Like Roman dictators, consumer brands in China have good reason to beware the Ides of March. It’s the date of the national broadcaster’s consumer rights gala, a two-hour festival of exposés famous for undercover sting operations.

The annual broadcast, known as the “3.15 Gala” after its date, is appointment television, promising embarrassing revelations about well-known companies. It can drive consumer outrage and crackdowns from regulators, and it’s often followed by unwelcome attention from other media. 

This year, tech came under heavy fire. Out of nine segments in the broadcast, the first four focused on allegations about misuse of technology. Well-known brands like Qihoo 360 search, UC browser, and the job search sites Zhilian and Liepin came under fire for accusations related to false advertising and poor privacy protection. At least five companies saw their apps kicked off Chinese app stores in the days following the show.

Major state media have repeatedly focused on tech-themed investigations. Renwu Magazine, owned by the People’s Daily group, has been on the warpath over working conditions, with viral investigative work targeting both pressure on delivery drivers and extreme limits on toilet time for white-collar workers. The same magazine was also among outlets that highlighted concerns over invasive use of face recognition. 

CCTV investigates CCTV

The broadcast began by accusing retailers of misusing face recognition to monitor visitors to their stores.

CCTV reported that Kohler, an American bathroom fixture brand, installed closed-circuit cameras in many stores to capture customers’ facial information without user consent. The company installed cameras with face recognition capabilities in thousands of its stores, allowing the company to identify and track consumers across multiple visits to different showrooms without their consent.

In addition to Kohler, CCTV said that more than 20 brands have installed face recognition systems in their stores across the country, including well-known brands like BMW and Max Mara. A manager at a surveillance camera supplier told undercover reporters they have already installed millions in different stores. 

Officially implemented on Jan. 1, 2021, China’s new Civil Code bans processing personal information without consent. 

Resumes for sale

The program also accused three well-known online recruitment platforms for leaking job seekers’ resumes: Zhaopin, 51Job, and Liepin. All three have since been removed from a number of Chinese Android app stores.

Online recruitment platforms are the first choice for most people to seek jobs. However, they are doing a bad job protecting user’s personal information. CCTV’s reporter paid RMB 7 (about $1) to a buyer in a QQ group called “58 Zhilian Fans” for one resume from Zhaopin, including the applicant’s name, gender, age, photo, contact information, work, and education experience. 

It appears that the black market in resumes serves both actual recruiters as well as scammers interested in personal information. 36Kr, which examined the practice following CCTV, reported that for small businesses it can be cheaper to buy a resumes secondhand and contact possibly hires directly than to register an account.

Weak privacy protections make it easy for resume brokers to export resumes in bulk. On Zhaopin, anyone with a corporate account can download an unlimited number of resumes. The registration of corporate accounts is also loosely regulated on these platforms. CCTV found that applications with fake certificates could pass through the application process.

Snake oil

Ads for fake medicine have plagued search since 2016, when a college student named Wei Zexi died after receiving an unproved cancer treatment promoted by ads on Baidu which were not clearly distinguished from search results, prompting a widespread outcry. The case drew wide public attention, forcing the tech giant to change its advertising practices and Chinese regulators to tighten control. 

Three years on, CCTV accused the Alibaba-backed UC Browser and Qihoo’s 360 Search for displaying results that appear organic but are in fact advertisements. 

The broadcast also accused intermediaries of helping unlicensed firms promote medical products. Normally, a company needs authorization to advertise a medical product or treatment. But third-party ad agents for the two companies told undercover reporters that they could use idle accounts that were previously registered by authorized companies.

“No need to fear accounts being blocked after posting questionable information. We can always switch to another one, because we have hundreds of them,” said one agent for 360 Search.

Both of the apps were removed from all major Chinese Android app stores two days after the exposé.

Some of these fake ads are pretty dangerous: The Beijing News found that ads on “a search engine” recommended ineffective treatments for heart attacks.

After searching with the keyword of heart attack, the results display a list of medical advertisements. One of them says the disease could be cured by taking their traditional Chinese medicine without surgery. 

A contact from the recommended hospital told Beijing News over phone that the coronary stents treatment typically used in hospitals could only stretch the blood vessels, rather than dissolve the blood clot. And patients taking such surgery have to take western medicines their whole life. In contrast, their traditional Chinese medicine can dissolve blood clots, and patients don’t have to take medicines after being cured. The medicine will cost about RMB 3,000 ($460) a month depending on different cases.

When chatting with an agent from the hospital through WeChat, the app warned the reporter about the contact and warned to beware of fraud. Doctors at an authorized hospital said “Stents are a standard treatment for heart attack, because blood clots are difficult to remove.”

Malware targeting the elderly

Last in the tech block, the program criticized four malware cleaner apps—Tencent’s Mobile Phone Manager Pro, Memory Optimization Master, APUS’s Superior Cleaning Master, and Smart Cleaner for collecting user information and pushing scam advertisements, suggesting that these scams target the elderly.

The program said some of the cleaners were malware themselves, featuring a 70-year-old woman surnamed Li. Li said that her phone became very slow even though she often cleans viruses and memories in smartphone with cleaner apps. It turned out that these apps are doing the exact opposite of what they say.

A third-party test agency consulted by CCTV found that Mobile Phone Manager Pro read users’ app list more than 800 times, GPS location more than 50 times, smart device code 900 times, and SIM card code 1,300 times within less than 10 seconds. Using this data, CCTV reported, the apps helped target users with vulgar content and scams.

Where’s Elon?

Many Chinese consumers and media were surprised that Tesla was not named at the broadcast. The EV maker has been a popular target online and in Chinese media during the past year, with accusations ranging from sharp sales practices to safety issues. Huxiu commented on the absence, and warned that the company is likely to face more consumer and media pressure.

Skeptical public 

Most of the named companies, including Zhaopin.com, Liepin.com, 51job.com, UC Browser, and 360 search had issued apologies hours after the gala concluded, promising to address the mentioned issues. 

Given previous experience, the public remains skeptical about whether public embarrassment will actually lead companies to solve the issues. Chinese netizens voiced their concerns on Chinese microblogging platform Weibo.

Responding to the Weibo hashtag “Monitoring institutions help to save RMB 4,4 billion consumer costs,” a Weibo user with the handle Fuchenruyi wrote:

“The monitoring institutions could have done a better job. We watch 315 gala every year, yet each year has more shocking cases.” 

Another Weibo user, with an unprintable name, wrote, 

“315 International Consumer Rights Day might as well be renamed “315 Apology Day.” Afflicting customers who wait for 315 to solve their complaints only get perfunctory apologies…”

Rednet, a news outlet backed by Hunan provincial government, cautioned that:

In most cases, the exposure of product quality scandals only brings short-term attention, rather than solving the problems completely. After a short while, the same problems will revive and become even worse. Obviously, it’s impossible to eliminate all of the quality problems with one single show, which is held only once per year and could only cover a few cases.

Two major Chinese state banks in Beijing and Suzhou have started opening up e-CNY merchant and enterprise accounts for businesses, bank employees told TechNode. 

Why it matters: Chinese banks had only been known to set up personal e-CNY accounts for individuals. Merchant accounts are a step toward widespread retail use of the new currency. Enterprise accounts will significantly widen the scope of use cases to include larger business transactions.

READ MORE: UPDATED: We got some digital yuan!

Details: TechNode contacted two bank branches Wednesday. At the Bank of China in Beijing, staff said they are accepting applications for enterprise e-CNY accounts. Bank staff said that the bank had already started granting applications to businesses, but the accounts were not yet operational. 

• Enterprise accounts are normally used for financial operations like payroll and taxes rather than retail transactions, although the employee did not specify what the digital RMB accounts will be used for. 
• All domestically registered businesses are eligible to apply, the employee said. 
• China Construction Bank in Suzhou has started opening digital yuan accounts for local merchants, an employee told TechNode over the phone on Wednesday. These accounts are typically used for retail transactions with customers. 
• The Suzhou bank employee said that the accounts cannot currently be used for management operations like payroll and taxes, and did not say whether they will be in the future. 
• Digital RMB accounts are required to hold the new currency.

Context: Trials for the digital yuan have accelerated in the last few months, and China is likely to be the first major economy to issue a state-backed digital currency. 

• Closed-door pilots for the digital yuan began in April 2020 in four cities: Chengdu, Shenzhen, Suzhou, and Xiong’an. In November, Shenzhen held the first e-CNY lottery, which made the digital currency available to lucky members of the public. Suzhou and Chengdu followed with their own lotteries. 
• The digital RMB will soon get to step onto the international stage—China is working with Hong Kong, Thailand, and the United Arab Emirates to test cross-border transactions using state-backed digital currencies. 
• A Beijing-based enterprise blockchain announced plans earlier this month to integrate the digital yuan. 

READ MORE:  CHINA VOICES | DCEP class is in session, with Zhou Xiaochuan

Will blockchain-powered digital collectibles revolutionize the art world, or are they just another bubble waiting to burst? Collectors have dropped millions of dollars on crypto keepsakes, known as Non-Fungible Tokens (NFTs), in the last two weeks, and Chinese social media is buzzing.

As the novel assets start to sell for millions in the West in forms ranging from fine art to trading cards, Chinese tech and art influencers have been asking whether they’re a real investment, and what they mean for the art industry. So far, art and blockchain outlets have been mostly positive, while social media users have been more mixed.

As far as we can tell, China is not a big consumer of tokenized art yet, although there is no hard data on the regional spread of NFT transactions. A Chinese-developed chain Binance Smart Chain, is powering some NFTs, although most use Ethereum.

Welcome change

Many in the art world have rushed to welcome NFTs as a breath of fresh air in what they see as a dinosaur industry with a strict hierarchy.

Traditional art trading is a rather conservative industry. It is highly hierarchical, highly opaque, and often slow to accept new things. All attempts to challenge its structure are questioned for a long time.

Sonia Xie, Vogue China, March 11

Crypto collectibles could bring tech-savvy, or tech-hungry, millennials into auction houses.

The entry of NFT encrypted art works into the auction market marks a possible trend: that auctions need to attract a new generation of customers who are not in the field of traditional art collection.

Yu Yi Collection Auction Magazine, March 4

Or it could get really metaphysical.

Art investment will be able to transcend material forms.

Yu Yi Collection Auction Magazine

Power to the people

Others don’t see auction houses and collectors as the benefactors of tokenized art. Instead, they see technology fueling a revolution in art markets. This techno-optimistic argument is that NFTs will change the relationship between artists, sellers, and buyers, to the benefit of artists and small-time art investors.

It is not only a change in artistic form, but also a change in production relations.

Yuan Yan, Art Business, Feb. 25

Digital art creators will be able to wrangle some power over their works from the collectors by maintaining ultimate ownership of their own creations even after it is sold, the magazine wrote.

In the traditional art industry, after a buyer purchases a work, the buyer holds its ownership, exhibition rights, sales rights, and even copyright. […] Digital art collectors who own the NFT may only have the reputation rights and trading rights as the supporters of the artist, while other rights need to be determined by the artist, the collector, and the market.

Yuan Yan, Art Business

The most techno-utopian of the takes imagined a world in which NFTs provide financial tools that could allow artists to capitalize on their art in new ways, and the general public to invest in artwork as stocks.

In the traditional art market, artists usually only get a share when their works are sold for the first time. After that, the profits generated by each resale of their works all belong to the seller. In the field of encrypted art, artists can hold “shares” of works through customized smart contracts, and a portion of the premium generated by each exchange in the future will be distributed to artists in proportion.

Sonia Xie, Vogue China

Tulip mania?

But not everyone was into the hype, especially on Weibo. Some voices warned that NFT art might be the next bubble.

Often due to lack of artistic professionalism or financial risk management capabilities, it has become a fundraising test ground for speculators…

The value of NFTs is often more dependent on market behavior than the value of the underlying assets. […] When we look to the beautiful picture of a decentralized, free, and open encrypted art ecosystem, where everyone is an artist, and everyone can set a price for the art they like, please also remember that no matter what platform is used, the exposure of the work is also directly affected by the platform and its popularity, and people’s attention is often directly linked to the economic value of the work.

The Art Newspaper, March 4

A report by HashKey Capital, one of China’s biggest blockchain venture capital firms, said that art is the “most suitable application” of NFT technology, but that regulation is lagging.

NFT development is in the stage of unregulated “barbaric growth”. According to the characteristics of NFT non-homogeneous tokens against physical objects, criminals may use NFT to launder money and in criminal activities such as trading prohibited items. In addition, as the value of NFT assets continues to increase and the ecosystem gradually expands, it may become a new target for hackers.

Fan Xiaoqi, HashKey Capital Research, March 3

Weibo users saw the recent NFT headlines as a gimmick to inflate the value of the tokenized art.

“The burned Mona Lisa seems to be more valuable than the Mona Lisa,” said the top voted comment on a Weibo news post about the burning of the Banksy artwork, with over 18,000 likes.

“Isn’t it just hype? They do a gimmick so that they can sell at a high price,” said the second most-liked comment on the same post, with 4,000 likes .

“Burn the person and sell their photo,” said a popular comment on another post.

FOMO

Awareness of the risks didn’t stop some blockchain publications from offering NFT investment advice. One article said that eager investors don’t want to be left out of the next big crypto market.

The NFT market is gradually gaining traction, art creators are actively exploring the production of NFT works, and investors are looking for new investment opportunities because they feel FOMO (fear of missing out).

Li Xiaoping, 8BTC.com, March 8

Instead of worrying about fine art, the article recommends investing in crypto basketball trading cards in the virtual collectors game NBA Topshot.

The NFT product that the author invests the most is NBA Top Shot, which is a blockchain-based NBA digital collection card launched by DapperLabs in cooperation with the NBA. Most of the people who play the NBA TopShot card game are born in the 90s. They have a deep affection for basketball and the NBA in their student days.

Li Xiaoping, 8BTC.com

The author describes WeChat groups in which people are discussing how to best capitalize on the NFT hype, concluding that even if the market is a bubble, it is a good opportunity to make money.

Innovation and hype, value and bubbles, are never contradictory. NFT is on the ascent.

Li Xiaoping, 8BTC.com

If prices keep rising, Chinese investors are likely to jump on the bandwagon.

This article is not currently available as an NFT, but if you have a few million dollars lying around, make us an offer!

In Zhangjiagang, in eastern Jiangsu province, an often unsung profession is in high demand this Lunar New Year season; delivery drivers.

The city, home to one of the many ports along the Yangtze river, emerged from the pandemic’s first year mostly unscathed with few reported COVID-19 cases. 

But like the rest of China, following a resurgence of infections in January in several parts of the country, the city’s 1.2 million residents have been subject to economic and transport controls leading up to the year’s biggest holiday, designed to discourage travel.

While many residents, determined to reunite with family, have skipped town early in order to avoid being snared by transport restrictions, a large portion of China’s population has chosen to refrain from going home for the week-long holiday, which begins Feb. 11.

In a normal year, the holiday is a peak time for brick and mortar stores, as consumers rush to snag gifts after returning home. But this year, much of that demand is shifting online. E-commerce and logistics are left scrambling to retain a labor force.

What sounds like a golden opportunity for delivery workers who stayed on the job, however, may be playing out differently in practice.

New year’s surprise

It was 8:15 p.m. in Shanghai. Kuang was sitting on his electric scooter outside the Grand Gateway in Xujiahui, a commercial district in the city. He looked down at his phone. There was only one order in his Ele.me food delivery app. 

Compared with January, he said, orders have plummeted. 

For delivery drivers who did not go home, the volume of work has been a far cry from what they were promised by delivery platforms. With drivers paid per delivery, slow days mean little pay. 

In nearby Zhangjiagang, Wang, a manager of the downtown area of rival delivery platform Meituan, told TechNode that he expected a shortage of drivers during this Chinese New Year. Many had already gone home, he said, and wouldn’t be returning until after the week-long holiday, which falls between Feb. 11 and 17 this year.

After a resurgence of COVID-19 infections in parts of China in January, central and local authorities have called for people to “spend the holidays where you are.” People who travel home, especially to rural areas, face a variety of barriers ranging from mandatory quarantine to regular testing. Meanwhile, some urban companies are offering workers bonuses to stay on through the holiday.

The Spring Festival is China’s most important holiday, and in a normal year almost everyone would spend it with family. Transport authorities project the number of trips to be made during this period to drop from 3 billion in 2019 to 1.7 billion. 

Delivery drivers won’t stop during CNY

With many people choosing to spend their holidays away from their hometowns, Spring Festival shopping has posed a new challenge to delivery and logistics, which have become a part of China’s economic backbone. 

During the first wave of lockdowns in 2020, logistics companies were caught with only a holiday-period skeleton crew, struggling to get staff back to work while focusing on relief deliveries to the then-epicenter of Hubei province. 

Online retailers have witnessed an explosion in purchases during what is normally a slack season. Data from shopping platform JD.com shows a whopping 55% year-on-year increase in orders destined for other cities during the last 13 days prior to the Lunar New Year, while for its grocery spinoff JD Daojia, the volume was twice that of the comparable period last year. 

Even China’s own State Post Bureau marked a growth in online purchases in the period leading up to the festival, in contrast with previous years when orders experience a steep drop in the week prior to the holiday. Its numbers indicate the amount of parcels being sent nationwide increased 28.94% year-on-year between Jan. 20 and Feb. 3, although lockdowns had swept China by this time in 2020, creating what could be a low base for comparison.

Deliveries during the holiday season are normally handled by JD Logistics, SF Express, and the state-backed China Post, the few companies that accept orders in this period. Much of the industry, which employs fleets of delivery workers and machines outside the national holiday, cease operations during what is normally a seven-day break.

Nearly all delivery platforms announced they will continue to operate during the Spring Festival. 

“Last year the pandemic didn’t really break out until the holiday [was underway] and the stores were all closed already.” Wang said. “This year is different. As per state policy, many stores will stay open during the holiday so there will be more orders.” 

The government’s call to “spend the holidays where you are” will fuel growth in the delivery market during the Lunar New Year, said Zhao Guojun, director of the Post Development and Research Center of Beijing University of Post and Telecommunications.

Bidding war or nice little gesture?

More than previous years, delivery companies have raised their financial incentives from previous years in an attempt to attract couriers to work for their platforms during the holiday.

• Cainiao, the logistics arm of e-commerce giant Alibaba,, is earmarking RMB 200 million ($31 million) in financial incentives for delivery staff who work during the holiday.
• JD Logistics will increase its budget for frontline employees, such as couriers and warehouse staff, doing holiday overtime to RMB 200 million, doubling the RMB 100 million first announced in January.
• SF Express plans to distribute a total of more than RMB 620 million in additional pay and incentives during the holiday.
• Delivery drivers who work between Feb. 4 to 26 on Meituan were offered up to RMB 2,610 in bonuses, with requirements such as signing into the order app on a regular basis and fulfilling a certain number of orders.

But while platforms are touting bonuses, several delivery drivers who spoke to TechNode said they were uncertain how much extra cash they would actually make. 

Li, an Ele.me driver in Zhangjiagang, expects the bonuses to be offset by slow business. In normal times, he says, he can make up to 90 deliveries on a good day, but when asked if this was likely during the new year holiday, he said he couldn’t be sure. His normal pay is RMB 3 to 5 per order, rising to RMB 15 each after 20 orders have been fulfilled. 

“The number of orders will change every day during the holiday,” he said. “I’m not expecting to get too much money from the platform.”

Yet for many workers, it’s travel restrictions, not cash incentives, that are keeping them away from family, especially given that some already forewent reunions in 2020 due to an escalating epidemic.

Tang, a Meituan driver, told TechNode that he would be quarantined for an entire month in total if he went back to his hometown in Sichuan province then came back to Shanghai, the city where he works. 

Still, the bonuses were better than nothing.

“Most of my non-Shanghainese colleagues won’t go back to their hometown,” he said, checking his phone for incoming orders. “The pay isn’t a lot, but it’s handsome enough given the circumstances. I will go back home after the holiday, when quarantine policies are removed.”

Mimi Tao walked outside of her residential compound at seven in the morning as usual, but found that the driver had already dropped off the products at the front gate and left. After checking her order list and confirming all the products were accounted for, she hauled them all back to her garage and began the deliveries to residents on her list. There were cherries, apples, imported snacks, rice, and even handmade wontons from a local store in Suzhou. It usually takes Tao about two hours to complete the deliveries. 

Tao is the organizer of the group-buying platform Linxuanhaohuo for her residential development in Zhangjiagang, Suzhou in eastern Jiangsu province. She started the job in August 2018, after a friend’s recommendation. Tao works full time as an accountant as well. She says she usually spends four to five hours every day coordinating the orders and posting products on the WeChat group of 219 people she manages. 

“I am busier on Mondays, Wednesdays, and Fridays because I need to deliver products on these days,” Tao said (our translation). 

Tao is not the only person in the apartment complex who manages a community-buying group. She has a competitor in the compound—Maggie Xu, who works for another platform, the name of which roughly translates to Tongcheng Life. Xu’s group is double the size of Tao’s and the platform offers a wider variety of products. 

Group-buying platforms have their own mini programs on WeChat which customers use to place their orders. Each day, organizers post links in the chat group to products that are popular or are on sale. Xu usually starts putting product links in the group chat around 9 a.m. She first posts links for products on promotion, and then fruits. In the afternoon she posts links for snacks such as yogurt, sweets, and nuts, and then sometimes eggs. As Spring Festival approaches, gift boxes are also popular in the group. 

Resurgence of online fresh groceries

China’s grocery market is large—it is expected to be worth RMB 11 trillion ($1.8 trillion), the world’s largest, in 2023, according to research agency IGD. But it’s complicated—rather than a weekly trip to the supermarket, most Chinese consumers visit a variety of stores and marketplaces to stock their pantries.

Chinese companies from small to large have been trying to figure out how to sell groceries online for years. Venture capitalists fueled the craze by injecting hundreds of billions of yuan in the sector since its first boom around 2013.

The earliest attempts included asset-heavy approaches like Dingdong Maicai, which ran its own warehouses and logistics systems, and marketplace operators like Meituan and JD Daojia that offered delivery support for offline vendors.

However, within the broader online grocery category, selling fresh produce online has proven a hauntingly difficult task. Selling highly perishable goods with significant logistics requirements has driven more than a few fresh produce platforms out of business, from Amazon-backed Yummy77 to Xianpinhui. The most recent example is the collapse of Dailuobo, a grocery upstart that burned $92 billion in five months. 

China’s community-buying trend can be traced back to the early days on platforms like Meituan and Dianping, which offered Groupon-like deals. Community-based group-buying emerged around 2016 within chat groups on ubiquitous messaging app WeChat. The model gained momentum around 2018, especially in second-and lower-tier cities after WeChat launched its mini program ecosystem.

The Covid-19 outbreak changed Chinese consumers’ daily routine of shopping for fresh food and daily necessities offline. Although the behavioral shift boosted all businesses in the grocery delivery sector, community group-buying has taken off. One platform, Xingsheng Youxuan, has attracted investment from a number of tech giants, and was valued at $5 billion as of its latest round of funding led by Tencent. 

The group-buying model addresses the pain points of online grocery deliveries. Many group leaders themselves operate small mom-and-pop stores, which become informal hubs for such platforms. This saves on overhead costs such as running an offline storefront and expensive last-mile deliveries. Pre-ordering and overnight deliveries lower the attrition rate for fresh food compared with storing big piles of inventory at a nearby location to sell. Meanwhile, group leaders, motivated to acquire users through their own social networks for higher commission, help the platform save on user acquisition costs. 

The community group buy platforms are popular in second- and lower-tier cities in China, often outside of service areas for big-name online platforms such as Alibaba’s Freshippo. Some 85% of group leads for the community-based group-shopping model platforms are based in second-or lower-tier cities, according to a report (in Chinese) from Kaiyuan Securities.

Lower-tier cities and rural areas are also powering the next stage of overall e-commerce growth in China. Its shoppers are viewed as being more inclined toward social shopping experiences, given the quick rise of social e-commerce site Pinduoduo.

Bargain-hunting buyers

Unlike other sectors in China’s tech industry, there’s no big player monopolizing the community group-buy market. It’s more like a collection of stores, where customers place orders on different platforms according to what kind of products they want, such as fruit, seafood, or snacks. Some residents will buy eggs on one platform and cherries on another. 

For most of the buyers, finding a good deal is the main reason to join a community-buying group. Some residents in Zhangjiagang told TechNode that they have joined more than one group-buying platforms to compare prices. Customers aren’t loyal to a platform; what matters is the price of the product and how well the platform handles the order fulfillment.

Partially due to platform competition and partially because of consumer demand, group leaders have started to promote products from multiple platforms (in Chinese) within the WeChat groups they manage, and offline pickup centers serve several platforms.

Xu said her mother-in-law had used Duo Duo Maicai exactly twice to take advantage of the platform’s free gifts for new shoppers. Unlike many group-buying platforms that deliver products to customers’ front doors, Duo Duo Maicai opened offline stores outside of compounds for customers to pick up. 

“She hasn’t bought anything since then because there are fewer products on their platform and they don’t support home delivery service,” she said.

The community aspect

Discussions with neighbors who share the same interests is a reason for shoppers to stay active on one platform. 

Deng Chanling, a stay-at-home mom in Shanghai, became an organizer for group-buying startup MMchong after using the service for a year. When Deng moved to her new neighborhood in October 2019, the part-time job helped her to get to know her neighbors. She now knows most of her 200-member WeChat group from offline promotional events, she told TechNode.

The workload of less than 20 hours a week gives her a comfortable balance between a job and taking care of her son, who is in primary school. Deng earns around RMB 3,000 ($462) a month, and RMB 6,000 during peak holiday seasons, through the 10% commission she earns from her sales in exchange for promoting the products, using her space for product storage, and logistics services.

The income is far from sufficient to support a family in a metropolis like Shanghai, but good enough for the time and energy she invests daily, Deng said.

The company delivers the products to Deng’s home the morning after a group order is placed, every other weekday. “It usually takes me an hour or two to sort out the orders. My neighbors will drop by to pick up their orders in the afternoon.” she said. She only delivers the parcels to a doorstep if the order is higher than RMB 108. 

The part-seller, part-user role of the group leaders help the platform select what products to sell, a crucial factor in differentiating from rivals. MMchong constantly updates its product listings. Deng says she tests samples recommended by suppliers and gives her feedback as a user before the platform determines whether or not to sell it. 

Deng doesn’t rely on the job to make a living, but some co-workers do. There are group heads who earn monthly income of around RMB 15,000 by mobilizing the whole family. “In such cases, they are operating on a larger scale and can afford to rent their own pickup storefronts,” Deng said.

Scorching hot market

As the community group-buying sector grows in size, smaller group-buying platforms are feeling the pressure. Xu said the competitive market has affected her commission rate. When she first started in 2018, she would net around 10% to 11% commission on each product, but now she earns just 6% to 7%.

“Last year there were not so many group-buying platforms so we had a high commission rate,” she said. “Now, more platforms have joined and they give a lot of coupons and discounts to attract customers, so the platform ended up cutting our commission.”

At the onset of the group-buying war last year, tech giants that set their eyes on the model had been poaching staff from existing players like Xingsheng Youxuan and Nice Tuan by promising to double or triple their salaries for similar positions, according to local media. In one case, most of Xingsheng’s employees at a Wuhan delivery center jumped ship to Pinduoduo within two weeks, forcing the downtown center to suspend its business. 

Competition between platforms starts with suppliers, according to Deng, the MMchong group lead. “Our supplier for sweet corn, a top seller on our platform last year, says that they have already sold out this year’s harvest to higher bids,” she said.

A threat to offline markets, maybe

Experts expect group-buy platforms to eclipse grocery stores. “There’s no chance for supermarkets larger than 500 square meters to survive in the next year or two given the increasing adoption of community-based grocery e-commerce,” (our translation) Ye Guofu, founder and CEO of Chinese low-cost retailer and variety store chain Miniso, said in December.

Pinduoduo cited an estimate from Goldman Sachs: By 2025, nearly half of China’s grocery shopping will take place online, up from 20% currently, and reach about $1 trillion in sales.

For Xu, she hasn’t set foot in the neighborhood supermarket for a while. She believes group-buying will replace the offline supermarket one day.

“I can just order online and the products will appear at my door the next day,” she said. “The price is also cheaper, so why not?”

However, there is still a lot of uncertainty in the sector. 

The government summoned tech majors including Alibaba, JD.com, Meituan, Tencent, Pinduoduo, and Didi for a meeting in December. Regulators issued a list of restrictions on group-buying businesses, forbidding predatory pricing to beat out competition as well as falsely advertising discounted prices and posting misleading product information.

The move follows a few months after these companies pushed into the sector with rock-bottom prices for fresh groceries, charging RMB 0.99 (around $0.15) for a box of eggs and RMB 0.01 per 500 grams (around a pound) of cabbage. The state-run People’s Daily ran a commentary telling tech companies to focus on innovation for bigger benefits instead of “thinking about the traffic of a few bundles of cabbage and a few pounds of fruits.”

Using low prices to attract users is reminiscent of the subsidy wars seen in many industries, but particularly tech-related sectors, from ride-hailing to bike rentals. Such an early intervention from state regulators comes against the backdrop of intensifying tech regulation, but could also be a result of the importance of fresh produce and grocery, a sector considered too vital to the masses for hot money to mess up. 

Many people have relied on group-buying platforms for daily groceries, rivals to offline supermarkets that also stock standardized and durable goods such as packaged snacks and detergents.

But there are exceptions, including neighborhood wet markets that consumers in China still depend on for the day’s fresh vegetables. Freshness still outranks convenience for many shoppers, particularly older generations who would rather make the daily trip outside rather than risk allowing a platform employee select food for the family dinner.

Xu stopped posting links for vegetables to the group after many complaints about quality. Tao said one of the advantages of living in second- and third-tier cities is their proximity to the countryside, which means easy access to fresh vegetables and seafood. For Tao and her family, going to the wet market for vegetables is a deeply ingrained habit.

“Usually it’s my mother-in-law who buys the vegetables and she is more picky and wants to see them before buying them,” Tao said.

Walk into NIO’s joint-venture factory grounds in Hefei, capital of China’s eastern Anhui province, and you might mistake it for a sprawling tech campus rather than an auto manufacturing plant. The factory sits next to a cluster of elegant, low-slung glass buildings, surrounded by a large, well-kept lawn.

The campus has become somewhat of a local icon, attracting interest beyond its employees, partly due to NIO House, the company’s expansive, clubhouse-style retail space and gallery located next to the plant. As customers peruse vehicles in the space or wait for a latte in the showroom’s café, a crossover rolls off the production line every two minutes, with the assistance of more than 300 robots, from assembly lines to painting.

Two weeks ago, TechNode paid a visit to NIO’s Hefei plant to view the production process and understand how it works. The plant itself is a scene of bustling activity—giant robotic arms work on production lines to assemble vehicles, while human employees conduct inspections on the final assembly line. Each vehicle varies in model, color, and configuration.

“Sometimes, in a month, no two vehicles leaving the factory are exactly alike,” (our translation) a company spokesperson told TechNode reporters.

When the EV maker received earlier this year a $1 billion funding lifeline led by the Hefei government, the city—a lesser-known automaking hub known for churning out lower-end sedans and trucks—got a major boost in return. Hefei is readying itself to spearhead China’s goal of becoming the world’s leading EV producer and consumer market and NIO, its best-known EV firm, is poised to ride the wave.

Futuristic factory

Located minutes from the city’s downtown, the 16-acre joint plant is the size of nine football fields and employs more than 2,000 workers—mostly technicians from its partner, state-owned automaker JAC Motors, as well as several hundred NIO engineers. Much of the landscaping still looks new after three years of operation. The two companies reached an outsourcing agreement in mid-2016.

The factory is well-organized and spotlessly clean. TechNode saw high levels of automation throughout the factory, with robots of all shapes and sizes waving their arms in various workshops. NIO boasts that all major vehicle components are assembled in a completely automated process.

A seamless human-robot collaboration powers the highly flexible, mixed-model production process and a made-to-order car business that allows customers to configure their cars “in a free style.” NIO said there is more than 200,000 different configurations, around 3,000 of which most popular with its customers. “This [customization process] was highly demanding in terms of error proofing… but we finally did it,” (our translation) Victor Gu, general manager of NIO’s Hefei Advanced Manufacturing Center, told TechNode.

Manufacturing ramps up

After delivering a cumulative 70,000 EVs to customers, the company is preparing an expansion that will increase output by 50% in January, amid rising domestic demand for luxury EVs. “We’ve seen substantial order growth in the second half of this year, sometimes by 30% to 50% in just one month, which is far faster than conventional production acceleration. Normally you need at least two to three months to improve existing production equipment,” (our translation) Gu said.

The company is on track to reach in January a monthly production goal of 7,500 vehicles, Gu added, and has stepped up output by 50% to 30 SUVs per hour starting this month. The Hefei factory has production capacity to build 120,000 vehicles per year with two labor shifts, and is capable of a 25% expansion “without significant investment,” according to CEO William Li during an earnings call in August.

Meanwhile, Tesla has reportedly (in Chinese) planned to more than double the annual capacity of its Gigafactory Shanghai to 550,000 units in 2021. Another Chinese EV maker, Xpeng Motors built its second plant in the southern Chinese city of Guangzhou and will be able to produce 350,000 EVs by the end of 2022, according to a Chinese media report.

Carmakers are aggressively expanding production as Chinese EV sales accelerate, with strong momentum expected in the next few years. UBS analysts estimated in a Dec. 11 research note that Chinese EV sales will surge 55% to 1.6 million units next year and maintain double-digit annual growth to reach more than 5.5 million units in 2025.

EV push in Hefei

Analysts are echoing China’s grand ambitions to hold a commanding lead in the global EV market. In a finalized blueprint issued Nov. 2, the central government said that new energy vehicles (NEVs)—namely electric, plug-in hybrid, and hydrogen-powered vehicles—would account for 20% of total car sales in 2025. This is equivalent to 5.15 million units, according to last year’s sales figures, and Hefei is one of several municipalities which has committed to supporting this vision.

Auto production in Hefei accounted for around 3% of China’s auto sales last year. Now, the local government has set a 2025 output target of 1 million NEVs, according to a document released last month (in Chinese). The government has high hopes for local EV makers, which it expects to “gain influence in the global market.” Hefei is also planning to build a local supply chain with at least 10 “hidden champions“—relatively unknown but globally competitive companies, in segments such as battery, powertrain, and Lidar.

While not unattainable, such a goal will require a hard push, and the city is beginning within its own borders. In Hefei’s recent stimulus program, the city will exempt EV drivers from payment in public parking lots and allow them to travel in the city’s bus lanes during off-peak hours. The government is planning to electrify all public transit starting next year, while the taxi fleet will be 100% electrified by 2025.

Historically known for manufacturing display panels and electronics, Hefei is now considered one of the country’s emerging EV capitals, surrounded by major industry players such as Volkswagen and its two manufacturing partners. Moreover, the city has had its own EV darling, with its RMB 7 billion ($1 billion) investment in NIO in April.

Hefei is not the only city with EV aspirations. Guangzhou, capital of southern Guangdong province, in September promised to be listed among the three biggest EV manufacturing bases in the country by making at least 1.5 million NEVs in 2025. As one of China’s auto manufacturing hubs and a foothold for Japanese auto giants Toyota and Honda, the southern gateway city is determined to stay ahead, and recently doubled down on EV startup Xpeng.

More local governments are playing catchup. Xi’an, the capital of northwestern Shaanxi province last week said it will extend government subsidies and tax exemptions on EVs to the end of 2022. Meanwhile, in central China, buyers of fully electric cars in Wuhan have been eligible since May for an additional RMB 10,000 rebate on top of Beijing’s subsidies.

In mid-November, a video of a man wearing a helmet while visiting a real estate sales center in Jinan went viral on social media. The man claimed that he was trying to prevent the sales center from collecting his face image. It turned out that the video was staged, but it struck a nerve: China is worrying about face recognition. 

Face recognition technology was first commercialized in China in 2018. It is now used in stores for pay-by-face, in hotels and public transportation for identification checks, and even in schools for monitoring in-class behavior. In some places, face recognition is even mandatory or is the only way to enter a building. 

After the pandemic, the launch of the health code system has drawn more people’s attention to the impact of face recognition technology on daily life. Increasingly, mandatory face recognition is facing challenges, both from individuals and major media.. 

China’s first face recognition lawsuit

A lawsuit challenging mandatory face recognition in a park in Hangzhou recently ended in a small victory. 

On Oct. 17, 2019, Guo Bing, an associate law professor at Zhejiang University of Science and Technology, was planned to visit Hangzhou Safari Park when he received a text message. The park told him that its entry system had been upgraded to face recognition, and that all guests would  have to activate the system to enter. 

When Guo went to the park and saw staff using phones to scan people’s faces, he wanted to opt out—but the park refused to let him in, or give him his money back. After failed negotiation, Guo decided to sue the park for invasion of privacy and violating consumer rights and interests. 

After a year, on Nov. 20, 2020, the court in Hangzhou ruled in favor of Guo, finding that the park shouldn’t collect face and fingerprint data without customers’ consent. Guo got his money back for the ticket, and his ride to the park—RMB 1,038 (about $160).  The court also ordered the park to delete Guo’s personal information, including fingerprint and face data. However, the court rejected Guo’s other claims, saying that the park’s use of fingerprint and face recognition didn’t violate regulations and laws. 

Guo, arguing that the park should not be allowed to require visitors to use face recognition, is still appealing. 

Guo’s case has been widely discussed on social media, with comments breaking one-sidedly in his favor. Many people raised concern about the abuse application of face recognition technology. In response to news about Guo’s lawsuit, one Weibo commentator wrote: “My residential area requires us to enter with face recognition. It looks fancy and high-tech, but who knows when the property company will collect our face data and where they sell them to?” 

The law professor who won

Renwu, a Chinese magazine that specializes in profiles recently published a story about a Beijing law professor’s battle with her residential compound over face recognition technology. Readers may remember Renwu as the same publication that sparked outrage in September with an exposé on algorithms forcing delivery drivers to drive dangerously.

Trapped by face recognition

Renwu

Dec. 15, 2020

In March of this year, Lao Dongyan discovered posters in the elevators of each unit in her residential compound requesting every resident to download an app and submit face data for entry system upgrade. Lao is a law professor at Tsinghua University. She has discovered that face recognition has been used in more and more scenarios-subway entrances for security checks, AI face-changing games on phones, and even the vending machines that sell coffee at her law school building require face payment. 

Lao knows the hidden threats of this technology. She did research and posted about them on a WeChat group of more than 200 people. A resident who was concerned about the matter invited her into another group chat of nearly 500 residents. There, what Lao posted gained more responses, and many residents joined her in expressing their concerns about the technology. Previously, the main dissatisfaction these residents had was: “Why do you want to collect information about my real estate certificate?”

On March 15, Lao wrote a detailed legal opinion, arguing that the compound’s behavior violated the current legal framework. She sent it to her property management department and neighborhood committee. 

One evening a few days later, the director of the neighborhood office called her and invited her to a discussion meeting together with staff from the property management department and neighborhood committee. Lao saw that they were mostly concerned about legal risks. When she told them that giving residents notice doesn’t mean they have consented, and acquiring data without consent is defined as illegal acquisition in criminal law, they asked how to avoid such risks.

Lao is most worried about data risk. She can’t imagine what motivation does the property management department have to maintain and protect the face data. She asked: “Who keeps the data and how to protect it?”

They gave Lao three options: store the data onat the local area network (LAN) of the property management company; hand it over to the convenience service center [ed: a local government office]; or give it to the police. At that time, many residents had already submitted their face data, and there was no conclusion as to how the data should be stored. The options they suggested also reflect the current status of domestic personal information protection: there is no real boundary between public and commercial organizations in the use and management of data. These aggravated Lao‘s concerns.

At the end of the discussion, the street office proposed three alternatives: residents who do not want to submit their face data can also use the key card, ID registration or mobile phone app to enter the compound.

When Lao shared her experience at a panel discussion about whether the residential compound should use the face recognition system, a guest praised her for fighting for her own rights. Lao said she just had to put up a fight.

Lao argued that the current capacity to manage risk is not up to the challenge of rapid technological iteration and commercialization. 

“The characteristic of the Internet era is that the problem will not appear in the place with the highest security level, but the place with the lowest level of security and the worst security capabilities,” Lao said.

More regulations issued

In response to the abuse of face recognition technology, many cities have issued policies to control it. In October, a draft amendment to Hangzhou’s property management regulations stipulates that property service providers should not force property owners to use shared facilities through biometric information such as fingerprints and face recognition. In late November, real estate sales centers in Nanjing were ordered to remove face recognition systems, in the first action of its kind in China. At the same time, some local governments began to protect face information with legislation. Tianjin announced regulations on Dec. 1, prohibiting local enterprises and public institutions, industry associations and chambers of commerce from collecting face, fingerprint, voice, and other biometric information starting Jan. 1, 2021. 

State media outlets have also issued warnings about the misuse of face recognition technologies. CCTV, China’s national tv broadcaster, has aired three shows related to personal information protection. And Party journal Banyuetan, also known as China Commentpublished an article criticizing the abuse of face recognition technology,

Face recognition is becoming rampant, and it’s time to rein it in 

Banyuetan

Nov. 27, 2020

The abuse of face recognition technology is causing a loss of control over personal information collection. Despite the weak public awareness of personal information protection, many organizations blindly pursue face recognition identity authentication regardless of whether they are legitimate or necessary is also an important reason. In addition, data companies continue to promote face collection technologies to expand their business and increase profitability, which also lays hidden dangers for face information security. 

The development and application of technologies needs to be synchronized with relevant laws. It is necessary for laws to set boundaries.

China has probably got more face recognition than anywhere else in the world—but its love affair with the technology is getting complicated.

Lucky winners of Suzhou’s digital yuan lottery can spend their digital currency on JD.com, Meituan, Bilibili, and Didi, depending on their bank card, a look at the wallet app reveals. TechNode has seen the app in action through screen recordings sent by a user in Suzhou.

TechNode is the first English language outlet to see the digital yuan wallet in action during the Suzhou trial.

The trials are still limited: The winners received only RMB 200—about $30, enough to buy 10 coffees at Luckin or five at Starbucks. There’s no way to load more money on the digital yuan wallet. Users only have access to a few online shopping platforms, with the exact options depending on which bank card they used to register with the app. They can also spend the currency in some offline stores in the city.

The digital yuan also knows a trick that cash doesn’t: It has to be used by Dec. 27 otherwise, it pulls a disappearing act. Poof. It’s gone.

Why it matters: This is the first time consumers can use the digital currency to pay directly on e-commerce apps in the digital yuan’s public trials.

• The Suzhou lottery is only the second time the digital currency has been made available to the public. Another lottery took place in Shenzhen in October.

Connected to bank cards: Users are asked to link their bank cards to the digital wallet to get the digital currency. Only cards from China’s big five banks are eligible: Bank of China (BOC), Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), China Construction Bank (CCB), and Postal Savings Bank.

• The local government said users don’t have to register a bank card to use the digital wallet. If they do register a bank card, it has to be one of the five.

Where to spend it: All bank cards can connect to e-commerce platform JD.com, where users can spend their money. ICBC cards also connect to ride-hailing platform Didi and lifestyle app Meituan. BOC cardholders can connect to streaming platform Bilibili, and users of CCB cards can use the digital yuan on own CCB’s e-commerce platform.

• The city said it will enable nearly 10,000 offline merchants to accept the digital yuan. A list can be queried through the city’s app.
• The app has a button to pay Communist Party dues. But when TechNode tried, the app said that it was not available for the user’s Party branch.

No withdrawals: The digital currency cannot be transferred to other users’ digital wallets. It also cannot be converted to ordinary RMB in the bank account of the owner. If users wind up returning goods they buy with the digital currency, the Suzhou government said, they will be refunded only for regular currency used in the purchase.

Context: In a lottery (in Chinese) announced on Dec. 4, Suzhou distributed RMB 200 million ($30.6 million) of the digital yuan to 100,000 people in digital red envelopes of RMB 200. Only residents of the city who have paid monthly social security at least once in the last three years are eligible to participate in the lottery.

• The results of the lottery were announced today, and winners can spend their winning from 8 p.m. on Dec. 11 to Dec. 27. They money will be taken back from the account if it is not spent within this time window. The Suzhou government said the unspent red envelopes will be “recycled,” but did not clarify how.
• Prior to the Suzhou and Shenzhen lotteries, only a few whitelisted individuals were taking part in the digital currency trials.

READ MORE: INSIGHTS | China’s digital currency has a long way to go

Chinese electric vehicle makers looking to expand to markets in Europe need a localization strategy for the culturally diverse region, although adapting to the various demands of each country could put a strain on their finances, according to an industry expert.

“Europe, like Southeast Asia, is very diverse, and therefore a marketing strategy in Germany might not work in France and Italy. The complexity ramps up significantly for EV makers and that could be a drain on their capital,” said Tu T. Le, founder and managing director of business intelligence firm Sino Auto Insights, on Oct. 29 during the TechNode Emerge 2020 conference.

Chinese carmakers have long sought to expand overseas amid Beijing’s ambition to build a world-class auto industry, and the aspiration has now been passed to young EV makers.

Nio is stepping up its global expansion with plans to begin selling in some European countries in the second half of 2021, according to a Reuters report. A Chinese media outlet reported last week that it aims to open its first overseas showroom in Copenhagen, Denmark and sell 7,000 SUVs within the next two years. Nio declined to comment when contacted by TechNode on Thursday.

Meanwhile, Alibaba-backed Xpeng Motors beat its rivals to the punch with a late-September shipment of 100 crossovers to Norway which were scheduled for delivery in partnership with a local dealer starting this month. 

With deliveries of several thousand units per month, Chinese EV makers have yet to carve out a prominent position among traditional automaker giants in their home markets. Flush from US market listings and investments from local Chinese governments, the companies are looking to establish footholds in Europe, a market where even Tesla has faced tough competition.

The California-based carmaker is losing ground with its EV market share falling sharply to 13.5% in Western Europe in the third quarter from 33.8% in the same period a year ago, industry analyst Matthias Schmidt said in a report earlier this week. Meanwhile, local giants Renault and Volkswagen, the two largest EV makers in the region, grabbed market share from Tesla in the first three quarters of the year.

While investor sentiment sends Chinese EV stocks higher, the companies have a long road ahead to succeed in such a market. In an interview in June, Nio president Qin Lihong acknowledged the barrier for entry to Europe is high and its current approach to build a sales network in China may not apply in the West.

“Chinese EV makers really need to focus on individual European countries as opposed to looking at Europe as one big market. Moving forward, what they do with new funding and where they invest could be an important indicator of how successful they’re going to be,” Le said.

From app bans in the US and India to the Chinese government’s increased push for self-reliance in cutting-edge technologies, 2020 has been a rollercoaster year for China tech. How has China’s VC industry been faring? Last week, TechNode held its Emerge 2020 conference in Shanghai. On the sidelines of the event, we chatted with William Bao Bean, an experienced venture capital investor who has been active in China since 2007.

Bean is a general partner at investment firm SOSV. SOSV runs Chinaccelerator, a startup accelerator based in Shanghai.

We took the opportunity for an interview. We’ve printed it in full below, edited for brevity and clarity.

TechNode: What are the new trends that you see in China’s VC market this year?

William Bao Bean: There are two major trends. First is enterprise B2B (business to business), where AI is becoming more important. Traditionally, large Chinese companies did not want to pay for their software, but now, one of the biggest applications of AI is personalization. For example, it can be used to tailor the messaging and advertising you see on an e-commerce site to each consumer’s preference. It’s very difficult for startups and other companies to build their own AI systems, because AI scientists are quite expensive to hire, and the big guys like Alibaba, Tencent, and Baidu basically hired most of the experts. So there’s actual demand for AI services from companies who want to remain competitive. Since the only way to remain competitive is personalization, companies are willing to actually pay to bring in AI solutions. 

Second, there’s a huge amount of investment happening around government policy. The Chinese government is really supporting investments in semiconductors, telecoms equipment, and a lot of hardcore traditional technology. Previously, you saw Chinese companies developing their own solutions. But because of the US-China tech decoupling and the difficulty in sourcing international semiconductors, telecoms equipment, and even manufacturing equipment, you’re seeing massive investment in these areas in China. It is a huge opportunity for local companies, and a very big opportunity for Chinese investors. 

TN: Do you think putting in more money will help China catch up with the world’s leading players in semiconductors?

WBB: China’s semiconductor industry is behind. But when you dump money on a problem, generally, you get a solution faster. I still think China is still four to seven years behind, but a huge amount of capital is flowing into the industry, so I think you will see the technology innovation gap narrowing. Often in China, when you have big government backing, there’s a huge amount of opportunity in that space—we’re seeing a huge amount of activity there. 

TN: What are the impacts of recent US-China tensions? Are China-based VC firms having a hard time raising money from the US?

WBB: Not so far. In China, VC firms have raised a lot of money from US investors. Now, we don’t know whether future funds will have difficulty raising money from those same limited partners (LPs). A friend of mine just closed a new $200 million fund from big traditional US LPs, and he is focused just on deep tech in China. He successfully closed last month in the middle of the Covid-19 pandemic. So far, the early data that we see is that it’s not having an impact. Investors are after returns, they don’t care about politics.

TN: We have seen many Chinese tech companies delist from US stock exchanges and more companies choosing to dual-list their shares in Hong Kong this year. What do you think these trends mean to tech investment in China?

WBB: 2020 has been a record year for Chinese companies listing in the US. When startups are getting bigger, they go where the capital is. It’s still the case that the US is where the higher valuations and the big capital willing to invest in technology can be found. 

In China, tech companies that list face a lot of restrictions. For example, they generally need to be profitable. Most technology companies are not profitable for three years —they grow fast and they’re investing money in the future. The restrictions on listing also make it very difficult for Chinese companies to tap global capital markets, so they choose to go abroad. The second thing is that the international appetite for technology investments is much higher than in China. In China, you have a huge interest in consumer-facing companies, but not so much interest in hardcore technology. And so those two issues combine to drive continued interest in an overseas listing. 

TN: Shanghai’s STAR Market doesn’t require companies to be profitable to list. How do you think this change in listing rules has impacted investment in China? Do you see increasing competition from RMB funds against US funds?

WBB: Startups just go where the capital goes. Many US dollar funds also have RMB funds. If you’re doing something on the consumer side, RMB funds make sense. RMB investors like investing in Chinese consumer-facing players—products that they can see and feel. For some companies that are not profitable, or require huge amounts of money, and have historically raised US dollars, they have to go the international path. Sometimes you move the company from offshore to onshore, or from offshore to onshore based on where the money is. It’s just a pure market effect. One is not competing against the other. It’s just what makes sense for the company to get the best value to be able to raise the money and then to exit.

Big deals

One of the biggest investments in China’s tech sector in the third quarter went to Yuanfudao, an online education firm. On Oct. 21, the company raised $1.2 billion from investors including DST Global, CITIC PE, and Temasek, valuing it at $15.5 billion.

Ted Mo Chen, a Beijing-based edtech entrepreneur, wrote in a column published on TechNode last month that the Covid-19 pandemic ignited a “unicorns take all” game in China’s online education market—and edtech startups have attracted big checks from investors.

Here are some of the biggest deals in China tech in the third quarter.

• July 23: Meiri Youxian, a grocery delivery startup, raised $495 million from investors including CICC Capital and Tencent, valuing the company at $5 billion.
• Aug. 5: Yipin Shengxian, a grocery delivery company, raised RMB 2.5 billion ($374 million) from Tencent and Capital Today with a valuation of RMB 15 billion.
• Aug. 18: JD Health, the healthcare unit of e-commerce giant JD.com, raised $830 million from Hillhouse Capital with a valuation of $30 billion. 
• Sept. 22: Electric vehicle maker VM Motor raised a RMB 10 billion (around $1.5 billion) Series D from investors including state-backed SAIC Capital, Baidu, and SIG China, hitting a valuation of RMB 35 billion.
• Oct. 21: Edtech company Yuanfudao raised $1.2 billion from investors including DST Global, CITIC PE, and Temasek, valuing it at $15.5 billion.

The term “plant-based meat” became a buzz word in China with the entry of Beyond Meat and Impossible Foods to the market. Plant-based proteins are not a new thing in Asia, but with new technology behind the trend, China is taking a fresh interest in the food industry. Venture capital investors are also assessing potential in foodtech.

More than 80% of investment in the sector has been downstream from foodtech, such as e-commerce, delivery, and brands, said Dee Zheng, principal at Bits x Bites, during a discussion at TechNode’s Emerge 2020 conference. However, she said that the trend will shift upwards to upstream segments to secure the food itself. 

E-commerce and food delivery addressed the problem of convenience, but doesn’t really change the food quality, Zheng said. Platforms have to go upstream to support farmland with technological improvements for environmental sustainability. Additionally, there will be a huge opportunity for alternative proteins because of Covid-19, which threatened the animal protein supply chain, according to Zheng.

A dynamic market 

Rich cultures and vast territory has made China a country with diverse food choices. Therefore, the constant exchange of demographics has created a relatively dynamic market in China, said Samuel Li, manager of projects and operations at Analytical Flavor System. There have been some successful cases of a new food or flavor from overseas that were welcomed among the younger generation in China. However, whether all new foods and flavors brought to the Chinese market will be fully successful is debatable, Li said.

“We have been seeing a lot of products that are doing well in overseas markets, but they didn’t translate their success into the Chinese market. There is a gap of perception between the Chinese consumer and consumers from other markets. This gap of perception will eventually crystallize into a gap of preferences to what specific flavors or combinations of different flavors they will choose,” Li said during the discussion.

Plant-based protein maker Just Egg has conducted a lot of research and customized recipes to fit Chinese consumers’ eating habits, according to Gary Zhang, head of its regional marketing. Some 90% of shoppers who buy its products are flexitarians, who opt for plant-based products from time to time for sustainability and health reasons. He said the awareness of plant-based dining among the Chinese consumers is growing very quickly. 

“We can see that more and more young groups and post-90s are embracing this kind of plant-based dining very actively,” he said.

Foodtech for the future

There’s a problem of waste in the food industry in terms of innovation, according to Zheng. Ninety percent of new products launched onto the market will not end up in the field. However, with the introduction of digitization and data generation, customers’ perception and preferences can be detected in advance. 

“Traditionally, you announce a color or flavor of the year, but it’s more based on the market research on existing products,” Zheng said. “Now they can have the potential to do non-existing predictions based on very scattered information and try to have the conclusion, which is quite amazing.”

The technology in the food industry is evolving, according to Zhang, and the government should also catch up with the pace of the market in terms of drafting regulations related to emerging food products such as plant-based meat.

“I think this poses a very imminent and long-term challenge to the administrators,” he said. “Sometimes they even need to deregulate some things to remove the burden and let the industry move forward.”

The Covid-19 pandemic has brought users and funding opportunities to healthtech startu­ps, but the industry is shifting away from B2C models due to high user acquisition costs, according to an early-stage investor speaking at TechNode’s Emerge 2020 conference on Thursday.

Many B2C healthtech startups, like Ping An Good Doctor, have followed a model popularized by China’s e-commerce platforms: They don’t care how much capital they spend on user acquisition, thinking that eventually it will pay off, said Linda Li, managing director and co-founding partner of investment firm Vickers Venture Partners.

Some startups have chosen B2B models, which Li said will win out for three reasons: Firstly, “They are more capital efficient.” Secondly, once you convince doctors to use your platforms, patients will follow doctors’ orders, she said.

Li also thinks that the B2B model will help democratize healthcare. The success of B2B models will lead to the development of infrastructure, especially that which creates information transparency. This infrastructure will serve as the base for democratized, patient-centric healthcare.

Mark Zhang, partner at law firm King & Wood Mallesons, said during the discussion that a major inflection point for China’s healthtech boom came two years ago in the form of comprehensive regulation.

“Before 2018, there was no nationwide framework to regulate online healthcare,” even though the industry had been growing for 10 years, he said. Platforms couldn’t really go into healthcare so the industry was focused on tasks like making appointments with hospitals. “The law was against anyone providing healthcare solutions online,” even though “everybody knew that the major platforms were playing around in that area,” he said.

Starting in 2018, three pieces of regulation cleared the way for healthtech innovation, Zhang said. The first allowed hospitals to use online platforms to collaborate; one hospital can assist another hospital’s activities. This could “solve the imbalances of resources across regions,” he explained. A second regulation allowed offline hospitals to provide online solutions, using their own physicians and nurses.

The most exciting piece of regulation opened the door to companies to enter the healthtech space, Zhang said. Under this law, any company can set up an “internet hospital” so long as it works with an offline hospital. “This internet hospital can draw doctors and nurses from various hospitals to practice on this platform,” he said.

In 2020, Covid-19 drew a lot of patients to online consultation services. In February, many patients didn’t feel that hospitals were safe. Even in late March to early April, when the Covid-19 outbreak was under control in China, “it was still very troublesome to go to the hospitals as they had to face more complicated procedures” because of the pandemic, Li said.

Some hospitals saw their business drop by 70%, then losses were gradually reduced to 50%, she said. But some hospitals say their business is still down about 30%, Li said.

“If people are not going to hospitals, they must go somewhere. This somewhere is online,” she said. With the support of China’s advanced delivery and logistics infrastructure, online prescription services have boomed along with online consultations, she said.

Following this surge in user growth was a jump in revenue, and funding for startups is now triple the average size compared to three to four years ago, Li said.

Better funding has helped startups make their case to hospitals, she said. Credibility and trust are very important to Chinese hospitals, who “don’t want to talk to small startups. If capital is really pushing some companies to be leaders, that solves some of these problems,” Li said.

At the same time, regulators are cautious: They “want to make sure the door is opened slowly and gradually,” and different cities are experimenting with different regulations, according to Zhang. Regulators are trying to find the right balance between growing the sector and protecting consumers.

Cybersecurity and privacy have emerged as key areas of compliance risk for healthtech companies. Many companies in healthcare, especially pharmaceutical, are attracted to China because of its immense data resources, Zhang said.

But multiple layers of new laws regulate data security and privacy, from data collection to storage and handling. Patient records, population data, personal information, and genetic data come with different compliance requirements, making data processing a tricky business, Zhang said. These days, “Data as a resource is very attractive but you have to be careful.”

Li agreed:“The data actually belongs to the hospital,” so a startup that wants to provide services must set up a server in the hospital instead of using servers or external servers.

READ MORE: INSIGHTS | High tide for healthcare apps?

In China’s tech context, livestreams are inextricably linked with e-commerce. Its sales-boosting effect is enticing more brands to integrate livestreams into their digital marketing and brand communication strategies in order to deliver compelling content for a strong brand connection, according to experts at TechNode’s Emerge 2020 conference held in Shanghai on Thursday.

Livestream-driven sales, though still important, is no longer the sole metric used to gauge its value. It is increasingly becoming a branding and marketing tactic that allows brands on various e-commerce platforms to show their products, build consumer rapport, and influence purchasing decisions. Tmall has integrated livestream replays to its product pages, for example, and Chinese millennial brand Shein launched a virtual livestream festival.

More livestream applications

Applications for livestream are various and it is a matter of what merchants or brands want to achieve by leveraging the format, Pablo Mauron, partner and managing director of Digital Luxury Group (DLG), said during the panel discussion. He cited a recent example from Louis Vuitton which staged and streamed its Spring/Summer 2021 Show in Shanghai as a typical non-sales-driven approach for livestreaming.

Michael Norris, research and strategy manager of Agency China, agreed. “Larger brands, such as SK-II and Aptamil, use elaborate branded sets to broadcast their livestreams. These broadcast studios become the home of product information, Q&A with the audience, celebrity cameos, as well as special offers and promotions.”

With this shift, Mauron said that companies should adjust their strategies accordingly. “Strategy around [livestreaming] is not the same as… a sales associate that is going to stream to a closed audience of existing clients to generate impulse buying and selling them new products,” he said.

However, changing the consumer’s perception of livestream could take time, because “the industry matures with other channels developing specific approaches… Also it requires brands and marketers in general to build the right understanding and framework around it, and to tackle it the right way,” Mauron explained.

Brands—particularly luxury brands once considered conservative in adopting new marketing strategies—are signaling they are ready to relinquish total control. “Livestreaming is a perfect example where it is going to be hosted by someone that is different from [the brand], that the codes according to which that performance that is going to be delivered is going to be different from what a brand would stage,” Mauron said.

What makes a great livestreamer

The livestream e-commerce boom has catapulted livestreamers to the center of the spotlight.

Speaking from her own experience, Maggie Fu, an internet influencer and co-founder of social media brand Melilim Fu, said livestreaming allows users to get a sense of being close to hosts. “People can see what you are doing, feel your personality through real-time interactions.”

Fu said that the key is to actually understand what the consumers want, rather than forcing consumers to buy. The entertainment aspect of watching the livestream and nice discounts are also crucial factors to attract eyeballs.

For Mauron, livestreamers’ success also depends on the ability to generate an element of credibility. “One of the key recipes of successful livestreaming if you talk about sales-driven livestreaming, is the fact that that raw format delivers something that somehow appears as more trustworthy than highly staged and polished and somehow artificial communication.”

Top livestream hosts like Viya and “Lipstick King” Li Jiaqi have become known worldwide. But they have not appeared out of nowhere. “They actually gone through many business cycles with ups and downs from a long time ago,” helping them to build their personality, and therefore strong connections with the users, Fu said.

Give a man a fish and you feed him for a day. Give a tech reporter a smart guitar and one hour, and she will learn how to play “Where’s Dad?” If you don’t know this song, don’t worry, neither did we. 

That sums up our test session with the Poputar, a smart guitar made by Chinese company Beijing Shigan Technology Company, also known as Popumusic. Its first product, a smart ukulele, was “an epic momentum of consumer technology,” the company claims. Popumusic has sold 400,000 units of its two smart instruments worldwide since the 2016 launch of the Populele smart ukelele. The company is currently doing crowdfunding on Indiegogo as a way to promote this guitar on the western market for the first time. Production and shipping will start in December this year. 

The Poputar is a lightweight acoustic guitar with LED lights embedded in its neck. The instrument syncs with an app made by the same company that registers what you are doing on the guitar and gives you feedback as you play, much like karaoke games on a Playstation. The neck-lights indicate where you should place your fingers to play chords. 

The app includes bite-sized video courses that take you from the basics, including how to hold the guitar and pluck the strings, all the way to mastering popular songs like “Let it Be” by the Beatles and Billie Eilish’s “Bad Guy.”

The Poputar promises to teach you to “play a song in five minutes.” Unsurprisingly, this is not what happened when we tried it.

The app was not loading properly when we tested it, so we wasted a lot of time waiting for the video courses to load. A Popumusic spokesperson later told us that this was a VPN-related issue. 

The Poputar didn’t live up to the five-minute promise, but it was an enjoyable experience, and I felt like I learned something. Hey, I got a 79% on “Where’s Dad?” so I must have inched closer to becoming a guitar virtuoso. 

It is definitely worth a try if you are a complete novice and want to master the basics, or if you just want to learn how to play “Wonderwall” by Oasis. If you want to get Carlos Santana’s level, you need to hire a teacher somewhere down the line.

READ MORE: TechNode blind tasting: plant-based meat

Since Beyond Meat launched in China, plant-based meat has been all the rage—at least in news headlines. Rarely do the marketing-savvy earth warriors ask, does China really want new age plant-based meat?

Dozens of companies are betting that it does, including Yum China, the company behind KFC, Taco Bell and Pizza Hut. In July, we visited the fast food chains to try Beyond Meat’s plant-based meat alternative. It exceeded my carnivorous expectations.

READ MORE: We tried Beyond Meat in China. Did anyone else?

I was especially impressed by Taco Bell’s vegan taco. The vegan beef was really juicy and blended well with the sauce. KFC’s vegan burger was good for the first few bites, but the portion was too big for me, and I felt my stomach fill with fast food grease as I ate more. Let’s not talk about my Pizza Hut experience…

All these foreign brands entering the Chinese market with armies of branding and marketing specialists are facing competition from local startups—and a centuries-old industry of Buddhist vegetarian meat.

With China’s market heating up, we thought it’s time to do a taste test on some of the local veggie meat brands. A lot of the hype around plant-based dishes on the Chinese market has revolved around western food, but we wanted to see how they’d perform with Chinese basics.

We picked dumplings—if plant-based pork is going to catch on in Chinese kitchens, stomachs, and hearts, it has to work with dumplings. They are usually made with pork, which is China’s favorite meat.

To ensure our taste test adhered to the highest standards of justice and fairness, we would not reveal to our tasters which dumpling was made with which plant-based meat until after they had given us their feedback. In other words, the phyto-beasts were subjected to a blind test.

The dough-wrapped pockets of delicious Chinese cooking have the added benefit of hiding what’s inside, sparing us the cost of blind folds.

The contenders:

• Omni Pork, a company based in Hong Kong
• Z-Rou, a Shanghai-based startup
• Traditional Buddhist veggie meat maker Gongdelin, established in 1992.
• Pig-based pork, for the meat-eaters.

We invited two vegetarians and two meat eaters to try our dumplings. Check out the video to see their verdict.

The three of us could barely finish a small pot—but Mini ordered a large one, enough for four people. Then she ordered five more. After ordering, she sat at a big table, waiting for her food as her camera crew set up the equipment. 

It was already 1:30 pm and the restaurant was almost empty. The usual clanking of cutlery had given way to the sound of a portable video studio being set up; a crew of young people chattering and giggling. Usually, Mini and her team shoot at off-peak hours to avoid interrupting customers, and vice versa. That day’s set was a famous luzhu (pork intestine) restaurant in the outskirts of Beijing, which Mini loves.

Mini is a cute girl with a cheerful personality: She smiles at the end of every sentence and generously hands out childlike laughs to everyone she talks to. She maintains this adorable quality as she devours mountains of food—something most “cute” girls don’t do on a daily basis. 

But Mini is not like most girls. She is a uniquely successful professional livestreamer with over 10 million followers on Weibo. Being adorable whilst demolishing massive quantities of food are key parts of her job description as a mukbanger; a livestreamer who binge eats. 

Two weeks before Singles Day, China’s biggest shopping festival, we spent a week chasing Mini around Beijing but barely managed to gain access to her. Mini’s schedule was packed with all kinds of promotional video shoots and Taobao Live broadcasts.

We ended up filming one of her shoots at the luzhu restaurant. Her camera crew had two cigarette breaks during the shoot. She had to reheat her food twice. Mini said she didn’t mind at all.

After watching the marathon meal in amazement, we finally heard: “Today’s last bite! Thanks for everyone’s company, follow me if you like me, bye-bye.” 

Six dishes lay empty in front of her. 

Before meeting her, I watched many of her videos. They are fun to watch: She visits different restaurants and tries all kinds of dishes. 

Seeing her eat in person was an entirely different experience. One of her 10-minute videos is just right to satisfy my appetite for food. Seeing her eat for nearly three hours is downright overwhelming. 

‘Lamb mountain‘

Mini is one of thousands of online celebrities who specialize in the online video trend known as mukbang. It’s a genre that combines a simulated dinner with friends with the shock appeal of competitive eating. 

Like many trends, it started in Korea—the word is a portmanteau of the Korean for “eating” and “broadcasting.” There, this genre of livestreaming became popular very quickly because it challenges traditional food culture, where dining is constricted by strict etiquette. 

Mini was one of the first people in China to try mukbang. After winning first place in 2016 in an eating competition, she was signed as a full-time mukbanger by an agency which manages social media influencers, known as key opinion leaders (KOLs) in China. 

“I saw many competitive eaters in Japan and Korea and I thought: ‘This is so cool’,” Mini said. “I thought I could do the same because I can also eat a lot, just like them.”

Her first viral success was a video of her eating an entire roast lamb in 2017. She still remembers how nervous she was when filming it. “I was eating with my right hand and my other hand was shaking off the camera. But I focused more as I ate more,” she said. 

Before that video, she used a smartphone for her livestreams. But her team wanted to do a professional short video to promote Mini’s conquest of the “lamb mountain,” as she called it, on social media platforms. They upgraded their gear in preparation.

More than a big stomach

Add the magic of a KOL agency onto a big appetite—especially on a small, “cute” person—and you have the makings of a star.

Much like the success of her lamb mountain video, her rise has been far from coincidental. It is the result of serious investment and careful planning.

We saw it first hand. Every detail of her livestream is planned meticulously: from her clothes, to her makeup, to the placement of the dishes. Her filming crew is made up of three people, fully armed with cameras, microphones, and lights.

Kingkong Culture, the multi-channel network (MCN) company that signed her, knows how to pick mukbangers with the potential to go viral, and how to get them there. 

To reach Mini’s success, a mukbang host needs more than a big stomach and a professional crew. The genre is about bringing a sense of companionship and joy to the audience. Mini told us that the most important thing is to present the food to everyone and “share the joy together.”

Most mukbang livestreams last over an hour. Throughout the meal, the host interacts with the audience, replies to their comments, and creates a warm atmosphere akin to a friend’s dinner party.

Mukbang’s popularity relies on a deeper social reality in modern urban China: Many people live and eat by themselves. Watching mukbang videos can help dispel some of that  loneliness during their meals. 

“I think eating by oneself is a very lonely thing and one tends to be happier and eat more if accompanied by other people,” Mini said. “Many of my fans eat alone, and they will watch my videos while eating.” 

Running a business

In the early days of the mukbang industry, Mini would make most of her money from gifts sent by viewers during her livestreams. Today, fan gifts are only a small part of her income. She makes most of her money from advertising products, mostly food. 

The change is evident in her videos. I’ve noticed she spends more time advertising than binge eating these days.

Mukbang hosts started making short videos in 2017, condensing the marathon livestreams so that they can be posted on social media. Mini’s team was able to monetize them on online platforms like Youtube. 

This video format attracted the interest of food brands, which saw the opportunity to advertise their products. By 2018, Mini and her team were paid to produce short video ads and post them on their channel. 

Eventually, advertising started trickling into her livestreams.

The mukbang format lends itself well to product placement. Mini eats the advertised dish and recommends it to fans. Her huge fan base loves watching her eat—and follows her recommendations faithfully. 

Today, paid promotional content is Mini’s biggest stream of revenue, of which the majority comes from product placement in her livestreams.

Kingkong Culture is trying to increase its clientele of brands. Mini mostly works with food brands, but has also advertised makeup products and clothes.

The KOL agency has even started its own snack food brand. The mukbangers that work with Kingkong Culture promote the company’s snack products in their broadcasts. 

As Mini and her team grew the number of advertisements on her videos, some of her fans started to complain.

A user named BeryEeaxxy commented on Weibo: “If you have fewer advertisements you will have more followers. As a long-time follower, I really hope your goal remains the same as before when you first started being a mukbanger” (our translation).

Mini doesn’t take these comments to heart. She knows she is running a business:

“I became a mukbanger because I love food but it’s also my career. I love what I’m doing but I really hope my fans can understand this.”

—Mini, mukbang host

Pivot to Taobao Live

Like many other livestreamers in China, Mini wants to join the Taobao Live wave. We were lucky to see her and her team in the midst of this pivot. We watched her film one of her first livestreams for Alibaba’s platform. 

Taobao Live has been massively popular with consumers and livestreamers alike since early 2019. It allows viewers to buy the products on the spot during the broadcast, and includes several features like coupons, creating a seamless shopping experience. 

During the broadcast, Mini and Yang promoted 40 products in total, all of them food. Mini introduced and ate them one by one, giving each product its own time on camera. The livestream lasted for about five hours. It was watched by tens of thousands of real-time viewers. 

It came out very well and they decided to do more in the future, her team said. Mini is confident that she can do well on Taobao Live since livestreaming is her bread and butter. 

Qiu Er, a staff member at Yihai Tiancheng, a media company working for Alibaba, is also confident in Mini’s potential to succeed on the livestreaming platform. He flew to Beijing from Chengdu just to see Mini shoot her livestream. He was amazed by Mini’s ability to sell products. 

“Mini has a huge fan base,” Qiu said. “I think we will work more closely in the future.”

An uncertain future

During our week following Mini around, every interaction with her was closely supervised by her team. 

When we sat down for an interview, we found that our question list had been heavily edited by her company. We weren’t allowed to ask her basic facts about herself such as her real name and what she studied in university. 

The company said it was for the sake of her future development.

Questions about Mini’s health were met with pre-written answers: She goes for a physical examination every year and gets positive results. She has more enzymes than the average person and a stomach that can expand to fill her whole belly. She doesn’t vomit after binge eating and never has. 

It is hard to tell if she gave us the whole story. 

When we asked her how long she will continue with her career as a mukbang host, she couldn’t give us an answer. She couldn’t imagine a life without food in its epicenter. 

“I’ve always considered my work as my life and I think it’s inevitable that one day I will be over the hill,” she said. “But even if I’m not a mukbanger, I will probably still do the same thing as I’m doing now because I love food.”

I still remember my first Singles’ Day shopping experience in 2014—it was simple and quick. After refreshing my shopping cart page at 12 a.m. the day of the sale, all the prices went down. I quickly checked out and closed Taobao. There were no coupons, no games, and no presales requiring buyers to put down deposits in order to secure discounted prices.

Some coupons are only available if you spend weeks playing mini-games before the event. Moreover, the check-out process has been likened on social media (in Chinese) to a mathematics exam where shoppers need to track different promotions which apply to certain shops and check out in several transactions to take full advantage of discounts. 

Gaming for discounts

I always love shopping seasons, but until this year, I never tried playing games for coupons. Last Singles Day (held on Nov. 11), a week before the promo was set to start, I thought about playing a game where you build skyscrapers by scrolling through lists of products, but I was already weeks behind in the Taobao mini-game race. My editor Carolyn Surh had already spent weeks on the virtual job site, accumulating enough gold coins to build a 43-story virtual tower. She even made an excel sheet, trying to take full advantage of all the coupons she got. I was intimidated, but I joined immediately and tried to catch up.

It was too late. This game was not just about earning the coins by yourself, but also about competing with other teams. After forming a team of three and adding up all their levels, the team comes out ahead wins, and is rewarded with more coins. I thought this was too much and refused to drag my friends into this war. So I ended up reaching only level 10 the day before Nov. 11.

Carolyn and I were in Shenzhen for an event, and lived in the same hotel room on Nov 11. After 12 a.m., just as I was about to click the check-out button on my poor, non-optimized shopping basket, I heard an angry scream.

Even though she was on level 43, Taobao rewarded Carolyn with a disappointing selection of coupons.

Getting hooked with Taobao games

After being left out of the Singles Day games, I had to try the real Taobao gaming experience. So I was ready early on for the 618 shopping festival on June 18. My expectations were low—I knew I wasn’t going to get a lot of coupons from the game, but somehow I still managed to get pretty addicted. 

This year, the Taobao game was not about competing with others to add levels to a skyscraper; instead, it was about upgrading trains. From level one all the way to level 58, players needed to collect coins to purchase and upgrade their trains. The missions were all easy but time-consuming: sign up, scan an assigned store for 15 seconds, or share the game with friends, and you earn a certain amount of coins, up to a daily limit. Every day the coin collecting limit would reset, so achieving a high score meant logging in daily. 

I spent hours every day visiting different stores on Taobao and waiting for the required 15 seconds in each store for my virtual coins. Taobao also rewards social activity between users: share game links to three people, and you get a few more coins. Some people create WeChat groups to share links between group members to earn more coins or gain access to discounts. 

I don’t like to bother my friends or colleagues, but my trains were progressing painfully slow. I finally relented and persuaded my colleague Eliza Gkritsi to join the game. We both became pretty obsessed with collecting coins—in the end, I spent two weeks playing to reach level 35. 

The grand prize: $1.55

Then the big day came. I opened Taobao on the eve of the promo, June 17, to check how much of a discount I got for my level 35 train. The amount was shocking—only RMB 11 (around $1.55) for all that effort. Eliza got a measly RMB 9 with level 30. I felt cheated and couldn’t believe my eyes. I didn’t expect too much, but I certainly expected more than RMB 11, which only covered the delivery fee of my order.

After staring at the RMB 11 coupon for a minute, I started to think about the meaning of playing these mini-games every year. This is where shopping festivals are going. They are less and less about discounts—and more and more about engaging users with mindless mini-games and competitions.

Six years ago, I could get a 50% discount on some of my festival orders. This year, I spent almost RMB 1,000 during 618, and after adding all the coupons and discounts, only got a total of around RMB 180 off. An 18% discount is not a big discount, or at least not what I expect from a major annual shopping promotion.

Why play Taobao games?

This isn’t the first year that Taobao has used mini-games to build awareness and buzz around the shopping festival. Some people hate it, but lots of users still play it every year. But it makes me wonder, if people get such minimal returns for playing, are they going to keep showing up for the shopping festivals? 

After some thought, I say yes. Besides saving money, Taobao mini-games have become more about competition between friends. In the end, upgrading trains is not only about getting more coupons and a bigger discount, but about winning or losing the game. 

But will I play them this coming Single’s Day? Probably not. I did get a momentary pleasure, but compared with the time and effort I spent, it’s not worth it.

In China’s consumer culture, “limited offers” from globally-recognized brands have the distinct potential to command long queues and consumer frenzy on levels associated overseas only with hardcore Star Wars fans.

The collaboration between the buzzy American plant-based meat company Beyond Meat and fast food giant Yum China did not command anything near those lines, for now.

The Chinese subsidiary of Yum! Brands, one of the world’s largest fast food corporations, recently introduced limited edition, China-only menu offerings featuring Beyond Meat’s plant-based protein in three of its restaurant brands.

KFC tested a Beyond Meat burger in select stores in Beijing, Shanghai, Hangzhou, and Chengdu for three days. Taco Bell offered a plant-based taco in three stores in Shanghai from June 3 to 10. Pizza Hut made a burger with the plant-based patty, available from June 8 to 10. 

I tried all three. I was impressed, but I didn’t encounter any Chinese consumers who were interested in trying the products.

After a hugely successful IPO in May 2019, Beyond Meat wants to bring its products to China.

In a country that overwhelmingly prefers pork to beef, loves fried chicken, is bursting with soy-based alternative proteins, and tacos and burgers are far from staple dishes, Beyond Meat’s botano-beef patty is a tough sell.

READ MORE: Start-ups and incumbents battle for China’s meatless future

It seems to me that Beyond Meat is keenly aware it is playing an away game. The launch tried to play to its strengths: Western food, big brands as partners, a launch so limited edition that it is basically a trial before the trial. 

I’m the kind of person that always roots for the underdog. But the reaction from the public I saw was underwhelming. 

Umami minus fast food grease

KFC was the first fast food brand to launch a Beyond Meat patty in mainland China. From the looks of it, it was also the most successful. 

Yum China secured one of the famous burgers at an official tasting event. Faced with a once-in-a-lifetime opportunity to see this phyto-beast in the plant-based flesh, I invited TechNode’s visual reporter—and passionate eater—Jiayi Shi to immortalize the moment. 

On one less-than-fine June day, we headed to outer Shanghai for the tasting in the sweltering heat and overbearing humidity. The selected KFC location wasn’t downtown or in a busy mall, it was in the headquarters of travel giant Trip.com; a marvel of glass and steel architecture with solid representation of all major food and beverage chains on its lower floors. 

The KFC store was mostly empty, with only a few employees having a late lunch. A total of eight reporters from Chinese media showed up for the event, escorted by two Beyond Meat PR reps and two Yum China reps. 

Our PR contact had told us that stock was so limited that she could attend but would not get a burger. Thankfully, they managed to find one for her. By the end of the press event, the KFC branch had sold out all the Beyond Meat burgers. Employees told us that they sold 500-700 plant-based burgers in total.

The Beyond Meat burger was very good, at least on par with your average fast food beef burger. The patty was juicy and bigger than a McDonalds or Burger King equivalent—a pleasant surprise considering that at RMB 32 ($4.80), it is twice the price of a regular burger. 

It had that je-ne-sais-quoi flavor of fast food—plenty of MSG-induced umami—but less of the greasy meat aftertaste. The texture was practically indistinguishable from a beef fast-food burger; tender with the right amount of chew. The rest of the ingredients—bun, lettuce, spicy mayo, pickles, and cheese—added freshness and rounded off the sandwich. 

All in all, a 10/10 fast food burger. I preferred the bigger, less greasy patty to the animal protein versions. Jiayi thought the patty was too big. Whilst I didn’t see the problem with that, our in-house fast-food expert found the patty overbearing relative to the rest of the ingredients. “It’s too much,” she said, shaking her head with a deadpan expression, as I was trying to plot my way to a second serving. 

Two wild phyto-beasts appear

A few days later, we managed to track down another two Beyond Meat dishes in the wild. No PR representatives or company photographers were harmed in the consumption of our subsequent plant-based lunches. 

The Pizza Hut store was in the basement of a busy mall, closer to central Shanghai. It was a sit- down affair and the sound of chatting clanking of cutlery filled the air during the lunch hour rush. The only way to get this particular patty was to buy it in advance through Pizza Hut’s Wechat mini-program. So we did, and were met with an unwelcome surprise. 

The plant-based burger at Pizza Hut came with an uninvited guest. The pizza chain served a dish of two burgers for RMB 59, one with the Beyond Meat patty and one with a plain old animal protein steak. The steak was chewy and flavorless. It tasted like a bit of ham you forgot at the back of the fridge for too long. 

The meat was so bad that we were left wondering if it was a ploy to make the plant-based alternative taste better by comparison. We tried to order the plant-based patty on its own or exchange the steak for another vegetarian patty. The waitressing staff was quick to reject our claims.

The Beyond Meat patty appeared to be exactly the same as the one served at KFC, but in fancier clothes—a bit like running into your gym buddy downtown in a tuxedo. The bun had a little more flavor and the burger was topped with kale, mushrooms, tomatoes, and a spicy mayo. 

While I appreciated the effort to achieve a more sophisticated burger and the toppings were tasty, I preferred the humble KFC version. The patty doesn’t lend itself well to such attempts at elegance. You can serve it in a fancy chopping board and add black sesame seeds on the buns (as Pizza Hut did), but at the end of the day it remains a modest fast-food burger. 

Pizza Hut in China targets a more upscale clientele, so their version of the Beyond Meat burger was on brand. The menu features less pizza and more steak, gratin, Japanese curry and matcha desserts, even a clam chowder soup topped with puff pastry. 

On a different day, we sat at an outdoor Taco Bell seating area in an upscale mall. We couldn’t order in advance but were able to get three tacos each. 

Taco Bell’s take on the Beyond Meat protein was my favorite, but—full disclosure—I really like tacos. The “meat” was cooked into something resembling a chili con carne. It was served in two tortillas, one soft and one hard, along with lettuce, tomato and sauce. I’m not sure if what made it so appealing was the texture, as it was cooked like ground meat, or the spices. It definitely tasted more fresh, perhaps because of a higher proportion of fresh ingredients.

Where are the queues?

Just because we liked the tacos so much, we ordered a total of six tacos during our lunch. We had no problem getting them, probably because no one was really buying them. 

At the restaurants I visited during busy lunch hours, no one was trying out the plant-based products. No one was even looking at them with any curiosity, despite the fact that the stores featured gigantic posters for the product launches. 

I’m not sure how much sense it makes to push burgers in China, where pork is king, fried chicken is the star of the fast food industry, and beef is generally dwarfed on menus by other protein staples like pork and tofu. Even at McDonald’s, chicken often leads beef on the menu. 

But beef is the product that Beyond Meat developed, and it did so with a Western palate in mind. The US-based company not only went for beef, but designed it for burgers, sausages and tacos. These are not exactly staples in the Chinese diet, where noodles, rice dishes, and stir fries abound. So, beef is what it is trying to push into China. Some of China’s older generation is vegetarian, so promoting it as sexy Western fast food is not such an outlandish idea. 

Along with China’s long Buddhist tradition come plenty of vegetarian soy-based proteins. But many Chinese youths have told me there isn’t anything appealing about this religion-inspired old people’s food. Avoiding this association is key to developing a trendy sought-after product in the new-age plant-based meat space.

The limited-edition, limited-time offerings of Western food at well-known chains are a sound marketing strategy to this end. They can create buzz without breaking the bank, test consumer appetite and open the market for a hip plant-based protein. 

A Beyond Meat PR representative said that the products “sold well” but that specific sales figures were not available. Store employees told us that there were less than a few thousand items across the selected Yum China stores in Shanghai. Maybe the launch created some interest in the product, but nowhere near what other brands have accomplished in China. 

You’ve probably heard the word fengkou thousands of times from Chinese entrepreneurs and investors. 

But it doesn’t mean what you think. 

Fengkou literally means an opening through which wind blows, like an air vent or a wind tunnel. But Xiaomi’s CEO, Lei Jun, gave it a new meaning.

Lei used pigs as a metaphor for investors. Just like pigs are able to fly at the wind tunnel, so as some investors can succeed if they can seize the good opportunities. Since then, the term quickly became the most frequently used word by investors to describe a new trend or an area that has huge profit potential. 

The term got a lot of criticism since people say Lei encourages opportunism. After Lei Jun’s fengkou theory was proposed, a large number of enthusiastic investors and entrepreneurs began to rush to various so-called opportunities. The entire business industry has gradually become a stage where fengkou projects are everywhere. Sharing economy, peer-to-peer platforms (P2P) and bitcoin industries all got their rise and fall. Some people even joked that even a small team can get billions of dollars if they know where the fengkou is.

“There’s a bad thing happening in our industry,” said Jiang Haotian, founder of GeniLink Capital. “Many people will invest in fengkou projects. Or we can say they intended to find some so-called opportunity. I think investors with independent thinking and judgment shouldn’t go after the trends.”

Lei Jun explained his “fengkou” theory in a panel held by SOHO China in 2015 saying his theory only applies to people who have 10,000 or more hours of hard work: “If you don’t have basic skills, chasing after fengkou is really opportunism. No one can succeed without 10,000 hours of hard training.”

In partnership with

Editor’s note: This article is first published on TechNode Global by Shi Hui Tan in partnership with Huawei Assistant. We believe in transparency in our publishing and monetization model. Read more here.

Huawei recently showed off new, Asia-specific content that’s just rolled out to Huawei Assistant.

Keen to give it a whirl, TechNode’s editor, David Cohen, gave a review of the Chinese version of Huawei Assistant and Huawei Ability Gallery at our Shanghai office while our TechNode Global (Singapore) country manager, Shi Hui Tan, visited a Huawei store in the city-state to check out the international version.

If you can’t play the video above, click HERE.

Huawei is facing a big challenge outside of China where, as was reported in 2019, new versions of its smartphones lose access to popular applications and services including Google Play, Google Maps and the Gmail app. 

To overcome this, Huawei is launching its own version of these, including the revamped Huawei Assistant and the new Huawei Ability Gallery. It’ll be interesting to see if the big-name Southeast Asia apps will sign up for the Huawei Ability Gallery – it’ll be a crucial factor for Huawei to stand up against the competition. 

TechNode editor David Cohen got a surprise parcel today along with the grocery deliveries: a sneak peak at Xiaomi’s newest phone, evidently developed under cover during the virus.

The Ovoid marks a bold change in design direction from previous phones—breaking with conventions that go back to the original iPhone. We’re excited to start learning new routines—how about you?

Dr. Jiang would usually be busy over the Lunar New Year, jabbing patients with acupuncture needles for aches and pains. This year, she was able to oversee her son’s homework and make a few hundred dumplings. The beds on the eleventh floor of her hospital, in Shiyan, Hubei province, were empty—except for the patient in the coma. 

Unless they are truly desperate, people are steering clear of hospitals. Even those with flu-like symptoms don’t make the hospital their first port-of-call. Instead, they headed online. Online medicine platforms like JD Health saw respiratory-related queries surge tenfold. JD Health general manager Xiao Junbo said they saw five to seven times as many consultations from people worried about their mental health. 

JD Health rivals tell the same story—steep uptakes in consultations. Alihealth reported that its first 24 hours of launch on Jan. 25 saw around 400,000 visits to its homepage. It fielded an average (in Chinese) of 3,000 consultations per hour. Newly registered users increased tenfold for Ping An Good Doctor, which also reported 1.1 billion visits during the outbreak period. Dingxiang, another online consultation provider, reported over 1 million consultations as of Feb. 20. 

Industry insiders say a 2018 nod from Premier Li Keqiang was better than any subsidy.

The virus has also pushed regulators to act. For this period, the state insurer now allows prescriptions and consultations handled by designated online platforms to be reimbursed under medical insurance. Previously, they were not covered.

More than two hundred public hospitals opened their own online consultations. In a set of opinions released jointly by the top Party and government bodies on March 5, all the signals (in Chinese) point to online healthcare becoming a big part of ongoing healthcare reform.

Healthcare reform 

Health care is a trillion-dollar market (in Chinese) in China. Put together, tech companies and other established online health care players have just 4% of market share, said a JD Health employee. 

That’s not for lack of government resolve. China wants a more efficient, cheap healthcare service enabled by 5G and new tech. But there is not yet a consensus on the precise form the full gamut of e-services should take and what kind of safeguards are necessary to ensure online services solve more problems than they make.

When 2014 regulations created a framework for online healthcare, players rushed in. Investors also loved the industry: at one point there were over five thousand players (in Chinese). By 2017, over a thousand of those were in the online medicine graveyard. 

A boost came the following year, when Premier Li Keqiang mentioned online hospitals in a high-profile speech. His nod-from-above reassured doctors that if they participated, they would not get into trouble. Industry insiders say that was more helpful than any subsidy. 

Covid-19 has given online medicine platforms a leg up in consumer awareness.

The 2018 retooling of China’s bureaucracy drove drug companies to drug-selling platforms. Previously these companies sold directly to hospitals. This arrangement allowed hospitals to negotiate directly with drug companies, leaving space for kickbacks and corruption. The newly centralized public medical insurance system moved to bulk buy to lower costs for public hospitals. Drug companies that lost tenders were in desperate need of additional sales channels, and many started selling online for the first time. 

Once the outbreak ends, online healthcare providers will be watching closely how the government will decide to manage online prescriptions, e-medical records, and online insurance. While all of these have had regulatory mentions, there is not a centralized platform for them all. If the government manages to set standards for these services, it could quicken an online migration of health care service chains. 

Medical insurance doesn’t cover all drugs bought from private online platforms, and it’s unlikely this will change completely. A gradual roll-out, first covering chronic illnesses like diabetes, and high blood pressure is more likely, said one industry insider, and would still be a boon to online sales. 

Too few doctors

Covid-19 has given online medicine platforms a leg up in consumer awareness. But users may not be the biggest hurdle.

Run out of shirts and you can source more, but that doesn’t apply for doctors.

“A difficulty faced by every player in the healthcare industry is that qualified doctors are in short supply,” a healthcare investment professional told TechNode. The more doctors platforms have (particularly famous ones), the more patients they can attract, and the more they can treat. 

Online healthcare players will not sweep away the old system any time soon.

Online platforms want to take on full-cycle treatment, with educational public health videos, preventative advice, initial online consultations, hospital referrals, and offline treatment if you really need it. JD Health’s initiative led by star cardiologist Hu Dayi is the prime example. Tencent and Alibaba are already buying up brick-and-mortar hospitals. Beyond regulation, the race is likely to come down to supply.

They are up against brick-and-mortar hospitals, possessive of their staff. A Shanghai-based medical professional told TechNode that they’ve seen doctors quit Ping An Good Doctor out of fear of consequences at their hospital days jobs. After hospital administrators asked them to fill out a form confirming whether they would work for the platform, two doctors known to the source took it as a warning and stopped.

Online healthcare players will not sweep away the old system any time soon. For one, Covid-19 has disproportionately affected the old and frail—the proportion of the population least likely to use apps. Resources are still concentrated in hospitals, and the rural-urban health gap remains.

“Online consultations definitely have value, if only to point people towards higher-level care in severe situations. But the challenges of access, quality, and availability still remain,” said Pei Hao, a Beijing-based global health expert.

Doctors who spoke to TechNode also described problems with online consultations, mentioning issues of patients presenting only the symptoms they considered important, or self-diagnosing by reading descriptions online. Patients, on the other hand, are worried about fake doctors. 

Platforms, however, can bolt on new efficiencies and expand private healthcare. A former senior manager at AliHealth told TechNode that “the government will stay the largest player [in healthcare], but a lot is possible at the periphery.” He expects new players, established pharmaceutical companies, pharmacies and foreign hospitals will enter the market as rival players in years to come. 

A JD Health employee said “even focusing on a single district or city gives a small company enough to bite off.” E-retail companies may find they do not define healthcare, as they do markets like beauty and electronics, but they do not need to, simply because the need is so big.

With millions of Chinese confined to their homes since late January, the Covid-19 outbreak has given an unexpected boost to China’s livestreaming industry, already the largest in the world. As the country is experiencing a strong move from offline to online activities, livestreaming, like grocery deliveries and online healthcare, is one of the few bright spots in the country’s digital economy. 

Editor’s note: This post on tech and the coronavirus crisis originally appeared in our members’ only weekly newsletter. Sign up so you don’t miss the next one. Read more on how Covid-19 is affecting China’s tech.

Bottom line: Livestreaming was interesting to marketers before the epidemic. Now it’s an obsession: merchants and brands trying to reach customers have very few other options, and many are hoping the emerging medium will save their sales during the crisis. While the whole industry faces a challenge in turning windfall users to recurring users, livestream e-commerce have a better chance in retaining them compared to entertainment livestreaming.

What’s new: Livestreaming was already hot. Data (in Chinese) from iiMedia Research shows that the number of users for China’s online live streaming industry has increased 10.6% year on year to 504 million in 2019, more than half of China’s total 854 million (in Chinese) netizens. It is estimated that the figure will reach 526 million in 2020. The virus is expected to accelerate the trend.

Meanwhile, merchants and marketers are looking for new ways to reach consumers who aren’t leaving their homes. The medium appears to have found its moment.

How big is the Covid-19 spike? It’s hard to say. Stuck-at-home audiences are looking for novel means of entertainment, and it makes sense that they’d turned to livestreams. Companies like Alibaba, Pinduoduo, and Kuaishou are boasting of large audience numbers for certain livestream sessions here and there, but so far no one has published overall user numbers for the period.

Content

Livestreaming businesses come in two very different flavors, each with its own idea of success:

The attention merchants: Entertainment and gaming live streaming contents are generally making money off interactions between host and audience and virtual gifts—meaning that eyeballs are an end in themselves. 

Entertainment: Entertainment is the granddaddy of livestreaming, but still a force to be reckoned with. One of the first successes was “e-stages,” where the hosts sing or dance. But unconventional livestreams sprung up over the past month: “Cloud clubbing,” live streaming sessions launched by music labels and clubs on video platforms like Douyin, Kuaishou and Bilibili, went viral over February. Recognizing the appeal, the platforms further rolled out livestream concerts and music festivals where the artists perform from their homes. The trend also brought change to the TV program production, where live audiences are replaced by online hosts and audiences in what are essentially video conferences for fun.

Gaming: China’s video game streaming rise continued as major platforms like Douyu saw spikes in daily active users and user engagement time, according to local media (in Chinese) reports.

The advertisers: E-commerce livestreaming is about pushing product, often through online stores linked directly to the stream. For this field, purchasing conversion rates are what matter. 

Agricultural products: Major e-commerce sites like Alibaba and Pinduoduo are boosting their efforts to facilitate online sales of fresh produce with livestreaming is an important part of their plan. Farmers, mostly living in remote areas, can use video to engage consumers face-to-face and introduce their products. Platforms claim that this model allows them a better margin for goods by cutting out the middleman.

Catering: Restaurants, which are on the front line in dealing with commercial impacts of the virus, are leveraging livestreaming to boost delivery orders. A total of 31 well-known catering companies, including Xibei and hot pot chain Xiaolongkan reached out to sign up for livestreaming on Alibaba’s livestreaming unit Taobao Live, on Feb. 10. Restaurants streams have gained momentum quickly. Consumers also tend to watch livestreaming late at night during the virus period, data from e-commerce market research agency Coresight shows. A livestreaming session of hotpot chain Xiaolongkan on Feb. 17 midnight sold tens of thousands of single-use self-heating hot pot pats within 10 minutes, boosting single day sales 1,200% compared with one month before.

Bookstores: Over 200 bookstore chains joined Taobao Live over the past month. The total number of bookstores giving livestream sessions on Taobao Live has grown more than five-fold, the company says.

Big tickets

The non-traditional, big-ticket sales: With showrooms closed, some surprising industries turned to livestreaming: real estate, cars, and even travel. While consumers are not likely to buy a house or an SUV sight unseen, salespeople are hoping they can maintain brand relationships and perhaps identify leads who will complete purchases after the epidemic is over. Early figures show they have eyeballs—but the question is how many will convert to sales in these uncharted waters.

Real estate: Taobao Live has attracted over 5,000 estate agents from over 500 brokers, across nearly 100 cities in China. During Feb. 12-17, some 2 million users watched real estate livestream events on Taobao Live. Beijing, Jiangsu, and Shandong were the top three areas for the sell side, as counted by the number of livestream hosts.

Cars: Over 1,500 automobile sales services shops have livestreamed through Taobao Live as of Wednesday, hosting an average of 300 livestream events everyday. China Passenger Car Association expects the country’s passenger car sales to drop 80% year on year in February. In response to the gloomy market, over 80% of the car brands opened livestream sessions in an attempt to offset the drop from offline sales.

Travel: Travel-oriented platforms have been among the worst-hit during the outbreak and spread of the current novel coronavirus. Top travel platforms like Fliggy, Ctrip and Mafengwo opened livestreaming services to allow online sight-seeing for users. Travel industry is gradually recovering as the epidemic shows signs of leveling up.

Already on the rise: Livestream e-commerce has been on the rise since 2016, year one for China’s livestreaming market. Alibaba’s Taobao, the pioneer, generated more than RMB 100 billion (about $14 billion) in gross merchandise volume through livestreaming sessions in 2018, an increase of nearly 400% year on year. Taobao Live, the live-streaming unit of e-commerce giant Alibaba, recorded sales of RMB 20 billion during the Singles Day shopping event held on Nov. 11, accounting for around 7.5% of the group’s overall RMB 268.4 billion in sales.

E-commerce platforms including Xiaohongshu and Pinduoduo, and short video apps such as Douyin and Kuaishou are all jumping on the bandwagon.

Carpe Covid: Online platforms are selling livestreaming to merchants as a means to fend off growth slowdown by the virus. On Feb. 10, Alibaba announced that it will waive normal requirements for offline store operators across the country to join Taobao Live , and made operational tools free of charge.  

In February, the platforms says, growth in new streamers was eight times higher than the previous month. Orders surged by an average of 20% each week, the company—meaning that they about doubled over the month—while by value February sales were double those of the same period last year, suggesting that consumers are making a lot more, but smaller, purchases. 

Some brands that never tried out the new marketing channel are experiencing beginner’s luck, enjoying sales even higher than before the epidemic.

• Shanghai-based skin care brand Lin Qingxuan saw performance fall by 90% as 157 were forced to close, creating a crisis in which the company feared bankruptcy within two months. After starting livestreaming sessions on Taobao Live, its performance rebounded, an increase of 45% over the same period last year within 15 days.
• Huang Honglin, a farmer in Jiangxi province, sold over 25,000 kilograms of fruit after starting livestreaming sessions on Pinduoduo.

Will it last? What happens to livestreaming as life goes back to normal, and people leave their houses? Some experts believe the trend will sustain:

The epidemic will reinforce the use of livestreaming as an effective selling channel. We will see more merchants across various sectors/industries use livestreaming to sell and reach consumers. Consumers will just rely more on livestreaming to buy things and form a habit of doing so. When the epidemic ends, buying through livestreaming will offer different alternatives for consumers to shop.

—Coresight analyst Eliam Huang.

But it will also have to overcome growing regulatory challenges. Livestream e-commerce may face lesser pressure compared with entertainment livestreamers, but challenges remain.

• Public scrutiny over livestream e-commerce has increased recently. The National Radio and Television Administration issued a notice in November warning audio-visual e-commerce live-streams and marketing campaigns about false advertising, vulgar content, and misleading exaggerations. 

• The government intervention was a response to public outcry over dishonest sales pitches prompted by Lipstick King Li Jiaqi. Li had an “emperor’s new clothes” moment before an audience of 400,000 while pitching a nonstick frying pan—to which an egg quite conspicuously stuck as he was promising that “It won’t stick, it can’t stick.”

• Live streamed e-commerce is expanding from the promotion of regular products like garments and cosmetics to more sophisticated products like automobiles. Livestreaming hosts in these new categories are expected to have professional knowledge of the products they introduce, and often don’t.

Delivery platforms like Meituan and Eleme have rolled out the “contactless delivery” feature that prevents direct contact between drivers and customers.

Many residential compounds are taking steps to limit the spread of the coronavirus. Most compounds in China no longer allow delivery drivers to enter.

Customers and drivers can use the app to decide where to drop off the order. At the checkout page, customers can click on “contactless delivery” feature and then they set where the order should be dropped off.

With restaurants closed and express delivery stopped, people rely on local markets more for grocery delivery during coronavirus outbreak.

If you can’t see the YouTube player above, try watching here instead.

In Zhangjiagang, a small city in eastern Jiangsu province, TechNode visual reporter Shi Jiayi found out that many merchants in the local wet market are using group chats in WeChat to sell vegetables and meat. Instead of using grocery delivery platforms like Alibaba’s Eleme and Meituan who set the delivery price, they rely on independent delivery drivers who charge by distance. Customers can also get a cheaper price if they purchase in groups.

Last week, Zhangjiagang broke the zero case record by having two confirmed cases. Zhangjiagang East Wet Market lost 60 percent of the customers, according to one merchant. It’s easy to see how technology is helping people who are afraid of going out, they can have fresh vegetables, fruits and meat delivered to their doors in two hours. At the same time, despite all this digitalization, the whole operation relies on food delivery drivers who still need to take the risk of being exposed to infection.

If you can’t see the YouTube player above, try watching here instead.

Because of the coronavirus, most schools in China won’t open until further notice. But many students have already begun learning again, only from home.

Teachers are using online platforms to hold live-streaming courses remotely. Alibaba’s DingTalk is now not only a virtual workspace for companies, but also a live streaming platform for over 12 million students.

However, DingTalk was filled with one-star reviews as some students didn’t want their holiday to end so quickly. Many students wrote ironic reviews such as: “I love DingTalk so much”; “Thank you DingTalk for letting us have live-streaming lessons when the winter holiday is postponed. Good app.”

Online education companies are working with schools to offer free classes during the epidemic. China’s Ministry of Education has worked with 22 education platforms to open more than 24,000 online courses for free.

At least 20 listed companies have announced plans to “donate” classes. Short video platform Kuaishou is working with over 40 multiple online education platforms. They will provide free educational content to mitigate the impact of the school suspension.

Alibaba’s Youku and DingTalk launched a “study at home” program. After Feb 10, primary and middle school students nationwide will be able to attend free classes at home by logging in to apps.

If you can’t see the YouTube player above, try watching here instead.

Many companies in China have started remote work from home as governments and companies are trying to contain coronavirus.

Everyone came back to work on Feb 3, 2020, but stayed at home. Two of the largest enterprise platforms, DingTalk and WeChat Work, were overwhelmed by the number of users. DingTalk announced Monday evening that it served over 10 million companies and more than 200 million employees.

Companies are relying on virtual workspaces and productivity software platforms like Alibaba’s DingTalk, Tencent’s WeChat Work and Tencent Meeting (the company’s Zoom alternative). These apps continue to rank among the most downloaded apps in China.

Some analysts say that the coronavirus epidemic may transform the way Chinese companies operate. Many businesses may choose to increase their remote work in the future.

Chinese e-commerce platforms are cracking down on fake or substandard protective masks, potentially the most visible symbol of the novel coronavirus outbreak that has rocked the country.

Why it matters: The coronavirus outbreak has triggered a rise in global demand for protective masks. Online retailers are tightening monitoring efforts to fight unethical sellers looking to benefit during a country-wide crisis by offering substandard products.

• Face mask production capacity in China is around 20 million per day, a representative of the Ministry of Information and Technology told local media.
• Daily demand for masks in China with its population of 1.4 billion surged to the hundreds of millions within a few days according to estimations from e-commerce platform Pinduoduo, according the company’s head of anti-epidemic team Fu Zheng in an emailed statement.

Chinese tech firms ramp up support to battle outbreak

Details: Alibaba has permanently barred 15 stores from operating on its shopping platforms for selling “problematic” masks, the company announced Tuesday through its official account on microblogging platform Weibo.

• The company has removed 570,000 questionable mask listings and has referred five of the banned stores to authorities for further investigation, Alibaba said in the statement.
• Alibaba’s marketplace regulatory unit reiterated its “zero tolerance” stance towards such behaviors in the statement released Wednesday. The firm suggested that the government should add such sellers to a country’s credit blacklist.
• Alibaba did not respond to requests for comment.
• Pinduoduo has removed 500,715 items and has closed more than 40 stores as of Feb. 4, the company said. Pinduoduo’s anti-epidemic group will run spot checks on protective gear listed on the platform, Fu Zheng added, to assess whether masks are up to national standards for particle filtering.
• Sellers found to be selling problematic products will be removed from the platform, have their cash accounts frozen, and will be reported to the police, the company said, and the platform will reimburse the buyers.
• JD has removed seven merchants from its platform, local media reported.

Context: Counterfeit goods have long plagued Chinese e-commerce platforms. To fight the issue, e-commerce platforms have rolled out anti-counterfeit initiatives by forming industry alliances, and implementing new technologies like artificial intelligence and big data, among others.

• The platforms are assessing protective product quality by analyzing in real-time merchants and product listings using data points such as product specification and user reviews. In addition, they are pulling random samples to examine and test the products.
• On Feb. 2, China’s Ministry of Public Security ordered a clampdown on sales of counterfeit and inferior protective products, the stockpiling such items, and inflating prices during the virus outbreak.

Updated: added the Ministry of Public Security statement.

With contributions from Eliza Gkritsi

The technological development that has taken over China’s cities is finally hitting rural areas. With the help of government subsidies, farmers are acquiring drones to automate water and pesticide spraying as they deal with an uphill battle against labor shortages brought by urbanization.

If you can’t see the YouTube player above, try watching here instead.

Chinese farmers use more pesticides relative to land size than any other country in the world, three times more than their US or European counterparts, TechNode calculated based on data from the Food and Agriculture Organization of the United Nations. These pesticides end up in the soil and produce, which can have adverse effects on the environment and public health.

Farmers can reduce the need for 30% to 40% of pesticides, and 90% of water by using XAG drones, Justin Gong, co-founder and vice president at the Guangzhou-based company, told TechNode. The firm’s drones are fully automated: farmers have only to press a button and artificial intelligence will do the rest.

The use of drones can also mitigate the diminishing labor force in China’s agricultural industry. “People under 50 are basically not farming. No one will be farming in the future,” said Huang Jianfeng, a rice farmer from eastern Zhejiang province.

Saving on labor costs, farmers can get a return on their investment. Three people will spray about 1.33 hectares in a day. In contrast, drones can cover more than 6.7 hectares at the same time. “If accumulated over a long period of time, the cost of using drones is even lower,” Guo Jianhua, a lemon farmer in southern Guangdong province, told TechNode.

Local governments provide subsidies of varying levels to encourage tech purchases. Huang told TechNode that authorities returned half of the money he used to buy the 24 drones he operates.

But the use of tech doesn’t necessarily improve the sustainability of farming, said Sacha Cody, a former fellow at the Hong Kong University of Science and Technology who led research on agricultural automation. It only distributes the chemicals more efficiently, he said.

The drive for efficiency in food production is guiding policy, meaning the government is more focused on feeding China’s growing population and not finding a new way of farming with long-term sustainability.

This overarching attitude is true to a certain extent, according to Lin Yifei, assistant professor of environmental studies at New York University’s Shanghai campus. At the same time, “we see a lot of conflicting observations on the ground about which direction China is going in the context of sustainability,” he said.

25-year-old Guo, the Guangdong lemon farmer, shared Lin’s uncertainty, saying he doesn’t know how his family’s future will look.

“I don’t have plans,” he said, “We don’t know what will happen in 10 years when they grow up, maybe they don’t need to do manual labor, maybe there will be a fully automatic system in the future. It’s hard to say.”

Getting precise about agriculture drones, one piece at a time

With contributions from Eliza Gkritsi

Amidst a sea of startups on show at TechCrunch Shenzhen 2019, two startups stood out for innovating in a massive industry that has remained unchanged for decades—industrial maintenance. 

Founded in 2016 by two Canadians living in Shenzhen, Skygauge has developed a uniquely stable and precise drone that tilts four rotors to keep the main body stable, even in strong winds. It is equipped with a sensor that attaches to a metal structure, such as an oil rig, and collects corrosion data within a few seconds. 

“Our frame can remain perfectly level, so that we can precisely approach a structure and contact the structure in very specific locations,” Nikita Iliushkin, co-founder and CEO of the startup, told TechNode. 

Thanks to the stability, the Skygauge drone can conduct inspections of large metal structures, like oil and gas facilities, offshore platforms, bridges, and ships. Currently, such checks usually require scaffolding around the structure to make it accessible—a task that can take weeks. Skygauge can not only save businesses time and money but also put workers out of harm’s way, Illiushkin said.

Skygauge sees inspections as only the first application of its stable drone technology.  In the future, the team wants to attach a stable robotic arm for general work, so that the drone can carry out jobs like painting, washing, and coating.

 “The same way robotic arms revolutionized work in factories, our drones will revolutionize work in the skies,” Iliushkin said. 

Also based in Shenzhen, Cassandra has developed an IoT-based predictive maintenance solution. The solution involves attaching magnetic ultrasonic vibration sensors to industrial machinery, and wirelessly feeding data in an artificially intelligent algorithm. Using Cassandra’s system, factory operators can monitor in real-time variables such as temperature, speed, and corrosion on an iPad app.

The AI analyzes the data and provides predictions on the machine’s state and functionality, so that the operators can know when a machine will fail ahead of time. 

“86% of all maintenance is either scheduled unnecessarily or too late [currently],” said Alain Garner, founder and architecture director at Cassandra, a Cogobuy Group company. “Either people are using time-based maintenance, so just throwing away things before they break,” he continued. 

Cassandra’s solution can help businesses save money on unnecessary maintenance or downtime caused by maintenance operations. “We’re in deployment at the moment in pilot stages, and we’re sort of rolling this out further,” Fournier said. 

The predictive maintenance market is expected to grow to $10.7 billion by 2024, according to global research firm MarketsandMarkets.

If you can’t see the YouTube player above, try watching here instead. 

China’s electric vehicle (EV) market has seen a four-month slump in deliveries since purchase subsidies were slashed over the summer. The move has left the industry reeling, while startups battle for funds and investors become increasingly wary.

“The whole industry obviously has seen a significant slowdown after the subsidy cuts,” Brian Gu, Xpeng president and vice-chairman told TechNode at TechCrunch Shenzhen this month.

EV subsidies are expected to decrease by a further 50% next year, and completely disappear in two years. The Chinese government has sought to counter automakers’ reliance on the subsidies to sell their vehicles, hoping the reduction will force these companies to innovate.

Despite mounting troubles in the industry, Xpeng recently closed its $400 million Series C. “We need a war chest to tackle the Chinese consumer market in order to build up our brand,” Gu said. “We have a lot of things planned, and we see this capital as being instrumental in achieving these goals.”

Founded in 2014, Xpeng is one of the few EV makers in China that has begun delivering vehicles. The company launched its first car, the G3 SUV, in 2018, subsequently releasing an enhanced version with a longer driving range. Xpeng also plans to begin deliveries of its P7 sedan in the second quarter of 2020.

Meanwhile, rival Chines companies Nio and Byton have struggled to secure new funds amid a macro-economic slowdown and flagging auto market. Nio has yet to finalize a RMB 10 billion ($1.42 billion) deal with Beijing E-T0wn, a state-backed capital fund, that the company announced in May.

Gu believes that the government’s investment in charging infrastructure and a focus on innovation will help the industry reach an “inflection point,” where EVs become more competitive than gas-driven cars.

“We would like to see the industry become more product-focused, competing on product merit rather than just subsidy levels,” he said.

With contributions from Chris Udemans

Unlike general funds that invest in various industries, Baidu Ventures is a $500 million independent venture fund focused only on artificial intelligence investments. Vice-president Felix Fang recently told TechNode that this focus has helped the firm to gain strong experience in the field.

As vice-president, Fang is responsible for AI investments and how the technology can empower and transform traditional industry. He told TechNode that Chinese AI first took root in the security and surveillance market because of government policy. High importance is attached to the sector as it can save lives, he added. In fact, China’s four leading AI companies—Sensetime, Megvii, Yitu and Cloudwalk—are all present in this field.

Fang said that in the future, AI technologies would expand to other fields gradually dependent on the basic datasets available and the digitization of different industries.

“For example, AI in the medical, retail and industry fields will develop incrementally because the ability for commercialization will not be as strong and its uses will be less widespread,” he said. “But we do think these industries represent potential markets for future AI applications and will have better development prospects in the future.”

Valuation bubble

Fang believes that there is a valuation bubble in terms of AI investment. He cites the lack of talent in the sector as a key reason. While funds are abundant in the market, companies will pay more when choosing investment targets, thus further inflating the value of the AI industry.

“So, I think we have to go back to the value of the investment itself,” Fang said. “We should consider a firm’s valuation from a more quantitative perspective, rather than over-scoring some projects that come with a lot of hype.”

As an investor, Fang said they could provide help in several ways. The first is to provide crucial talents for early-stage companies. Secondly, the VC can provide industry partners to help them better understand the real application scenarios, and thirdly, it can help with ideas on how to bring a product to market.

Fang contends that entrepreneurs often overlook pain points associated with doing business in the real world. He suggests they remember to carry out enough market research before pushing ahead with commercialization efforts, which can help them to know the actual drawbacks of their plans.

“We also need to have a clear road map on how to grow into a $1 billion or $2 billion unicorn,” he said. “It’s a process that requires constant adjustment throughout the whole entrepreneurship.”

Prior to joining GGV Capital, Chao Luo was the co-founder and CSO of Laiye, an AI platform offering intelligent assistants to consumers and enterprises. After experiencing the dual roles of both an entrepreneur and an investor, Luo described the two as a revolving door, meaning you need to gain perspectives on both sides.

“Now I define myself as a venture capitalist,” he said. “To me, it is not like a real transformation but more like I’m learning different things at different stages.”

Luo is now vice president at GGV, a global venture capital firm with $6.2 billion in funds that invests in entrepreneurs in the US, Asia and other emerging economies.

In January, Chinese authorities called for the formulation of a relatively complete top-level design for an industrial internet network by 2020. According to a report by bg.qianzhan.com, the average annual compound growth rate of China’s industrial internet in the next five years is about 13% with its value hitting RMB 1 trillion in 2023.

Luo told TechNode that he believed tech companies who can empower the secondary industry will form a new force, which is also what he is focused on now.

“In fact, there are many pain points within the industry area,” he said. “A large number of devices used in industrial scenarios are yet to be digitized. From meter devices to industrial operating systems, the majority of them are still operating offline.”

Maintenance issues

A lack of digitization in industrial sectors causes two main problems: The first is operational issues and the second is maintenance, which all require a lot of manual work. However, by introducing useful IoT devices, coupled with background data analysis capabilities, Luo expects 90% of these scenarios to no longer need people in the long term.

The market is full of opportunities, along with challenges because platforms should be able to deal with different types of devices, models, and API interfaces. This requires that those who want to work in industrial internet have more patience and are okay doing the dirty work needed before products can roll out.

Black Lake Technologies, a software-as-a-service (SaaS) company that provides digital applications for manufacturers, is a successful GGV investment. The company has already empowered many traditional manufacturing companies with its cloud-based data collaboration and analysis tools. In the future, Luo contends that companies with a strong combination of software and hardware will be more competitive and prepared for long-term survival.

He explained that by combining software and hardware services, the company could increase the value generated for customers and also boost their stickiness so that the relocation costs for customers will be relatively high. “Only by developing the hardware can the data be digitized,” he said. “If the company only provides software, it’s very possible for customers to find a replacement.”

When asked about how to intelligize one specific industry, Luo said there are three key factors. The first is to build an infrastructure for digitization, the second is to have robust data analysis and processing capabilities and the third is to have the ability to facilitate the application, which requires a team with multi-talented individuals.

“We’re seeing lots of excellent teams that are not just made up of PhDs but more mixed teams with all kinds of talents,” Luo said. “And teams like this will have a better chance to succeed.”

If you can’t see the YouTube player above, try watching here instead.

Taobao Maker Festival, one of the biggest offline events held by e-commerce giant Alibaba to showcase the maker spirit of merchants and designers, is now in its fourth year. As the scale and diversity of the festival keep expanding, the event has been extended to run for 14 days this year. With more brands and merchants joining the festival, some of them are focused wholly on environmental protection.

Food delivery platform Ele.me aims to recycle its take-out plastic waste and turn them into fashionable products. “At Ele.me’s relab, we will collect some recyclable plastic and remake it into beautiful trinkets to give them back to customers,” an employee told TechNode.

The Ele.me relab booth is divided into two sections, the recycling area encourages visitors to sort and recycle garbage with its AI garbage sorting and recycling machine. And the display area showcases various products made from recycled plastic food delivery boxes and used delivery bags.

“The concept of Taobao Maker Festival is to create,” she said. “We hope to create some fashionable products from the perspective of environmental protection.”

Following the global vegan movement trend, this year’s Taobao Maker Festival provides visitors a chance to try plant-based “meat” made by Hong Kong-based social enterprise GreenMonday, making it one of the must-see booths at Taobao Maker Festival.

David Yeung, founder of GreenMonday, told TechNode that right now the whole animal production chain is facing challenges in developing sustainably, and creating vegan meat can relieve the environment burden and supplement the increasing demand for real meat.

“The whole concept of vegan meat is to extract vegetable protein and synthesize it into something very similar to beef, pork, or chicken that we consume in daily life,” he said.

Yeung said there’s an educational process for every new product from emergence to acceptance, but once the public realizes the taste and nutritional value are no different to those of real meat, it won’t take long for them to gain acceptance, especially among younger generations.

“Millennials and Gen Z, and more broadly people under the age of 35, are the groups where we saw the most rapid increase in vegetarians or flexitarians numbers,” Yeung said. “There’s an increased awareness in these groups to eat healthier and environmental-friendly goods.”

If you can’t see the YouTube player above, try watching here instead.

Following on from the recent FaceApp Challenge craze, another deepfake app Zao has gone viral in China. It rocketed to the top of the iOS App Store in China within 48 hours of its release at the end of last month. However, like FaceApp, Zao quickly attracted scrutiny over potential privacy leaks.

Zao is a face-swapping app that uses deepfake technology to let users change their faces with celebrities in a mere 10 seconds with just one photo needed. The app is designed just for entertainment, but it soon received a backlash on social media due to its user agreement.

The original agreement allowed Zao “free, irrevocable, perpetual, transferable, and re-licensable rights” to all user-generated content as well as full copyright and ownership, triggering widespread debate on whether the clause violates users’ data privacy. While Zao moved swiftly to change the fine print, the damage was already done. The app was bombarded with thousands of negative reviews, and its average rating stands at 1.5 out of 5 in the App Store.

With the rise of digital payment as well as facial recognition payment, faces have become just a crucial part of a user’s data makeup.

“In fact, nowadays people’s faces also represent a symbol of authority, it is not just about a look anymore,” Stella Huang, a college student in Shanghai, told TechNode. “So I feel that there is indeed a risk,” she added.

It only takes five seconds to swap your face with Leonardo DiCaprio using deepfake technology, an artificial intelligence-based human image synthesis technique. It started trending in 2017 after a Reddit user named “deepfakes” uploaded a series of self-made face-swapping videos and since then it has become a controversial technology due to ethical risks.

“Deepfake technology is not very mature now, so it’s easy to recognize the differences between the real thing,” said another student Shen Shiyu. “But when this technology does mature, does that mean some original videos and information will be replaced and we won’t be able to figure out what’s real?”

The unexpected Zao fad laid bare the problems of personal information protection in China. College student Wang Yunjuan told TechNode that she had turned off her fingerprint and face recognition payment because of concerns over personal information leaks. “All the information links together,” she said.

“I do worry about my privacy,” Huang said. “Because no one cares about my data when I’m a nobody. But if people think they can make money from my information, it makes me worry about the security of my data.”

Most interviewees expressed the need for more regulations to protect personal information. “The law has not kept up with the development of the internet,” said Yin Yan, a student in Shanghai.

“Even if you are intentionally protecting your personal information, there is still a chance that it might leak. So I will always have a sense of fear,” said Tony Wang, another local student.

This year’s theme for the World Artificial Intelligence Conference (WAIC), one of the largest tech events organized by the Chinese government, was “Intelligence Connectivity Infinite Possibilities.” Held in Shanghai, it provided a stage for the world’s tech giants to showcase the newest innovations. This year there was a clear focus on industrial internet applications in combination with AI technologies.

The Smart Cafe at the Amazon Web Services (AWS) booth gave a demonstration on how AI technologies can ensure that every step in a supply chain is functioning.

Didi displayed one of its robotaxis at the exhibition. Zhang Bo, CEO of Didi’s autonomous driving company, announced Friday that it will launch a pilot robotaxi fleet in Shanghai. The company declined to provide a specific timeline.

Tencent’s Intelligent Inspection and Manipulation Robot can perform dexterous movements in a special environments such as in the oil or gas industry without the need for custom code.

Crew Interactive MObile CompanioN (CIMON), the first AI assistant for humans in space, made its first appearance at WAIC this year. CIMON was designed by a collaboration between IBM, German Aerospace Center, and Airbus.

In cooperation with Xiaoguan Tea, IBM’s Visual Inspection technology can scan and pick out the impurities from tea leaves.

“Let’s defend first, let’s defend first—there’s no rush,” said a reserve team player with the gamer ID “seven.”

“Go to the bottom lane and counterattack. I can do it this time,” said a starter nicknamed “Yitong” as he wiped his hand with a tissue to make sure he could keep a grip on his phone.

Dressed in T-shirts, shorts, and slippers, this group of teens and young twentysomethings, all members of Vici Gaming, a Shanghai-based e-sports club, are some of the best “Honour of Kings” players in the country.

Because it was the off-season for the King Pro League (KPL), the professional league of “Honour of Kings” founded by Tencent, the players only need to train three hours a day. Once competition season starts, however, training could last from two in the afternoon to as late as one in the morning.

These players are among the first e-sports professionals to ride the wave of public, corporate, and government support for the industry, which has been growing noticeably in the past few years. The players’ prospects are rosy, but not without their own uncertainties.

Life as professionals

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The “Honour of Kings” players at Vici Gaming are all young. The oldest member of the starting team is 21 years old, and the youngest has just turned 18. According to the players, though, they all started their careers much younger. Liu Xiang, the 18-year-old player more widely known by his handle “Yitong,” said he started competing at the age of 15.

“After playing the game for a week, I was in the master tier, and then I helped several of my friends get to that tier as well,” Liu said, referring to an in-game ranking that only the top 3% of players achieve.

Becoming a professional, however, requires a lot more than just being better than 97% of all players. To compete for a club, one must spend countless hours to truly stand out. “Before getting signed, I spent most of my waking hours playing this game,” said Li Tianshun, a 19-year-old starter team member better known as “tgod.”

During the season, Li still spends most of his day playing the game, though now it’s in collaboration with four other team members. Players show up the training room at 11:30 a.m. for warm-up matches. Then, after a lunch break, they proceed to training matches with other clubs, which last from 2 p.m. to 5 p.m. Another training session with rival clubs takes place between 7 p.m. and 10 p.m., followed by two or more hours of “pinnacle matches,” competing with random players in the “Honour of Kings” master tier.

To make this kind of training possible, Vici Gaming players live at the club. The top floor of the three-story training center is used as a dormitory, and the in-house canteen means that players do not need to leave the building.

While players say they still love the game, the intense training and immense pressure to win does take some of the fun away. “When an interest becomes a job, it can become a bit more monotonous because you are doing it all the time,” Li said.

Long hours of playing doesn’t always lead to tournament wins. This is why Vici Gaming hired the coach of the Chinese “Honour of Kings” team that won gold at the 2018 Asian Games to help players review matches and hone their skills.

“Each player has his own level of skill and play style, and it is up to the coach to devise different strategies based on those factors,” said Zhang Nuozhou, the manager of Vici Gaming’s “Honour of Kings” team.

A booming industry and its rewards

E-sports is thriving in China with a market of RMB 8.48 billion (around $1.23 billion) in 2018, according to a report from China Central Television (CCTV), the country’s state television broadcaster. The same report predicts that the number will more than double by 2020 to RMB 21.10 billion, creating demand for half a million e-sports professionals nationwide.

Revenue from the industry is also projected to grow at a steady rate. A report provided to TechNode by PricewaterhouseCoopers predicts that revenue will rise by 23.3% year-on-year to reach $202 million in 2019 and further increase to $392 million by 2023.

Viewer numbers are soaring as well. Tencent’s League of Legends Pro League (LPL) hit 15 billion cumulative viewers in 2018. That’s a total of 2.5 billion hours watching matches organized by the league, according to company statistics. With so many people watching, more corporate sponsors are getting involved, including Mercedes-Benz and Shanghai Volkswagen. According to the PricewaterhouseCoopers report, e-sports sponsorship in China will reach $76 million in 2019.

For professional players, the most obvious benefit of this rapidly growing industry is the rocketing value of tournament rewards. The summer season of LPL, for instance, offers RMB 1.5 million to the winning team. The 2019 “Honour of Kings” World Champion Cup, ended on August 11, has an even higher overall prize pool of RMB 32 million, thanks to Tencent’s efforts to promote the title. The winning team, Shanghai-based eStarPro, took home RMB 13.4 million.

From untamed to professional

According to analysts, the most important change for professional players has been the industry’s development toward standardization and professionalization, which only truly started a few years ago under the combined effort of companies such as Tencent and local governments.

Due to the limited means of promoting the sport and public suspicion toward gaming in general, China’s e-sports industry prior to 2014 was a challenging environment for both clubs and professional players.

“Clubs at the time didn’t have a well-developed system to select players and generally lacked funding because most of them depended on prize money. On the players’ side, when they joined the industry, they faced pressure from both their families and society. Nor was there a scientific training system,” said Liu Jiehao, an analyst from research group iiMedia.

“It wouldn’t be an exaggeration to call the environment at the time ‘untamed,’” said Liao Xuhua, an analyst at data consultancy firm Analysys.

Starting from 2014, however, Tencent started to construct an e-sports ecosystem based on “League of Legends.” This ecosystem revolves around LPL and is supported by other tournaments such as LPL’s secondary league, League of Legends Secondary Pro League (LSPL), which was replaced in 2017 by League of Legends Development League (LDL).

From 2016 to 2017, Tencent “borrowed heavily from traditional sport” and substantially increased the total number and level of matches with the goal of laying the foundations for commercializing the sport, according to a white paper released by the company. In 2016, Tencent expanded its e-sports ecosystem by creating KPL, the professional league for the mobile game “Honour of Kings.” That year, Tencent also began soliciting sponsors for LPL and selling the rights to stream the matches.

Monetization was made possible by the rise of live-streaming platforms such as Huya and Douyu, starting around 2014; they soon became the hub for viewers to learn about e-sports. “Live-streaming not only provided hopes for monetization but also helped popularize e-sports games and related tournaments,” Liao told TechNode.

In the meantime, municipal governments and the central government have become increasingly supportive of the industry. China’s Ministry of Education, for instance, added “e-sports and management” as a supplementary major for universities in 2016. Earlier this year, China’s Ministry of Human Resources and Social Security said it would recognize “e-sports operations” and “e-sports professional” as real professions.

At the city level, Shanghai outlined its intention in 2017 to build the city into the “e-sports capital of the world.” In June of 2019, the city revealed more detailed plans, promising to encourage investments in e-sports stadiums and pledging to provide incentives for both high- and low-level tournaments. Cities like Beijing, Chengdu, and Hangzhou have also unveiled plans on a smaller scale to spur development of local e-sports industries.

The professionalization of e-sports, in addition to creating higher prize pools, has also given professional players a fairer and more secure environment for personal development. Both LPL and KPL, for instance, have rules about how clubs and players should behave, as well as regulations about the players’ transfers and payments, though exact numbers are not made public. Each league has a dedicated team who oversees these matters. The teams also make public important information such as player recruitment and transactions on their respective league’s official Weibo account.

Companies like Tencent have very strong incentives to facilitate this transformation, says Cecilia Yau, head of entertainment and media at PwC Hong Kong.

“[Organizing] competitions is a way to extend the life of video games, and to make competitions sustainable you have to keep them as regulated and professional as possible,” Yau said. “Professionalization also helps create a sense of belonging to a team on the viewers’ side. If viewers have a sense of belonging for a particular team, following it could be a lifetime thing.”

Uncertain future

Despite the explosive growth of China’s competitive gaming industry, the revenue of tournaments and clubs is still minuscule compared to what developers and publishers receive, which will add up to nearly 90% of the industry’ total revenue in 2019, according to the estimates of research firm Gamma Data. Tournament sponsorships, streaming rights, and advertisements will likely account for 1.1% of the industry’s revenue, whereas the income of e-sports clubs will only comprise 0.3% of the total revenue of the industry this year.

In addition to generating little revenue and therefore having a smaller voice in the market, e-sports clubs are also vulnerable due to their reliance on certain titles. “Clubs still depend on corporate sponsorships and profit-sharing from e-sports leagues,”  said iiMedia analyst Liu Jiehao.

Once an e-sports game starts losing its popularity and amateur user base, sponsorships start drying up, and profit-sharing agreements lose their value. This decline is likely already happening to Tencent’s “Honour of Kings”—according to data from consultancy firm Analysys, monthly active users in February dropped by around 34% year-on-year and the number of total hours spent fell by nearly 50% year-on-year.

For the players themselves, most will only have a brief career—cut short by competition from new entrants and their own slowing reflexes. In 2019, the estimated average career span of players in LPL is only 2.6 years, according to a Tencent white paper.

“E-sports players generally peak between 17 and 22, after which their skills start declining, but their understanding of the game increases,” said Zhang, the team manager at Vici Gaming.

Professional players may also face limited career options once they retire. With players beginning systematic training at as early as 15, they rarely have time to pursue any other form of education. Zhong Kaiqiang, one of the players at Vici Gaming, told TechNode that he quit school a long time ago. The other two players that TechNode interviewed also never finished high school. While most retired e-sports players have remade themselves as game live-streamers, the players of Vici Gaming’s “Honour of Kings” team said they haven’t really started seriously considering what comes next after they leave the competitive scene.

“One of my plans is to become a singer,” said Li Tianshun, smiling.

If you can’t see the YouTube player above, try watching here instead.

More than 364,000 people descended on Shanghai last week to attend the four-day ChinaJoy event, one of Asia’s largest annual digital entertainment and gaming expos. Visitor numbers have grown eightfold since it started in 2004.

Despite the record-high visitor figures, ChinaJoy saw a fall in gaming companies on show at the convention this year. The country’s gaming sector is still in recovery mode after a year-long freeze on new licenses that only ended earlier in 2019.

For a lot of ACG fans, however, ChinaJoy represents one of the few reasons to leave the house this summer. One attendee dressed as Roadhog from Overwatch told TechNode reporters that he was here just to see check out what Blizzard, the game’s developer, was going to display.

“I’ve been playing Overwatch since it first came out in 2015,” he said. “I’m here to see if Blizzard’s booth has a Roadhog figure so I can buy one.”

ACG, short for “Anime, Comic, and Games,” is being embraced by more and more young people in China. For one female interviewee, it was her seventh time visiting ChinaJoy, and she still gets excited walking through the different halls.

“It’s like entering a 2D world in a 3D space,” she said. “I feel relaxed and far from the pressure of work and life.”

For those not so familiar with ACG culture, ChinaJoy is most famous for two things—showgirls and “zhainan.” The expo garnered a negative reputation over the years for using scantily clad girls to bring in more male attendees. Things changed in 2015 when the convention organizers rolled out strict regulations on their attire, and those dressed inappropriately faced fines.

The term “zhainan” derives from the Japanese phrase “otaku” (御宅男), literally meaning “house male.” It refers to a guy whose favorite thing to do is to stay at home and watch or play ACG content. They are usually often seen as lacking in social skills, and they choose to immerse themselves in the world of ACG. However, as one eventgoer quipped, they can be the ”backbone of the country“ as long as there’s such a massive market for them.

“It used to be a niche group, but I think that with the presence of more and more exhibitors, you can see that the audience is growing,” she said.

Not all of this year’s visitors came away impressed. One World of Tanks fan spent a whole year creating a huge paperboard tank like the ones from the game to wear on his head at the event. He arrived at the expo only to be told by organizers that he couldn’t wear it inside because there were too many people.

“We wanted to see the World of Tanks booth but the game publisher Kongzhong didn’t attend,” he said. “We have to just let it go.”

If you can’t see the YouTube player above, try watching here instead.

Local resident Stacy Man believes it is now possible to go a week in her native Hong Kong without using her wallet or cash.

That would have been hard to imagine in the Asian financial hub just a few years ago. A mix of cash, credit cards, and payment smart card Octopus has dominated the city for years. While they remain popular, the situation appears to be changing as mobile payments are increasingly accepted at stores and restaurants, as well as on public transport.

So far the changes in the special administrative region have not been as radical as those on the Chinese mainland, where cash is fast becoming a thing of the past, especially in urban hubs.

Man, a 19-year-old university student, clarified that her choices would be relatively limited if she left her cash and credit cards at home for this imaginary survival challenge.

“If you make every purchase in supermarkets or convenience stores, I think that will be okay,” she said. “But if you want to buy something from the wet market or on the streets, then it may not be a good choice [to use mobile payments].”

Despite the limitations, Hong Kong residents are growing increasingly familiar with this new way to pay. Some 84% of Hongkongers have used mobile payments before, according to a survey from the Hong Kong Internet Registration Corporation Limited last August.

Fierce competition

The competitive landscape not only features not only China’s usual suspects Alibaba and Tencent but also global players such as Google, Apple, and HSBC.

Alibaba’s Alipay and Tencent’s WeChat Pay, which enjoy a combined 93.2% share in the Chinese mobile payment market, both chose Hong Kong as their first port of call for their global expansion.

WeChat Pay has been available in Hong Kong since February 2016 while Alipay entered the market with its AlipayHK localized app in May the year after. Both apps allow Hongkongers to complete transactions by scanning merchant QR codes. AlipayHK claimed in March to have more than 2 million users, and 50,000 retailers have signed up.

However in Hong Kong, it appears that Alipay and WeChat Pay will be unable to enjoy their duopolistic dominance that they have grown accustomed to in the mainland, at least for now.

This is in part due to Google, Apple, and Samsung, which entered the market earlier. The roaring success of Octopus has also contributed. There have been over 35 million cards issued in the market, home to only seven million residents.

HSBC, the biggest bank in Hong Kong, launched peer-to-peer payments app PayMe in February 2017. Only available for those with Hong Kong phone numbers and bank accounts, it has racked up more than 1.5 million users in the space of two years, according to company data.

The commercial lender announced in February that testing had started on a business version of PayMe. Also reliant on single-use QR codes, the service is available at 15 retailers as part of the trial.

Driving factors

The battle for Hong Kong’s mobile payment market began when authorities granted the first batch of operating licenses in 2016 to five players including AlipayHK and WeChat Pay.

Their issuance helped to reduce uncertainty regarding investments in mobile payment and helped drive the adoption of the technology in the city, Hong Kong-based Deloitte China partner Paul Sin told TechNode.

Sin contends that the entry of HSBC’s PayMe is one of the key driving factors of the technology’s growing adoption.

[infogram id=”infographic-1h7v4pqrqxlz6k0?live”]

He also believes that increasing interactions between Hong Kong and China have spurred on growth, adding that mainland service providers like Alipay and WeChat Pay, are de facto payment channels linking the two regions.

Liu Dawei, an e-commerce professor at Hangzhou Dianzi University, told TechNode that the influx of mainland Chinese visitors to Hong Kong is also boosting the use of the payments in the city.

“If Hong Kong retailers don’t provide payment methods such as Alipay and WeChat Pay, then mainland [China] visitors would find it very inconvenient. From the retailers’ points of view, the costs of providing such mobile payment methods are very low, so they are willing to adopt them,” said Liu.

[infogram id=”participation-in-mobile-payment-1h7v4pqrqxpk6k0?live”]

From a user’s perspective, the reason for them to use mobile payment methods is simple: It’s more convenient.

At the RISE tech conference in Hong Kong from July 9 to July 11, TechNode asked nine locals about their experience of using the platforms, and most of them regarded convenience as a primary reason for them to use the new technology.

Adrian Ng, a 29-year-old human resources consultant, said he uses Google Pay, AlipayHK, and PayMe. “It’s very convenient, and it’s very easy. So payments get done in a second,” he said.

“It’s nice not to have to bring around so many cards all the time. And it’s an easy way to track [expenses],” said 25-year-old Lan Lai who use Apple Pay and HSBC’s PayMe.

Hongbao promotion falls flat

Chinese firms have attempted to replicate promotional activities that proved popular in the mainland in Hong Kong, but they haven’t enjoyed the same level of success. 

Tencent rolled out WeChat-based Hongbao, red packets filled with money that are traditionally given out on special occasions, in Hong Kong as a digital way of gifting money, but interest was lackluster.

Offering discounts at fast-food restaurants and convenience stores has proved successful in the market, however. Both WeChat Pay HK and AlipayHK provide discounts and coupons occasionally when users make payments through their mobile wallets.

In the interview with TechNode at RISE, Quincy Lin, a 23-year-old entrepreneur, said he was skeptical about the sustainability of this promotional method. “I wonder if they don’t have these coupons anymore, will people still use it [mobile payment apps],” he said.

An AlipayHK spokesperson told TechNode that providing offers and discounts together with merchant partners is one of the company’s ways of encouraging people to use the mobile wallet, but it also planned to support more merchants in a bid to attract more users.

Data concerns

Over half of respondents to the HKIRC survey said they were concerned about cybersecurity and privacy issues related to mobile payments. This indicates that Chinese firms may face a harder struggle than expected to gain a firm foothold in the market. 

“I really hope Hong Kong can catch up with mainland China, where most people don’t really use cash anymore. But I do have concerns about the security problem,” said 23-year-old Hong Kong resident Aka Chung in an interview with TechNode.

AlipayHK and WeChat Pay HK come under greater scrutiny because of their link to their mainland equivalents. Both of them require real-name verification before transactions can happen.

To address the concerns, Jennifer Tan, chief executive of AlipayHK, said in July 2018 that AlipayHK would only require limited personal data from Hong Kong users like their mobile numbers. Data is also not shared with the mainland unit, she added. 

Professor Liu maintains that while mainland users previously had similar concerns, they have now come to accept mobile payments as a regular transaction method after decades of development in the country’s e-commerce sector. 

“Hongkongers’ consumption behavior is still more western-style,” said Liu. “But if they start by making small-scale payments, I’m sure they will gradually accept it.”

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Looking back at how the US  has used national security as a means to protect its domestic industries can provide a better understanding of the current predicament facing Huawei in the US, according to the CEO of the company behind the RISE conference that will take place in Hong Kong next week.

“I think history holds lots of lessons,” Paddy Cosgrave, CEO and co-founder of Web Summit told TechNode in a recent interview. “This hasn’t been the first time that the US has used national security as a basis for restricting foreign companies selling products into their economy.”

Back in the 1980s the US imposed huge tariffs on Japanese cars, Cosgrove said. The American government claimed that Japan was dumping cars into the US market and Japan was too heavily involved in these car companies.

“National security just tends to be the reason that’s given when countries have traditionally produced companies, countries outside of the United States that tend to out-innovate American companies in particular sectors.” Cosgrave said. Japan for example, started rapidly growing the business in other markets and were able to minimize the effect of being blocked from entering the United States back in the 1980s. He thought it was difficult to speculate what outcomes are going to be for Huawei and hopefully Huawei can find other markets they can grow.

Cosgrave also believes the history of innovation in different countries forms a fascinating pattern.

“Through the 20th century after World WarII, America started accusing Japan of doing nothing but copycatting American technology,” he said. “The Japanese were dismissed as being incapable of actually creating anything themselves and they didn’t possess a truly innovative culture much the same as Europeans is dismissed Americans. And in time Japan managed to become a truly Innovative country.”

In recent years, China has been dismissed by other countries as copycatting but Cosgrave believes the 250 years of history holds true and the country is already creating remarkable products and represents the future of tech.

Cosgrave is known for holding technology conferences all over the world. He described those conferences as “dating festivals” for people in tech. So far the company has conferences in Europe called Web Summit, in North America called Collision and in Asia called RISE. RISE will take place in Hong Kong from July 9 to 11 next week.

“It’s a serious business event, but it’s also a lot of fun as well,” he said. “And people are very open minded, very open to meeting people. It’s entirely global. I think that makes a really interesting melting pot by day and by night.”

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The year 2018 may seem a little late to join the robotics market. However, Alex Wu, co-founder and CEO of Tiger Technology, believes it could help him better understand what the sector really needs.

“The service robot market is highly competitive and there aren’t any major players that are operating in the sector,” Wu said. “Entering this market late is not a disadvantage to us; it helps us understand what kind of application scenarios are doable.”

Wu described current service robots as “moving iPads,” a computer with a mobile chassis. He believes a robot should not only be able to feel and communicate but should also perform tasks like a human.

“Service robots on the market now are more like computers which sit on autonomous guided vehicles (AGVs),” Wu said. AGVs are found in warehouses and typically follow lines or markers on the floor in order to navigate. “When I see that I don’t think it can be called a robot,” he said.

iKudo is Tiger Technology’s two-wheel collaborative robot and is equipped with a flexible robotic arm. It can provide multiple services for consumers. Wu said the robot could be responsible for the last 100 meters of door-to-door deliveries in large communities. The company is also planning to target in-home elderly care in the future.

Wu told TechNode that the robotic arm on iKudo doesn’t need to be as accurate as its industrial cousins. By reducing the accuracy, Tiger Technology can cut the cost of the arms and increase the amount of goods they can carry. Moreover, the company is focused on how to make the arm safer for consumers’ everyday use.

“The main feature of our robotic arm is safety,” Wu said. When pressure from iKudo’s arm exceeds a safe level it is programmed to stop immediately, he claims.

In the future, Wu hopes to build a cloud system for all service robots that will help them collaborate. He said with the help of 5G, service robots would be able to do more advanced calculations and help people in a wider range of scenarios.

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Two automakers unveiled their visions of the future of driving at CES Asia 2019, with the hopes of improving drivers’ lives through increased autonomy and humanized design.

Inceptio

Hoping to better conditions for truck drivers in China, autonomous truck technology startup Inceptio unveiled its first model—the Inceptio No. 1—at CES Asia 2019 in Shanghai, China last week.

The truck features sensors placed around the vehicle. Using data from these sensors, Inceptio’s autonomous driving software is able to maneuver the vehicle with millimeter accuracy and quick reaction times, the company claims.

“Today, driving a big truck is a manual job. It’s physically challenging and requires high skill levels,” said Julian Ma, CEO of Inceptio. “It’s not a very desirable job for many people because [it means being] away from home with long hours and night driving.”

Ma is also the president of G7 Networks, an Internet of Things startup. He was the corporate vice-president at Tencent prior to founding Inceptio.

Inceptio No. 1 is a Level 3 autonomous vehicle—the truck can monitor the environment and manage most aspects of driving under certain conditions. However, driver intervention is still required when the vehicle cannot navigate some scenarios.

With Level 3 autonomy, Inceptio hopes to relieve truck drivers of grueling periods of concentration and also improve the efficiency of long-haul interstate logistics.

Inceptio says it will enter mass production within the next five years and eventually provide a nationwide logistics service via autonomous trucks powered by the company’s technology.

“By combining the lower labor cost, higher fuel efficiency, and the much stronger network effects, we anticipate that just with our Level 3 technology, the whole logistics industry can reduce existing cost levels by more than 10%,” Ma said.

Hyundai Mobis

Unlike Inceptio, Hyundai Mobis presented attendees with their vision of what it could be like to drive in the future.

Mobis showed off two concept vehicles at CES, hoping to attract Chinese consumers with its technologies. By incorporating what the company calls “virtual space touch technology” into the operating system, drivers can control the car through hand gestures.

Communication lighting outside the vehicle can also quickly identify the surrounding environment and interact with pedestrians.

David Cho, general manager of the Interior & Exterior Business Team at Mobis China Sales Center, believes that these technologies will be more mature and cheaper in the future.

“We believe in the [next] five or 10 years you will probably be experiencing those technologies in your vehicles,” he said.

With contributions from Eugene Tang. 

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Largely driven by its 1.4 billion citizens, a fifth of the world’s population, China has quickly risen as an economic powerhouse and tech leader with rich data resources over the past few years. It has some of the world’s biggest tech companies, including e-commerce giant Alibaba with GMV forecasted to exceed $1 trillion by 2020, and social heavyweight Tencent, creator of super messaging app WeChat which boasts an impressive 1 billion-plus users.

Chinese netizens enjoy discussing the country’s “four great new inventions”: high-speed rail, mobile payments, online shopping, and rental bike platforms. However, huge consumer-facing successes have done little to influence the adoption of innovative technologies in traditional industries such as manufacturing. Certain technologies such as AI and cloud computing could have transformative effects on this industry in particular.

“The scenario in consumer internet is comparatively simple, and the solutions can be highly replicable. However, the situation becomes much more complex in the industrial world,” Jesse Zhang, director of software engineering for Chinese business software provider Black Lake Technology, told TechNode in an interview at the Emerge by TechNode conference on May 23 in Shanghai.

Backed by a list of prominent venture capitalists (VCs) including GSR Ventures, GGV Capital, and Bertelsmann Asia Investments, Black Lake has been selling software-as-a-service (SaaS) applications to manufacturers since 2017. The company’s aim is to achieve highly automated yet intelligent manufacturing processes, enabling more flexible and efficient production to meet consumers’ changing demands, while lowering risks and failures.

Its manufacturer collaboration and intelligence software have been running in production bases for some big names, including Anheuser-Busch InBev and McDonald’s. One of the company’s use cases was helping McDonald’s Chinese vendors that make Happy Meal toys. Better controls over its procedures and improved inventory visibility allowed for a wider variety of toys from different cultures and changing trends in flexible quantities, rather than in fixed categories and amounts.

However, there are still millions of Chinese factories that have not yet digitized. As of 2018, only 25% of Chinese manufacturers had smart-factory initiatives, compared with 54% in the US. The adoption of industrial IT such as cloud services for data connection across systems is also low, only one-third compared with 80% of those in the US, according to a joint study by BCG, Alibaba, and Baidu.

Also, a company’s digital investment usually does not translate into return on investment immediately. “Digital transformation requires heavy investment in a long-term perspective, and this is particularly challenging to small- and medium-sized companies,” (our translation) reported Xinhua citing a researcher from the National Development and Reform Commission (NRDC).

Another big challenge is that a large amount of data available at currently are isolated. “It takes much effort to associate the datasets from one system with another. Companies should establish jointly a networking infrastructure for industrial use which is applicable to each player rather than building their own networks,” said Zhang. The former GE Digital and Tsinghua alumnus believes that for Chinese factory owners, the future of a scalable industrial internet is based on a commonly accepted standard protocol, where data could be openly shared and connected in real time.

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After Chinese authorities cracked down on cryptocurrencies and initial coin offerings (ICOs) two years ago, the hype surrounding the technology is noticeably muted.

During a panel on blockchain regulation at the Emerge by TechNode conference on May 23, Steven Wang, who heads the market research team at Ant Blockchain, said that the concept of blockchain was frequently linked with cryptocurrency in China before 2017. Now, there is a clearer distinction between the two buzzwords—a shift that Wang sees as positive. Companies are more interested in “landing blockchain applications that would actually solve real problems rather than just [creating] another new bubble,” Wang told TechNode in an interview following the panel.

Last year, Ant Financial said it identifies blockchain as one of the five key technologies that will dominate industries. It has been working with authorities on implementing the technology for use in public services including blockchain-based medical prescriptions and electronic invoices. The fintech giant officially launched its blockchain subsidiary Ant Blockchain in February.

Wang describes the regulatory environment for blockchain in China as pro-innovation. “There’s a lot of support from the relevant bodies and also from the industry organizations to push for blockchain development… I think it’s quite a strong push for blockchain to develop in a healthy way currently in China and it’s not something which we are afraid of,” said Wang.

Wang noted that government agencies are increasingly interested in blockchain and are inching toward an open attitude with more proven applications and actual use cases being implemented. “They are  more interested in coming to us to actually look for ways to collaborate and to use our technology to make their own public services more efficient.”

Outside of the public sector, Wang expects to see more corporations moving into the blockchain space this year and opening up their technology to other businesses.

Looking forward, Wang said the company plans to support more open source projects like Hyperledger Fabric, which it already works with. It is looking to make blockchain more accessible to other businesses, including those that are interested in the technology but lack the technical ability develop their own solutions.

Update: clarified Ant Blockchain’s existing relationship with Hyperledger Fabric.

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Private and public sector actors should cooperate internationally to come up with a framework for ethical implementation of artificial intelligence (AI). “If we ignore those options for constructive dialogue and cooperation because there are other things where it is harder to make progress, then we are doing ourselves a disservice, collectively,” said Chris Byrd, research fellow at the Future of Humanity Institute at Oxford University at last week’s Emerge by TechNode conference in Shanghai.

Despite the different problems China may face in comparison to the rest of the world, there is a lot of overlap. Byrd pointed to the example of algorithm bias: China has a more ethnically homogeneous population so bias is stronger in the initial data sets. This doesn’t mean that nothing can be done, merely that more legwork is required to find data points signaling ethnic minorities, much like US companies must do.

These common points present an opportunity to learn from one another. However, Chinese AI companies and relevant institutions have not been as involved in the global conversation because, in part, the west hasn’t made serious attempts to include them, Byrd said in an interview after the AI panel. This is slowly changing; Baidu, for example, was the first Chinese company to enter the Partnership on AI, a global industry consortium seeking to establish best practices in the AI field.

China has some advantages in implementing policy because it has a more unified system, according to Byrd. At the same time, all of the problematic implications of AI must be treated as a its own topic; algorithm bias, job loss, and safety require different kinds of solutions and thinking.

“Governments are slightly out of their depth when it comes to emerging technologies,” Byrd said. Those with technical skills who understand how the technology will be used don’t know how to solve governance problems, and vice versa. To construct laws and regulations that will bring about AI without unforeseen, negative effects, the two sides must work together.

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In China’s increasingly convenience-focused economy, venture capital investor Linda Li says a more efficient healthcare is on the horizon.

“It’s hard to imagine that in this day and age we can so easily use Meituan [food delivery app] to order lunch, but still have to wait for five hours at the hospital to see a specialist,” said Li, managing director and partner at Vickers Venture Partners in Shanghai. “I think e-health is the next step.”

Li is responsible for the firm’s investment business in China and focuses on consumer internet, mobile applications, financial services and precision medicine.

Vickers invests in China, the United States, and Southeast Asia, and believes that new technology and business models can be transferred from one area to another. The company has offices in Singapore, Shanghai, Hong Kong, Kuala Lumpur and New York, according to its website.

In the past, Li says, those ideas have flowed from the US to China and then to Southeast Asia, but in today’s e-health industry, there has been a reversal. Chinese ideas are spreading.

Li said when it comes to e-health China and the US each has their own strengths. “The US may be slightly better than China in terms of innovation, but China is better than the US in optimizing service technology,” she said.

Some say China’s next hurdle is to standardize health data, but Li doesn’t believe this is the best approach. She believes an influx of new, third-party companies, that provide health services will bring more competition, more modes of collecting data, and ultimately, better services for Chinese consumers.

“I am really optimistic about these third party companies,” Li said. “They are really able to collect data for consumers who are willing to pay.”

Li believes a successful e-health company requires strengths in four areas: online services, mobility, doctor relations and multiple patient services.

Li joined Vickers in 2005 and has grown up alongside the firm’s investments. “2005 was a booming time in China’s VC history,” Li said. “I joined in this industry at the right time.” In her experience, she’s found that the biggest industry breakthroughs come from outsiders.

“The [healthcare] industry hasn’t done very well for many years,” she said. “So why don’t allow people to use another way to solve the problem?”

At Friday’s Ali Day, Alibaba’s annual event to celebrate employees, Jack Ma said that employees’ sexual activity should happen six times every six days, and that it should last a long time. The remarks make reference to the 996 working regime, for which Jack Ma’s harsh  attitude has received significant criticism in the past.

Ma got in trouble in April after condemning an online movement against the 996 working schedule in the tech industry, which forces employees to work 9 a.m. to 9 p.m., six days a week. Tech workers took to GitHub to speak out against the long hours, saying that eventually they will lead them to the ICU. Ma responded that having the opportunity to work 996 is a “blessing.”

At Ali Day, the richest man in China followed up on his 996 proclamations with a wordplay. The Chinese word for “long” is a homophone with the word for “nine,” so he flipped the notorious 996 quote to encourage daily sexual activity with a long duration.

This year’s Ali Day featured the weddings of 102 employee couples. Ma, Alibaba’s founder, acted as the witness to the weddings, which were performed simultaneously on stage.

At the end, he gave a speech where he pronounced “We emphasize the spirit of 996 at work. We want 669 in life. What is “669?” Six times over six days a week, the key is to last long.”

Ma said that the purpose of marriage is solely to produce babies, which led several Chinese netizens to assume that he was promoting an increased birth rate, one of the key aims of the Chinese government. “Jack Ma is following the state in promoting having more babies,” one Weibo user said.

“If an ordinary person said this it would be considered as part of the “straight man cancer,” a post on Weibo reads which raised 6,500 likes by May 11. “Straight man cancer” is a Chinese term used by netizens to describe men who are self-righteous and indifferent to the value of and the obstacles faced by women.

Another user said “996 during the day, 669 during the night, I guess after less than a month I might have to stay in the ICU forever.”

In a statement, an Alibaba spokesperson said that “Jack offered lighthearted life and marital advice” to the newlyweds that included the tip “that the value of love, unlike coding, can’t be measured or calculated.”

With contributions from Shi Jiayi. 

UPDATE: This story has been updated to reflect comment from Alibaba. 

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Chinese pop star Cai Xukun became a meme this spring when the internet began poking fun at his basketball skills. Now, his lawyers are demanding that users of video site Bilibili take down their viral, satirical videos.

The conflict began when the National Basketball Administration named Cai—long known as a controversial figure for his effeminate look and passionate fan base—as an ambassador for the brand. Cai’s detractors began posting guichu videos—a video genre that mixes existing videos with sounds and effects—to joke about his athletic abilities.

In response, Cai’s studio posted an open letter calling for Bilibili to take down videos the studio said were “deliberately defamatory image misuse.”  Many support Cai’s call for Bilibili to remove the offending videos.

Bilibili responded by saying that it was concerned about Cai’s feelings but said the law would have the final say: The company linked to an article listing celebrities who have failed at similar lawsuits.

After Cai sent his open letter, jokes picked up steam on Bilibili—a site not heavily populated by Cai’s fans. Bilibili is not completely open to the wider internet; users must pass an exam to gain permission to post comments.

Some have said the scuffle represents the worst of so-called “idol culture,” in which fans blindly and passionately defend their favorite celebrities in online debates.

Cai rose to fame after debuting on the musical talent show Idol Producer, and later became captain of the musical group Nine Percent. He has a whopping 23 million followers on Weibo and is ranked first on Weibo’s mainland superstar power list.

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Chinese workers are responding to Github protests over China’s grueling “996” work schedule, with many expressing wariness about whether the protest can change China’s long-lasting overtime work culture.

Last month, an anonymous post on Github—a software resource website—urged workers to rally against forced “996” schedules, shorthand for working overtime from 9 a.m. to 9 p.m., six days each week. The post called out companies that enforce a 996 work schedule and urged all developers to license their projects as “Anti 996,” in an effort to limit the software that so-called “anti-labor” companies are allowed to use.

Proponents of 996 work culture argue that China’s technology industry is fast-paced and competitive, and overtime work is an unavoidable necessity. Many tech workers in Shanghai, however, argued the opposite.

Xia Rongrong, a brand consultant at an advertising firm, said that 996 could reduce productivity in the long term. “When you are working, you’re doing it with an attitude,” she said. “The complaints on the internet right now came about because we’ve had this situation for a long time, which just demonstrates that people haven’t been working the 996 schedule willingly. They just wanted to keep their jobs, so they continued to let it happen.”

At some Chinese companies, overtime work is obligatory but not officially so.

“My boss likes to see us working overtime,” said Michelle Lu, an HR employee at a real estate company. “Sometimes I can leave at 6 p.m. but nobody in the office will go home until my boss says we can.”

Most workers who spoke with TechNode believe that a 996 work schedule goes against Chinese labor laws. When asked, however, whether they would take legal action to protect their own labor rights, many said they would prefer to simply change jobs.

Among those who were wary about a legal fight was Wang Xin, a former IT employee. He explained, “I don’t really know much about the laws.”

Likewise, many were dubious about the efficacy of an online protest. Wayne Wu, an engineer in Shanghai, said he’s seen action like this before and is not optimistic about the outcome.

“A group of people won’t be able to successfully resist,” he said. “There have been many protests before. They lasted half a year. Three or four months will go by and then you’ll no longer hear a sound.”

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Chinese media have called this year’s Apple product launch event the “softest” one yet. Unlike Apple’s previous hardware-focused launch events, 2019 was all about the services—Apple News+, Apple Arcade, Apple TV and Apple Card. The company is pivoting away from hardware and toward content-based services.

This strategy, however, may ignore the desires of Chinese consumers, who may not have access to these new services.

Only a portion of Apple software products are available in China—iTunes Movies, iBooks Store and Apple News are all blocked on the mainland. After Apple’s March launch event, netizens joked that they looked forward to trying Apple’s new “404 not found” services.

In Shanghai, a consumer said he was not interested in Apple’s new services. “These services are already common in China,” he said. Within the Chinese firewall, citizens have become accustomed to homegrown services—social media platforms like WeChat and Weibo, mobile payments like Alipay and WeChay and a slew of video platforms—many of which they deem superior to Apple’s.

Alipay and WeChat Pay dominate China’s e-payment, and Apple Pay has only a 16% market share.

A worker from Shanghai’s financial area surnamed Qian said, “I think if Apple wants to launch its credit card, it will be difficult for them to expand in the Chinese market.”

Apple does, however, still have loyal fans eager to try hardware the company released a week before the event: the updated iPad mini and iPad Air as well as the new AirPods. A sales representative in a Shanghai Apple store told TechNode there was still a waiting list to purchase the new iPad mini.

While some Chinese citizens still say Apple is their ideal phone, others are ready to switch to Chinese phone brands like Huawei and Xiaomi.

One Shanghai resident surnamed Zhou said, “Overall, mobile phones are just tools… I think domestic phones have reached this level of quality through nonstop hard work. I’m not necessarily saying people who buy Apple products are worshiping foreign things, but it’s a good thing to buy products from your own country.”

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Luckin Coffee—the Chinese coffee chain that has used lossmaking, internet-focused marketing tactics to expand rapidly across China—is under increased scrutiny as it reportedly prepares for a US IPO.

Some analysts question whether the brand’s cash-burning marketing strategy can sustain Luckin’s position in the Chinese market, or if the coffee chain will burn out before reaching maturity.

Luckin Coffee has opened more than 2,000 shops since January 2018 but posted a net loss of RMB 857 million (around $128 million) over the first three quarters of 2018. And the company’s astonishing expansion doesn’t stop there. Luckin plans to surpass Starbucks by opening about 2,500 new Chinese outlets this year.

Chinese consumers have reacted positively to the brand, which has positioned itself as a more convenient, less expensive alternative to Starbucks.

One interviewee in Shanghai said he thought Luckin had found a niche audience that was different from that of Starbucks, although he himself said he had yet to drink a coffee from Luckin. “I think they are two different products,” he said. “Starbucks pays more attention to quality. They’re selling an experience. But Luckin Coffee is convenient and affordable.”

Luckin’s operations rely on a strategy called “fission marketing,” a concept conceived by Luckin Coffee’s CMO, Yang Fei. This approach focuses on storing and maintaining internet traffic in order to build a large pool of users. Luckin purchases are made entirely within the company’s app, where the coffee chain also pushes rewards to buy in bulk or refer new customers.

According to Yang’s fission marketing strategy, once the company builds a pool of users, the next step is to “pour” the traffic. Luckin does this by pushing constant coupons that reward sharing with friends.

Luckin Coffee has completed $200 million Series B at a total valuation of $2.2 billion in December 2018 with Joy Capital, Tai Chung Capital, Singapore Government Investment Corporation (GIC), CICC and other companies participating. According to an article in Sohu, the companies above are all the former investors of CAR Inc. While Luckin CEO Qian Zhiya and chairman Lu Zhengyao are all from CAR Inc. Zhihu users joke that it’s a “club deal.”

As to whether the local brand can overtake Starbucks, some Chinese coffee drinkers are optimistic. “It depends on how Luckin is positioning its brand and how it develops in the future,” said another coffee drinker in an interview. “I think anything is possible.”