Hi all — James here. Much of the world has been becalmed by the pandemic but Asia’s tech scene is hopping. The question of what happens to TikTok in the US (The Big Story) is of far greater importance than the issue itself. Like the US blacklisting of Huawei, it could sour bilateral relations further and set the tone for data privacy policies in Europe and beyond.
But this is by no means the only must-read story this week. Ant Group’s planned IPO (Mercedes’ Top 10) may well be the world’s big tech splash of the year. Japan’s move to subsidise manufacturers to shift production capacity out of China represents a key signal — and one likely to be positive for south-east Asia. Don’t miss Ken Koyanagi’s piece (Best of Comment) on the US-leaning posture of Mukesh Ambani, India’s wealthiest man. Take care as always, until next week.
The Big Story
Is the US set to issue a general ban on TikTok, the wildly popular Chinese video streaming app? It took a step in that direction this week after lawmakers voted 336 to 71 to prohibit TikTok’s use by federal employees. An unnamed US official said Washington would send a “very strong message to China” within a month — but opposition towards a general ban is nevertheless significant.
“Foreign tech companies should not be kept out of the US market because of rumours and innuendo,” said Daniel Castro, vice-president of the Information Technology & Innovation Foundation, a leading US tech think-tank. “Doing so not only risks immediate retaliation for US companies, but it also would establish a global norm where countries are free to impose trade restrictions on digital goods and services for vague and undefined national security threats.”
Key implications: The case against TikTok, which is owned by Chinese tech giant ByteDance, revolves around data security. US officials told the Financial Times that Washington was considering blacklisting ByteDance in order to prevent Beijing from harvesting US personal data.
Mike Pompeo, the US secretary of state, said downloading the TikTok app would put “your private information in the hands of the Chinese Communist party”. TikTok has about 26.5m active monthly users in the US, mostly between the ages of 16 and 24.
Zhao Lijian, a Chinese foreign ministry spokesman, said comments by certain US politicians about TikTok were “completely groundless” and amounted to “malicious smearing”. TikTok says it has never handed over user data to the Chinese government.
Upshot: This week’s vote by US House of Representatives lawmakers to ban TikTok for federal employees would need to be approved by the Senate to become law. But the administration of Donald Trump does not need congressional approval to add ByteDance to a blacklist.
Mercedes Top 10
Ant Group, the Chinese payments giant valued at $200bn, is to pursue a dual share listing in Hong Kong and Shanghai in what is likely to be the splash tech IPO of the year. The company is said to have generated about $2bn in profit in the fourth quarter of last year.
Japan is helping its manufacturers leave China. Tokyo is subsidising 87 companies to help them move production capacity from China to south-east Asia or Japan. Thirty have opted to head for south-east Asia.
One of South Korea’s biggest technology companies is quitting Hong Kong as a base for back-up data storage because of privacy fears. Naver, a Google rival, said it was moving its data back-up centre to Singapore.
Australia and China enjoy a “knowledge boom”. While the headlines have been about Canberra’s concerns over Chinese espionage, cyber attacks and intellectual property theft, the number of Australia-China partnerships in scientific research has quietly boomed.
Alibaba courts foreign influencers. AliExpress, the unit of Alibaba that targets global shoppers, has launched a new campaign to sign up 100,000 content creators worldwide by April next year, as it looks to increase international shipments.
The global shift to embrace electric vehicles is showing up in the order book of LG Chem, a South Korean company. Demand from US carmaker Tesla and others has boosted orders to 18 times last year’s battery sales revenue.
Things are getting tougher for Huawei. Chipmaker TSMC confirmed it had stopped processing orders from the company to comply with US export regulations.
The US has blacklisted a key Apple supplier as part of its latest crackdown on Chinese tech companies. The move against camera and touch module supplier O-Film is likely to shake up consumer electronics supply chains. For more on Apple’s supply chain, see here.
More than 20 companies worldwide joined the ranks of unicorns — privately held businesses with valuations of at least $1bn — in the three months through June, according to CB Insights. The US and China remained the main drivers, accounting for 13 and three respectively. The most-represented industry was internet software and services.
Counter-intuitive but true: Thailand’s oldest bank is moving into food delivery. Fed up with food delivery start-ups such as Grab and Gojek muscling into financial services, venerable Siam Commercial Bank is striking back.
When sages speak
Jeff Ding talks to TechBuzz China about China’s AI leaders in this podcast. The section on “unsexy AI” mentions Chinese companies that you probably have not heard of doing interesting things by applying artificial intelligence.
George Hendrata and Gaery Undarsa from Tiket.com, Indonesia’s fastest-growing online travel agency, give an insight into how to appeal to Indonesian millennials in this podcast with GGV Capital.
China is using its social credit system to blacklist Covid-19 rule-breakers. This study by Merics, a Berlin-based think-tank, says the Chinese public supports such measures.
Best of comment
Indian conglomerate Reliance Industries’ digital arm Jio Platforms has secured a $4.5bn investment from Google, adding to a list of new backers that includes some of the biggest names in US technology: Facebook, Intel and Qualcomm, writes Ken Koyanagi, Nikkei Asian Review’s editor-at-large.
Noticeably absent from Jio’s A-list global tech partners are Chinese tech titans such as Alibaba and Tencent, both of which have market capitalisations comparable to Google, Apple, Facebook and Amazon.
Reliance has sought to avoid being caught up in the US-China tech war. Mukesh Ambani, Reliance’s chairman, told US president Donald Trump in February that his company was not using Chinese technologies, including Huawei’s telecoms equipment, in developing its upcoming 5G network.
Then the India-China bilateral relationship deteriorated in May over the disputed Himalayan border. A clash between the two sides in June led to the deaths of 20 Indian servicemen, triggering anti-Chinese sentiment across India. The Indian government has since banned 59 Chinese mobile apps, including TikTok.
Art of the deal
A small club of ByteDance investors is reportedly examining the idea of joining forces to buy a majority stake in TikTok as one of way dealing with a potential US ban. More here from The Information.
Reports surfaced this week that Didi Chuxing, China’s biggest ride-hailing company, is considering a $77bn IPO in Hong Kong. Didi has been trying to boost its international business but the company disputed that an IPO was imminent.
Xpeng Motors, one of China’s most high-profile electric vehicle start-ups, has raised $500m from investors including Aspex, Coatue, Hillhouse and Sequoia Capital China. Xpeng last raised $400m from investors in November.
Netflix is betting big on viewers in Asia, increasingly bringing locally produced content on board. Its latest tie-up with the Line TV platform in Thailand has given Thai dramas a place on its platform.
In the spotlight
When Ma Baoli — whose gay dating company listed on Nasdaq this month — was a young man in China, it was hard to find love. There was no internet and society was conservative.
“When I wanted to find a boyfriend, I had no way to go about it,” he told the South China Morning Post. “At the time, everyone just wrote their dating information on public washroom walls. What a miserable era.”
Such trials led Mr Ma in 2000, while he was still a police officer, to found Danlan.org, one of China’s earliest and most influential gay forums. And the experience he gained helped him set up Blued — pronounced Blue-dee — which listed on Nasdaq this month, raising $85m. Shares are down by a quarter since listing in early July.
Covid-19 is hitting the job market in many countries hard. But in Japan a revealing trend is emerging: jobs that can be easily automated are being hit much harder than those that cannot.
A study conducted by Nikkei surveyed 2,200 types of jobs. Employment offers in the jobs that can be easily automated — including for desk clerks and some types of manufacturing — have declined by more than 30 per cent year on year recently.
By contrast, job offers in occupations less easy to automate have fallen off much less steeply. This suggests that Japan is using the epidemic to push ahead with automation.
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