Hi everyone, this is Mercedes in Singapore. Sometimes the more effective course is just to do nothing. That goes for not just my recent two-week break — maybe most relaxing holiday I have taken without going anywhere — and, increasingly, how governments are handling their Huawei problem. The latest case in point is in India, where according to an FT scoop, India has not issued any formal ban on Chinese equipment suppliers or made public pronouncements. And yet, Huawei is being phased out of the country’s telecoms networks. Check out our Big Story this week.
Elsewhere, we have the rundown on Ant Group’s blockbuster IPO (top 10), James and the FT’s Washington bureau collaborated on a great video that explains why TikTok and WeChat are in the US government’s crosshairs. Don’t miss the Nikkei Asian Review’s analysis on India's cryptocurrency trading surge (Best of comment), and check out why the dreams of Taiwan’s “bandit phone king” have been shattered (Spotlight). And, the world's fastest supercomputer has a verdict on the most effective type of face masks. James and I love hearing from you so please do email us at firstname.lastname@example.org or email@example.com. Have a great rest of the week.
The Big Story — Exclusive
The cost to China of a brutal border clash with Indian troops in June is becoming ever clearer. The latest victims are Huawei and other Chinese telecoms equipment companies that are being phased out of India’s booming market, including that for 5G networks, according to Amy Kazmin and Stephanie Findlay of the FT in New Delhi.
Although New Delhi has not issued any formal written ban on equipment suppliers such as Huawei and ZTE, industry executives and government officials say key ministries have indicated that local telecoms service providers should avoid using Chinese equipment in future investments.
Key implications: The impact on Chinese tech companies could be considerable. Huawei has been one of the three biggest telecoms equipment suppliers in India (see Smart data), which is the world’s second biggest mobile market with more than 850m users. It has had significant contracts with Bharti Airtel, Vodafone and state-owned BSNL.
A government official said the administration of Narendra Modi was highly wary about Chinese investment in sensitive infrastructure. The two nuclear-armed neighbours have tens of thousands of soldiers massed along their disputed border high on the Tibetan plateau, after a June clash left at least 20 Indian soldiers dead.
Upshot: “The thinking is: ‘let’s do tough rather than talk tough’,” the official told the FT. “We don’t want to make life miserable for consumers. But when it comes to big public contracts and critical infrastructure, we would prefer non-Chinese companies. That message has gotten through to Indian business.”
Mercedes’ top 10
Jack Ma’s Ant Group launched what could be the world’s biggest IPO with a dual listing in Hong Kong and Shanghai. Read the FT’s take here and the Nikkei Asian Review’s here. In other IPO news, flash memory maker Kioxia — formerly Toshiba Memory — is set to be Japan’s biggest listing in 2020.
An interesting take from the Nikkei Asian Review on the demise of personal shoppers, known as daigou in China, who for years helped Chinese consumers get their hands on cheaper luxury products abroad.
“Unlike.” Facebook is planning legal action after Thailand’s government forced the US social media company to block a group deemed critical of the country’s monarchy. The move comes as Thai student protests ramp up.
Berlin-based Delivery Hero is on a charm offensive to get its acquisition of Woowa Brothers — the company behind South Korea’s most popular food delivery app — over the line. Read the FT interview with Niklas Ostberg, Delivery Hero boss, here.
Sino-US tensions are hitting the college endowments and pension funds that have helped fuel China’s tech industry over the past decade. Just six US-dollar funds with exposure to China have sought to raise capital this year, down from 21 last year, according to researcher Preqin.
Japan’s Rakuten has been trying to make a move into banking in the US to boost its ecommerce business. American banks, wary of retailers engaging in banking, are not having a bar of it.
Another addition to Asia’s “super app” bandwagon: India’s Tata Group said in an interview with the FT that it was bringing together its disparate consumer services on one platform by as early as December.
Taiwan is the latest country to issue a number of restrictions on Chinese tech companies in recent weeks, the latest being on the Taiwanese arm of Alibaba’s Taobao ecommerce site.
WATCH: The FT’s Washington bureau chief Demetri Sevastopulo and #techAsia editor James Kynge discuss why TikTok and WeChat are the new front line in the US-China tech war.
Which mask, you ask? The Nikkei Asian Review brings us the verdict from the world’s fastest supercomputer in Japan on the most effective types of face masks. Apparently, masks made of non-woven fabric are best protection against the virus.
When sages speak
This overview of US-China decoupling by Torsten Riecke for Merics, a Berlin-based think-tank, delves into how two competing “technospheres” for the world might look.
Here’s a helpful backgrounder on China’s electric vehicle market by Ilaria Mazzocco at Macro Polo, a think-tank at the Paulson Institute in Chicago. The build out of the EV industry in a decade represents Chinese industrial policy 101.
Some interesting perspectives are relayed here by Gateway House, an Indian think-tank, on tech competition between India and China.
Best of comment
After India’s Supreme Court reached a landmark decision in early March that essentially lifted a two-year-old ban on cryptocurrency transactions, the country has seen numerous homegrown and foreign cryptocurrency businesses revive or start up from scratch, like a spring awakening after a long period of hibernation, writes Ken Koyanagi, editor-at-large at the Nikkei Asian Review.
Many of the entrepreneurs and investors are pushing ahead with their bets despite fears of another complete ban or severe restrictions on cryptocurrency trading. Local media reports say the government aims to submit a bill to parliament before the November holiday season, which, when enacted, will regulate or possibly ban cryptocurrencies.
Undeterred, Indian investors are rushing back into the cryptocurrency trading scene.
According to UsefulTulips.org, a cryptocurrency information website, combined monthly trading volume between the Indian rupee and bitcoin, the biggest cryptocurrency by market capitalisation, has nearly doubled between March and July at two large peer-to-peer crypto asset trading platforms — LocalBitcoins of Finland and Paxful of the US. Their total volume in March was equivalent to $8.14m. By July the figure had reached $16.26m.
Art of the deal
Tencent is close to taking Leyou Technologies private in a deal that would value the Chinese gaming group at about $1.3bn.
A unit of Telekom Indonesia is in advanced talks on injecting capital into Gojek, the Indonesian super app decacorn, according to people familiar with the situation.
Beijing-based iSpace, a private space launch start-up, has raised $174m in a fundraising that is thought to be the biggest yet for a private space company.
Chinese electric vehicle manufacturer XPeng said it hopes to raise up to $1.1bn in an IPO in New York, milking the enthusiasm for EVs even as US-China relations remain strained.
Health is where the action is. Xuanzhu Biopharmaceutical, a research and development subsidiary of Hong Kong-listed Sihuan Pharmaceutical, has raised $116m in Series A funding led by the Chinese government-owned State Development and Investment Corporation.
Until last week, Tsai Ming-kai, the Taiwanese billionaire once known as China’s “bandit phone king”, was on a roll, writes Kathrin Hille in Taipei.
The founder and chairman of chip design house MediaTek had already seen his personal wealth jump by 80 per cent last year. The launch of the company’s “Dimensity” chipset for 5G smartphones and Washington’s blacklisting of Chinese technology group Huawei from buying from US chipmakers had sent MediaTek’s shares soaring.
This year, things looked even brighter. The US in May barred chip manufacturers from selling to Huawei any custom-made semiconductors produced with US equipment. For Huawei, the most obvious solution was MediaTek’s off-the-shelf smartphone chipsets, a development that would have boosted the Taiwanese company’s fortunes immensely.
But that dream was shattered last week when the US Department of Commerce closed the loopholes in its May sanctions against Huawei by prohibiting the sale without a licence of chips made using US software or equipment to the Chinese company. Given the prevalence of US technology in the semiconductor industry, this would include chipsets sold by MediaTek. Now Taiwan’s fourth-largest chip design company has more at stake than many other Huawei suppliers.
Huawei stands to lose access to one of the world’s biggest telecoms markets as official opposition builds in India (see The Big Story). But the implications for Indian telcos are also severe.
Of them, Bharti Airtel and Vodafone Idea — whose current 4G network was built mostly by Chinese suppliers Huawei and ZTE — are especially exposed. The three alternatives to Chinese 5G kit makers — Ericsson, Nokia and Samsung — charge significantly higher prices than Huawei.
The indebted industry may not be able to afford to switch quickly. Vodafone Idea, 44 per cent owned by UK’s Vodafone, has net debt of more than Rs1tn ($13bn), nearly six times this year’s estimated ebitda. Bharti Airtel has less leverage, but like Vodafone Idea it has little or no free cash flow. Just covering interest payments and then buying 5G spectrum at next year’s government auction will be a stretch — never mind paying higher prices.
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