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Mobike unveils first initiatives since acquisition by Meituan, including no longer requiring deposits in China
Mobike made a roster of announcements about its bikesharing program today, including the end of customer deposits in China and full integration into Meituan Diaping’s app. The developments, its first since its acquisition by Meituan for $2.7 billion in April, are meant to help Mobike become a stronger competitor against Ofo, its biggest rival, and a slew of smaller startups in China’s heated bikesharing wars.
Mobike, which claims 200 million users, will have the chance to reach more customers thanks to its integration into Meituan’s platform. Meituan has ambitious growth plans (filed for an IPO in Hong Kong last month) and describes itself as a “one-stop super app” because of the large range of services, including dining, salon, entertainment and travel bookings, it offers. Meituan’s 310 million users were already able to pay for Mobike on the platform and will now also be able to rent a bike through the app.
Mobike also upped the ante for competitors by announcing that it will stop requiring users in China to pay 299 RMB (about $45) deposits and will refund all deposits already paid. Mobike says it is getting rid of deposits to “establish a no-threshold, zero-burden and zero-condition deposit-free standard for the entire bikesharing industry.” (Since the new policy only applies to users in China, instead of all 200 million Mobike users, TechCrunch has contacted the company for more information about how much money it is refunding).
Deposits are a contentious issue among bikesharing users. Though Mobike and Ofo claim they do not use customer deposits to fund operations, some bikesharing startups have been accused of spending deposits on operational expenses, with users complaining that it is very difficult to get their money back, even if they stop using a service or it goes out of business. The issue has resulted in Chinese lawmakers drafting regulations that require bikesharing companies to store deposits in a separate bank account so the funds are still available to return to customers even if a company goes out of business.
Another controversial issue is the large number of trashed or abandoned bikes created by bikesharing companies, with photos of “bikesharing graveyards” becoming symbolic of the sector’s excesses and unsustainable growth. To address environmental concerns, Mobike says it is launching a bike components recycling program in partnership with several companies, including Dow, China Recycling Resources and Tianjin Xinneng Recycling Resources. Called Mobike Life Cycle, the program will recycle bike components into new parts or raw materials. Mobike says it has already recycled and reused over 300,000 Mobike tires.
Mobike will also add a new e-bike that can reach a top speed of 20 km/hour and travel up to 70 km on a single charge. The company hopes that the e-bike, which will be available in China and Mobike’s international markets, will increase trip lengths. In its press statement, Mobike says most of its bikes are used for trips up to 3 km, but the e-bikes will hopefully increase that to 5 km.
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Airwallex raises $80M for its international payment service for businesses
Airwallex, a three-year-old fintech startup focused on international payments for SMEs and businesses, is putting itself on the map after it raised an $80 million Series B round.
Based out of Melbourne, but with six offices in Asia and other parts of the world, Airwallex’s new funding round is the second-largest financing deal for an Australian startup in history. The round was led by existing investors Tencent, the $500 billion Chinese internet giant, and Sequoia China. Other participants included China’s Hillhouse, Horizons Ventures — the fund from Hong Kong’s richest man, Li Ka-Shing — Indonesia-based Central Capital Ventura (BCA) and Australia’s Square Peg, a firm from Paul Bassat, who took recruitment firm Seek to IPO and is one of Australia’s highest-profile founders.
The financing takes Airwallex to $102 million raised. Tencent led a $13 million Series A in May 2017, while Square Peg added $6 million more via a Series A+ in December. Mastercard is also a backer; the finance giant uses Airwallex to handle its “Send” product, while Tencent uses the service to power an overseas remittance service for its WeChat app.
Airwallex handles cross-border transactions for companies that do business in multiple countries using international currencies. So it’s not unlike a TransferWise-style service for SMEs that lack the capital to develop a sophisticated (and expensive) international banking system of their own.
The service uses wholesale FX rates to route overseas payments back to a client’s domestic bank and is capable of processing “thousands of transactions per second,” according to the company. A use case example might include helping a China-based seller return money earned in the U.S. or Europe via Amazon or other e-commerce services, or route sales revenue back directly from their own website.
Airwallex CEO Jack Zhang (far right) onstage at TechCrunch Shenzhen in 2017
China is a key market for Airwallex — which was started by four Australian-Chinese founders — as well as the wider Asian region, and in particular Australia, Hong Kong and Southeast Asia. With this new capital, Airwallex co-founder and CEO Jack Zhang said the company will increase its focus on Hong Kong and Southeast Asia, whilst also extending its business in Europe (where it has a London-based office) and pushing into North America.
Product R&D is shared across Melbourne and Shanghai, while Hong Kong accounts for business development, compliance and more, Zhang explained. However, Airwallex’s locations in London and San Francisco are likely to account for most of the upcoming headcount growth planned following this funding. Right now, Airwallex has around 100 staff, according to Zhang.
The company is also aiming to expand its product range.
The firm is in the process of applying for a virtual banking license in Hong Kong, a third-party payment license in mainland China and a cross-border Chinese yuan license. One goal, Zhang revealed, is to offer working capital loans to SMEs to help them scale their businesses to the next level. Airwallex is working with an undisclosed partner to underwrite deals in the future. Zhang explained that the company sees a gap in the market since banks don’t have access to critical data on clients for loan assessments.
More generally, he’s bullish for the future, despite Brexit and the ongoing trade war between the U.S. and China.
“The trade war gives the Chinese yuan a lot of vitality, and we’ve seen more demand in the market. China’s belt road initiative has really taken off, too, and we’re seeing the impact in many, many of our payment corridors,” he explained. “Business has been booming, especially as traditional offline SMEs start to move online and go from domestic to global.”
“We want to be the backbone to support these new opportunities for businesses,” Zhang added.
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Microsoft launches two new Azure regions in China
Microsoft today launched two new Azure regions in China. These new regions, China North 2 in Beijing and China East 2 in Shanghai, are now generally available and will complement the existing two regions Microsoft operates in the country (with the help of its local partner, 21Vianet).
As the first international cloud provider in China when it launched its first region there in 2014, Microsoft has seen rapid growth in the region and there is clearly demand for its services there. Unsurprisingly, many of Microsoft’s customers in China are other multinationals that are already betting on Azure for their cloud strategy. These include the likes of Adobe, Coke, Costco, Daimler, Ford, Nuance, P&G, Toyota and BMW.
In addition to the new China regions, Microsoft also today launched a new availability zone for its region in the Netherlands. While availability zones have long been standard among the big cloud providers, Azure only launched this feature — which divides a region into multiple independent zones — into general availability earlier this year. The regions in the Netherlands, Paris and Iowa now offer this additional safeguard against downtime, with others to follow soon.
In other Azure news, Microsoft also today announced that Azure IoT Edge is now generally available. In addition, Microsoft announced the second generation of its Azure Data Lake Storage service, which is now in preview, and some updates to the Azure Data Factory, which now includes a web-based user interface for building and managing data pipelines.
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Valve is bringing an official version of Steam to China
Valve is officially bringing its Steam game platform to China as it aims to take a chunk of the world’s largest market of gamers.
Valve said it will work with local partner Perfect World, which it previously collaborated on to release major games Dota 2 and Counter-Strike: Global Offensive. Shanghai-based Perfect World will control local promotional, the selection of games and distribution. There’s no confirmed date for when the Steam China service will go live.
The move makes perfect sense. For one thing, Valve has a vast opportunity to tap into. China’s games market is booming, with Newzoo forecasting that it represented $32.5 billion in 2017, ahead of the U.S., Japan, Germany and the UK. PC gaming has always been the base for revenue, but mobile is growing fast with Tencent — one of the largest gaming firms on the planet — recently reporting that its mobile revenue has overtaken that of PC.
But, as with all things China, access is uncertain. Parts of Valve’s service were blocked in China last December, although the ability to guy games remained intact. It isn’t clear why the partial blockage occurred — China frequently upgrades its firewall technology which can trigger changes — but working with a local partner is a more reliable approach than going solo. That said, Perfect World will have to manage the inevitable government censorship demands.
Despite having no official presence in China, more than one-quarter of Steam users have the language set to Basic Chinese, second only to English, according to a user survey. Whilst that also accounts for the Chinese diaspora, it is a sign that Steam already has significant traction among China’s gamers.
There’s plenty of competition in this space, so Valve won’t simply waltz into dominance. Tencent has its own Steam-like platform while NetEase has partnered with big U.S. gaming companies like Bungie and Blizzard.
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Xiaomi posts $1.1B quarterly loss ahead of much-anticipated IPO
A month after it filed for a much-anticipated Hong Kong IPO, Xiaomi has revealed a little more financial information after a monster 621-page document disclosed a $1.1 billion (seven billion RMB) loss for the first quarter of the year.
The IPO, which could raise up to $10 billion value Xiaomi at high as $100 billion, is set to be the largest IPO raise since Alibaba went public in the U.S. in 2014. That prospect got a boost with a dose of positive financial growth despite a loss incurred by one-off payments.
The document filed was an application to issue a CDR as part of a dual-listing that would include Mainland China, showed that Xiaomi’s revenue for the quarter jumped to 34 billion RMB, or $5.3 billion. That’s compared to 114.6 billion RMB ($17.9 billion) in total sales for all of last year, according to digging from TechCrunch partner site Technode.
While Xiaomi posted a loss for the quarter, the firm actually posted a 1.038 billion RMB ($162 million) profit for the period when one-time items are excluded. Xiaomi previously registered a 43.9 billion RMB ($6.9 billion) loss in 2017 on account of issuing preferred shares to investors (54 billion RMB) but it did post a slim profit in 2016.
The company is ranked fourth based on global smartphone shipments, according to analyst firm IDC, and it is one of the few OEMs to buck slowing sales in China.
China is, as you’d expect, the primary revenue market but Xiaomi is increasingly less dependent on its homeland. For 2017 sales, China represented 72 percent, but it had been 94 percent and 87 percent, respectively, in 2015 and 2016. India is Xiaomi’s most successful overseas venture, having built the business to the number one smartphone firm based on market share, and Xiaomi is pledging to double down on other global areas.
Interestingly there’s no mention of expanding phone sales to the U.S., but Xiaomi has pledged to put 30 percent of its IPO towards growing its presence in Southeast Asia, Europe, Russia “other regions.” Currently, it said it sells products in 74 countries, that does include the U.S. where Xiaomi sells accessories and non-phone items.
Despite its design progress, relative age as an eight-year-old company and the fact it is shooting for a $100 billion, Xiaomi left some spectators disappointed when it wheeled out a very iPhone X-looking new device earlier this month. While the company claims the Mi 8 is packed with new technology, it’s hard to look past the fact that a number of its visual designs are identical to Apple’s flagship smartphone. Xiaomi could have made a stronger statement of intent with the launch, but it will hope its financials can do the talking as it moves into the last moments of preparation before its public listing.
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Google’s Duo and Cisco’s Webex Teams among the VoIP apps pulled from the China App Store
Earlier this week, it came to light that Apple had removed a number of VoIP-based calling apps from the App Store, at the request of the Chinese government. The apps had been using CallKit, Apple’s new developer toolset that provides the calling interface for VoIP apps, freeing up developers to handle the backend communications. China’s government asked developers, by way of Apple, to remove CallKit from their apps sold on the China App Store, or they can remove their apps entirely.
Notices Apple sent out to the developers were first spotted by 9to5Mac, who shared a snippet from of one of the emails.
The email states that the Chinese Ministry of Industry and Information Technology (MIIT) “requested that CallKit be deactivated in app apps available on the China App Store,” and informed the developer they would need to comply with this regulation in order to have their app approved.
The regulation only impacts apps distributed in the China App Store.
We understand that the apps can still use CallKit and be sold in other markets outside the region.
Apple is not publicly commenting on the matter.
The pushback against CallKit is another means of discouraging people from developing or using VoIP services in China, without having to go so far as to ban the apps directly. It wouldn’t be the first time China has cracked down in this area. In November, Microsoft’s Skype was also pulled from the Apple and Android app stores.
The government also last year ordered VPN apps, which help users route around the Great Firewall, to be pulled from app stores – another order with which Apple complied.
Other social media apps, like WhatsApp and Facebook, are also disrupted at times, and newspapers’ apps like those from The NYT and WSJ are blocked, too.
According to data pulled by app store intelligence firm Sensor Tower, two dozen apps with CallKit had been removed during the week prior to the news reports.
That list, along with the date removed and publisher name, is below:
Sensor Tower notes it’s possible that there are other apps removed from additional stores, but doesn’t have that data.
In addition, this list only includes those apps that have been downloaded enough times to rank in the top 1,500 of an app category at some point – beyond that Sensor Tower wouldn’t pick it up. But an app that wasn’t ranked would have had so few downloads that the impact of its removal would be minimal.
Nevertheless, you can see list includes a few well-known names, including Cisco’s Webex Teams and Google’s Duo video calling app, among those from other operators and VoIP calling providers.
The full text of Apple’s email is below:
From Apple
5. Legal: Preamble
Guideline 5.0 – LegalRecently, the Chinese Ministry of Industry and Information Technology (MIIT) requested that CallKit functionality be deactivated in all apps available on the China App Store. During our review, we found that your app currently includes CallKit functionality and has China listed as an available territory in iTunes Connect.
Next Steps
This app cannot be approved with CallKit functionality active in China. Please make the appropriate changes and resubmit this app for review. If you have already ensured that CallKit functionality is not active in China, you may reply to this message in Resolution Center to confirm. Voice over Internet Protocol (VoIP) call functionality continues to be allowed but can no longer take advantage of CallKit’s intuitive look and feel. CallKit can continue to be used in apps outside of China.
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China closing in on massive new chip fund in bid to dominate US semiconductor industry
China’s government has made technological independence from the United States one of its highest priorities. And now it appears to be putting its money where its messaging has been.
According to The Wall Street Journal, China is close to finalizing a $47 billion investment fund that would finance semiconductor research and chip startup development. The fund, formally the China Integrated Circuit Industry Investment Fund Co., appears to be underwritten predominantly by government capital sources.
Such a fund has been rumored for months, with the size of the fund ranging widely. Just two weeks ago, Reuters reported the fund would be $19 billion, while Bloomberg reported $31.5 billion two months ago. The exact number appears to be under intense negotiation among the Chinese leadership, and is also responsive to the increasingly tense trade negotiations with the United States.
If the $47 billion number pans out, it would be identical in size to a $47 billion fund that was financed by Tsinghua University, China’s leading engineering university, to spur the development of an indigenous semiconductor industry back in 2015.
China is highly dependent on foreign tech in its semiconductor industry, importing 90 percent of its chips in order to power its fast-growing economy. The Chinese government has always been wary of that dependency, but its fears were heightened in recent weeks after the United States banned American companies from selling components to ZTE, a prominent Chinese telecom equipment manufacturer.
Chinese President Xi Jinping has gone on something of an indigenous innovation tour in recent weeks, visiting factories across the country and encouraging further investment in the country’s technology industry. From the Communist Party of China’s official newspaper the People’s Daily two weeks ago, “National rejuvenation relies on the ‘hard work’ of the Chinese people, and the country’s innovation capacity must be raised through independent efforts, President Xi Jinping said on Tuesday.”
While the numbers discussed are eye-popping, so are the costs of developing leading-edge semiconductor technology. As semiconductors have grown more complex, costs have skyrocketed to maintain Moore’s Law. Intel spent more than $13 billion on R&D expenses alone in 2017, according to IC Insights, with Qualcomm, Broadcom, and Samsung each spending more than $3 billion.
While China may try to play catchup in the broad category of semiconductors, it is strategically placing its money on new areas like 5G wireless and artificial intelligence-focused chips where it might become a leading provider of technology. Concerns over 5G in particular have galvanized American attention on Qualcomm and its ability to compete in what is rare virgin territory in the telecom equipment space.
For American companies like Intel and Qualcomm, which are used to holding de facto monopolies on entire swaths of the semiconductor market, the renewed competition from China is going to pressure them to push their tech forward faster.
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China said to be discussing ZTE ban with U.S. officials
The Chinese government is reportedly going to bat for ZTE over a seven-year ban that would have broad ranging consequences for the phone maker. According to a new report from Reuters, the subject was broached during a meeting with between senior Chinese and U.S. officials in Beijing this week.
The ban imposed by the Department of Commerce is the result of a violation against U.S. Iranian sanctions. ZTE pled guilty, agreeing to pay a fine and penalize employees. After the DOC insisted it failed to do the latter, it barred US companies from selling software or components to the phone maker for seven years. Between chip makers like Qualcomm and software providers including, most notably, Google, the restrictions will prove next to impossible for ZTE to circumvent.
For many, the steep penalty appears to be part of a larger looming trade war between the two countries that’s also found ZTE and Huawei caught in the crosshairs over ties to the Chinese government. U.S. officials, however, have insisted that the ban isn’t related to trade issues between the two countries.
Earlier this week, the Pentagon banned the sale of both companies’ phones on military bases — just the latest in a long line tough breaks here in the States. ZTE has largely weathered the broader U.S. spying concerns better, due in part to a broader footprint in the States than Huawei, but the company admitted that this latest ban would be downright devestating.
“The Denial Order will not only severely impact the survival and development of ZTE,” the company told TechCrunch, “but will also cause damages to all partners of ZTE including a large number of U.S. companies.”
ZTE has also reportedly been in talks with U.S. companies like Google and has suggested it will take judicial action, if necessary.
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Tyson Foods investment arm backs another lab-grown meat manufacturer
The venture investment arm of massive meat manufacturer Tyson Foods is continuing its push into potential alternative methods of poultry production with a new investment in the Israeli startup Future Meat Technologies.
The backer of companies like the plant-based protein-maker Beyond Meat, and cultured-meat company Memphis Meats, Tyson Ventures’ latest investment is also tackling technology development to create mass-produced meat in a lab — instead of on the farm.
Future Meat Technologies is working to commercialize a manufacturing technology for fat and muscle cells that was first developed in the laboratories of the Hebrew University of Jerusalem.
“It is difficult to imagine cultured meat becoming a reality with a current production price of about $10,000 per kilogram,” said Yaakov Nahmias, the company’s founder and chief scientist, in a statement. “We redesigned the manufacturing process until we brought it down to $800 per kilogram today, with a clear roadmap to $5-10 per kg by 2020.”
The deal marks Tyson’s first investment in an Israeli startup and gives the company another potential horse in the race to develop substitutes for the factory slaughterhouses that provide most of America’s meat.
“This is definitely in the Memphis Meats… in the lab-based meat world,” says Justin Whitmore, executive vice president of corporate strategy and chief sustainability officer of Tyson Foods.
Whitmore takes pains to emphasize that Tyson is continuing to invest in its traditional business lines, but acknowledges that the company believes “in exploring additional opportunities for growth that give consumers more choices,” according to a statement.
While startups like Impossible Foods are focused on developing plant-based alternatives to the proteins that give meat its flavor, Future Meat Technologies and Memphis Meats are trying to use animal cells themselves to grow meat, rather than basically harvesting it from dead animals.
Chef Uri Navon mixing ingredients with FMT’s cultured meat
According to Nahmias, animal fat produces the flavors and aromas that stimulate taste buds, and he says that his company can produce the fat without harvesting animals and without genetic modification.
For Whitmore, what separates Future Meat Technologies and Memphis Meats is the scale of the bioreactors that the companies are using to make their meat. Both companies — indeed all companies on the hunt for a meat replacement — are looking for a way around relying on fetal bovine serum, which is now a crucial component for any lab-cultured meats.
“I want my children to eat meat that is delicious, sustainable and safe,” said Nahmias, in a statement, “this is our commitment to future generations.”
The breadth of backgrounds among the investors that have come together to finance the $2.2 million seed round for Future Meat Technologies speak to the market opportunity that exists for getting a meat manufacturing replacement right.
“Global demand for protein and meat is growing at a rapid pace, with an estimated worldwide market of more than a trillion dollars, including explosive growth in China. We believe that making a healthy, non-GMO product that can meet this demand is an essential part of our mission,” said Rom Kshuk, the chief executive of Future Meat Technologies, in a statement.
One of the company’s first pilot products is lab-grown chicken meat that chefs have already used in some recipes.
FMT’s first cultured chicken kebab on grilled eggplant with tahini sauce
In addition to Tyson Ventures, investors in the Future Meat Technologies seed round included the Neto Group, an Israeli food conglomerate; Seed2Growth Ventures, a Chicago-based fund backed by Walmart wealth; BitsXBites, a Chinese food technology fund; and Agrinnovation, an Israeli investment fund founded by Yissum, the Technology Transfer Company of The Hebrew University,
“Hebrew University, home to Israel’s only Faculty of Agriculture, specializes in incubating applied research in such fields as animal-free meat sources. Future Meat Technologies’ innovations are revolutionizing the sector and leading the way in creating sustainable alternative protein sources,” said Dr. Yaron Daniely, president and CEO of Yissum.
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Chinese authorities dish out $5M in fines for developers of PUBG hack software
There has long been speculation and evidence of cheating software for PlayerUnknown’s Battlegrounds (PUBG), but action is being taken to stamp it out. The makers of the smash-hit game have confirmed that they have worked with authorities in China who have dished out over $5 million in fines to at least 15 people caught developing hacks that help players cheat.
PUBG, in case you missed it, is one of the top-grossing games in the world this year. A shoot-up battle royale game that sees players battle to survive to the end, PUBG grossed $700 million in revenue via PC sales last year and that’s only increased in 2018 as the title landed on mobile. It’s particularly big in China where internet giant Tencent is the publishing partner.
That Tencent link might have proved useful, as Bluehole — the company behind PUBG — revealed in a statement that Chinese authorities have helped it clamp down on hacking programs, handing out the huge number of fines in the process:
Here’s some translated information from the local authorities we worked with on this case:
“15 major suspects including “OMG”, “FL”, “火狐”, “须弥” and “炎黄” were arrested for developing hack programs, hosting marketplaces for hack programs, and brokering transactions. Currently the suspects have been fined approximately 30mil RNB ($5.1mil USD). Other suspects related to this case are still being investigated.
While the programs were being developed in China and there were users there too, it isn’t clear whether that reach extended to gamers in the U.S. and other countries.
Beyond just cheating, there is also a significant risk for those who use the hacked software.
Bluehole said it found evidence that the programs were used by their developers to infect host PCs in order to “control users’ PC, scan their data, and extract information illegally.” Some, it is said, used Trojan Horse software to steal user information — that could mean information from when they shop online (like credit card numbers), the content of emails, and more.
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