chinese chips industry would disrupt the supply chains of semiconductor producers worldwide, as the country is an essential part of the global semiconductor industry, according to Peter Wennink, the CEO of semiconductor giant AMSL.

Details: On July 29, Bloomberg cited sources from two primary semiconductor suppliers, Lam Research and KLA Corporation, saying that the US Department of Commerce had informed them to stop supplying products to mainland China for making chips under 14 nm in the past two weeks.

• In early June, the US talked ASML and Nikon into not supplying devices, including deep ultraviolet (DUV) lithography machines, for advanced chip making to mainland China.
• SMIC, a major Chinese chip contract maker, was previously able to import devices that can produce chips above 10nm, including DUV machines from ASML, with a license from the US authorities. 
• Although the measures are targeted at limiting the ability of China to produce advanced chips, they could have a major impact on non-Chinese-owned foundries on the Chinese mainland, such as those run by Samsung and TSMC.
• The tightening regulations are unlikely to affect storage chip makers, as these firms typically require less advanced processes. For instance, YMTC’s new storage chip launched this April uses a 20 nm process, according to Tech Insights.
• DUV can potentially make chips of up to 5 nm with multiple exposure technology, but the costs are often prohibitive. The more advanced extreme ultraviolet (EUV) machine can produce chips under 7nm with only a single exposure, Netherlands-based media outlet Bits&Chips wrote in a 2021 report.

Context: The US has been restricting the sale of equipment to Chinese firms to develop chips since 2020 and has sped up its effort in recent months. Last week, the two branches of the US congress passed the $280 billion Chips and Science Act. In addition, the bill will subsidize US semiconductor manufacturers and innovation and hope to strengthen its competitiveness in the crown jewel of modern technology. 

• The bill will provide $52 billion in subsidies for US chip makers and more than $100 billion in related technology investments. 
• Firms that receive funds from the bill are forbidden from building or expanding factories in mainland China.

Chinese electric vehicle battery supplier Gotion High-Tech made its debut on the Swiss stock exchange on Thursday, wrapping up a listing that brings it closer to European investors and will supply a $685 million war chest to fund its global expansion.

Why it matters: The deal is the biggest offering of global depositary receipts (GDRs) by a Chinese company on the Zurich-based exchange since mid-2019, when China and Switzerland began implementing a stock connect scheme that allows companies traded in Shanghai and Shenzhen to list on the Swiss exchange.

Details: Gotion, a battery maker in which Volkswagen is the largest shareholder, raised $685 million in its overseas listing ahead of the start of trading in Switzerland on Thursday, selling 22.83 million GDRs at $30 each.

• Each GDR represents five mainland China stocks, known as “A-shares.” The company’s newly listed Swiss shares closed flat on Thursday, representing a discount of about 2.9% against the most recent closing level for its Shenzhen-listed depositary receipts.
• Cai Yi, a senior vice president of Gotion, said on Thursday that the company will expand its global footprint in battery production and raw material supply chain and has set a goal of building up 300 gigawatt-hours (GWh) of battery capacity by 2025.
• The Chinese battery maker currently operates eight research facilities and more than 10 production sites in countries such as the US and Germany while providing technical support for Volkswagen in building its second battery factory in Europe.

Context: Gotion sold the equivalent of 4.2 GWh of batteries in the first five months of this year, giving it a 2.7% market share in the global EV battery market, according to figures compiled by South Korean industry tracker SNE Research.

• By comparison, Chinese battery giant CATL sold 53.3 GWh of batteries with a 33.9% share over the same period, followed by LG Energy Solution and BYD with sales of 22.6 and 19 GWh of batteries, respectively.
• Three other Chinese companies listed on the Swiss stock exchange alongside Gotion on Thursday, including battery recycling giant GEM, lithium-ion battery material maker Ningbo Shanshan, and building material manufacturer Keda Industrial.

Major Chinese electronics manufacturer Anker introduced a new series of gallium nitride (GaN) chargers called GaNPrime at a release event on Tuesday. The new lineup offers fast-charging tech with higher charging wattage (up to 150 watts) and greater energy efficiency.

Why it matters: As a pioneer in charging tech, Anker managed to pack more power in smaller and lighter chargers. Its new 737 model, for example, supports 120W charging wattage, but the size is equal to most 60W chargers offered by Anker’s competitors. 

• Following Apple’s lead, almost all phone vendors stopped providing chargers in 2021, which makes it a good time for Anker to introduce its new lineup of products.
• Chargers that can cater to multiple devices started to trend last year. Anker’s new series can be a cheaper alternative to the expensive chargers offered by phone makers.

Details: The new GaNPrime series includes six products for the overseas market, with charging wattage ranging from 65W to 150W and multiple ports for multi-device charging. 

• There are three traditional chargers, two AC power products, and a power bank, which offers charging plugs on a portable battery.
• A key highlight of the lineup is Anker’s new charging tech PowerIQ 4.0. The new feature can allocate variable charging wattage to multiple devices in real-time based on power needs, reducing charging time by up to one hour.
• Apple has already released a similar product, the 35W dual Type-C charger, but it costs more and comes with a lower maximum charging wattage, relatively speaking. In addition, other rival products must pause charging when reallocating power.
• Anker partnered with Infineon, a major semiconductor manufacturer, to bring new tech to its devices. While traditional designs require two GaN components, the new products require only one, slimming down profiles of Anker’s new chargers. 
• To solve the issue of overheating, Anker introduced new heat control tech, which detects charger temperature and adjusts power output accordingly. The detection frequency is 76% greater than the previous generation of products, with a single charger making 3 million detections in a day.
• For the mainland Chinese market, Anker released two additional products supporting the latest USB protocol  PD 3.1, powered by a control chip developed by Anker (a pioneer of this standard), offering up to 140W charging speed in a single port.
• With a price range from $59.99 to $109.99, four of the chargers are now available overseas, and the other two — the 150W Charger and 733 Power Bank — aim to ship in the third quarter of this year. Both are available for pre-order on the official Anker website and Amazon.

Context: Founded in 2011, Anker is a major Chinese electronics company best known for its charging products. As a pioneer in the GaN charger field, Anker became the top brand in this market with the most sales worldwide in 2021, according to a survey from Frost & Sullivan, which was cited by the company at the release event.

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. 

On Wednesday, the Indian government accused Chinese smartphone maker Oppo of evading 43.9 billion rupees ($550 million) in import taxes.

Why it matters: The incident is the latest development in the Indian government’s investigations into Chinese tech firms with operations in the country, including Xiaomi and Vivo, which all faced tax scrutiny from the local authority earlier this year.   

• This is another setback to Oppo’s international business, as the firm is also caught up in multiple lawsuits with Nokia for 4G and 5G patents and facing a sales ban in Germany.

Details: India’s anti-smuggling agency, the Directorate of Revenue Intelligence (DRI), has launched an investigation, searching and questioning members of Oppo’s local offices, according to a press release from the Indian Finance Ministry on Wednesday.

• The investigation found evidence suggesting “wilful mis-declaration” in certain items imported by Oppo India for use in mobile phone manufacturing.
• The press release also said that Oppo didn’t include patent licensing fees totaling 14.1 billion rupees that were paid to overseas companies when calculating the value of goods imported, a violation of the country’s Customs Act and Customs Valuation Rules.
• The country’s Finance Ministry issued a notice to Oppo, informing the company that it must pay customs duty amounting to 43.9 billion rupees.
• An Oppo India spokesperson told TechCrunch that the company has a “different view on the changes mentioned in the SCN (show cause notice).” Oppo is reviewing the notice and will reply to present the firm’s side, according to the spokesperson. 
• Senior officials at Oppo India have already issued statements acknowledging errors and have voluntarily paid 4.5 billion rupees “as partial differential customs duty,” according to a report by Bloomberg.
• Oppo did not respond to TechNode’s inquiry for comment.

Context: In late May, India started probing the local units of two notable Chinese phone makers, ZTE and Vivo, for alleged financial improprieties, according to Bloomberg.

• India also demanded Xiaomi, another Chinese phone vendor that dominates the Indian smartphone market, pay about $88 million in import taxes in January.
• Chinese smartphone makers lead India’s market. Four out of five smartphone brands that ship most units in the country are Chinese brands: Xiaomi, Oppo’s sub-brand Realme, Vivo, and Oppo. The four brands took 63% of the Indian smartphone market in the first quarter of 2022, according to Counterpoint Research.

A Tesla service center in the eastern Chinese city of Suzhou was temporarily shut down after a fire broke out on-site, resulting in multiple vehicles being damaged, state media publication The Paper reported on Tuesday.

Why it matters: Damage from the incident was captured in a video that was widely shared on Chinese social media and will likely intensify concerns about the safety of electric vehicles, one of the existing barriers to wider EV adoption.  

Details: Footage of the fire posted by multiple Chinese online users showed that a Tesla in-house body repair center in Suzhou, a neighboring city of Shanghai, was engulfed by flame and thick clouds of smoke on July 8.

• There were no reported deaths or injuries, though several Tesla vehicles were damaged by fire and heat. The cause of the fire is under investigation, local officials said. 
• A crashed Tesla car with a damaged battery pack was involved in the incident, Sun Shaojun, a Chinese auto journalist, said on the Twitter-like platform Weibo.
• A Tesla service representative confirmed the incident to state media outlet The Paper on Tuesday, saying that the company has temporarily closed the location without providing a timeline for when it will reopen.

Context: Tesla is not alone when it comes to such accidents. Last month, the Chinese Ministry of Emergency Management reported 640 fire incidents involving EVs in the first quarter of 2022, a 32% increase from a year earlier. Battery damage, collision, and hot weather conditions are some of the leading causes.  

• A fire was also reported at a BYD repair shop in the southern city of Nanning on July 9, which the automaker said was due to a “short circuit.”
• Last month, a Voyah-branded electric crossover, produced by state-owned automaker Dongfeng, burst into flames on the street in the central Hubei province. No people were injured in the fire, which occurred on June 27.

On Monday, Xiaomi introduced a new series of high-end smartphones, 12S, using Sony imaging sensors and Leica lenses. The premium 12S series models are priced from RMB 3,999 to RMB 6,999 ($598 to $1046).

Why it matters: With the new series, Xiaomi has hoped to compete with rivals by offering high-end smartphones at a competitive price. The firm has focused the series on quality lenses and imaging capabilities. 

• Xiaomi’s new series is the first to use Qualcomm’s latest processor, making them potentially the fastest among all Android phones. 

Details: The three models – the Xiaomi 12S, 12S Pro, and 12S Ultra – share the same processor, coming with slight differences in other specs like charging speed, cameras, display specs, and cooling system. The three models will be available on Wednesday exclusively in China, coming in two colors for Ultra and four for the other two models, according to Android Authority.

• The phone uses Qualcomm’s latest processor Snapdragon 8+ Gen 1. Xiaomi 12S Pro’s theoretical performance exceeds all existing Android phones, scoring 1.1 million points on Antutu, a benchmarking app.
• The camera is an upgrade from the Xiaomi 12 series. Featuring Leica lenses, the series are the first Xiaomi phones after Xiaomi announced a long-term strategic cooperation with Leica in May. 
• The 12S series features Leica’s lens and imaging profiles, while the Ultra version comes with special camera lens materials, such as new materials and aspherical lenses, to achieve better imaging quality. The Xiaomi 12S Ultra has three cameras from 13mm to 120mm. 
• The Ultra model also adopts a relatively largest 1-inch CMOS imaging sensor – the Sony IMX989 – behind the main camera. Such a large sensor helps deliver better imaging performance, especially in low light. Other brands like Sony and Sharp attempted to adopt a large imaging sensor on smartphones, but the two brands have relatively small smartphone shipments. 
• The 12S series’ screen specs follow industry standards and have fewer highlights. The Xiaomi 12S Pro and Ultra feature a 6.73-inch LTPO display with a curved edge design, supporting adaptive refresh rate and 2k resolution. The display can also present content with up to 1,500 nit peak brightness and native 10-bit color depth, providing a rich color range and smooth transition, which the brand says guarantees an HDR entertainment experience.
• For battery and charging, the Xiaomi 12S Ultra will be the first model equipped with the new Xiaomi Surge G1 battery management chipset. It has a large 4860 mAh battery, but its charging speed is 44% slower than the Xiaomi 12S Pro’s 100 W fast charging.
• The three models all support 50 W wireless charging and 10 W reverse charging. 

Context: Chinese phone makers have often relied on partnerships with notable camera or lens makers to broaden their appeal. Huawei previously partnered with Leica for imaging systems in smartphones. 

• Vivo has partnered with Zeiss, another notable German optical giant, to design camera systems since 2020.
• Meanwhile, OnePlus teamed up with Hasselblad on phone camera optimization in March 2021. 
• In February, Oppo also announced to work with Hasselblad.

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 auto chip startup Horizon Robotics on Monday announced that it has secured a new round of funding from state-owned automaker FAW Group, the latest example of local automakers upping their investment in the domestic semiconductor sector to cope with a prolonged global chip shortage.

Why it matters: The investment reflects Chinese automakers’ growing anxiety about the ongoing semiconductor constraints that have crippled them for more than a year and show no signs of abating amid recent Covid-19 outbreaks in the country.

New money influx: Horizon Robotics plans to use the proceeds to speed up the development of new auto chips for artificial intelligence computing and its software development, the company said in an announcement (in Chinese) on Monday. The funding amount remains undisclosed.

• Founded by Yu Kai, a former head of Baidu’s artificial intelligence unit, the seven-year-old startup said that the company’s Journey chips, which could enable rapid processing with vehicles’ advanced driver assistance systems, have shipped more than 1 million units as of last year.
• The company added that it has formed partnerships with more than 20 car manufacturers, including SAIC and Changan, making it the country’s largest producer of automotive-grade AI chips. Its existing investors include SAIC, BYD, and GAC Capital, the venture capital unit of the namesake automaker.

Persistent chip shortages: Last year, China only made 5% of the auto chips it consumed, according to figures published by US research company IC Insights and obtained by Caixin (in Chinese). Chinese automakers’ production has been hit by the low self-sufficiency in auto chips and an ongoing chip shortage, creating more demand for building more domestic auto chip firms to fill in the growing demand. 

• GAC is among a string of automakers being hit by ongoing supply chain issues, with production cut by 160,000 vehicles, equivalent to RMB 20 billion ($2.98 billion), in the first half of this year, chairman Zeng Qinghong said on June 25 at a semiconductor conference in Guangzhou.
• GAC, Toyota’s manufacturing partner in China, expects chip shortages will continue into 2024 and is thus looking for home-produced substitutes to ensure supply. The Guangzhou-based automaker has also invested in local chip foundry CanSemi to develop microchips for future vehicle models on 12-inch wafers.
• GAC is not alone. At the same conference, Bosch China’s president Chen Yudong called for more investment to increase domestic production of semiconductors in the country, estimating that production in China has fallen by 1 million vehicles during the first six months of 2022 because of supply issues.
• Struggling to recover from a lengthy Covid lockdown affecting several of its China plants, Bosch currently meets around one-third of the total demand for its car parts in the country but expects an improvement from July when it thinks supply could meet 60% at most of the market demand.

Context: China has for years been building an independent domestic chip supply chain, reporting a 33.3% year-on-year increase in domestic output of integrated circuits (ICs) last year, according to data released by China’s National Bureau of Statistics.

• The central government recently promised to take more measures to help domestic makers expand capacity and boost innovation, China Securities Journal reported Tuesday, citing Guo Shougang, a deputy director at the Ministry of Industry and Information Technology.

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.

Apple has launched a hiring program to bring on software engineers in China, helping more automakers use CarPlay software. 

Why it matters: The tech giant sees potential in the country’s burgeoning transition to intelligent and electric vehicles (EVs). The move could improve Apple’s ability to target local business customers, provide software solutions tailored to Chinese consumer tastes, and add a major player to the Chinese connected car market.

Details: Apple is looking for an unspecified number of “Car Experience Partner Engineers” who can help advance Apple’s CarPlay software and services for auto partners as they look to integrate the mobile technology into their cars more easily, according to a job post on the company’s website.

• The company is looking for candidates with technical project experience in automotive systems development who can facilitate communication between Apple and the global automotive industry, the post added.
• The job will also involve technical support and guidance to developers in creating apps and services, particularly for Apple’s auto-related projects in China.
• The post did not reveal how many engineers Apple planned to hire but said that the roles will be located in its Beijing, Shanghai, and Shenzhen offices.

Context: News of the hiring comes as Apple unveiled a forthcoming version of its CarPlay software on June 6, which the US tech giant said can be deeply integrated into car dashboards and provide a familiar but auto-specific interface for drivers, according to Reuters.

• Apple said that the current version of CarPlay is available in more than 98% of new cars in the US and it’s also talking to a list of big auto names including Audi, Ford, and Mercedes-Benz about adopting the upcoming version. Apple and automakers will reveal in late 2023 which new car models will come with built-in CarPlay software. 
• Chinese automakers Great Wall Motor and Chery are also said to be participating in the project, local media outlet Jiemian reported on June 20, without revealing further details.
• State-owned automakers BAIC and Changan have partnered with Huawei for in-car software, while BYD and Dongfeng work with Baidu to offer automated driving functions.

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.

On Wednesday, Nio announced a new electric sport utility vehicle, the ES7, which the Chinese EV maker says boasts top-notch self-driving technology at a competitive price tag. The newly-launched model is expected to compete with similar vehicles from the likes of BMW and Mercedes-Benz.

Why it matters: Nio chief executive William Li hopes the latest model in a growing family of premium electric vehicles will grab a significant share of the Chinese luxury car segment and help the company challenge BMW as a market leader.

Details: Nio said that the ES7 will feature the necessary hardware for automated driving in all traffic scenarios, including 11 cameras, one lidar sensor, and an array of nearly 20 radar and ultrasonic sensors. The car will also offer customers three different battery options, with the smallest, at 75 kilowatt-hours (kWh), expected to be able to manage around 485 kilometers (301 miles) on one full charge.

• Some of the car’s autonomous features will work on city roads and can be unlocked via over-the-air updates. Nio is planning to launch an enhanced Navigate on Pilot (NOP) software package in the third quarter of this year. The company’s vehicles will use high-definition maps created in collaboration with Chinese internet giant Tencent, Li told analysts on a conference call last Thursday.
• Pricing for the ES7 will start at RMB 468,000 ($69,825), though that number can be lowered to RMB 398,000 if customers lease battery packs with a monthly subscription starting from RMB 980. The EV maker promised that deliveries will begin on August 28, after taking more than one year and nine months to deliver its sedans ET7 and ET5, respectively.
• The first five-seater Nio will be able to accelerate to 100 km in less than four seconds. These numbers suggest that it will pose a direct challenge to BMW’s iX M60 electric SUV and Tesla Model Y high-performance model, which cost RMB 996,900 and RMB 417,900 in China, respectively.
• The electric crossover also boasts class-leading headroom and legroom and will be one of the first passenger car models in China that can tow a caravan or a trailer. Owners will also be able to use the car’s energy for other means via bidirectional charging devices, allowing vehicles to serve as energy-storage units while camping.

Context: Nio’s growth has slowed considerably over the past year in comparison to competitors, and the challenges the Shanghai-headquartered EV maker faces are growing as its two major rivals Xpeng Motors and Li Auto are set to launch similar offerings to the ES7.

• Xpeng plans to launch its first flagship five-seater SUV the G9 later this month, which the automaker claims will be the first Chinese car model using an 800-volt electrical system for fast charging. The G9 is scheduled for delivery in the third quarter of this year.
• Li Auto will release its second model the L9 on June 21, with the large-sized SUV priced between RMB 450,000 ($67,635) and RMB 500,000. The company’s chief executive Li Xiang expects monthly deliveries to surpass 10,000 units from September.  

READ MORE: Drive I/O | Nio, Xpeng, and Li Auto face more challenges after a mixed 2021

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.

Drone maker DJI is about to see its in-car system used on a mass-produced electric vehicle for the first time through a partnership with SAIC-GM-Wuling (SGMW), General Motors’ China joint venture with SAIC Motor and Liuzhou Wuling Automobile, a small Chinese automobile company. On Thursday, the automaker announced that it will launch an EV using DJI’s automated driving technology, making it the drone maker’s first major project in the competitive sector.  

Why it matters: The launch marks a first milestone for the world’s largest maker of consumer drones in its push into the Chinese EV space and reflects the growing trend of traditional automakers partnering with tech companies to bring self-driving cars to market.

Details: The automaker said that it has worked hand-in-hand with DJI in developing intelligent vehicles since 2019,  investing “several billions of RMB” in the project and having undergone 1 million kilometers (631,371 miles) of vehicle testing, in a statement (in Chinese) published Thursday on SGMW’s WeChat account.

• The statement is sparse on details about the collaboration, but Chinese financial media outlet Caixin reported that the automaker plans to fit DJI-developed automated driving functions on Wuling Baojun Kiwi EV, a mini two-door EV launched last August.
• Full specifications, pricing details, and the launch date of the revamped model remain unclear. The original Kiwi EV is priced between RMB 77,800 and RMB 86,800 ($11,639 and $12,968) and has an estimated driving range of 305 kilometers (190 miles), according to the company.
• Company insiders told Caixin that the in-car software will allow assisted lane changing, automated driving in congested traffic, and other automated driving technologies and that the vehicle’s features will receive regular software updates.   

Context: DJI first launched its auto unit in 2016 and operated with nearly 1,000 employees as of last year, as the Shenzhen drone unicorn steps up its efforts to enter China’s booming EV market.

• SGMW’s affordable Hongguang Mini EV was the best-selling EV model in China in 2021. It recorded sales of 395,451 units last year, easily beating BYD’s Qin sedan and Tesla’s popular Model 3, which sold 187,227 and 150,890 units, respectively, according to figures from the China Passenger Car Association.
• Chinese tech giants Huawei and Baidu also continue expanding into the industry, while young EV makers Xpeng Motors and Nio have catapulted ahead of the competition by developing their own in-house autonomous driving systems.
• Huawei and its manufacturing partner Chongqing Sokon are on track to roll out their second EV model M7 by the end of this month, while the telecommunications giant has also established partnerships with state-owned automakers BAIC, Changan, and GAC, Chinese media reported on May 28, citing chief executive of consumer business at the firm, Richard Yu.
• Baidu has teamed with domestic automakers such as BYD and Dongfeng, and plans to roll out its first consumer car with partner Geely later this year, while also supplying vehicle software technology to WM Motor, an EV startup backed by the search engine giant.

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 smartphone brands Oppo and Vivo have joined with education brand Okii to build a K-12 school in the southern Chinese city of Dongguan, where the brands have manufacturing facilities, according to an official announcement by ITHome on June 1. All three brands are owned by the parent company, BBK Electronics.

Why it matters: Okii is an edtech brand in China that makes study devices for kids. Leveraging BBK’s resources, the project shows the long-term ambition of the brands. 

Details: The school, called “Dongguan BBK Experimental School” (our translation), is approved by the Dongguan Education Bureau in Guangdong province. Oppo, Vivo, and Okii will begin enrolling students next September.

• The school focuses on K-12 education, covering kindergarten, primary, and middle school ages. It aims to accommodate 15 kindergarten classes, 60 primary school classes, and 30 junior high school classes.
• In preparation for its first academic year, the school plans to hire 99 teachers in two batches. The first batch will comprise around 30 jobs, with applications being taken from June this year. Teachers will be offered a yearly salary ranging from RMB 160,000 to RMB 600,000 ($24,037 to $90,139). The second batch of teaching posts will open to the public in September.
• The announcement also goes into detail about working benefits for teachers, including offering 56-square-meter apartments for teachers, as well as social insurance, holiday benefits, and year-end performance bonuses. The salary offering and the additional perks are higher than average school offerings. 
• The original announcement has since been removed from BBK Education’s official WeChat account. TechNode was unable to reach BBK Education on Monday. 

Context: Oppo and Vivo are following the footsteps of other large consumer electronics firms in building a community in their base cities. Samsung and Haier have done similar social projects.

• In South Korea, smartphone giant Samsung has a deep presence in the country’s social life, building hospitals, pharmaceuticals, apartment buildings, and other social projects. Last December, Haier, a Chinese appliance giant, launched a school in the eastern city of Qingdao with the aim of opening for students in 2022, Chinese media outlet Jiemian reported.
• Founded in 1998, BBK Electronics is one of China’s largest consumer electronics manufacturers. According to its official website, its business covers education, mobile tech, and home appliances.

TikTok owner ByteDance is looking to re-enter the Indian market through a partnership with local company Hiranandani Group, nearly two years after being banned in one of the world’s fastest-growing economies, Indian media outlet Economic Times reported on Wednesday.

Why it matters: ByteDance’s effort to re-enter India, if successful, could pave the road for other Chinese companies, including major players such as Tencent and Alibaba, to access a market that’s undergoing rapid growth in mobile internet and one where they have already invested tens of billions.

• ByteDance’s effort to gain access to India through a partnership is reminiscent of some of the solutions international companies have sought when faced with blocks in China. The Chinese government requires foreign companies engaged in “restricted” areas, such as chemicals and machinery like engines and cameras, to set up a joint venture with a local Chinese partner to run in the country.
• Even if Chinese tech giants could make a successful comeback, they would still have to catch up with India’s quickly changing market, which has fostered its own alternatives in the absence of Chinese firms.

READ MORE: INSIGHTS | Does India need China tech?

Details: ByteDance is in discussion with Mumbai-based realty major Hiranandani Group in an attempt to re-enter India, the Indian media outlet Economic Times reported.

• Joining forces with a local company is expected to help ByteDance avoid government scrutiny in India, the company’s second-largest market and a country where it had more than 2,000 employees before being banned in 2020.
• Details of the partnership remain elusive since the talks are still at a very early stage. But ByteDance has informed Indian regulators about its intentions, the report said. A senior government official told Economic Times that there’s been no official approach yet, but that they will examine the requirements when the companies seek government approval.
• Hiranandani Group runs data center operations. A partnership would allow ByteDance to store user data within the country, therefore making it compliant with local regulations.
• ByteDance didn’t respond to TechNode’s inquiries on the matter when reached on Thursday morning.

Context: The Indian government banned nearly 200 Chinese apps from June to September 2020 as China and India engaged in a border conflict. Some of the most popular Chinese apps and services, including TikTok, WeChat, Shein, and Alipay, have remained on the blacklist. 

China announced a broad campaign on Tuesday in which 26 automakers will create incentives for people in rural China to buy electric cars, in an attempt to revive flagging car sales after a wave of coronavirus lockdowns hit the country’s economy. 

Why it matters: The move is Initiated by policymakers as part of a larger scheme to boost big-ticket purchases and battle the deepening economic fallout from the Covid-19 pandemic.

Details: A total of 26 auto firms, including BYD, state-owned SAIC, Volvo’s parent company Geely, and GAC’s EV subsidiary Aion, are joining a series of online promotional campaigns targeting car buyers in rural areas and lower-tier cities in at least 11 Chinese provinces.

• Automakers will be encouraged to work on sales incentive programs in collaboration with e-commerce platforms to generate offline car sales from May to December, according to a statement (in Chinese) jointly issued by four government agencies on May 16 and released to the public on May 31.
• The Ministry of Industry and Information Technology, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the National Energy Administration jointly launched the campaign. They will also team up with provincial governments to push supportive measures that will encourage more people to buy EVs, such as more investment in public charging infrastructure.
• Other automakers participating include state-owned automakers Dongfeng and Changan, SAIC-GM-Wuling (a joint venture between General Motors, SAIC, and Wuling Motors), as well as WM Motor and Leapmotor. The China Association of Automobile Manufacturers (CAAM) is assigned to collaborate on the project.

Context: Beijing has pledged to mitigate the adverse effects of the Covid-19 outbreak on the auto industry, including cutting vehicle purchase taxes up to RMB 60 billion ($9 billion). In addition, multiple local governments have unveiled new cash subsidies and announced new vehicle quotas to stimulate car purchases.

• In April, China’s new car sales fell 47.1% from March to 1.18 million units, with a 38.3% slump month-on-month in sales of new energy vehicles, including all-electrics, plug-in hybrids, and hydrogen cars, CAAM data showed (in Chinese).
• Big automakers such as Tesla and SAIC, the latter of which has joint ventures with Volkswagen and General Motors, were forced to suspend operations at their factories in Shanghai throughout most of April as the city enforced a strict lockdown to stop the spread of Covid-19.

TikTok’s Chinese version Douyin announced on Tuesday that its online sales more than tripled for the year ending in April, an impressive growth rate for the e-commerce upcomer when other majors are slowing down due to an economic downturn in China.

Why it matters: Chinese short video platforms like ByteDance-backed Douyin and Kuaishou are quickly taking away the market shares of e-commerce giants like Alibaba, JD, and Pinduoduo, thanks to their widely popular social content.

• Douyin chose to announce sales numbers and growth plans on the eve of China’s 618 shopping festival to build momentum for the mid-year spending frenzy, a local media outlet in Chengdu reported.

READ MORE: 618 is not just about e-commerce platforms anymore

Details: Douyin’s gross merchandise value (GMV) surged 320% year-on-year in the year ending in April as the company sold more than 10 billion products, president of Douyin E-commerce Wei Wenwen said (in Chinese) at a Douyin e-commerce conference on Tuesday.

• At the online meeting, Douyin rebranded the concept of “interest e-commerce” as “full-field interest e-commerce” after rolling out the idea last April. The company hopes to highlight its ability to attract consumers through multiple channels such as short videos, livestreaming, its search function, and more, said Wei at the conference.
• The firm didn’t give a specific GMV figure, but people with knowledge of the matter told Caixin that Douyin achieved more than RMB 800 billion GMV in 2021 and is expected to bring in between RMB 1 trillion and RMB 1.2 trillion this year. However, the company said the figure is “inaccurate” in response to Caixin. 
• Douyin E-commerce, which became a stand-alone business unit only two years ago, achieved fast growth by tapping into Douyin’s 600 million daily active users. Douyin generates more than 200 million short videos and holds 9 million livestream sessions per month in a bid to convert user attention to sales. 
• Douyin’s Wei said she believes plenty of opportunity remains in the sector and that the platform aims to take more than 50% of the industry’s growth market in the future.

Context: Although still holding the lion’s share of the market, Alibaba, JD, and Pinduoduo are recording decelerated growth as they face macroeconomic headwinds, regulatory challenges, and pandemic control measures.

• Alibaba’s global consumer-facing businesses generated RMB 8.3 trillion in GMV for the year ending in March, remaining relatively flat compared to the RMB 8.1 trillion recorded a year ago. In 2021, Pinduoduo’s GMV increased 46% year-on-year to RMB 2.4 trillion, while JD’s GMV grew 26.2% year-on-year for the same period. Kuaishou’s GMV increased 78.4% year-on-year to RMB 680 billion in 2021.
• Douyin’s e-commerce sales dwarfed its global sibling TikTok, which reportedly achieved nearly RMB 6 billion GMV in 2021.

Dingdong Maicai plans to suspend operations in several lower-tier cities in China, joining a slew of grocery delivery platforms downsizing amid a cooling market.

Why it matters: Dingdong is pivoting from expanding by all means to prioritizing profitability, a trend that has been visible among many of the top players like Meituan and Alibaba.

• Dingdong’s cutback in lower-tier cities comes when China’s top-tier cities, Shanghai and Beijing, see surging demands for groceries, driven mainly by panic buying during lockdowns and uncertain times as the Covid-19 outbreak surged again in the country. 

Details: Dingdong will stop providing delivery services in two cities in the eastern province of Anhui — Xuancheng and Chuzhou — from 6 p.m. Tuesday, according to a May 29 report from Ahwang (in Chinese), a regional media outlet. The firm will also halt operations in the northern city of Tangshan in Hebei province and the southern city of Zhuhai in Guangdong province around the same time.

• Dingdong users’ group chats in these cities will be dissolved, and the company will refund any outstanding balance in users’ prepaid accounts, according to a statement from the company.
• Suspension of services in these cities is part of the “company’s normal business adjustment and optimization,” a Dingdong representative told TechNode on Tuesday.
• The Ahwang report added that the company’s business in Guangdong province’s Zhongshan and Zhuhai is also undergoing adjustments. Meanwhile, services within the Yangtze River Delta area, where the firm expects to achieve profitability soon, remain unaffected.
• TechNode found that Dingdong users in Shanghai still can’t order freely as of Tuesday morning. Instead, they have to compete for limited amounts of order slots, a measure that was introduced amid soaring demand and staffing shortage during the city’s Covid-related lockdown that began in late March. 

Context: Online grocery and food delivery teams at various Chinese tech giants were among the worst-hit units in the country’s ongoing mass tech layoff. Dingdong reportedly launched a series of job cuts in January this year.

• Along with around 150 US-listed Chinese companies, Dingdong has been added to US’s Securities and Exchange Commission’s provisional delisting list targeting foreign companies that have failed to comply with the country’s financial audit rules. 
• In its fourth-quarter earnings of last year, the grocery delivery company said that it achieved profitability in Shanghai for the quarter. 

Qualcomm and MediaTek plan to cut another 30% in 5G chip orders in the second half of 2022 due to a decline in orders from Chinese phone makers, according to Ming-Chi Kuo, an analyst at TF International Securities and a frequent Apple supply chain news commentator, wrote in a May 22 report.

Why it matters: Weak demand in the Chinese smartphone market has resulted in domestic phone makers cutting orders, causing a ripple effect in the industry. Additionally, android phones are using processors one or two generations behind Apple, making them face a long uphill battle in China.

Details: Qualcomm and MediaTek, two of the world’s largest system-on-a-chip (SoC) makers, have reportedly been forced to cut orders after Chinese phone brands had to cut smartphone orders as a result of Covid-19 lockdowns across China and weak demand for smartphones.

• Kuo surveyed major Chinese Android phone brands, including Xiaomi, Oppo, Vivo, Transsion, and Honor, finding that they had cut another 100 million orders since his last survey on March 31. 
• Kuo’s survey also showed that Taiwan-based MediaTek has cut orders for the fourth quarter of this year by 30%-35%, with those mainly focused on mid-to-low-end chips. Additionally, Qualcomm cut orders of its high-end Snapdragon 8 series by about 10%-15% for the second half of 2022.
• Kuo explained that the performance of 5G chips can be seen as a long-term indicator of the strength of the smartphone industry. Due to the longer lead-time needed for 5G chips, declining orders indicate that the Chinese smartphone market will remain muted during the peak season of the third and fourth quarters and won’t see a comeback till the first quarter of 2023.
• Louis Liu, an analyst from CINNO Research, told TechNode a similarly pessimistic prediction and believes that smartphone sales in China would drop by 7%-8% this year.

Context: China shipped 17.6 million smartphone units in April, a yearly decline of 21.6% and 12.2% less from March. The decline can be attributed to a drop in market demand and less promising processors for Android phones compared to Apple’s, according to a report from CINNO Research.

• Apple, on the contrary, remains relatively strong in the Chinese market due to the US company’s processors being two generations ahead of those supplied by Qualcomm and MediaTek.

Nio is building a new battery research and development center near its headquarters in Shanghai, intending to develop and use new types of battery cells in its electric vehicles (EVs), a Shanghai government filing showed on Monday.

Why it matters: Nio’s move is part of a growing trend among automakers attempting to develop their own batteries to secure an advantage in China’s fast-growing EV segment, which has been hit by supply chain bottlenecks in recent months.

Details: The facility will be approximately 22,090 square meters (roughly 237,775 square feet), and located in the city’s northwestern Jiading district. It will involve an investment of around RMB 219 million ($32.8 million), according to a filing (in Chinese) by the environmental assessment firm conducting a feasibility study for the project.

• The new facility will encompass 31 laboratories, one trial production line for lithium-ion battery cells, and one assembly line for battery packs made from lithium-ion cells, which could pave the way for Nio to make new batteries with improved performance capability and better safety measures at scale, the filing said.
• Slated for construction as early as August this year, the center will operate 250 days per year and employ about 400 staff, the EV maker said in the filing, but it did not reveal when the facility will start operations.
• Nio did not respond to TechNode’s requests for comment.

Context: Nio has been sourcing cells manufactured by Chinese battery supplier CATL and assembling them into battery packs at one of its factories in the eastern city of Nanjing since mid-2019, in addition to undertaking in-house production of electric motors.

• Leapmotor, another local EV startup, revealed (in Chinese) its so-called “cell-to-chassis” technology last month, which skips the need for battery packs and integrates modules directly into the vehicle body. Typically, battery cells must first be fixed into a battery module when being added to an EV.
• Tesla has been producing battery packs with cells from its partner Panasonic at a factory in Nevada since 2016. Chinese EV giant BYD is currently the world’s third-biggest battery maker with a market share of 11.1% as of March 31, Bloomberg reported on May 2, citing figures from South Korean research firm SNE Research.

READ MORE: Nio, Xpeng, Li Auto see dismal April deliveries as coronavirus lockdowns disrupt production

Chinese smartphone maker Xiaomi released the Redmi Note 11T Pro and Pro+ on Tuesday, priced at RMB 1,799-2,499 ($270-$374). The new models mark a further move into higher-end markets for the sub-brand Redmi, which was previously focused primarily on budget devices.

Why it matters: The new series is indicative of the maturation of Xiaomi’s phone offerings, which have found significant popularity in China and in developing markets overseas. The new Redmi Note phones, targeted at middle- and high-end customers, will intensify competition between Xiaomi and rival brands such as Oppo’s Realme.

Details: The newly released Redmi Note series promises higher specs than previous Xiaomi models without abandoning the brand’s affordable image.

• The new phone features a highly-rated MediaTek Dimensity 8100 processor, produced by TSMC’s 5nm process and an efficient cooling solution.
• The Redmi Note 11T Pro and Redmi Note 11T Pro+ come with a 6.6-inch 144 Hz LCD screen, which changes tone according to the environment; however, the screen is a downgrade from the Redmi Note 11 released in February.
• The two models are distinguished by their battery capacity and charging speed. The plus version has a 4,400 mAh battery which is smaller than the pro’s 5,080 mAh. However, the plus version features a much faster wire charging speed thanks to its in-house Surge P1 charging chip, which charges 79% faster than the pro model.
• As for the cameras, the new phones have a 64 million pixel primary camera alongside additional wide-angle and macro cameras. 
• Other features include Dolby-supported dual speakers, high-resolution audio verification from Sony, Bluetooth 5.3 and Wi-Fi 6 capability, and an infrared remote control feature for home appliances.

Context: Xiaomi is the third-largest mobile vendor globally after Samsung and Apple, with a  12.8% of the global smartphone market share in April, according to web analytics firm StatCounter.

• Xiaomi initially launched the Redmi brand to sell budget devices, but in 2019, it began moves to attract more medium and high-end customers.
• Redmi said on its social media accounts on Tuesday that sales of its Note series had hit 280 million units in total worldwide. 
• Xiaomi’s phone sales have been driven chiefly by emerging markets outside its home market. The company is the highest-selling phone brand in India, accounting for a quarter of all sales in the country. In contrast, it occupied just 1.4% of the North American market in April 2022, according to StatCounter.

Top automakers such as Tesla and SAIC (Volkswagen’s partner in China) are slowly rolling towards a restart after weeks of shutdowns of their plants in Shanghai, China’s worst coronavirus outbreak site, in two years. Baidu and self-driving unicorn Pony.ai received permits to offer fully autonomous rides to the Beijing public in late April, the first service of its kind in the country. Domestic battery suppliers saw profits plunge in the first quarter amid rising raw material costs, thanks to a strong demand for electric vehicles (EVs) that utterly outstrips supply.

Shanghai’s Covid outbreak continues to weigh on auto production through May

As Tesla and Volkswagen’s plants in Shanghai slowly resume production, China’s auto industry is struggling to regain the momentum lost during a citywide lockdown that has dealt a significant blow to local businesses over the past two months. Government officials said on May 13 that employees from 95% of the companies on a whitelist of 666 firms prioritized for business resumption are now getting back to work, with automakers and suppliers accounting for more than a third of the total.

China’s biggest automaker SAIC said on May 13 that its joint facilities with Volkswagen and General Motors have restarted production in mid-April in a single shift rather than their usual two shifts, with each plant assembling at least 2,000 vehicles every day. As a result, Tesla shipped out another 4,000 locally-made vehicles to Europe on May 15, four days after its first shipment of 4,767 cars set sail from the Port of Shanghai – the first to do so since the start of the sweeping lockdowns in the city, Chinese media reported.

Supply chain hurdles: Disruption related to labor and supply chains continues to impact auto firms, as many workers can’t return to their workplaces due to inflexible Covid-19 control restrictions in many parts of the city. Tesla’s Shanghai facility reportedly idled most of its production lines for a few days earlier this month due to insufficient supplies, when Aptiv, one of its key parts suppliers, halted shipments of some parts due to new Covid cases at its local plant.

Auto supplier giant Bosch has only experienced a partial recovery with output at around 30%-75% of its pre-pandemic levels at several manufacturing sites, a result of worker shortage and supply chain crunch, its China president Chen Yudong said at a May 11 press conference, while also calling for the easing of Covid restrictions. 

The auto firms that have resumed operations represent only a fraction of the 20,000 parts suppliers, big and small, located in Shanghai and nearby regions, state-owned media outlet China Newsweek reported on May 11, citing several experts.

Weak Q2 guidance: Analysts expect output to slightly recover in May but believe a full recovery is still some way off, as the industry struggles with massive uncertainty caused by Covid lockdowns. Li Auto, which has a production base in the eastern city of Changzhou, was among the automakers hit hard by the lockdown, releasing poor second-quarter revenue guidance on May 11 due to a likely disruption to parts supplies.

And yet, there is still a chance to make up for lost sales in China during the rest of the year if automakers can ramp up car output, given that a growing number of consumers feel safer traveling alone than taking public transport, experts say. In April, Tesla maintained its forecast of at least 50% annual growth for vehicle deliveries this year, despite saying that production volume could take a hit of 8% in the second quarter due to a month-long production halt at its Shanghai facility. The China Passenger Car Association predicted that total passenger vehicle sales may face zero growth to remain at 20.1 million units this year, compared with 2021’s growth rate of 4.4%.

Driverless cars get a push from China’s capital

In a rare step, Beijing authorities announced on April 28 that Baidu and Pony.ai have been authorized to participate in the country’s first pilot program to provide driverless rides to the public in test vehicles. Following the move, Baidu and Pony.ai began by operating 10 and four autonomous vehicles, respectively. The vehicles operate without safety drivers on public roads in an area of 23 square miles in the city’s southeast Yizhuang district. However, each vehicle has a company employee overseeing the journey in a passenger seat, and the firms are not allowed to charge a fee for now.

Chinese self-driving car companies have faced a long and arduous reality check since a wave of early hype and hopes of scaling the technology. Now, regulators are giving the industry a boost by permitting the offering of autonomous services to the public in the country’s capital city – with no human safety driver at the wheel. Concurrently, the race to prove robotaxis are a viable business is intensifying among the top contenders.

AVs undergo reality check: Despite the milestone in Beijing, few of China’s self-driving car startups are making any money, and venture capitalists have been cooling on the companies over the past year, particularly those with little to show commercial prospects. Total investment activity for robotaxi companies fell by 22% annually to $8.4 billion in much of 2021, data compiled by startup data platform PitchBook and obtained by Reuters showed.

Major players are working hard to live up to their promises. WeRide became China’s first self-driving company by testing completely driverless cars in the southern Chinese city of Guangzhou in July 2020. In January of this year, its fleet of 300 autonomous vehicles had logged 10 million kilometers after four years of testing. For Baidu, that number is more than double, and the tech giant said that it provided more than 320,000 autonomous rides in eight domestic cities as of last year, with plans to expand the service to 65 cities by 2025. 

Chinese battery makers’ profits slump amid supply chain issues

Drops in Q1 profit: Despite being buoyed by strong demand for electric vehicles in the country, Chinese battery makers are facing a profit squeeze as the global supply chain continues to buckle under the pressure of rising costs, limited raw materials, and manufacturing disruption. On April 29, CATL reported a year-on-year profit tumble of 41% to RMB 977 million for the three months that ended in March, which came in far below expectations of a RMB 5 billion profit from multiple analysts. It was CATL’s first quarterly decline in net profit since 2020. Meanwhile, profits of the Volkswagen-backed Gotion declined 33%, while Sunwoda, a lesser-known supplier invested in by EV maker Li Auto, also saw a 26% decline in profits despite double-digit revenue growth.

Q2 easing expected: Margins for battery makers have been dragged down by surging raw material costs made worse by the Russia-Ukraine conflict and a global pandemic. An index for battery-grade lithium prices increased by 127% in the first quarter of this year, after a 280% surge in 2021, according to data provider Benchmark Mineral Intelligence. The costs of nickel and cobalt also exploded during the first three months of this year, which hit battery suppliers hard since many of them had negotiated quarterly price terms with automakers for the period up to last December.

Analysts estimate that the supply shortage of raw materials will slightly ease starting in the second quarter of 2022 as battery suppliers step up efforts to secure minerals and expand production capacity. Margins are also expected to improve as most battery makers increased the prices of their products in March by at least 15% for the second quarter, China Securities Journal reported on April 28, citing company sources. This rally in material costs has been reflected in the recent price increases for EVs, ranging from RMB 2,000 to RMB 30,000, although analysts expect that EV sales will maintain their growth momentum this year, boosted by inflated oil prices.

Qcraft, a Chinese autonomous driving startup, said at a Wednesday conference that it is partnering with ride-hailing firm T3 to bring self-driving vehicles onto the latter’s ride-share network in the eastern city of Suzhou. T3 users within the range of those vehicles’ routes will soon be able to select one for a ride.

Why it matters: The partnership is the latest example of driverless tech firms rushing to work with more consumer-facing companies as they aim to commercialize autonomous driving tech. 

Details: Starting from July, Qcraft and T3 will begin offering rides to public passengers using self-driving cars within a restricted area in Suzhou, a neighboring city of Shanghai, where the companies are already testing the vehicles.

• The initial phase of the pilot deployment is expected to allow the companies to fine-tune their robotaxi offering by collecting rider feedback and improving user experience ahead of a commercial launch, according to an announcement (in Chinese). 
• On Wednesday, Qcraft also announced plans to test its self-driving system for consumer cars beginning in the third quarter of this year, collaborating with Chinese chipmaker Horizon Robotics. Backed by leading tech companies Meituan and ByteDance, the three-year-old Qcraft is testing a fleet of more than 100 autonomous mini-buses and sedans in around 10 major Chinese cities.
• T3 has emerged as a significant rival to Didi and is backed by state auto majors FAW, Dongfeng, and Changan. The ride-hailer completes over 3 million rides every day with operations in more than 80 Chinese cities, its vice president Li Jinfeng told reporters at a press briefing on Wednesday. To compare, Didi reportedly provided 20 million trips per day in January.

Context: Other Chinese self-driving car companies are racing to launch commercial autonomous ride-share services either by themselves or with partners.

• Baidu began operating fully autonomous taxis in the suburbs of Beijing in late April, a few months after being allowed to charge customers fares for rides in the capital city. The tech giant said it had offered around 213,000 rides in eight domestic cities in the fourth quarter of 2021.
• Self-driving unicorns Pony.ai and WeRide have turned to ride-hailing service OnTime for a wider group of users, recently participating in its RMB 1 billion ($153 million) Series A, TechCrunch reported on April 27. Operating in the southern Guangdong province, OnTime was launched by state-owned automaker GAC in mid-2019 and backed by Tencent.

Chinese online retailer JD posted mixed results for the first quarter of this year on Tuesday. The company beat market expectations on revenue but recorded its slowest revenue growth as a public company as net losses widened for the quarter.

Why it matters: JD, along with rivals including Alibaba, faces several headwinds, from Covid-19 lockdowns in many Chinese cities to sluggish retail consumption to a weak macroeconomic outlook.

• The revenue growth rates of major Chinese e-commerce tech giants have been hitting new lows since late last year. JD rivals Alibaba and Pinduoduo, which have yet to release their first-quarter results, recorded their slowest revenue growth for the fourth quarter of last year.
• These companies are adjusting their operational structures and product lines to adapt to a challenging economic environment.

Details: JD’s total revenue increased 18% year-on-year to RMB 239.7 billion ($37.8 billion) for the first quarter of this year, beating the $35.6 billion high-end estimation compiled by Yahoo Finance. However, this is its slowest growth since JD went public on the US market in 2014.

• In the first quarter, total revenue for the company’s core retail business increased 17% year-on-year to RMB 217.5 billion, while the company’s second-largest business segment, JD Logistics, climbed by 22% to RMB 27.4 billion compared with the same period last year.
• The company’s net loss for the reporting period was RMB 3 billion compared to a net income of RMB 3.6 billion one year ago. These increased costs and expenses related to investment in infrastructure, research and development, as well as order fulfillment and employee benefits, which were hiked up by recent lockdowns in Chinese cities.
• “Since the start of 2022, we have seen many challenges arise in our external environment, including the Covid resurgence, supply chain disruptions, and weak consumer sentiment, among others,” JD’s chief executive officer Xu Lei said in the company’s earnings call, held on Tuesday.
• Recent omicron outbreaks in China have a much more significant impact on the supply chain than in 2021 because of higher contagion rates, Xu pointed out. While the Covid-19 outbreak in 2020 brought “some positive effect” to the internet and e-commerce sectors by accelerating the online migration of users, the ongoing outbreak has “hit both online and offline enterprises heavily.”  

Context: On Tuesday, China’s top political advisory body held a consultation session to promote the digital economy. Vice Premier Liu He emphasized support for the platform economy and the list of digital companies overseas.

• China’s online retail sales increased 6.6% in the first quarter of this year, the slowest growth rate since June 2020, according to data from China’s National Bureau of Statistics. On the bright side, more consumers have chosen to buy goods online over the past two years. The online retail sales for physical goods accounted for 23.8% of total retail consumer goods sales in the four months ending April, up from 18.6% for the same period in 2019.

A new Chinese startup founded by DingTalk’s former CEO Chen Hang launches a new line of wireless earbuds, its first consumer electronic product, on Tuesday on the US crowdfunding site Indiegogo. 

Why it matters: The earbuds are the first batch of releases from Chen Hang’s new startup called HHO, which he founded after leaving Alibaba’s workplace collaboration app DingTalk in July 2021. Chen’s new project focuses on helping local Chinese manufacturers to produce and sell products directly to overseas consumers. 

Details: The main selling point of the earbuds are their light control feature. Called GPods, the earbuds beam lights along the spine. It also supports customized control for the color and pattern of the light. A corresponding app uses an algorithm to pick and generate color patterns from any picture chosen by the user. The color can change to match the beat of the music.

• The earbuds have a premium setup with 10mm dynamic drivers and high-definition audio coding technology via Bluetooth version 5.2.
• The earbuds also support Active Noise Cancellation, offering a cleaner sound in noisy surroundings.
• The earbuds can reach five hours of listening time with a full charge and 20 hours of listening time when used with the charging case. But the listening time drops to only three hours when noise cancellation technology and light effects are turned on. Additionally, the earbuds are equipped with fast charge technology. A charge of ten minutes gives the user two hours of battery life. 
• The product has an IPX4 rating, which means it can bare water splashes from any direction, enabling it to work in light rain and similar situations.
• The product is priced at $89 to $99 on the crowdfunding platform and released through HHO’s sub-brand HHOGene.

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 smartphone maker ZTE announced the launch of Axon 40 Ultra on Monday, the third generation of a smartphone that features an under-display camera.

Why it matters: ZTE has adapted an under-display camera design, rather than traditional options like notch display or hole-punch display,  to create an all-screen design. 

Details: Axon 40 Ultra is equipped with an all-screen 6.8-inch display. The phone maker touts improved screen image quality compared with previous generations.

• The new phone has a 93.1% screen-to-body ratio. For context, Apple’s iPhone 13 Pro Max has a screen-to-body ratio of 87.4%.
• In previous generations, ZTE had to compromise other qualities to achieve the under-display camera design, like decreasing pixel density, leading to less ideal display quality. The Axon 40 Ultra has solved such issues by increasing the screen’s pixel density while reducing the size of pixels around the camera area.
• ZTE has also used new tech that separately controls every single pixel and decentralizes transparent circuits to create clearer image quality. The camera area is barely noticeable in a comparison video in the latest generation.
• Another important spec of the phone is its triple 64 million pixel cameras. Axon 40 Ultra is the first to adopt a dual Sony IMX787 sensor for all back cameras. Other brands like Xiaomi, Huawei, and Apple have used high spec sensors on only one primary back camera.
• The Axon 40 Ultra will be available from Friday in China and launched in June for overseas markets, with prices ranging from RMB 4,998 to RMB 7,298 ($747 to $1,087).

Context: ZTE also revealed its 2021 overall performance during the product launch, recording 100 million unit shipments, with 50% of chips used in these shipments developed by the firm.

• ZTE released Axon 20, the world’s first all-screen phone with an under-display camera, in September 2020, which sparked critical reviews due to poor image quality.
• Since then, Xiaomi and Samsung have launched phones that have adopted an under-display camera option. They are Mix 4 and Galaxy Z Fold 3 phones. 
• In 2018, ZTE paid $1 billion fines to settle with the US government after being banned for working with American supplies. The US accused the company of violating a 2017 deal by evading sanctions on Iran and North Korea. In November 2021, the Federal Communications Commission stopped issuing new licenses to ZTE, cutting off the firm’s last hope to sell phones in the US.

Once focused on Chinese tech companies, venture-capital funds are pouring money into new noodle chain brands that sprung up in the country. Even tech giants like Tencent, the social and gaming behemoth, and an active investor, are doubling their bets on the sector. The capital inflow and media attention on a very specific food and beverage vertical highly resembles China’s coffee craze four years ago – and has many observers referencing the spectacular rise of Luckin Coffee.

Chinese-style noodle chain restaurants first became tech investor darlings in 2021 when the industry faced tightened regulation while the country’s consumers became increasingly willing to spend more on quality products and experiences. There were twelve noodle chain investment deals in the first half of that year, with a combined total of RMB 1 billion injected into the emerging area. The market scale of Chinese noodle restaurants is expected to be worth RMB 346 billion ($52 billion) by 2022, according to Chinese data analytics firm iiMedia Research.

So will China’s noodle chain market see the emergence of the “next Luckin”? Or, more importantly, will the market craze maintain its momentum?

Blurring boundaries between tech and consumption brands

Before its spectacular, highly controversial downfall after a financial fraud scandal, Luckin helped grow the popularity of coffee culture in a majority tea-drinking nation and fostered the growth of a trillion-dollar market in China. 

Coffee chains are not tech businesses, but Luckin borrowed a playbook from tech companies by building its ordering and delivery services around mobile apps while adopting online-first marketing and branding strategies typical of internet companies. It’s perhaps no surprise that Luckin adopted an internet-based approach to the coffee business, given the company shares the same founding team of car-sharing platform CAR, Inc. But it was nevertheless a fresh approach when Luckin first rose to stardom in 2018.

Luckin is still trying to recover from the aftermath of a shocking RMB 2.2 billion accounting fraud scandal. Still, the company’s approach to entering a traditional industry with heavy discounts and an online-first marketing strategy has been picked up by many companies and viewed by numerous investors as a proven business model.

This model has been partially tested in China’s milk tea industry, which has seen the rise of bubble tea giants like HeyTea and Nayuki attracting funds from tech majors. Tencent has invested in HeyTea and Canadian coffee chain Tim Hortons, while ByteDance has backed Shanghai-based coffee chain Manner.

Venture capital attention has since been turned to a slew of verticals in food and beverage. Hotpot brands (for example, Lanxiong Hotpot), Chinese pastry chains (such as Bao Shifu), and packed stewed snacks (including Tencent-backed Shining Taste) are also getting investor attention. But for many investors, noodles, one of China’s favorite staple foods, is the next break-out vertical to win over.

The race to be Luckin for noodles

Luckin’s approach has prevailed in China’s noodle market over the past year. Armed with funding, a host of noodle brands have targeted rapid offline expansion combined with online marketing campaigns to quickly capture market share. Here are a few rising players in China’s new noodle chain brands.

• Hefu Noodles: A top player in the field, this decade-old brand of Beijing-style noodles operates more than 380 stores across China as of February. It has so far secured six funding rounds totaling RMB 1.6 billion. The company’s most recent Series E booked RMB 800 million in July 2021 from investors, including CMC Capital, Tencent, ZWC Partners, and Longfor Capital. With a market valuation of RMB 7 billion, the company is gearing up for an overseas IPO this year.
• Chen Xianggui: This Lanzhou-style noodle chain restaurant has received more than $300 million in funding since its establishment in 2020. Investors include Source Code Capital, an investor in ByteDance and Meituan, and Huaxing Growth Capital, the tech and entertainment-focused venture capital arm of financial institution China Renaissance. The company’s valuation reached nearly RMB 1 billion, with the most recent RMB 200 million funds secured last November.
• Majiyong: Tencent invested in the operating body of Majiyong, an upstart beef noodle brand, in late January. Last May, the Shanghai-based food chain received an angel round from renowned tech investors, including Sequoia Capital, Gaorong Capital, and K2 Venture Capital, at a valuation of RMB 1 billion ($160 million).
• Yujian Noodles: The valuation of the Chongqing-style noodle chain reached RMB 3 billion after receiving RMB 100 million in funding in September last year. Investors include Country Garden Venture Capital, the investment arm of property developer Country Garden, and restaurant chain Xijiade. 

Noodles 2.0: standardize noodle-making 

Chinese have been cooking and eating noodles for thousands of years, creating many varieties and styles of noodle dishes, making the category a rich, busy place for competition. While traditional Chinese noodle joints have shabby storefronts and affordable pricing, the new noodle chains have chic dining settings and are often located in malls and business areas, offering a Chinese-style fast food alternative for urbanites. 

Such stores are usually accessible through various online food delivery platforms and offer streamlined membership services embedded in popular social media apps such as WeChat. The noodle newcomers also charge higher prices with better service and chic settings. For example, a typical bowl of tomato and beef noodles at Hefu Noodle costs RMB 38, much higher than similar items sold at below RMB 20 in traditional shops.

On top of that, the new breed of noodle chains save on operating costs by standardizing and streamlining food production at “central kitchens,” which are back-end facilities that pre-prepare frozen packages of noodle toppings for the restaurants. This model saves chains on the cost of hiring professional chefs for in-store cooking while making better use of storefront spaces for diners.

Will the Luckin recipe work?

For investors, capital flows to where it could make the biggest profit. Tech venture capitalists are shifting attention to new consumer consumption brands when China continues to clamp down on the tech sector. Combining that with a growing base of comfortable Chinese consumers looking for better dining and life experiences, investors see the food industry as a new, safer sector to chase potentially mouthwatering returns. 

There’s no doubt that capital support is an indispensable element in developing an emerging industry, but it’s not the only or even the most important factor for a successful business. Luckin’s ousted founder and chairman Lu Zhengyao (Charles Lu) was among the first to launch a new Chongqing-style noodle shop (called Quxiaomian) last year in an attempt to duplicate Luckin’s success. But the brand received a lukewarm reception from diners and was soon forced to downsize operations.

An excessive inflow of hot money can also harm the long-term development of a market. From subsidy-fueled market grabbing wars to skyrocketing valuations, China’s tech market has seen multiple “bubbles” burst over the past two decades. The latest case was the community group-buy industry, where even top players collapsed after the venture craze ebbed last year.

In addition, the noodle market is facing obstacles before it can really take off. As with any offline business in China at the moment, noodle chains are dealing with dropping foot traffic as China fights a new wave of Covid-19 outbreaks with strict lockdown measures, which seem unlikely to end any time soon. The new noodle chains are not only competing with their peers but also with traditional noodle stores, which better cater to the taste of more price-sensitive users and sometimes hold a rustic charm and human touch that the newcomers can’t replicate. 

However, with the inflow of capital and market attention, the new noodle chains are a sector worth following.

On Thursday, Chinese telecommunications giant Huawei released Mate Xs 2, the second generation of its foldable Mate Xs series, priced from RMB 9,999 ($1505).

Why it matters: Huawei first adopted an outer folding design for its foldable phones in 2019, differing from mainstream models that folded inward, thereby solving the key issue of the prominent crease on the screens of foldable phones. With new hardware updates, Mate Xs 2 is vying to be a strong competitor in this vertical.

Details: Targeted at the high-end market, Huawei highlighted Mate Xs 2’s top-line tech specifications at the launch event on Thursday.

• According to the company, the new foldable phone continues with an outer fold option and has a 7.8-inch display, which downsizes to 6.5 inches when folded. 
• The maximum size of the model is slightly smaller than the 8-inch display on the recently released Vivo X Fold but is 18% lighter in weight.
• The OLED display on the Mate Xs 2 supports a 120 Hz refresh rate, with high rate dim illumination tech, that can reduce the harm to users’ eyes in dark environments.
• The phone is equipped with a Qualcomm Snapdragon 888 4G processor and has two combinations for memory storage: 8 GB RAM plus 256 GB or 512 GB storage and 12 GB RAM plus 512 GB storage. Huawei is having difficulties buying 5G chips due to US export restrictions. 
• The Mate Xs 2 features three cameras, which gives users the option of framing from ultra-wide to telephoto, with a maximum of 5,000 pixels image quality when shooting with the main camera. The phone also supports filming in 8K resolution.
• Although Huawei’s outer folding design solves the creasing issue, it makes the display more fragile, especially the phone’s folded spine. Huawei has yet to introduce extra protection that can solve this issue. 

Context: In 2021, Huawei shipped 900,000 units of foldable phones, accounting for 10% of the market, a distant second to Korean manufacturer Samsung, which accounts for 88% of the market.

• While many Chinese phone manufacturers have released their own foldable phones, such as Xiaomi, Oppo, and Vivo, Huawei remains predominant among Chinese brands.

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.

On Tuesday, Meituan suspended the Beijing operations of Meituan Select as the Chinese food delivery and local life service giant joins local peers in scaling back community group buying businesses.

Why it matters: Meituan and Pinduoduo led China’s community group-buy craze that took off two years ago. Meituan Select’s withdrawal from Beijing has raised market speculations about the company’s further retreat from the cooling market. 

• The company halted the service despite a recent surge in consumer demand for grocery products, driven by panic buying in the city after finding new coronavirus outbreaks.
• The news came two weeks after a major layoff in Meituan, which reportedly hit grocery delivery services Meituan Select and Meituan Maicai, as well as enterprise-facing food distribution arm Kuailv, the worst.

READ MORE: The Big Sell | Will Shanghai lockdown change the game for community group buying?

Details: Meituan stopped receiving orders for Meituan Select, a community group buying service that offers next-day grocery pickup services, in Beijing from Tuesday. The company has removed Meituan Select from the homepage of its main app and its WeChat mini program, local media outlet Caixin reported.

• Amid a market downturn, Meituan Select planned to shut down operations in loss-making cities a few months ago, according to Caixin’s report, which cited an unnamed employee at the company. Beijing was one of Meituan Select’s loss-making cities due to high delivery and order fulfillment costs and low margins.
• Although Meituan has taken a step back from the community group buying services, the Beijing-based company has joined grocery peers as it has beefed up its support for on-demand grocery delivery service Meituan Maicai to cope with the recent Covid-19 outbreak in Beijing.
• The company declined to comment on the matter when contacted by TechNode on Wednesday morning.

Context: China’s grocery delivery craze is losing momentum as the industry sees withering investment. After witnessing the collapse of a group of smaller players, deep-pocketed companies like Meituan, Didi, and Alibaba are retreating from the market after struggling to find a commercialization path.

• Meituan recorded a net loss of RMB 23.5 billion ($3.6 billion) in 2021,  compared with a net profit of RMB 4.7 billion in 2020. The company’s operating loss from new initiatives such as Meituan Select expanded to RMB 38.4 billion in 2021 from RMB 10.9 billion in 2020.
• Community group buying teams at various Chinese tech giants are among the worst affected by the ongoing layoffs in Chinese tech companies.

Major Chinese online grocery platforms are increasing their product supplies in Beijing as residents rush to stock up on food and daily supplies after the capital city announced a surge of local Covid cases. 

Beijing health authority said on April 24 that the city found a local Covid outbreak has spread for a week, with more than 40 local cases since April 22, prompting locals to worry about facing lockdowns and supply shortages like Shanghai. 

Why it matters: Having learned from what happened in Shanghai, China’s online grocers respond quickly to a surge in demand in Beijing. However, pressure on operation and supply chains remain as potential omicron outbreaks expand to other cities in the country. 

Details: Chinese online grocers like Meituan, Dingdong Maicai, and JD increased their stock and extended operation times as Beijing residents rushed to online platforms and offline supermarkets to stock up on daily supplies,  such as food and toilet paper.

• On Monday, Meituan’s grocery arm Meituan Maicai will increase product supplies three to five times and raise its sorting workforce by 70%. On top of that, the company said the service would begin receiving and delivering orders around the clock starting April 24.
• Alibaba’s Freshippo and JD’s 7Fresh plan to double or triple their stock, while Dingdong Maicai will increase its stock of staple goods by 150%, local media outlet GeekPark reported.
• On April 24, Dingdong Maicai saw a 50% growth in daily orders in Beijing. The platform said it plans to increase supplies to Beijing by 1.5 times and has set up a dedicated group to ensure deliveries in Beijing. 
• Offline supermarket chains Carrefour and Wumart expect to triple their usual stock.

Context: Beijing has reported a sudden spike in locally confirmed infections since April 22, with 42 Covid-19 cases reported over the past three days.

• Shanghai residents have had difficulties buying food supplies online since ongoing Covid-19 prevention measures immobilized more than 25 million people in the city over the past month.
• Online grocery platforms have served as a lifeline for residents in Shanghai since a city-wide lockdown began in late March. However, surging orders quickly overloaded the city’s online grocery operations.

READ MORE: The Big Sell | Will Shanghai lockdown change the game for community group buying?

OnePlus, the Chinese smartphone maker owned by Oppo, launched a new product line named Ace, targeting the global mobile gaming market. The company released the first model of the series on Thursday, pricing at RMB 2,499 ($384).

Why it matters: OnePlus is expanding its offering to the global mobile gaming market after launching OnePlus 9R last year.

• Chinese phone makers, like Xiaomi, have been known to use game performance metrics to sell their phones. OnePlus is vying to be a strong competitor in this vertical. 
• The mobile gaming market is rapidly expanding, and the global revenue of the sector will reach $116.1 billion in 2024, as estimated by global gaming insight firm Newzoo.

Details: On Tuesday, OnePlus revealed the new Ace product line for mobile gaming, alongside a new entrance level True Wireless Stereo (TWS) earbuds in a release event.

• The first model of Ace is powered by a customized processor designed by MediaTek. The 8100-MAX processor is said to be optimized for high-performance games and low-light videography. The new phone also features a 6.7-inch and 120 refresh rate screen supplied by a Chinese display maker BOE, and comes with a fingerprint scanner, which supports heart rate detection. OnePlus also announced an external cooler which they claim to improve overheating issues in mobile gaming.
• The names of the series, Ace, and the black and blue case color cater to OnePlus’ targeted users of mobile games. In many games, the term ace refers to a player who has defeated all enemies. The black and blue color versions of the phone also go by the names Kaihei and Huilan, which are gaming terms in popular games Dota.

Context: OnePlus merged with Oppo, another major smartphone brand in China, last year and is now an independent brand under the Oppo umbrella, focusing on overseas markets.

• In the premium smartphone market, where phones sell for over $400, OnePlus ranked fourth in North America in terms of sales in 2021. The brand is even more popular in India, where it is listed second among premium smartphones, behind Apple.
• On the brand’s eighth anniversary last year, Liu Zuohu, the founder of OnePlus and CPO of Oppo, announced that the company had shipped 10 million phones globally since it began operating in 2013.

Chinese game streaming platforms Huya and Douyu have begun slashing headcounts as China’s mass tech layoff continues, Chinese media outlet Tech Planet reported Friday.

Why it matters: The pair joined China’s large-scale layoffs among tech companies as the country tightens restrictions on the game livestreaming industry.

• Layoffs at Huya and Douyu are another blow for Chinese gaming giant Tencent, a major shareholder in both of the companies. The Chinese State Administration of Market Regulation (SAMR) blocked a merger deal between Huya and Douyu in July 2021 to avoid “further strengthening Tencent’s dominance in the game streaming market.”
• In mid-April, China resumed issuing gaming licenses to Chinese game makers after an eight-month freeze. But the regulator has yet to resume issuing licenses to overseas games. 

READ MORE: INSIGHTS | Chinese tech giants are still slashing headcounts

Details: Huya’s layoff mainly affects its international business department, which has more than 200 employees, or around 10% of the company’s total headcount, according to the report. The company is planning a 70% cut in its international arm, while its domestic business will also face a 20% layoff. Douyu is reportedly planning for a 30% layoff, targeting teams for gaming business development and livestream agent services.

• The international teams at both of the companies will bear the brunt of the layoffs as they operate in a new business area that demands more investment, the report cites an unnamed employee of Huya as saying.  
• Douyu said the layoffs are just part of their “normal human resources optimization,” according to the report.
• Regulatory headwinds and decreasing user bases led to weak financial performances for the two companies during 2021. Huya recorded a net loss of RMB 312.7 million ($49.1 million) for the fourth quarter of 2021 after consistently posting profits since its IPO in 2018. Douyu posted a net loss of RMB 193.2 million for the same period.

Context: Huya and Douyu account for a combined 70% of China’s game livestreaming market, the SAMR said in July 2021. Huya owns a 40% market share and Douyu 30%.

• Earlier this month, Tencent said it will shutter its game streaming platform Egame by June due to a “change in business strategies.”
• China’s gaming industry has felt the layoff chills since the beginning of this year, with many of the key players trimming their headcounts.

Pinduoduo is seeking offline retailers to join its platform as the e-commerce titan tries to expand into on-demand retail businesses, local media outlet Beijing Business Today reported on Monday.

Why it matters: As a latecomer to the game, Pinduoduo enters a crowded sector that already includes established incumbents such as Meituan, Ele.me, and JD Daojia.

• Shanghai’s Covid outbreak since March has prompted companies to rethink the importance of last-mile delivery capabilities, which is a weak point for Pinduoduo and is plaguing many major online grocers to deliver on time during the outbreak. At the usual time, on-demand retailers offer 30-minute or one-hour delivery as a standard service, but such promises became unsustainable during lockdowns.

READ MORE: The Big Sell | Will Shanghai lockdown change the game for community group buying?

Details: Pinduoduo is recruiting local offline retailers, front-end warehouse operators, wholesalers, and couriers in China’s first-tier cities of Shanghai, Beijing, and Shenzhen.

• For starters, the platform will focus on fruits, especially more perishable ones like watermelon and durian, a poster obtained by Beijing Business Daily reads. On-demand retail for more product categories such as gifts, flowers, and cakes is also being tested, the report added.
• Pinduoduo expects potential fruit retail partners to have the delivery capabilities to fulfill intra-city orders they receive through the e-commerce app within 24 hours. The delivery timeline is currently expanded to 48 hours during the pilot period.
• In other words, the platform will not take care of delivery for offline retailers like its rivals Meituan and Ele.me. Pinduoduo will only serve as a central platform for the retailing partners to access users. Pinduoduo claimed to have 868.7 million annual active users in 2021.
• Pinduoduo assured retailers in the poster that the delivery won’t be challenging to handle because they will divide the market into small delivery areas to the level of city districts and counties to make the business feasible for retailers.
• Pinduoduo didn’t respond to TechNode inquiries on the matter when contacted Wednesday afternoon.

Context: Pinduoduo has been adopting an asset-light approach to e-commerce since its establishment in 2015. While pushing to help more farmers access a wider market, the company has gradually moved to invest in logistics, warehouses, and other infrastructure since 2020.

• In February, Pinduoduo tested a pickup service to receive and send parcels on users’ behalf through partnerships with major couriers to expand its delivery capabilities. But the service was soon suspended because the firm hadn’t filed for a license to run a delivery business in China.
• The market scale of China’s on-demand retail market is expected to reach RMB 900 billion ($140 billion) by 2024, data from research agency iResearch shows.
• Nearly all of the major e-commerce companies have tapped into the market. The annual transacting users on Meituan’s on-demand retail service Instashoping reached around 230 million in 2021. Last year, JD launched a one-hour delivery service in partnership with Dada Group, the company behind JD Daojia and backed by JD and Walmart. Alibaba operates a range of services in the sector from Tmall Supermarket to Ele.me and Taoxianda. And in January, ByteDances’s Douyin piloted a logistics service called Yinzunda.

Apple’s supply chain companies in China face major production disruptions as Chinese cities follow the country’s strict covid policies with full and partial lockdowns since late March to tackle a new wave of Covid-19 outbreaks. Although Shanghai and nearby cities have recently begun to assist manufacturers in resuming operations, analysts still expect major disruptions to Apple’s shipments. 

Why it matters: China plays a vital role in Apple’s supply chain and its global shipments, with Chinese factories accounting for almost half of Apple’s total supply chain. iPhone shipments could fall behind by 6 to 10 million units, according to one analyst quoted by 9to5mac, an Apple daily news site. Meanwhile, expected arrival times for some iPad and Mac models have also been disturbed by weeks-long delays. 

Details: Shanghai began a two-step city-wide lockdown on March 28 as daily new Covid cases broke 4,000. The harsh control measures soon spread to neighboring provinces of Jiangsu and Zhejiang. These eastern regions are key to China’s high-tech manufacturing sector, including carmaking, semiconductors, and electronics. 

• Shanghai, its nearby Jiangsu province, and the southern province of Guangdong are home to more Apple supplier factories than anywhere else in the country, according to TechNode research on Apple’s supplier list. These three areas account for one-third of Apple’s total factories worldwide and 61% of China’s.
• At least 30 companies in Apple’s supply chain have factories in Shanghai, including Foxconn, a major assembler for Apple. Foxconn previously halted production at its iPhone assembly factory in Shenzhen on March 14 due to a lockdown in the southern city, before resuming production after one week. 
• Quanta is another key supplier based in Shanghai, which produces the MacBook for Apple. The company told Nikkei Asia that it had stopped production to comply with the local government’s Covid-19 prevention measures, beginning in early April.
• Apple’s second-largest electronic manufacturing services company, Pegatron, has also paused operations in Shanghai and neighboring city, Kunshan, according to Ming-Chi Kuo, an analyst for Apple.

Context: Shanghai’s ongoing weeks-long lockdown has triggered severe cascading effects in various industries from automobile to semiconductor to e-commerce. The Shanghai municipal government encouraged several key industries to resume production on April 16. But manufacturers still expect delays in the future. 

• On April 18, Shanghai released a whitelist of 666 companies of key industries to make sure they restart production as soon as possible. Auto manufacturers and suppliers account for more than a third of the list, followed by pharmaceutical companies, according to a “whitelist” created by the Ministry of Industry and Information Technology last week and seen by Chinese media Caixin.
• Following Shanghai’s footsteps, Suzhou also whitelisted 1,696 companies that play a key role in the region’s manufacturing supply chain to prepare to restart production, Foxconn was one of the companies on the list.

In locked-down Shanghai, Zhang Chen was standing by her community gate, waiting to pick up apples to be delivered to her apartment compound. She reveled in her luck at striking the apple deal because fruit had become a rare treat in the metropolis locked down since late March in response to a new Covid-19 outbreak. The city authorities prioritize delivering essential foods like rice and vegetables to the city’s 25 million residents. 

A neighbor who bought 15 kilograms of apples through a community group’s bulk buy last week was willing to split the order with her, saving Zhang days of waiting in this challenging time. 

Some Shanghainese have been locked in their homes since early March, when the city was only doing partial lockdowns. Shanghai began a two-stage city-wide lockdown on March 28 and promised to reopen by April 5, which never happened. The lockdown has been extended, and as of the time of writing, most of the city is still under lockdown. The unexpected long locking period has left many residents unprepared and scrambling to find food and supplies.  

At 10 in the evening, the little square in front of Zhang’s community gate was crowded with other people like her, either collecting their deliveries or waiting for their food to arrive. Meanwhile, more residents were clinging to their phones at home, waiting for their group buying heads to tip them off the arrival of their purchases. Delivery times have become unpredictable as truck drivers are asked to show negative Covid test results certificates to deliver goods across the city.

Zhang’s phone rang. Her neighbor called to confirm her identity because they were only connected on WeChat and had never met before. It turned out the neighbor was a casually-dressed woman standing right next to her. After collecting a big box of apples, the pair split the apples by counting out half for each because no one had a scale. Neither woman cared about who got slightly more weight in these unprecedented conditions. 

“I already bought some apples last week. But they disappear so quickly because I have a big family to support. My parents are under lockdown with us to take care of the kids,” Zhang said.

For millions stuck in Shanghai like Zhang, purchasing daily necessities has become a hassle over the month as they have been forced to stay home. During the lockdowns, reliable delivery platforms have become lifelines for people living in the financial hub, China’s second-largest city with a 25 million population. 

As other online grocery delivery services struggle to keep up with the city’s spiking online orders, community group buying has revived, thanks to its flexibility. But analysts say that a regional resurgence of the service won’t turn the tide for the cooling sector.

It’s a ‘last-mile’ problem

Shanghai’s current food shortage problem is more about how to deliver food to residents rather than a lack of national food reserves, according to the city authorities. 

Shanghai’s deputy mayor Chen Tong said at an April 7 press conference that the city had sufficient food reserves to feed locked-in residents for the foreseeable future.  Chen pointed out that the current problem lies in the lack of last-mile delivery forces, the couriers who complete the last leg of a delivery process. 

“The battle against the epidemic has affected the quality of life for Shanghai residents. There are cases when food supplies can’t be delivered to residents’ homes. We are trying our best to address the problem,” he said.

As part of the municipality’s pandemic fighting initiative, all major grocery delivery companies, like Meituan, Alibaba’s Freshippo, and Dingdong Maicai, are attempting to keep up with the rocketing online demand across categories from vegetables and rice to fruits. 

Different business models, different solutions

China’s decade-old grocery delivery industry consists of players operating under various business models. For example, self-operated platforms like Dingdong Maicai and huge grocery retailer marketplaces such as JD Daojia and Meituan.

The various business models mean the platforms are confronting locked-down circumstances differently.

The sudden surge in orders soon overloaded nearly all mainstream grocery delivery platforms, including Alibaba’s Freshippo and Ele.me, Meituan, Dingdong Maicai, JD, and MissFresh.

These services usually rely on powerful teams for a promised 30-minute delivery for individual customers, but operations have become strained this time when the labor shortage is a critical issue.

Many users of services like Dingdong set their alarm clocks for early morning to scramble for the limited number of orders couriers can deliver that day. For example, Zhang Menglin, a mother of a six-year-old, tried for a few days only to find the websites and apps repeatedly crashed due to soaring demand. After an experience similar to Zhang’s, TehNode reporter Ward Zhou resorted to using an app that repeatedly clicks the “buy” button, thus upping his chances of placing an order.

Instead of giving away hefty cash donations for disaster alleviation, Chinese tech majors have resorted to a more practical approach to address Shanghai’s delivery labor shortage: providing more hands. 

Grocery platforms and supermarket chains, including Ele.me, JD, Dingdong Maicai, and Yonghui pledged in early April to move more than 6,000 staff to the Shanghai by April 11 while also leveraging autonomous delivery vehicles, according to a rough count by local media outlet Awtmt. 

Of the total, the Alibaba-affiliated services Ele.me, RT-Mart, Freshippo, and Cainiao account for a combined 3,000 workers, mainly filling delivery and sorting positions. 

Meituan launched urgent deliveries and vowed to move at least 1,000 delivery workers to the city after its vice president Mao Fanglie made a rare public appearance at Shanghai’s April 7 government briefing. 

Pinduoduo, WeChat benefit from community group-buying surge 

In normal times, community group-buying platforms operate by selling products in bulk through group heads, typically stay-at-home mothers or local store owners who collect orders from residents in nearby housing compounds. The platform’s couriers drop off products at community stores or the compounds’ gates for consumers to pick up overnight. 

This model has emerged as a more reliable food source for millions of people in Shanghai, compared with the above-mentioned platforms catering to individuals. On the one hand, the models’ bulk sale approach allows grocery apps to make the best use of their available delivery forces. On the other hand, customers are much more tolerant of the less predictable delivery times. 

“I have given up on grocery delivery apps like Dingdong after multiple failed tries and depend solely on community groups buying my food now,” said Wang Jia, a 40-year-old Shanghainese. 

After being locked down for three weeks in Shanghai, the reporter of this article tried to order bread from JD on April 9. Instead of its standard same-day delivery, the retailer’s app showed the bread would arrive in two weeks. In frustration, the reporter turned to her neighborhood’s group buying head, which delivered two loaves of bread in two days. She was thrilled and grateful to get bread for her six-year-old daughter’s breakfast sandwich. 

Besides the veteran group heads already in the business before the outbreak, novices are becoming group-buying leaders, both to meet their own needs and to help neighbors. 

Given that most group heads communicate and promote their products through various WeChat groups, WeChat-based mini-programs gained popularity among group-buying participants.  They are Pinduoduo’s community group buying service Kuaituantuan, Tencent’s e-commerce feature Weidian, and WeChat Jielong.

Platforms like Freshippo and Carrefour have moved to a wholesale model too, requiring a minimum price or number of orders to support delivery. That’s similar to the community group buying model, except that unpaid volunteers, who are locked-down residents themselves,  are functioning in the group heads’ intermediary role. E-commerce platform Pinduoduo also rolled out wholesale services in the city, encouraging individuals to resell the goods to their neighbors.

A comeback for community group buying?

The inflow of venture capital and internet giants plays a bigger role than real consumer demands in driving the rise and fall of the community group-buying industry.

—Zhang Yi, consulting CEO and chief analyst at iiMedia Research

However, looking beyond its current boom in Shanghai, the dust had already settled for China’s grocery community group-buying vertical after a crazy ride in the past two years. High regulatory fines and cash-burning battles put the sector on the brakes. As the market tide ebbs, the once red-hot sector has become an area where tech giants have enacted deep headcount counts amid industry-wide layoffs. 

Covid-driven demand will become an opportunity for the broader online grocery shopping industry, and the trend will live on after this wave of epidemics subsides. But it won’t be a game-changer for the failing community group-buying vertical, according to Echo Gong, a Shanghai-based analyst with global research agency Coresight. 

Data from market intelligence agency Emarket shows that online food and vegetable sales reached an annual growth rate of 61.4% in 2020 when the coronavirus hit China the hardest. The growth rate slowed down to 24.6% in 2021, but the sector nonetheless was still growing. “Shanghai’s epidemic will reinforce the use of online grocery shopping for certain groups, such as the elderly who didn’t use the platforms before,” Gong told TechNode.

But it’s a different case for the community group-buy vertical. “Most of the group leaders who initiated group-buy are motivated to help each other during difficult times. Most of the parties engaged in the group-buys now, either group heads, volunteers, vegetable suppliers, or catering services providers, are not profit-driven. After the pandemic, it will be difficult to keep them motivated without incentives,” she said.

Long-term drivers: VC, tech giants

“The inflow of venture capital and internet giants plays a bigger role than real consumer demands in driving the rise and fall of the community group-buying industry,” said Zhang Yi, consulting CEO and chief analyst at iiMedia Research, echoing Gong’s opinion. 

Shanghai’s Covid outbreak highlighted the importance of last-mile delivery capabilities. Zhang said he’s bullish on companies with mature inter-city delivery forces like Meituan and JD, as well as Freshippo, all of which have strong offline presences.

“At the end of the day, the industry threshold and winning factor for a platform is the ability to ship products to customers in an efficient and timely manner,” said Zhang.

Ant Group, the company behind China’s popular mobile payment service Alipay, is seeing an accelerated adoption rate for its payment services outside of China, less than two years after launching a pilot cross-border payment project. 

Why it matters: The company has pushed to expand in Asia and Europe as countries begin to reopen and offline shopping activities recover. 

• Ant’s businesses in China have faced increased regulatory scrutiny since halting its massive IPO in late 2020. At the same time, China’s consumption has entered a slow period due to recurring pandemic outbreaks and external geopolitical pressure.

Details: On Monday, Singapore-based payment platform 2C2P and Ant entered a strategic partnership, with Ant becoming the platform’s majority shareholder. During the first week of April, Ant saw more than 70,000 merchants outside of China sign up for a business-to-business mobile payment service called Alipay+. The service, launched in September 2020, allows people and merchants from different countries to transact using their local digital wallets. 

• With Alipay+, Ant provides the technology backend and related financial service for digital wallet operators and merchants worldwide, connecting shops with various digital wallet users. For example, the service allows people with a supported Malaysian payment app to shop and pay with their local app in some shops in South Korea. 
• The service supports various digital wallets worldwide, including Malaysia’s Touch ‘n Go eWallet, South Korea’s Kakao Pay, the Philippines’ GCash, Thailand’s TrueMoney, Indonesia’s Dana, and Europe’s Klarna.
• In early April, German drugstore chain Müller, South Korean chain store GS25, and Malaysian company Razer Fintech announced their integration with Ant’s service, allowing their merchants the ability to transact using overseas digital wallets. 
• In March, Ant Group appointed Jia Hang as the new regional head in Southeast Asia. Jia is expected to expand Ant’s ongoing plan to attract more small merchants in the region to use its services. 
• Ant has already integrated more than 1 million offline merchants in Asia and Europe, covering industries including food and beverages, tourism, hospitality, and retail, according to a Monday company statement shared with TechNode. 

Context: Ant Group has quietly pushed to expand its businesses outside of its home country as China intensifies regulatory pressure in the fintech sector.  

• In November 2020, Ant Group suspended what would have been a record-setting $34.5 billion IPO offering in Hong Kong and Shanghai.
• Alibaba, which has a 33% stake in Ant, was fined RMB 18.2 billion ($2.8 billion) for antitrust violations last April. 
• While China adheres to a strict dynamic-zero Covid-19 policy to control local outbreaks, many other Asian countries have begun moving to a full reopening since the beginning of April. South Korea and Singapore reopened to fully vaccinated visitors on April 1, and Indonesia has lifted all quarantine rules for international travelers.

Chinese smartphone manufacturer Vivo released its first foldable phone on Tuesday, targeting premium users with a price tag of around $1,500. 

Why it matters: Vivo follows the footsteps of rival brands such as Xiaomi, Huawei, and Oppo, releasing its first foldable phone. Global shipments of foldable phones will hit 15.7 million in 2022, forecasting a yearly growth rate of 107%, according to market research firm CINNO Research.

• The new phone, called the Vivo X Fold, showcased more tech than just foldable tech, Louis Liu, an analyst from a Chinese hardware insight firm CINNO Research told TechNode. The new phone addressed some of the shortcomings of previous models from other brands with features such as rapid wireless charging and on-screen fingerprint recognition, Liu added. 

Details: Using a Samsung display screen, the Vivo X Fold has an 8.03-inch interior display when used in tablet mode and a 6.53-inch exterior display when folded. For comparison, an iPhone 13 has a 6.1-inch display, and a regular iPad is 10.9 inches. 

• Both displays support a 120 Hz refresh rate with a battery-saving display tech called Low-Temperature Polycrystalline Oxide (LTPO), which claims to reduce power consumption by about one-third. 
• A model with 12GB RAM and 256GB of storage is priced at RMB 8,999 ($1,413); a model with 512GB of storage and the same RAM spec will cost RMB 9,999 ($1570).
• Liu also said that compared to its sister brand Oppo’s foldable model Find N, the Vivo X Fold is a more premium device, adding that Vivo focused more on internal technology whereas Oppo focused on getting an optimal display size when folded.

Context:  CINNO predicts that Samsung will lead the foldable market this year with a 70% share.

• Vivo is the largest smartphone maker in China based on shipments in 2021, according to IDC.
• Vivo, Oppo, and OnePlus – three of the biggest smartphone brands in China – have shared roots: they are or were indirectly owned by Better Life Group. Therefore, while the brands share technology in some cases despite the competition. For instance, OnePlus and Oppo will merge their phone operating systems to the singular ColorOS, according to a post in the OnePlus community on March 8.

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.

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. 

Struggling with a global shortage of semiconductors and a sharp increase in the cost of battery materials, an increasing number of Chinese automakers are raising prices for electric vehicles (EVs). Geely, BAIC, and Chery has become the latest companies to implement pricing changes, following BYD, Xpeng, Li Auto, and others.

Details: Chery Automobile, a manufacturing partner of Jaguar Land Rover, said Wednesday on its Weibo account that from April 7, price increases on its vehicles will range from RMB 2,900 to RMB 5,000 ($456 to $786), without giving a breakdown of the specific price increases for each of its models.

• This is the second time in less than a month that Chery has raised the prices of its vehicles. The previous markup on its entry-level EVs cost consumers as much as an extra RMB 7,100, according to figures released in a March 17 announcement (in Chinese).
• Huawei’s auto partner BAIC also announced Wednesday that it will raise prices across its entire line-up of Arcfox-branded EVs, including those equipped with Huawei’s advanced driver assistance systems, starting from May 1. The company stated that full details will be released later this month.
• Geely’s premium EV brand Zeekr has also followed suit with a price increase, according to an April 2 statement (in Chinese), citing a significant rise in the cost of raw materials.

Context: A surge in the cost of battery raw materials such as nickel, driven by an ongoing supply chain crunch and the Russia-Ukraine war, has triggered a series of price hikes throughout the Chinese auto industry over the past few weeks.

• Tesla lifted prices for its locally-made Model Y electric crossover twice in March, while more than 10 Chinese major car brands lifted their prices by between 1% and 15%, TechNode reported.
• Some EV makers could lower prices to maintain their sales targets if demand starts to weaken during the second half of this year, Credit Suisse analyst Wang Bin said during an online conference on March 22.

READ MORE: Drive I/O | Chinese EV makers face price hikes as nickel prices soar, Didi to enter EV market

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.

On Wednesday, the US Securities and Exchange Commission (SEC) added five more Chinese companies, including search giant Baidu and video streaming site iQiyi, to a growing list of companies that may face delisting from the US stock market. Market analysts expect the list to grow.

Why it matters: The US regulator’s possible delisting push targeting Chinese companies brings further uncertainty to volatile Chinese tech shares, which have experienced a turbulent year due to regulatory crackdowns in their home country.

• The SEC’s delisting moves may expand. Paul Gillis, an accounting professor at Peking University, wrote in a March 24 tweet that he believes all 271 Chinese companies listed in the US will eventually be added to the delisting list after they file annual reports with an opinion from a Chinese auditor, which is due May 2. Bill Bishop, the author of the China commentary newsletter Sinocism, echoed a similar view in the Thursday newsletter. 
• On March 16, Vice Premier Liu He held a high-level meeting. He signaled China’s willingness to discuss with US authorities to keep the country’s companies investible in the US, saying that a concrete cooperation plan is underway while officials of the two countries are “maintaining good communications.”

Details: In a Wednesday statement, the SEC named five Chinese companies – Baidu, iQiyi, online brokerage platform Futu Holdings, aquaculture equipment provider Nocera, and biopharmaceutical company CASI Pharmaceuticals Inc. – to its provisional list for possible delisting.

• The US regulator gives these companies 15 business days to submit evidence to oppose the commission’s charge, meaning a deadline of April 20.
• On Wednesday, Baidu closed down 2.6% on the Nasdaq market. iQiyi closed up 0.4% but dropped 3.8% in after-market trading. Futu slid 2.9%. 
• Baidu said in a Thursday response that it has been “actively exploring possible solutions.” The company pledged to comply with applicable laws and regulations in China and the US and strive to maintain its listing status on Nasdaq and the Hong Kong stock exchange.
• The market reaction was calmer compared to the SEC’s first round of delisting announcement of Chinese companies on March 10. Share prices of included companies tumbled as much as 25% back then. A more expected move from the SEC and Chinese regulators’ previous proactive stance may help explain the market reaction.

Context: In December 2020, the Holding Foreign Companies Accountability Act (HFCAA) became law in the US. The statute bars the trading of non-US companies on the US stock market if it can’t provide accounting access to US regulators for three consecutive years. Chinese laws have long prohibited foreign regulators from accessing Chinese capital market documents, putting US-listed Chinese companies in the crosshairs of HFCAA. The aforementioned Chinese companies are among the first batches to be identified for being in alleged breach of the act.

• Wednesday’s announcement brought the total number of companies on the SEC’s delisting watchlist to 11 after naming six firms earlier this month. On March 10, the SEC put five Chinese companies on potential delistings for the first time. They are fast-food chain Yum China Holdings, biotech groups BeiGene, HutchMed Limited, Zai Lab Limited, and technology firm ACM Research. It added Weibo to the list on March 23.

The article has been updated with Baidu’s statement. 

From food delivery to travel booking, Meituan earned itself the title of the “Amazon of services” in China by providing a wide range of services that touch nearly every aspect of Chinese people’s lives. Now, the giant service app is expanding to Amazon-like territory, selling physical goods, a sector that will put it in competition with local retail giants like Alibaba, JD, and Pinduoduo.

Operated under a platform model, Meituan already has a footing in physical goods e-commerce: It’s among the most popular choices for on-demand or next-day delivery of fresh produce and groceries. Yet that is a small fraction of China’s trillion-dollar online retail market. Starting by selling food and beverages, the company now aims to become a comprehensive e-commerce platform, selling not only daily services (food deliveries) and groceries, but also tangible goods like consumer electronics, cosmetics, and clothing.

Alibaba, JD, and Pinduoduo, the three largest e-commerce platforms in China, still dominate China’s online retail market. But the space is no longer a three-horse race after the entry of a slew of rivals such as short-video apps Douyin and Kuaishou. Meituan wants to take a bite of the physical goods e-commerce pie too. 

Meituan, a relative latecomer, has quite ambitious plans, based on some aggressive moves over the past month. In early March, the company rolled out direct sales services for physical goods. Meituan’s pilot shopping review feature, initially tested as Zhenxiang, was rebranded as Guangguang and formally launched this month with additional social and entertainment elements. On top of that, the everything app also dipped its toe into the hot cross-border shopping sector by integrating a global retailing section into the e-commerce channel of its main app. 

Taking a leaf out of rivals’ playbooks

Meituan’s earliest foray into e-commerce dates back to 2013, but it closed that business three years later to focus on food delivery. The company revived efforts in late 2020 by setting up a new marketplace, Tuanhaohuo, and then moved on to update the platform to a full-fledged business unit and rename it Meituan E-commerce (our translation) in 2021.

Facing a sophisticated market, Meituan is taking a leaf out of the playbooks of rivals like Alibaba, JD, and Pinduoduo by adopting market-proven models and features. While discussions on the ethics of copying business models and features continue, it’s still common for Chinese internet firms to “borrow” ideas from each other. 

Meituan is known for beating rivals with better executions. After all, Wang Xing, Meituan’s CEO and the master of “copy to China,” started Meituan in 2011 as a clone of the then high-flying Groupon and beat more than 100 other Groupon copycats, becoming the sector’s leader. 

Meituan vs JD: In mid-March, Meituan rolled out a new e-commerce service under the direct sales model to sell products directly to customers in a model similar to JD.com. Through a Beijing-based subsidiary, Meituan launched many “self-operated stores” on its e-commerce platform, selling beverages and snacks for starters, such as the Chinese energy brand Eastroc Beverage, rice and meat seller CR NG Fung, and snack brand Xiaowanxiong. Under the model, Meituan functions as the main operating body for controlling product quality, sourcing, and delivery. Although Meituan’s popular Instashopping service offers on-demand service for non-food deliveries, it is operated through cooperation with third-party offline merchants. Meituan’s direct sales model previously only applied to its grocery group-buy unit Meituan Maicai. Meituan followed Alibaba to become the second Chinese tech major to embrace the direct sales model for physical product e-commerce this year.

Meituan vs Alibaba: Meituan renamed and relaunched its shopping review feature Zhenxiang as Guangguang (“shopping around” in English) to tap into the content-driven e-commerce trend. It’s no coincidence that the new name is the same as Taobao’s Guangguang, a content channel where merchants, influencers, and consumers publish short blog posts to recommend products. Meituan intentionally made its new feature a namesake of Taobao’s Guangguang in the hopes of picking up some of the clouts of its rival, local media reported. Taobao’s Guangguang now claims more than 200 million monthly active users after launching in 2020. 

All e-commerce giants are trying to emulate the Zhongcao model, a marketing strategy first popularized by Instagram-like Xiaohongshu. The term zhongcao (“planting grass”) refers to the idea that favorable and comprehensive reviews of a product can sow the mental seeds that nudge consumers to buy it. 

Meituan intends to increase traffic and improve conversion and repurchase rates with the new review feature, said Esme Pau, senior director at Tonghai Securities. 

Cross-border e-commerce: Meituan this month unveiled a global shopping channel to tap cross-border commerce, a popular vertical that gained momentum during the coronavirus pandemic. The channel sells items sourced from Australia, Japan, the US, and other countries to Chinese shoppers. The most popular categories are skincare products, baby products, apparel, and vitamins. The state considers such platforms part of its efforts to boost exports and imports. 

Meituan is a serious e-commerce contender

E-commerce is too big a pie for any tech company to ignore in China. Meituan, with its vision as a platform company, won’t stop with just a small fraction of the market.

Meituan’s accelerated e-commerce drive aligns with the strategic shift announced last October, when the company upgraded its strategy from “food plus platform” to “retail plus technology” searching for new growth points. 

Meituan CEO Wang Xing sees the direction of e-commerce moving from an “everything store” to “everything now.” On an earnings call for the Hong Kong-listed company’s third-quarter performance of 2021, Wang said, “retail will be our focus and remain the main area where we will do our fundamental capabilities in the future. So please understand ‘retail’ in a broader sense as to sell goods or services to end customers.” 

Analysts told TechNode that they are quite bullish about Meituan’s e-commerce prospects. The company has the right toolkit to push into retail e-commerce, including its existing on-demand delivery network, platform capabilities, user base, and merchant relationships, according to Michael Norris, research and strategy manager at marketing and sales firm AgencyChina. “Going forward, one of the keys will be to build user habits to shop from Meituan in more contexts,” he said.

It’s not a decision propelled by recent market developments. Meituan’s push into wider e-commerce through Instashopping predates China’s regulatory pressure on things like mandatory lowered fees for core food delivery businesses, Norris added.

Zhuang Shuai, founder of Beijing-based consulting firm Bailian, predicts Meituan’s e-commerce business could achieve an annual gross merchandise volume of around RMB 1 trillion ($160 billion) soon. Norris estimated that the goal would be attainable within the next three years. The estimated volume is around the same size as the e-commerce volume from ByteDance’s Douyin.

Zhuang notes that the company is also leveraging its e-commerce business to attract more delivery orders to best use its logistics capacity. Food delivery alone can’t satisfy Meituan’s delivery capacity because of the low-traffic hours between meals. 

During a March 25 earnings call, Meituan managers stressed that they would prioritize allocating resources to the e-commerce business. “The rationale for expanding retail goods e-commerce was to bring value to retailers and customers while increasing job opportunities for [Meituan’s] delivery couriers,” said Pau.

Bad timing for e-commerce?

Meituan is entering a crowded market where incumbents are reeling from slowing growth. In 2021, Alibaba and Pinduoduo reported the slowest revenue growth since their respective IPOs in 2014 and 2018. JD also posted its weakest revenue growth in six quarters. The sluggish revenue growth for the major players comes against a dip across the overall market. Data from China’s National Bureau of Statistics shows that online spending on physical goods, including food, clothing, and cosmetics grew by just 12% year-on-year in 2021. The slowest pace since recording such data started in 2015.

“We believe the timing is good,” said Tonghai analyst Pau. Meituan, like all other Chinese internet players, will need to diversify its revenue stream to be sustainable long-term, she said, referring to tightened regulatory pressures on its core businesses in food delivery, in-store coupons, hotels, and dining. 

Meituan is thus fighting an uphill battle but is nonetheless making an important strategic move, according to Zhuang, the Bailian founder. “The food delivery market has reached its ceiling, but e-commerce is a much larger market with no foreseeable ceiling,” he said. Despite the slowdown, e-commerce is still growing and companies providing good products and services to customers will always stand out from the crowd, he believes. 

Meituan’s advantage in e-commerce, or any other new endeavor, lies in its ability to aggregate all kinds of services and products into a one-stop super app ecosystem, Zhuang said. The company still relies heavily on its more popular food delivery and travel services to attract users. E-commerce is only a supplement function on the main app, for now.

Chinese online retailer JD is expanding its layoffs, cutting people in nearly every business unit, including its core retail businesses, local media outlet Jiemian reported on March 27.

Why it matters: JD’s layoffs will be worse than the market initially expected. China’s months-long tech layoff, which started late last year, shows no sign of ending. Big-name behemoths like Alibaba and Tencent began broader layoffs earlier this month.

READ MORE: INSIGHTS | Chinese tech giants are still slashing headcounts

Details: In addition to laying off people in its community group-buy unit Jingxi, JD is expanding the recently-launched layoffs to its core businesses, including JD Retail, JD Technology, JD Logistics, and JD’s international business department, Jiemian reported, citing several employees at the company.

• JD plans to cut between 10% to 30% of the jobs, with cut rates varying by the departments, according to a widely-circulated internal spreadsheet revealed by local media. 
• For example, JD Retail will face a 10% to 30% layoff in technology, business development, and platform operation positions, while the firm’s international business unit will be cut by 10% to 15%. 
• The company’s community group buy service Jingxi remains the worst-hit unit. Some of the unit’s regional teams will let go of the entire team, such as the teams in Guangdong, Jiangxi, and Sichuan provinces.
• The Jiemian report said that there are few opportunities for internal transfers since the layoff affects the whole company.
• The company declined to comment on the layoff news when contacted this Monday.

Context: On March 11, JD posted a RMB 5.2 billion ($0.8 billion) net loss for the fourth quarter of last year and reported its weakest revenue growth in six quarters.

• Slowed economic growth, fierce competition, and trade tensions are weighing down the revenue growth of China’s e-commerce giants. Alibaba and Pinduoduo recorded their slowest quarterly revenue growth in the fourth quarter of 2021 since their respective IPOs in 2014 and 2018.
• In December, Tencent weakened its ties to JD by distributing around $16.4 billion worth of shares in the online retailer to its shareholders as interim dividends. Both companies said their partnerships won’t be affected, although Tencent’s shareholding in JD will be reduced from 17% to 2.3%.

Since last week, more than 10 Chinese electric car makers have raised prices for their EV models, prompted by the significant increase in raw material costs. Analysts say that the price hikes will not hurt vehicle sales in the short term due to an already high order backlog, but also predict that companies will change prices more often in the future to meet their sales targets.

Some of the biggest names in the EV market have led the price hike. In March, Tesla raised prices for two premium versions of its China-made Model Y electric crossover twice in less than a week. Chinese EV giant BYD on March 15 announced it was lifting prices for most of its vehicle lineups, after it upped prices two month previously to address government EV subsidy cuts. Among the 11 carmakers that raised their prices in recent weeks, EV startup Leapmotor enacted the biggest hike, increasing its list prices by as much as 15%, or RMB 30,000 ($4,710), while state-owned automaker SAIC introduced the lowest price rises on average, with a 1.2% hike, or RMB 2,000, according to data compiled by TechNode. 

Why the price hikes?

A major reason behind the rise in EV prices is the “very strong” growth in the Chinese market, making it harder for raw material suppliers to keep up with demand, Peter Li, a Credit Suisse analyst, said on Tuesday during the company’s Asian Investment Conference.

EV battery makers have been scrambling to secure supplies of key ingredients, such as lithium. In mid-January, the cost of battery-grade lithium carbonate was 569% higher compared to two years ago, according to figures from Benchmark Mineral Intelligence. Lead battery maker CATL raised its price by RMB 20,000, Chinese media Yicai reported Monday. 

Major battery suppliers have now directly linked their pricing mechanisms to raw material price changes rather than adjusting their rates on an annual basis, due to the volatile commodity market. “That’s why we are seeing further battery price hikes in the second quarter,” Li said, adding that the trend will continue in the next two years, pushing potential price surges throughout the industry value chain from material suppliers to battery makers to car manufacturers.

Credit Suisse expect the lithium supply deficit to be expanded from 37,000 tonnes in 2021 to 101,000 tonnes this year, around 18% of global demand, and commodities prices to remain high at least until 2024, due to EVs’ growing popularity in China. Sales of new energy vehicle sales (NEVs) in China, mainly EVs and plug-in hybrids, skyrocketed 154% year on year to 3.52 million units in 2021, according to official figures. 

Does the future hold more frequent price changes?

Analysts anticipate the price hike won’t have a major impact on automakers’ deliveries in the short term, thanks to major players enjoying massive backlogs of orders in the market.

The waiting time for new orders of Tesla’s locally-made Model 3 sedan is now 20 to 24 weeks, compared with only six weeks last April, while the waiting time for Xpeng’s P7 is at least 12 weeks. BYD chairman Wang Chuanfu said in November that the company’s orders for its various models had reached an all-time high of 200,000 and it had to spend four months on average to deliver a vehicle, Chinese media reported.

In the longer term, Chinese EV makers could implement more flexible pricing strategies, lowering prices at the cost of their margins to ensure growth, if the current high demand for EVs slows down later this year. Some automakers are already preparing for more pricing adjustments, which means they could provide promotions or discounts to maintain their volume targets if demand starts to weaken during the second half of this year, Wang Bin, a Credit Suisse analyst, said at the investment conference.

EV makers could also change prices more frequently to attract new buyers, as the industry is transitioning towards a revenue model based on software subscription services rather than car sales, said Lu Shengyun, an independent adviser to entrepreneurs and CEOs. Passenger EV sales could grow by 84% year on year to 5.5 million vehicles this year, industry group the China Passenger Car Association said in January.

Electric vehicles “is a strategically important direction for automakers. They will sacrifice margin to offset the impact from rising material cost,” Wang added.

Ward Zhou contributed to the reporting of this story.

Nickel prices climbed to an all-time high and could further increase the cost of electric vehicles (EV) and force automakers to cut earnings forecasts. Ride-hailing giant Didi became the latest Chinese tech company to enter consumer EV space; it plans to deliver an entry-level sedan next year. Shares of Nio closed flat in the company’s Hong Kong trading debut. Its listing follows the steps of Xpeng Motors and Li Auto. All hope to attract more investors in China amid growing financial market tensions between China and the US.

Soaring nickel prices cast shadow over Chinese EV players

As the price of nickel jumped to an all-time high since early March, auto industry insiders expressed concerns that an escalating Russia–Ukraine conflict could disrupt supplies of the metal, a key component of EV batteries. While watchers have differing views about the impact on EV adoption, most expect battery prices to remain high and to weigh on the margins of Chinese EV makers for the rest of the year.

Nickel craze: Nickel markets had a wild ride early this month. On March 8, the price of three-month nickel on the London Metal Exchange (LME) more than doubled in a short period, reaching an all-time high of $101,365. The unusual surge prompted LME to halt trading for seven days, set new price limits, and adjust prices. When it reopened, the price dropped back down to around $80,000, yet still about 300% higher than the $20,000 price in late February. 

• China’s nickel producer Tsingshan Holding Group was caught on the wrong side of the market, having built the biggest short position in the metal and betting the price would fall since last year. Tsingshan on March 14 said it reached a deal with its banks to backstop its short position after struggling to pay margin calls on its position during the nickel price surge a week earlier. The company faced an $8 billion paper loss based on nickel’s price of $48,002 on March 14, the Wall Street Journal reported.
• The unprecedented price surge was partly due to concerns from Russia. Western nations imposed sanctions on Russia after it started a war with Ukraine in late February. Russia is the world’s biggest exporter of nickel, prompting buyers to worry that Russian nickel suppliers could be hit by sanctions and transport disruptions.
• The already tight supply of high-purity nickel, fueled by the rising sales of EVs, contributed to the highs in the metal’s price. Nickel is increasingly used in EV batteries as it ensures high-energy density that allows the vehicle to travel further.

Higher cost for EVs: Nickel’s price surge is magnifying the current supply chain woes that have dramatically pushed up automakers’ production costs. The global semiconductor shortage and a boom in the prices of other metals have been the principal factors. 

• The input cost of an EV equipped with a 60 kilowatt hour (kWh) battery pack will increase RMB 9,000 ($1,418) due to nickel’s price growing from about $20,000 early this year to the recent price point of around $50,000, according to estimates from China International Capital Corporation (CICC). Nickel’s price will probably stay high over the short term, partly thanks to low inventories in the country, but the high price may be hard to maintain long-term, CICC wrote in a March 9 report.
• Many experts anticipate an accelerated shift towards lithium phosphate (LFP) batteries from the current mainstream types that use nickel and cobalt as core materials. Nickel-free LFP batteries generally provide a lower driving range and cost less to produce than its counterparts, and yet are now also under price pressure thanks to rising lithium prices, the Wall Street Journal reported.
• Average prices of lithium-ion battery packs are expected to slightly grow to $135 per kWh this year from $132 a year ago, ending nearly a decade of price declines, Bloomberg New Energy Finance estimated in a report published on Nov. 30, 2021.

Impact on EVs: Predictions vary among experts of how nickel’s price hikes could affect the EV supply chain and affordability for customers.

• Morgan Stanley automotive analyst Adam Jonas, one of the leading voices warning investors of massive earnings drops for automakers, expects at least a $1,000 increase this year in the input cost of an average EV in the US. If sanctions against Russia are extended to nickel, it’s “probably time for investors to take auto company earnings forecasts down,” Jonas wrote in a March 7 note.
• Other experts say the overall impact will be limited. The high price of nickel is likely to prove a temporary phenomenon since the metal has long seen high output, Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), told reporters during an online conference on March 8. There are currently few signs of risks to output from other major nickel producers such as Indonesia, Cui added.

Didi’s first consumer EV could hit the roads in 2023

News: China’s red-hot EV market just added another competitor as struggling ride-hailing platform Didi reportedly plans to develop its first consumer car in-house. The compact EV could begin mass delivery as early as next June, according to a local media report on March 15. With an estimated price tag of RMB 150,000 ($23,580), the new model will be an entry-level compact sedan competing with existing offerings such as BYD’s popular Qin EV, the report said. The company is said to have more than 1,700 staff dedicated to the project at its Beijing headquarters. In addition, it is considering a deal to buy Zhijun Auto, a little-known EV manufacturer with a plant in central Jiangxi province.

Insights: The launch of a consumer car might create a new revenue stream for Didi as its core business falters. The project can also cover the high cost of developing autonomous driving technology, an initiative the company has undertaken since 2016. The move would also see the Chinese mobility giant lining itself up to compete with big auto names such as BYD, which is also its manufacturing partner.

Didi had a rocky start in its first attempt to produce an EV with BYD. The D1 was a purpose-built electric crossover for ride-hailing services developed by the two companies. It entered into production in late 2020, six months later than expected, the report said. 

Didi’s ride-hailing volume reportedly declined to 20 million trips per day in January, a 20% plunge from daily figures in the first quarter of 2021. Over the same period, the company’s ride-hailing market share in China has shrunk from nearly 90% to 70% due to Beijing’s ongoing cybersecurity review of the company that began last July. 

Nio shares debut in Hong Kong secondary listing

News: Chinese EV maker Nio made a weak debut in Hong Kong on March 10, closing down 0.69%. The listing took place after a long and winding journey. Already listed on the New York Stock Exchange, Nio has followed in the steps of rivals Xpeng Motors and Li Auto by tapping into Hong Kong’s capital markets. However, Nio did not sell new shares or raise money, and it chose to list by introduction. Xpeng and Li Auto, on the other hand, raised HK$14 billion and HK$11.8 billion, respectively, by selling shares in Hong Kong in the summer of 2021.  

Insights: Nio explained the move by saying it hopes to attract more investors by enabling more listing locations and flexible trading hours. A Singapore listing may be another possibility. The Hong Kong locale does bring the Shanghai-based EV maker closer to mainland investors and provides the automaker insurance against the risk of delisting in the US. But Nio said it had “a sufficient pool of working capital,” according to financial media Caixin (our translation), and did not have an urgent need to raise additional funds. 

Plagued by a shortage of semiconductor chips and batteries, among other supply-chain headaches, Nio has posted lackluster monthly sales volumes for several months. Sales of Nio’s existing three models have been slow. Its first sedan, the ET7, is scheduled for delivery later this month. The company hopes to catch up: It plans to begin delivering its second sedan, the ET5, in September and to launch a sports utility vehicle (SUV), its fourth, by year-end.

US-traded shares of major Chinese tech firms soared after the State Council, China’s cabinet, pledges to adopt policies favorable to economic stability in a meeting held by Vice Premier Liu He on Wednesday.  

The Nasdaq Golden Dragon China Index, which tracks stocks of Chinese companies, jumped 33% on Wednesday to 7,230 points. 

Zhihu, known as China’s Quora, led the jump with a 79% increase on Wednesday trading, followed by Kingsoft Cloud’s 72%, online grocer Dingdong Maicai’s 66%, and a 64% jump by housing broker Ke Holdings. Around 160 Chinese companies recorded a 10% share jump or higher, according to a rough count by local media iFeng. Tech majors like Alibaba, JD, Baidu, and Pinduoduo, climbed by around 40%.

Why it matters: The Wednesday meeting is the first major policy adjustment after China’s year-long crackdown on prominent areas across the board, from the capital market to internet companies to real estate. Tech companies, especially those under the platform economy model, were among the worst-hit during the regulatory clampdown. However, the country kept increasing investment in hard and core technologies like semiconductors and smart manufacturing.

• With favorable policies, the State Council sends a reassuring signal to investors after Chinese tech stocks saw intense sell-offs over the past weeks.

Details: China’s Vice Premier Liu He said the Chinese government will “actively introduce market-friendly policies and prudently introduce policies that have a contractionary effect,” according to a briefing of the Wednesday meeting.

• The Chinese government said that it will continue to support companies to seek listings in the overseas markets. The remarks come less than a week after the US Securities and Exchange Commission named five Chinese companies for potential delisting. The meeting added that China and US regulatory bodies have “maintained good communication and made positive progress” in the regulation of US-listed Chinese firms and said a concrete cooperation plan is underway.
• The meeting also clarified China’s regulatory moves on big internet platforms. It said to complete rectification work on these platforms but asked for “steady,” “predictable,” and “transparent” regulations, a notable different tone from last year’s sudden and intense regulatory moves.  

Context: Chinese leadership is under pressure to keep economic growth steady when the country faces challenges from all sides, from slowing consumption to Covid resurgence to international pressure from the Russia-Ukraine war. 

• Premier Li Keqiang, speaking at China’s “two sessions” meeting in early March, said that the Chinese economy should expand by “around 5.5%” this year. It’s the lowest target for the country in 30 years, but still higher than the World Bank’s expectation of 5.1% and the International Monetary Fund’s prediction of 4.8% for 2022.
• China’s 2021 economic growth took a hit in the latter half of the year after regulators launched a series of crackdowns that eliminated industries like private education and crypto mining and slowed growth and enthusiasm in games, overseas IPOs, and other tech-related areas. Averaging out at 8.1%, the country’s 2021 GDP growth fell sharply from 18% in the first quarter to 4% in the fourth quarter. 

READ MORE: INSIGHTS | Chinese tech giants are still slashing headcounts

On Thursday, the US-traded shares of major Chinese tech companies saw steep drops as the US Securities and Exchange Commission (SEC) named several Chinese companies that face delisting.

The Nasdaq Golden Dragon China Index, which tracks stocks of Chinese companies listed in the US, plummeted by as much as 10% on Thursday to 6,535 points, the biggest slide since October 2008, Bloomberg reported.

Shares in more than 10 US-listed Chinese tech companies fell more than 10%. For example, iQiyi dropped 21.71%; Pinduoduo fell 17.49%; Bilibili 14.10%; NIO 11.90%; Parkson China 10.94%. Alibaba and Xiaopeng dropped by 7.94% and 9.01%, respectively.

Why it matters: The market sell-off is a sign that investors are taking notice of a tougher stance from the US stock market regulator towards US-listed Chinese companies. 

The SEC said Thursday that five Chinese companies, fast-food chain Yum China Holdings, biotech groups BeiGene, HutchMed Limited, Zai Lab Limited, and technology firm ACM Research, may face delisting for failing to disclose information, according to the Holding Foreign Companies Accountability Act (HFCAA). 

The US passed the act in 2020, but this is the first time that the SEC has threatened companies of an actual delisting. The five named companies can submit evidence disputing the commission’s charges until March 29.

According to the act, Chinese companies and their auditors would have to open their books to US inspections, which companies like Alibaba and Baidu had previously refused to do. 

READ MORE: US-listed Chinese firms are on thin ice

Politics or financials: Responding to the SEC’s delisting warnings, the Chinese government said it welcomes measures to improve companies’ financials but is “against politicizing securities regulations,” according to a Friday response from the China Securities and Regulatory Commission.  

Some analysts think SEC’s move is more about politics than the companies’ financials. “Most things are about politics now, both in China’s own domestic securities regulation, or US-China securities regulation disagreement,” Ren Liqian, director at exchange-traded fund sponsor and index developer WisdomTree Investments, said in a Friday Twitter post. 

She expects the SEC list to grow as more companies report 2021 annual earnings in which the auditor information is used.

Tech companies that released their fourth-quarter earnings from last year took the brunt of the market blow. On Thursday, JD shares sank 16% even though its Q4 earnings beat market expectations. Shares of Ke Holdings slumped 24% after posting a Q4 report, which investment bank Jefferies considered a “turnaround story.”

“Today’s company earnings numbers are also not bad”, Ren noted. “It’s less about this year’s fundamentals, but how much the US wants to tie Chinese companies to Russian sanctions and future impact on fundamentals,” she posted.

Meanwhile, the incident may further boost the Hong Kong stock exchange, a popular alternative to the US market for Chinese tech companies. Since Alibaba launched a dual listing in Hong Kong in 2019, many Chinese tech firms started to look to list closer to home amid the backdrop of escalating tensions between China and the US. This homecoming trend grew stronger after Luckin’s fraud scandal.

Several Russian banks are planning to use China’s bank card service UnionPay as US services Visa and Mastercard suspend services in Russia, according to Reuters. Russia-issued credit cards using the Visa and Mastercard systems will stop functioning after March 9, part of a broader global economic backlash over the ongoing Russia-Ukraine war.

Why it matters: China could face more geopolitical pressure from the US. The country has toed a diplomatic line since the conflict began in late February, advocating for peaceful resolutions (in Chinese). 

• US card operators Visa and Mastercard handle 90% of all debit and credit card payments outside China. Another US operator American Express said on March 6 that it will stop services for internationally-issued cards in Russia.
• Founded in 2002, UnionPay now has more than 1 billion users serving 180 countries and regions, providing cross-border payment services to cardholders and merchants.
• Some Russian banks have already adopted the UnionPay payment system, including Rosselkhozbank, Post Bank, Gazprombank, Bank St. Petersburg, Promsvyazbank, VBRR, Primsotsbank, Zenit, and Sovcombank.

Details: Russian banks, including Sberbank, Alfa Bank, and Tinkoff Bank, will use China’s payment system UnionPay to issue credit and debit cards. 

• After Visa and Mastercard announced a suspension of operations in Russia on March 5, several local Russian banks said they will switch to China’s UnionPay. Sberbank PJSC said it’s looking into issuing new cards with Russia’s Mir payments system and China’s UnionPay.
• Alfa Bank, Russia’s largest private bank, will switch to UnionPay to issue cards.
• Tinkoff Bank stated that they have not issued cards with UnionPay, but will begin using the card provider as soon as possible.

Context: Russia launched what it called “a special military operation” on Ukraine on Feb. 24. Since then, the country has received a series of financial sanctions from the US and its Western allies. 

• The US, EU, the UK, Canada has agreed on Feb. 26 to cut selected Russian banks off from SWIFT, a financial messaging system that helps the majority of banks around the world to process electronic funds transfers. Japan joined the move a day after.
• Western nations have also frozen the Russian central bank’s assets, limiting its ability to access its $630 billion reserves.
• Paypal shut down its service in Russia on March 5.

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.

Chinese EV maker Nio is taking a step into hardware by developing its own smartphones, Chinese media 36Kr reported. The move makes Nio the latest Chinese automaker to diversify operations in the hope of protecting its core EV business amid increased competition. 

Why it matters: Nio’s pursuit of making smartphones comes as other Chinese tech companies are making plans to build EVs, looking to profit in the world’s biggest auto market embracing EVs.

• EV makers are also carving out a new growth story at a time when chip shortages remain a major stumbling block to car sales and the industry is still years away from realizing a fully autonomous future, Lu Shengyun, a partner at tech consultancy firm Artefact said.
• Lu added that it “totally makes sense” for EV makers to develop smartphones vital to intelligent and connected vehicles and their mobile ecosystems. But it’s yet to be seen whether these automakers can deliver seamless user experience across devices.

Details: Nio recently hired Yin Shuijun, former president of the smartphone unit of Chinese mobile internet firm Meitu, to lead the new business in Shenzhen, Chinese media 36Kr reported Wednesday, citing people familiar with the matter.

• The EV company has been mulling the idea for some time and had previously approached talent from multiple smartphone makers, including Honor, a Chinese budget smartphone brand formerly owned by Huawei, the report said.
• One of the world’s biggest EV startups with a $35 billion valuation, Nio has posted multiple jobs on job recruitment site Liepin, such as telecom testing engineers (in Chinese), suggesting the company is assembling an engineering team for making smartphones.
• A Nio representative declined to comment further when contacted by TechNode on Wednesday.

Context: Nio is not alone in exploring new areas for expansion, as multiple Chinese tech companies are also looking to enter the EV space.

• Xiaomi last March unveiled its plan to invest a total of $10 billion in making autonomous EVs over the next 10 years, while Huawei has partnered with domestic automakers, including BAIC and Changan, to sell its self-driving and in-car software.
• Chinese auto major Geely made its foray into the smartphone market with the establishment of a RMB 715 million ($113 million) venture in the central city of Wuhan in September and was reportedly in discussions to acquire an Alibaba-backed smartphone maker.
• Nio’s fellow startup Xpeng Motors has taken a slightly different approach with the debut of a low-speed robot toy pony for children last September, as part of the company’s strategy to create a robotic ecosystem that will enable driverless mobility SCMP reported. 

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.

As Beijing prepares to close the 2022 Winter Olympics, TechNode selects five notable pieces of technology built by Chinese companies that left an impression during the two-week games.

Two Chinese display manufacturers, Leyard and BOE, supplied the floor display screen for the opening ceremony. BOE also provided power-saving athlete nametags. Baidu Cloud and other startups developed a virtual host to translate sign language. Alibaba Cloud provided high-definition panoramic footage for selected games. Remote-controlled beds built by Chinese company Keeson became a social media hit during the game, while iFlytek provided live translation services with a 95% accuracy rate. 

8K floor display

For the Feb. 4 opening ceremony, Chinese display maker Leyard and BOE supplied most of the screens used in the 100-minute program. Leyard, which was also the supplier for Beijing Olympics in 2008, provided most of the displays used in the ceremony. On the other hand, BOE designed the giant snowflake and the rest of the floor display.

The two companies together supplied a ground screen system with 8K resolution. The ground display covered 10,393 square meters (largest in the world) with 8K resolution, 100,000:1 ultra-high contrast (100 times the average display), and a 3840Hz refresh rate (30 times the average).

BOE also built a power-saving nametag that could charge via phone. The tag is an E-ink screen, which consumes little power for its feature. E-ink requires power only when users need to change the display content, and it tends to have a longer battery life than traditional smartphone screens. The tag does not contain a battery. Instead, it charges wirelessly through phones, using near-field communication tech, which comes with most smartphones.

Another unique part of this name tag is that the screen could display red color, while the traditional E-ink screen displays only black and white colors. In addition, the tag could display more vivid content with three colors.

Virtual host

China’s state broadcaster CCTV developed a virtual host named “Ling Yu” to translate sign language with Chinese tech companies Baidu Cloud, Zhipu AI, and Luster. Zhipu and Luster are artificial intelligence startups. Zhipu mainly develops virtual humans and enhances them with AI and data, while Luster focuses on computer vision and imaging, giving the virtual host a presentable look. The sign-language translator has an elegant look, appearing on all CCTV broadcasts.

Virtual humans have gained great popularity in the investing circle and are seen by some companies as an essential part of the metaverse.

Cloud-backed live broadcast and panoramic game views 

Alibaba Cloud, the cloud service unit of the Chinese e-commerce giant, supplied live game footage for the Olympic games. The 2022 Beijing Winter Olympics chose to store and transfer live footage through cloud services rather than traditional transmission methods, the second Olympics to do so, after the 2021 Tokyo summer games. The cloud system eliminated the need for media outlets to bring in satellite news trucks and customized networks. 

The cloud unit also provided special panoramic views in curling and speed-skating games. The view allowed users to adjust the point of view in a 360-degree panoramic video. Called the bullet time, the visual impression is named after the science fiction cult movie “The Matrix” and gives viewers an immersive experience. 

Alibaba Cloud delivered more than 6,000 hours of live footage via its cloud system to media outlets worldwide. The cloud subsidiary became the International Olympic Committee’s exclusive cloud network provider in 2017. 

Remote-controlled smart beds

Chinese company Keeson supplied 7,000 smart beds for the Olympic Village. These beds come with a foam mattress and a remote controller with eight functions, allowing athletes to easily change sleeping positions and mattress support levels.

US luge athlete Summer Britcher helped create an online discussion about the bed when she uploaded a TikTok video comparing the bed’s comfort level with the cardboard bed used in the 2021 Tokyo Olympic Village. Britcher called the smart bed’s Zero-G mode “phenomenal.” The bed-maker Keeson said the Zero-G mode adjusts the level of the head area a little lower than the foot area, minimizing heart pressure and helping people to relax. 

Keeson delivers more than 90% of its products to overseas, including North America and Europe. 

Highly-accurate live translation

Chinese voice recognition company iFlytek provided full translation services for the games, with portable translation terminals, recording pens, remote meeting systems, and more.

The company’s service can translate more than 60 languages in verbal communication, including voice recognition and synthesis, according to the company’s announcement. The system can imitate a human-like voice when translating verbally using voice synthesis technology while using voice recognition to help the machines to understand human language. The company said it can achieve up to 95% accuracy when translating between Chinese and other major languages. For context, Google translation has an average accuracy of 81.7% when translating between Chinese and other languages in medical situations, according to a study conducted by the UCLA Medical Center and the Memorial Sloan Kettering Cancer Center in New York.

Trunk Tech, a Chinese autonomous truck technology startup backed by EV maker Nio, raised an undisclosed amount in its Series B, the company announced Wednesday. The round was led by state-owned automaker BAIC, which is also partnering with ride-hailing giant Didi to get a fleet of self-driving taxis on public roads by 2025.

Why it matters: Trunk Tech is one of the most promising startups in the Chinese self-driving car space. The Beijing-based company has been backed by a list of prominent investors, and is among several players to test autonomous vehicle systems for hauling freight at domestic harbors.

Details: New investors in this latest fundraising round include private equity firm Pre-IPO Capital Ltd and Zhengzhou municipal investment fund, according to a statement published Wednesday (in Chinese).

• Trunk Tech, which was founded in 2017, said it has delivered more than 100 driverless trucks to clients including China National Offshore Oil Corporation in trial projects at domestic ports in Tianjin and Ningbo.
• The startup said it is operating a testing fleet made of dozens of autonomous trucks, which haul cargo for partners such as JD Logistics, Deppon Logistics, and Alibaba-backed STO Express, with its fleet having now driven 1.5 million kilometers (932,057 miles).

Context: Chinese automobile and tech companies have been racing to develop and commercialize their own self-driving tech which they claim will increase road safety and improve fuel efficiency for traditional trucks.

• TuSimple, which was founded in 2015, was the world’s first self-driving truck company to go public on the US stock market, in April 2021. Its fleet had logged more than 6.3 million miles on public roads as of Dec. 31, 2021, according to its fourth-quarter earnings report. The company plans to start mass producing driverless trucks for clients in 2024.
• Inceptio, a robotruck startup backed by tech giants JD and Meituan, unveiled plans early last year to start mass producing autonomous trucks with automakers Dongfeng and Sinotruk as early as the end of 2021. The company reaffirmed the goal in September, adding its vehicles had passed summer endurance tests.
• Fabu, a company founded by former Didi executive He Xiaofei, nabbed RMB 100 million ($15.4 million) in a Series B+ in August, after testing automated trucks in Zhejiang province’s Ningbo-Zhoushan Port for more than a year.
• Trunk Tech raised an undisclosed Series A from investors including NIO Capital and logistics giant GLP’s investment unit Hidden Hill Capital, in October 2018. Other existing investors include German auto supplier Bosch and artificial intelligence company iFlytek.

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.

Chilye, a Chinese startup that develops high-voltage battery systems for electric vehicles (EVs), has raised around RMB 100 million ($15.7 million) from a group of investors led by Xiaomi, the latest move of the Chinese smartphone maker joining the EV race.

Why it matters: Leading automakers have been embracing high-voltage battery systems, a technology that enables fewer charging times when using fast chargers and a longer driving range with better energy efficiency and lighter car weight, according to Otmar Bitsche, a director at Porsche’s research unit.

Details: Apart from Xiaomi, other investors include private equity firm Yonghua Capital and state-backed Oriza Holdings, according to a Thursday statement (in Chinese).

• Chilye said that the proceeds from the round will be spent on researching and developing high-voltage car battery systems and ramping up manufacturing for commercial products without revealing further details.
• Xiaomi will continue to invest in “prominent domestic companies” in the EV supply chain. The company sees great potential for China’s auto components segment boosted by smart EVs, according to Sun Changxu, a partner at Xiaomi’s industry investment fund (our translation).
• Headquartered in the eastern city of Suzhou, Chilye said it has secured clients including “multiple mainstream automakers” and will have the production capacity to equip 3 million EVs with its products annually by mid-2022.

Context: Xiaomi has set a target of mass-producing its first consumer EV model during the first half of 2024 and recently poached a senior executive from state-owned automaker BAIC Motor to lead its EV project.

• Xpeng Motors is also transitioning to high-voltage technology with the recent debut of its second electric SUV model, the G9, scheduled for delivery starting September. The company claims it will be China’s first mass-produced vehicle model featuring an 800-volt electrical system.
• Xpeng, backed by Alibaba and Xiaomi, added that an 800V power system and its proprietary superchargers will allow its vehicles to have a 200-kilometer (125-mile) driving range with only five minutes of charging.

A content moderator at Chinese video streaming site Bilibili died on Feb. 4 while working a Lunar New Year holiday shift. On Monday, the company said that the deceased employee didn’t work excessive hours before his death, but online influencers say otherwise.  

Why it matters: The sudden death of the Bilibili employee has renewed public discussions about the persisting overwork culture of Chinese tech companies. The news has drawn extra attention since it happened during the Lunar New Year holiday, China’s all-important annual public holiday.

• Under mounting public scrutiny, Chinese tech giants such as Alibaba, ByteDance, Meituan, and Kuaishou have tried to improve staff’s working conditions by either introducing shorter working hours or enhancing worker benefits.

READ MORE: Insights | Why ‘996’ just won’t go away 

Details: A Bilibili employee, nicknamed “Twilight Muxin” died of a brain hemorrhage on Feb. 4 after working a holiday shift from home during the seven-day break for the traditional Chinese New Year, according to an internal Bilibili memo shared with TechNode on Tuesday.

• The male employee felt unwell on the afternoon of Feb. 4 and was rushed to the hospital. He was pronounced dead around 8:00 p.m. on the same day after hours of rescue attempts failed to revive him. The employee joined Bilibili in May last year and worked in the company’s content review department.
• Facing heightened scrutiny over its content from Chinese authorities, Bilibili, a Nasdaq-listed streaming site, had a sizable 2,400-member content moderation and auditing team as of 2020, roughly 30% of the company’s headcount at the time.

Conflicting narrative: There are two different narratives regarding the employee’s cause of death. Weibo workplace blogger “Wang Luobei” first broke the news on Monday around noon, blaming the company’s grueling work schedule for the tragedy. Bilibili denied the employee had worked overtime in a Monday memo, stating that he had worked 9:30 a.m. to 6:30 p.m. each day during the Spring Festival, considered “regular working hours.”

• The deceased employee, an AI audit team leader based in Wuhan, had worked five consecutive 12-hour shifts from 9:00 a.m. to 9:00 p.m. during the New Year holiday, according to the blogger’s sources.
• Bilibili says in the memo that it has set up a special team to cooperate with the police and the employee’s family to follow up on the matter.

Context: Chinese labor law dictates that work schedules should not exceed eight hours per day and 44 hours on average per week. Given specific circumstances, workers can put in a maximum of three hours per day and 36 hours per month of overtime. 

• Overtime work culture in Chinese tech firms drew widespread public ire in 2019 after software engineers used Github to protest the so-called 996 work schedule (9 a.m. to 9 p.m., six days a week) of tech giants JD, Xiaomi, and ByteDance.
• E-commerce giant Pinduoduo also faced public ire regarding its alleged overwork culture after two employee deaths in early 2021.

Chinese tech companies are still laying off large numbers of employees in the aftermath of a year of regulatory crackdowns. While annual team adjustments are common in tech industries, investors and market watchers are alarmed by the scale of the recent job cuts and what they indicate about the underlying regulatory upheaval.  

Over the past year, 35 companies scaled back their teams according to a rough count made by one local media outlet. The cuts affect nearly every major vertical, from education and short video, to gaming and e-commerce, with thousands of people losing their jobs. In some cases, whole business departments were dissolved. Deep-pocketed tech titans such as Alibaba, ByteDance, and Baidu, which are generally less vulnerable to small market fluctuations compared to startups, were not immune to these cuts.

The current wave of layoffs, still ongoing in the lead up to the Chinese New Year, stands in stark contrast to the hefty incentives distributed by Chinese tech heavyweights in their heydays around the mid-2010s. At that time, an employee might enjoy a bonus in the form of pay equivalent to 100 months of salary or even a Tesla car. The incentives were intended both to show the tech giants’ muscle and to lure talent.

The most obvious difference in the Chinese tech industry today is a tightened regulatory environment. China offered extensive support to tech innovation and entrepreneurship from the beginning of 2010, with initiatives such as the launch of a state-backed entrepreneurship and innovation program in 2014. In the years after the launch of the program, China witnessed the rise of some of the most prominent tech names in the country such as Didi, Pinduoduo, and Xiaohongshu. Even though regulations, such as those on anti-monopolistic practices, existed back then, the government often failed to enforce them, helping boost the growth of budding companies.

Government attitudes shifted sharply in 2020 when Beijing launched the first industry-wide regulatory crackdowns as the authorities tried to exert greater control over tech companies, particularly those with large platforms. State actors still say they support tech innovation, but the support increasingly only applies to hard tech industries like semiconductors, new energy vehicles, and biotech.

The elimination of practices and services that no longer comply with the raft of new regulations has been a major source of these slashed headcounts, but leaders of tech giants are also being driven to urgently reduce loss-making units and improve operational efficiency.

Job cuts in headlines

News of mass layoffs has dominated China’s tech headlines in recent months.

• TikTok owner ByteDance reportedly laid off more than 1,000 staff from its edtech business in November following the deeper cuts made in the sector in August. The tech titan, known for its sprawling business lines, cut its talent development center and scaled back its Human Resources department in December. The company reportedly dissolved its investment unit in January by laying off 100 employees as authorities stepped up antitrust scrutiny of the country’s tech giants.
• Douyin rival Kuaishou laid off mid-level managers and low-performing employees in December and cut jobs across key units such as e-commerce, globalization, and algorithm recommendation in January. Employee benefits were slashed in December.
• Chinese search giant Baidu has started layoffs at its mobile business arm, which oversees its search and mobile businesses, several Chinese media outlets reported in December.
• IQiyi, a Baidu-backed video streaming affiliate, laid off 20% to 40% of its workforce in December as the Netflix-like firm tries to reduce costs amid increasing losses. That means the layoff could wipe out some 1,500 to 3,000 positions based on the company’s nearly 7,800 headcount in 2020.
• Perfect World, a Chinese game developer, plans to cut up to 1,000 staff, local media reported on January 25.
• Giant tech firms including ByteDance and Alibaba adjusted their organizational structures, while also making business adjustments and job cuts.

Worst-hit sectors

Online education companies targeting after-school tutoring of students up to the ninth grade were among the worst-hit verticals as China’s crackdown on the sector essentially banned companies from offering services related to core curriculum subjects.

All major players in the field, including New Oriental, TAL, and Gaotu, terminated their after-school tutoring services in the wake of the crackdown on the private education sector. In one of the largest edtech layoffs, New Oriental founder Yu Minhong confirmed in his WeChat Moments feed last month that the company dismissed 60,000 workers and saw revenue fall by 80% in 2021.

READ MORE: Edtech will survive China’s crackdown, but it won’t be the same

E-commerce, another highly-regulated area, is also experiencing downsizing. Fresh produce delivery giants that survived a 2021 market consolidation are trimming operations to save costs. Online grocer Dingdong Maicai reportedly planned to cut from 20% to 50% of the workforce at its core business units in January, while Meicai, a Chinese app that supplies farm-to-table produce for restaurants, laid off around 40% of its remaining workforce after halving headcounts in September.

Youzan, one of China’s largest e-commerce service companies, is reportedly planning to lay off 1,500 people, or nearly 30% of its employees in early 2022.

Downshifting for years

Chinese tech companies have been gradually reducing headcounts over the past few years as the country’s economy felt strain long before the pandemic hit. However, a combo of regulatory curbs on everything from technology to education and a renewed virus-induced public health crisis is creating further headwinds for local big tech firms. They are being forced to drastically cut costs to keep themselves afloat as more challenges await in 2022.

This wave of layoffs is the result of multiple events, such as Beijing’s education crackdown and the cyclical economic downturn, Chinese media outlet Leiphone wrote in a Jan. 21 article. Chief among them was Beijing’s draft amendment to its Anti-Monopoly Law, released in October and dropped a hammer on the country’s internet giants. 

With scant regulation and China’s population producing massive numbers of customers, the country’s large tech companies enjoyed supercharged growth rates over the past two decades. Tech giants therefore are used to attracting and retaining large numbers of workers with huge salaries and comprehensive benefits. The result was many redundant positions and overall inefficient use of human resources. Now, the heavyweights are beginning to realize that they must stretch their budgets in an environment where it is no longer so easy to reap huge profits, the Leiphone report said.

By slashing headcounts from loss-making business units or units now facing stringent regulation, tech companies are phasing out less profitable activities  in order to achieve efficiency and bigger profit margins, experts told local media Shenran Caijing in December.

Fearing a looming recession, executives from Chinese big tech firms have vowed to focus on core businesses and value creation. In November, Tencent Chairman Pony Ma said the company will ramp up efforts around its main sources of revenue, such as cloud services and gaming, while Alibaba and Kuaishou have set their sights on the overseas market as a major growth driver. And yet, as companies are taking more steps to reduce costs, the only thing that seems certain is that industry will face slower development, the report said.

“Do I look like a loser?”

Under the weight of repeated COVID-19 outbreaks, a further economic slowdown, and a string of regulatory crackdown across industries, it has become fairly standard for Chinese tech firms to let go of tens of thousands of employees at a time. While mass layoffs like these are usually discussed as an indicator of a company’s struggles and changing strategies, they are also life-changing decisions for a vast number of talented and dedicated individuals who have spent their youth with these companies.

Wu Jing, a former employee at iQiyi, still vividly remembers the moment she lost her job in December. In an interview with Chinese media outlet Jiemian, she said it only took five minutes for her and her supervisor to finish their conversation. When she went back to her cubicle and checked her phone, rumors that the Baidu-backed video platform planned its largest-ever layoff sweep had begun spreading on Chinese social media.

Wu joined iQiyi four years ago when the Chinese Netflix-like firm was thriving. Two of the company’s variety shows, “The Rap of China” and “Idol Producer,” were huge successes and kicked off fierce competition among idol-focused variety shows in the domestic video streaming market. IQiyi went public in March 2018 at $18 a share, but since then, the share price has fallen by more than two-thirds.

Aware of the company’s anemic pace of growth, Wu had made plans to jump ship in 2022, but the layoff was quick and came as a surprise. Haunted by the feeling of abandonment, she now asks herself, “Do I look like a loser?”

Fresh graduates are not immune to these cuts either. Chen Yi, a former engineer at ByteDance’s gaming unit Ohayoo, lost his job late last year, just months after passing a strict selection process, according to a Jan. 25 report by media outlet 21st Century Business Herald. The report said that nearly all of Chen’s peers were let go by ByteDance’s gaming studio, among waves of layoffs as the TikTok owner sought to lower costs as it faced a potential growth bottleneck.

“The layoff just happened so suddenly that I wasn’t prepared,” said Chen.

CATL expects its annual profit to nearly triple in 2021 after a strong rebound in Chinese electric vehicle sales through the year, the country’s largest electric vehicle (EV) battery supplier said on Friday.

Why it matters: The outlook reflects the strong consumer demand and growing profitability of EVs, as Beijing pushes for EV adoption to make China a power in the auto industry.

• Sales of new energy vehicles (NEVs), which are mainly made up of all-electrics and plug-in hybrids, jumped nearly 160% year-on-year to 3.52 million units in 2021, according to figures published by China’s Ministry of Industry and Information Technology last month. 

Details: CATL expects to report a 2021 net profit attributable to shareholders of between RMB 14 billion and RMB 16 billion ($2.2 billion to $2.5 billion), an increase of up to 195.5% from RMB 5.6 billion a year earlier, according to a Thursday announcement (in Chinese).

• The Chinese battery giant attributed the improvement in financial performance to a growing penetration of NEVs in the auto market, as well as increased production and tightened cost control.

Context: CATL maintained its market lead with 80.51 gigawatt-hours (GWh) of battery capacity supply in 2021, accounting for 52.1% of the Chinese EV battery market, according to figures recently published by the China Automotive Power Battery Industry Innovation Alliance.

• The company last week launched a battery swap brand called Evogo with plans to establish swap stations in 10 Chinese cities competing against existing players including Nio. It is also developing its next-generation sodium-ion battery, with aims to begin mass production in 2023, Reuters reported.

READ MORE: Chinese EV makers may face a price war in 2022: UBS

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.

Baidu’s electric vehicle (EV) project Jidu Auto announced on Wednesday that it has raised nearly $400 million in Series A as the Chinese search engine giant accelerates the development of EVs with self-driving capabilities.

Why it matters: Jidu will use the proceeds on research and development as the company aims to unveil a concept car in April later this year and release its first production model in 2023, according to the announcement.

Details: Baidu and its manufacturing partner Geely both raised their stakes in Jidu by jointly investing almost $400 million in the venture. The two companies didn’t reveal the sharing ratio. 

Context: Baidu and Geely linked up last January with a deal that would allow the tech giant to make its own consumer EVs with autonomous driving capabilities.

• The result was the establishment of the RMB 2 billion ($316 million) joint venture Jidu Auto two months later, with Baidu and Geely holding 55% and 45% of the total shares, respectively, according to business research platform Tianyancha (in Chinese).
• Baidu has operated an autonomous driving unit testing its vehicles in China and the US since 2015. It began commercial autonomous ride-hailing services for passengers in Beijing in November last year, and plans to expand the service to 65 domestic cities by 2025.  
• Early last year, Geely also launched its own premium EV brand Zeekr, which raised $500 million a few months later from a group of investors, including China’s biggest battery maker CATL and streaming giant Bilibili.
• Geely reportedly plans to acquire Alibaba-backed smartphone maker Meizu as part of its long-term electric mobility vision.

JD Technology, the financial technology arm of Chinese online retailer JD.com, is preparing an IPO that could raise between $1 billion and $2 billion in Hong Kong this year, IFR reported Monday.

Why it matters: JD Technology’s expected listing is one of a number of long-awaited IPOs from Chinese vertical giants, including bike rental app Hello Inc. and podcast platform Ximalaya. The latter two suspended IPO procedures last year after the Didi cybersecurity review put a halt to the overseas listings of Chinese tech giants.

• JD Technology’s possible IPO comes after the company withdrew from a planned Shanghai STAR Market IPO in April 2021 amid antitrust regulations in China’s fintech sector, which led to the halting of Ant Group’s proposed dual Hong Kong and Shanghai IPO.
• JD Technology’s Hong Kong IPO plans could set an example for other IPO candidates as authorities set up clearer regulations for Chinese companies seeking to go public outside the mainland market.

Details: The JD affiliate is discussing the listing with investment banks including Bank of America, CITIC Securities, and Haitong International, according to financial information provider Hithink Royal Flush Information.

• The company declined to comment on the news when contacted Tuesday morning.
• JD Technology’s revenue grew from RMB 9.1 billion ($1.4 billion) to RMB 18.2 billion between 2017 and 2019, according to the company’s prospectus filed with the Shanghai STAR market in 2020.

Context: In 2013, JD spun off its financial technology services to form an independent fintech unit JD Finance, which operates a series of loan businesses and provides AI and blockchain-based financial services. JD Finance was renamed JD Digits in 2018 and then changed its name again in 2021 to JD Technology, as it diversified its business line to include cloud, artificial intelligence, and IoT offerings. 

• Last year, JD sold JD Cloud and its artificial intelligence business to JD Digits for a combined valuation of $2.4 billion, before the financial unit changed its name.
• In January, the Cyberspace Administration of China required companies that control data of more than 1 million users to undergo a cybersecurity review before they seek overseas listings. It’s currently unclear whether this new requirement applies to Hong Kong listings that are not deemed to be related to issues of national security.

Geely is reportedly in advanced talks to acquire Meizu Technology, a domestic smartphone maker backed by e-commerce giant Alibaba, as the Chinese auto group aims to provide a mobile-driven in-car experience and pose a challenge in the smart mobility race.

Why it matters: The move comes against the backdrop of China’s big tech firms, like smartphone maker Xiaomi and search engine Baidu, pushing to develop vehicles with smart cabin systems and autonomous driving technologies, developments that pose major threats to traditional automakers like Geely.

Details: Hubei Xingji Shidai Technology Co Ltd, a smartphone venture launched and majority owned by Geely chairman Eric Li, has begun talks to buy Meizu, a small and relatively obscure smartphone player, Chinese media outlet 36Kr reported Friday, citing people with knowledge of the matter.

• Geely is currently carrying out due diligence on the niche handset maker, the sources added, while other details surrounding the acquisition such as the sale price are unknown.
• A Geely spokesperson declined to comment on the report, saying only that the company is working to “expand the industrial footing” of its newly-established cellphone business. Meizu did not respond to TechNode’s request for comment on Monday.

Context: Geely announced its entry into the competitive Chinese smartphone market by establishing Xingji Shidai with registered capital of RMB 715 million ($113 million) in the central city of Wuhan in September, Reuters reported. Geely chairman Eric Li owns a 55% stake in the venture, according to Chinese business research platform Tianyancha (in Chinese).

• The private automaker has hired Wang Yong, a former vice president at telecommunications giant ZTE, to help lead its smartphone business, while stepping up efforts to poach talent from electronics giants such as Xiaomi and Oppo, the 36Kr report added.
• In early 2015, Alibaba invested $590 million for an undisclosed minority stake in Guangdong-based Meizu, with the e-commerce behemoth at the time reportedly intending to integrate its custom mobile operating system YunOS into mobile devices. The company was handed an antitrust fine of RMB 500,000 ($79,000) by local regulators in November last year, because of the deal.

Chinese online retailer JD and Canadian e-commerce platform Shopify have entered a strategic partnership to help global brands sell in the Chinese market and Chinese merchants looking to sell overseas.

Why it matters: Expanding beyond home markets, especially in the competitive e-commerce sector, is a daunting task even for tech majors like JD and Shopify. With lessons learned from Amazon’s withdrawal from China and JD’s own setbacks in overseas expansion, Shopify is teaming up with a local partner, saving costly tasks such as initial user acquisition, infrastructure construction, and providing insights to the local market.

• JD, which already has a solid presence in the Southeast Asian market, is advancing its global expansion. The tie-up with Shopify comes shortly after JD opened its first brick-and-mortar store in Europe last week.
• The deal will compete with other major players in China’s cross-border e-commerce sector, such as Alibaba’s Kaola.

Details: Under the partnership, JD will allow Shopify merchants to list their products on the company’s cross-border e-commerce platform JD Worldwide, giving them access to more than 550 million active buyers in China, according to a Tuesday statement from the company.

• JD will support expedited onboarding and help Shopify merchants sell their products within three to four weeks, a much shorter process than the previous 12-month time frame. The company will achieve this through technical means, including intelligent translation and smart price conversion.
• JD also opened up its end-to-end fulfillment capabilities to Shopify merchants by leveraging the company’s logistic power, including China-US cargo flights, US warehouses, more than 1,300 warehouses, and more than 200,000 couriers in China.
• Additionally, JD will support selected Chinese brands to set up their direct-to-consumer channels through Shopify, helping Chinese brands and merchants reach consumers in Western markets.
• Aaron Brown, Vice President of Shopify, refers to the partnership as “a major step” in solving cross-border commerce for merchants. “The future of commerce is commerce everywhere—and that starts by removing barriers to entry to one of the most important e-commerce markets in the world,” Brown said in the JD announcement.

Context: To spur foreign trade growth, Beijing has been promoting the construction of cross-border e-commerce pilot zones since last year. China’s cross-border e-commerce imports and exports reached RMB 1.98 trillion ($311.7 billion) in 2021, up 15% year on year, according to data from China’s General Administration of Customs.

Chinese short video platform Kuaishou has opened its e-commerce store to local merchants managing online-to-offline services, including everything from food delivery to hospitality.

Why it matters: Continuing its recent focus on e-commerce, the Beijing-based company is expanding into the competitive local services market, which already includes fierce rivals such as Meituan, ByteDance’s Douyin, and Alibaba’s Alipay.

• Kuaishou’s move to extend its homegrown services business comes on the heels of a December partnership with Meituan. Under the deal, Kuaishou users have gained access to Meituan’s services through a Meituan mini-program within the short video app.
• The short video app has begun venturing into e-commerce, along with livestreaming and gaming, to commercialize its user base.

READ MORE: ByteDance is trying to take a bite of Meituan’s cake

Details: In addition to physical products, merchants can now sell various services through Kuaishou’s online store Kwai Shop, according to a Tuesday statement from the company.

• Merchants offering 15 categories of services, including food and drink, hospitality, healthcare, entertainment, film, and transportation ticketing, can apply to set up their own stores on the platform from Jan. 15.
• With their own Kuaishou store, merchants can manage their service listings to drive transactions and potentially convert online customer attention into offline service sales.
• To attract merchants, the platform is offering incentives to business operators. Kuaishou has pledged to encourage new store registrations with a promotion plan that offers individual stores up to RMB 1,000 ($158) and viewership from 50,000 customers.
• American chain KFC, hotpot chain Haidilao, Meituan’s hotel booking service, and healthcare clinic chain iKang are among the earliest brands to launch their stores on the platform.
• “The growth of the traditional in-store group-buying business model is slowing down, and merchants are in urgent need of new service models to attract users and to promote purchasing frequency,” Zhu Yunbo, head of Kuaishou’s local life service unit, said in a statement shared with TechNode on Tuesday. 

Context: Kuaishou, China’s second-largest short video-sharing app, reportedly laid off up to 30% of its workforce in December as Chinese tech giants weather a market downturn.

• Rival ByteDance has been increasing investments in the online services market over the past year with the most recent move being the acquisition of cinema ticketing platform Yingtuobang this week.

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.

Xiaomi has hired Yu Liguo, a former senior executive at state-owned automaker BAIC Motor, to lead its autonomous electric vehicle (EV) project. The move brings a highly-experienced executive from the traditional auto industry to the 12-year-old smartphone maker.

Why it matters: The hire is the latest sign that Xiaomi is serious about venturing into the EV industry.

Details: Yu has come aboard as vice president of Xiaomi’s auto unit and a “political commissar” at its Beijing headquarters, according to an internal letter published Friday and obtained by Chinese media outlet 36Kr.

• Yu will be tasked with leading Xiaomi’s car-making project and managing the development and implementation of key business goals, and will report directly to CEO Lei Jun, a person with direct knowledge of the matter confirmed with TechNode on Monday.
• Yu will also play a major role in talent management of the auto unit and report his daily work as a “commissar” to Liu De, a senior vice president and head of Xiaomi’s organization department, the person said.
• Yu began his career at BAIC in 2012 and worked as the president of Arcfox, an EV unit of BAIC, from 2020-2021. His leadership of the EV program at Daimler’s Chinese manufacturing partner resulted in the launch of the Alpha S vehicle, its flagship electric sedan co-developed with Chinese telecommunication giant Huawei in early 2021.

Context: The news comes just months after Li Tianyuan, a former exterior designer of BMW’s electric vehicle the iX, joined Xiaomi, an appointment that was made public via a group photo of the firm’s corporate executives posted by CEO Lei Jun last September.

• The Chinese smartphone giant is targeting the first half of 2024 to produce passenger EV that could include its own assisted driving technology, Lei told investors last October, six months after unveiling Xiaomi’s $1.5 billion auto investment plan.
• Xiaomi will face significant competition in the transportation space, with a host of startups jostling for a place in the EV market alongside banner brands such as Tesla and General Motors Wuling.

Read more: Drive I/O | Chips, batteries, AV: Xiaomi’s most high-profile auto investments of the year

Chinese automaker BYD said on Wednesday it is partnering with US autonomous driving startup Nuro to make electric robocars for goods delivery services.  

Why it matters: The partnership is the latest example of Chinese automakers working with overseas tech companies to build autonomous vehicles.

Details: BYD is currently working with Nuro to design and develop the latter’s next-generation autonomous delivery robots, which will be equipped with components provided by the automaker such as electric motors and lithium-iron-phosphate blade batteries, according to a Thursday announcement. 

• Softbank-backed Nuro plans to begin mass production next year of the low-speed vehicles, which come with two spacious cargo areas and an external airbag for pedestrian safety, as it scales up production at its currently under construction manufacturing facility in Nevada, according to TechCrunch. 
• The two companies expect the collaboration to help scale Nuro’s last-mile delivery services to “millions of people” in the US.

Context: Nuro was co-founded in 2016 by Zhu Jiajun and Dave Ferguson, two former engineers at Google’s self-driving car project. The company announced in December 2020 that it had received first-of-its-kind approval by US regulators to operate and charge for its driverless delivery services, TechCrunch reported.

• Warren Buffet-backed BYD formed an alliance with Japanese automaker Toyota in mid-2019 to jointly develop electric vehicles, which they expected to hit the Chinese market under the Toyota brand name by 2025.
• Another Chinese auto major Geely said earlier this month that its premium EV brand Zeekr is working with Intel’s autonomous driving unit Mobileye to develop electric and autonomous passenger vehicles, aiming for release as early as 2024 in China, according to TechCrunch.

Zvision Technologies, a Chinese startup that makes lidar sensors for self-driving cars, announced a new investment from three Chinese automakers on Monday, including Xpeng Motors. The company becomes the latest startup to tap growing investor interest in the self-driving car space.

Why it matters: The investment is another sign of the increasing interest in lidar sensors, seen as a crucial building block for future vehicles by most auto and tech firms. Lidar is a key component for self-driving cars and uses laser light to sense surroundings. 

Details: Zvision has raised “hundreds of millions of yuan” in a pre-Series C led by Xpeng Motors, according to a Monday announcement (in Chinese). Shang Qi Capital, a private equity firm owned by Chinese automaker SAIC, participated in the round. 

• State-owned automaker Dongfeng Motor and existing backer Intel Capital also joined the round. A company spokeswoman declined to disclose an exact valuation when contacted by TechNode on Tuesday.
• Zvision plans to use the funds to accelerate the development and mass-production of its automotive-grade lidar sensors, including improving its production line and supply chain. The company has yet to show a timeline. 

Context: In September, Xpeng had begun delivering the world’s first Lidar-equipped production vehicle, the P5, which the company boasts can distinguish objects within a range of up to 150 meters and can run autonomously under a driver’s supervision on Chinese roads, the South China Morning Post reported. 

• Xpeng sources lidar sensors for the P5 from Livox, an affiliate of Chinese drone maker DJI, which previously encountered technical issues when attempting to meet the reliability requirements for automobiles, TechNode reported last June.
• In November, the EV maker unveiled its second sports utility vehicle model, the G9. It will come fitted with two lidar sensors provided by Robosense, a lidar startup backed by SAIC and BYD. The G9 is scheduled for delivery in the third quarter of 2022.
• Xpeng chief executive He Xiaopeng told investors last May that the company was testing lidar technology from multiple suppliers.
• Rival EV maker Nio has heavily backed Innovusion, a startup formed by two Baidu veterans in 2016, and used the firm’s lidar technology for its first sedan model ET7 as well as the upcoming ET5.

China lists crypto mining as an industry to retire and eliminate. The Chinese government plans to use blockchain technology in public services. A Jay Chou-supported NFT has topped the transaction volume list on OpenSea. 

Crypto mining to be “retired”

• China’s National Development and Reform Commission (NDRC) has listed crypto mining as an industry to retire in an amended industrial catalog (Catalogue for Guiding Industry Restructuring 2019 version). The catalog said sectors that ought to be retired tend to be energy-intensive, polluting, and use outdated technology and equipment. Since March, officials across China have launched a widespread campaign to shut down mining operations. Inner Mongolia was the first region to crack down on miners, while Xinjiang and Qinghai, plus Sichuan, Yunnan, Jiangsu, Zhejiang, Fujian, and Jiangxi provinces soon followed. (NDRC, in Chinese) 

• Crypto mining conflicts with China’s carbon neutrality goal according to a monthly work report issued by the Central Commission for Discipline Inspection (CCDI), China’s top inspection unit for Party officials. The report applauded officials in Zhejiang and Jiangxi for their crackdown on crypto mining operations using public resources as well as related operations in the government-funded development zone. (CCDI, in Chinese)

Blockchain in public service

The Chinese government vowed to explore the use of blockchain technology in public services, alongside other technologies such as big data, cloud computing, artificial intelligence, and the internet of things, in its newly released five-year plan for public services. The plan aims to see “significant improvements” in public services by 2025 and “equal access” to public services by 2035. The National Development and Reform Commission (NDRC) led the drafting and worked with 20 other government agencies. (NDRC, in Chinese)

NFT fever

Phantabear, an NFT supported by Jay Chou and Edison Chen, celebrities popular in China and across Asia, has topped OpenSea’s ranking chart on transaction volume since Jan. 9. OpenSea, the NFT-trading platform, also experienced a site outage on the day Phantabear topped due to “a sustained surge in API traffic” that overloaded its systems. The platform vowed to “rearchitect core parts of our architecture” to meet future demand. (OpenSea)

Chinese tech giant Alibaba announced a major organizational reshuffle on Thursday with the goal of further integrating its core domestic e-commerce businesses.

Why it matters: This is the first organizational reshuffle since Trudy Dai, a founding member of Alibaba, was named last December as head of the tech giant’s China Digital Commerce unit. The unit manages the company’s domestic commerce platforms such as Taobao, Tmall, Alimama, Taocaicai, and Taobao Deals, as well as its B2C retail business.

• The adjustment comes as Alibaba faces headwinds on multiple fronts from increasing competition, a regulatory crackdown, and a slowing economy.

Details: While maintaining the dual-branding strategy for Taobao and Tmall, the company will set up three new business centers to connect the back-end operations of the two e-commerce platforms and related services under the business unit, according to a Thursday internal letter which was made public by local media.

• One center, focused on improving user experience, is to be helmed by Yu Feng (whose internal company nickname is Xuande), the former head of Taobao Live. 
• The second, dedicated to product operations and development, aims to better serve merchants on Taobao and Tmall. This center will be overseen by Yang Guang (nickname: Chuixue), a former member of the management team at Taobao and Tmall. 
• The third is focused on upgrading platform operation mechanics and digitizing merchant operating systems. It will be run by Wang Mingqiang (nickname: Sihan), current president of AliExpress and former head of Taobao search.
• Adjustments are also being made to the company’s content generation business, with new heads named for livestreaming and social shopping services.
• Alibaba Group Chief Technology Officer Cheng Li (nickname: Lusu) and Chief Risk Officer/Chief Customer Officer Zheng Junfang (nickname: Shitai) will fill the same roles for the domestic e-commerce business unit. That unit includes Taobao, Tmall, and Alimama.
• The changes aim to “upgrade user experience, improve client values,” and “encourage innovation,” according to the internal letter. All the new appointments will report directly to Dai.

Context: Alibaba announced in December that it had created two new units: one for its domestic e-commerce businesses and the other for international e-commerce businesses. Trudy Dai will lead the domestic unit, and Jiang Fan will head the global one.

• Alibaba’s retail marketplaces served 953 million annual active consumers in China as of Sept. 30, 2021, according to figures from the company.
• Alibaba experienced a tumultuous year in 2021. The company was hit with a $2.8 billion fine for antitrust violations.

WeChat’s app store-like mini program ecosystem attracted more than 450 million daily active users (DAUs) in 2021, up 12.5% from 400 million DAUs in 2020, according to figures released on Thursday by the Tencent super app.

Why it matters: Mini programs have seen increasing adoption in China and WeChat’s latest figures suggest users have grown used to operating on apps-within-an-app rather than going to multiple standalone platforms. 

• Mini programs allow users to access an array of services without leaving the main app. The system offers merchants a chance to access a vast pool of users by building lightweight apps within WeChat, an ubiquitous app in China, instead of having to develop a separate app and convince users to go there. 

Details: WeChat mini programs have expanded their user base and seen growing usage over the past year, head of Weixin Open Platform Lake Zeng said on Thursday at WeChat Open Class Pro 2022, an annual event for WeChat business partners and developers held in Guangzhou.

• Ahead of the system’s fifth anniversary on January 9, it was revealed that WeChat mini programs topped 450 million DAUs in 2021, with users spending 32% more time on them each day when compared with 2020.
• In 2021, the total number of mini programs increased 41% year-on-year, while mini programs supporting payment transactions grew by 28%. Users who pay through mini programs soared 80% year-on-year. Small- and medium-sized companies drove 90% of the growth, Zeng said. 

The pandemic accelerated mini program adoption: The company said that more than 700 million users have accessed pandemic control services such as Covid-19 tests and vaccination appointments through mini programs on WeChat, cultivating habits of using the embedded app function. 

• Sectors hit the hardest by the pandemic, including catering, tourism, and retail, saw their transaction volumes on mini programs double year-on-year in 2021.
• During the pandemic, the number of active mini programs offered by overseas merchants grew 268% over the past two years, with total transaction volume surging 897% in the same period. 

Context: Launched in 2017, WeChat mini programs have been aped and adopted by a host of Chinese apps, including Tencent’s QQ, JD.com, Baidu, Meituan, Alibaba’s Alipay and Taobao, and ByteDance’s Jinri Toutiao and Douyin. 

• WeChat’s healthy growth for mini programs comes as the total number of native apps in Chinese app stores has slumped more than 40% over the last three years amid regulatory crackdowns and a mature market.

BYD delivered a record 593,745 new energy passenger vehicles in 2021, a segment that includes all-electrics and plug-in hybrids, as outlined in a report from the Chinese automaker on Monday. The figure represents a 231.6% increase from the 179,054 vehicle deliveries it made in 2020.

Why it matters: Analysts expect the blockbuster delivery numbers to bolster 2022 expectations for the firm as China’s overall electric vehicle (EV) market continues to recover from the pandemic.

• Citigroup raised the target price on BYD stock from HK$536 to HK$587 on Jan. 4, predicting 1.3 million EV deliveries for the company in 2022. That would be more than double 2021 levels.

Details: BYD’s new energy vehicles (NEVs) had a fairly even sales split between all-electrics and plug-in hybrids in 2021, with the two segments accounting for 54% and 46%, respectively, of its total passenger EV deliveries, according to the company’s report.

• The Warren Buffet-backed automaker said it had delivered 13,701 Han EVs in December, helping it surpass 117,000 total deliveries of the premium electric sedan in 2021.
• In 2020, BYD handed over 40,556 Han EVs, priced from RMB 209,800 ($32,917) and intended as a rival to the Tesla Model 3 and Xpeng’s P7.
• In total, the Shenzhen-based automaker in 2021 recorded deliveries of 603,793 NEVs, comprising passenger and commercial vehicles, marking a 218.3% rise year on year. Sales of the company’s gasoline-powered vehicle fell 42.5% from the previous year, to 136,348 units.

Context: China’s NEV market saw a strong rebound this year, with sales nearly tripling to 2.51 million passenger EVs for the first 11 months of 2021, according to figures (in Chinese) released by the China Passenger Car Association.

• Hongguang Mini EV, developed by General Motors’ joint venture with China’s Wuling Motors and state-owned SAIC Motor, remains the most popular sedan model, recording sales of 344,890 units during the same period. Meanwhile, Tesla sold 120,788 Model 3 vehicles, a slight increase of 6.3% from the same period the previous year.
• Several other EV makers saw strong growth over the past year in China. Xpeng’s deliveries grew 263% annually to 98,155 vehicles in 2021, while Nio and Li Auto followed closely behind, handing over 91,429 and 90,491 vehicles, respectively.

Despite their various fields and interests, members of the TechNode community agree: The theme for China tech 2021 was regulations. 

Sometimes the regulations came in waves. Sometimes the rules were new, sometimes just newly enforced. There were so many rules that, like a chronic state of pandemic alertness, regulation fatigue set in by year’s end.

There were industry-rattling rules, like the bans on crypto mining and trading in May, soon followed by the data security review that forced Didi’s US delisting. And while we were still digesting that, there was the sweeping ban on the most profitable edtech services. Mostly, though, there were fines. Tech giants like Alibaba, Meituan, and Pinduoduo faced fines large (for anti-competitive practices) and small (for illegal information releases).  

Next came the drastic limits imposed on minors’ playing hours, which could gnaw into game-makers’ profits and dent the world’s largest population of players. Meanwhile, even tech companies never previously enmeshed with virtual or augmented worlds claimed to be ready to soar into the metaverse in 2022. Already making great—frankly, surprising—advances in 2021 were several homegrown silicon chip designers and a handful of the slew of electric carmakers.

In the wake of news of tragic employee deaths and abusive working conditions, the grueling hours demanded by Big Tech got renewed official and unofficial attention in 2021 as well. It turns out that requiring employees to work six days a week, from 9 a.m. to 9 p.m–the so-called 996 workweek–violates labor laws, according to a statement the Supreme People’s Court issued in August. 

Some of the biggest companies quickly declared that they were abolishing weekend work. 

So are tech workers shouldering a lighter workload now? Is Big Tech assuming a kinder, more humane face?  TechNode’s friends and contributors are once again united and …. skeptical. On the upside, at least the ten richest tech moguls, notably PInduoduo founder Colin Huang, got whacked in their pocketbooks this year. 

Wishing you a 2022 minus 996. 

This year’s most surprising development was Didi’s forced delisting, justified by vague references to national security. It’s still unclear on what basis the Cyberspace Administration of China (CAC) believes foreign listings may result in: (1) Chinese firms transferring onshore data overseas or (2) Chinese firms being compelled to hand over data to foreign entities. My best guess is CAC believes there’s a possibility sensitive data may be requested as part of an investigation under the US Foreign Corrupt Practices Act. Whether well-founded or ill-founded, this fear has led to an overhaul of foreign listings.  

—Michael Norris, research and strategy lead, AgencyChina

The regulatory crackdown is a big one, although a long time coming. I think at this point we have become a bit desensitized to the news. I remember just how shocking the Ant Group fiasco was last year. Everyone was talking about it. Now, with everything going on in gaming, education, content, livestreaming, fintech, crypto and more, it seems like a drop in the bucket. During the latest crypto crackdown, I was surprised to see just how much mining was done in government facilities, or under government supervision, despite the May announcement to shut down the industry. 

—Eliza Gkritsi, Asia mining reporter, CoinDesk

In the semiconductor space, it is how strong industry has aligned with the government. In almost every WeChat group I am in, engineers seem to be one hundred percent behind China’s self-sufficiency goals. Whereas before they may have gone along with such drives begrudgingly, there now seems to be a true desire to work together to achieve these goals. One example where this has been a success to some extent is the silicon IP (intellectual property) space where China—through self-development, tech transfer and other means—has become much more self-reliant in CPU, interface, and GPU IP.

—Stewart Randall, director of operations, Intralink

What do you fear or hope for in 2022?

I expect China’s commercial space industry to achieve more encouraging results in 2022. As novelist Liu Cixin wrote in “The Three-Body Problem”: “The future of mankind is either to move towards interstellar civilization, or to indulge in the virtual world of VR all the year round.” Although metaverse hype swept the global tech industry in 2021, it was also fascinating that we witnessed the successful launch of NASA’s James Webb Space Telescope this past Christmas Day. Personally, I hope Chinese space companies accelerate the steps of mankind to spread themselves beyond earth.

—Lu Guanghao, director, Befor Capital

I hope industry players can work together to create a unified standard for intelligent driving functionalities when it comes to the names, definitions, and driving scenarios, among other things. In the past year, we have seen self-driving companies and electric vehicle makers hyped up automated driving technologies as a unique selling point of their products and services due to the surging demand from customers. 

However, it takes users a great amount of additional time and effort to familiarize themselves with different vehicle systems. Also, as the technology is advancing, there are no industry-wide rules and safety requirements governing the development of automated driving capabilities. 

—Liu Guoqing, founder and CEO of automotive software developer Minieye

My hope for 2022 is that our collective understanding of China’s regulatory activities steps up a gear. In 2021, too many were suckered by the temptation to ascribe a single, all-encompassing narrative to China’s regulatory thrusts. Early uncritical anchoring to a particular analytical frame left market participants blindsided by regulation that didn’t fit neatly within their mental model. If we are to have an analytical frame equipped to consider and make prudent investment decisions within the shifting sands of China’s regulatory landscape—particularly its views on competition and market irregularities—we must do better than “Well, it’s all about taking down Alibaba” or “Well, it’s all about taming the private sector” or “Well, it’s all about semiconductors” or “Well, it’s all about reducing inequality.”

—Michael Norris, research and strategy lead, AgencyChina

US efforts to decouple China from the global economy are meant to weaken and isolate China’s technology sectors to some extent, but technology really does not follow any political boundaries. For Chinese enterprises, a key initiative would be to better utilize the research and development resources from the rest of the world and be more engaged in the global innovation community. 

Meanwhile, China will grow more innovative and more resilient in its long-term development of advanced technologies and the future looks very rosy for those startups in frontier sectors in the next several years. With the launch of the Beijing Stock Exchange in November, innovative Chinese startups will have more access to raise capital at home, while more Chinese-born scientists are expected to bring their expertise home from abroad. 

—Lu Shengyun, former partner with Simon-Kucher & Partners

I fear VCs that have been surprisingly patient to date will want to see returns on their semiconductor investments here in China towards the end of 2022. A chip takes 18 months to two years to design and get to market, so if they are not seeing returns–if these chips do not sell, miss deadlines, or struggle with performance or with bugs–then we could see some semiconductor startups fail. There is a lot of competition out there: over 20,000 chip-related companies and now over 2,800 chip design companies in China. Many companies are on thin margins, if any at all.

—Stewart Randall, director of operations, Intralink

Are Chinese tech giants becoming more humane workplaces? Or more socially responsible neighbors?

As we approach the one-year anniversary of the tragic deaths of two Pinduoduo employees in the same week, I don’t believe China’s tech giants have turned the page on excessive work hours. The collaborative “Worker Lives Matter” spreadsheet, originally published in October, suggests that overwork is commonplace and confirms Pinduoduo employees have the most grueling work hours among the tech giants.

—Michael Norris, research and strategy lead, AgencyChina

They certainly want to make it look that way, but to what extent it is an accurate depiction of reality, I don’t know. I am worried that better work-life balance might actually translate into layoffs. 

—Eliza Gkritsi, Asia mining reporter, CoinDesk

Although the “996” work schedule has been banned, it does not seem that the workload on employees has been reduced. Therefore, this particular policy has meant a reduced salary (as no longer paid double on Sundays), and yet a similar total number of working hours. Hopefully, this is simply the “adjustment period” and the companies will adapt to a non-overtime work culture. But for now, there has not been a great shift. 

—Capucine Cogne, China tech-watcher in Chengdu

As we’ve seen, the Chinese government brought two big policy shifts in the country’s tech space over the past year: strengthened policy support to build its own core technology, as well as the tightened regulation against internet giants. I believe “tech for good” will be the main theme in the industry for a while in the future.

—Lu Guanghao, director, Befor Capital

A Chinese market regulator has started a pyramid scheme investigation into Ting’s Secret, an online cosmetics brand founded by Taiwanese celebrity couple Zhang Ting and Lin Ruiyang, continuing China’s crackdown on e-commerce related malpractices.

Why it matters: Zhang and Lin are the latest celebrity influencers to get caught up in the broad crackdown that first targeted e-commerce giants but is now extending to illicit practices of individual influencers, who increasingly wield as much power as platforms.

• China’s recent e-commerce influencer crackdown has affected top livestreamers including Viya, Zhu Chenhui (also known as Cherie), and Lin Shanshan.
• Chinese social e-commerce sites that adopt a decentralized network of members to sell products are under increased scrutiny from Chinese authorities wary of potential pyramid schemes and tax evasion.

Details: The Market Regulation and Monitoring Administration of Yuhua District in Shijiazhuang said that it had launched an investigation in June into Shanghai Dowell Trading, the operator of Ting’s Secret, in a Dec. 23 letter quoted by local media The Economic Observer.

• The regulator has frozen company assets worth RMB 600 million ($94 million). The move was in response to reports (in Chinese) by a non-governmental anti-scam organization on Dowell’s alleged use of pyramid schemes.
• Shanghai Dowell Trading said in a Wednesday response that “it is a legally operating company” and “welcomes authorities to help check their risks.” “The company is operating normally and will cooperate with relevant departments,” the statement said.
• Shanghai Dowell Trading has the three characteristic features of a pyramid scheme, Li Xu, the founder of the anti-scam organization, told The Economic Observer. Li highlighted the multi-layered management structure and that members must pay a fee or purchase products to join and that their income depends upon the number of members they recruit.

Context: Founded by the Taiwanese actor couple in 1996, Shanghai Dowell Trading sells cosmetics and skincare products, mainly through online channels. It promotes its business through social messaging tools like WeChat and livestreaming platforms such as Taobao Live and Douyin.

• Shanghai Dowell Trading was once an acclaimed taxpayer in Shanghai’s Qingpu District, contributing RMB 2.1 billion in 2018 alone. In addition to TV actors Zhang and Lin, the company also has had several celebrity shareholders and endorsers, including actresses Lin Chiling and Tao Hong.
• Over the past few years, Chinese regulators have hit social e-commerce companies with a series of fines, including Peanut Diary and Nasdaq-listed Yunji for their use of pyramid schemes.
• China’s livestreaming boom has drawn in numerous celebrities—such as actors and singers—seeking to monetize their fanbases. The current round of crackdowns is part of Chinese authorities’ push to remind the public that the internet is not outside the law.

Short video app Kuaishou and food delivery giant Meituan announced a strategic partnership to connect their platforms on Monday.

Why it matters: With the deal, Kuaishou and Meituan will work closer to fend off their common rival Douyin, the TikTok’s Chinese version, which is accelerating its foray into Meituan’s home turf of local lifestyle services.

• Tencent, which owns a 21.6% stake in Kuaishou, is also a major investor in Meituan.
• Kuaishou has adopted an open attitude towards external partnerships in driving growth, especially towards companies in Tencent’s portfolio. In 2020, the short video app also signed a cooperation deal with Tencent-backed online retailer JD.com.

READ MORE: ByteDance is trying to take a bite of Meituan’s cake

Details: Kuaishou announced the partnership with Meituan at its Ecological Opening Conference held on Monday. The new deal between the two companies allows Kuaishou users to access Meituan’s lifestyle services, such as ordering food, through a newly launched Meituan mini-program without leaving the short video app.

• Meituan’s mini-program on Kuaishou currently only supports its core food delivery features, allowing users to browse restaurant listings, place orders, and access after-sales services. Users can also redeem vouchers and make reservations through the mini-program.
• In a Monday statement (in Chinese), the food delivery giant said that it plans to expand offerings in the mini-program to include more categories such as booking hotels, homestays, travel attractions, and beauty salons.
• In the tie-up, Kuaishou is giving Meituan access to its large user base (573 million monthly active users in China in Q3 this year). In return, it hopes to gain higher user retention by integrating daily services.  
• The short-video company also launched its “one-stop open platform” at the Monday event. The new platform incorporates a series of features such as mini-programs, service accounts, point of interest interfaces, and various tools that help merchants and service providers to manage their branding, marketing, and supply chains.

Context: Kuaishou is China’s second-largest short video platform by daily active users, behind only ByteDance’s Douyin.

• Listed this February in Hong Kong, the company has seen significant stock price volatility over the past few months due to weaker-than-expected earnings guidance and regulatory concerns.
• Kuaishou reportedly began a new round of layoffs in December, one month after co-founder Su Hua stepped down as CEO.

Update: The article is updated with Kuaishou’s Chinese user number. 

Leading Chinese e-commerce platform JD launches a portal for non-fungible tokens (NFTs), making it the third internet giant in the country to do so. Meituan refutes a fraudulent virtual currency project using the company’s branding. Inner Mongolia completes its crypto mining sweep. A Beijing court rules a crypto mining contract invalid in a business dispute. 

JD gets into NFTs

JD launched an NFT platform called Lingxi on Dec. 17. The platform is accessible through a mini-program on one of JD’s apps. The platform’s inaugural digital collectible is a digital rendering of Joy, the company’s mascot of a white cartoon dog, and is priced at RMB 9.9 ($1.55 apiece) and limited to 2,000 copies. The program is backed by JD Digits Blockchain, the company’s own consortium blockchain. Buyers aren’t allowed to resell or trade digital collectibles in line with China’s rules on preventing digital asset speculation. JD is the third major Chinese tech company to launch an NFT platform, following Tencent and Alibaba affiliate Ant Group. (Jiemian, in Chinese)

Meituan refutes fake virtual currency project

Life-services app Meituan said on Dec. 17 that it had found an unknown group fraudulently using the Meituan brand to sell virtual currencies named “MEITUAN.” The company clarified that it has no virtual currency projects. Meituan Security has acquired evidence of the fraudulent use and is actively working with the relevant authorities to investigate. (Meituan Security, in Chinese)

Mining woes

• Officials in China’s northern Inner Mongolia region announced that they have finished cracking down on all crypto mining projects in the region, Chinese media reported on Monday. The region shut 49 virtual currency mining projects and cleared 186 IP addresses involved in mining during the crackdown. Various Chinese regional governments have been sweeping and closing crypto mining projects in their jurisdictions since this fall, including Yunnan, Sichuan, and Zhejiang. (China Star Market, in Chinese)

• A Beijing district court voided a bitcoin mining contract in a business dispute on Dec. 15, setting a precedent for such caes in the region. In a 2019 contract, a Beijing-based company called Phonf (Fengfu Jiuxin in Chinese) commissioned a Tianjin-based blockchain company called Zhongyan Zhichuang (ZYZC) to mine bitcoin and share mining profits. Phonf is suing ZYZC for owed gains. In the initial trial, the court ruled the contract invalid and dismissed Phonf’s claims for unpaid bitcoin mining gains. (Xinhua News, in Chinese)

TikTok owner ByteDance is the world’s largest unicorn with a market valuation of $353 billion (RMB 2.25 trillion), according to a Monday unicorn ranking list from the Hurun Research Institute. Alibaba affiliates Ant Group and Cainiao take the second and ninth spots, respectively, with valuations of $150 billion and $34 billion.

Why it matters: ByteDance, one of China’s top tech IPO candidates, has maintained growth, despite China’s tech crackdown and US sanctions this year. The firm’s valuation has more than tripled from $80 billion a year earlier. 

Details: The Hurun Research Institute released on Monday its Global Unicorn Index 2021, a ranking of startups valued at more than $1 billion and not yet listed on a stock exchange. “A unique feature of China’s startup ecosystem is the ability of big tech companies to spin off unicorns, with 49 of the world’s 50 ‘spun-off’ unicorns coming from China, such as Ant Group, spun off from Alibaba in 2014,” said Hurun Report chairman and chief researcher Rupert Hoogewerf. Based in Shanghai and Oxford, England, Hoogewerf is also known by his Chinese name, Hu Run.

• Compared to China’s tech giants, Hoogewerf said that global tech giants like Microsoft, Apple, Amazon, and Alphabet are “not as active” as their China counterparts when it comes to investing in unicorns.
• Other prominent Chinese firms that made the annual annual list include JD Technology, WeBank fintech services, fashion retailer Shein, Instagram-like lifestyle community Xiaohongshu, and drone maker DJI.
• The report listed 1,058 unicorns worldwide, double the number since 2020. Hoogewerf calls 2021 the “most successful year for startups ever.” China now counts 301 unicorns, or 28% of the global total. Most focus on e-commerce, healthcare, or artificial intelligence.
• The total value of these unicorns is $3.7 trillion, or equivalent to the GDP of Germany, according to the report. 
• The report named Sequoia Capital the most successful unicorn investor with investments in 206 unicorns in its portfolio. The US venture capital firm is followed by another US investor, Tiger Fund, and Japanese investor SoftBank. Chinese investors Tencent and Hillhouse occupy the eighth and the tenth positions, respectively, on the list. 

Context: Chinese big tech companies have faced regulatory headwinds since autumn 2020 when Beijing stepped up its crackdowns on market monopolies and cybersecurity lapses.

Livestream e-commerce is proving to be a trend with staying power, rather than a flash-in-the-pan phenomenon driven by pandemic-crazed online consumption.

E-commerce sales achieved through livestreaming represented more than 10% of China’s total online retail sales in 2020, according to data from iResearch. The research agency forecasts that the proportion will reach 24.3% by 2023. 

E-commerce giants, such as Alibaba and JD.com, as well as short video sites, notably Douyin and Kuaishou, have tapped into the livestream boom to boost their online commerce businesses.

For now, e-commerce platforms still rule the livestreaming roost, but Douyin and Kuaishou are catching up quickly as Chinese users’ experience and shopping preferences evolve. Experts we talked to said short video apps pose a threat to Alibaba’s dominance in live e-commerce.

READ MORE: How e-commerce and livestreaming became frenemies

Same service, different operating rationales

From a user’s perspective, e-commerce and short video apps offer very similar livestream shopping experiences. However, the operational models of these two types of platforms mean they approach live e-commerce differently.

Users on e-commerce platforms like Taobao and JD open these apps with clear shopping intentions. Therefore, the livestream sales performance of stores on Alibaba’s Tmall depends on the traffic to the store or brand itself, an employee from a business process outsourcing company in the livestream industry told TechNode. 

“If the store (brand) is well-recognized and has its own user base, the sales will be high, and vice versa,” he explained, asking to stay anonymous because his employer did not give him the permission to speak.

Meanwhile, the primary goal of livestreaming on Douyin is always to drive sales—not platform branding or customer relations—said the same source. “Most Douyin users haven’t established the habit of shopping on the short video platform. It’s highly probable that they are diverted to the livestreaming session for potential impulse buys while browsing some funny video clips.” 

It’s thus not surprising that Taobao’s traffic is more stable while traffic from Douyin and Kuaishou tends to be sporadic and unpredictable. The difference in platforms leads to different demands on livestreamers and support teams. Tmall store livestreamers tend to adopt a lean approach. One livestreamer can run a session after becoming familiar with prices and basic product information.

In contrast, Douyin’s livestreamers, whose primary goal is to retain audience attention and convert that attention into sales, usually need about three support staff to run a session. The extra staff perform tasks such as uploading the product links and changing prices, he explained.

Douyin versus Kuaishou

As for the livestream battle within the short video arena, Douyin has the upper hand over Kuaishou so far. Douyin aims to reach RMB 1 trillion ($160 billion) in gross merchandise value (GMV) on its platform this year. Meanwhile, Kuaishou expects to achieve a GMV of RMB 650 billion this year. That’s a downsized adjustment from the beginning of the year, when it set a GMV target of between RMB 750 billion and RMB 800 billion. 

“Kuaishou’s commercialization started earlier by building e-commerce based on social trust and connecting directly to the starting point of the supply chain,” said Xin Youzhi, a top livestreamer widely known as Xin Ba. He has 95.6 million followers on Kuaishou. 

To compare Kuaishou and Douyin, the livestreamer sales star explained that Kuaishou has a strong bond with users, who have dubbed themselves lao tie, or “buddies” in English, a term of endearment for the fans of livestream hosts. First gaining popularity among users in China’s lower-tier cities, the Tencent-backed firm is often described as the less sophisticated rival of ByteDance-owned Douyin. 

Merchants on Kuaishou were among the first to adopt the C2M (consumer-to-manufacturer) model, under which they directly give user feedback to upstream supply chain manufacturers. They thus can significantly reduce the marginal and intermediate costs and enable customers to buy more affordable products.

Meanwhile, Douyin has more social media features than Kuaishou. But the two video platforms are learning from each other to strengthen their e-commerce ecosystems, said Xin.

Short video as e-commerce challengers

E-commerce platforms are still far ahead in livestream e-commerce revenues. Taobao Live achieved a GMV of more than RMB 500 billion in the 2021 fiscal year ended March 2021. Douyin’s livestream GMV was RMB 100 million in 2020, according to a comparable fiscal calculation standard adopted by Alibaba. Douyin boasted a livestream GMV of RMB 500 billion in 2020, of which RMB 100 million was achieved through Douyin stores, according to a report by Forward Research Institute.

Compared with e-commerce platforms, short video platforms have advantages in terms of customer traffic and livestreaming scenarios, according to Xin Youzhi.

“Livestream e-commerce” for now puts the emphasis on e-commerce, not livestream. “Users on e-commerce platforms like Taobao and JD will buy, with or without livestreams,” said Sandy Shen, VP analyst with the digital commerce team at research and advisory company Gartner.

“As people spend more time on short video platforms, the apps could become super apps like WeChat, which cover every aspect of our daily lives, including e-commerce,” said Shen. 

Young shoppers lead the way

The trend is already apparent among Chinese youth. “Millennials, the core user group of short video apps, could be easily converted to consumers on these platforms,” said Shen. 

She added that short video apps are becoming an important entertainment and information channel for people from lower-tier parts of the country, where e-commerce platforms like Alibaba and JD have lower penetration. For this group, it’s natural for them to buy through a platform they are familiar with, according to Shen.

User attention is only the first step on the way to winning the e-commerce market, however.

“In the early stage, the live commerce industry relied on customer traffic, KOLs and livestreamers, but the core of live commerce is still e-commerce. That means e-commerce is always driven by products rather than by people. Customer traffic is not a panacea,” said Xin, who also runs his own retailer and livestream company Xinxuan Group.

In the meantime, the industry is also getting to the point where it has to face and adapt to a new developmental stage. The industry needs to push its limits with respect to people, goods and business models, according to Xin.

The short video apps still need time to improve behind-the-scenes capabilities from supply chain and logistics to KOL talent training and regulation compliance, Xin added.

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. 

Chinese electric vehicle maker Xpeng has been ordered to pay RMB 100,000 ($15,710) in fines by China’s local market watchdog for collecting customers’ facial data without consent, Chinese media reported, as Beijing looks to tighten rules over user data privacy.

Why it matters: The latest penalty reflects the Chinese authorities’ goal of tightening data privacy rules following a series of controversies over the use of consumers’ personal data. The moves are changing the way Chinese tech companies operate.

Details: A district office under Shanghai’s market regulator (Shanghai Municipal Administration for Market Regulation) has imposed a fine of RMB 100,000 on an Xpeng subsidiary for unlawfully gathering facial data without customers’ knowledge, state-owned media The Paper reported Tuesday, citing Tianyancha, a Chinese business data inquiry platform.

• The Alibaba-backed EV maker was handed the fine for installing a total of 22 facial-recognition cameras in seven showrooms in Shanghai, according to a penalty bill (in Chinese) viewed by state-owned media outlet China News Service.
• The company reportedly used these cameras to collect more than 430,000 facial images during the first six months of this year without declaring the practice to the public, thus breaching China’s consumer protection law, the report said, citing the market watchdog.
• Xpeng said in a Tuesday statement to local media that it used the technology to gather information such as traffic flows, hoping to improve sales and better customer service. The company added that it had deleted all collected facial data and will strictly comply with regulations and protect customers’ personal information in the future.

Context: Xpeng is not the first automaker in China to violate customers’ privacy. German automaker BMW was found using facial recognition technology on customers without their knowledge, state broadcaster CCTV reported in March. 

• The Chinese government in August passed the Personal Information Protection Law, which came into effect on Nov. 1. The law requires companies to gain consent before collecting personal data.

China’s Ministry of Education on Monday suspended the filing and review process for homework search apps that allow students to upload pictures of exam questions and search for related answers.

Why it matters: The move signals an extension of China’s sweeping edtech crackdown that began in July with the online after-school tutoring sector targeting K-12 students, once the most lucrative sector of China’s private tutoring market.

• Chinese edtech giants, including ByteDance, Yuanfudao and Zuoyebang, have already made deep headcount cuts in the wake of the crackdown.

READ MORE: Chinese edtech upended by sweeping regulations

Details: The education ministry said in the Monday statement (in Chinese) that it will suspend the filing and review process for all homework apps targeting primary and middle school curriculum courses, pausing approvals for related edtech apps. Those apps already listed on its filing platform must be taken down.

• The review process and relisting of homework apps will resume once developers get approval from local educational authorities.
• Online tutoring apps that could be affected include Yuanfudao’s Xiaoyuan Souti and Zuoyebang, although both of the apps have recently shifted their focus and labeling themselves as tools for parents and teachers.
• Zuoyebang has started the re-application process, a representative told TechNode. The company added that use of the app in the meantime won’t be affected and that the app is still available on app stores despite its removal from the ministry’s filing platform.
• The ministry cited negative impacts on students as the reason for the suspension, saying that the apps may make students “lazy,” affect independent thinking, and result in lousy learning habits by violating the rules of education and teaching.

Context: “Snap and search questions” is a popular feature in Chinese homework apps; it enables users to search for answers by taking screenshots of homework questions, thereby avoiding the difficulties of inputting hard-to-recognize characters, mathematical symbols, and equations.

• Despite its popularity, the feature sparked controversy this June when a student from China’s Hubei province was caught searching for answers with Xiaoyuan Souti (a homework search app) while taking the college entrance exam. The app’s maker said it reported the case to relevant authorities and didn’t answer the student.
• Edtech platforms such as Tipaipai and Afanti said in August that they would no longer offer homework search features.

Xpeng Motors confirmed with TechNode on Wednesday that it is facing delivery delays caused by an ongoing supply crunch in lithium iron phosphate (LFP) battery packs, as customers of the Chinese electric vehicle maker are reportedly frustrated over months-long waits for their new cars.

Why it matters: Xpeng is the latest Chinese automaker to feel the sting from the supply chain shortage of both semiconductor chips and key battery materials.

• The EV maker in late October began delivering its second sedan model, P5, without millimeter-wave radar units due to the shortage of radar chips. Xpeng promised owners it would install the components by next March.

Details: Xpeng said that it has apologized to customers who experienced significant delays after ordering its flagship P7 sedan. It is currently ramping up to ensure the lower-end P7 deliveries are made no later than next February, state-backed Shanghai Securities News reported Wednesday, citing a company representative.

• Xpeng will also cancel the orders and refund down payments if requested by customers, the spokesperson said, adding that deliveries of the entry-level version of its P7 sedan, which has a driving range of 480 kilometers (298 miles), would be delayed up to 17 weeks.
• Several customers complained that the Alibaba-backed EV maker deliberately intends to prioritize deliveries of higher-end versions of P7, according to a post published Monday on “Black Cat,” a complaint platform owned by Sina. The P7 allows for a driving range of up to 670 km.
• When contacted by TechNode on Thursday, an Xpeng spokeswoman responded by calling the post’s accusation “factually wrong” and that the company “didn’t prioritize deliveries of the high-end P7.” The higher-version P7 models are equipped with the conventional cobalt lithium-ion batteries that guarantee more power and range than LFP batteries, the spokeswoman noted.

Context: Xpeng delivered 56,404 vehicles during the first three quarters of this year, a figure four times higher than the 14,077 vehicles it placed with customers during the same period in 2020. It set a delivery forecast of up to 36,500 vehicles for the last three months of this year.

• Speaking to analysts during an earnings call on Nov. 23, President Brian Gu said the company was aiming to hit a monthly delivery of 15,000 vehicles over the next two months, although he expected the supply chain constraints to remain “very severe.”
• Xpeng rival Nio on Nov. 10 predicted its fourth quarter deliveries would number between 23,500 and 25,500 vehicles, as chief executive William Li said during an earnings call that the company’s delivery volume was constrained by supply chain volatilities with regards to certain chips and batteries.
• Li added that the company is currently ramping up battery production with partner CATL and expected production volume to reach “a reasonable level” in the first quarter of 2022. Nio delivered 24,439 vehicles in the third quarter of this year, an 11.6% increase from the preceding quarter.

As tech and auto giants continue to toil on their autonomous vehicle projects, according to one Geely executive, such technology will come to flying cars more quickly than road vehicles.

Despite regulatory barriers and ethical issues, self-flying cars are likely to be ready before autonomous road vehicles, Guo Liang, chief executive of Geely-owned Aerofugia said at the Beyond Expo event held in Macau on Dec. 3. The movements of unmanned aerial vehicles are supervised by aviation authorities, which makes them more coordinated and safer than ground vehicles, according to Guo.

The idea of building an on-demand ride-hailing service for the skies is gradually getting off the ground in China, as eVTOLs, or electric vertical takeoff and landing vehicles, are transitioning from a pie-in-the-sky concept to a maturing technology and promising investment opportunity.

Geely is among a number of companies – from auto majors to venture-backed startups – racing to grab a foothold in this nascent market. In September 2020, the company took a big step into aviation by forming Aerofugia through a merger with Chinese drone developer AOSSCI.

Prior to that, China’s biggest private automaker had invested in German flying taxi startup Volocopter in September 2019. Volocopter in April said it had formed a joint venture with Geely’s Aerofugia, with a plan to bring 150 eVTOL aircraft to China as early as 2024, Reuters reported.

Electric vehicle maker Xpeng Motors also aims to stretch itself beyond just selling cars, in October leading a $500 million Series A investment round in aviation startup HT Aero at a pre-money valuation of $1 billion. Morgan Stanley estimated the global urban air mobility (UAM) market for flying cars and taxis could be worth $1.5 trillion by 2040.

Unlike conventional helicopters or airplanes, electric-powered vertical-lift machines can take off and land without a runway while delivering low-carbon air travel without producing emissions, providing commuters with a new way to speed above crowded streets.

Guo called for a joint effort from industry players to scale up urban air mobility operations with regards to technical standards and route management, among other industry-wide aspects.

A clear regulatory framework and established infrastructure on the ground also need to be in place for the vehicles, noted Jiang Yutao, vice president of Chinese flying taxi startup EHang. Also speaking as part of Beyond, Jiang added that eVTOLs could help the country meet its climate goals.

Nasdaq-listed Ehang expects to obtain approval from the Civil Aviation Administration of China for its autonomous aircraft EH216 “in the next few months,” Hu Huazhi, chief executive told investors during its third-quarter earnings call last week.

Such moves make Guo’s prediction more grounded than it may first appear, with a number of companies seemingly believing that automated flying cars are very much on the horizon in the next decade.

China’s youth-focused video site Bilibili may launch a shopping cart feature in its livestream pages in the coming weeks, Chinese media 36kr reported on Tuesday.

Why it matters: Bilibili is getting serious about livestream e-commerce, hoping to diversify its revenue sources. The firm has previously made a few tentative steps in the area.

• Compared with market incumbents like Alibaba and Douyin, Bilibili is late to the livestream commerce game, which has seen rapid growth due to the pandemic. The Shanghai-based firm tries to differentiate itself from other platforms by selling products relating to its core content of anime, comics, and games (ACG). 

Details: The video site, listed on both the Nasdaq and Hong Kong exchanges, is talking with several content creators about introducing a shopping cart feature for livestream shopping, 36kr reported, citing people with knowledge of the matter.

• Similar to the shopping experience offered on Taobao Live and Douyin, users will be able to click into a shopping cart embedded in the livestream interface to browse product listings and place orders.
• Bilibili will support the livestreamers by allocating more traffic to them. The feature is already in a small-scale test stage, a second source told 36kr. 
• The feature would offer Bilibili’s content creators a new way to make money from their popularity.
• In its fourth-anniversary celebration event held in September, Bilibili introduced four content creators selling ACG products such as art toys and costumes during a four-hour livestream. It was viewed as an attempt to try out livestream commerce.
• Bilibili did not respond to TechNode’s request for comment on Wednesday morning.

Context: Bilibili’s third-quarter revenue was RMB734.0 million ($113.9 million), representing an increase of 78% from the same period in 2020. E-commerce accounted for 14% of the company’s revenue. 

• In November, Bilibili obtained a payment license, moving one step closer to launching its own online payment service, an important step for tech companies looking to build a closed-loop shopping experience for users. 

“Robots will replace human labor for indoor delivery in the future with higher efficiency and lower costs,” Yao Jincheng, founder and CEO of robot maker 3S Robotics, predicted at Beyond Expo on Saturday. 

Now widely used in shopping malls, office buildings, hotels and residential areas, robots are especially apt for solving the “last-100-meter-delivery problem,” or the final stop step of delivering products to a customer, according to Yao.

Yao’s comments come against the backdrop of a rising industry. The global market for indoor delivery robots was valued at $6.1 billion in 2020 and is expected to grow at a compound annual growth rate of 17% to reach $158 billion by 2027, showed a report by research agency Astute Analytica.

In addition to making deliveries, service robots are also undertaking a number of other roles, such as giving directions, taking care of the elderly or the disabled, assisting medical diagnosis and treatment, education, and entertainment.

Di Min, chairman of service robot maker Nanjing University Electronics, said he believed that technology and market resources are helping propel the sector. The company, which is mainly engaged in developing service robots for banks and financial institutions, says its robots have been deployed in more than 220,000 bank branches in China. 

Zhu Hanqi, CEO and founder of Enhanced Robotics, added that the industrialization and upgrading of the supply chain is providing another boost for the scaled application of robots. “Thanks to the rise of DJI, the price of drone motors dropped as the supply chain matured,” he said. 

“In contrast with internet companies, the service robot industry needs support from manufacturers along the industrial chain. That’s why the manufacturing centers in China, like the Greater Bay area and areas around Jiangsu province, are more advanced in the sector,” said Zhu, whose company develops AI-enabled consumer exoskeletons for fitness and hiking.

The commercial application of robots at scale still faces a number of challenges however. Beyond simply developing the best hardware, companies in the sector must take into consideration the regulations surrounding use of indoor delivery robots in commercial spaces as well as how they can be adapted to existing infrastructure, according to Yao, who cited the case of providing service robots for the Beyond Expo as an example. 

“To prepare for the event, we spent more than one month testing our delivery and temperature-taking robots in six hotels that accommodate Beyond Expo participants under the guidance of Macau travel agencies and hygiene authorities,” he explained.

Chinese artificial intelligence company Sensetime on Thursday announced several partnerships with state-owned conglomerate Nam Kwong Group, among others, which will bolster its business in Macau, as the gambling center is rushing to become a tech innovation hub in Asia.

Why it matters: The partnerships, in part a reflection of Sensetime’s ongoing investment in Macau, are expected to enhance the artificial intelligence giant’s outreach in the city and prop up the local economy.

Details: Sensetime is teaming up with Nam Kwong Group, a Chinese state-owned enterprise specializing in infrastructure and transport services, and expanding partnership with Macau’s Kiang Wu Hospital to support the city’s digital transformation efforts, the company announced Thursday at the Beyond Expo Macau 2021 event.

• State-owned Nam Kwong Group will work with Sensetime to adopt the AI technology in various applications including hotel management, public transport, and electric power grid, among others with a goal to improve urban safety, governance efficiency, and environmental protection, according to a statement. 
• The Chinese AI unicorn claimed that its algorithms could improve the accuracy of detection of benign and malignant lung nodules by 20% and increase the efficiency by 50% compared with human doctors. Kiang Wu Hospital has been using Sensetime’s assisted diagnosis and treatment technologies such as chest x-ray software starting 2020. 

Context: Chinese AI companies have been thriving with surging demand for their image recognition software, as local governments are adopting the technology to fight against the pandemic.

• Sensetime last month had reportedly secured approval from the Hong Kong stock exchange for its initial public offering, seeking to raise at least $1 billion. The company was valued at more than $10 billion in a 2020 funding round.
• The company’s revenue nearly doubled to RMB 1.65 billion (around $260 million) in the first half of 2021, with a net loss of RMB 3.7 billion in the same period. It is currently Asia’s biggest AI software provider by revenue, according to a Frost & Sullivan report commissioned by SenseTime in its prospectus.

Shanghai issued new regulations to facilitate data sharing and develop other data-related high-tech areas such as blockchain. In Xiong’an New Area, a bank issued China’s first blockchain-powered loan. ChainNews shutters its operations.

Blockchain love

• Shanghai legislators announced on Monday a new set of data regulations, due to take effect in 2022. The regulations are the nation’s second regional set of rules to focus on data. Southern tech hub Shenzhen issued the first such regulations in late June. The regulations are aimed at protecting personal data, promoting “free and orderly data exchanges,” and aiding development in big data analytics, cloud computing, blockchain, AI, and other high-tech areas. Four days before the regulations were announced, Shanghai opened a new data exchange in the Pudong district to facilitate data trading. (Shanghai government, in Chinese)

• China’s Xiong’an New Area issued an RMB 6.4 million ($1 million) loan through blockchain, the country’s first such financing case. A local branch of Shanghai Pudong Development Bank (SPDB) issued the loan to three construction companies that built the new area. The blockchain loan service is a new financial product from the SPDB. The product has a 6% interest rate and offers loans of up to RMB 20 million per transaction. (People’s Daily, in Chinese)

• The tax bureau from a local region in the central province of Hunan has been studying blockchain technology to expedite the real estate transaction tax process. Tax workers from Loudi Economic and Development Zone have reportedly been using blockchain technology to refine the process and provide a more precise service. (China Star Market, in Chinese)

ChainNews no more

Chinese media reported on Nov. 26 that prominent crypto news outlet ChainNews had shuttered its operations. The outlet announced a suspension of service due to “site upgrades and maintenance” on Nov. 15. The outlet had remained active on Twitter until Nov. 25. (China Star Market, in Chinese)

Discussion around a high-profile spat between French cosmetics giant L’Oréal and China’s top livestreamers Li Jiaqi and Viya filled Chinese social media last week. 

In a rare public dispute for the retail industry, the duo accused the cosmetics brand of failing to deliver on its promises in giving them the lowest price for a face mask product as part of pre-sale promotions for this year’s Singles Day shopping festival, the Chinese equivalent of Black Friday in the US.

Furious users, who made purchases through the pair’s livestreams only to discover the product was available for cheaper days later on a separate L’Oréal’s livestream, voiced their discontent with the cosmetics company after it was publicly called out by the star livestreamers, and demanded the brand refund the difference.

With the popularity of live commerce, brands have become increasingly reliant on popular livestreamers as a sales channel to drive their revenue. The incident shed light on the hidden machinations between livestreamer KOLs and brands, who were once inanimate partners looking to capitalize on the live sales trend but have seen such relationships grow increasingly complex.

In recent years, China’s e-commerce environment has shifted to favor sustainable growth and profitability, not a win-at-all-costs pursuit of gross merchandise value (GMV). But that doesn’t mean that brands have abandoned steep discounts as a sales tactic – far from it, many are using such promotions to lure in customers who they then hope to build long-term relationships with. The dispute shows how much power – and sometimes how little agency – KOL livestreamers have as part of such collaborations.

A brief timeline

• Oct. 20: Several top livestreamers, including Li Jiaqi and Viya, promote L’Oréal’s Revitalift Filler mask in their livestream sessions on the first day of Alibaba’s pre-sales for Singles Day 2021. Fifty masks are sold for RMB 429 ($67), a deal that’s promoted as the lowest price all year. Li Jiaqi and Viya sell more than 800,000 units of the product, raking in around RMB 350 million.
• Nov. 1: Consumers find that the same product package is being sold more than a third cheaper at only RMB 257 on a livestream held by L’Oréal’s Tmall store. Angry buyers who placed orders via the pair’s livestreams ask the brand to refund the difference. The livestreamers redirect users to complete purchases on the brand’s Tmall stores.
• Nov. 17: Li Jiaqi and Viya explain in seperate statements that L’Oréal’s RMB 200 discount to users who spent more than RMB 999 is the cause of the price difference. “This is unfair for consumers who watched their clock to tune in to our show on October 20,” both streamers declare. The livestreamers suspended their collaboration with L’Oréal, giving the company 24 hours to come up with a solution. In a recognition of how damaging this could be to their personal brands, both stars pledge to compensate users out of their own pockets if the cosmetics company fails to make amends.
• Nov. 18: L’Oréal apologizes for the confusing promotion mechanism and explains that some consumers were able to purchase its products at a lower price in its online store because they used multiple discounts offered by the store and e-commerce platforms. After this fails to quell the backlash, the skincare giant says in a second statement that it will offer shopping vouchers to affected customers to settle the dispute.

Even this announcement fails to satisfy some users, however. “Why do I need the voucher? You expect me to buy your products again?” asked Weibo user “Wuyuemeirendemengda”.The sentiment is shared by many. A hashtag on the microblogging platform, “Why do I need the vouchers”, attracted 110 million views.

The condemnation was joined by state-backed media outlet People’s Daily, which criticized the company in a post from its Weibo account, saying the cosmetics brand’s blaming of complicated promotion mechanisms fails to address the more serious accusations of false advertising.

Others argued there was no “significant wrongdoing” on the part of the company because the promotion on its own store covered various products, while the promotion by the livestream KOLs only covered a single product. Regardless, the incident demonstrated the pitfalls of livestream strategies and resulted in several days of heated debate – not to mention some awkward headlines for the French brand.

A new way to shop the sales

Whereas Singles Day was once about hopping from store to store in search of a deal, the emergence of livestream e-commerce has seen hundreds of millions of buyers swarm to these virtual sales rooms to trust in livestream stars to guide them to the best bargains.

Fans of the “lipstick king” and the “livestream queen”, nicknames for Li Jiaqi and Viya, have spent lavishly and fearlessly because they believe the livestream figureheads will bring them the best deals. Consumers expect the products they recommend to be of high quality and to be sold at a low price that can’t be beaten anywhere else on the internet – thus, trust is crucial. 

This idea is so important to the presenters’ personal brands and income, that Li Jiaqi even starred in a hit variety show ahead of this year’s Singles Day which showed him bargaining with some of the biggest cosmetics firms in the world. Entitled Offers to Every Girl, the eight-episode show saw Li argue with firms including LVMH and Perfect Diary, bringing sales heads to their knees to gain extra-low prices.

The marketing worked. Buyers spent a combined RMB 18.9 billion during Li and Ziya’s livestream sessions on Oct. 20, the first day of Taobao’s Singles Day 2021 pre-sales.. 

Such numbers are only possible because the top KOLs have mostly delivered on their promises, yet this year things are beginning to change as brands shift their focus to store streaming or corporate streaming, a channel that addresses their new strategic focus of long-term growth.

Rise of the store-specific livestream

While the livestream model that Li Jiaqi and Viya have made their names with still retains enormous popularity, store-specific livestreaming, where brands or merchants promote their products through their own flagship stores either on Tmall or other platforms, is on the rise.

In its early stages, the live e-commerce industry relied on KOLs and livestreamers to bring them the traffic, but now an increasing number of mature brands are launching their own livestream sessions rather than relying on KOLs to promote their products, according to Echo Gong, an analyst at research agency Coresight. The trend is especially clear among companies that have already built a strong brand awareness and therefore feel increasingly emboldened to attract their own audiences. 

In addition to saving on the hefty commission fees star livestreamers now command, merchants also believe that they can direct user attention to their own marketing channels for long-term operations, thus building user loyalty. This trend was on full display during this year’s Singles Day shopping festival, where numerous merchants focused on long-term benchmarks such as customer retention, operating profit, and customer lifetime value, rather than judging themselves purely on sales numbers, according to a report research institute Bain released before Singles Day.

READ MORE: Singles Day 2021: Slower growth, more sense

During last year’s Singles Day promotional period, more than 60% of Taobao Live’s revenue came from corporate livestreams. According to data from iResearch in 2020, the sales of store-specific livestream accounted for 32.1% of the total live e-commerce industry in 2020, and it is expected to reach nearly 50% by 2023.

Xin Youzhi, also known as Xinba, a top livestreamer KOL with 95.6 million followers on video app Kuaishou, says he’s optimistic about store-specific livestreaming in the future. “The core of live commerce is still e-commerce,” he told TechNode “That means e-commerce is always driven by products rather than by people. Customer traffic is not a panacea.”

Conclusion: There’s no getting away from the fact that discounts will still be the most effective means to attract users for the foreseeable future given Chinese buyers’ long-ingrained taste for deals.

But promotions come at a cost. Instead of spending a huge chunk of their budgets on celebrity livestreamers, brands are increasingly looking to spend more tactically with the goal of attracting users to their own stores.

Disputes like the one between L’Oréal and its star livestreamers appear to damage everyone without a clear winner emerging. This specific incident tarnished the French brand’s image, while Li Ziqi and Viya were suspected in some quarters of monopolistic behavior.

The price bargaining power of livestreamers is “scary”, Weibo user Zeicha declared in a post on the microblogging platform in the wake of the public spat. “Similar to e-commerce marketplaces like Taobao, top KOL personalities like Li and Viya are platforms themselves. Instead of distributing customer traffic among the merchants, they hold onto the traffic on their own.”

Brands seem to have woken up to this too, meaning we could now be set for a whole new phase of livestreaming e-commerce.

China’s tech giant Baidu officially launched an autonomous ride-share service in the capital city Beijing, after receiving the country’s first permit for commercial robotaxi services.

Why it matters: This is the first time that the Chinese government has allowed companies to legally charge Uber-like fees to the public for their robotaxi services, a major milestone for Chinese self-driving car development. 

Details: The service, known as Apollo Go (or Luobo Kuaipao in Chinese), ferries passengers around a 60 square kilometer (around 23 square miles) area in the Beijing Economic and Technological Development Zone in the south of the city, Baidu said on Thursday.

• A 55-year-old female resident surnamed Yuan took the first commercial trip on the platform and paid RMB 1.34 ($0.2) for her 3km ride (with a 95% discount), according to an announcement released Thursday (in Chinese).
• Qualified users can locate one of 67 autonomous cars in the vicinity and hail a ride by themselves by using the Apollo Go App. Baidu is currently operating the fleet from 7 a.m. to 10 p.m. each day in the area.

Context: Baidu, as well as self-driving unicorn Pony.ai, obtained approval from the head office of the Beijing High-level Automated Driving Demonstration Area to start charging for rides using autonomous vehicles (AVs) in the zone, China Daily reported on Thursday.

• Pony.ai said in an announcement (in Chinese) that it will gradually transition its free trial service, which began in April, into a commercial one in the future, without revealing further details.
• Baidu in May launched a fully driverless, paid robotaxi pilot project using 10 AVs in the Shougang Industrial Park on the outskirts of Beijing, and plans to expand the fleet to more than 100 vehicles during the Beijing Winter Olympics next February.
• The search engine firm claimed its robotaxi project offered 115,000 rides during the third quarter of this year, and its testing vehicles had logged 10 million miles as of September. Google’s self-driving unit Waymo announced in January 2020 that its vehicles had driven 20 million miles on public roads, Quartz reported.

ByteDance is laying off more than 1,000 staff from its edtech businesses following the deep cuts it made in the sector in August. The newer round is concentrated in the K-9 education units, a person with knowledge of the matter told TechNode. The person declined to be identified.

Why it matters: TikTok owner ByteDance is the latest Chinese tech giant to retreat from online tutoring services targeting students up to grade nine, or K-9. All are responding to China’s crackdown on private tutoring services in late July.

• The current layoff comes only three months afters job cuts in August.

Details: The layoffs will affect more than 1,000 employees. The source said ByteDance is mainly cutting in business units that offer after-school tutoring services for primary and middle school curriculum courses. This once lucrative sector is now fast downsizing.

• ByteDance’s after-school tutoring services for K-9 students include pre-K education platform Guagua Long and online course livestream apps Qingbei and Xuelang.
• Local media LatePost (in Chinese) reported Wednesday that this round of layoffs also affects core teams in product development, operations, and research and development. In contrast, in August, ByteDance laid off edtech workers mostly in supporting teams such as sales and tutoring.
• ByteDance staff on English tutoring platform Kaiyan, education hardware teams, and school collaboration teams were also affected in this round of job cuts, LatePost reported.
• The company’s edtech business has cut roughly a third of its headcount from 15,000 at the beginning of this year to fewer than 10,000 now, according to Late Post.

Context: Over the past two months, China’s top private education companies TAL, Gaotu Techedu, and Koolearn Tech have announced plans to stop offering curriculum tutoring services to students in K-9 grades in response to China’s broad ban on private tutoring services in late July.

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.

Alibaba’s community group-buy arm Taocaicai suspended operations in southwestern China’s Guizhou province on Tuesday. Chinese media attributed the suspension to its accessibility issues within the WeChat ecosystem.

Why it matters: Despite Chinese regulators ordering tech giants to tear down walls between the services, blocking moves to fend off competition still persist.  

• The road to success in China’s community group-buy market, even for e-commerce giants the size of Alibaba, remains bumpy. Since mid-2021, market consolidation has wiped out some of the top rivals in the industry.

READ MORE: China’s grocery delivery fever is cooling down

Details: Taocaicai said in a Tuesday statement that it will stop operations in Guizhou. The firm stated that it will update the digital system for the region to “avoid the service barriers incurred by connectivity issues,” insinuating its lack of access to Tencent’s superapp WeChat is to blame. The company didn’t mention a timeline for resuming services in the region.

• Although the statement refers to the reason for the suspension in vague terms, an employee of Taocaicai told Chinese media Tech Planet (in Chinese) that the move is largely the result of the application experiencing delayed software updates on WeChat’s mini-program system (an app-store-like ecosystem within the app). The delay leads to inferior user experiences, the source added. 
• Taocaicai failed to get its WeChat mini-program updates approved for more than seven months despite continuous efforts to communicate with the platform, says Antonio Liu Neng, who identified himself as a programmer at Taocaicai in a post published on professional networking platform Maimai. By comparison, Tencent-related community group-buy platforms such as Meituan Select and Duoduo Maicai update weekly.
• WeChat mini-programs are a vital channel for community group-buy services to reach customers, especially in lower-tier cities where people rely on WeChat more for daily tasks and transactions. 
• Delayed updates to WeChat mini-programs harm Taocaicai’s ability to attract and retain users with sophisticated social functions such as lucky draws and coupons, said the Tech Planet report.
• However, the suspension won’t affect much of Alibaba’s community group-buy business, since Guizhou represents only a small portion of the company’s activity, said the report. The platform recorded more than 13 million daily orders in November, trailing only Meituan Select and Pinduoduo’s Duoduo Maicai in volume, thanks to growth in provinces such as Guangdong, Jiangsu, Hubei, Anhui, Shandong, and Henan.

Context: Alibaba, which has placed big bets on community group-buy services, is aiming to take over the market share left after rivals like Tongcheng Life and Shixianghui exited in recent months.

• In September, Alibaba rebranded its community group-buy services to Taocaicai by incorporating two existing community grocery services, Freshippo Market and Taobao Maicai.
• Authorities have made it clear that companies must stop blocking links to rivals’ services on their apps.
• Alibaba and Tencent have begun to heed Beijing’s orders over the past few months by partially opening their services to each other.

Self-driving startup QCraft will equip the next generation of its autonomous driving system with Nvidia’s Drive Orin processing chip. The chip can be deployed to both self-driving prototypes and mass-produced vehicles.

Why it matters: Nvidia claims the Drive Orin system-on-a-chip (SoC), unveiled in late 2019 and scheduled for shipping in 2022, is by far the “world’s highest-performance, most-advanced” processor for use in autonomous vehicles (AVs). Its use will allow QCraft to develop driverless vehicles for road testing and partially automated cars for the consumer market.

Details: Nvidia’s Drive Orin chipsets will underpin the hardware suite that will be fitted as standard for QCraft’s next-generation self-driving car fleet, the two companies announced as they unveiled the deal at an event on Tuesday.

• Capable of performing 254 trillion operations per second (TOPS), the Orin supercomputer will be the brain of QCraft’s vehicles, providing the necessary power to process inputs from multiple sensors as well as GPS and mapping data, according to a statement released Tuesday.
• QCraft will begin testing its AVs with the Nvidia-assisted computing platforms by the end of next month, given that it already has experience in adopting the chipmaker’s technology, chief technology officer Hou Cong told reporters during an online conference on Wednesday.
• The self-driving startup, backed by tech giants Bytedance and Meituan, on Wednesday also unveiled its third-generation hardware system, including nine cameras, five lidar units, and four millimeter-wave radar units, claiming a lower production cost and improved sensing capabilities.
• The technology costs of installing an array of sensors in vehicles will be lowered to between RMB 100,000 and RMB 150,000 ($15,620 to $23,430) in the next two years, chief executive Yu Qian told Chinese media last month. A testing AV reportedly costs at least $130,000 in sensors and computers, according to John Krafcik, former CEO of Google’s self-driving subsidiary Waymo.

Context: Nvidia has also signed a series of deals with Chinese electric vehicle upstarts (including Nio, Li Auto, and WM Motor), supplying their upcoming vehicle models with the chipmaker’s SoCs.

• QCraft has been operating a self-driving test fleet of nearly 100 vehicles for public transit and ride-hailing pilot services in nine domestic cities, including Shenzhen and Wuhan. It is also developing assisted driving technologies for several automakers, chief scientist Da Fang told TechNode in September.
• In August, it raised $100 million in a Series A+ led by YF Capital (the investment firm founded by Jack Ma) and participated in by Longzhu Capital, a venture capital fund of Chinese on-demand service giant Meituan.

A major Chinese state bank is hiring 20 postdocs researching digital currency, quantum algorithms, cryptography, and more. Russia plans to launch a platform to test the digital ruble early next year. China’s central bank showcases a machine that converts 17 kinds of foreign currencies into digital yuan. A Chinese education company plans to mine bitcoin outside of China to make money after the country cracks down on private tutoring. 

Digital currency 

• The Industrial and Commercial Bank of China (ICBC)’s postdoctoral research station is hiring 20 postdocs. Researchers can choose one or two study areas from 39 provided topics, including digital currency, quantum algorithms, and cryptography. ICBC established the station in 2002 and has since educated 101 postdoctoral graduates. (Mypaypass, in Chinese)

• Russia plans to launch a platform to test the digital ruble next year. Elvira Nabiullina, governor of Russia’s central bank, said the platform prototype will be ready for early 2022. Russia plans to amend 13 pieces of legislation, including the Civil Code, Tax Code, Budgetary Code, Criminal Code, and Administrative Code, to establish the digital ruble. Anatoly Aksakov, head of the State Duma Committee on the Financial Market, said the law must differentiate digital currencies, stablecoins, and the digital ruble. Since late 2020, China has become the first major economy to test and release its own digital currency, the digital yuan. (Yahoo)

• China’s central bank unveiled a foreign exchange machine that converts foreign currencies into digital yuan at the China International Import Expo held in Shanghai. The machine only requires a foreign passport, with no bank account or registration needed. The machine supports 17 different currencies. (Coindesk)

From teaching English to mining bitcoin

Chinese English training firm Meten EdtechX is getting into the bitcoin mining space, another example of an education company pivoting as China cracks down on private tutoring businesses. In September, the Nasdaq-listed company said that it planned to get into cryptocurrency mining and raised nearly $60 million in a new round of equity issuance. The company plans to build its own mining farm outside of China. In July, China launched a sweeping crackdown on private education, resulting in many key players’ stocks nosediving and numerous companies announcing plans to pivot to other industries. (The Block)

At least half of the 1,000 surveyed Chinese urban consumers are looking to buy an electric vehicle (EV) as their automotive purchase, an increase of 16% from the 2019 findings, a survey by consultants AlixPartners found. It’s the latest sign of an accelerated transition from gasoline vehicles in the country.

Why it matters: China’s EV market is recovering faster than expected following subsidy cuts by the central government and a shakeout due to the pandemic.

• One out of five new vehicles sold in China in September was a new energy vehicle (NEV), referring to battery-powered cars, plug-in hybrid cars, or hydrogen cars. The NEV penetration rate now exceeds 20% of all new car sales for the first time, data from China Association of Automobile Manufacturers (CAAM) show.
• At this pace, China has already met, at least in the month of September, the target it set to be reached by 2025 — NEVs accounting for 20% of new car sales — Stephen Dyer, managing director of AlixPartners, told reporters in Shanghai on Thursday.

Details: The survey of 1,000 Chinese car buyers in major cities found that 50% are now believers of all-electric vehicles, meaning they are very likely to buy one as their next vehicle; that is double the world average of 25% and the highest share among potential car buyers surveyed in seven countries by AlixPartners. 

• The 2021 survey released Thursday covered about 8,100 respondents from seven countries, including China, France, the UK, and the US. The approximately 1,000 surveyed in China lived in large cities, with roughly half aged between 36 to 55, the research firm said. 
• Also, over 99% of current Chinese all-electric owners remain highly satisfied with their purchase and expect to buy an EV again as their next auto purchase, which is 2% above the global average, according to the AlixPartners survey.
• Chinese consumers are motivated to buy EVs as more of their acquaintances recommend them. 26% of those all-electric car believers say friends and family are their biggest influences on their purchases, compared with 11% of those not interested, the report said.
• AlixPartners consultants advise that more “grassroots” marketing channels such as greater use of social media could connect likely buyers to current all-electric car owners and significantly influence their purchase decisions, potentially resulting in a “network effect” growth of sales.

Context: China’s NEV sales almost tripled to more than 2.15 million vehicles from a year ago during the first nine months of this year, according to CAAM figures.

• Xu Haidong, chief vice engineer of the industry association, last month expected the country’s NEV sales to surpass 3 million units this year, more than double the 1.4 million sold last year, Reuters reported.