Tag Archives: China
BEIJING/SHANGHAI (Reuters) – Cai Li, a janitor in Shanghai, developed a serious addiction to news app Qutoutiao, lured by gossipy articles about celebrities and the cash she gets from reading them.
A red packet giving out free cash for new users is seen on the news aggregator app Qutoutiao, on a mobile phone next to a Qutoutiao logo in this illustration picture taken November 26, 2018. REUTERS/Florence Lo/Illustration
Logging on during breaks at work and sometimes at night when she can’t sleep, the 63-year old has earned a few hundred yuan ($ 30-$ 40) over several months, which she says is useful to supplement her income.
With its unusual pay-your-user strategy, Tencent-backed Qutoutiao Inc (QTT.O) – pronounced “chew-tow-ti-ow” – has drawn in 20 million daily readers. A leaderboard shows the top-earning user has raked in more than $ 50,000.
Digital gold coins are earned by playing games that involve reading stories or by convincing others to join up. The current exchange rate is 1,600 coins for 1 yuan, with strong players receiving the title of ‘master’.
The payments are an extreme example of financial incentives from discounts to coupons employed by a new generation of Chinese internet firms as they seek to establish themselves in a market dominated by much bigger players.
“Acquiring new users if you’re competing with Alibaba, Baidu, Tencent and traditional mobile players, you need to come up with something new,” said Zhang Chenhao, Shanghai-based managing partner at technology-focused Prometheus Fund.
On one hand, it has worked. The news aggregator, which listed in the United States in September, tripled its number of daily users over the last year. Third-quarter revenue – nearly all of it from advertising – jumped more than six times from the same period a year earlier to just under 1 billion yuan ($ 145 million).
THE EYEBALL ECONOMY
But the strategy doesn’t come cheap, even if individual amounts paid to users are ‘trivial’ – a word it used to describe the payments in its IPO prospectus.
Qutoutiao spent over 1 billion yuan on marketing in the last quarter – more than its revenue, nearly the amount of its net loss and over seven times what it spent in the same period a year ago.
“It is getting more and more expensive to get traffic,” Chief Financial Officer Wang Jingbo told Reuters in an interview, but said the cash giveaways were a key hook and a long-term strategy.
“It’s the eyeball economy. Previously, people had to spend money to see content, but with the changing internet they no longer have to pay…Not only are they not paying – users now need to earn something as well.”
Since surging on its trading debut, its shares have lost three-quarters of their market value, hurt by a wider economic chill that has hit Chinese stocks and disappointing earnings. It is now worth around $ 1.3 billion.
Industry experts question how long firms like Qutoutiao can sustain cash-burning habits and how they will become profitable.
“It’s very messy. If you lower the amount of money, users will lose interest. But if you raise it, the cost is too high,” said Wei Wuhui, an academic and managing partner at tech-focused venture capital fund SkyChee Ventures.
More broadly, concerns are growing about how some Chinese tech firms, including household names, are generously using discounts and other means to subsidize customers while also taking on other costs in the pursuit of market share.
Meituan Dianping (3690.HK) – a ‘super-app’ whose services include food delivery, restaurant reservations and ride-hailing – saw its stock plunge last month after quarterly operating losses tripled amid a bruising price war with its main rival.
Prometheus Fund’s Zhang noted venture capital funding was tightening due to the slowing economy, pressuring a key funding channel for tech firms.
“This (stage) is purely cash-burning to create a foundation. But in the end you have to deliver value and be profitable. If you don’t make profits, no-one will subsidize you and finance you forever.”
Qutoutiao – whose name means “fun headlines” – targets smaller cities and rural areas with content that ranges from cooking tips to videos on how to dance.
CFO Wang said he hopes to have 200 million monthly users at some point, getting towards the estimated 250 million currently commanded by rival news aggregator Jinri Toutiao. Qutoutiao had 49 million monthly active users as of July.
Bytedance-owned Jinri Toutiao recently launched a lite version of its app targeting rural markets and users with smaller phones that includes cash games, a sign it’s taking Qutoutiao’s threat seriously. It even offers 25 yuan for persuading another user to join, trumping Qutoutiao’s 8 yuan.
Several Qutoutiao users said their main interest in the app was the money, but complained it was becoming harder to earn.
Zhai Liyun, 45, a temp worker who lives on the outskirts of Beijing, said she read “clickbait” stories before bed but so far had only earned 20 yuan because most of her friends were already on the platform.
Cai, the janitor, said she was cutting back after her eyesight suffered and she lost weight from going on the app too much – prompting an intervention from her husband and daughter.
“I’ll play in the evening if I can’t sleep but I won’t lose sleep over Qutoutiao. I try not to think about it too much now,” she said.
($ 1 = 6.9437 Chinese yuan)
Reporting by Pei Li in Bejing and Adam Jourdan in Shanghai; Additional reporting by Shanghai newsroom, Sankalp Phartiyal and Euan Rocha in Mumbai; Editing by Edwina Gibbs
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BEIJING (Reuters) – The Shanghai head office of China’s central bank has levied a fine of 4.12 million yuan ($ 601,846) on Alipay, the online payment platform of Ant Financial, for violating regulations on payment services, the regulator said on Monday.
FILE PHOTO: An Alipay logo is seen at a cashier in Shanghai, China January 12, 2017. REUTERS/Aly Song/File Photo
It gave no other details.
Reporting by Beijing Monitoring Desk; Editing by Clarence Fernandez
BEIJING (Reuters) – Facebook has set up a subsidiary in China and plans to create an “innovation hub” to support local start-ups and developers, the social media company said on Tuesday, ramping up its presence in the restrictive market where its social media sites remain blocked.
FILE PHOTO: A Facebook panel is seen during the Cannes Lions International Festival of Creativity, in Cannes, France, June 20, 2018. REUTERS/Eric Gaillard/File Photo
The subsidiary is registered in Hangzhou, home of e-commerce giant Alibaba Group Holding Ltd, according to a filing approved on China’s National Enterprise Credit Information Publicity System last week and seen by Reuters on Tuesday.
“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups,” a Facebook representative said via email, referring to the Chinese province where Hangzhou is located. Facebook has created similar hubs in France, Brazil, India and Korea to focus on training and workshops, the spokesperson said.
Facebook’s website remains banned in China, which strictly censors foreign news outlets, search engines and social media including content from Twitter Inc and Alphabet Inc’s Google.
Setting up a company-owned enterprise in China does not mean Facebook is changing its approach in the country, the company said, adding that it was still learning what it takes to be in China.
Last year Facebook’s messaging app WhatsApp was blocked in the run up to the country’s twice-a-decade congress, and it has remained mostly unavailable since.
The filing listed only one shareholder of the new entity, Facebook Hongkong Ltd.
While censorship controls have hardened under Xi Jinping, who was formally appointed president in 2013, U.S. tech firms with blocked content are increasingly looking for new ways to enter the market without drawing the ire of regulators.
Google has several hundred staff in China and recently launched its own artificial intelligence (AI) lab. It has also tentatively launched several apps for the Chinese market in recent months, including an AI drawing game and file management app.
Apple Inc has also heavily modified its app stores to fit Chinese censorship restrictions in the past year, removing hundreds of apps at the request of regulators.
Reporting by Cate Cadell, Lusha Zhang, Se Young Lee and Jonathan Weber; additional writing by Peter Henderson; Editing by Kirsten Donovan, Emelia Sithole-Matarise and Cynthia Osterman
SHANGHAI (Reuters) – Chinese firms FAW Group, Dongfeng Automobile and Chongqing Changan Automobile have set up a venture to establish a ride-sharing platform, Changan said on Saturday, creating the kind of service pioneered by Uber.
“The three major car companies have joined forces to enter the field of shared travel, which provides an opportunity to transform traditional car enterprises,” a notice posted by Changan on its Wechat social media account said.
The new venture, called T3 Mobile Travel Services, would introduce partners from other industries to build the service and seek to make use of the development of driverless cars to offer safer and more efficient travel services to customers.
The three firms signed a cooperation agreement in December.
China’s ride sharing market is now dominated by Didi Chuxing, which is valued at $ 50 billion and counts Japan’s SoftBank Group as one of its major investors.
Reporting by David Stanway
(Reuters) – Micron Technology Inc on Thursday played down the likely impact on its business of a temporary Chinese ban on some chip sales but said it would appeal a decision that has added to U.S.-China trade tensions.
The firm’s estimate that the ban imposed by a Chinese court in a patent infringement lawsuit would weaken quarterly revenue by just 1 percent drove its shares as much as 3.6 percent higher and lifted stocks of other U.S. chipmakers.
Shares in the sector had been shaken on Tuesday by the first reports of the ruling, which added to a growing list of intellectual property disputes between Washington and China in the technology sector.
Micron said the ruling by a Fuzhou Court in a lawsuit filed by rivals United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co temporarily bans it from selling some memory chips and solid state drives in China.
The chipmaker said it would comply with the ruling, but would request the court to reconsider or stay its decision.
“The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense,” said Joel Poppen, Micron’s general counsel.
The lawsuit followed Micron’s complaint in December against Chinese government-backed Fujian and UMC in a California court alleging misappropriation of its trade secrets and other misconduct.
China is trying to build its own semiconductor industry as part of its “Made in China 2025” strategy and as it seeks to lower its reliance on foreign companies, many of them U.S.-based.
The dispute follows a ban on U.S. firms supplying parts to China’s telecom equipment maker ZTE as well as the drawn-out wait for Chinese regulators to approve Qualcomm Inc’s $ 44 billion takeover of NXP Semiconductors.
“It certainly appears semiconductors could move to the prime time in negotiations between the Trump administration and China,” Evercore ISI analyst C.J. Muse said. “Near-term this could favor non-US chipmakers vs. US chipmakers.”
Several Chinese government-backed entities have poured billions into research and for buying companies with a trove of chip patents. Micron itself was the target of a failed takeover attempt by China’s Tsinghua Unigroup in 2015.
The Chinese ban on Micron targeted its products sold through retail outlets and represented only a small portion of the chipmaker’s revenue.
Analysts believe the ban is largely symbolic as hurting the U.S. chipmaker would end up creating more pain for local Chinese firms who would have to rely on Korean firms Samsung Electronics and SK Hynix, pushing up memory chip prices.
“At the end of the day, the Chinese government is not going to impact its own local companies,” said Kinngai Chan of Summit Insights Group.
Micron said it expects quarterly revenue to be within the previously guided range of $ 8.0 billion to $ 8.4 billion.
Shares of Micron, which fell 5.5 percent on Tuesday after the ban, was up 1.9 percent at $ 52.46 in afternoon trading on Thursday.
Other chipmakers also gained. Qualcomm Inc rose 3.2 percent, Broadcom Inc 2 percent and Intel Corp up 2.6 percent.
Reporting by Sonam Rai and Supantha Mukherjee in Bengaluru; Editing by Arun Koyyur
SHANGHAI (Reuters) – Chinese state-backed media group CMC Inc said on Tuesday that it had raised around 10 billion yuan ($ 1.49 billion) in a fund-raising round from investors including rival tech giants Alibaba Group Holding Ltd and Tencent Holdings Ltd.
CMC, formerly CMC Holdings which stretches from sports to amusement parks, said the A-round fundraising was led by the two tech firms along with new investors such as property developer China Vanke Co Ltd.
CMC, founded by media magnate Li Ruigang in 2015, added the firm was valued at around 400 billion yuan after the round.
Reporting by Adam Jourdan; Editing by Muralikumar Anantharaman
WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.
The Treasury Department has recommended that Trump use the Committee on Foreign Investment in the United States (CFIUS), whose authority would be enhanced by new legislation in Congress, to control investment deals. The legislation expands the scope of transactions reviewed by the interagency panel to address security concerns, Trump said.
The decision marks a victory for Treasury Secretary Steven Mnuchin in a fierce White House debate over the scope of such curbs.
Mnuchin had favored a more measured and global approach to protecting U.S. technology, using authority approved by Congress, while White House trade adviser Peter Navarro, the administration’s harshest China critic, had argued for China-specific restrictions.
“We are not, on a wholesale basis, discriminating against China as part of a negotiation,” Mnuchin said on CNBC on Wednesday.
The investment restrictions are part of the administration’s efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after U.S. complaints that China has unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of U.S. tech firms.
“I have concluded that such (CFIUS) legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump said in a statement that did not specifically name China.
U.S. stocks rose after Trump announced the new approach to U.S. investment restrictions but reversed gains in afternoon trading.
Senior administration officials told reporters on a conference call that sticking with CFIUS, a process companies are familiar with, would ensure strong inward investment into the United States while protecting the “crown jewels” of U.S. intellectual property.
Trump said in his statement that upon final passage of the legislation, known as the Foreign Investment Risk Review Modernization Act, he will direct his administration “to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies.”
If Congress fails to pass the legislation quickly, Trump said, he would direct the administration to implement new restrictions under executive authority that could be applied globally.
The decision to stick with CFIUS was a pragmatic move because the new CFIUS legislation “will put a crimp in China’s efforts to move up the value chain in high tech,” said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.
But it will likely do little to stop the activation of U.S. tariffs on $ 34 billion worth of Chinese goods, scheduled for July 6, or jump-start trade negotiations between the two economic superpowers, Kennedy said.
And the mixed messages from the administration do not help Trump’s negotiating position, he said.
“It shows the Chinese that the Trump administration is still undependable and can be moved back from the most hardline positions,” Kennedy added.
Mnuchin on CNBC downplayed the dissent within the administration, saying that Trump wants to hear differing views on important issues, but the administration’s economic team typically comes together on major recommendations such as the investment restrictions.
Mnuchin said the new CFIUS legislation, passed 400-2 in the House of Representatives on Tuesday, would broaden the types of transactions that could be reviewed by the panel on national security grounds, including minority stakes, joint ventures and property purchases near U.S. military bases.
“This isn’t a question about being weak or strong, this is about protecting technology. We have the right tools under this legislation to protect technology,” Mnuchin said.
COMMERCE EXPORT CURBS
Trump also said that he has directed Commerce Secretary Wilbur Ross to examine U.S. export controls and recommend modifications that may be needed “to defend our national security and technological leadership.”
A Commerce Department spokesman could not be immediately reached for comment on the study.
The CFIUS legislation is headed for negotiations between U.S. House and Senate lawmakers in the coming weeks to craft a final version, with guidance from the Treasury.
A sticking point that could emerge is language in the Senate version that would reinstate the ban on Chinese telecom equipment maker ZTE Corp (000063.SZ) from purchasing U.S. components for a year. The Commerce Department ban had effectively shut the Shenzhen-based company down, angering Beijing.
The House version has less stringent language prohibiting the U.S. Department of Defense from purchasing any ZTE communications gear.
Reporting by David Lawder; Editing by Jeffrey Benkoe and Steve Orlofsky
BEIJING/SHANGHAI (Reuters) – China is yet to approve U.S. chipmaker Qualcomm Inc’s (QCOM.O) proposed $ 44 billion acquisition of NXP Semiconductors (NXPI.O), three people close to the talks said, dismissing an earlier media report that said Beijing had already greenlit the deal.
Chinese clearance would remove a long-running roadblock to the deal that has become entangled with broader trade tensions between the United States and China. The acquisition has already got a nod from eight of the nine required global regulators, with China being the only hold-out.
Hong Kong-based South China Morning Post reported on Friday morning that China had given its go-ahead to the deal, citing people with knowledge of the matter, driving up shares of the U.S. firm in extended trade.
But Reuters sources, who are close to the Qualcomm-NXP deal, said they were not aware of any Chinese approval. One of them said planned U.S. tariffs on Chinese goods expected to be unveiled later in the day could impact the process.
Qualcomm did not have an immediate comment on Friday, while NXP did not respond to a request for comment.
China’s State Administration for Market Regulation, the regulator which reviews merger deals, did not immediately respond to a faxed request for comment.
Qualcomm met with regulators in Beijing last month in a bid to secure a clearance, but sources at the time said an approval would depend on the progress of broader bilateral talks and the U.S. government lifting a crippling supplier ban on telecoms equipment maker ZTE Corp (000063.SZ)(0763.HK).
Washington and Beijing have struck a deal to help ZTE back into business. However, trade talks remain in the balance with U.S. President Donald Trump expected to unveil “pretty significant” tariffs on Chinese goods on Friday.
Analysts said a Chinese approval would be significant as it would remove the last major barrier to the NXP deal, which is seen as key for Qualcomm to diversify its business and make a push into new areas like smart cars.
Qualcomm initially announced its bid for Dutch semiconductor company NXP in October 2016.
Reporting by Michael Martina and Matthew Miller in BEIJING, Adam Jourdan in SHANGHAI and Nikhil Subba in BENGALURU; Editing by James Dalgleish, Grant McCool and Himani Sarkar