CapCut, an all-in-one video editing app owned by TikTok parent company ByteDance, has surpassed 200 million monthly active users, according to a report from Chinese financial media outlet Baijing. 

Why it matters: CapCut’s success comes amid an increasingly hostile climate for China-developed apps in the US and European markets, with ByteDance’s TikTok facing restrictions and investigations on multiple fronts. 

• The figures make CapCut the second overseas-focused product from ByteDance to achieve more than 100 million MAUs.

Details: CapCut was originally developed by Shenzhen Lianmeng Technology, a startup which ByteDance acquired in 2018 for $300 million. Launched as Jianying in China and designed for both mobile and PC, it offers a range of video editing functions, filters, audio and visual effects, and video templates and is compatible for use with TikTok.

• ByteDance released an overseas version of Jianying in April 2020, rebranding it to CapCut in December 2020.
• According to data from Chinese app analysis platforms Diandian and Data.ai in Baijing’s report, CapCut had more than 200 million MAUs in January. That month also saw CapCut enter the top 30 non-game apps list for iOS and Android devices in China. Its global revenue in January was $800,000, with the US market accounting for more than half of this figure. Although CapCut still has a revenue gap to Meitu’s editing tool BeautyPlus, which tops the list with over $2 million in monthly revenue, it has seen impressive growth, managing to achieve significant monetization in just four months. 
• CapCut has largely gained users through in-app promotions on Douyin, the Chinese version of TikTok, and by making its services available for free for two years. Since September 2022, CapCut started charging for premium features, which users can access by monthly or annual subscription packages.
• CapCut Pro’s charges revolve around cloud storage and premium features. The monthly cost of cloud storage is $0.99 for 10GB, $1.99 for 100GB, and $5.99 for 1,000 GB. The premium features are priced at $9.99 for a single month, $7.99 for a continuous monthly subscription, and $74.99 for a full year.
• In October 2022, as part of an update, CapCut launched a PC version, which is compatible with most mainstream social media platforms overseas, making it more attractive to both private customers and enterprise businesses.
• The app also runs a creator recruitment program whereby video creators making popular templates can earn up to $1,000. 

Context: TikTok reportedly set a goal of topping 1 billion daily active users worldwide by the end of 2022, testament to the app’s continued growth even as it faces a number of investigations and restrictions around the world. 

• On Feb. 27, Canada announced that it was banning the use of TikTok on government-owned devices, following similar moves in the US. The ban came just days after the EU announced similar restrictions for its staff. 
• In September, the UK Information Commissioner’s Office (ICO) warned that the ByteDance-owned video platform could face a $29 million fine for failing to protect child privacy.
• Earlier this year, ByteDance moved Douyin vice president Zhi Ying to TikTok to head up the latter’s products and content businesses, as the Beijing-based company looked to involve more of its successful executives in TikTok’s development.

Self-driving startup QCraft has begun operating an autonomous shuttle bus pilot project in an eastern Chinese city, the latest example of local entrants racing to make driverless transport commonplace in the country.

Two-year-old QCraft, backed by tech giants Bytedance and Meituan, currently operates a fleet of around 70 self-driving mini-buses in several major cities, including Shenzhen and Wuhan, the largest fleet of its kind in China.

Now, the company is expanding its footprint with the launch of a robobus project in the downtown area of Wuxi, a city in the eastern Jiangsu province, which started taking local residents on rides on Oct. 23.

Initially deploying five robobuses for three routes totaling 15 kilometers (9.3 miles), QCraft said its pilot service covers a range of about 10 square kilometers in the busiest portions of the city and connects major shopping centers and subway stations to residential properties.

On Oct. 23, TechNode got a look at the driverless future with a ride on one of QCraft’s Wuxi buses. The electric mini-bus model, called Longzhou One, is equipped with an extensive self-driving sensor suite including five Lidar units, four front cameras, and two millimeter-wave radar units, making it capable of seeing objects from long distances of up to 250 meters.

The self-driving buses still have a driver to reassure passengers and comply with government rules. The driver took control of the vehicle once during a 15-minute ride when a large bus zoomed past it in the overtaking lane.

The buses typically travel between 30-50 km/h (19-31 mph) and are currently programmed on fixed routes. Each bus carries a maximum of nine passengers and has a driving range of up to 200 km (124 miles) on a single charge. 

Passengers can access real-time transit information from the company’s app on their phones. The buses operate from 9 am to 6 pm on weekdays, which the company said will meet the needs of nearby residents with their daily commute.

After receiving $100 million from reputable investors, including Meituan and Jack Ma’s YF Capital, QCraft is on track to expand its test fleet to more than 100 vehicles by year-end.

READ MORE: Drive I/O | Meet the Chinese self-driving car startup with Google roots

After completing a test drive across China’s eastern coastal region, Xpeng Motors said on Wednesday that its driver assistance technology is the top performer in China, using a technology rejected by Elon Musk: high-definition maps.

At a press event in Beijing, Xpeng executives said its Navigation Guide Pilot (NGP) function, which enables primarily unassisted highway driving, surpassed Tesla’s Navigate on Autopilot (NoA) in several key metrics. Specifically, Xpeng said that it had achieved a lower rate of human driver intervention and a higher success rate for automatic lane changing, among others. The 3,600-kilometer (1,864 miles), eight-day road trip, which included members of the media, ended on Sunday.

The road trip included a fleet of 15 P7 sedans traveling a combined total of around 50,000 kilometers on highways and urban streets through major domestic cities including Beijing, Shanghai, and Guangzhou. Xpeng said it logged 0.71 disengagements per 100 kilometers. This means a human driver was forced to take control of the vehicle after traveling in autonomous mode for 140 kilometers on average. In the meantime, Xpeng claimed several Tesla vehicles in tests conducted by local media experienced 1.03 disengagements per 100 kilometers.

The Chinese EV maker also announced its latest version of NGP, scheduled to launch through an over-the-air update in the second quarter, resulted in a 94.4% success rate for lane changes versus Tesla’s 81.3%. Xpeng vehicles successfully self-navigated through tunnels 95.0% of the time compared with Tesla’s 41.8%. Huang Xin, a director at Xpeng Motors, called it “an overwhelming lead” (our translation).

”NGP completely exceeded Tesla’s NoA regarding all the metrics in our tests… and has become the most advanced driver-assist function for production models,“ (our translation) Huang said while calling out challenges from all of its competitors. Huang added that Xpeng will release all the data collected during the trip.

TechNode took one of the Xpeng sedans on a test drive from a hotel in Shanghai to a highway service zone in neighboring Suzhou city, sitting alongside the driver. During the 45-kilometer, 40-minute test ride, the vehicle drove primarily at around 120 kilometers per hour, navigated safely and responsively including changing lanes a number of times. However, at one point, the driver was required to take over the wheel when the vehicle passed an off-ramp on its right while being cut off by a car from the left.

In another test drive made by Chinese trade publication 42How, the P7 disengaged 19 times over 2,000 kilometers of autonomous highway driving compared with 22 driver interventions for a China-made Model 3 on the same route. The article said that Xpeng’s tech provided a better, more localized experience for Chinese customers, including a smoother drive when guiding its car from a highway on-ramp to off-ramp, and normal operation in tunnels or with heavy rain, which caused Tesla’s NoA to stop working.

Alibaba helps

So far, around 20% of owners of Xpeng’s P7, the company’s first premium model with the hardware necessary for offering advanced self-driving capabilities, have ordered its latest Xpilot 3.0 advanced driver-assist system (ADAS) featuring the NGP function, which launched in January. The Nio Pilot, which has been offering for almost three years, had a 50% take rate. More than 68% of Tesla buyers had reportedly opted in for its Autopilot software back in 2019.

READ MORE: Nio, Xpeng, Li Auto: your cheat sheet to China’s listed Tesla rivals

And yet, Xpeng is considered by many to be a big threat to Tesla in China where vehicle autonomy is concerned. Xpeng has boldly marketed itself as one of few companies capable of developing in-house the entire software architecture for AVs. The P7 currently remains the first and only production vehicle in the market equipped with Nvidia’s Xavier computer dedicated to highly autonomous driving, according to Xpeng’s vice president of autonomous driving Wu Xinzhou.

And now, the Alibaba-backed EV maker is stepping up its challenge against Tesla by working hand-in-hand with Alibaba’s map platform Amap, or AutoNavi. The company is confident that an elaborate, detailed map for real-time self-driving purposes would give it a leg up in luring increasingly savvy Chinese consumers, according to comments during the online press event. Xpeng attributed Amap’s latest high-definition map with providing navigational capabilities in adverse weather conditions or places with poor signal such as tunnels.

“Our vehicles can enter and exit highway ramps automatically and switch highways pretty much all by themselves, because most of the interconnections between highways are mapped by our partner AutoNavi. So we can have a seamless experience when you’re switching highways using NGP,” Wu said during an online conference in late January.

NGP could work properly in benign weather conditions, Wu added, and even under “medium to heavy rains” although it is designed to shut down and require human intervention when the windshield wipers are on the highest setting. Wu acknowledged there are also challenges in snow, which make it difficult for the vehicle’s sensors to detect road lane lines.

Tech dogma

The practice of using HD maps for AV navigation has long been criticized by Tesla’s Musk, partly because maintaining an constantly updated HD map was believed to be an arduous and costly effort. Musk in 2018 publicly stated that dependency on HD maps would cause an AV to fail when real world changes are not reflected on the map. Tesla’s vehicles, he said, have sufficient sensors and processors to drive themselves.

Tesla did not respond to TechNode’s request for comment.

However, most other automakers and AV companies including Waymo and GM Cruise, rely on a suite of hardware stacks comprised of cameras, radar, Lidar, and HD maps—usually viewed as “another sensor.” Xpeng is currently the only car company incorporating Amap’s latest map technologies for on-board navigation, a partnership which Wei Dong, a general manager of Amap, commented requires an automaker have a strong proprietary capability in software development, since map data will be aggregated with sensor data to give AVs a sense of their surroundings.

“We do a very careful checking between what the cameras see and what the map is telling you pretty much all the time. And whenever there is a difference, the system will send a warning to the driver and sometimes just downgrade the AV functionality to make sure it’s safe,” Wu told TechNode.

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.

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.

“China is in the driver’s seat” of blockchain development as blockchain adopters look for solutions to connect different chains, Fudan University professor Michael Sung said at the TechNode Emerge 2020 conference held on Thursday.

Cross-chain integration, called “interoperability” in the blockchain world, is a key challenge for the emerging technology. Blockchain promises a decentralized, largely tamper-proof way to store and share data. But as different users adopt different chains, there is a rising need for good ways to exchange data between them.

Interoperability is “going to be driven by China, because China can mandate that everyone do the same thing,” said Sung, the co-director of the Fudan Fanhai Fintech Research Center and chairman of Carbon Blue Innovations.

China’s blockchain developers are riding a wave of state support since the technology was “anointed” by top leaders, following the pattern of artificial intelligence and 5G, Matthew Graham, CEO of blockchain-focused investment fund Sino Global Capital, said during the panel discussion. This support means “huge investment, probably overinvestment,” he said. “But out of that, innovative things will emerge.”

Crypto investors are also misallocating funds in exchanges, Graham said. He cited the decentralized file storage token Filecoin as an example of frothy funding from retail investors. 

“The last time there was a digital technology that was this transformational,” said Graham, “it was probably the internet. With blockchain, we’re not even at AOL—it’s 1993.”

China’s blockchain ecosystem has weaknesses, the panelists said, naming public blockchain and token-based business models as examples. The country restricts much cryptocurrency activity, and is known for favoring more controllable permissioned or consortium chains over decentralized chains. 

But this preference is not absolute, said Harriet Cao, co-founder of Bianjie, a Shanghai-based startup that has developed both public chains and enterprise-oriented consortium chains. “Public blockchain is highly supported” as long as companies are working on the technology and not banned activities like initial coin offerings, she said. Cao said she has been invited to universities around China to introduce public chains. 

Chinese regulators are also working with companies to experiment in blockchain-based  “digital assets,” Sung said. His lab is working on a project to create blockchain-based green bonds, he told TechNode, and he expects similar projects to take root soon. The key, he says, is finding a balance: “How can we create the proper hybrid frameworks as to have enough control, whether it’s a bank, a company. There is a balance point in taking a centralized system and slowly decentralizing it,” said Sung.

Soon, Sung predicted, a digital asset economy will emerge “like the flip of a switch.” With projects already in the works, he said, he expects this change “on a sub two-year time horizon.”

READ MORE: China’s BSN to test cross-chain interoperability in October

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.

This week, I looked at battery swap technology for TechNode’s Drive I/O newsletter. Two Chinese electric vehicle (EV) companies, Nio and BAIC, are betting big on cars with batteries you can change instead of charging. It’s an ambitious idea—it could solve some of the EV industry’s biggest problems, but there’s no guarantee it’ll work in the market.

READ MORE: Drive I/O | Big bets on battery swap

I wanted to know what drivers think of battery swap, so I visited a Nio swap station in the west Shanghai. As you can see in our video below, the swap process is pretty fast—a little more involved than refuelling a gas car, but faster than changing a tire at the mechanic. 

The Chinese Tesla challenger has seen some initial success, completing over 800,000 battery swaps with a nationwide chain of 143 service stations for car owners. The company recently doubled down, establishing a RMB 800 million ($117 million) battery asset management joint venture with several partners, reported SCMP, and plans to build 50 more swap stations next year.

Located in an understated residential area in west Shanghai, the swap station is far less flashy than you would expect.

The facility doesn’t look new and shiny, unlike some of Tesla’s spacious supercharging stations in China’s first-tier cities, but it seems to get the job done. We saw five Nio vehicles pull into the station during our 40-minute stay. Here’s what we found out while we were there. 

We spoke to three Nio owners, and all said they own more than one car. All three said they usually drive their ES6 crossovers for daily use. 

• Frequency: Mr. Bai, who has been a Nio owner for under a month, has exchanged batteries five times.
• Mr. Xie, an ES6 owner since January, uses the vehicle for his daily commute. He typically swaps batteries six to seven times each month. 
• Mr. Ji, an ES6 driver since 2019 and a businessman with frequent road trips to nearby cities, comes to battery swap stations about ten times each month.

• Why swap? Both Xie and Ji said their residential parking spaces have home chargers, but Nio’s battery swap stations are easily accessible to them for daily commutes. Money is another major reason: Xie told TechNode that Nio’s free swap service saves him more than RMB 10,000 in electricity fees each year.
• Bai, however, is among thousands of EV owners in China who don’t have a fixed parking space or fixed charging pile in their residential car parks. He said he chose Nio over other EV brands largely due to its recharging services. The Nio battery swap station is only around 2 kilometers (1.24 miles) from his home.

• How about experience? All the three customers spoke highly of the availability and efficiency of Nio’s free-of-charge battery swap services, saying that the facilities meet their daily needs.
• Still, two customers mentioned that they sometimes have to wait in lines for up to 20 minutes during evening peak hours, as more Nio EVs are on the roads. Nevertheless, they think the delay is acceptable, since the driver remains in their vehicle before getting out to have the battery swapped.

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.”

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.

This article was co-authored by David Cohen and Chris Udemans.

As China goes back to work after weeks of epidemic lockdown, it’s betting on high-tech QR code quarantines to keep the virus from spreading.

In the eastern Chinese city of Hangzhou, scanning a QR code at a checkpoint with Alipay has become a routine part of daily life. It’s essentially a health passport for the city. A mini-app embedded in Alipay or WeChat rates people as red, yellow, or green risks. To enter an apartment complex or a market, residents must scan a QR code at a manned checkpoint, letting the system know where they are and producing a one-time color code pass to show the guard.

Hangzhou, the capital of Zhejiang province, became the first to adopt the QR code system on Feb. 11, although lockdown continued for most residents until Feb. 15. Alipay announced on Feb. 16 that it was ramping up development support for a national health code system that assesses individuals for self-quarantine based on basic health information and travel history, which it is preparing to launch this week under the guidance of the State Council, China’s cabinet.

Read more: How China built its health surveillance system

In a statement provided after publication of this article, Alibaba said that ratings are provided by government, not the company, using Alipay as a platform. Referring to widespread references in Chinese media to an “Alipay health code,” the company said: “It is marketing language used for promoting usage. In reality, these are not Alipay-issued health codes, but rather are issued by governments.”

By Feb. 20, Alipay boasted that platforms it had helped develop were already in use in over 100 cities, including all cities in Zhejiang, Sichuan, and Hainan, as well as Chongqing.

But national implementation doesn’t mean a unified national system—instead, each participating city is launching a local version of the system, creating a fragmented landscape resembling local social credit system pilots. Some have versions of Alipay’s system, some have local apps—and others have both. While online tracking ended Hangzhou’s total lockdown, many other cities have not revised quarantine rules to reflect new online systems.

How QR code systems work

As of Feb. 25, sources on the ground described very limited implementation outside Alipay’s home province of Zhejiang, ranging from paper-based lockdown in Shanghai to laxly enforced digital checkpoints in Shenzhen. Talking to locals in cities that have adopted health passport systems, TechNode saw its limits: the app alone does nothing without human-based enforcement and public compliance, and few cities outside Zhejiang have overcome these human challenges.

The system shows both how much is possible with high-tech surveillance—and how much human input is required to make such systems work.

To register, individuals provide their name, ID number, phone number. The health-rating platform, asks a series of questions, including physical health condition and whether the individual has traveled to virus-hit areas or has come into contact with infected cases, to produce an initial rating. These ratings are reported to change, likely informed by where the user has checked in and new reports of infections.

According to Hangzhou rules, residents with a green code are allowed to move around the city freely. Yellow means a seven-day quarantine is required, and red requires a 14-day quarantine. Some versions adopt a slightly different color-coding system, but the general idea is the same—to track mobility and regulate it based on risk assessments. Though the questionnaires record self-reported information, public data is used for verification purposes.

Internet users have questioned the way the system analyzes health and travel data. In numerous accounts on microblogging platform Weibo, netizens said people living in the same household were given different color codes even though they had been isolated together for weeks.

Others have expressed frustration with unpredictability, saying they were initially given a green code only to have it change to red after a few days. The colors are dynamic, and some people taking what they believe to be adequate measures to protect themselves while outdoors have had their mobility limited after their code changed color.

While Alipay’s version is associated with a State Council project, local governments are not required to adopt it. WeChat operator Tencent is working with the State Information Center to develop similar QR code-passed health passports.

Tencent’s version, called “Tencent Healthcare Code,” is already available in provinces including Guangdong, Sichuan, and Yunnan.

While the system has the potential to bring a semblance of normal life back to places that have been locked down for weeks due to the outbreak, to create a surveillance system capable of tracking 1.4 billion people everywhere they go comes at great challenges and costs.

To enter market, scan QR code

Uny Cao, a resident of Hangzhou, says that he scans twice a day—once when he goes to the vegetable market, and once when he returns home. Getting on the subway, riding a bus, or going to a park would mean more scans, so he’s chosen to limit these behaviors. Many also avoid borrowing share bikes, reasoning that the apps may share data with the Health Code:

“A few days ago, they found a new case in City North. Rumor spread that if you have rented a shared bike in that region, your code might get a downgrade,” he said. “So for those few days, I avoided renting shared bikes, in case they discover a new patient in my area.”

According to our observations, there is no place that enforces the health passport system as rigorously as in Zhejiang.

Regular scans both track and shape behavior. Sources told TechNode that citizens are required to show their code to be scanned when entering supermarkets and residential areas as well as getting on the subway and buses.

For Hangzhou residents, the inconveniences are a small price for something like normal life—for the ten days before the app launched, the city was forced to stay indoors except for short trips to buy food every other day. Since the code system came in, residents have been allowed to leave their homes and even to drive to other cities.

Even here, enthusiasm has its limits: While apartment buildings and food markets appear to be rigorously enforcing the rules, TechNode correspondents have walked into banks past napping checkpoint guards. Restaurants and smaller shops are starting to re-open without check-in systems.

The Hangzhou version of the mini-app, which the national version will reportedly be based on, allows non-Hangzhou residents and foreigners to register. Other places such as Shanghai and Shenzhen’s platform only allows residents to apply for a pass.

The Hangzhou health passport works for long-distance travel. When a TechNode correspondent traveled from Shanghai to Hangzhou, train station staff checked travelers’ health codes and wrote down their ID numbers. Travelers who had applied for codes outside of Hangzhou had no problems entering the city.

Mileage may vary

Beyond Hangzhou, enforcement can be more lax. In Jinhua, a city in Zhejiang 180 kilometers south of Hangzhou, a 25-year-old city resident told TechNode that she only needs to use the system when taking public transport. Her local supermarkets and residential community do not check the color of her QR code when she leaves her apartment. The system is enforced more stringently for out-of-towners, she said.

In a rural area, quarantine guards suggested a TechNode correspondent write down an ID number on a piece of paper to save time registering with a local version of the color codes mini-app.

But other cities can enforce non-app limits far more strictly, suggesting that they do not fully trust the app: A resident in the eastern Chinese city of Ningbo says there are checkpoints set up at community complexes and supermarkets. People are being asked to show, but not scan, their QR code at public places. On top of enforcing the new health code system at the community level, the previous lockdown rules still apply, the Ningbo resident said. In her apartment compound, residents are required to show the QR code at the entrance of the complex and still adhere to the rule that every household can only send one person out every two days.

The source also said her relative purposely left out the fact that he just came back from Wuhan when filling out the questionnaire. The police called days later and ask why he didn’t report it. They found the license plate under his name had been in Wuhan recently.

For people that have returned to their work, they have to show the QR code when leaving the apartment complex and also show a document from their employer that permits them to return to work.

Active but unused

TechNode sources described health passport systems that were implemented either spottily or not at all. In some places, including Shanghai, Beijing, and central China’s Hubei, the worst-hit province in the country, apps were superseded by strict offline measures; in others, such as Guangdong, quarantine appears to be lax.

More than a week after launching a track-everything health code system, Shanghai is still very much relying on paper records to enforce a 14-day quarantine on all new arrivals. Shanghai launched health passports as a new feature within its pre-existing “Health Cloud” mini-app on Feb. 17, accessible on Alipay and WeChat. But TechNode correspondents could not find a place to scan the app inside the city, finding checkpoints at office buildings and apartment complexes relying on paper records and paper cards or stickers to identify approved residents or workers.

In Shenzhen, the headquarter of internet giant Tencent, sources say that the health code system has been mostly ignored as the city hurries to get back to work.

Henk Werner, head of Shenzhen-based hardware incubator Trouble Maker, told TechNode that he and his friends had not bothered to register for the local version unless they wanted to take the subway. Residents are being asked to show QR codes at places like the parking lot of an apartment complex, but found it possible to bypass the checkpoint. Another source in Shenzhen says she hasn’t bothered to register—and that she’s going to work by taxi every day with a paper pass.

The central city of Xi’an has used a more limited pass system that requires scan check-ins but does not display a color code for about a week. Graduate student Liu Weiqi and TechNode editor Wang Boyuan both described checkpoints at the entrances to apartment compounds, but saw mixed use of the app. While Wang saw people using the app to enter his apartment compound, Liu made a trip to the market by bus on Feb. 25, and found that in practice he was registered on paper records everywhere but the market. On Feb. 25, the city announced that it is adopting a version of Alipay’s color code-based pass app.

A source in Chengdu said even though the city implemented a health passport on Feb. 21, it’s not enforced. Residents can go out without being asked to show the code. She said it’s probably because the area she lives in is mostly locals rather than out-of-towners, who are seen as being a higher risk.

At the epicenter of the outbreak, attempts to roll out the health check system have also had limited effect, simply because no one is going out to be checked. Earlier this week Wuhan, the city at the epicenter of the Covid-19 outbreak, launched a Tencent version of the health passport. The local government now recommends residents who need to leave their apartment complex for valid reasons to apply for the pass.

Wu Chuan, a 26-year-old resident of Yichang, a city in Hubei that is approximately a four-hour drive from Wuhan, told TechNode he hasn’t stepped out of his home for close to a month and wasn’t aware of any health passport platform in Hubei.

The city has a strictly enforced health-reporting system that requires citizens to fill out an application if they plan to leave the community complex. Without official approval, they’re forbidden to do so. Wu said the health passport system does not seem to have much use in his city because, unlike Hangzhou and other metropoles that actually allow people out and go about their usual activities, it is still under lockdown.

Suizhou, a city 180 kilometers northeast of Wuhan, has also begun implementing a health passport system. People with green codes will need to have their temperatures checked before being allowed through checkpoints. Those with yellow and red codes will not be permitted to pass. The system is not yet mandatory and a resident of the city told TechNode that she is still not allowed to leave her residential community.

Big data, huge payroll

It is unclear whether the implementation will improve after the launch of the national version of the health code this week. Although it is a standardized system across the country, according to Alipay, local governments have the liberty to decide whether they want to adopt the version of not.

In order for the system to work, cities need to deploy checkpoints on highways and roads, on public transportation, and apartment complexes—which requires tremendous manpower to operate. Then they need to supervise these guards closely enough to make sure they do the work.

Hangzhou under the watchful eye of an app shows us what an extreme version of mass surveillance might look like. But it also shows how far we are from that world—it takes a lot more than the click of a button to know where people are.

This article was edited Feb. 26 to include comment from Alibaba.

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

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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.

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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.

When it comes to AI and robotics, there are the optimists, and then there are the skeptics. Working in the AI and autonomous transportation vertical, I have struggled to convince people to adopt unmanned solutions. “This is so far away,” they often say. “What is the use case of autonomous drones anyways?” they would ask.

As the outbreak of novel coronavirus becomes an international crisis, the Chinese technology industry is getting creative in finding solutions to avoid human-to-human interactions. Suddenly, these previously “useless” and “too far ahead” technology have found their use cases.

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Unmanned aerial vehicles

Last week, a video of a policewoman using a drone-carried speaker to warn pedestrians to wear masks went viral on Chinese social media. The combination of policewoman + dialect + unmanned aerial vehicle provided comic relief for the nation during the depressing outbreak days.

Not only are drones being used to patrol and promote healthy behavior, but consumer drone company DJI also allocated RMB 10 million (about $1.4 million) to combat coronavirus by donating medical equipment, funding drone-enabled disinfection, and establishing drone-enabled disinfection protocols. DJI competitor and China’s leading agriculture drone tech company, XAG, allocated RMB 50 million to allow drones to be used for disinfection in remote areas.

Agriculture drones have been widely used to spray fertilizers and pesticides since 2013. These well-established drones seamlessly transferred to medical missions to support China’s effort to contain the outbreak.

VIDEO: How tech is changing agriculture in China

Unmanned ground vehicles

Both the Guangdong People’s Hospital and the Hangzhou First People’s Hospital have deployed unmanned ground vehicles to deliver medication and food to quarantined patients. These minimize interaction between nurses and patients.

Each trip, an unmanned robot can deliver four meals with the ability to use elevators, avoid obstacles and find their way back to chargers.

Though these unmanned delivery robots are still in the pilot stage, it has revealed a pain point in the medical field that can be solved by unmanned systems.

Remote work

I am a digital nomad and an advocate of remote working.

A month ago, Zoom stock was falling despite good quarterly results. But the sudden spike in remote work caused by the outbreak has revived Zoom’s stock price. Since corporates in Beijing went back to work remotely on Feb. 3, after the prolonged Chinese New Year, Zoom’s stock price has been climbing. On the day of Feb. 3, Zoom had a closing price of $87.66, with the highest daily percent change of +15% over eight months.

At a hospital built over the past two weeks in Wuhan, Huawei, in cooperation with China Telecommunications Corporation, provided a remote video diagnostic center supported by optical cables. In the future, the company says, the remote diagnostic center will be supported by 5G.

The special circumstances posed by the outbreak have pushed people to use technology in ways that we could not have imagined were necessary a few weeks ago. Technology continues to play a part in the fight against the disease. Not all these technologies will pan out, but they’re getting a real-world test and some will probably emerge with proven applications

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.

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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

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Baidu has released its annual ranking of the hottest search terms in technology for 2019.

Artificial intelligence (AI) garnered more searches than any other tech phrase.

“AI is going to open a new chapter of the society of the world that people try to understand ourselves better, rather than the outside world,” said Alibaba founder Jack Ma in a discussion with Tesla CEO Elon Musk at the World Artificial Intelligence Conference in Shanghai in August.

China issued a plan for next-generation AI in 2017, pledging to turn the industry into a new growth engine. Countless Chinese entrepreneurs and startups have focused on AI in recent years.

Hurun named SenseTime and Megvii in the top four of its Hurun Global Unicorn List 2019 with respective valuations of USD 6 billion and USD 4 billion.

5G was the second most searched term

It was a pivotal year for the next-generation communications technology in China as the country officially kicked off commercialization services in November, giving it a slight lead in the global race to build the superfast networks.

For consumers, faster speeds and low latency can improve mobile experiences. For industry, machine-to-machine communication on a massive scale presents vast potential for industrial IoT.

A report from the China Academy of Information and Communications Technology estimated that the domestic 5G market could be worth RMB 1.1 trillion by 2025, contributing 3.2% of China’s gross national product expansion.

Blockchain ranked third

China has stepped up efforts to apply blockchain in a wide range of fields, with President Xi pointing out the importance of the technology in a landmark speech in October.

China leads global blockchain patent applications, according to a report from the China Academy for Information and Communications Technology. Alibaba, Ping An, Baidu are spearheading the development of China’s blockchain sector.

The country’s central bank is also developing its own digital currency, which has created a climate of confidence for the already fast-moving blockchain sector. Spending is likely to hit $2 billion by 2023, according to a report from global market intelligence company IDC.

VR: 5, AR: 10

2019 also witnessed the development of virtual reality (VR) and augmented reality (AR) which also made Baidu’s top 10.

China’s VR market will grow to RMB 54.5 billion ( USD 7.7 billion) by 2021, according to the Ministry of Industry and Information Technology.

AR is becoming more and more popular in the country. Scanning objects for virtual red envelopes using Alipay has already become a widespread practice during Chinese New Year. 5G is expected to aid the technology’s development further.

Below is Baidu’s top ten in full.

1.     AI
2.     5G
3.     Blockchain
4.     Robotics
5.     VR
6.     AI for missing people
7.     Smart Home
8.     IoT
9.     Facial Recognition Payment
10.    AR

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With contributions from Lavender Au.

At TechCrunch Shenzhen 2019, TechNode spoke to China-based startups that want to predict medical conditions before they happen and put sports fans on the field alongside their favorite athletes—all through the use of cutting-edge imaging techniques. 

Suanier Electronic Technology uses its Visbody scanners to reconstruct a digital version of the user’s body and map data such as body fat and muscle content. Users can record changes in their health and store these in the cloud, as well as spot health issues before they become serious.

The firm’s biggest challenge was size. While the firm had had the tech to “scan a human in one second” Chu Zhiwei, chief technology officer at Suanier told TechNode, it was far too big for practical use—gyms, for instance, don’t have unlimited space. So they developed a far more compact scanner that rotates.

Chu previously built multiple prototypes for research purposes. But making a physical product is “not like writing software,” he told TechNode. When it shipped early products to Germany for exhibitions, half of them arrived broken. At the start, the team had no one devoted solely to quality control. Now, it’s the focus of over half of its engineers.

Suanier Electronic Technology will offer a professional version for sports trainers and researchers in March 2020. In September, it will launch a home-use version that generates a 3D model and related data in 10 seconds and is around the same size as a set of scales.

Youtube of 3D images

Tabletop 3D scanner startup Kiri Innovation is creating a pool of intellectual property assets related to physical options. Chief executive and founder Jack Wang wants to create the Youtube of physical assets. “Think of the MP3, people started worrying about how to protect the IP of music spreading online and came up with platforms like Apple Music and Spotify,” he told TechNode. Wang wants to do the same with physical objects. 

He envisages a platform called Kiri Hub, where people share, buy, and sell. The starting point is Phiz, a tabletop 3D scanner. A standard 3D scanner connects a camera, laser, or projector and turntable to generate models. Kiri Innovation separates those components and replaces the camera with a smartphone so that users can scan objects and create models more efficiently. 

Wang has met multiple difficulties along the way, he said. The firm first made Phiz for a phone in portrait mode, but problems with distance meant they needed a whole new configuration and it now uses a landscape orientation. 

The scanner has already enjoyed a soft launch thanks to Kickstarter. “We have an animator who 3D-scanned a dragon toy and with that model made a dragon 3D movie,” said Wang. Currently, Phiz is listed on Kickstarter for $229. Once it moves to retail, that will go up to $379, but Wang wants to keep it cheaper than a 3D printer. 

Helmet cams 

Orbi embeds cameras that record 360-degree video into sports helmets, bringing audiences closer to the on-field action. “Fans have been dreaming about this since the TV and Internet were invented,” said Orbi Chief Operating Officer Adil Suranchin. At first, the firm met doubters in the camera industry. A lot of cameras are needed to achieve a 360-degree view, with angles stitched together. Smoothly joining two images, taken from cameras following the motions of a football player in real-time, is no small task.

Cameras aren’t content-aware, they see pixels, not objects. Orbi’s dynamic algorithm analyzes each optical frame and stitches them together, reducing or resizing when necessary, the company said. The three-level software stabilization algorithm calculates the optimal rotation angle at every point in the video to make sure horizons line up. 

Orbi also embeds three IMU chips into the helmet. While it adds several hundred grams in weight, the analytics generated are “worth it,” said Suranchin. Coaches can see a detailed breakdown of each player’s performance and detect concussions quickly. 

The NFL’s billion-dollar streaming contract with ESPN expires in 2021. “Major tech players such as Amazon, Netflix, and Facebook are going to be bidding for those rights,” said Suranchin. He confirmed that Orbi has already reached out to leagues but couldn’t disclose details due to non-disclosure agreements. Orbi will display a prototype model at CES 2020. “5G means everything is possible”, said Suranchin. Without latency concerns hanging over leagues, they could pivot towards streaming services and prompt a reconfiguration of the sports broadcasting industry.

Editor’s note: This article was sponsored by BMW China. We believe in transparency in our publishing and monetization model. Read more here.

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As autonomous driving technology is bringing up reformation of traditional automotive industry, BMW is actively adopting its innovation strategies. Opportunities go together with significant challenges, “The complexity of Chinese road condition is much higher than that of western countries, which requires designated solutions.” Peter Riedl said during an interview at TechCrunch Shenzhen 2019, Riedl heads up the Tech Office China under the BMW China R&D umbrella, which is the biggest R&D footprint outside Germany. Besides, he also mentioned other influence factors such as traffic laws applied by different regions, thorough communications and understanding are certainly needed.

BMW R&D Centers in Beijing, Shanghai and Shenyang structured the biggest research network outside of Germany, BMW’s headquarter. These R&D centers support cutting-edge topics like Electric Vehicle, Autonomous Driving, Connected Cars, etc. BMW Group stepped into Autonomous Driving R&D in the year of 2006. Currently, over one hundred tech experts in Beijing and Shanghai are striving together with their counterparts in BMW HQ and other European R&D teams to guarantee 7/24 efforts  on this topic.

BMW Group has become the first foreign OEM to be awarded the license by the Shanghai Government to test autonomous driving cars, which could be spotted in Shanghai International Automobile City. And to fasten the development of autonomous driving technology, BMW works closely with Chinese technology companies. In July, 2019, BMW announced its partnership with ChinaUnicom, Tencent and NavInfo (a leading digital map solution provider).

Except for co-operation with tech giants, BMW Group never stopped seeking the rising stars. Starting from 2015, BMW Group set up the BMW Startup Garage program, which is the venture client unit within BMW to provide startups a gateway into the multi-trillion dollar automotive industry. The BMW Startup Garage looks to become the early adopting venture client of top startups that can make a difference to innovation at the BMW Group. There are now more than 60 startups having become the alumnus of this program with their promising projects.

“The borderline between technology startups and automotive enterprises is blurring.” Said Riedl. He mentioned some of the cases he worked on with tech startups to TechNode reporter, for example the experiment of long-distance remote control under 5G networks with AI technologies.

“China market has always been highly-valued by BMW Group as the biggest single market for us and with its leading position now regarding autonomous driving technologies.” Based on a market forecast research conducted by IHS Markit, China would contribute over 14 million sales volume of autonomous driving cars by 2040, which is about 44% of global market share. China is highly possible to become the biggest market for autonomous driving cars.

“BMW Group always has continued and will continue expand China market and adapt its open innovation strategy here as we always did.”

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.

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Since last year, tech funding in China has undergone a ‘capital winter’—referring to the significant slowdown in investment and fundraising activities. However, areas such as cloud, AI, and blockchain, are still generating excitement among investors, representatives from multiple domestic venture capital firms told TechNode at TechCrunch Shenzhen on Monday.

“This year’s capital winter is colder than usual, but the cycle will likely soon pass,” said Duane Kuang, founding managing partner of Qiming Venture Partners, during a fireside chat at the event. Kuang explained that venture capital funding in China’s tech space has always followed the natural cycles—cooling, freezing, heating up, and overheating. But each cycle is becoming shorter. The Shanghai-based venture capital firm is a prominent backer of Chinese tech giants including Xiaomi, Meituan Dianping, and Bilibili.

The current capital winter can be attributed by factors in the current macro environment—the economic slowdown and the US trade tensions. On a microscopic scale, however, the past few years have seen a huge flow of capital into the tech startup space with many companies securing substantial sums. These results of these investments will take time to emerge, he said. “We are at a place where the advancements in technology will continue to gradually seep into the previously more developed and mature applications.”

Despite the slowdown in tech startup funding, investors have still been drawn to some areas, including social networking, enterprise software, education technology, as well as cutting-edge technology like artificial intelligence (AI) and blockchain, Kuang said.

He pointed out that Chinese companies, in general, have been slower to adopt enterprise software technologies partly because many choose to invest their resources into expanding their offerings instead of investing in software to optimize the existing business operations, but they are catching up.

Liu Erhai, founder and managing partner at Joy Ventures, shares similar optimism toward China’s tech startup space.

There are many opportunities for tech startups with traditional industries, such as food and beverage and mobility, and this opens up many opportunities for startups, Liu said during his fireside chat on investment and entrepreneurship in the era of the “new species” of tech firm. This group refers to those startups that have emerged from the rise of technology infrastructures like mobile internet, mobile payments, and the internet of things (IoT). For example, startups like Luckin and Mobike are the “new species” in their respective industries that operate more efficiently.

Qiming’s Kuang is also paying more attention to the developments in China’s blockchain space, which he believes have the potential to fundamentally change a lot of industries. “Although blockchain technology is used universally across different countries, in China, its applications will likely adopt strong Chinese characteristics,” said Kuang.

Blockchain’s promise of decentralization has a strong appeal in other countries, but perhaps less so in China where the focus is more on encryption, immutability, and facilitating the exchange of digital currency.

However, there remains a lot of challenges, said Liu. “Startups not only need to know how to attract decent traffic but also understand their products and services. Not a lot of entrepreneurs can manage both,” he said.

Speaking about emerging markets that have attracted more attention among investors. “I would attribute the increasing attention from Chinese VCs to that region less so to the slowing of the Chinese investment space and more so to the increasing opportunity [in the region],” Kuang told TechNode in an interview on the sidelines of TechCrunch Shenzhen.

Rightly or wrongly, he said, a lot of Chinese investors are seeing certain patterns repeating in Southeast Asia—rising middle classes, as well as rapid mobile internet penetration. This could be an advantage for China-based VCs to deploy capital in new and emerging markets or help Southeast Asian and Chinese firms find success in China and overseas.

With contributions from Coco Gao.

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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

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While global expectations are high on the potential for 5G technology to fast-track the development of cutting-edge sectors such as autonomous driving and artificial intelligence, a Hong Kong telecom executive has warned that superfast mobile networks could be more vulnerable to cyberattacks than their predecessors.

“The 5G systems are built around cloud-based technology and functions, so the cybersecurity threat is there. We have to protect our networks better than before,” KL Ho, senior vice-president of strategic wireless technology at Hong Kong Telecom (HKT), told TechNode on the sidelines of the electronicAsia trade fair in the special administrative region last month.

Cybersecurity obstacles

The debate over 5G and cybersecurity has become a global geopolitics issue, involving countries including the US, China, and EU members, as well as Chinese gear makers such as Huawei and ZTE.

The US, along with some of its closest allies such as Australia and Japan, has banned Huawei from participating in their 5G network rollouts. It is also actively lobbying other countries, especially EU nations, to exclude Huawei equipment from their 5G upgrades.

Though no EU nations have complied with the US’ call so far, the group published a report earlier this month warning that “hostile third countries” may force 5G suppliers to facilitate cyberattacks serving their own national interests. The reports’ findings echoed US government sentiment that Beijing could use a 2017 Chinese law to force Huawei to hand over network data to the government.

State-backed actors are perceived to pose the most serious threat, as they “can have the motivation, intent and most importantly the capability to conduct persistent and sophisticated attacks on the security of 5G networks,” according to the report.

Ho, however, believes that no “decent“ 5G equipment suppliers would assist their governments in conducting cyberattacks against other nations because such behavior would discredit them.

“The point is once they were found with solid evidence that they ever engaged in such conduct, they will fail in no time and nobody will trust them anymore,” said Ho.

HKT is undergoing a comprehensive tender process for vendors that intend to provide equipment for its 5G networks, Ho told TechNode, adding that the company’s principle of choosing 5G suppliers is “vendors with the best performance both technically and commercially.”

Regulatory challenges

HKT, the biggest wireless carrier in terms of subscribers in the special autonomous region, plans to launch 5G services in the city in the second quarter of 2020.

Ho confirmed that the release of 5G in Hong Kong had been delayed by six months to one year, compared with other economies.

In June 2018, HKT called on the local government to make “radical changes” to its spectrum policies and management to avoid “disastrous consequences” for the city’s role as a regional telecom hub.

The company secured the 4.9 GHz band spectrum for the provision of 5G last month from the city’s Office of the Communications Authority.

New opportunities

Ho believes that 5G will bring plenty of opportunities for startups to assist telecom operators in fields such as network construction and maintenance.

With the automation of 5G networks, he said, “we can not rely on engineers to manage the networks manually. We have to rely on some sort of artificial intelligence solutions.”

“Those are the areas where startups can bring in their expertise to help operators to build those solutions.”

With contributions from Coco Gao

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Around half of all China’s netizens or an estimated 421 million people ordered takeout delivery on their smartphones last year, bringing in revenues of RMB 240 billion ($34 billion). The market is dominated by two major players—Meituan Dianping and Alibaba’s food delivery subsidiary, Ele.me.

Propping up this industry is an army of food delivery drivers, who work long hours rushing around China’s megacities to keep up with customer orders. Meituan said (in Chinese) that in 2018 it employed 2.7 million drivers.

TechNode recently shadowed 26-year-old Ding Liang, who has been a driver for four years, on his daily routine.  Most drivers work around 10 hours a day while others work 15 hour-shifts every day, he said. All of them have to compete fiercely to get orders, especially during the lunchtime rush.

Drivers get anywhere between RMB 5 ($0.71) to RMB 7 ($1) for each order, depending on the time of day, distance, and other factors. He works as a crowdsourced or “zhongbao” (literally, crowd outsourcing in Chinese) delivery worker so he has a more flexible schedule and type of orders he receives varies greatly.

Ding takes 30 to 40 orders a day, earning him an average of between RMB 11,000 and RMB 13,000 per month—a decent income compared with the average salary of food delivery workers in China, around RMB 7,750 per month in 2018 (in Chinese). But other contract food delivery workers, those who have a fixed contract with a company, earn RMB 7,000 to RMB 8,000 a month for the same amount of orders.

Falling wages

However, as the two major platforms fight to consolidate their market position, drivers are seeing their wages fall. “The pay is now too low. I can’t stand it anymore,” said Liu, a full-time Ele.me driver, who requested his given name not be used for fear of possible repercussions.

As wages are getting lower, drivers struggle to deliver more orders within the 30-minute window the apps allow them. They have to drive faster and faster to make ends meet within a limited time frame, often breaking traffic rules and working in extreme weather conditions, which can lead to accidents.

“If everyone abides by the law and also tries to deliver orders as specified by the platforms, it means that they can only complete 8 to 15 orders a day,” which is not enough for them to make a living, said Aidan Chau, a researcher at China Labour Bulletin, an NGO based in Hong Kong that monitors working conditions in China.

Shanghai police reported a spike in road accidents for the first half of 2019, and food delivery workers were involved in more than 80% of them. In August, one driver died (in Chinese) in Shanghai when he was electrocuted by his own scooter during the typhoon.

Ding said he doesn’t take a day off even in bad weather conditions. “I work every day, even in snow, and heavy rain,” he said.

But the drivers are often not entitled to work injury compensation.

There are two kinds of drivers, formal and informal. The formal ones are contractually bound to their jobs, either directly to the app provider or to an agency that is in turn contracted by the app. Their contracts typically don’t provide social security or work insurance.

The informal ones are those who adhere to the most common conception of the gig economy—they simply sign up to the app and select orders at will. Being free agents, they are not entitled to any compensation for accidents.

In terms of regulation, “the first step is to help all these platform workers become formal workers,” said Chau.

With contributions from Eliza Gkritsi and Nicole Jao.

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Electric vehicle maker Nio is looking to alleviate range anxiety among prospective car buyers by rolling out higher capacity batteries, supplementing its existing network battery swap stations.

Nio is one of China’s most visible electric vehicle makers and is often seen as the poster child for the sector nationally. The New York-listed company has had a tough year, as macroeconomic factors take their toll on China’s auto market, leading to an overall decline in sales.

TechNode tested Nio’s flagship SUV, the ES8, with the company’s newly released 84kWh battery. The upgrade extends the vehicle’s NEDC range from 355 to 425 kilometers. Nio began delivering the ES8 with the upgraded battery option in October. Previously the vehicle came equipped with a capacity of 70kWh.

The company believes the update can improve the competitiveness of the ES8, a vehicle that falls into the premium bracket, according to Nio founder William Li.

We approached the test from a consumer’s point of view, trying to ascertain how the vehicle would fare on a daily basis. Setting a popular culinary attraction on the outskirts of the eastern Chinese city of Suzhou as our destination, we put the new battery, Nio Pilot, and China’s charging infrastructure through their paces.

Nio Pilot functions, including automatic lane changing and automatic braking, worked well on highways and city streets. The system also includes warnings if you get too close to the lane markers, with haptic feedback in the steering wheel. The vehicle requires the driver to take over when it senses pedestrians in the road ahead. Not specific to Nio Pilot, we did at first find it difficult to trust in ADAS and its limitations.

Meanwhile, the battery performed well. The trip included a lot of highway driving, which typically requires more energy than travelling on urban roads.

There were problems, however. At times, Nio’s in-voice assistant required numerous calls to wake it up. While not an issue with the ES8, we also encountered problems with charging infrastructure in and around Shanghai. A number of public charging piles we attempted to use were broken or had cars parked in bays while not being charged.

With contributions from Jill Shen

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.”

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China’s luxury goods sector has received a steady stream of investment money in recent years.  TusStar is one such capital investor to pour money into the sector acting as angel investor for second hand high-end goods marketplace operator Ponhu-Luxury back in 2015.

Building an integrated offline platform for second-hand luxuries is what the market needs in the future, TusStar Venture General Manager Liu Bo told TechNode.

“In Japan, the penetration rate for second-hand luxury goods has reached 1:1, which means that every time a new bag is purchased, an old one will be resold,” she said. “In China, when I carried out due diligence in 2015, only 3% of goods are sold on. Basically, no one bought second-hand luxuries,” Liu said.

Liu expects to see growth in the market for selling on used high-end products in China.“But you have to think that one day if economic recession hits in China, second-hand luxuries will maintain their value as has happened in Japan in the past,” she said. “East Asian cultures are similar. We see promising growth points in China’s second-hand luxury business.”

In her current role, Liu keeps an eye out for investment opportunities in TMT, energy saving and environment, as well as the new economy and new services.

TusStar invests in high-tech, high-growth start-ups, mainly focused on TMT, mobile internet, cleantech, new material, healthcare, advanced manufacturing, education, intelligent hardware and consumption area. The firm has inked deals with more than 300 startups and invested over RMB 2 billion so far, according to its website.

Some say digitalization is the major engine powering luxury sales in China, but Liu contends that offline is the real arena. “Only outsiders will consider buying luxuries online,” she said. “Most customers care little about discount, they crave brands and quality.”

According to a report published by Bain Analysis in 2019, even though online luxury sales outgrew the overall market in 2018, online penetration in other luxury categories remains very low, with the exception of cosmetics.

JD.com sold its luxury e-commerce platform Toplife to its biggest partner Frfetch in February for $50 million in February this year after two years of operation. The deal raised the question of whether or not the Chinese market is ready for establishing platforms for the luxury sector.

“There are still plenty of opportunities to build platforms in this industry,” Liu said. “But it’s not the kind of e-commerce platform on the internet that people talking about today, but actually an offline platform which knits every key node together in the entire trading chain.

”This platform can then provide a variety of services to different roles in this industry,” Liu added.

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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.”

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It has been ten years since China first proposed the concept of a smart city. With the commercialization of 5G and development of new technologies like edge computing this year, smart cities are once again stirring up debate.

As one of the first batch of cities to start smart city projects, Beijing was named “the most promising smart city” in a report from The Beijing News’ smart city research institute earlier this year.

Not all citizens will realize the changes brought to their daily lives as the smart city develops. Less than half of the 20 people that TechNode talked to agreed that Beijing is a smart city, while the rest replied “not sure” or “I don’t think so.”

Rita Zeng, the 24-year-old Beijinger who featured in the video, expressed her feelings to TechNode about this topic from an ordinary citizen’s perspective.

AI wake-up call

“I feel that it’s much easier for us to reach out for what we want these days, compared with ten years ago,” said Zeng. “Like with my AI robot, I can listen to music, watch videos, play games, and even order food.”

Beijingers exhibited a high degree of acceptance, even in the early days of artificial intelligence. The city leads the country in terms of smart home device adoption, especially in smart appliances and family health management devices, according to TalkingData’s report.

Double-edged sword

“You do have multiple choices when you need to go out in Beijing, subway, bus, electric scooter and shared bike,” said Zeng. “And I feel that traffic conditions have improved thanks to the city’s big events like the 2008 Olympics. But, it still sucks when you suffer from congestion every day. ”

To make it easier to get around the city, the government set up the Transportation Operations Coordination Center in 2011 as the city’s “transport brain”, responsible for the traffic coordination, emergency handling, data-sharing and providing information.

As of this year, all buses in Beijing have onboard video surveillance and GPS tracking systems, while 18,000 buses are equipped with one-button alarms, according to Beijing Public Transport Corporation.

For fare payments, all Beijing subway lines and bus lines support mobile payments. Passengers can also use apps on their phones to rent bikes or call taxis.

“Yes, you can use your phone to take public transportation. It’s very convenient. But you also have to install several different apps respectively for subway, bus and traffic information,” Zeng said.

Beijing’s public transportation mobile payment system is relatively fragmented. There’s no single integrated app that covers all services. Citizens use the Beijing Public Transport app to take the bus, as well as the Yitongxing app for the subway. Public transport cards also exist in an online form, though they are only compatible with a limited number of NFC-equipped handsets.

“For Beijing, the biggest thing is the traffic problem,” said Ren Zhuoran, a Peking University Ph.D. candidate who is currently working on a smart city research project. “To solve this problem, precise data collection and unblocked data sharing are the main foundations. But since the city government has many different sectors to deal with, it’s very likely to cause data barriers.”

Cashless society

“I use online payments nearly 99% of the time in my daily life. I carry no cash with me because even street stalls support Alipay or Wechat Pay,” Zeng said.

Beijing ranked first in terms of the cashless penetration rate in basic systems and services, according to a report from the State Information Center, Alipay and Xinhua Indices this year. The city is pioneering the use of mobile payments in all different scenarios like public transport, convenience stores, and retail shops. And new payment methods like facial recognition payment are also developing in the city.

Zeng was optimistic regarding possible privacy issues brought by the development of smart cities. “We all know that the internet will collect your data, but we are still using it, right?” She said. “The most important thing is who uses your information for what purpose. It’s the city government’s responsibility to protect our data.”

However, there is no specific legislation in China currently on data use, so the boundaries are still ambiguous.

“Developing more advanced technology to fix the privacy problem caused by the current technology could be a possible solution,” added Ren.

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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.

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

Audio content has gained in popularity over recent years in China.

The number of online audio users in China rose by more than one-fifth to hit 425 million last year, according to a report from iiMedia Research in March. The online audio sector is exhibiting faster growth compared with other channels such as mobile video and mobile reading, which have expanded 13.6% and 6.3%, respectively, in the same period.

Cynthia Zhou, a female university student in Beijing, has listened to audio programs before bed for more than five years. “When you’re listening to audio programs, you’re learning something but you don’t feel anxious, like when reading a book,” she said.

Like Cynthia, more and more young people listen to audio content every day. The medium can be more flexible and efficient since users can do something else while listening. This aspect allows people to listen in multiple contexts, like during commutes or before going to sleep.

Meanwhile, contributors also see the great opportunities in this industry. Many content producers are turning to audio since it’s a relatively inexpensive and straightforward distribution channel with a potentially broad audience. It enables amateur as well as professional producers to create self-published, syndicated performances.

Making it big

After previously majoring in nursing, Ayla is now a renowned podcaster and rakes in over RMB 1 million annually. After interning at a hospital for several months, she decided to take a different path.

“Honestly, you have to be in the hospital for a few decades to become a head nurse, I don’t want to spend my whole life on it,” she said. “And at that time, even though I didn’t have a concept of being a podcaster, I knew the salary of a professional voice actor was actually higher. So I decided to take a risk.”

The rapid development of smart devices like AirPods, smart speakers and internet technologies have also provided a boost to the industry. At this year’s Apple Worldwide Developers Conference, the company officially announced the death of iTunes and made Podcasts into a standalone app. Siri also began to support third-party music, podcasts, and audiobook apps following the latest iOS upgrade, sending positive signals to other competitors in the audio content industry.

In China, competition in the online audio market has become intense. Different from most free podcasts in Western countries, Chinese platforms are gradually convincing younger generations to pay for audio content.

“From UGC content to the earliest pay-for-the-knowledge, establishing an audio form of YouTube and Taobao has always been the goal of Ximalaya,” the company’s CEO Yu Jianjun said at a talk in August in Shanghai. “The mission of Ximalaya is to share human wisdom through audio.”

Around three-quarters of TechNode’s interviewees indicated they were willing to pay for audio content. “A lot of programs that my daughter listens to now need to pay, like Kaishu Storytelling. But we think it’s worthwhile to spend money on that,” one mother told us.

As more and more people are gravitating toward listening, creating, and monetizing audio content, the industry is expected to boom. But since listeners are more and more demanding of content quality, competition among producers and companies in the market will intensify in the coming years.

“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

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

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.

Using social media as a platform, an increasing number of male beauty bloggers have emerged in the public consciousness, changing the perception of male beauty.

When interviewed by TechNode, some respondents were able to name bloggers like Aike Lili and Heima Xiaoming.

But by far the most widely-known male beauty bloggers among our respondents was Austin Li, who has amassed nearly three million followers on microblogging site Sina Weibo, as well as 5.8 million on Taobao Live and 28 million on short video platform Douyin.

After selling cosmetics on the side during his university days, Li became a full-time livestreamer on Taobao in 2017. Nowadays, millions of people tune in to his livestreams daily.

In one livestream, Li reportedly applied upwards of 380 lipsticks during a two-hour livestream session, selling a whopping 15,000 tubes in 15 minutes.

For many men, makeup is still a taboo. “The mindsets of many Chinese men are still not as open as men from other countries,” said one respondent.

However, times are changing. Makeup has never been a topic widely discussed by men, but an increasing number are embracing cosmetics.

The Chinese male beauty market is brimming with untapped potential. Male customers on average spent more on beauty products and sunscreen than their female counterparts on social e-ccommerce platform Pinduoduo, accounting for 40% of overall sales in the busy shopping season following the college entry examination period.

During this year’s 618 shopping season, JD posted record sales of male face masks and eye cream among other products. Male customers who purchased beauty products increased by 61% year-on-year, and masks, lipsticks, BB creams, eyebrow pencils were hot-sellers.

Most respondents felt that Generation Z—loosely defined as those born after 1995—were the most likely among men to buy cosmetics. According to JD, users born after 1995 accounted for 27% of 618 cosmetic sales. 18.8% of these males had the habit of using BB cream while 18.6% of them had the habit of using lip balm or lipstick.

Half of the customers who bought male cosmetic products were actually female, pointing to a possible reason for the booming demand: more women want their partners to care more about their appearance.

One respondent said, “It (makeup) could boost their self-confidence, and let other women know that they take care of themselves.”

“Makeup for men may not be widely accepted now,” said another respondent, “But it has become a trend, and society could become more accepting of it.”

Taobao doubles down on livestreaming with ambitious Taobao Live plan

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.”

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

While Dong Zhanbin hardly plays video games himself, some of the titles he has invested in are now among the most played across China. These include Dragon Nest M, which brought in nearly RMB 1 billion in revenue in its first month on the market.

As a founding partner at Qingsong Fund, Dong has also overseen the release of Three Kingdoms and Jieji Sanguo (an RPG similar to King of Fighters), which brought in returns of more than 60 times their original investment within six months. However, as the video game industry quickly expands to a multibillion-dollar business, he has switched his focus to other areas including social gaming.

When he helped set up Qingsong in 2012, desktop gaming was still king though smartphone titles were also gaining traction. Dong seized on the chance of investing in mobile gaming startups as he expected their business models to be similar to those of traditional gaming firms. “During the PC era, we figured out that the clearest revenue model was video games,” he said. “And in the mobile era, entrepreneurs would repeat the same process.”

In the fund’s first phase, Dong and his team invested in more than 20 startups. But then the focus shift completely. “Tencent and NetEase had taken up the lion’s share of the entire market and listed gaming companies left very few opportunities for startups,” Dong told Technode.

“There can be some chances for social games, such as our Werewolf investment in 2017,” he said.

Dong didn’t invest in any video games after the first-phase but that didn’t mean he had given up on the gaming sector — Laoyuegou, a gaming community for Chinese players, has become the biggest gaming search engine in China while audio-based social game Werewolves boasts over 60 million users.

He explained that his investment strategy is driven by younger gamers’ desire to make friends. According to QuestMobile, the number of active GenZ gamers has reached 275 million in China as of this June and social features are a key draw.

“Making friends is the most basic requirement for younger generations to rid them of loneliness and to help them connect,” he said.

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

As Oppo doubles down on efforts to breaking into overseas markets with its latest offering, the Reno 10x Zoom, released last month. I’ve been using the device for a month now, and with its sleek design and a novel camera setup, it performs swimmingly.

With no known relation to the city in Nevada, this device is part of the Reno line. As its bizarre name suggests, the main draw of the Oppo Reno 10x Zoom is its cameras. With a triple camera lineup, the device is the first implementation of Oppo’s development of 10x hybrid zoom capability, which TechNode reported on in December last year.

The “10x Zoom” can be a little misleading—in fact, the camera only zooms up to five times using its telephoto lens. But the device supports a whopping 60x digital zoom. What’s even more confusing is the way the zoom presets were programed. Through the zoom button in the camera app, the camera jumps from 1x, to 2x, jumping to 6x and 10x, then to ultrawide.

Barring this quirk, the camera lineup is great—but it doesn’t blow its competition out of the water. Outdoors and indoors, the cameras seem to deliver images that tend look a little soft and videos still look a bit shaky. Although the beauty filters can be adjusted, the default setting seems to slightly over-touch photos.

The selfie camera is cleverly hidden in a “shark-fin” style pop-up at the top of the device, which was definitely amazing to see in action. Oppo claims that the mechanism is good for five years of “frequent use”, but we won’t know how true that is—that is, until we see it in the news.

When I was done marveling at the mechanism, we dove into the cameras themselves. The photos from the front camera were… not bad. The photos looked a little washed out, and the bokeh in Portrait mode was a little overzealous—even artificial at times. In some low light situations, however, the Oppo Reno 10x Zoom flounders. Fidelity of pictures taken with little light were lost significantly.

In video mode, the in-camera stabilization works, but not really well. Unlike other phones like the Huawei P30 Pro, the telephoto lens cannot be used to take videos.

As a firm believer of stock or near-stock Android experiences, slow and chunky Chinese-made UI skins do not float my boat. ColorOS 6, on top of Android 9.0, chokes ever so slightly occasionally when playing graphics-intensive games, but I can let that slide.

For anyone who’s used an Android phone, the device shouldn’t take long to get used to. With a clean interface and many customizable options, the software is certainly up to par.

The Oppo Reno 10x Zoom is a mid- to high-range device, and its hardware certainly suggests so. With a Snapdragon 855 and at least 6GB of memory, the device runs games and processes photos at a blazing speed.

The phone also sports a massive 4,056 mAh battery, comfortably allowing for a full-day moderate use (read: video-streaming and games before and after work). Using Oppo’s proprietary VOOC charging system, the massive battery can go from 0 to 70% in 30 minutes too.

The 6.6-inch AMOLED screen is extremely impressive as well, with a high resolution 2,340 x 1,080, producing eye-popping colors and deep blacks. Thanks to the front-facing camera mechanism, the screen is effectively bezel-less. The proximity sensor, ambient light sensor and fingerprint reader are embedded in the screen, achieving a 93.1% screen-to-body ratio. Together with the glass and metal finish, the device feels truly premium.

The Oppo Reno comes without an IP rating and wireless charging—things some might consider as “must-haves” for a premium smartphone in 2019. But make no mistake—the Oppo Reno 10x Zoom is a very good smartphone. Most of the remaining issues from the phone seem to be fixable with just a software update, and it’s up to Oppo to correct these issues.

With a solid camera lineup, one of the best smartphone chips, and the large notchless display, the thoughtful design of the Oppo Reno 10x Zoom makes a splash with its refreshing experience. I’ll certainly be looking forward to what Oppo has to offer in the future.

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Chinese innovation investment has continued to shrink as investor fundraising has cooled further this year. Only 271 private equity and venture capital firms in the country raised funds in the first half, down by over half compared with a year ago.

Still, given that a number of VCs raised money in 2018, Jixun Foo, managing partner at GGV Capital, believes the problem is not a lack of money, but where money goes. “There needs to be new innovations that drive new capital deployment,” Foo said at the recent RISE conference in Hong Kong.

Foo honed in on China’s mobility sector, in which GGV has solid experience as an early backer of major player Hellobike.

In the space of just a few years, China’s bike-sharing sector has boomed. The industry still exhibits great growth potential with demand remaining strong among the country’s 1.4 billion people. Mobility players are now also focused on a new race to provide rental services for electric two-wheelers. Hellobike is one of the early movers, having rolled out shared e-scooters back in September 2017 when ofo and Mobike were still battling it out in the shared-bike market.

The Alibaba-backed company took another step forward in June this year, inking a RMB 1 billion ($145 million) deal with Ant Financial and CATL, the country’s largest battery manufacturer, to install battery-swapping stations nationwide for e-scooters. Ride-hailing giant Didi quickly followed suit, forming a two-wheeler business group the same month as it vies for market share.

“We believe China’s bike market goes very deep and is still growing,” (our translation) Fischer Chen, Hellobike’s chief financial officer, said at RISE. With about 250 million two-wheeler motorists nationwide, there are 700 million e-bike rides happening each day in the country, triple that of shared bikes, the company estimated.

China’s bike-sharing bubble has burst with dozens of players going bankrupt over the past years as funding dried up. The market cooled as authorities banned operators from putting additional cycles into circulation on the streets of key cities in late 2017. National technical standards on electric bikes followed and took effect in April this year.

In an interview with TechNode at RISE, Foo maintains that Hellobike could actually benefit from government regulation in terms of its technology and product capabilities.

Unlike ride-hailing, which is a serviced dependent on human drivers, bike-sharing is a business that basically relies on hardware, Foo said. This means it is more suitable for management using technology and rules. Some typical examples include locating bikes more accurately using IoT and educating users more effectively with regulations. One of the key issues is the efficient operation of the bikes, he added.

The Chinese short ride market, populated by shared bikes and e-scooter players, has undergone some key reshuffling. Ofo, once a pioneer in the bike-sharing boom, is now on verge of bankruptcy amid mounting debts and massive layoffs. Mobike has also scaled back expansions since Meituan took over. The city services giant posted an RMB 4.55 billion loss last year after the acquisition. Chen claims that Hellobike has snared more than 60% share of the bike-rental market and for the e-bikes, the share is even higher at around 80%.

Return to rationality

In an interview with Chinese media earlier this year, Foo said as investors have returned to a more rational approach and the Chinese investment market is expected to see a higher capital efficiency over the next couple of years.

Efficiency is a constant area of focus throughout GGV’s investment portfolio. Hellobike has broken even in more than 100 domestic cities, CEO Yang Lei announced last October. The average operation cost for each blue and white bike is only RMB 0.3, while other players spend over RMB 1 to keep them in action.

Another GGV-invested company Xpeng Motors claimed a “much higher capital efficiency” compared with rivals, as the NEV startup focuses more on the mid-range market rather than luxury models. The recent nosedive in Nio’s stock price “is a good lesson for the rest of us… to try to be more efficient and more sustainable,” said Xpeng President Brian Gu at RISE. The company, a top seller among China’s EV players, claims it probably only needs to use a quarter of its capital to hit the same shipment numbers as Nio.

Looking forward

Foo maintains that the next wave of innovation is also on the way with the mass adoption of artificial intelligence and 5G across industries like logistics, automobiles, and healthcare.

“Last year we saw a number of IPOs and some of them didn’t do well, but things always go in cycles,” Foo said. “We see short-form videos from 3G to 4G, what will come next with 5G?” The venture capital firm is betting on mobility, electric vehicles, and smart cities going forward. It will invest more than one-third of its $1.88 billion of funding secured last year in the sectors.

With contributions from Wei Sheng.

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With the market for handheld translators booming, Cheetah Mobile’s CM Translator is one of the many contenders for space in your luggage for your next trip overseas.

It’s easy to see the appeal of these devices: they’re lightweight and handy, and you don’t have to bring out your expensive smartphones just for translation. The microphones on these devices are also more sensitive than your smartphone, which means that you don’t have to pass your precious smartphone to someone else for them to speak to it. 

The unit that we reviewed is the international version of the original CM Translator, a top-selling handheld AI translation device in China. Announced at Microsoft’s Build developer conference in early May, the device is expected to ship this month.

CM Translator boasts 180 days of standby time and 24 hours of continuous use per charge. It supports six languages: English, Spanish, Chinese, Japanese, Korean, and Thai.

At just 45g, the device sits comfortably in the hand, kind of like a longer presentation remote. With a one-button design, the translator is intuitive and easy to use.

Simply launch the CM Translator app (available in both Apple’s App Store and Google Play) and click the button on the translator to pair the device with your smartphone. Once paired, press and hold the button, speak into the device and the translation will play from the device itself. 

From the app, you can adjust the playback volume, check the battery level and change languages. The translations are also stored in the app, so you can replay older conversations.

CM Translator is powered by AI technology from Microsoft Azure Cognitive Services, including machine translation Neural Text-to-Speech capabilities, as well as Automatic Speech Recognition from China’s OrionStar.

The 10-feet voice recording range worked better than expected. Translations of simple sentences were mostly accurate from distances of more than 3m.

Other translations were a mixed bag, though. The translator could not understand contextual information such as coffee orders and street names. On some occasions, speech could not be recognized.

At $129.99, CM Translator is on the cheaper end of the spectrum. Cheetah Mobile says that it will support 28 more languages in the coming months. But it remains to be seen how effective this device will be in the other languages, given the translator’s poor performance in translating context-specific terms and phrases.

CM Translator is available for order on Indiegogo. Cheetah Mobile is currently offering the device at an early bird price of $79.

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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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By 2025, around 15% of the world’s population will be able to connect to next generation 5G networks promising ultra-fast data speeds, said an industry insider.

“By about 2025, we think that most markets around the world will have launched 5G,” said Julian Gorman, head of Asia Pacific at GSMA, a UK-based organization that represents mobile operators worldwide.

By that year, half of users will come from Asia-Pacific, Gorman told TechNode at the Mobile World Conference (MWC) in Shanghai on June 27.

As of June, South Korea, the US, Australia, and the UK have launched commercial 5G networks. China has granted commercial licenses to the country’s big three telecom operators last month, and the country is expected to launch the technology nationwide on October 1.

Gorman said initially a lot of 5G subscribers would come from China because the ecosystem in the country is starting to take off.

A recent report by research firm Canalys said 5G-enabled handsets would reach nearly 800 million units by 2023, and Greater China, which includes mainland China, Hong Kong, and Taiwan, will account for more than one-third of those shipments.

However, Gorman envisages some uncertainties around the telecoms supply chain and some operators are trying to ascertain whether they will have access to all the vendors that they usually use.

The risk is more evident when it comes to 5G-related equipment. The US government has been campaigning hard to urge allies to exclude Huawei equipment from their network roll-outs. Some countries including the US, Australia, and Japan, have banned Huawei equipment from their forthcoming 5G networks.

Gorman thinks a transparent framework formulated by stakeholders and countries will help 5G equipment vendors move forward with certainty, and a competitive supply chain is also welcomed.

“We need to move forward in a transparent way so that vendors can innovate and compete and make technology available—especially the 5G technology—for mobile operators together to launch this important technology, which is going to add so much to the economic value of the world,” he added.

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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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Artificial intelligence (AI) is now an inescapable and often unnoticed part of daily life, and everyone can and should take part in developing its applications.

Max Pechyonkin, a deep learning engineer and dean of the China School of AI, an AI-focused education program, spoke at the Emerge by TechNode conference in Shanghai in May about his work in teaching people the fundamentals of an omnipresent technology that is vastly misunderstood.

“If you use a smartphone, you are using AI everyday,” he said, including any app with a content recommendation feature.

The technology has become so ubiquitous that its very definition has changed, he said. Twenty years ago, navigation apps like Google maps were considered AI, today, they are just “path-finding algorithms,” he explained. Perhaps in another 20 years what is considered cutting-edge AI at the moment, like computer vision, will be so commonplace that it is not labelled as such any longer, he added.

But as AI becomes part of our everyday lives, people focus too much on the technology itself, resulting in an “overhyped” concept, Pechyonkin said. People forget to talk about particular applications of AI, and focus on debating far-fetched scenarios instead of tangible possibilities, he explained.

People can’t really ground their ideas about AI because they are not very familiar with it, “when you don’t know about the technology in detail, you have no idea what it can and cannot do,” he said.

In fact, learning the basics of this technology is easier than ever before, it doesn’t require a doctorate, and there are plenty of online resources that can help anyone get a working understanding, Pechyonkin said. This is the biggest myth about AI these days, he has found. There is no need, for instance, to complete an online course just to have informed conversations about the ethics of applications.

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While Luckin Coffee is projected to have the largest coffee network in China by the end of 2019 at its current rate of growth, the sustainability of its business model remains to be seen, said Michael Norris, research and strategy manager at AgencyChina.

Frustrated by the lack of insights in English-language media coverage of the coffee startup, he decided write a series of articles analyzing the company’s business model.

Norris regularly conducts in-depth market research to help domestic and foreign firms understand how China’s consumer and technology spaces are evolving. Having read the Chinese perspective on Luckin Coffee, he decided to bring the story to light.

“I’d seen a lot of English-language press which just looked at the PR notes that the Luckin team had given them and were just playing exactly from that without doing any digging,” Norris said.

There are reasons both to care and not care about Luckin Coffee, Norris said. Luckin Coffee is one of many businesses that are trying to scale massively over physical assets, and this model can be replicated across different industries. “The next industry that that particular model is applied to might very well be your own,” he said.

However, since the average lifespan of a publicly listed companies is 10 years, it remains to be seen “whether or not it’ll even get that far, and then whether or not it makes a profit,” he said.

But investors aren’t “quite yet done” with blitzscaling over physical assets, Norris said. “We’re seeing good amounts of money being put into cloud kitchens or shared kitchens. We’re seeing half-decent amounts of money being applied to other types of micro-mobility in the States, so scooters and the like, and so Luckin Coffee itself—who knows?”

Why it’s time to wake up and smell the coffee on Luckin

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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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Many users of platforms like Douyin and Kuaishou are young, making the short video apps  an ideal place for brands to market their products to China’s youth, said Hillary Han, director at market research firm iResearch.

The top two digital channels that youth spend their time on are video platforms and social apps, Han said. Specifically, apps like Douyin and Kuaishou are where younger users are spending increasingly more time, according to data from research firm Jiguang.

Short video apps are now more prevalent than online payment tools. At the end of 2018, 80% of China’s 829 million netizens used short video apps, according to a report from the China Internet Network Information Center.

Short video app users also tend to focus less on price comparisons, making monetization easier, Han said. Speaking at TechNode’s Emerge tech conference last Thursday, Han said: “If they trust this KOL [key opinion leader], if they can afford this and if that’s what they need, they buy it.”

Most purchases are in lower-tier cities, where industry giants like Douyin and Kuaishou see the fastest growth. “In top-tier cities, people have so much information and so many channels to compare. In lower-tier cities, the information channels are limited,” Han explained.

Short video apps key for engaging China’s lower-tier city youth

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The sheer size of the market and the untapped opportunities has drawn many large foreign corporations to China. But to compete with local companies, survive, and thrive in the world’s second-largest economy is a daunting mission. Collaborating with young tech startups has become a way for these large corporations to keep up with innovation and China’s rapidly evolving landscape.

“Our business in China does not have the same amount of resources that our business, for example, in the US does. So, the startups are helping us to fill that gap, and actually be—in my opinion—in some areas, cutting-edge,” Ben Hassing, senior vice president of global cross-border trade at Walmart, told TechNode in an interview at the Emerge by TechNode conference last week in Shanghai.

Walmart is one of the few multinational corporations in China that are taking advantage of the local tech startup ecosystem, but the number is growing. The US-based retailer has been operating in China for more than two decades and started working with tech startups last year with the launch of Omega 8, its innovation platform. For Walmart, the real intent of the initiative is to reduce the cost of experimentation, Hassing explained.

The retailer invests in prominent players in the Chinese retail space like JD.com and Dada-JD Daojia, and works closely with internet giant Tencent,. These partnerships have helped the company upgrade their e-commerce, digital, and online-to-offline (O2O) businesses, Hassing said, but there were still some unfulfilled gaps and pain points. For example, the company sees an opportunity working directly with Chinese startups on last-mile delivery services, which is unique to the market. Consumers in other markets value pick-up services as a more economical option over delivery, but this is not the case in China, he noted.

Omega 8 provides a friendly environment for tech startups to test integration within Walmart’s business, Hassing said. “Omega 8 is not a separate standalone innovation center. It’s integrated into the business.”

Walmart has partnered with Microsoft as well as Plug and Play’s startup program, and is looking to collaborate with more. The retailer is aiming to work with 50 startups on proofs-of-concept (PoC) projects, according to Hassing.

“We expect over the long term what we’re doing here in China with the startups will be exported to other markets, and there’s a lot of interest and we’re just starting that journey.”

Industry goliaths seek innovation boost from Chinese tech startups

Hassing spoke about the benefits and challenges of working with Chinese startups on the panel, Corporate innovation: Harnessing China speed, at the Emerge by TechNode conference.

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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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Liu Wenfeng, chief technology officer at Baidu-owned platform iQiyi—sometimes known as the “Netflix of China”—insists that the platform is more than just a copycat.

“Last year somebody called us Netflix Plus … but we have more than that,” Liu told TechNode. Referring to their expanding range of content formats and methods of monetizing content, he said, “We’d rather call ourselves an online Disney.”

Unlike either Netflix or Disney, however, iQiyi is still bleeding cash as it seeks to level up content as well as its paying subscriber base. While its efforts have seen success, the platform faces a long road to profit that is hemmed in on either side by competitors and new tech trends.

However, 2018 was a bright spot for growth in both original content as well as number of subscribers, which shot up 72% year-on-year to 87.4 million. iQiyi’s performance was a highlight for Baidu’s overall year-end earnings report, although the streaming site also racked up RMB 9.1 billion ($1.3 billion) in losses.

On March 31, iQiyi reported that subscribers had risen to 96.8 million, up 58% year-on-year, although net losses—RMB1.8 billion—were between four and five times the figure from the first quarter of 2018.

Shelleen Shum, forecasting director at eMarketer, told TechNode via email: “[iQiyi’s] investments in premium content have clearly helped to attract more subscribers. A growing user base will add not only to its membership revenue but also help its ad business remain competitive.”

“However, the online content market in China is very crowded and relying solely on content investment is not sustainable due to the continued high costs.”

Pathbreaking content

At iQiyi’s 2019 World Conference, held from May 9-10, executives announced new strides into the realm of interactive content.

In a sense, they’re late to the party. In December 2018, Netflix released an innovative episode of a popular series, “Black Mirror: Bandersnatch.” Mixing together gaming elements with user choice and metafictional narrative, its debut made a successful splash across English-language media.

However, with the release of their “Interactive Video Guideline (IVG) and Interactive Video Platform (IVP),” iQiyi hopes to create an entire creation and distribution ecosystem for material similar to “Bandersnatch.”

Speaking at the conference, iQiyi senior director Yang Guang explained that more personalized storylines can add color to the entertainment experience: “The more immersive, the better.”

According to an official press release, the IVG is being used to guide content development from conception through plot, as well as production and release. In the future, shows created under these guidelines could be rolled out through iQiyi’s app. The IVP brings together content producers with IP creators and broadcasters in order to publish the new forms of video, and has thus far been used to produce interactive video for iQiyi.

“iQiyi aims to standardize interactive video creation, build an efficient ecosystem for the industry, and explore the possibilities of interactive video in collaboration with our industry peers,” Liu is quoted as saying in the press release.

At the conference, Yang explained that in future iQiyi shows, audience members will be able to actively choose where they want a character to go next, as was possible with “Black Mirror: Bandersnatch.” Alternatively, audience choice might involve switching points of view throughout an episode.

Using the new IVG and IVP, iQiyi announced on May 9, the platform will release an interactive romantic drama titled “His Smile.”

Doubling down on AI

iQiyi CTO Liu Wenfeng also elaborated on another major part of the company’s tech strategy: artificial intelligence.

Starting five years ago, the company has steadily ramped up its efforts in the area. Nowadays, not only does machine learning help recommend content, a la Netflix, but it also helps cast actors and actresses, edit footage, create customized promotional content, and add to the audience’s viewing experience—for example, by allowing users to skip to scenes featuring a favorite actor.

The applications go beyond content production and post-production. “We utilize AI technology to do the content distribution,” Liu said. By better categorizing and recommending content, algorithms are helping to match viewers with the videos they want to see.

According to Liu, AI also helps determine which content is truly popular. In genres such as children’s content, for instance, the sheer number of views don’t tell the whole story—as “kids tend to watch videos multiple times.” Additional factors must be included in any assessment of a video’s impact, including amount of user interaction and number of shares.

The tastes of fans, in turn, can influence what types of shows iQiyi will make next. When asked if the company could reveal its projected hit flick for the summer of 2019, Liu demurred. He did claim, however, that iQiyi’s algorithms for predicting the popularity of a video are highly reliable, with around 88% accuracy.

That helps content producers decide which directions to explore in the future, although Liu added, “We are not going to [entirely] replace the creativity work by human[s].”

Long road to profit

It’s not hard to see how AI can help save iQiyi money in the long term by cutting down on the time required to make decisions, as well as reducing the risk involved. After all, in 2015, Netflix claimed that its technological advancements, including smarter recommendations and improved user interfaces, saved the company some $1 billion each year.

Liu told TechNode that using AI to optimize content classification and recommendation allows iQiyi to get “more value from the same library.”

In addition, Liu said that the platform’s growing user base makes it easier to profit off its increasingly extensive catalog of content. “That scale can dramatically lower our cost and improve our profitability.”

In the realm of AI, the platform has a competitive advantage because it is backed by Baidu, said Shum. “The ability to utilize AI to not only grow its revenue base by attracting and retaining more subscribers but also to realize efficiencies in content production and push down production costs will be an exciting development to watch for iQiyi in the coming quarters,” Shum added.

Interactive videos seem to promise higher overhead without immediate financial reward. But making that leap may be a requirement for iQiyi amid fierce competition from rivals such as Tencent Video or popular short-video apps Douyin and Kuaishou.

“Development of quality content and IP is the core of competitiveness in online video, so these measures are necessary for iQiyi,” iiMedia consulting analyst Li Songlin told TechNode. Even in an increasingly regulated media environment, iQiyi must keep experimenting with its repertoire of content in order to stay ahead.

“Currently, video platforms’ methods for profit are generally in advertising, paid membership business, and IP development. Among these, homegrown IP and tapping IP value are key for profit, but the period needed is relatively long,” Li wrote.

At the World Conference, at least one iQiyi executive pointed out interactive content’s moneymaking potential. In his address, senior director Yang Guang noted that interactive video binds viewers and content creators more closely together. In doing so, more opportunities for user-ad interaction also arise—for instance, by allowing audience members to click on a character’s clothing in order to purchase a similar item.

The foray into new territory could help Baidu’s streaming platform pull ahead of major rival Tencent Video. In a March ranking, research firm Aurora Video placed Tencent Video one place ahead of iQiyi in terms of “value of app traffic” (our translation).

The ranking, an Aurora representative told TechNode, was created using assessments of apps’ active user counts, quality of online traffic, and user backgrounds, as well as the products’ ability to retain user attention and strategically place ads.

In the ranking, Tencent Video’s RMB 12.6 billion value beat out iQiyi’s RMB 12.5 billion estimate. Neither, however, measures up to short-video apps Kuaishou or Douyin, valued at RMB 17.7 billion and RMB 21.9 billion, respectively.

With additional reporting by Cassidy McDonald.

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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?”

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Ant Financial’s Xiang Hu Bao is a platform within the mobile payment app Alipay that provides affordable online health plans.

A clue to how it works is in its name: It means “mutual protection” and is a nod to the concept underlying the platform where members agree to pitch in and help other members with their medical expenses.

Centered on the concept of low-cost health care, Xiang Hu Bao, and other similar platforms, are beginning to take hold—especially among those who have typically not been well served by the country’s medical system.

Members of mutual aid plans share health care costs equally, so there are no premiums. Participants of  Xiang Hu Bao health plan make contribution twice a month, which is often less than a tenth of a yuan, and, in return, they receive coverage for 100 critical illnesses.

In return for managing the process, Ant Financial takes an 8% administrative fee out of every payout.

Late last month, TechNode visited Peking Union Medical College Hospital (also known as Beijing Xiehe Hospital), a state-run general hospital located in Beijing’s Dongcheng district, to understand why online mutual aid plans like Xiang Hu Bao are gaining popularity.

Near the busy entrance of the hospital complex, family members waited in the afternoon sun while loved ones undergo surgery, while nearby, hundreds of patients lined up to have prescriptions filled.

TechNode searched the crowd for Xiang Hu Bao users to learn what impact, if any, the app has had on their lives. In the first hour of relentless searching, however, we had little luck.

Finally, we bumped into Huang Zekai, a 29-year-old Xiang Hu Bao user from the northeastern province of Jilin. Huang said a pop-up in one of the Alipay mini-apps led him to join the Xiang Hu Bao health plan.

“People nowadays care more about healthcare and there is an increasing awareness around it,” Huang told TechNode.

Huang hadn’t given it much thought because the payment amount automatically deducted from his Alipay account each month is trivial.

Huang has a stable job in international trade. Better off Chinese people like him are increasingly turning to private insurance for better coverage and lower co-payments than public insurance.

But Huang is aware that many others in the country don’t have the same privilege.

Huang said one of his close friends working in the floral business received help from another online mutual aid community after his friend’s mother’s accidental fall last month that caused injuries around her thoracic area. The operation cost more than RMB 500,000 (around $74,200), Huang said he donated RMB 7,000 to assist his friend through Tencent-backed insurtech company Waterdrop Inc. (also known as Shuidi).

“I think the most important aspect for me is that someone benefited from such services,” said Huang.

Online mutual aid plans like Xiang Hu Bao takes on a more meaningful aspect—it allows those more fortunate to give back to the society, by donating and pitching in other participant’s medical expenses.

Ant Financial announced last month that its online mutual aid platform had amassed more than 50 million members since its launch in October. Xiang Hu Bao is aiming to have 300 million users—roughly a fifth of the population in China—on its platform in the next two years.

Other Chinese tech titans like, Tencent and Suning have made moves into the mutual aid space over the past year. For example, Waterdrop Inc. closed a RMB 500 million ($74.3 million) funding round led by Tencent in March and is now seeking new funding at a valuation of over $1 billion. The company’s mutual aid platform Waterdrop Mutual has over 78 million members. Meanwhile, Chinese retailer Suning announced last month that it was testing (in Chinese) its mutual aid product “Ning Hu Bao.”

Anyone with a score of 600 or higher in Sesame Credit, the credit scoring system developed by Ant Financial, that meets the health conditions can join the plan. The 600 level is considered a “benchmark” score and is what everyone starts off with when first opt-in to the Sesame Credit system.

The health plans, which cost significantly less than private insurance policies, have gained popularity over the past few years, especially among rural and underserved parts of the country.

Although it is also popular with white collar workers like Huang, Xiang Hu Bao is popular with less well off citizens. For example, some 47% of Xiang Hu Bao’s participants were migrant workers and 31% were from rural regions, Ant Financial said in April.

Significant strides

China has made significant strides in healthcare over the years. In a decade, the rate of basic healthcare coverage went from 22% in 2000 to nearly 95% in 2011.

However, even with improved access to public health care, out-of-pocket payments remain high, and access to medical care for the country’s rural citizens is worse compared to their urban counterparts.

Another couple at the hospital, who declined to be named, had traveled from Inner Mongolia for the wife’s routine check-up after her thyroid surgery. The husband, a gardening worker in his early thirties, said he enrolled in Xiang Hu Bao after a colleague recommended it. He said he pays an annual fee of less than one hundred yuan per person, which is an affordable option for him to get additional healthcare coverage for himself and his three-year-old son.

“It doesn’t cost us a lot of money and it adds an extra layer of protection,” said his wife, who teaches preschool. In her early thirties, lean and fair skinned, she sat on the pavement outside near the hospital entrance playing online mahjong on her smartphone.

Although both her husband and her young son are covered by Xiang Hu Bao, she is not. She’d applied for Xiang Hu Bao and another mutual aid plan Shuidi Huzhu, she said, but was rejected both times because of her thyroid operation, which left a visible scar that runs across the right side of her neck.

“It’s like I’m being blacklisted,” she joked.

One of the kids in the class she teaches received a payout of RMB 170,000 ($25,344) for his treatment for leukemia, the teacher added. Though short of the maximum payout of RMB 300,000 that the family had hoped to receive, it was still a financial burden lifted off of their back.

For a long time, public knowledge and awareness of health care and insurance remained quite low in China, said You Jia, a life insurance worker from Changchun, capital of the northeastern province of Jilin who now works in Beijing for pan-Asian insurance company AIA Group.

It wasn’t until two years ago that the public became more knowledgeable and aware of health insurance, which had to do with the government’s policy push to improve health care and reduce poverty caused by illnesses.

Online mutual aid plans like Xiang Hu Bao gained traction because they are inexpensive relative to health insurance policies. For those with little understanding of health care products, You said, the cost becomes a much bigger factor.

What Xiang Hu Bao offers seem like a better deal: members only need to put aside a few yuan every month, “a pack of cigarettes or a bottle of liquor” as You puts it, unlike traditional health insurance products that ask for larger sums of money annually. You said, however, such online health plans complement but do not replace traditional insurance.

You believes that with the government further push to improve basic health care and educate the public about health products like insurance, online mutual aid, and other inexpensive health care products will effectively bridge the gap of the urban-rural medical care gap.

Also at Peking Union Medical College Hospital, another middle-aged couple who had traveled from rural Henan province to visit their children said they were unfamiliar with online health plans, or, for that matter, the public health care system.

They said they were illiterate, and received health care the way most residents from their agricultural town did: They paid cash to treat minor ailments at inexpensive community clinics.

In some ways, the couple, who were nervous to speak with reporters and declined to give their names, belong to a demographic group who could be well-served from a mutual aid platform like Ant Financial’s.

But they are also precisely the same kind of people Ant Financial does not want in their fund as it begins to grow: As older adults, they have a higher chance of requiring expensive care. Xiang Hu Bao only allows users between the ages of 30 days and 59 years old and does not admit those with pre-existing conditions.

Leveling the healthcare system

The purpose of online mutual aid plans like Xiang Hu Bao is to complement public and commercial health insurance plans with wider coverage, rather than provide an alternative to those products, as Ant Financial has emphasized after facing regulatory scrutiny (in Chinese) from Banking and Insurance Regulatory Commission for promoting it as a health insurance product.

Chinese retailer JD.com tested its online mutual aid plan “JD Hubao” in November but was forced to take it down after just one day.

While online mutual aid plans are not necessarily patching up all the holes in the healthcare system, there is a clear need for affordable and adequate healthcare plans that such services are addressing.

The existing public health schemes in China cover only a portion of medical expenses, which often still leaves individuals saddled with hefty out-of-pocket payments. On average, Chinese still have to cover around 30% of their medical expenses out of their own pockets according to OECD figures in 2015, which is much higher than that of advanced economies like the US, Japan, and South Korea.

Moreover, the reimbursement of medical fees can vary considerably from urban to rural areas—lower for rural citizens compared to their urban counterparts—which has exacerbated inequality in China’s healthcare system.

Another insurance professional—whose company may soon launch a competing product—agreed to speak to TechNode on background. Health care products that cover critical illnesses could help bridge that gap, however, there is an inherent risk with mutual aid plans: members in the plan share medical costs, so if members exit the program, monthly rates could go up, which would only drive more people to leave.

While online mutual aid is not a new concept in China, the Xiang Hu Bao delivery mechanism is broader via Alibaba’s channels, which gives it an upper-hand in terms of expanding its reaching and growing its user base, the insurance industry worker added.

Additional reporting by Cassidy McDonald.

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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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Despite recent buzz about Chinese companies pivoting business models to service enterprises, venture capital investor Han Bing is wary of the trend.

Han founded Shanghai-based Cambrian Venture Capital in 2016. “In China, many industries and companies have achieved a high level of automation and usage of information technology. But they are not at that high a level of systematization yet,” (our translation) he explained.

While the market is brimming with opportunity, venture capital firms must contend with both overstated demand for corporate services and few examples for success.

Han became an angel investor in 2012, and founded Cambrian Venture Capital four years later. Cambrian focuses on early-stage investing and primarily invests in the upgraded consumer market, education, and corporate services sectors. In Han’s seven years as an angel investor, he invested in more than 110 companies, including the women’s health app, Meet You.

The corporate services category ranks first on TechNode’s China Investment Trends tracker, which monitors the number of deals made in China in the past 30 days. In total, 35 corporate services companies in China have secured funding from investors—the highest of any industry in 2019 so far.

Although there is much room for growth in the segment, Han said, it’s necessary to be rational before entering the fray.

The corporate services industry requires entrepreneurs to have a “deep understanding of the entire industry and not just general knowledge about the internet industry,” Han said, adding that those who do not perform due diligence could make “costly mistakes.”

According to Han, American companies have matured and are already aware of the strategies their competition might deploy. At this stage, Han said, companies must save costs, and outsourcing their work becomes “inevitable.”

In contrast, he said, Chinese companies are not yet at a stage where they have a “desperate need to maximize efficiency.”

As an investor, Han considers himself risk-averse. When it comes to investment strategy, Han aligns himself  closely with Warren Buffett’s method of long-term value investing. “[Buffett] puts more of his money onto safer bets,” he explained. “He does not lose money most of the time. But over time, the growth is massive.”

No stranger to responsibility, the Peking University’s School of Government graduate was responsible for Uniqlo’s e-commerce operations in China. Even though venture capitalists wield the financial power, Han believes that they should support entrepreneurs, standing behind them for the ups and downs of the entrepreneurial trajectory.

In fact, Cambrian encourages their entrepreneurs to make mistakes. “Only through making mistakes do we realize what the limits and boundaries are,” he said.

Another of Cambrian’s values is “Don’t be Evil”—Google’s former code of conduct and now a renowned adage. “We felt that intelligence was innate, but kindness is a choice,” Han said. “We don’t want to be profiteering individuals, and it shouldn’t be that way.”

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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.”

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Xiaomi co-founder and CEO, Lei Jun, warns that Xiaomi phones could get more expensive in future releases as the company attempts to leave behind its reputation for producing cheap hardware.

The company’s flagship Mi 9 phone, launched Feb. 20 in Beijing, is packed with new features: three separate back cameras, a powerful Qualcomm Snapdradon 855 chip, wireless charging—and a slightly higher price tag.

The Mi 9 starts at RMB 2,999 (around $446), while the Transparent Edition sells for RMB 3,999. The stripped-down SE edition starts at RMB 1,999. The previous model, Mi 8, started at RMB 2,699.

Lei said, “Actually, we want to get rid of this reputation that our phones cost less than RMB 2,000. We want to invest more and make better products.”

He added, “I said internally that this might be the last time our price will be under RMB 3,000… In the future our phones might get more expensive—not a lot, but a little more expensive.”

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Train passengers may be riding into the Chinese New Year with concerns about data loss after thieves listed millions of train passengers’ information for sale on the black market.

China’s official rail authority, China Railway, blamed a recent hacking on third-party ticketing vendors, often thought to be more convenient, though perhaps less secure, than the official railway ticketing platform, 12306.cn. Earlier this week, it was reported that China Railway moved to limit third-party apps’ access to train tickets.

Some Chinese consumers, it seems, value the convenience of third-party applications over the ostensible security of official platforms, even when that may lead to data theft.

A student who was traveling with his friend from Hebei port city Qinhuangdao to Beijing Railway Station for a college entrance exam told TechNode that although the official site might be more secure, he prefers to use third-party apps like WeChat or Ctrip. He said, “I feel like third-party apps are more convenient than the official booking platform. They also offer more promotions and discounts.”

While Chinese consumers do care about data privacy, a 2015 Harvard Business Review study found that they were willing to pay less to protect most types of private data than their American, British, and German counterparts.

Many Chinese passengers told TechNode they were unconcerned about hacking because they believed their personal data wouldn’t be used for nefarious reasons.

One college student said, “Sometimes this information is used for advertising or communication purposes. It’s not like personal information was violated. I’m not really worried.”

But some Chinese consumers are deeply aware of the risks of online commerce. A 25-year-old technology worker, who asked to be referred to only by her initial, M, so that she could speak candidly about the industry, told TechNode that she was afraid to use smaller, third-party applications. She believes these platforms tend to be managed by younger, less experienced developers.

She said, “Sometimes it is because [smaller platforms] simply don’t have the manpower, sometimes it is caused by vulnerabilities in their server or the third-party services they use, including cloud services. All of these factors are possible.”

According to a 2018 report by Tencent research arm Penguin, 60% of Chinese consumers occasionally worry about data leaks, and are most concerned about their data being used for fraud, being resold to third parties, or leading to spam calls.

Jia Sen, 24, said that he is often pestered by spam calls offering to sell him a house, but he doesn’t believe he has any way to avoid them. He, like many consumers, buys tickets on whichever platform has seats available.

China Railway has denied the claims that there was a data breach and warned passengers to avoid booking their tickets on unauthorized third-party apps—in particular, ticket-snatching software and plug-ins.

12306.cn recently rolled out a new feature that it claims is faster than ticket scalping programs, which previously drew droves of customers looking to snap up much-coveted tickets during the Chinese New Year period.

Jia told TechNode that he hasn’t worried about personal information being stolen from ticket booking sites. “There isn’t that much information on there,” he said. “Only my phone number, ID number, and my name.”

The Dec. 28 ad, which listed 12306.cn passenger information from over 600,000 user accounts involving more than 4.1 million passengers, reportedly included names, ID numbers, phone numbers, email and account usernames, and passwords. The usernames and passwords were proved to be valid and could be used to log into 12306.cn’s user accounts.

Police said that an investigation led to the arrest of a 25-year-old suspect who allegedly purchased account details on the dark web, then used them to gain access to more data held by third-party ticketing platforms.

This is not the first time the platform has found itself the target of massive data hacking. Last year, 30 million pieces of information were reportedly leaked from 12306.cn and sold on the dark web for 10 Bitcoins (roughly $65,000 at the time). Officials immediately denied claims that the platform was hacked and advised customers not to use unauthorized channels to book their tickets. A similar incident took place in December 2014, when thieves leaked 130,000 railway passengers’ personal information from the 12306.cn site.

The 25-year-old tech worker, M, said, “To be honest, I’m halfway from giving up. Working in the [tech] industry, you’d know very well it’s quite difficult to protect your personal information from being put online.”

Additional reporting by Nicole Jao.

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On any given Beijing street, look near the cars and taxis and buses, among the motorbikes, and you may notice a commuter on a scooter with a glowing white circle.

That distinctive logo belongs to one of China’s hottest smart electric scooter brands, Niu Technologies, a Beijing-based company that bets luxury electric two-wheelers will be the future of urban transportation—in China and beyond.

Li Yan, the company’s CEO, said Niu was founded upon the premise that cars are not the future of Chinese urban transit. The founders’ daily life served as inspiration, Li said, pointing to the snarling traffic jams and crowded public transportation in the Chinese capital. “We actually got frustrated in terms of commute living in the city,” he said.

Startups around the world are jumping on the so-called “micro-mobility” trend, which refers to non-car transit options such as bike-sharing, e-bikes and standing scooters like Lime and Bird. They all aim to solve the “last mile” problem, tackling the lack of transit options in the short distance between a user’s home and the nearest available public transit stop.

Niu scooters, like Tesla cars, use lithium-ion batteries. Niu—not to be confused with Chinese electric carmaker Nio—says it leads the Chinese lithium-ion powered scooter market in terms of sales volume with 26%.

China’s lithium-ion scooter segment is projected to grow rapidly, but currently accounts for a small portion of China’s $7.7 billion electric scooter market. Most Chinese e-bikes use lead-acid batteries.

In China, a conventional scooter sells for around RMB 2,500 (about $369) but Niu’s scooters sell from RMB 3,000 to as much as RMB 10,000 (about $443 to $1,478). Niu believes urban riders will upgrade their lead-acid powered scooters to more expensive but more stylish, more energy-efficient, cloud-connected smart scooters.

Niu’s competitors include Taiwanese startup Gogoro and China’s leading e-bike producer, Yadea, who also sell stylish, high-end bikes targeting affluent consumers.

Niu has been a subject of interest in Chinese media due to its famous founder, Li Yinan, the former Huawei vice president and Baidu CTO who was in 2015 convicted of insider trading at private equity firm GSR Ventures. Niu’s growth hit a speed bump during Li Yinan’s time behind bars, though he remains Niu’s largest shareholder. CEO Li Yan said that Li Yinan will remain only a passive investor in the company.

Niu reported RMB 1.05 billion (around $155 million) in net revenue in the first nine months of 2018, 9.1% of which came from overseas markets.

Li said urban transit solutions in China—once known as a “bicycle kingdom” due to its affinity for the two-wheeler—can be translated to Europe, where Niu has turned its attention. The company is eyeing countries that are ready to switch to lithium-ion batteries, and in Europe, Li said, the market is ripe.

“The European guys are on a much, much faster pace on this one, so that’s why we’re doing very well in Europe,” Li said. Unlike in China, European scooter drivers tend to use gasoline, so a switch to lithium-ion batteries could give consumers greater cost savings.

Niu has also become a provider for six scooter-sharing schemes in Europe, New Zealand and Mexico. Li said Niu is well positioned to supply to sharing operators because the company’s cloud-connected scooters can be managed through a Niu API.

Niu made its New York debut with a rocky October IPO. The downsized $63 million they fetched in fundraising is less than half of the highest target noted in their initial listing plan. Niu closed its first day of trading at $8.65. On Friday, shares closed at $7.74.

Still, Li said, the IPO was an opportunity for worldwide publicity. “We’re not that well-known in Europe or the US or Southeast Asia or those countries that we want to be in,” he said.

Correction: This article previously misstated Niu’s 2018 net revenue. The figure has been corrected. 

GUIZHOU, Southwest China—Dressed in a casual black bomber jacket with her smartphone in hand, 22-year-old college student Li Manhong seems like a textbook example of a tech-savvy millennial. She uses all the most popular online platforms like WeChat and Weibo, and even those blocked in China such as YouTube and Instagram.

Li, a marketing major at Guizhou Normal University, in the provincial capital of Guiyang, is eyeing a master’s degree in psychology. To prepare, she’s taking a MOOC—massive online open course—in the subject, offered by Chinese internet giant NetEase. She’s also taking online classes to get ready for the College English Test (CET), which is a prerequisite for a bachelor’s degree in China. And, as an avid K-pop fan, Li is teaching herself Korean with the help of online language training platforms.

In many ways, Li is typical of China’s post-’90s generation: proud of their country’s breakneck economic and technological development as well as confident about their and their nation’s future. Yet while China is raising a generation of digital natives, beneath the surface many are woefully underprepared to staff the technological revolution that the government has promised. Unemployment among college graduates is high, largely because of a mismatch in skills, but also because of graduating students’ unrealistic expectations.

(Can’t load YouTube? Try watching here instead.)

Technology is also at the heart of China’s ambition to shift its economy away from traditional manufacturing to more high-value industries. So, perhaps even more importantly, it’s an area of skills and learning that is key to realizing the nation’s ambitious economic goals.

China hopes to foster innovation in artificial intelligence and autonomous driving, new energy vehicles, chipmaking, and robotics through its “Made in China 2025” initiative. The State Council, China’s cabinet, also wants the country to become a world leader in AI by 2030.

But the nation faces a serious skills shortage precisely in the sectors where its future needs it most. By 2020, there are expected to be 24 million fewer high-skilled workers—those with tertiary-level or vocational training—than the country requires, according to consultancy firm McKinsey. The opportunity cost could reach $250 billion should China not bridge the skills gap by that year, the consultancy added.

When it comes to emerging technologies, the country could face a shortfall of 4.5 million robotics engineers by 2022, according to the Ministry of Industry and Information Technology (MIIT). The dearth also extends to AI talent, where China may have to deal with a shortage of 5 million AI professionals, a ministry official said.

The same is true of the country’s chipmaking sector. In 2017, China had fewer than 300,000 employees working in its integrated circuits industry. According to the MIIT, the country needs at least 400,000 more to reach its 2030 chipmaking industry growth goals.

[infogram id=”talent-supply-and-demand-1h706erxox3725y?live”]

Technology also offers the means to bridge the country’s skills gap by addressing persistent social and economic inequality through online education that includes MOOCs. Yet while the government has invested heavily in vocational training, the state education system is married to old methods.

The government hasn’t made the most of the game changer that is online education, remaining reliant on brick-and-mortar vocational colleges that are more accustomed to teaching traditional blue-collar trades than, for example, robotics, machine learning, or coding. Meanwhile, universities are criticized for prioritizing rote learning over innovation and focusing on theory rather than practical skills that could enhance their graduates’ employability.

A 2016 report produced by JPMorgan Chase put it bluntly, stating that in China, “labor costs are rising, supply and demand are dangerously skewed, and vocational training is unable to fill the breach fast enough.”

The paper made several policy recommendations, including establishing closer ties between educational institutions and businesses—so that schools could better grasp industries’ needs—and joint training whereby universities and enterprises could work together to identify and develop talent. It also called for similar collaboration between private enterprise and the country’s vocational schools.

In November, during a “deepening reform” conference led by President Xi Jinping, the government announced that it would support the involvement of private enterprise in vocational education to ensure a more skilled talent pool for China to stay competitive. But while policymakers have pledged to invest in remote learning, most funding still prioritizes vocational schools.

There’s evidence to suggest that the government is beginning to take the MOOC opportunity more seriously. In addition to the plan to launch 3,000 national-level quality MOOC courses by 2020, the government expects to add an additional 7,000 such courses over time. Simultaneously, it aims to build 10,000 quality MOOC courses at the provincial level.

In January, China’s education ministry said there were around 3,200 courses with more than 55 million “viewers” in the country. Wu Yan, a senior official with the education ministry, said that China “leads the world in MOOC construction,” with the largest number of online courses in the world.

However, China’s young people can’t afford to wait around for the education system to change. Many of them are looking instead to private providers of online courses in an effort to fill the gap left by public tertiary and vocational institutions.

A shot at the middle class

To be sure, online learning is opening opportunities for some people in China. Thirty-four-year-old Beijing resident Li You says studying through MOOCs has helped him improve his skills and boost his earning potential. In August 2017, he started taking online courses in deep learning and AI through Udacity, a U.S.-based for-profit course provider, and eventually completed a “nanodegree.”

Li hails from northern China’s Heilongjiang province but moved to the northwestern province of Shaanxi to study engineering at a university in Xi’an. After graduation, he worked as a data analyst with global logistics company DHL. Four years later, his annual salary was RMB 300,000 (close to $44,000)—a handsome sum in a province where the average annual salary was only 13% of that in 2017.

Still, Li felt something was missing. “The data analyst job became less fulfilling for me,” Li tells TechNode. “More importantly, it offered little potential for future development.” He signed up for the Udacity courses with the belief that there was high market demand for advanced tech skills.

“Basic courses on calculus and programming were part of my college education, but my memory of these knowledge areas had become rusty,” Li says. “So, I began taking some basic courses though MOOC platforms, where courses from the world’s most reputable universities are shared online.”

Through online learning, Li was able to refresh and improve his professional skills, finally landing a job in Beijing as a data algorithm engineer for SoYoung, an online platform focused on cosmetic surgery. At RMB 400,000 per year, his new salary is a hike of 33% over his previous income.

But Li was unusually well-positioned to take advantage of MOOCs. His salary at DHL made the RMB 3,600 course affordable. (A three-month program offered by Chinese IT-focused open course platform iMOOC costs around RMB 2,200.)

Li’s command of English and the head start afforded him by his undergraduate studies in engineering meant he could select advanced offerings. Some of the courses had Chinese subtitles, but most were in English, so language skills are important, he says.

Similarly, taking courses online offers a vital lifeline to some young people, offering them a way out of desperate situations. Just one year ago, Li Xuanlin—who is not related to Li You—was working grueling 13-hour shifts in an engine factory in rural Shandong province. On the factory floor, flecks of iron covered every surface, and when Li Xuanlin would stop to take a lunch break, he could taste iron in every bite. When he fell ill from exposure to that environment, he says he knew something had to change.

Li Xuanlin began taking online classes through Sanjieke, a Chinese internet-skills platform. Fortunately for Li, the investment was worthwhile. Through a classmate’s referral, he landed a job in the Tianjin office of Maimai, a Chinese platform like LinkedIn, and now leads an urban, white-collar lifestyle that he says feels a world away from a childhood spent in a farming town.

Thirst for digital knowledge

Online learning has become hugely popular in China in recent years. With gaps in the public system, the private sector has taken up the mantle of tech education, offering a growing range of choices from both Chinese and foreign players. China’s market for online learning, which includes MOOCs, is expected to be worth over RMB 540 billion by 2022, according to consulting firm iResearch—more than triple the market size in 2016.

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The potentially lucrative industry is also attracting some of China’s biggest internet giants. Baidu boasts an online education arm Baidu Jiaoyu and student Q&A app Zuoyebang, and has also invested in online language learning company Hujiang Education Technologies. Alibaba offers courses on e-commerce and entrepreneurship via Taobao University and live-broadcasts lectures through Taobao Education. It is also a prominent backer of language learning unicorn VIPKID. Tencent launched professional online education platforms including Tencent Classroom and Tencent University and has invested in several online education platforms such as Yuantiku.

Homegrown options abound as well. NetEase was one of the first major internet companies in China to dabble in online education when it launched NetEase Open Courses in 2010. In May of 2014, NetEase and Chinese higher-education textbook publisher Higher Education Press jointly launched the China College MOOC, which provides the public with more than 6,000 MOOCs from over 700 Chinese universities and institutions. Other prominent MOOC platforms include Tsinghua University’s XuetangX and programs from institutions such as Peking University.

Udacity, which developed out of offerings at Stanford University, entered the Chinese market roughly two years ago and started offering courses and programs in Chinese. It is also working with Chinese companies to build customized courses for the market. Other international MOOC platforms such as Coursera, edX, and Khan Academy have expanded their footprint in China by partnering with local universities to disseminate their educational content, and working with local platforms. For example, NetEase Open Courses has translated a significant portion of Khan Academy’s content into Chinese and helped promote it on its platform. Similarly, Coursera teamed up with Guokr, an online tech and science education site, to localize content.

Fresh forms of online education are also flourishing. The year 2016 saw new pay-for-knowledge models take off, particularly paid audio-streaming platforms like Ximalaya FM, iGet, and Qingting FM. These platforms feature wide-ranging topics from finance and business management to technical skills development, art history, and psychology. Some platforms like Qianliao and Lizhi Weike use popular messaging app WeChat as the main channel of distribution. By 2020, the market size for pay-for-knowledge platforms is expected to reach RMB 23.5 billion. While MOOCs by major providers can run to hundreds or thousands of yuan, an audio course often only costs around RMB 10 to 20.

Wang Xiaowei, author of the forthcoming book Tech Goes Down to the Country, which explores technology and its impact in rural China, is not surprised that Chinese companies are ahead of education authorities when it comes to online learning. “The private sector is always going to move faster than government,” she says, adding that many companies might consider a shortage of skilled workers in tech a potential “pipeline” issue. To make sure that they’ll have enough future applicants with the right skills, enterprises are “probably saying, ‘Let’s go out and do this ourselves.’”

But Wang believes the government must lead the development of MOOCs in China. “It’s important to have government in there in order to have standards,” says Wang. To her it’s an issue of specific software skills versus broader tech skills. “You can teach people how to operate a piece of software, but they’ll only know how to use that specific software. If they want to develop their skills, they’ll have to pay again.”

If those abilities are taught at universities or vocational schools, educators can give learners a broader foundation in tech skills. “Leaving such training up to the private sector worries me in the context of China, as well as in the U.S.,” she says.

Many Guizhou college students believe online classes can propel them into better opportunities, including Li Manhong, in pink, a junior marketing student, and Zhang Youyou, in black, who studies landscape design. (Image credit: Cassidy McDonald/TechNode)

Some also have questioned online course quality, particularly in cutting-edge areas like deep learning. Providers in pursuit of profit are more likely to offer courses in high-demand fields, those which can offer students quick career results rather than a foundation for lifelong learning or innovation.

Tsinghua University’s XuetangX, for example, provides MOOCs to some 10 million registered users, mostly from first- and second-tier cities. Most are seeking instant gratification in the form of a pay raise, promotion, or better job opportunities, CEO Li Chao tells TechNode, so the platform offers courses on subjects like accounting and programming.

The proliferation of platforms and lack of a solid regulatory framework for the sector leaves customers vulnerable to scams or disappointment. Disgruntled students have accused online education companies of overstating the benefits of their courses. In one story reported by Shanghai-based Chinese media outlet The Paper, a former customer of Nasdaq-listed TEDU accused the company of failing to deliver on its alleged promise of numerous job opportunities and an annual earning potential of around RMB 200,000.

The student, who was not identified by his real name in the article, said he went into debt to the tune of thousands of yuan after paying tuition, while still being unable to find a job. Aptech, one of China’s oldest IT training schools, has faced similar criticisms, with former students alleging false advertising—to which the school has countered that students expected too much and didn’t work hard enough.

Tackling the digital divide

In theory, online education should provide a much-needed solution to the much-cited digital divide, which appears alive and well in China. Getting the right skills to the right people in time will allow China to reach its goals for economic development and equity. Failure to do so could see obvious repercussions for the country’s economy and stability. The challenge, observers say, is how to stem the emergence of a new type of “left behinds”—people who have been overtaken by the relentless onslaught of technology and development.

The reality, however, is that those who already have strong educational and professional foundations, including English skills, stand to benefit the most from these new learning opportunities. For example, Udacity currently has close to 10 million users worldwide, including around 400,000 from China. But according to head of marketing and partnership Zoe Zhou, close to half of their Chinese users come from the top four metropolises of Beijing, Shanghai, Guangzhou, and Shenzhen. People with such skills and who live in more developed cities also have a greater chance of knowing where to look for new skill enhancing options in the first place.

However, even when individuals are aware of online learning opportunities, language can remain a barrier. Nancy Xu, former IDEO China designer turned founder of education consulting company Cevolution, says that there is a “big gap” between the quality of Chinese-language offerings and international ones. “It’s not systematic,” she says of most Chinese-language courses. “It’s not like Coursera where if you want to learn AI, if you want to learn machine learning, then the top scientists in the world teach you that.”

The lingua franca among software developers has long been English. Most programming languages are based in English, so it’s natural that many technology education resources are in English as well, though Chinese developers are beginning to change that.

Recently, software developers have been making more resources available in Chinese. For example, when TechNode checked the popular software development platform Github earlier this month, six of the site’s 25 weekly trending repositories were written mainly in Chinese, while the rest used English.

And in 2014, China-born developer Evan You released the popular Javascript framework Vue. The U.S.-based company has found traction in markets worldwide, including in China, as much of the framework’s documentation is written in Chinese.

Last year, NetEase launched an initiative to bring its MOOC platform to learners in living in remote mountainous areas in China. Jiang Zhongbo, general manager of NetEase’s education business unit, described the initiative as part of the company’s “Internet+” approach aimed at pushing for inclusive education.

XuetangX’s Li said the company has attempted to bring the online learning platform to rural parts of China but realized that it is difficult to pique people’s interest there. So they modified their approach by partnering with high schools and universities in central and western China, providing teachers with resources through their platform—bringing benefits of online learning back into the brick-and-mortar classroom.

[kopoverlay id=”23″ type=”image” caption=”Students eat near a food stand at Guizhou Normal University, a teacher’s school located in one of China’s poorest provinces.”]

[kopoverlay id=”24″ type=”image” side=”right” caption=”Zhang Youyou, a Guizhou Normal University junior, takes online classes but says that lectures sometimes fail to keep her attention.”]

China could look to India for inspiration for making access more equitable. There, two public institutes partnered to create The National Programme on Technology Enhanced Learning (NEPTEL), which offers learners courses from eight Indian science and technology universities. First conceived in 1999, as of the Spring 2019 semester NEPTEL had 290 free classes in engineering, hard sciences, and other fields. Another initiative launched two years ago via a technical partnership with Microsoft connects Indian residents with 300 free college-level courses, much of which cover professional topics. Called the SWAYAM MOOC platform, its official website states the platform’s objective is “to take the best teaching learning resources to all, including the most disadvantaged.”

Anant Agarwal, CEO of worldwide non-profit MOOC provider edX, tells TechNode that online education is key, especially with increasing penetration of mobile devices in developing countries.

“I think everyone worries that with online education, it will increase the [urban-rural] digital divide,” he says. “I think it’s very important to work hard to make sure that everybody has access to education.” Agarwal adds that, due to money and time constraints, “for a lot of people in rural areas, online might be the only way to do that.”

Elsewhere in the world, Singapore’s SkillsFuture initiative forms another notable public-private partnership. As of January 2016, all citizens aged 25 and above receive a SGD500 (around $365) credit with “periodic top-ups” in order to take pre-approved online courses from local universities as well as MOOC platforms. Singapore also offers between 50% to 90% subsidies for employers who sponsor their workers’ training.

Upskilling the heartland

With mountainous terrain resulting in many remote villages lacking infrastructure, Guizhou province is one of China’s poorest. However, the region is rebranding itself as China’s big data capital. Guiyang now hosts China’s annual Big Data Expo and boasts partnerships with Apple’s iCloud operations.

But low-income areas are, predictably, the least developed in terms of technological infrastructure, and have the least access to educational opportunities.

Li Manhong, the Guizhou Normal University marketing major, hails from Xingyi City in the southwest corner of Guizhou. While mobile payments have become ubiquitous in the country’s bigger cities, according to Li, cash still dominates in Xingyi. Many people have mixed feelings about the role of technology in their lives.

“The internet offers people in remote or impoverished areas access to information and knowledge they may not have had in the past,” Li says. Her parents didn’t have the opportunity to undertake tertiary education, and even now only students from a few top high schools in Xingyi can get into university. Yet many are also wary of recent developments. “People of my parents’ generation see new technology more as a challenge to their old lifestyles, and more importantly, as taking jobs away from their children,” she says.

In Guiyang, tall buildings have shot up like new teeth crowning between the region’s characteristically steep and sudden peaks. The city has become a symbol of China’s tech-powered solutions to rural poverty. On certain blocks of Guiyang’s gleaming hi-tech zone, a four-year-old district located north of the city, white-collar tech employees are outnumbered by laborers at work constructing skyscrapers. Locals frequently comment on how quickly the city has developed.

Yet there are reminders that some dreams have yet to be realized, and that the path toward achieving them is not so smooth. In April, Guiyang opened the doors to “Oriental Science Fiction Valley,” China’s first virtual-reality theme park. Everything about the park is tremendous: a towering, 50-meter metallic-blue robot, a mall-sized spaceship complete with multi-story propellers, and a life-size blue airplane perched atop shining front offices. It takes nearly one hour to walk the entire circumference of the park.

On a recent morning, however, the gates are closed and the park is empty aside from a lone security guard reclining in a folding chair, staring at a video on his phone. A meter at the massive parking garage displays 8,888 open parking spots on each of the structure’s two floors.

With three metallic robot sculptures standing at ease behind him, the guard says that the park closed for renovations over a month ago. When asked when the park will reopen, he smiles and says, “unclear.”

Despite the city’s tech push, many of the students TechNode spoke to in Guiyang had their sights set on becoming local teachers, joining the civil service, or enrolling in further study.

Unlike many of her peers, who say they would prefer to stay closer to home, Wang Qianyi wants to move to Shenzhen or maybe even Shanghai. Anywhere bigger than her childhood home of rural Bijie, Guizhou province, would be fine. When she was young, she dreamed of being a police officer. But at 1.55 meters tall, she says she’s too short for the job and so decided to switch paths. Now a third-year student at Guizhou Normal University, Wang is majoring in electronic and information engineering.

Wang Qianyi, 23, studies electronic and information engineering at Guizhou Normal University. (Image credit: Cassidy McDonald/TechNode)

It sounds impressive, but according to Wang it won’t mean anything unless she can truly understand the dense subject matter. She says she’s struggled. Already 23, she transferred to the university from a junior college and aims to graduate from her bachelor’s program after another two years.

There’s a big difference in education quality, Wang says, between rural and urban colleges, and she’s not sure her education will be enough to propel her to a big city job.

Yet while Wang is aware of online learning opportunities, she feels they are not for her. She doesn’t believe that they would seriously enhance her employability, and right now she’s focused on finishing her degree, even though she feels her studies are too theoretical—a view that many other students echoed. She knows she will face a tough job market.

“At school what we study is ultimately not enough to prepare us for outside experience,” says Wang. “Chinese universities are all like this.”

Additional reporting by Cassidy McDonald and Nicole Jao. With contributions from Zhao Runhua, Bailey Hu, Colum Murphy, and Christopher Udemans.

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In China, heavy cell phone users are known as the ditouzu. This slang term roughly translates to the “heads-down crowd,” and describes the types whose heads stay glued to their screens in all situations: at work, on the subway—even in the bathroom.

Nonstop cell-phone use is a phenomenon not unique to China, though the country has seen its share of injuries from so-called “text neck,” the hunched posture required for marathon scrolling sessions.

It makes sense: Since 2012, China has been home to the most mobile users in the world, and in 2017, 753 million Chinese people accessed the internet through their cell phones.

TechNode visited one of the highest-tech areas in one of China’s highest-tech cities—the Huaqiangbei electronics market in Shenzhen—to ask Chinese cell phone users, “What are you doing on your phone?”

There were leisure users, like Zhang Qingna, a 36-year-old civil servant. She said she had been reading celebrity news about Hong Kong actor and singer Myolie Wu’s vacation in Malaysia.

Yang Xiaodong, a 45-year-old system analyst, said that he’d just been using his phone to play card games, and he’d won. “Just as you guys came I had very good luck,” he said.

Others were using their phones for more urgent tasks. Guixin Chen, 22, had just arrived in Shenzhen for a weekend trip and was looking for a place to sleep.

And others, naturally, were shopping. Guang Xu, 29, and Zhou Jie, 28, were researching a newly released sneaker, and Yu Hui, a 33-year-old bank administrative worker, was maneuvering a shopping rewards program.

All agreed that in today’s China, mobile access is a crucial part of daily life.

Jie said, “In the lives of people today, if they don’t have a phone, it’s not doable. Whenever I stop working, I think, ‘Is my phone there? Is it charged?’”

His friend, Xu, added, “You unconsciously pick it up and want to check it.”

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Hardware startup Timekettle wants to make translation devices more human.

The two-year-old Shenzhen-based company has begun production on its flagship product, the WT2 in-ear translation device.

Timekettle marketing specialist Kazaf Ye said he believes in-ear translation is a superior method to a device or app that users must pass back and forth.

Ye said that when typing and passing a device back and forth, “You don’t have the eye contact. You don’t have the body language. That’s not natural. That’s not human.”

The company previously targeted travelers, but upon beginning an initial production run, found that only 40% of their consumers were travelers, while another 60% were using the product domestically.

“If it’s only a question, like, ‘Can I get to the subway station? Can I order a steak?’ I think those simple questions, you can do it with the handheld translators. But we provide solutions for long-time communications and deep communications.”

Ye said that typical customers include business users and couples who want to better communicate with international in-laws.

“Because the world is connecting so closely together nowadays,” Ye said, “even though if you don’t travel to foreign countries, they will come to your countries, so you’re going to make more friends.”

When TechNode tested the device, the voice recognition seemed quite accurate as long as the surrounding environment was relatively quiet. Timekettle outsources translation software for most of its 21 languages, so the translation should be on par with any typical automatic translation software, but may vary from language to language.

The device sells for $219 and is currently available on Timekettle’s website. The company says the WT2 will be available in stores in Japan and Italy sometime this January and aims to sell in Chinese stores by February (2019).

Note: This story has been updated to include the price, product performance and availability of the WT2 device.

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China’s ambiguous cryptocurrency regulations are driving startups overseas, according to 500 Startups partner Edith Yeung.

Yeung — head of greater China at the global venture capital seed fund— spoke to TechNode on Nov. 20 at TechCrunch Shenzhen 2018. She said that China is “one of the hardest places” to launch new blockchain projects.

While Yeung stressed that the Chinese government is supportive of blockchain innovation (Shenzhen and Hangzhou governments both launched blockchain funds this year) rules around cryptocurrency are ambiguous, with repeated crackdowns on cryptocurrency exchanges.

Yeung said that regulations in China are hard to predict. “It’s more or less just wait and see,” she said. “The regulatory environment will sort itself out later.”

If blockchain startups hope to create their own token—or even have the option to do so in the future—they often choose to open offices overseas, Yeung said.

“Because what is going on in China is not clear, I am seeing more and more even Chinese projects actually going overseas,” she said. “All these guys are—from day one—thinking about international. They are not only sitting in Shenzhen or Beijing. They are thinking, OK from day one I need to have an office in San Francisco, in Berlin.”

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The flip phone has made a comeback.

Royole Corporation, a 6-year-old startup, has become the first company to commercially release a smartphone with a foldable screen. Their product, the FlexPai, launched on October 31, besting Samsung, which is still teasing a release of their own foldable phone.

TechNode got a hands-on look at the FlexPai Tuesday during TechCrunch Shenzhen, where Royole Chairman and CEO Bill Liu said that while the FlexPai is a novelty, the company envisions the product as a practical solution.

“People always want portability and large screen visual experience and that’s exactly what FlexPai can do,” he said. “People are interested in this new product not only because of the novelty. Novelty eventually has to serve for human needs.”

Video by Sky Gidge

What’s the opposite of memory lane? Try TechCrunch Shenzhen’s Startup Alley — a veritable future-fest, crammed full of startup hopefuls all aiming to become the technology of the future.

Shenzhen has been called the hardware capital of the world, and accordingly, many of the startups on display this week were gadgets: high-tech dog bones, skin scanners and skateboards.

Yi-Yuan Intelligence‘s AI device is a face-scanner aimed at beauty salon customers. Visitors place their heads into a sleek looking hood that takes five flash photos then uses machine learning to rate their skin on attributes such as oiliness, bumpiness and number of beauty marks or blemishes. The company claims the software can identify acne with a 98% accuracy rate. The company, based in Shenzhen and founded in 2017, has filed patents to use the device for cosmetic surgery.

Cheerble — a Shenzhen-based company founded in 2016 — focuses on creating pet-related smart gadgets. Their debut product, Wickedbone, urges users to play with their dogs by playing on their phones. Pet owners can manipulate the dog toy via bluetooth, and it rolls, shakes and lasts for four hours on interactive mode. The company received AUS$91,306 via Kickstarter this summer, and the product now retails for $169 on Amazon.

Walnutt, a company based in San Fransisco and Hong Kong, claims to offer the world’s first “posture-controlled” electric skateboard. Like a Segway, it moves as users shift their weight. The product gained some fame last year when YouTube celebrity Casey Neistat reviewed it in his blog, but his feedback was mixed. Of the hardware, he said, “I do think there’s a place for this little guy in the market. It’s incredible.”

But after multiple attempts, Neistat was unable to get the product to work, and he blamed the software. “If you’re making hardware don’t require a username and password to ride a skateboard,” he said. “That’s preposterous.”

Additional reporting by Sky Gidge.

Doe-eyed girls with slender faces used to be all the rage on the Chinese internet. Not anymore.

The popularity of that look—typically associated with the country’s sizable army of web celebrities or wanghong—is giving way to a trend toward a more sophisticated, more natural concept of beauty among certain segments of Chinese consumers.

The shift is particularly important to those tech companies marketing photo editing apps, such as Meitu, who must roll out new features to sustain their user base and attract new users.

To succeed, companies like Meitu will need to keep consumers like Li Mengfei in mind. By day, the 25-year-old is a full-time social media content editor; by night, she goes by the name “Afei,” and works as a part-time key opinion leader (KOL).

Stores and restaurants pay KOLs like her to visit their locations, take photos of themselves having fun, and then post them online.

“One or two years ago, Chinese people thought very big eyes, very thin face — that was the internet celebrity (wanghong) look,” Afei said in an interview with TechNode that took place while she was on assignment at a trendy pet store in Beijing’s Chaoyang District. “But now, there’s a more high-end internet celebrity look.”

To be sure, the move to “natural” doesn’t apply to everyone, and it doesn’t mean people don’t want to photo edit away pimples and wrinkles. Women—and for the most part it is women—still want to look flawless, but they want a flawless version of their own face. For many, Meitu is no longer the photo app du jour.

It’s almost as if Meitu’s fame is its undoing—almost everyone has used it and the results have, for some, become predictable. It has become boring.

Beauty bloggers discuss the changing face of Chinese beauty. Video by Cassidy McDonald

(If the video above doesn’t play, try watching on QQ instead.)

Meitu fights back

Meitu is aware of the trend. “Our users’ aesthetic standards are shifting to a more natural one,” a representative of Meitu said in response to questions from TechNode. The representative pointed to the company’s BeautyCam product, which it said aims to offer “better photo effects by enhancing tech support including filters, augmented reality elements, and user interface.”

In addition to the selfie beautification app BeautyCam, the product lineup of the company and its related units include photo editing tool Meitu Xiuxiu; instant video beauty app Meipai; and one-touch make-up app MakeupPlus.

In late September, the company rolled out a texture-enhancing feature which would “assign an image with aesthetic value” and generate “harmonious and natural” results, according to Meitu’s official introduction to the feature.

Meitu also appears to be betting on technology. In August, Meitu’s R&D unit MTlab beat out competitors backed by Tencent and Lenovo to win the first prize in a leading AI-driven dermatology competition, the International Skin Imaging Collaboration Challenge.

As one of the earliest Chinese selfie apps, Meitu quickly conquered the Chinese market, earning it a market valuation of more than $8 billion just three months after it listed on the Hong Kong exchange in late 2016.

According to Meitu’s latest financial results, the company’s total monthly active user numbers dropped by almost 16% from 415.8 million recorded at the end of 2017, to just over 350 million at the end of June. In the case of its Meipai app, users numbers plunged by more than 55%.

The company’s path back to success may not be easy. As it strives to satisfy increasingly fast-changing aesthetic standards among Chinese consumers and the notoriously fickle fashion industry, foreign photo editing apps are also gaining traction in China.

Valerie Chow, a New Zealander who was born and raised in China and who works as a freelancer fashion blogger in China, described Meitu’s style as promoting “fair skin, slim body figure, gentle personality, double-lid, big eyes, tall nose, long hair, light makeup, and a fairy-like aura.”

“These are the features that most Chinese people would typically mention when referring to a [natural] beauty,” Chow said.

Traditionally, Meitu has offered editing effects to produce doll-like appearances, but is increasingly facing intense criticism from netizens in China for producing photos that have been excessively edited to the point where they’re “unnatural.”

For evidence of China’s recent embrace of natural beauty, look no further than the June campaign “Bare Skin Project/Going My Own Way” for China by Japanese brand SK-II. According to quotes from celebrities participating in it, the campaign hoped to convey a more confident image of female power by showing bare skin directly.

SK-II has developed a reputation for being in close sync with Chinese women’s self-perception. In 2016, it launched a popular marketing campaign that explored the issue of so-called leftover women—women aged over 27 who are widely treated with disdain and dismissed as being too old to get married. The campaign struck a chord—SK-II’s video received more than 1.3 million hits in the first 24 hours after its release.

Raised eyebrows

“In China, sometimes people raise eyebrows when hearing the name Meitu,” said Li Lilin, of millennial-focused market research company Youthology. “I would say there is a Meitu stereotype.”

Li said in the pursuit of a more “natural” look, what people are actually saying is that the want something different from wanghong style. “Here ‘natural’ means ‘comfortable’,” she said.

KOLs are also turning away from Meitu. One popular beauty and fashion blogger, who goes by the name Yuanlaishiximendasao, recommends her followers use Meitu competitor Qingyang Xiangji, saying that apps able to highlight natural effects will beat apps that can only do “studio effects worth only half a yuan ($0.07)”—a remark apparently aimed at Meitu.

The results are telling when one types the name “Meitu” in Chinese into the iOS App Store search function: Pinned on top of the search results is an app-recommendation post “How to be a Selfie Pro.” For adjusting the light in portraits for true effect, the app store story recommends Facetune2, which is free, and MaxCurve, which sells for RMB 18. Meitu comes further down the list after Snapseed, a Google-owned editing app. The English translation of Meitu is “beautifying a photo.”

Facetune, an Israeli photo editing app that aims to provide natural effects with improved skin texture, has fast become a leading competitor of Meitu in China in the portrait editing market.

While Crystal Yin, who works in international fashion retailing, says she sometimes uses Meitu’s BeautyCam for casual use when out with friends, her photo editing app of choice is Facetune. “I wanted to look natural, so I switched to Facetune,” she said.

A young cosplay enthusiast who asked to be called by her cosplay name, Niannian, said even though people in the cosplay community frequently apply heavy makeup, Meitu is rarely the photo editing app of choice for them. Instead, Photoshop is preferred because it can make subjects appear natural “like people in real life.”

Niannian is not optimistic about Meitu’s long-term prospects in what she describes as a mature market where tech barriers are relatively low and needs change fast. “Being a trend-follower may not be enough,” she said.

Additional reporting: Cassidy McDonald

In China, it’s possible to do almost anything with WeChat: call a taxi, pay bills—even get one’s day in court.

Going to trial with WeChat-based courtroom mini-app Weisu (微诉) looks a lot like a Skype meeting: courtroom participants can join from the comfort of their couch. The mini program—which functions as an independent app but can be launched directly from the social platform—can verify their ID, submit court files, and have their testimonies transcribed by WeChat’s voice-to-text technology.

Weisu—developed by Chinese big data and AI company Gridsum—is part of a larger initiative to digitalize Chinese courts making them faster and more efficient—as well as collect big data. For now, the software is largely used in intellectual property litigation.

One well-known example of the effort is China’s first cyber court launched last year in the Chinese city of Hangzhou—home of e-commerce giant Alibaba. The court was set up to handle the swelling number of online disputes including e-commerce complaints, online lending disputes, and copyright infringements.

(If you don’t see a video above, try watching on QQ video instead.)

Bringing technology into Chinese courtrooms is not just a matter of convenience—it’s a necessity. The country had only around 365,000 lawyers by the end of 2017 with courtrooms across China handling 15-20 million cases each year. For comparison, the US has approximately 1.3 million lawyers. Chinese judges complain of too much work with many reportedly leaving the profession because of low salaries.

Aside from remote trials, Chinese courts started live streaming some of its trials in 2016 as a part of an effort to shed some light on Chinese judicial system which has often been criticized as opaque. China has a  99% conviction rate, more than any other country in the world.

“Streaming of cases improves transparency but for lower courts, streaming is selective,” said Susan Finder, a China-focused legal scholar that has been monitoring the Supreme People’s Court for more than 25 years. “How many people pay attention to the case streaming is also a question.”

Many other technologies are being integrated into the judicial process. In March, a court in Beijing trialed a VR visualization of a crime scene. Hoping to mitigate the lack of lawyers for enterprises, e-commerce platform JD recently presented its voice recognition-powered AI legal bot Fadongdong (法咚咚) which is also available as a WeChat mini program. Alibaba Cloud’s ET Brain has equipped 6000 courtrooms with its AI speech transcription. The legaltech industry is rising: China filed 34% of legaltech patents globally in 2016, second only to the US, and the demand is likely to grow.

Among these technologies, artificial intelligence is grabbing the most attention but it is also one of the more controversial ones. Gridsum, for example, is providing judges AI-powered suggestions on how to handle their cases with the help of a legal search engine based on data from China’s court database opened in 2014.

“Our core competence is to generate data based on text mining, turn that data into knowledge, and then make it available to the court, legal practitioners, and then to judges and court presidents and others,” Du Feng, deputy general manager at Gridsum Legal Big Data Division, told TechNode.

However, even a machine would find it hard to sort through a legal system, and not just China’s. As Gridsum’s Du explains, an AI machine can quickly grasp how to play a game of Chinese chess or Go like the example of Google’s AlphaGo, but China is too big; each province has its rules and guidelines on verdicts with great development gaps among different provinces.

Geographic differences aside, laws, regulations, and the judicial system as a whole is constantly changing and upgrading. This makes providing AI assistance to judges a complex endeavor, according to Du. “Our product has to be precise,” he says.

Unlike some countries, China has not yet decided to hand over more important decision making to AI, according to Finder. Police and judicial bodies in the US, UK, and soon in Switzerland are using risk assessment algorithms for decisions about pretrial release and parole including software such as COMPAS, HART, and ROS.

“The use of an algorithm in crime prevention should help to eliminate uncertainties when authorities and judges have to make difficult decisions,” said Ioannis Martinis, a lawyer for the Swiss legal protection insurance Coop Rechtsschutz where he leads artificial intelligence projects. “But the use of such algorithms seems and feels like delegating human responsibility to the machine—that is always somewhat questionable.”

Both in the UK and US, the use of AI systems in making legal decisions has come under attention for racial bias and bias toward people from poorer areas, urging developers to be aware of the possible prejudices that get built into algorithms.

Another risk of using AI decision making in court is the risk of reducing or even completely abandoning human control due to cost and/or time pressure, according to Martinis. Considering China’s lack of legal experts, this scenario is not hard to imagine.

However, interest in solutions such as these is growing in China. The AI “black box” was one of the main topics the AI and Law forum at this year’s World Artificial Intelligence Conference in Shanghai which brought speakers from China’s judicial system, law research institutes, and legaltech startups.

However, most experts at the forum agreed that what China needs is practical solutions and merging the convenience of WeChat with courtrooms is one of them. As CEO of PowerLaw AI Tun Cunchao said during the forum, AI and law need to focus on solving specific tasks rather than “fantasizing about an omniscient and omnipotent legal AI solution that can be used universally.”

If you can’t see anything above, try watching here instead.

For OnePlus, one is enough.

The company, founded in Shenzhen in 2013, tends to introduce only one new model each year. This year, they’ve tasked that phone — the OnePlus 6 — with the near impossible: compete with the iPhone X on style, compete with the Galaxy S9 on performance, remain number one in India’s premium phone market — and do it all for less than $600.

Does this cost-conscious premium phone live up to expectations? John Artman reviews.

If you can’t see anything, try watching here instead.

Less than two weeks after Alibaba co-founder Jack Ma announced his plans to retire, his company held its biggest event of the year, The Computing Conference, in Yunqi Town, Hangzhou.

During his speech at the investor day event, Ma emphasized the theme of this year’s event — “Empower Digital China” — when he evoked the U.S.-China Trade War. He suggested Chinese manufacturers could survive the mêlée by boosting innovation, and he urged the industry to follow the example of Chinese retail.

Ma said, “We only protect the future. We only protect the hope. We only protect the new ideas.”

All week, Alibaba made sure their new ideas were on full display — most notably, the company’s smart logistics network, Cainiao; their new retail flagships, Hema supermarket and BingoBox; and their partnership with the city of Hangzhou, City Brain 2.0.

For more on Alibaba’s future plans, check out our video recap.

Updates to the monitoring system of Chinese tech firm Tuputech now allow for real-time scrutiny of video such as live streaming. Partners in the industry speaking at the launch event for Tuputech 2.0 talked about how it could help them be even stricter than current government regulations call for.

Tuputech has already been helping social media, and online companies understand the content of images being shared on their platforms. It processes a billion images a day for the likes of Jinri Toutiao and Blued, filtering out over 95% of any illegal content posted to the platforms.

But, as the Chinese government makes ever stricter demands on what can and cannot be shared, people are communicating in ever more ways such as short videos and live streaming. Since July 2016, the government has imposed several rounds of regulation, warnings, and periods of tight scrutiny of video sharing live streaming platforms. Now video clients such as Bilibili, iQiyi, and Musical.ly are using its AI-based video filters.

Video and live streaming analysis

At an event in Beijing with the theme “High removal, low vulgarity, understanding video” on May 29, Tuputech’s CEO Li Mingqiang, a founder of WeChat, and partners talked about the difficulties facing video platforms and how tech is helping to keep ahead of users trying to abuse the products.

The software also helps with other aspects of content management such as real name registration and even matching the person appearing in the video to the ID of the registered user.

The algorithms are tailored to each client. The various video platforms carry different types of content aimed and created by different user bases. Perhaps the most noticeable difference is between apps popular in the most cosmopolitan cities compared to smaller, less developed towns and cities. The filtering is becoming increasingly sophisticated for each platform and is forming a “Sky Net” (天网), a term given to China’s smart surveillance camera network.

The updated systems not only recognize faces in the video but can determine facial attributes such as gender, age, expression–and attractiveness. Scoring systems for attractiveness are becoming more popular in apps in China with Microsoft’s XiaoIce becoming more discerning. It can also detect the faces of celebrities.

Beyond identifying the person, Tuputech’s algorithms detect and define actions and whether they should be blocked. For example, if someone is dancing in front of a camera for their live stream audience, at what point does the dancing cross the line to become “inappropriate”? There’s an algorithm for that.

The software can also detect and assess actions such as eating (there is a lot of this in Chinese video entertainment), but also anything inappropriate including smoking. Video analysis can determine the location, objects in the room, items related to crime or terrorism such as people wearing face masks (but not for pollution) or banned flags. People’s hand gestures are recognized and monitored.

Keeping up with regulation

Speaking at the event, Chen Taifeng, vice president of Yixia Keji which operates Miaopai, explained how his company had helped face the “big pressure” of recent government requirements on live streaming, joking that content safety workers hair went white because of them.

The software allows his company to be compliant far more cheaply, though he admitted that they didn’t find as much offensive content as they were expecting. Chen also spoke of the importance of learning about what people are doing and maintaining blacklists for content. He used the example of a Chairman Mao impersonator being brought on stage at a blockchain event in Hainan. They could see from their backend that only a few images and videos of this event got out through their platforms and if the type of image were added to the database, they “could 100% have been removed.”

“We should go broader and wider than the government’s requirements for content checking,” said Xiuse Entertainment’s Zhou Gaoqin, who also spoke of the need to monitor messages between users as well as any video generated.

Many of the updates are aimed at informing content quality for the platforms. Simple measures such as detecting whether no one has been in front of the camera for a while can shut off a stream or judge whether the lighting or focus is off.

But the algorithms can also detect and assess the clothes people are wearing and the brand of cars appearing. Categories can be created for example classifying whether the host is “sexy” or a “glasses girl.”

Chinese technology companies have witnessed amazing growth in the past half decade. Of the world’s top 20 internet firms, nine originate from China, even though just two went public prior to mid-2013. Tencent’s market value has increased by a factor of seven in the past five years Alibaba, which only IPOed in 2014, is now the country’s most valuable company.

The meteoric growth of China’s internet firms can be partly attributed to the number of people accessing the internet. China has an online community that is more than twice the size of the total population of the US and exceeds the entire populace of Europe.

These insights form part of famed venture capitalist Mary Meeker’s 2018 Internet Trends Report. The document contains everything from global e-commerce trends to internet policy, and more importantly, China’s rising influence in internet-related markets.

Development of artificial intelligence

The explosive growth of digital data in China is providing the opportunity for the country to increase its artificial intelligence capabilities rapidly. China did not enter any international AI challenges until it 2011, at which point it placed 11th in the Large Scale Visual Recognition Challenge. However, it has advances hastily in the past few years. In Stanford’s ongoing Question Answering Dataset, Chinese organizations have dominated the top five places.

While the US is currently ahead in the race to advance AI technologies, China is focussed on gaining ground. The Chinese government hopes to be the at the forefront of development by 2030. The most valuable AI unicorn in the world, SenseTime, calls China its home.

Numerous AI research centers have been launched this year in Beijing. In February, city officials launched an international research center led by CEO of Sinovation Ventures, Kai-Fu Lee. Four months later, in May, Qualcomm opened an AI department dubbed The Qualcomm AI lab.

Technology is driving domestic consumption

China’s economy is increasingly driven by domestic consumption, representing a 62% contribution to GDP growth, compared to 35% in 2003. Internet-based consumerism is propelling this trend with the proliferation of e-commerce.

Online-to-offline (O2O) are changing the face of retail in China. Numerous outlets are beginning to provide both online shopping capabilities and brick-and-mortar stores. Alibaba’s Hema has shown that physical stores with online capabilities can dramatically increase its number of transactions. The combination of daily online and offline purchases have enabled the company to facilitate twice as many sales as its competitors.

Unlike countries like the US and UK, which transitioned from computers to mobile devices, China has remained a mobile-first economy. As such, the country’s mobile data consumption to drive these services increased by 170% year-on-year.

Local tech companies are also spreading their services overseas.  While Alibaba’s non-China revenue makes up just 8% of its total, it has seen over 65% year-on-year revenue growth in its international operations. The company has been investing heavily in the Asian market, with several investments in Pakistan, India, Indonesia, and Singapore.

Mobile payments dominate

Alibaba’s Alipay still commands the mobile payments sector. The company controls 54% of the market while WeChat Pay holds 38%. The country’s total mobile payment volume reached nearly $16 trillion in 2017.

The prevalence of mobile payment platforms is also allowing for growth in the car and bicycle rental sectors. The country is responsible for 68% of global trips on these rental platforms. Bike rental companies have a presence in most of the country’s major cities. However, due to the saturation of the market (and city streets), the government has been cracking down on the continued deployment of bicycles to selected cities around the country.

Video services have begun dominating the entertainment sector

In 2013, the country spent 60% of its daily entertainment time on social media and 13% on video platforms. As of March 2018, video services have seen a dramatic increase in time spent on their platforms, up nearly 70%.

Short-form videos are driving this upward trend. Users of Douyin and Kuaishou spend an average of 52 minutes a day on these platforms. Additionally, online video content budget exceeded that of China’s TV networks for the first time in 2017. The increased budget is enabling platforms like iQiyi, Tencent Video, and Youku to produce original content and license exclusive films and TV series on their platforms.

China loves social gaming

Chinese gamers spent most of their time on team-based multiplayer games, including Honor of Kings and PUBG Mobile. The country is also home to the biggest computer game company in the world. Revenue from computer games reached almost $30 billion, the highest in the world.

Tencent’s recently published financial results are a testament to this. The company reported a 26% increase in gaming revenue in May.

While the North American facial recognition technology market remains the world’s largest, China is developing new technologies at an unmatchable pace. Last year according to CB Insights, Chinese entities filed for 530 camera and video surveillance patents, while U.S. entities filed for only 96.

Megvii is thought to be the first facial recognition “unicorn.” Three Tsinghua graduates founded the company in 2011, and its main investors are said to include a Chinese state fund and Alibaba’s Ant Financial.

Megvii’s open-source software platform, Face++, is considered the world’s largest. And because 300,000 developers use — and train — Megvii’s software, it’s also among the most accurate in the world. The company said that by as early as 2013, their software had already surpassed the recognition accuracy rate of the human eye.

Megvii began as a facial recognition startup, but now the company also develops body, object and text recognition software, and also sells its own facial recognition surveillance cameras.

Other Chinese companies in the facial recognition space include DeepGlint, SenseTime, and Yitu.

Facial technology in China is particularly prolific because it’s widely used in both private commercial products and public surveillance systems. Megvii not only supplies consumer products like Alibaba’s “Smile to Pay technology,” but also sells cameras and monitoring software to governments in over 32 Chinese cities.

Because facial recognition technology is used both in commercial and government arenas, some consumers say that they’re relatively open to its use, since they encounter potential benefits in everyday life.

“You have to become part of the online scene, you can’t retreat into your own thinking,” Santo Han, screenwriter on The Ferry Man Manjusaka, told TechNode. On that day alone his film made RMB 160,000 on iQiyi, ranking app Maoyan tells us, still going strong five weeks after its release when it brought in over RMB 3 million a day.

Access to audience data is transforming the film industry in China. Movies made for streaming platforms have rapidly become high-quality feature films with lavish budgets and marketing allowances to match. The turf war between the mainstreaming platforms has coincided with changes in technology, changes that have brought more data about the audience and made it easier for them to pay. Add in business models that share revenues based on views with production companies, and the industry is awash with cash and data. This is generating sophisticated content that is expected to become increasingly fragmented to capture diversifying audiences.

iQiyi just about has the lead in terms of rival platforms in China. As it announced its $2.4 billion Nasdaq IPO filing which will give it even more cash to pump into content, we spoke to screenwriters and producers who work with iQiyi to understand the changes to the industry.

-Video by Timmy Shen

Know your audience–and talk to them

“One of the biggest differences between TV broadcasts and online platforms is ‘the user’,” Ma Zhongjun told TechNode. President and chairman of Ciwen Media Group—and a household name in China and Taiwan as a screenwriter—Ma has seen decades of change in China’s entertainment sector.

“We’re able to gather a lot of data about content from how it is viewed—at what point someone stops watching, which bits they go back and watch again—and then from the other facts such as age and gender,” explained Ge Xufeng, deputy general manager of the Membership Business Department at iQiyi. “This can be passed on to [production] partners along with the danmu from iQiyi and the discussion page, along with information about where people are sharing [links to] the content.”

Danmu (弹幕, sometimes translated as “bullet screen” or “bullet comments”) are the fascinating phenomenon of viewer comments tagged to a particular moment of a program. These comments hurtle across the screen while you watch, providing an additional layer of viewer experience (that thankfully can be switched off).

“The most successful online films have a mostly male audience, and for this, I considered targeting females,” said Santo Han, (who goes by the name Xiao Jixiang Tian 小吉祥天 in Chinese), who was recovering from getting female-friendly The Ferry Man Manjusaka finished and published. “There’ll be word of mouth. After a few years of observation, I’ve realized that females can be good for word of mouth.” All four interviewees talked about the gender difference of viewers of certain types of content.

“You determine which group of fans you want then might try to extend the catchment area out to include others, which is what we try to do,” said Santo Han.

Another of iQiyi’s production partners is Qi Shu Youyu (奇树有鱼) which has specialized in online films from the outset. Founder and CEO Dong Guanjie explained the reality of who holds the data: “There are several thousand small production companies, but only a few massive platforms which means information asymmetry.” He pointed out that, at the other extreme, the box office only provides one type of data: how many tickets were sold.

Ma Zhongjun explained that knowing different audiences allows the company to tap into them. “With the big data generated, we can say let’s do this type of drama and tap into its fanbase, or into a previous fanbase or a particular actor’s fanbase or that of a novel. This way, even before we start production we’re already talking to them. Then when we start filming we can share trailers and have a conversation. It’s not like the closed circuit of the past,” said Ma.

Data from platforms such as iQiyi informs decision-making down to individual actors. According to Ma, “We’ll talk to the iQiyi team and say which actor or actors should we use. They might say ‘Definitely not this one’, or ‘You must use this one’. The platform has its own requirements.”

Once uploaded to iQiyi, films have on average 50 tags such as film type—action, drama—but also the emotion of a film. These are used to make recommendations based on the users’ preferences “This is very useful when a film is first put up and over 90% of views come from automatic recommendations,” said iQiyi’s Ge.

Business model and online box office

iQiyi’s Ge Xufeng explained the basics: “Our business model is simple. First of all, we buy. Lots of production companies have made content and we buy the rights from them. Then we’re also making our own. iQiyi puts up the investment and finds producers to come and make content with us. This model means we put up the money and a partner tailor-makes something for us and we give them a set proportion of revenue. The third type is revenue share, that’s the business model we use for films. In this case, the producers invest their own money to make the film and we put it on the platform. Then for every account holder who watches enough for this to qualify as an effective view—over 6 minutes—we allot the agreed amount per effective view to the producer.”

As for the payment amounts, it depends on how the film is categorized, in terms of quality and exclusivity. An additional allowance can be made per effective view of top-quality content for marketing costs incurred by the production company. Payments per view can span from RMB 0.5 per view through to a maximum of RMB 3.5 including marketing subsidy.

37.6% of iQiyi’s income is from subscriptions, 46.9% from advertising. The platform had 60.1 million subscribers at the end of February, 98% of whom are paying subscribers. This is up from 10 million in 2015, with 9.3 million added in the last two months alone. Loss-making from the outset, its latest announcement was a net loss of RMB 3.74 billion despite a 55% revenue increase for 2017 to RMB 17.38 billion yuan. Baidu is and will remain the controlling shareholder and recently propped up iQiyi with an interest-free $100 million loan at the beginning of the year.

How making films for online is (and isn’t) different

Online TV series are already pioneers in production and marketing. Individual episodes of top series cost over 8,000 times as much to make as they did a decade ago. Ma Zhongjun predicts that in the next three years online dramas will overtake broadcast (or broadcast first) dramas in terms of influence.

Budgets for online films are rising steadily. As an example, budgets at Qi Shu Youyu have gone from RMB 300-500,000 at the end of 2015 to RMB 1.5 million per film by the end of 2016. RMB 3.5 million was the going rate in 2017 and Dong is looking at around RMB 5 million by mid-2018 and between RMB 8 and 10 million by the end of the year with RMB 20 million not far over the horizon.

It is worth noting that production companies take around 35-40% of box office takings at cinemas in China, while the agreement with iQiyi is a 50:50 revenue share, meaning even a lower box office online could mean higher returns for makers.

According to screenwriter Santo Han, “The stand-out feature about online films is speed. They are fast. The traditional film industry has been developing for over 100 years, whereas the online film sector has got this far in just 4 years.” His production cycle for a film is less than a month (at a grueling pace), but he doesn’t believe that online-first impacts production standards as people are watching his films on large TV screens. He also says you cannot overthink the 6-minute effective view target for trying to hook viewers.

“What the audience cares about is whether or not it’s a good story, whether it’s moving. Chinese audiences are actually very good,” he says. “They don’t have a requirement for a certain basis, but whether or not you can move them, make them happy. They’re more interested in the content.”

Meanwhile, at Qi Shu Youyu, over 80% of viewers are watching on small mobile devices, snatching moments while eating or waiting for the bus. They save money on special effects and make sure there’s a plot point every couple of minutes. “We have to make things very easy to jump back into so we don’t hold to the concept of 6 minutes [effective view],” said Dong.

The use of small screens requires other tweaks to production. Cinema films are designed to be watched in the dark, with the viewer far from the screen. Qi Shu Youyu’s films are watched at arm’s length at best and in all light conditions. “The distance is actually a psychological difference,” according to Dong.

Piracy and censorship

Platforms like iQiyi could be having an impact on piracy. The rampant VCD and DVD piracy of just a few years ago has moved online. “One approach is that we have improved the quality of content formatting,” said iQiyi’s Ge Xufeng. “We offer Dolby sound and 4k steaming.” This coincided with the sheer ease of mobile payments. Simply scan the QR code on your TV to pay a few RMB to watch a film.

“Requirements for online content are more stringent than for cinema releases. The authorities aren’t concerned which market is bigger. The cinema industry is worth RMB 60 billion, our market is RMB 3 billion. What they’re looking at is the influence of the user. More users, so the requirements are stricter,” explained Dong.

Certain content has been noticed to have been removed at politically sensitive times.

The future of film

The current Hollywood model is a top-down approach out of step with the internet age, according to our interviewees. The internet brings equality between producers and viewers. “It’s an equal exchange where criticism is welcome, which leads to a better conversation, better communication with audiences and greater satisfaction,” said Ma.

Qi Shu Youyu’s Dong believes the industry has yet to reach its rapid growth period.  A landmark film that proves that online can produce a blockbuster will change opinions for good and drive even greater development.

“Why do we dare to invest RMB 20 million to make an online movie now? Because the whole market acceptance is growing, people’s willingness to pay to view content is growing and it means box office returns are higher. That’s why we dare. Things are still in the early stages and just getting started,” said Dong.

“I think the subdivision of the internet will become clearer and clearer in the future because big data will give you a picture. A picture of what and where the audience is will emerge and tell you what to make. Small and medium cost movies, those based on specialist literature and art, will be able to find a corresponding crowd, which will be enough for them to live,” said Ma, who believes improving accuracy will go on to better box office successes as a result. “In fact, Americans actually do very well in targeting different groups. Take a look at audiences in cinemas there.”

Fewer than 500 films a year get a theatrical release in China whereas 1,900 films were added to the country’s online platforms last year—1,321 for iQiyi. This provides more space for experimentation. “Cinema releases tend to be more expensive which in turn means people are less likely to take a risk on smaller films or unknown directors. That’s why I think it’s possible that the Internet movie market will bring new opportunities to these people,” said Dong.

But all is not lost for traditional movie theaters. There will be a specialization of films made for the cinema. “The sense of ritual will become stronger and stronger,” says Ma.

Updated March 22 4.38pm: Paragraph 12 changed “91% of views” to “90%”; paragraph 15  changed “37%” to “37.6%”, “40%” to “46.9%” and “RMB 3.74” to “RMB 3.74 billion”. 

Bilibili, also known as “B Station” (b站 in Chinese), is the spiritual home for Chinese ACG (anime, comic, and games also known as 二次元 erciyuan) fans. Founded in 2009, the site quickly gained popularity over the years. As of July 2017, Bilibili has 150 million registered users and 100 million monthly active users.

Previously known as a place to watch (sometimes pirated) anime and discuss the latest in ACG, Bilibili has grown into a haven for erciyuan (or 2D in English, a reference to the “flat” nature of ACG) aficionados to create and share their own fan content.

We talked to two popular Bilibili stars, who upload “Zhaiwu” (宅舞, literally meaning “house dance”), or ACG dance covers. Their videos have drawn tens of thousands of views.

If you can’t see anything, try QQ video instead.

“Danmu” (弹幕, “bullet screen” in English or “danmaku” in Japanese), real-time comments that skim across and atop the streamed videos, are also very popular on Bilibili. With the feature, viewers are able to leave instant comments and even interact live with other viewers.

E-sports, or competitive video gaming, is quietly on the rise in China. We visited a training spot of KillerAngel, an all-female e-sports club, in Shanghai to find out how gamer girls are professionally trained.

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This is how e-sports teams are trained in China. The clubs usually rent houses on the outskirts of metropolitan areas, where professional players live together to focus on their training. Often times before a tournament, coaches and managers would arrange “friendly” matches with the other listed teams—to spy on each other.

KillerAngel (KA, 杀戮天使 in Chinese) Women’s E-sports Club is one of the best professional teams in China. Just before Christmas, the six-woman team, who were top players in League of Legends, pocketed the championship of 2017 NTF Women’s Super League in China.

Read also: The quiet rise of China’s $3 billion e-sports market

“With more young girls becoming professional (e-sports) players, nurturing the young talent is fulfilling for me,” said Nini, a former professional gamer on KillerAngel. She currently works as the team’s manager.

Valued at $3 billion in 2016, China’s e-sports market is expected to hit 220 million spectators by the end of 2017. To put that into perspective, one in every six people in the country will have watched e-sports matches and have some understanding of the matter.

China’s leading short social video and photo sharing app Kuaishou is rumored to launch a new round of funding with the estimated valuation at $15 billion, according to the self-media “Kaiqi.” Kuaishou told other local media that it has nothing yet to release.

In March, Kuaishou raised $350 million in its Series D financing led by the Chinese internet conglomerate Tencent, and was valued at around $3 billion. In the previous financing rounds, Kuaishou has pocketed fundings from Sequoia, DCM, and Baidu.

There has been talks in the industry saying that Kuaishou plans to apply for IPO either in the US or Hong Kong this year. TechCrunch in February reported that the popular video-sharing app plans to go public in the US.

Kuaishou has done exceptionally well in China with its easy-to-share video features, especially among users in lower-tier cities. The number of its monthly active users surged from 93.40 million in September 2016 to 183 million in September 2017 with 87 million daily active users, according to a report from Jiguang, a mobile data research firm. The latest figures show that now Kuaishou has 700 million registered users and sees over 100 million daily active users.

As a front-runner in China’s mobile video sharing sector, Kuaishou allows users to share short video clips or live stream their daily lives, most of which often include eating, shopping or other bizarre performances.

How would you introduce your startup to an 80-year-old lady? And to your blind date? We asked around at the Startup Alley at TechCrunch Shanghai 2017, where about 200 startups showcased their latest products about AI, IoT, and Fintech, etc.

If you can’t see anything, try QQ video instead.

TechCrunch Shanghai 2017 gathered over 110 VCs and 400 entrepreneurs at the VC Meetup, where each startup had 10 minutes to chat with a single VC. Watch what they have to say before meeting the VCs.

If you can’t see anything, try QQ video instead.

If you can’t see anything, try QQ video instead.

On a Friday night in Beijing, You Yi, a gay volunteer at PFLAG (Parents, Families, and Friends of Lesbians and Gays) China, was ready to go live online to talk about sexual identity and share his experience of coming out to his family.

“By doing live streaming, we hope to tell everyone what homosexuality is really about,” You Yi told TechNode.

In the hope of advising more confused and struggling parents and children, PFLAG China, a non-profit organization aiming to serve the LGBT community in the country, began broadcasting live online in August. Volunteers share their coming-out stories, give suggestions and educate the audience about HIV, sexual knowledge, sexual identity, expression and sexual orientation—hoping to eliminate misconceptions from the general public about the LGBT community as well as misunderstandings within the community.

“We invite parents who have gay children to share their stories,” said Flora, the head of volunteer management at PFLAG China. “They would talk about how they first reacted when their children came out to them and how they coped with it.”

Often times, the nature of live streaming—real-time audience interaction—brings in the most exciting discussions. “Sometimes people don’t care what our theme (of the live streaming) is,” said Flora. “They would just throw in random questions like ‘I’m falling for a straight guy but I’m a gay man, what should I do?’ or ‘I just came out to my parents and they were furious, what should I do?’”

Aside from going live on LGBT dating apps like Blued and LesPark, PFLAG also broadcasts on Yizhibo—the live streaming platform that serves a broader audience base rather than just the gay community.

“Even though we may not get that much interaction on Yizhibo, we think it’s an important platform for the general public to get to know us more,” said Flora.

Despite the vibrant LGBT app scene in China, it hasn’t been a smooth sailing for PFALG since starting to do live streaming, especially when the authorities released regulations last year to ban portrayal of homosexual relationships on television dramas and web series (in Chinese). PFLAG’s accounts on some live streaming platforms have once been suspended due to the “sensitive” online discussions during live streaming.

“We’d avoid saying highly sensitive terms like ‘tongxinglian (homosexuality, 同性恋 in Chinese)’ and instead say ‘tongzhi (slang for homosexuality, 同志 in Chinese)’ or ‘LGBT’ or ‘sexual minorities’ during live streaming,” said Flora.

Even though the organization’s online activities have come under scrutiny, the live chats seem to be quite popular online. As of the end of October, the total views of the live stream and playbacks on Yizhibo exceeded 1 million since starting out in August. The number of real-time viewers, on the other hand, vary from video to video, but there was one live stream in October that drew in over 71,000 real-time watchers during the live streaming.

“We find live streaming the best way to promote information related to LGBT,” said Flora. “It’s very helpful especially when we’re doing advocacy work and hoping to change how people see the sexual minorities.”

Xiaohun, a gay KOL (key opinion leader) from China, runs a successful WeChat official account dedicated to the LGBT community in China. Starting in June 2015, he now has over 20,000 followers on WeChat. He mostly writes about same-sex marriage, equality, and sometimes he shares his life in a rural island in Fujian Province, where he lives together with his boyfriend.

If you can’t see anything, try iQiyi instead.

Once Xiaohun learned that  Gay Pride would take place at the end of October, he knew that he had to go—with his boyfriend.

“We’ve never been to a gay pride parade before, so I asked around on my WeChat official account,” Xiaohun told TechNode. “I received lots of comments. Some said we could meet up here at the parade, so I created a group and chatted on and off.”

For Xiaohun, the WeChat official account isn’t just a place to post personal photos and diaries but serves as a platform for the underserved LGBT community in China.

“In the past, gay people didn’t have their own platform,” he said. “Now that we have WeChat official accounts, we can report on our own stories by ourselves. I’m the reporter who reports on myself.”

As a KOL, Xiaohun has to put himself in the spotlight and often times shares his personal stories as a gay man. “I’ve come out to my colleagues and parents when I started to write,” he said. “I had no concerns, and could just write whatever I want.”

“I got thousands of followers in the first month—way faster than I expected,” said Xiaohun, adding that WeChat, as a platform, is a good place for the LGBT community to exchange information.

Alibaba saw a record-breaking GMV totaling RMB 168.2 billion ($25.3 billion) in its sales on Singles’ Day. Behind that are the “handchoppers”—shopaholics who say they will have to chop off their hand before they stop buying stuff online—vying for discounted goods in full force. We talked to a couple of them, and this is what we found.

If you can’t see anything, try QQ video instead.

Alibaba’s latest addition to its retail chain might be changing the grocery retail game in China. The group last month unveiled three new Hema supermarkets in Beijing and Shanghai, hoping to provide a seamless blend of online and offline shopping experience as part of their “new retail” strategy.

TechNode visited the Hema store in Beijing, and this is what we found.

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The highly mobile-powered supermarket requires shoppers to download their “Hema” app and link it to their Taobao or Alipay accounts. The store provides free WiFi, so the customers don’t need to worry about bad internet connection when they scan a bar code with the app. Doing so provides more information—or perhaps the backstory—of an item or facilitates the checkout process as all payments are processed through the phone.

One of the highlights of the Hema supermarkets is the variety of live seafood available. Aside from regular fresh produce, shoppers can hand-pick their own crabs, shellfish, lobsters, or clams, and have them cooked right away for take-out, delivered to their home, or eat in at the store’s dining area.

The fresh seafood section is definitely a game-changer. It’s like moving a traditional seafood market into a grocery store, just without the fishy smell.

The store also serves as a warehouse. For those who fancy shopping from the comfort of their home, they can simply order goods on the mobile app and get them delivered. However, each store only serves a customer base within a three-kilometer radius—a hyperlocal business.

When an order is made, staff prepare the items with bags that each comes with a special bar code. They collect the goods with the bags and put them on a conveyor belt which carries orders to the delivery center next to the store.

“We believe the future of new retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place,” said Daniel Zhang, CEO of Alibaba Group, in a company press release. “Hema is a showcase of the new business opportunities that emerge from online-offline integration.”

The online and offline blend also ensures an enhanced shopping experience. With every purchase logged and preferences saved, the company is able to track the user behaviors and offer up a more customized shopping experience.

“I did find the shopping experience fun,” said Gong Rong, a customer who visited the supermarket with her college-age son after hearing about it from her neighbors. “However, I don’t really like the way they cook the seafood. It doesn’t have enough flavor,” said Gong.

“It’s convenient to shop with the app, and the food is delicious,” said Liu Dan, another customer who came to the store with her husband and toddler. They had crabs and lobsters. “We waited for about an hour for our food to come, though,” said Liu.

Even though it seems that Alibaba is ambitious about the grocery business, the e-commerce giant doesn’t intend to operate a large grocery chain, according to Alizila, Alibaba’s corporate news site. However, since 2015, Alibaba has opened 13 Hema stores in China — 10 in Shanghai, two in Beijing and one in Ningbo.

It is smart for Alibaba to merge everything with Alipay, making the major player in mobile payment sector more of a necessity. However, at the end of the day, that fresh seafood section may be the ultimate game-changer. That’s what local Chinese really care about, after all.

BingoBox is becoming one of the more vivid examples of how fast innovation is moving in China’s retail industry along with Alibaba’s initiative in unmanned stores powered by their face recognition technology. However, the concept isn’t without its own teething problems. A BingoBox in Shanghai was closed for being too hot and when we tried one ourselves, we found the service had some flaws, such as invalid product tags and no paper receipts, causing customer frustration.

BingoBox (缤果盒子) is an unmanned convenience store that can greet customers 24/7, and requires the customer to have a mobile phone. It’s like the Chinese answer to the Amazon Go unmanned store. In the supply chain, the company has reached a strategic partnership with Auchan Group, one of the top ten retailers in the world, which is in charge of its supply chain to cover BingoBox convenience stores in the East China region and possible global expansion. It’s not completely unmanned: on site, we met an Auchan employee who was restocking the BingoBox.

BingoBox has completed Series A, acquiring more than RMB 100 million ($14 million) in investment led by GGV Capital, followed by Qiming Venture Capital, Source Code Capital, Ventech China and other institutions, our sister site TechNode Chinese reported on July 3rd.

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If you can’t see anything, try QQ Video instead.

What is BingoBox and how does it work?

Users only need a smartphone to enter and purchase an item in a BingoBox. To enter, a user scans a QR code via their WeChat account. After a text message authentication, the door will automatically open. Customers choose their wares, then scan the products with a scanner like a cashier would. A screen displays the running total and the shopper can complete the payment using Alipay and WeChat Pay.

The main products in BingoBox are biscuits, potato chips, instant noodles, dairy products, and drinks with about 500-800 different product lines. BingoBox says its stores offer prices about 5% lower than those of other convenience store brands, and that they provide RMB 60 in discounts for new users.

In 2013, the team launched their first service BingoFruit (缤果水果), an O2O version of the fruit delivery business. The company said that it has its own logistics channel, and was also the first to achieve two-hour delivery. In August 2016, they first tried an unmanned convenience store in Guangdong’s Zhongshan city, and on June 6th this year, they opened in two locations in Shanghai.

At the beginning of 2017, they reportedly made progress in artificial intelligence to achieve accurate identification of more than 200 categories of goods. With their team of deep learning experts, they are working on commodity identification and classification algorithms, through the algorithmic optimization and mass training. They are planning to launch a large-scale commercial artificial intelligence solution this August.

Currently, the company holds 16 international patents, including anti-theft systems, automatic billing systems, and facial recognition.

BingoBox benefits

Wang Ran (30)

I was interested in Amazon’s unmanned store, and I read an article about BingoBox on the website and came here to try it out with my friend, Deng Fei. It took me 30 minutes to get here. I previously worked in the technology part of the supply chain at Alibaba’s Tmall. They also want to do this.

I think the idea is very good. You can make the purchase in a store all by yourself. It’s fun. If it’s a packaged product, I can buy it here, and buy fresh groceries at the supermarket. It’s more like a convenience store, and more people will love this kind of store since it’s easy to try it out. I bought a pack of milk, a can of Sprite, and a can of beer.

Auchan’s employee

I’ve worked at Auchan for two years. BingoBox will spread, and more people will use it. It opened on June 6th this year. I come in here about six to seven times a day to fill up the products that have sold out. The price here is same as at Auchan. It’s really convenient, and I use it too to buy drinks.

Fang Tuanzi (29)

We’re a couple living in the area. About two weeks ago, I caught sight of this shop. We buy big things in Auchan and just bought a bottle of water here. I just wanted to buy a bottle of water, and you have to wait in a long line [in other stores]. I think they can put BingoBoxes around bars or basketball courts, that way people will come in to buy drinks and snacks. Simple things are what we need, so the items in the BingoBox are good enough. But I’m not sure if this model would work if the shop gets any bigger.

In China, the future of retail is already here. Alibaba Group launched its second Taobao Maker Festival on July 8th and introduced the Tao Café, an experimental cashier-less coffee shop driven by face recognition. Alibaba’s AI and data technologies have made it possible for customers to shop in this offline store without going through the time-consuming process of queuing to pay.

When a user walks to the counter and says she wants a cup of Americano, her face is scanned through the screen and deducts the coffee price from her Alipay account. Such facial recognition payment is backed by Alibaba’s artificial intelligence. Alibaba’s facial recognition payment was first shown to journalists who participated in 2016 Taobao Global Shopping day held on November 11th, Chinese Singles’ Day.

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While Tao Café runs with some clerks who prepare the food, buying goods at the Tao Café is done digitally, without the help of a human cashier. Users can grab physical goods and walk through a 1-meter long scanner to purchase the product using Alipay.

“Alibaba is a maker by itself. We would like to share the latest thinking through technology. Last year, we showed VR shopping through Buy+. This year we launched Tao Café, to introduce the new offline experience,” Chris Tung, Chief Marketing Officer of Alibaba Group said at the press conference at the festival.

“We want to bring Alibaba experience to support retail brands, to run the operation with our data capability. It’s about digitizing the footprint the digital store and optimizing the shopping experience,” Chris says.

Alibaba has been putting efforts into “new retail (新零售)” to integrate online and offline commerce. Under the plan, Alibaba has founded Hema (盒马鲜生, Hemaxiansheng) in 2015 to enable cashless checkout, and has collaborated with Bailian Group that introduced a new retail supermarket called RISO last week in Shanghai.

Chris mentioned that Alibaba has been in the online space, and they observed how they can enhance the offline shopping experience using data assets and data technology they have.

“Online experience is shown differently because we personalize the web page for customers. Offline has always been the same, and we believe offline should be more exciting. You have to integrate the data to enhance the in-store experience,” Chris says.

Alibaba has no plans to open a cafe, according to Chris. This demonstration is about showing what is possible for stores of all kinds.

“It’s rather showing retailers that they can do better when they work with us. Department stores, convenience stores are now working with Alibaba. Tao Café just shows what we can do,” he said. “I don’t know if online or offline will lead the future. We are not a retailer, but a data technology provider, and we are showing that this kind of shopping is possible now. It’s our retail partners’ job to choose what is right for them. The goal is to digitize customer’s experience, and it’s not really about an unmanned store or getting rid of people in the store. This technology is all about improving the user experience.”

For China’s increasingly picky bike renters, ease of access is one of the key determinants when choosing from a rainbow of similar bikes. After all, there’s no user experience to speak of if the service isn’t available. Because of this, speed is everything for bike rental companies as they scramble to stake their claim.

As one of the advocates of this principle, Chinese bike-rental unicorn ofo has been known for its aggressive expansion at home and abroad. The company’s trademark bright yellow bikes flooded the streets almost overnight, but have you ever wondered where these bikes come from and how they are produced?

TechNode got a chance to visit a Flying Pigeon factory in Tianjin, one of the largest bicycle manufacturing hubs in China.

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Flying Pigeon is a reputable bike brand in China with over 80 years of history. The company began working with ofo just as the emerging business was taking off and has manufactured over 800,000 bikes for ofo in the four months from December last year to March this year. Its production line for ofo is expected to churn out around 5 million bikes per year, says Huang Shuo, marketing manager of Flying Pigeon.

Not all of the 5 million bikes are produced in Tianjin, according to Huang. “Ofo’s order is featured by cross-regional demand that varies every week. We have regional plants or partner factories across the country to meet ofo’s demand for local production. Of course, all bikes we produce meet the same standards, regardless of factory location.”

“Ofo’s orders account for one-third of our whole production capacity. The rest of our production line include higher-end bikes, sports bikes, and more,” Huang says.

Five million bikes is not a small deal, but that only ranked Flying Pigeon as one of the top-ten bike partners of ofo, according to ofo’s SVP Nan Nan. Apart from Flying Pigeon, the Beijing-based startup also inked a strategic partnership with bike producer Fushida for a 10 million bike per year deal earlier this year.

Ofo’s robust hardware demand underlines a larger market surge in the bike manufacturing industry, boosted by a string of bike-rental services that include ofo, its arch competitor Mobike as well as smaller players such as Bluegogo and HelloBike. It’s safe to say that the bike-rental boom has injected new vigor into flagging bike manufacturing industry.

Although manufacturers are scrambling to raise their production capacity, there’s limited automation and technology in the factories. The components for the bicycles are mostly assembled by manual labor: In the factory we visited, there were 70 to 75 workers on one assembly line.

The market surge may be able to pull in enough hot money to boost an overheated industry in the short term, but they can’t support the sustained development when the market craze cools off.

The bike availability principle that ruled at the beginning of bike-rental boom is losing its charm now when lines of dockless bikes become the cause for mounting pressures on urban management, especially in big cities.

Compared with aiming for higher production capacity, the problems of how to put the right amount of bikes at a place where it is most needed, how to lower the damage rate, and how to repair damaged bikes more efficiently are more pressing problems.

18:20 June 2, 2017: This post was updated to clarify some bike production numbers. 

This is the final post of Now in Shenzhen, where TechNode visits a handful of Shenzhen-based companies leveraging Shenzhen’s core strength: manufacturing. 

Shenzhen is becoming an ever dynamic place for startups and makers, and the city now is seeing more companies finding a niche in the market that big factories and notable hardware accelerators could not embrace. Workshop, the Uber of manufacturing to beat big factories, and Trouble Maker, a co-working space for non-professional makers are a good example of that trend. You can see that the manufacturing is moving towards serving much smaller scale of startups and individuals. Here’s our video of visiting Workshop, Trouble Maker and Gravity Innovation. Hope you enjoy it!

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“Now In Shenzhen” covered six stories on interesting trends emerging in Shenzhen:

1. Workshop 

Workshop is “Uber for manufacturing”, helping hardware startups on manufacturing and scaling production in China, especially when they go through crowdfunding.

2. Trouble Maker

Trouble Maker is a Shenzhen-based product development platform that works like a co-working space for makers who want to realize their product.

3. Madrasters

Madrasters is a designer community in Shenzhen where people can learn and chat about design trends and network. The key message is “Made In China” needs more expat designers.

4. Focalmax

Focalmax, a Shenzhen-based company that specializes in smart optical technologies and products, says that its artificial intelligence robot combining VR technology will be ready by the end of this year.

5. EcoFlow Tech

EcoFlow Tech, the battery startup founded by ex-DJI employees, launched a mobile power station RIVER that can charge up to 11 devices simultaneously.

6. Gravity Innovation

Gravity Innovation wants to encourage young students to get interested in space with their connected rocket lamp and SpaceGO app.

Buzz surrounding China’s video and live streaming craze continues this week as Kuaishou, a video editing and sharing app, announcing the completion of a US$ 350 million USD investment led by Tencent, before a potential IPO reportedly slated for the second half of this year.

The new funding is earmarked for improving product experience and R&D,  the company said in a statement, adding that they will invest more in cutting-edge technologies like AI and video analytics technologies to keep the company ahead.

In addition to Tencent, Kuaishou’s previous investors include bigwigs like Sequoia, DCM, and Baidu. But it is still not clear whether the current investors will join this round.

Aside from capital cooperation, Kuaishou disclosed that they would partner with both Tencent and Baidu in product, technology, and services to promote user experience, a move which would further boost the company’s growth thanks to the support from the two Chinese tech giants.

“Kuaishou has brings people closer with their focus on the recording and sharing everyday lives. It’s a product that close to users for its warmth and vigor,” said Pony Ma, CEO of Tencent.

“We believe by pooling together the two companies’ unique user insights, technological capabilities, and operational expertise, we will work closely with Kuaishou to capture the exciting business opportunities as demand for video content continue to grow rapidly,” Tencent told TechNode.

As a pioneer in China mobile photo- and video-centric craze, Kuaishou, born out of a GIF Kuaishou, has gathered over 400 million users globally. Its app allows users to share video clips or live stream on a variety of topics from mundane activities, from eating food, shopping, and hair tutorials to funny or bizarre performances.

Data from the company shows that the daily active users on the app surpassed 50 million and over 5 million videos were updated every day. The company has launched an overseas version, Kwai,  but the new app is still gaining momentum.

Despite its huge popularity in China, the company is maintaining a relatively a low profile and is very cautious in getting public exposure, partially because the negative press they have gotten regarding vulgar content.  A large proportion of the users are believed to come from lower-tier cities or rural areas, and filmed vulgarity led to the unfair profiling of rural and regional Chinese.

However, the company is definitely trying to become a platform for a wider demographic.

CEO Su Hua told TechNode in a previous interview: “We view Kuaishou as a kaleidoscope. The types of videos shared on Kuaishou are varied and diverse. In most cases, the videos are simple depictions of joyful moments in everyday situations.”

Live video streaming is no doubt the new buzz in China. It’s interactive and real-time nature have contributed greatly to the surge, however, virtual gifting, a model that has become as lucrative as gaming, is the real booster that keeps the sustainable development of live-streaming and made it the top trends as it is in China now.

For Dong Huizhi, co-founder and COO of Video++, there’s so much potential in video live streaming right now; virtual gifting is far from being its only commercialization channel.

Dong made this proposition for his startup Video++, an in-video technologies company headquartered in Shanghai. Launched in 2014, Video++ provides an in-video operation system that currently serves 11,135 video platforms with 10.1 billion service requests per month, he introduced.

Supported by computer vision and AI technologies, Video++ leads in automated video content recognition, tracking, ads matching and creative interactive features.

“Our video structuralization technologies allow computers to identify the persons, objects and contextual relations between them, turning videos into a searchable database,” he said. “Based on the structuralized data, we apply big data and AI technologies to match objects and viewer behavior to updated product and e-commerce info, to give supporting information, or to add interactive and gamification features.”

As a smart video solution, Video++ has grown rapidly in past year thanks to the live streaming boom. On the other hand, Video++’s technologies are adding another layer to the services, helping live streaming platforms to gain a competitive edge in a heated battlefield.

Supported by Video++ online voting feature, hosts could determine their next moves by a real-time audience poll, whether to sing a song or do a dance. Dong introduced that the company has partnered with PandaTV for an online beauty pageant and have worked with Mangguo TV to support Super Girl, one of China’s most successful reality talent shows.

Internet celebrities who got their fame through live streaming platforms are making real cash by selling products in their Taobao shops. Their usual practice for promotion is to broadcast the names of their shops, hoping their fans would search it out on Taobao.

“As you can imagine, the conversion rate of this traditional means is quite low and a large proportion of potential customers were lost,” said Dong, “We are working on a new in-video shopping feature that can redirect shoppers to a homegrown e-commerce marketplace.”

In addition, Video++ helps clients to run interactive video ads to better engage with audiences, tailoring ads to better achieve specific advertising goals, such as product purchases.

The company has had a bumpy road since its establishment. In early 2015, Video++ got a lot of media exposure as a star project in video/AI sector. As the media coverage brought the company to spotlight, reporting shifted when Chinese online media were filled with (in Chinese) doubts about the company. He added that despite the negative press, Video++ is strong and expanding in the two years after the incident.

“We have expanded from less than 30 to more than 100 staff since then. A large proportion of the leading video platforms including LeTV, iQiyi, Mango TV, are cooperating with us,” he said. “The growth is achieved through word-of-mouth.”

The live streaming boom sure boosted Video++’s growth, but what if the craze ebbs? The current live steaming boom mainly centered around streaming the lives and performances of good-looking ladies or men, said Dong. This kind content would fade away, but live streaming as a new means of communication will survive and resurge in new verticals like education and finance.

Daily average video views on Weibo, the leading social media in China, increased seven times year-over-year, surpassing 2 billion in the fourth quarter of 2016. Video advertising, launched in the second quarter of 2016, contributed over 10% of its total advertising revenue in the second half of the year, according to Weibo.

Though the total user base and usage of Twitter-like services in China began to decline in 2013, Weibo regained momentum in 2016 thanks to the significant consumption growth in short videos and live video streams, especially the former.

Weibo monthly active users reached 313 million and total revenue was US$212.7 million in the fourth quarter of 2016. 90% of the monthly active users accessed Weibo on mobile in December 2016, up from 83% a year ago.

Mobile short video sector saw explosive growth in China in 2016.

“We’re seeing advertisers shifting their ad budget to mobile, social and video ads”, Wang Gaofei, CEO of Weibo, said in November 2016. At the same time, TV ratings are going down in China, Charles Chao, Chairman of Weibo, said so on today’s earnings conference call, so the company expected TV ad spending would shift increasingly to online.

The list prices for Weibo’s video ads were much higher than their previous offerings, according to CFO Herman Yu. Total advertising revenue, which represents 87% of Weibo’s total annual revenue, increased over 40% in 2016 from the previous year.

Weibo’s short video sharing and live streaming services are supported by Yixia Technology, the mobile video service developer which operates short video app Miaopai and live streaming app Yizhibo. Miaopai launched a pre-roll ad program earlier this month. Like the existing successful live video streaming services such as YY, Yizhibo enables virtual gift giving. Launched in the second quarter of 2016, Yizhibo was able to generate virtual item sales from the beginning. Weibo currently doesn’t take revenue cuts from either Miaopai or Yizhobo.

In November 2016, Yixia Technology announced US$500 million in Series E funding from a group of investors including Weibo, which contributed US$120 million, and WePiao, the Tencent-backed e-ticketing, and film distribution company.

A variety of Chinese online services has benefitted from the short video trend. Taotiao, a content aggregation and recommendation app, recorded 1 billion daily video views as of November 2016. Very soon Weibo will be competing with Toutiao and other mobile content platforms, including Tencent, UC (owned by Alibaba) and Baidu, for short video consumption and mobile video advertising.

Social sharing is what Weibo differs from all the others. Also, Weibo has a big pool of key opinion leaders (KOL). Weibo is the primary platform for Chinese celebrities to post videos and live video streams.

For other KOLs Weibo has rolled out some monetization methods, paid content, advertising, and e-commerce, to encourage quality content creation. Hou Ning, a KOL in personal finance, has made RMB 3 million in paid content, according to Weibo. Zhang Dayi, a marketing staff of an apparel company and one of the most famous KOLs in fashion, made hundreds of millions yuan showcasing new goods through live video streams. Only one-third of KOLs currently have access to those monetization channels but Weibo says they will open the opportunities to more KOLs in the future.

At an event in Beijing last month, Charles Chao, CEO of Sina and Chairman of Weibo, said that 2016 was the best year in the history of Sina, largely thanks to Weibo’s performance (in Chinese). Weibo’s stock price more than tripled in 2016 from a year ago.

Its market cap has surpassed that of Twitter as of this writing. Although starting off modeling after Twitter together with a wave of other Chinese microblogs, Weibo has added many other types of social features and enabled publishing of various content categories.

Short videos are becoming a pillar of Chinese social media, especially on Weibo.

Yixia Tech, parent of popular video streaming and sharing apps such as Miaopai, Xiaokaxiu, and Yizhibo, recently raised 500 million USD investment in a Series E led by Weibo.  Following a 200 million USD Series D last year, this values the company at between 3 and 5 billion USD.

Miaopai is a a Vine-like service where users shoot, edit, and share 10-second video, launched in 2013; Xiaokaxiu is a video-dubbing app; and Yizhibo is a live streaming service inside Weibo.

While Twitter may be bearish on their own short video service, Vine, other platforms are becoming more and more popular not only in China. Instagram has just announced that it is adding a live-streaming video function while its parent company, Facebook, has already put lots of effort on developing their live-streaming business.

Weibo led this round with 120 million USD. This put the total amount invested by Weibo alone at 190 million USD. That, plus a 100 million USD fund for Miaopai video makers, shows that relationship between the two companies is deepening.

Indeed, Weibo is gearing up to become the most prominent “social media platform” in China. According to their latest financial reports, the company has been growing rapidly with users increasing 30 percent from last year.

Over the past year, Weibo has made a series of strategic adjustments that have contributed to their growth. At the Wuzhen Internet Internantional Conference last week, Cao Guowei, CEO of Weibo, mentioned that second-quarter growth can be attributed to short video sharing and real-time content consumption, enhancing user experience.

China is currently ranking second in the overall Olympic medal tally, so how are their fellow countrymen cheering them on at home?

This year, China’s state broadcaster CCTV resold the airing right to Chinese internet giants Tencent and AliSports, the online sports arm of Alibaba. Under the deal, Chinese people now have access to live streaming games on Alibaba-backed Youku or Tencent Video.

China is a highly mobile country, and true to form, most young people we came across completely avoided the television this Olympics. We hit up a local co-working space on Shanghai’s Nanjing road to find out exactly how China’s tech-savvy young people are watching the games.

Kangying Dong (27): a designer from Anhui

I watch the Olympic games everyday, either through the CCTV app on my phone or through the CCTV website on my laptop. CCTV5 is all about the Olympics games. It’s all free. I prefer watching the games through the computer, because the screen is bigger. I only watch when there is a Chinese teams’ match. Line 1~9 on the Shanghai metro offers free WI-FI called “Huasheng Ditie (花生地铁)”, so I use it to watch the live-streaming games on the metro. If I missed the match, I will watch the rebroadcasting on the app.

Han Lin (25): UI designer

I read Olympic highlights on my phone and watch the games on TV. My phone is a Meizu MX5 and it has an in-app called information (资讯), where I can follow up with the Olympic news. When I want to watch the game, I only watch through the TV.

Judy Feng: a Shanghainese working in eCommerce

I watched the opening ceremony of the Olympics through Tencent Video on my iPad. It was rather comfortable. I haven’t watched TV for a long time.

Bon Zhengkon (26): programmer

I just read the Olympics highlight news and don’t watch videos, since I’ m very busy. I read mostly Tencent news on my laptop. I still can watch the GIF clips of the game highlights.

Ken Z (26): works at an architectural visualization company

I watch the Olympic games in real-time, through BBC live and CCTV on my laptop. I need a VPN to watch the BBC though. I watch the games even when Chinese players are not playing. I don’t use my phone to watch videos.

Jane Zhang (37): a teacher from Shanghai.

I search the Olympics games on Baidu using my laptop, and watch any video that comes out in the search results. I watch the games that Chinese teams play in. In previous years, Chinese people used to watch the games through the TV, now more people watch them through the internet.

Zhang Xin (32): working in medical industry

I watch the Olympic games through the CCTV5 app on my phone. I don’t have time in the daytime, so I watch the live broadcast at around 8p.m. and 9 p.m. I have a TV at home, but I almost never watch it. Watching TV gives me the feeling of being passive. I like watching what I like through the phone.

Yeshou Shuai (40): entrepreneur

I watched the rebroadcasting of the opening ceremony through CCTV5 and Youku app on iPad. I have no time to watch the live streaming, so I watch it at night. TV resolution is much better, of course, but it cannot beat the convenience of an iPad.

Dena Cheng (26): a secretary from Shanghai

When I’m at home, I watch the Olympic games through the TV, and when I’m outside I watch the games on my phone through Youku. I don’t watch them often, so I didn’t download the app, and I just search Youku on Safari.

Zan Peng (28): mechanical engineer from Wuhan.

I watch the Olympic games via the Aiyuke (爱羽客) app, about 10-20 minutes a day. It’s a specialized app for watching Olympic games and they have both live streaming videos and recorded videos. I have internet TV, namely Skyworks TV at home and sometimes watch the games using that.

Thea Pan (21): a student from Guangzhou

I’m a student and I live in the dorms, so we don’t have a TV. I read the Olympic news through news publications on WeChat public accounts and I watch the videos on Youku through my laptop. I don’t watch live streaming. Just when I’m interested in the game, I will watch it afterwards.

Image Credit: TechNode

Kuaishou, a video clip editing and sharing app, is among a raft of video platforms that are tapping China’s ongoing video and live-streaming boom. The five-year-old app has caused a sensation on China’s social media recently because of the viral spread of their Jackass-style videos.

Dangerous and self-injuring pranks like eating strange things, drinking excess liquor, jumping into icy rivers and putting fireworks in one’s own crotch are among the most popular videos on the platform. One popular user on Kuaishou named “Gourmet Sister Feng” attracted lots of followers by feasting on light bulbs, whole cubes of wasabi, live goldfish and burning cigarettes.

However, becoming the Jackass of China is not something Kuaishou aimed to do, and shocking videos is just part of the their video content, the company’s CEO Su Hua said in an interview with TechNode.

“We view Kuaishou as a kaleidoscope. The types of videos shared on Kuaishou are varied and diverse. In most cases the videos are simple depictions of joyful moments in everyday situations.”

Apart from stunts, the videos that pull in the most followers range from mundane activities, such as eating food, shopping, and hair tutorials, to funny or bizarre performances.

“In line with the state’s scrutiny on online content, we have a number of initiatives in place to scrutinize and supervise the content, … including advanced multiple-technology filtering, strict manual reviews, a detailed live broadcast behavior code as well as reminders and guidance rules in eye-catching places within the app to alert users.”

Although Kuaishou’s clips have been criticized for being “vulgar” and “coarse”, they have won popularity among young Chinese seeking online novelty. Su noted that 87 percent of Kuaishou’s users are from the post-90’s generation.

For most of us, Kuaishou might be a lesser-known name. It now boasts a substantial 200 million-strong user base, who have uploaded nearly 900 million videos in total. Data from leading telecoms carrier China Unicom shows that the app topped traffic consumption on their network, eclipsing that of Weibo and WeChat, the two biggest mobile apps of the Chinese market.

However the fame was highly controversial, as Kuaishou’s users are widely believed to be from China’s lower-tier cities or rural areas, and filmed vulgarity led to the unfair profiling of rural and regional Chinese.

The app failed to draw the attention of the public in the past, despite a huge user base. It shows that although rural people account for a great proportion of the Chinese population, their voice is scarcely heard by mainstream society.

“It is commonly thought that Kuaishou is focusing on users living in third to fourth-tier cities and rural areas, but this is not really the case. 85 percent of Kuaishou users are from second-tier cities and below, and 15 percent are from first-tier cities, which is in line with China’s Internet user demographic.”

“Many other social media platforms focus their attention on first-tier city users, which perhaps artificially enlarges their popularity figures.”

“We have not split target users but want to give all people the opportunity to share fun and joy, regardless of whether they live in urban or rural areas.” Kuaishou’s CEO explained.

Like most video and live-streaming services, virtual gifts are a major revenue source for Kuaishou. “We have officially launched this function in Q2. It has generated approximately one hundred million yuan in revenue so far.”

“We plan to launch a short video advertising business in Q3 this year. In the future we also plan to introduce membership-based services as well as other added-value services to build up our revenue sources.” Su said.

Local success has prompted the company to seek overseas markets. A regional head office has been set up in Singapore this year in an attempt to tap the South East Asia markets.

“We have already taken steps to enter Indonesia and India. In Indonesia, we are launching an English-language short video social platform named Wakaka”, said Su.

This past week we had the pleasure of welcoming Eric Schmidt, the Executive Chairman of Google’s parent company, Alphabet, to join us onstage at TechCrunch Beijing, co-hosted by Technode.

<p class=”p1″><em>Media Credit: Alesca Life</em></p>

For many of us urbanites, the dream of eating a fresh-picked salad at the office is an elusive one, especially in China. Though one startup in our 2015 TechCrunch Beijing startup competition is looking to do just that.

Co-founder and CEO of Alesca Life, Young Ha, is no farmer, though a background in tech and a passion for food security saw him quit his job at Dell to pursue agriculture in the form of smart urban container farms.

“[Food security] will be a big problem for China if they cannot feed their billions of people and have to depend on imports from other countries,” he says.

Young’s concept is not entirely unique, though it’s certainly a first in China’s congested city centers. Alesca Life produces shipping containers that are modified with hydroponic systems, designed to house more produce per square meter than any other method. The systems are pesticide and herbicide free, and are almost wholly run on software, meaning each container requires no more than two hours of labour to maintain each week.

“Using Alesca Life’s solution, plants grow faster with the highest quality and freshness,” says Young. “Combining hydroponic cultivation techniques and advanced software management, it is also dramatically more water and land efficient than traditional field methods.”

Like other hydroponic systems, the shipping containers rely on LED lights and nutrient solutions. They are stacked in layers to maximize space.

“Nowadays, we see global climate change induced droughts, flooding and rising seas, leading to food insecurity. Increasing populations and crowded cities also exacerbate food security issues,” says Young.

While China’s overcrowded cities are a major driver for urban farming, Alesca life is also finding its customers in the country’s increasingly health-conscious growing middle class. “It’s safer because it doesn’t require using any pesticides and harmful chemicals,” says Young. “It’s not artificial all.” 

The company’s high level of software integration has made it an ideal candidate for direct-to-consumer sales. In a concept video [below], the company shows how urban professionals could potentially order a pesticide-free salad from a shipping container located in Beijing’s busy urban center.

Currently, the company sells containers to businesses including hotels and restaurants. The team has also designed a ‘Sprout’ automation system, a smart connected device enabling famers to grow most kinds of leafy green vegetables such as kale, lettuce and fruit vegetables like tomatoes, strawberries, and cucumbers.

Direct competitors are primarily from the U.S. and Japan, including FreightFarms, PodPonics, and Growtainers. “They are also focusing on container systems,” says Young. “However in addition to a shipping container product, we have products designed for restaurants and homes to make urban farming more affordable and accessible to everyone.” 

Please Note: If you are viewing from within China you may need a VPN to see some of our video content.

Just in case you missed it, this is what has happened over the last week in Chinese tech. Subscribe by email or Wechat, or follow us @technodechina for regular updates. 

Like many of China’s consumers, Beijing’s 5th International Film Festival (BJIFF) will be very digital. Local video sites and social networks are vying for coverage of the event, as well as leveraging their partnerships to premiere original content.

Several of the events, including the opening ceremony, will be live-streamed on the BJIFF website, as well as on Tencent Video, Youku Tudou, Sohu and iQiyi. The BJIFF will also post live updates on social platforms Weibo and WeChat.

Increasing numbers of Chinese people of all ages are bypassing the living room TV in favour of online web series. The appetite for digital films is no different, as can be seen in the online focus of the forthcoming festival.

Local content producers like Sohu and Youku Tudou’s Heyi Pictures are ramping up their original content offerings. According to a spokesperson from Youku Tudou, the company will be premiering nine online movies this year, with the option of theatrical releases depending on their web popularity.

Sohu is also capitalizing on the momentum of online video, adapting their most popular comedy web series Diors Man  (with over 2.3 billion cumulative views) for a silver screen release this July.

During the festival, Youku Tudou’s film division Heyi Pictures will be premiering feature film Ever Since We Love, as well as exhibiting eight micro-movies. The company revealed a large investment in the micro-movie ecosystem earlier this year and will host a forum on April 21st as part of the festival, to discuss this developing industry.

“The festival serves as an excellent opportunity to bring Heyi Pictures on the stage where international and domestic film industries get together to network and cooperate.” said Allen Zhu, head of Heyi Pictures.

Image Source: BJIFF

Editing by Mike Cormack (@bucketoftongues)

With so many online video creation tools around, Shakr has taken a broader approach by embracing two big groups from the demand and supply sides of video creation. On the one hand, Shakr provides a platform that enables After Effects designers to make great video templates, encouraging them to generate income from it. On the other hand, users can choose  from thousands of video template options and easily edit them in a web browser.

With its office in Seoul, Shakr raised $3m from investors including POSCO Venture Capital last May, followed by super angel funding from 500 Startups, as they graduated its Accelerator program as part of Batch 10.

Users can drag and drop photos or video clips into the thousands of video templates the company offers. By providing an easy way to create professional quality video, Shakr especially attracted many small businesses, including restaurants, car dealers, manufacturers, events and more, with a 40% conversion rate. When TechNode reported about Chinese female founders in tech, we used Shakr to create the video. 

“Living in Seoul, just walking down the street, people are exposed to fancy videos in digital displays which captivate them. What struck me was that only big companies with big budgets could afford to create these kinds of advertisements or put their content on screen,” Shakr CEO David Lee explained. “I thought it was inherently unfair that small business who don’t have the budget can’t tell their story, especially using video. Video is the most effective ad format today, with the lowest effective cost, while providing the greatest reach. So I thought it’s essential for small businesses to tell their stories with video, and that’s why we started Shakr.”

Some of Shakr’s designers are people who have worked for Nike, Samsung, JTBC, SBS, CBS and other major brands. Every time a customer pays to remove the Shakr watermark, the template designer gets 70% of the earnings. Shakr’s designer platform manager Inwoo shared her experience as a designer. “The challenge for motion graphic designers is that it’s not easy to generate high incomes. When they work on an outsourcing project, they must edit a video several times until it meets the needs of their clients. However, designers can express their own style in Shakr and create their own brand,” she said.

A large number of customers from around the world are using Shakr’s templates and the company is getting global attention. Shakr participated in AsiaBeat and made the Top 10 shortlist for startups on December last year in Taipei. “Now that we have an API partner called Rainmaker in Taiwan, we’ll have great opportunities in the Taiwanese market,” the company’s China manager Laney said.

“With our video templates, our audience is jam-packed worldwide. We don’t pretend to know how to expand to Japan or Taiwan, so Shakr’s global success  has been driven by our designers. Anyone who wants to be a Shakr designer can create their template and post it on Shakr,” Lee said.

Image Credit: Shakr

Editing by Mike Cormack (@bucketoftongues)

Yes, we did the successful 2-days ChinaBang 2012 conference which we also believe it is now the No.1 annual event truly focus on startup space. But, I just realized that we had not published the video recorded during the event, yet.

So here you go, and hope you enjoy it. 🙂

No matter if you came or not, what I want to say here is that, in 2013 ChinaBang conference will be bigger, guaranteed! So see you all soon!!

Opened at $24.41 each on the Nasdaq stock exchange, down 13.4% on their $29 asking price, not a perfect debut, but Tudou, the potatoes finally went public today, raising ~$146.6 million with an offering of 6 million American depositary.  We had a call with Gary Wang, CEO of Tudou.

“It’s been 4 years since we first met, and it’s really been a long way. ” when I asked Gary about his personal feeling after being through so much in past a few months, he said to me, “I am very excited and also very looking forward to the new journey for Tudou. Thanks to our investors who are always confident for us and to the team for their hard work.”

Tudou definitely missed the best time for IPO, and its market valuation is roughly only 1/3 of its competitor Youku which is listed back in last December. With less money in the pocket to burn, Tudou obviously faces a touch competition ahead. Gary admitted that but he said no one is going to use all the money raised and they just need spend the money on wherever it’s needed. He said the money would be used mainly on the content, the bandwidth and the platform upgrade.

Started with the UGC model, Tudou also follows Hulu’s model and spends large amount of money on buying copyrighted video content, addition to that, it also produced 2 drama movies itself. Tudou and Youku both started like YouTube, but now all become a mix of YouTube+Hulu+HBO. “Chinese online video market is more complicated than the western.” Gary said, “UGC is always important for us as we’ve been doing our Video Festival for over 5 years and we will continue doing that to encourage our users to produce good video content. But in China, producing your own video content is also important given the fact that buying copyrighted content is so expensive.”

“Tudou is to be a platform where everyone can find any type of video content at anytime and anywhere. ” Gary positions Tudou as such.

“We will definitely spend more effort on the mobile market. We have China Mobile as our mobile video distribution platform partners which is definitely the key in our mobile strategy.”

The competition is going to be tough still. Gary believes Tudou can be more competitive because its video content is more entertainment-focus and the user base is younger at the age of 14-32. “We have only one competitor which is, Youku”, Gary said.

Ads will still be the main revenue source for Tudou, as Gary said. As for the subscription model, Gary think it may take years to happen still. But he said there might be chance in the mobile space. “Watching copyrighted video clips on mobile by paying monthly subscription fee sounds more realistic”, Gary think.

Personally, I am also excited by Tudou’s IPO as I always think it should be first listed video company. Congrats to Gary Wang, one of few Chinese CEOs who is truly a great entrepreneur with silicon valley style.

You may still question about the revenue model of online video and how long they will be burning the money, but the fact is that Ku6 has been listed, and other two leading video sites Tudou and Youku both are preparing for its IPO. (ref: Chinese online video sharing: where is the way out)

The Money

Tudou has raised USD 135 millions since it was set up in 2005; Youku has raised in total USD 160 millions in its 6 rounds of fundrasing and the latest one is USD 50 millions which closed only 2 months ago (ref: this). No need to say why they still need money, but you may wonder why not go for VC money for one more time? First of all, I don’t think it make sense any more to raise another round of VC money. USD 50 millions investment this amount probably has reached the max for a VC round; The valuation for these sites is very high after several rounds. Also from strategy point of view, video sites need much more money to cope with very high copyright fee, more bandwidth, fast growing mobile market. Of course, I guess the pressure from the investors may also be the reason. After years of burning money, VC firms of course want the exit as soon as possible. Acquisition sounds impossible anymore for Tudou and Youku considering their valuation, IPO seems the only and a must solution.

The Piracy

YouTube is fighting against the Piracy issues for a long while. Piracy, as always, might be complicated in Chinese internet where every one can not avoid. On one hand, due to the tough competition, video sites have to pay more and more money for the copyrighted content. (Youku paid around usd 8.44 million for copyrighted content during the first 9 months this year, according to this report.) On the other hand, some video content producer even movie studio want to see the piracy content on these sites at beginning because it can help generating social buzz and later on when content gets hot they can charge more. So the piracy is a long-time battle which could be the hurdle for sites going IPO, but surely they know how to get around it. Also we have seen sites like Tudou has been working hard to give people the image, it encourage Chinese independent and creative video producers to work with them and help them monetize their works. Tudou Video Festival which is held every year is absolutely great, is like Oscar for Chinese online video industry.

The Market

Net loss attributable to Ku6 Media was $12.8 million in the third quarter of 2010 ($12.4 million in the second quarter of 2010, and $5.2 million in the thirdquarter of 2009, according to this report.) Tudou‘s loss is reported at $12.67 millions in past three quarter this year; and Youku’s net loss is even double the figure, $25.27 millions in past three quarter this year (via this). Even so, the investor, the operator still believe it is worthy of burning the money. Thanks to the market. According to Nielson’s latest report on Chinese video market, 265 millions users watch video online and around 40 millions only watch online video instead TV. The market value will be over $300 millions by end of this year. iResearch report also say the market value for Chinese online video market will reach $775 million by end of 2012. The market still has huge potential.

The Vision

So how are they going to use the money? Besides paying for the expensive bandwidth, marketing expense, copyright content, high-difinition video content etc, I think they must have a clear plan for the fast growing mobile video market. With 3G getting popular in China, it assumes more and more videos will be watched on mobile devices; and some new ideas, such as live video streaming from mobile phone, augmented reality which could bring more interesting business models to this industry.

The money will keep burning, as long as we still have the hope!

Content – Most of the Chinese video content are about Entertainment, but you see less that in US where video is used for news, online show, video marketing, ads etc. And Gary also pointed out that the video content they received this year for the festival is different than before, ‘you can see more creative stuff coming’, he said.

Creators – More and more small teams are now in China created funny/interesting/creative video content. But it’s hard to find individual creators who think video can be the media reporting content such as Technology. I used our video blog mobinode.tv as an example. It now has 60+ video interviews with great startups/entrepreneurs who shared their valuable experience, but we managed to keep doing that for almost a year without any income and the traffic is still not comparable with those ‘entertaining’ stuff.

Technology – When all Chinese video sites still focus on the monetization, the US video market has started on the future of video technology. What if HTML5 is fully accepted; and how the market is going to be changed in Mobile space.

Monetization – Gary said the advertisement is still the nature method for monetization, so does US market. I mentioned the example of how Nicovideo, the leading Japanese video site integrated e-commerce with video content, and Frank also pointed out the Virtual Item could be another try. Gary said they used to try the e-commerce a bit, but it did not work very well.

Copyright – Copyright environment is complex enough in US, but once you drag this into China, it could be more complex, laws, regulations, grey areas and tricks etc. “The copyright cases sometime are just stupid”, Gary said.

Service vs. Ecosystem – YouTube is building a platform for the video content. Tudou spend the past ~5 years doing the same by offering good service, but it has another responsibility, i.e. building a healthy ecosystem for Chinese video market for Chinese creative people. David also made a very good point, “Tudou has a huge future as an education media”.

Tudou also put together some of tweets from the panel discussion into slides which shows some of the highlights.

In the VC panel of Paypal X China event a few days ago, we were discussing the monetization of web service with four famous VC panelists from Qiming, Gobi, RedPoint and Lightspeed. As the moderator I threw the question to four VCs: How do you think of Chinese online video-sharing market? Some are optimistic, some are a bit not. Looking back this market in 2009, a completely different story compared with several years ago when +200 similar sites co-existed.

Acquisition – the happy ending

You have to say sometime it’s better not to be the No.1. Ku6, the leading video-sharing site (but seems not as popular as Youku and Tudou) was reported its acquisition by Hurray, the subsidiary company of Shanda (Nasdaq: SNDA), the Shanghai-based leading online game development and operation company. The new company formed by the merge between Hurray and Ku6 will hold USD 160 million in cash assets and the founder and CEO of Ku6, Li Shanyou will serve as the CEO of the new company. RMB300 millions are ready for 2010, 1/3 for copyright content, 1/3 for service integration and the rest for the cost of bandwidth. I guess it is a happy ending because it is also reported that Ku6 might run out of cash before the acquisition.

The 5th round of investment – fight for IPO

Although Youku says its revenue in 2009 has reached RMB200 million, it still needs more cash. Youku has recently announced its 5th round of investment from Brookside Capital, Maverick Capital and Sutterhill Venture, this time the figure is set to USD40 million. Victor Gu, the founder and CEO of Youku believes his company could break even in 2010 and he is also expecting that in next 18 months we would see one leading company goes IPO.

Content is the key – believe what should be believed

A friend told me the first company Shanda contacted was actually Tudou, not Ku6; another rumor also said Tudou will soon secure its 5th round investment worths USD40 million too; and Gary Wang, also denied the rumor that Tudou planned to go IPO by end of 2010. Tudou will continue to focus on its video content and promises RMB100 million to be spent on copyright content in 2010.

Portal’s power – everyone wants more share

Gary of Tudou was asked by an audience for his opinion on the debate of who’s the No.1 video-sharing in China (Youku or Tudou) in Shanghai Lunch2.0 event a few months ago. He said, he does not really care about it. But if he has to point out who are the real competitors, he thought they would be the portals, such as Sohu, Tencent etc. “They will keep low key until we found a good revenue model for video-sharing”, Gary said.

It seems that Sohu is the first which believes the time (for more share on video-sharing market) is coming. No surprise, the battle field of this war between portals and independent sites are on the copyright of video content. The ‘description’ meta tag of Sohu’s video site clearly shows its ambition and also the strategy: Sohu Video, the largest online video site with copyright content. Obviously, Sohu as the leading Chinese portal, has much better cash flow for buying copyright content. Early this month, Sohu won a copyright infringement lawsuit against Youku.

It’s a show just started. How and when other portals such as Sina, Tencent will join the war, we will find out the answer probably very soon.

State-run online video service – the good or bad news

Although the online video market is highly regulated in China. But if it is a huge and super-hot market, everyone wants a share. Portals are there for a while and now some state-run traditional tv/video services want to follow as well. The very latest news is from CCTV which has just announced its own online video site: CNTV (China Net TV). Now CNTV has News, Sports and Entertainment Channel, and all content are copyrighted. It also offers video-sharing and video-on-demand service. The spokesman said, more channels will be launched early next year including Finance, Movie, Music, TV Series, Health etc. With the support of CCTV networks, CNTV’s service will be integrated with IPTV, Mobile TV and so on, and will be multi-language serving global audience.

And CCTV is not the only one. Early this month, another very popular local TV operator, Hunan TV has announced its new online video site where all Hunan TV’s content will be available.

Where is the way out?

Chinese video-sharing market, started with +200 copycats of Youtube, now becomes a completely different story. Independent sites, portals, industry leaders, venture capitals, state-run TV stations, government are all involved. 2010, for Chinese online video-sharing, will not be quiet; more breaking news might come out; another battle field, the mobile market has emerged too. There is no way I can draw the conclusion here, but let’s end with a comment from a friend, a normal netizen:

As long as I can find good content online for Free, who cares about who are the leaders.

I am thinking of an tech video-blog for a long time. In this post, I said, Blog is not just about text and image, and the audience needs audio and video too. Today, MOBINODE.tv, initiated by Cindy, Snake and Boyuan is ready for public, and on behalf of the team I am very proud to announce that the first video blog focus on Chinese tech industry is launched.

Why do we want to do a video blog? In past several months, we’ve been to many conference and events inside and outside China, met many great people and heard loads of interesting stories, and we don’t want all these slipping away. But text can not cover everything and we want all these great people sitting before the camera and telling their stories in their own way; On the other hand, video-sharing is so hot in China, but still the entertainment content is dominating everything. It would be naive to say that we want to change this by launching a video blog, but we really want to bring some fresh air and hope our young generation can learn some priceless experience after watching the video we shot for their future career.

MOBINODE.tv is a video blog focus on Tech, i.e. tech startups, founders, entrepreneurs, thoughts leaders and grassroot in Chinese tech industry are all our ‘targets’; MOBINODE.tv will not be a Tech channel as you find on traditional TV. We want it to be more personalized and free-style because we are not only producing these video, but also thinking of and learning from what we see and hear in China’s fast growing tech industry. MOBINODE.tv will be soon delivered in both Chinese and English like what we have done very well in this blog, as bridging the global industry with China is still our very important mission.

We are very exciting about the launching of MOBINODE.tv, and we also understand that doing a video-blog is not that easy as pressing the Record button. Preparing the interview, editing the video etc are very time-consuming and sometime even boring; I dont really worry about the content and pretty sure we can find many brilliant interviewees as well as cool projects, companies and ideas, but facing such a massive market with full of energy, we can not cover everything. MOBINODE.tv now steps forward and takes the lead, what I really expect is an Ecosystem where more volunteers in different places can join us and bring the Tech scene around you to the global audience.

My best wishes to Cindy’s team and also to this young MOBINODE.tv. Please, do feel free contact them (via Twitter, Fanfou, Digu or online form) if you, your startup, company, event and story want to be broadcasted in a multimedia way.

Finally, we found one, it is named Geek Goddess Show. I have to say it is not very professional yet, but its team is doing very interesting work. Geek Goddess Show is co-produced by SG Entrepreneurs which is co-founded by Bernard Leong and Podfire.sg, Singapore’s premier video podcast network founded by Michael Cheng of Singapore PHP User Group.

Geek Goddess Show is produced in Singapore, but Bernard told me, the show seriously wants to talk more about things in Asia instead of being US or Europe centric. The video clip followed is Geek Goddess Show Episode 4 which talks about OpenWeb Asia and Social Media Breakfast in Singapore. More episodes can be found on Podfire. If you want to contact the team for news in Asia, please email geekgoddessshow At gmail.com.

One more note: if you love video blogs and are interested in life in China, you should visit Danwei TV founded by Jeremy Goldkorn and Sexy Beijing TV.