Hello from Singapore and welcome back to another week of the best in Asia tech news. Our big story this week is how US-China tensions have stretched beyond earth and into outer space. This wasn't the original intention of Beijing's Beidou satellite system of course — but the effort to cut reliance on America’s GPS technology is well timed. The system will also be instrumental for China’s Belt and Road Initiative.
In other important updates, the backlash in India towards China is gaining ground. Indian start-ups are now even wooing Japan Inc for funding as money from Chinese venture capital funds dries up. Elsewhere, south-east Asia's biggest unicorns, Gojek and Grab, have joined global peers Uber and Lyft in laying off staff. Don't miss the Asia angle to the Wirecard scandal and the latest updates on supply chain shifts away from China by Apple supplier Foxconn. Finish up with a feature on Alibaba letting 100,000 influencers bloom on its platform to boost its sales internationally.
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The Big Story
China has taken one giant leap as a space power. The country launched the final satellite for its Beidou constellation, giving it global commercial coverage and issuing a direct challenge to the US-operated GPS navigation system.
The 55th satellite blasted off from the Xichang Satellite Launch Center in south-western Sichuan province on Tuesday. The system was projected to cost $9bn and has been years in the making. The project picked up pace after the devastating 2008 earthquake in Sichuan when Chinese rescue efforts were hampered by the difficulties in using GPS.
Key implications: While the project began long before its rivalry with Washington intensified over the past two years, the completion of Beidou — meaning Big Dipper or Plough — comes as Beijing seeks to reduce drastically its reliance on US technology, in this case the American satellite system. Not only will Beidou help with navigation for Chinese border patrol and coastguard vehicles, it will also work in conjunction with China's transcontinental Belt and Road Initiative. China has exported Beidou products to 120 countries already.
Upshot: Outer space is one of the priorities of Beijing's “Made in China 2025” plan for high-tech self-sufficiency. Becoming a “space power” by 2030 is something President Xi Jinping strongly aspires to, as demonstrated by China’s first mission to Mars scheduled for July and the expected completion of its own space station in 2022.
Mercedes’ top 10
India is digging its heels in on China. Indian start-ups are wooing Japan Inc for investment as souring ties with China put a squeeze on funding. Chinese companies — including Alibaba, Tencent and Huawei — have gained a strong foothold in India’s growing market and until now local tech start-ups had benefited from strong Chinese venture capital inflows.
Huawei’s three-storey flagship store in Shanghai has opened across the street from US rival Apple. The Nikkei Asian Review details why the opening represents an opportunity for the Chinese equipment maker to appeal to the patriotism of Chinese consumers in the face of US sanctions.
Gojek and Grab, south-east Asia’s two largest unicorns, have laid off hundreds of employees in the past week as they whittle down their vast number of services and “non-core” businesses. The future for these two businesses appears increasingly financial rather than transport-related.
Another SoftBank-backed start-up has hit the skids: Auto1 is facing a probe after cutting loose its flailing fintech partner, which was launched to provide financing for the online car dealership. The venture’s largest shareholder alleges it suffered from governance failings. The FT has the story.
Wirecard’s dramatic collapse this week has made waves in Asia: Singapore has asked the German fintech company to ensure customer funds from its payments processing business remain in local banks. Even SoftBank executives have been casualties. Read more about the FT’s investigation into Wirecard here.
Alcohol is the new area of competition in India. Amazon has been given the green light to start delivering alcohol in one region, according to a Reuters scoop. The US company is competing with rivals Swiggy and Zomato in a market that is worth $27.2bn.
Google’s cloud arm is focusing on south-east Asia for growth, with the launch of a cloud data centre in Indonesia. The move comes after the US government warned Google and its partners against a planned high-speed internet cable link to Hong Kong for security reasons.
China has clamped down on 10 of its most popular live streaming apps, including on fast-growing services backed by including Tencent and ByteDance. Meanwhile, Apple will start removing thousands of mobile games lacking government approval from its App Store in China next month, closing a loophole that the developers have relied on for years.
Apple supplier Foxconn said it would intensify moves to increase investments in India and Taiwan to diversify away from China.
Are you sure your remote working colleague is real? Dragonfly Intelligence, a Chinese robotic automation start-up, is already rolling out “digital workforces” that automate back-office tasks such as accounting and data processing.
When sages speak
The latest episode of the TechBuzz China podcast is right up Tech Scroll Asia readers’ alley: Jeff Ding, writer of the ChinAI newsletter, joins Rui Ma to dig past the alarmist headlines about Chinese artificial intelligence into some of the more technical industry applications for the emerging technology. Listen here.
More for your listening list this week: Molly Roberts at the University of California, San Diego, joined the Sinica podcast to discuss her deep data dive into how China’s Great Firewall operates — deterrence, distraction and diversion — and how it affects Chinese internet users.
Although the Trump administration is not openly talking about decoupling with China, its actions — restricting tech exports and reshoring supply chains — add up to a decoupling strategy, Scott Kennedy and Shining Tan write at CSIS. It may have the unintended consequence of decoupling the US from western businesses.
In the spotlight
Another key departure at Indonesian unicorn Bukalapak. Muhamad Fajrin Rasyid co-founded Bukalapak a decade ago with two of his classmates from the Bandung Institute of Technology. Together with Achmad Zaky and Nugroho Herucahyono, Rasyid turned a small online marketplace into a top ecommerce platform in Indonesia, the world’s fourth most populous country.
But Rasyid has resigned as president and left the board to join state-owned Telekomunikasi Indonesia, or Telkom, as its director for digital business. That means Bukalapak, which has 92m users and 6m retailers on its platform, has lost all three of its co-founders.
Bukalapak, founded in 2010, was one of the earliest ecommerce players in Indonesia and counts Alibaba’s Ant Financial as a backer. The departure of Rasyid is another sign of trouble for the business, which started recording a large drop-off in app downloads in the Google Play and Apple Stores from the middle of last year. Last September it laid off nearly 10 per cent of its 2,000-strong workforce and was rumoured to be for sale. Its rivals, including Alibaba-owned Lazada, Shopee and SoftBank-backed Tokopedia, will be watching closely.
Art of the deal
What downturn? Bangkok-based fintech start-up Synqa Holdings has raised $80m from Siam Commercial Bank’s venture capital subsidiary, Tokyo-listed asset manager Sparx Group and four other Japanese investors, to take advantage of the growing demand for cashless transactions in Asia.
Japan’s Toshiba will sell down more than 40 per cent of its stake in flash memory chips firm Kioxia Holdings, with a majority of proceeds going back to shareholders.
SoftBank led a $19.5m funding round in start-up Splyt, which helps app operators integrate mobility options with other services. The start-up has helped integrate ride hailing into apps such as Alibaba Group’s Alipay and Grab but wants to build its own super app.
Geek+, a Beijing-based start-up that makes warehouse fulfilment robots similar to those of Amazon’s Kiva, has raised $200m in a Series C funding round.
Less than a week after the secondary listing in Hong Kong raised almost $4bn, JD.com is fully offloading its 21 per cent stake in Chinese online travel website Tuniu for 458m yuan ($65m). The sell-off of what was a $500m bet for JD comes as the coronavirus pandemic has decimated the travel industry.
Let 100,000 influencers bloom. Valentina Avalon is someone Alibaba hopes can replicate its ecommerce success abroad. The 37-year-old from Ukraine has been recruited by the Chinese conglomerate as an “influencer” — someone who interacts with a Russian-speaking livestreaming audience to promote products from the latest fashion items to Bluetooth speakers.
Why? Although Alibaba is the leading ecommerce platform in China, it is struggling beyond its borders. The sales from its international segment, which include sales from partners or its investments such as south-east Asian ecommerce group Lazada, only account for a single-digit share of its total revenue, far short of its goal of deriving half of its income from outside China by 2025.
The company aims to convert 100,000 influencers into sales ambassadors this year, increasing to 1m by 2023, to further its global ambitions. Whether the group’s strategy that captivated Chinese consumers with a blend of online retail and social engagement will be successful elsewhere, especially in European markets where customers’ habits, behaviour and preferences are quite different from China, remains to be seen.
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