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Hello from the fast-paced world of Asia tech. The big news this week is a surprising bifurcation in investor attitudes toward China and south-east Asia. The bloom is coming off the China story, while in Singapore, Indonesia and elsewhere an extraordinary boom is gathering pace. Elsewhere, Taiwan is getting tougher toward China and Vietnam is surfing a wave of digital money.
The Big Story — Exclusive
A big chill is stealing over China’s tech sector, delaying share flotations and slashing company valuations as the impact of US-China tensions and waning investor appetites takes hold. By contrast, south-east Asian tech companies are enjoying a stellar investment boom.
Key Implications: A glance at the private equity flows into China and south-east Asia so far this year shows a clear fork in the road. South-east Asian tech companies — led by firms in Singapore and Indonesia — have attracted $5.85bn in investments, up more than 10-fold from the same period last year. This nearly matches the rather meagre $6.3bn that has gone into China’s tech sector so far this year — a slump from $16.3bn in the same period last year.
Upshot: Some are calling this the onset of a “capital winter” for China. That might be pushing it a bit. But certainly, some big names — Didi Chuxing, ByteDance, Tencent and several others — are caught up in the downdraught. When a company as vast as Tencent starts slashing the book value of its investments, it is a sure bet that a widespread reappraisal is under way.
Mercedes’ top 10
A round-up of the week's best tech stories from the FT's Asia tech reporter Mercedes Ruehl
- The big chill was not the only grim news for China tech this week. Taiwan is widening its ban on government procurement of Chinese technology, according to a Nikkei Asian Review report. Companies including Huawei, ZTE, Alibaba, Lenovo, Xiaomi, Hikvision and even dronemaker DJI are likely to be placed on the blacklist.
- At least for Huawei there was also some good news, with the UK approving the Chinese company’s participation in some “noncore” parts of Britain’s 5G data network. And an analysis showed Huawei is closing the gap with Apple in developing smartphone chips. Read Nikkei’s scoop on that here.
- There’s a new triumvirate in autonomous vehicles in Asia: SoftBank, Toyota and Uber. Can their collaboration help Uber catch up to Google’s Waymo in this fast-growing sector?
- That wasn’t Softbank’s only play this week. The Japanese conglomerate will invest €900m in Wirecard as part of an alliance in Asia — just as the Germany-based digital payments company battles accounting allegations.
- India’s logistics industry, whose inefficiency has long stunted the national economy, is being revolutionised thanks to tech start-ups.
- Breaks, bulges and blinking screens. The first reviews came in for Samsung’s highly anticipated foldable smartphone and they were not good.
- The release of a controversial measure restricting foreign companies from taking certain data out of China has been delayed thanks to the US-China trade war, the FT’s Beijing correspondent reports.
- Mobile payments appear to have finally taken off in Vietnam. The percentage of consumers using mobile technology to pay for goods and services increased from 37 per cent in 2018 to 61 per cent in 2019.
- Can India’s Reliance Industries upend the country’s ecommerce sector in the same way it did the country’s telecommunications market? It seems to be making all the familiar aggressive moves to ensure its success.
- Sri Lanka shut down social media in the aftermath of the Easter Sunday attacks. Cue sighs of relief from some top tech commentators. Misinformation on social platforms has been a big problem in Asia.
Heard by Henny
A gladiatorial struggle is under way in Indonesia between two ride-hailing start-ups, Grab and Go-Jek. The tussle should decide which firm will prevail in south-east Asia’s most populous market. But its importance extends beyond that; it should also yield insights into whether the most cashed-up combatant always wins.
Grab, a Singapore-based firm that is backed by SoftBank, raised $4.5bn in March this year, eclipsing Go-Jek, a homegrown Indonesian company, which had raised $1bn a few weeks earlier. But does this necessarily mean Grab is set to vanquish Go-Jek?
The relatively narrow gap between the two companies’ valuations — with Grab at $12-13bn and Go-Jek at $10bn — suggests that investors do not see funds alone as a decisive factor. Go-Jek’s greater efficiency and its reputed good judgment — as well as local knowledge — appears to count for a lot.
Read the story here by Henny Sender, the FT’s chief correspondent, International Finance.
In the spotlight
DouYu International, the Tencent-backed game-streaming company, is heading to the public markets.
The company filed to raise up to $500m in a listing on the New York Stock Exchange this week. That’s down $200m on the amount that bankers said it was targeting last year, further evidence of falling Chinese tech valuations. There is a case for optimism, however. NYSE-listed shares in rival Chinese streaming platform Huya, also backed by Tencent, have risen 86.5 per cent from its $12 issue price at IPO in May 2018.
DouYu, which streams esports matches and other games-focused content in China, reported adjusted net loss for the 2018 financial year had sharpened by more than a quarter from a year ago to Rmb818m ($119m).
A bit more detail on the divergence in deal flow between China and south-east Asia. For the region as a whole some $16.1bn has been invested in 428 deals, down somewhat from $18.4bn in 601 deals by this time last year, according to Refinitiv, a data company.
But this is one of those occasions when headline numbers obscure more than they illuminate. As the chart shows, total private equity inflows into south-east Asian tech companies are up more than 10-fold to $5.85bn so far this year, whereas flows into their Chinese counterparts are down to $6.3bn from $16.3bn in the same period last year.
- Go-Viet, Go-Jek’s Vietnam affiliate, has appointed former Facebook Vietnam country director Christy Le as its general manager. The announcement comes as the chief technology officer of Go-Jek’s rival Grab, Theo Vassilakis, announced that he would step down.
- Karim Temsamani, formerly chief of Asia-Pacific at Google, is joining US-based payments company Stripe.
- Ariya Banomyong, the head of Japanese messaging service Line in Thailand, announced on his Facebook page that he would step down after more than three years in the job.
- Twitter has appointed former Network18 Digital chief executive Manish Maheshwari as the managing director of its India operations.
- Japan is the latest Asian country to attempt to bring Big Tech to heel. Tokyo is planning a broader interpretation of its antitrust law that would mean stricter rules for technology groups such as Google, Facebook and Amazon for handling consumers’ personal information. The government is expected to detail the new rules as soon as midyear.
- The Japan Fair Trade Commission will also weigh a proposal for new legislation meant to press tech platforms for faster responses to unfair treatment of small and medium-sized businesses.
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