Hi all — it’s James here, just back in Hong Kong from an overseas trip and doing my obligatory 14 days of quarantine (in a tiny hotel room). Still, I’m teaching myself yoga and sampling Hong Kong’s food deliverers. Yesterday I ordered fruit salad and received eel soup. The big news in this issue is India’s crackdown on Chinese mobile apps. We see this as part of the stiffening headwinds being encountered by China Inc as it expands abroad amid suspicions over surveillance and data harvesting. In related news, Hong Kong’s new security law is prompting people in the territory to erase their digital footprints (Mercedes’ Top 10). Don’t miss the video by Mercedes (Smart data) on how Asia’s fintech boom is deflating. Till next week, please take care wherever you are.
The Big Story
China Inc is paying heavily for associations with Beijing’s “surveillance state”. India’s decision this week to ban 59 mobile phone apps, which have been downloaded about 5bn times, shows that suspicions are catching up with Chinese tech companies as they expand overseas.
Indian officials told the Financial Times that the Chinese tech companies — including ByteDance, owner of the wildly popular TikTok short video app — will have to answer accusations that they are “surreptitiously stealing data”. A full investigation into the Chinese apps was under way, the officials said.
Key implications: The ban by India ranks as one of the broadest sanctions taken by a country against Chinese tech companies. The US blacklisting last year of Huawei, the telecoms equipment maker, and other Chinese tech companies was also motivated by national security concerns.
Actions in one country are having echoes in others. Singapore, for instance, left Huawei out in the cold last week as its telecoms companies chose 5G equipment suppliers. The UK is similarly feeling the mounting US pressure to drop Huawei from its 5G plans, according to an FT exclusive report.
India’s move is expected to send a chill through Chinese venture capital firms, many of which have backed Indian start-ups and co-invested with Chinese tech companies now under investigation.
Upshot: Concerns over data privacy and surveillance are creating stiff headwinds for Chinese tech companies as they expand their footprint overseas. Chinese laws that require them to share data with China’s state security agencies, if requested, do nothing to allay suspicions.
Mercedes’ top 10
If you only read one piece this week, make it this investigation by James Kynge and Ryan McMorrow into Pinduoduo’s gravity defying rise. The Chinese online shopping group, listed in the US, is the most valuable company in the world never to have achieved a single quarter of operating profit.
Hong Kong people are erasing their digital footprints as the new national security law imposed by Beijing sends a chill through the territory, write Kenji Kawase and Michelle Chan.
Solina Chau has for years been the driving force behind many of the technology bets credited to Hong Kong’s “superman” dealmaker Li Ka-shing. The FT profiles Mr Li’s long-term companion and head of a group that invests his money. Her early bet on Zoom alone has netted billions.
Tech unicorns Grab and Gojek are upping their investments in cloud kitchens — or shared kitchens for food deliveries — across south-east Asia. The move has been driven by a 13-fold increase in food deliveries in the region, to $5.2bn in 2019.
Huawei has been left out in the cold in Singapore. The city-state’s three largest telecoms operators have chosen Sweden’s Ericsson and Finland’s Nokia as main equipment suppliers for their 5G networks, leaving the Chinese company on the sidelines.
Are you sick of WFH? Well, bad news if you are. The FT’s Richard Waters finds that leading tech companies are preparing for a world in which working from home would be a more regular feature of life.
Apple is working overtime to reduce production delays of its 5G phone as it trails rivals Huawei and Samsung, which launched 5G-enabled smartphones last year. It may now be able to avoid the worst-case scenario of postponing its launch until 2021, sources told the Nikkei Asian Review.
The pandemic is bringing a bonanza to Samsung Biologics. The South Korean biopharmaceutical company has racked up $1.5bn in orders in the past three months as companies around the world scramble to develop treatments for Covid-19.
China’s answer to Nasdaq is set to loosen its rules, aiming to attract more stock market listings as the US intensifies scrutiny on Chinese companies.
Leo Lewis finds 416 quadrillion reasons to admire Fugaku, the world’s fastest supercomputer. The $1bn-plus made-in-Japan machine is currently being put to use analysing aspects of the global health crisis.
When sages speak
Here is a great backgrounder on India’s decision to ban 59 of China’s leading mobile apps, including TikTok and WeChat. Written by Trisha Ray for ORF, an Indian think-tank, it explores the long-running suspicions that Indian authorities have had over data privacy and Chinese apps.
And for more on China’s large corporate stake in India, this piece by Ananth Krishnan at Brookings is useful.
This groundbreaking research by Strand Consult shows the extraordinary reliance of European telecoms companies on Chinese technology — mainly from Huawei and ZTE — in their 4G RAN infrastructure. RAN (radio access networks) are the interface between computers, mobile phones and other devices and the core telecoms network.
In the spotlight
Some Street Fighter fans may have done a double take when they heard the name of Lazada’s new chief executive. Chun Li, a veteran Alibaba executive, was last week announced as head of the south-east Asian ecommerce company. He shares his name with a character in Capcom’s Street Fighter video game series.
Lazada, which is owned by Alibaba, needs a warrior. Mr Li is Lazada’s fourth boss in just over two years, a period that has involved significant internal restructuring and increasing competition in the region, especially from Tencent-backed rival Shopee.
The lossmaking company is one of Alibaba’s biggest overseas acquisitions, with $4bn now invested. Lazada has spent heavily competing in countries such as Indonesia but has found itself outpaced by rivals. The appointment of Mr Li, who joined Alibaba in 2014, suggests the company will have a greater focus on becoming profitable, according to one industry executive.
Art of the deal
As foreshadowed by TSA last month, Zuoyebang, a Chinese online tutoring company backed by SoftBank, has raised $750m from investors led by New York-based Tiger Global and Chinese private equity fund FountainVest Partners. It is one of the biggest fundraisings in the online education sector this year. The start-up says its has monthly active users of 170m, albeit with only 12m paying students.
Tencent has been on a spending spree. The Chinese company has bought south-east Asian video-streaming company iflix for an undisclosed sum and is also reportedly funding online grocery delivery start-up Xingsheng Youxuan in a deal that values the company at $3bn.
Also in education, Byju’s, an India-based education start-up, has raised an undisclosed amount from investment firm Bond at a $10.5bn valuation, reports the Economic Times.
Over in Malaysia, Singapore-listed Yoma Strategic Holdings is acquiring a controlling stake in its Wave Money digital wallet venture. The $76.5m deal is interesting because it follows news in May that China’s Ant Financial would buy a stake in Wave Money to bring its Alipay mobile payment technology to the country. Alipay is making similar manoeuvres throughout south-east Asia.
Coronavirus has brought Asia’s fintech funding boom down to earth. Funding for fintech companies in Asia fell nearly 70 per cent in the first three months of the year compared with the previous quarter, far more than in the US over the same period and against an actual rise in funding in Europe. Asia’s fintech surge has been one of the region’s biggest growth stories in recent years, as online lenders in particular catered to unbanked populations in south-east Asia, India and China. Watch our video on Asia’s online lenders troubles below.
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