Hello from Hong Kong — my name is Eli, and I’m a newsletter writer and editor for the FT, standing in this week for Mercedes, who is taking a well-earned break. She has graciously left us with our Big Story, a collaboration with James and Stephanie Findlay in New Delhi on how nationalist fervour in India is turning against Chinese investors — creating an opening for US tech companies to steal a march on their rivals.
The TikTok tumult remained at the top of the geopolitical agenda, with Donald Trump unexpectedly backing a proposed takeover by Microsoft — but with some curious caveats, including an unheard-of kickback for the US Treasury (Top 10). One of the beneficiaries: Japan’s Line. Not so merry: LinkedIn, the latest sandbox for Chinese espionage (both Top 10).
Don’t miss Henny Sender’s analysis of how China’s central bank is turning to a digital currency to rein in its own dominant tech giants (Best of Comment). The future of batteries is emerging in Japan — and it looks supercharged (Smart data). It’s been a pleasure to meet you. Let’s get to it.
The Big Story
India is becoming the first big overseas battleground in the US-China tech war. US big tech companies are making ground against Chinese competitors as anti-Chinese sentiment bristles following a brutal border clash, according to this analysis in the Financial Times.
An explosion of Chinese venture capital investments — amounting to $4.3bn since the start of 2017 — is looking increasingly exposed and new Chinese deals are at a standstill. By contrast, US venture capital and M&A inflows are surging.
Key implications: China’s dominance of India’s tech start-up scene has hitherto been strong. Seven out of India’s top 10 unicorns are backed by a Chinese strategic investor versus only one backed by a US counterpart. But a policy shift since the border clash in June imperils China Inc’s position.
Scores of Chinese apps — including TikTok, WeChat, Weibo and others — have been banned by New Delhi. Google Pay, meanwhile, has emerged as the leading payments app in India while previous market leader Paytm, a $16bn start-up backed by Alibaba, is languishing.
Upshot: Big US tech — including Google, Facebook, Amazon and others — is seeing India as an El Dorado and gaining ground on Chinese competitors. But India’s market is never straightforward. The trials of Vodafone and Cairn Energy should stand as cautionary tales. Further reading here.
Eli’s Top 10
A round-up of the week’s top stories from FT newsletter writer Eli Meixler
In a dramatic U-turn, Donald Trump approved Microsoft’s proposed takeover of TikTok’s US operations — but demanded a September 15 deadline and a “very large” cut for the Treasury. Numerous technical and political hurdles remain, not least the price for the Chinese-owned video sharing app. Don’t miss the FT’s Yuan Yang on why Beijing won’t come to bat for TikTok as it has for Huawei.
Ant Group, the fintech arm of Chinese ecommerce giant Alibaba, is looking to raise $30bn in a planned IPO, Caixin reported, citing sources. The share sale in Shanghai and Hong Kong would edge out Saudi Aramco for the largest ever.
We have a buyer: US chip company Nvidia is in talks to buy Arm from SoftBank in a deal that would value the UK chip designer at more than $32bn and consolidate Nvidia’s position at the centre of the semiconductor industry.
The geopolitical blowback against Chinese apps — including TikTok and WeChat — is sending users scrambling to Japan’s Line. NAR has more.
“Would you like to join my professional network on LinkedIn?” Not so fast — your new connection could be a Chinese spy. The FT has the yarn.
But there could be a solution: Japan Inc is hiring hackers — “white hats”, that is, or ethical hackers that probe for vulnerabilities before malicious attackers find them.
The Philippines is going 5G, with telecoms leader PLDT launching a next-generation network with help from both China's Huawei and Sweden's Ericsson.
Sticking with Huawei, the Chinese giant topped Samsung in quarterly smartphone shipments for the first time — but it’s a fragile world leader, NAR writes, as US pressure cuts into its share of overseas markets.
Japan’s seismologists have taken a shine to artificial intelligence (see illustration) and machine learning, amid hopes of one day predicting huge quakes, writes the FT’s Leo Lewis.
What pandemic? Singapore is planning a fintech festival — both in person and at an “online city” — in December. Last year’s event drew 60,000. Bring your own face mask.
When sages speak
It’s difficult to have a dispassionate debate about Huawei these days, write Scott Kennedy and Shining Tan at CSIS, especially thanks to “insufficient familiarity with how Huawei has grown and evolved”. Here’s a primer.
India’s ban of 59 Chinese apps lifted a page from Beijing’s own Great Firewall, writes Matt Sheehan at MacroPolo. Could it likewise incubate domestic Indian start-ups by walling off international competitors?
In case you missed it: #techAsia’s Mercedes Ruehl spoke with Rui Ma, co-founder of the Tech Buzz China podcast, about the future of TikTok and ByteDance in a LinkedIn Live video chat. Watch it here.
Best of comment
China’s central bank is also looking to break up domestic Big Tech dominance — with a digital currency, writes Henny Sender. The experimental digital currency is on trial in a number of Chinese cities and the PBoC intends to use it to simplify digital payments and interbank settlements.
Regulators and executives at Ant, Alibaba’s financial affiliate, said PBoC officials have Alipay and WeChat Pay, the dominant digital payments platforms, firmly in their crosshairs.
“It is about the role of a digital currency for domestic retail use,” said a senior executive at the Hong Kong Monetary Authority familiar with the thinking at the PBoC. “They want a more level playing field for the banks. Retail payments are so dominated by Alibaba and Tencent while banks are less active in electronic payments.”
Christian Klein, 40, took over as the sole boss of SAP, Europe’s largest software company, in April. But he is not happy with the continent’s talent pool.
Europe “has to do better” if it wants to compete with Asia and the US, he said. Earlier this year the European Commission unveiled a plan to boost the bloc’s tech sovereignty and ensure that it can compete with the US and Asia in artificial intelligence and the analysis and use of data. Europe is also planning to build its own network of cloud computing and data services, named Gaia-X, that will be protected by EU laws and offer an alternative to the US providers Amazon, Microsoft and Google.
Additionally, Brussels has said it will spend €600m to train more than 250,000 people across Europe with advanced tech skills.
Art of the deal
Hong Kong’s Li & Fung, the world's largest sourcing company, has tapped Chinese ecommerce giant JD.com for a $100m investment to bring its global supply chain business online.
Is the next gaming development frontier . . . Turkey? Maybe so: US gaming group Zynga acquired the country’s first unicorn, Peak Games, for $1.85bn, following purchases by Tencent and South Korea's Netmarble.
Japan’s Line is taking a bite out of Thailand’s food delivery market, raising $110m investment from BRV Capital Management and a merger with a local restaurant aggregator to take on the likes of Grab and Go-Jek.
Grab is also on the move, raising $200m, half from South Korean private equity firm Stic Investments, and launching consumer financial products including micro-investments, loans, health insurance and a pay-later programme.
Oyo, the SoftBank-backed Indian start-up is merging its hotel-booking and apartment-rental operations in Japan. Meanwhile, Oyo founder Ritesh Agarwal has set up a new VC firm to invest up to $5m in start-ups.
Chinese EV start-up Li Auto revved its engines and took off in a successful debut on the Nasdaq last week that raised $1.1bn as shares soared 43 per cent.
A new battery generation is dawning in Japan. It looks bright — and long-lasting. From smartphones to drones to electric cars, the standard is currently lithium-ion, but Japanese start-ups are designing new high-performance power packs with 10 times more energy.
Rechargeable batteries are a longstanding strength of Japan’s corporate tech, but the sector has come up against tenacious Chinese and South Korean competition. Now, Japan’s hopes of remaining atop a market expected to be worth more than $25bn by 2035 rest on its engineers — and their ability to churn out a new standard in lithium-metal batteries.
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