Tag Archives: China
China has closed more than 13,000 websites since the beginning of 2015 for breaking the law or other rules and the vast majority of people support government efforts to clean up cyberspace, state news agency Xinhua said on Sunday.
The government has stepped up already tight controls over the internet since President Xi Jinping took power five years ago, in what critics say is an effort to restrict freedom of speech and prevent criticism of the ruling Communist Party.
The government says all countries regulate the internet, and its rules are aimed at ensuring national security and social stability and preventing the spread of pornography and violent content.
A report to the on-going session of the standing committee of China’s largely rubber stamp parliament said the authorities had targeted pornography and violence in their sweeps of websites, blogs and social media accounts, Xinhua said.
As well as the 13,000 websites shut down, almost 10 million accounts had also been closed by websites, it added. It did not give details but the accounts were likely on social media platforms.
“Internet security concerns the party’s long-term hold on power, the country’s long-term peace and stability, socio-economic development and the people’s personal interests,” Xinhua said.
More than 90 percent of people surveyed supported government efforts to manage the internet, with 63.5 percent of them believing that in recent years there has been an obvious reduction in harmful online content, it added.
“These moves have a powerful deterrent effect,” Wang Shengjun, vice chairman of parliament’s standing committee, told legislators, according to Xinhua.
Authorities including the Cyberspace Administration of China have summoned more than 2,200 websites operators for talks during the same period, he said.
For more on China, watch Fortune’s video:
Separately, Xinhua said that over the past five years, more than 10 million people who refused to register using their real names had had internet or other telecoms accounts suspended.
China ushered in a tough cyber security law in June, following years of fierce debate around the controversial legislation that many foreign business groups fear will hit their ability to operate in the country.
This will be a four-part series on China’s rapid technological growth in the past few years. Each part will focus on a different investment you could make today in order to get a piece of China’s booming technology sector.
If you spend any amount of time in Beijing or Shanghai, you’ll notice something interesting almost right away. No one is carrying cash or credit cards, and almost no one uses their cellphone number as their primary means of communication. Instead, they’re using an app called WeChat, which is similar to having Facebook (FB), PayPal (NASDAQ:PYPL), Skype, and text messaging all bundled together into one app. Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) owns this application, which has over 950 million active users.
Tencent’s revenue growth has been astounding, and analysts expect that trend to continue into the future:
The reason for this massive growth is because Tencent owns people’s screen time in China. Whether you’re paying bills, playing a game, talking with friends, or hailing a taxi, you never have to leave Tencent’s world.
Speaking of games, Tencent also just happens to be the world’s leader in mobile gaming based on revenues. It’s currently ahead of Apple (AAPL), Microsoft (MSFT), Sony (SNE), King (KING), Electronic Arts (EA), Zynga (ZNGA), etc. What’s even more impressive is that despite being the top player in this area, it still grew its gaming revenue by 39% in the past year, and its market share in the space is continuing to increase.
Tencent has accomplished this dominance in the gaming sphere by partnering with a lot of the major players in the space to bring online versions of FIFA, Call of Duty, NBA 2K, and other extremely popular games to China.
Another interesting area where Tencent operates is streaming. Basketball is a perfect example of its foresight into this space. The popularity of the sport in China has exploded over the past decade, thanks in large part to Yao Ming. So what did Tencent do? It went out and struck a deal with the NBA to stream games in China. 65 million people watched the NBA finals last year from their phones in China through Tencent.
Besides gaming and streaming, Tencent’s other two major areas are social networks and advertising, which grew by 51% and 55% in the past year, respectively. Tencent is a $ 488 billion company that is still growing like a start-up. If you scroll back to the revenue chart above, you’ll see that the company’s revenue is expected to double by 2019.
Tencent’s social networks are particularly interesting to me. We’ve already discussed WeChat a little, but it has another app called QQ that has 850 million active users. Both QQ and WeChat together dominate China’s mobile payment space. Today, QQ and WeChat have over 300 million bank accounts linked to their mobile payment system.
As if all this wasn’t enough, QQ also has an application called QQMusic, which is considered to be the Spotify of China. This is an area where I anticipate Tencent will see a lot of growth moving forward.
Tencent has numerous potential catalysts that could push the stock price higher, but there are a handful that I want to specifically point out that are quite promising.
The first is in the gaming space, specifically with e-sports. China has the world’s largest video game market, which is expected to generate about $ 27.5 billion in sales this year. This incredibly large video game market has spurred an immense interest in e-sports in China and other Asian countries. In fact, the Olympic Council of Asia recently announced that it would be including e-sports at the Asian Games in Hangzhou in 2022.
E-sports have grown so popular in Asia that a crowd of more than 40,000 people recently packed into a stadium to watch two of South Korea’s biggest gaming stars play each other head-to-head. Tencent has a stranglehold on this market. The company recently signed a deal with the city of Wuhu to build an e-sports university and a stadium for events.
Tao Junyin, the market director of a top e-sports content company recently said, “Tencent has a controlling power in the whole industry, so we have to find a way to work with Tencent. You either die or you go Tencent.” Tencent has a stranglehold on the e-sports market in Asia and will benefit tremendously from its rapid growth.
Another area where the company could see growth is the music streaming space. Tencent owns QQ music, KuGou, and Kuwo, which together make up over 75% of China’s music streaming market.
Tencent has exclusive online distribution deals with Sony Music, Warner Music Group, and Universal Music Group. Its deals with the three largest music labels and dominance of market share put Tencent in a great position to control China’s music streaming market, which is relatively immature at the moment.
While China is the world’s most populous country, with over 1.3 billion people, it is only 12th in the world in terms of recorded music revenue. That’s up from 14th in 2015 according to the International Federation of Phonographic Industry (IFPI). This jump was largely due to the 30.6% growth in streaming and China’s 20.3% growth in music revenue, which was almost four times the 2016 global average of 5.9%.
Despite these impressive growth numbers, China’s music industry is still lagging behind the rest of the world. This gap won’t last forever, and as China begins to catch up with everyone else, Tencent stands to be the main beneficiary.
Finally, I just wanted to quickly point out that China’s mobile internet use is only expected to grow faster in the coming years, something that will clearly benefit Tencent.
There are two main risks I want to point out before you invest your money into Tencent. The first is its valuation. After everything we just discussed, it should be no surprise that you’re going to have to pay a premium to get into this name. Tencent’s 51.69 P/E ratio currently reflects that.
Tencent has enjoyed a nice run-up over the past year, so some short to medium-term weakness certainly wouldn’t surprise me. If you plan on investing money that you may need within the next year, Tencent might not be the best investment for you. That being said, I’m a long-term investor, so some short to medium-term weakness would allow me to add to my current position at a cheaper price.
The second risk comes with investing in almost any Chinese company, and that’s the risk of regulation. Any regulations in China dealing with the internet could make life more difficult for Tencent and potentially limit its capabilities.
Tencent seems to be doing everything right. They are major players in almost every facet of China’s tech revolution, which is why some people expect Tencent to become the world’s biggest company by 2025.
If you want to own some of China’s technology revolution, Tencent is one of the best places to start. Stay tuned for Part 2 of this series coming in the next few days.
Author’s note: If you would like to follow along with my China Series and other analysis, I would encourage you to hit the follow button next to my name at the top of the page. I enjoy interacting with my followers, so please comment below!
Disclosure: I am/we are long TCEHY.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Microsoft’s Skype may still be functioning in China, but it’s becoming increasingly difficult to find a way to download it in that country.
According to a New York Times report on Tuesday, Skype has been unavailable on Apple’s Chinese App Store and on various Android app repositories for almost a month now.
Apple (aapl) told the publication that it had been “notified by the Ministry of Public Security that a number of voice over internet protocol apps do not comply with local law,” so it had removed those apps in its Chinese store.
Android app stores run by local web giants such as Huawei and Xiaomi also don’t carry Skype anymore—Google (googl) doesn’t run its Play Store in the country because of local laws, so Android users have to turn to third-party services such as these for their app downloads.
Microsoft (msft) told the Times that Skype’s removal from Apple’s App Store was only temporary, and it was “working to reinstate the app as soon as possible.”
It’s not clear which law Skype is breaking. It doesn’t provide end-to-end encryption, though it might be that the Chinese authorities don’t like its encryption of messages in transit between people’s computing devices and Skype’s servers. It’s also possible that Skype is falling foul of a recently introduced Chinese rule that demands the use of verified real names on online platforms.
China has recently been particularly restrictive of online speech, due to the high-stakes Communist Party meeting that took place last month. However, Skype’s disappearance from the app stores seems to have taken place after that event.
Apple took flak from digital rights activists earlier this year when it removed from its Chinese App Store apps that could be used to bypass state censorship in the country.
BEIJING (Reuters) – China Citic Bank Corp (601998.SS) and search engine giant Baidu Inc (BIDU.O) launched on Saturday a direct banking joint venture, dubbed AiBank, to capitalize on China’s rapidly growing fintech sector.
AiBank is one among several tie-ups between an internet firm and a lender in China’s booming online finance market where technology gurus like Alibaba Group Holding Ltd (BABA.N) and Tencent Holdings Ltd (0700.HK) have already set up their own finance arms to offer a range of financial products including payment, wealth management and micro loans.
A direct bank offers services over the internet instead of through physical branches.
AiBank will focus on lending to individuals and small businesses while leveraging big data and artificial intelligence to build new risk control models, Li Rudong, president of the new bank said at a launch event in Beijing.
Li said 60 percent of the new bank’s employees will be technology staff.
“AiBank is the future of intelligent finance…It is an institution that understands customers best and understands finance best,” said Baidu Chief Operating Officer Lu Qi.
Mid-tier lender Citic Bank owns 70 percent of the joint venture, while Baidu controls the remaining 30 percent. The direct bank has a registered capital of 2 billion yuan.
China’s banking regulator approved the establishment of AiBank earlier this year.
Reporting by Shu Zhang and Elias Glenn; Editing by Muralikumar Anantharaman
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