Weekly Business Roundup #3
News that captured my attention this week
Monday April 22
In 2024, major Chinese cities have reduced new land supply for real estate by 10% compared to the previous year, following a significant decline in home sales that has affected developers' liquidity and purchasing capacity. Notably, cities like Wuxi, Changchun, Xiamen, and Suzhou cut their allocations by over 30%. The first quarter saw a nationwide drop in residential land supply and transactions by around 30%, with some key cities experiencing a 50% plunge in property sales. This strategic reduction in land availability is designed to stabilize market prices and is also influenced by governmental housing policies that adjust land supply based on sales performance and inventory cycles.
Newly appointed Vice President of Baidu Group BIDU 0.00%↑, Wang Yunpeng, shared his strategic priorities for the Intelligent Driving Business Group in his first all-staff letter. Wang emphasized four goals for Baidu Apollo: completing the autonomous driving base model, turning Apollo Go profitable, improving user experience with intelligent driving cabin products, and growing Baidu Maps' market share through unique competitive strategies. He also announced the launch of a new integrated car map product that aims to replace phone holders in 300 million vehicles.
Tuesday April 23
Chinese bubble tea maker ChaBaiDao $2555.HK falls over 30% in its Hong Kong debut.
Ahead of the 618 e-commerce festival, JD (JD) utilized an avatar of its founder Richard Liu in a livestream for World Book Day, marking the avatar's third appearance. Although Richard Liu's avatar was featured for just 40 minutes in the 11-hour event, it highlights JD's strategy to generate headlines and hype using digital personalities. This approach not only aims to boost sales on JD's platforms but also seeks to reduce operational costs and compete with rival platforms that use human hosts for their livestreams.
Tencent Holdings (TCEHY) introduced a new smart mobility solution at Beijing's largest auto show, focusing on software development for automotive applications, contrasting with Xiaomi’s (XIACY) approach to car manufacturing. Leveraging its Hunyuan LLM, Tencent aims to enhance carmaker capabilities in research, development, and customer service, collaborating with over 10 auto groups including GAC Group (GNZUF) and FAW Toyota. The company also launched a smart cockpit solution targeting international markets, helping Chinese automakers quickly adapt to global standards. By the end of the year, Tencent's smart solutions are expected to be featured in over 15 million vehicles.
Wednesday April 24
Alibaba Cloud (BABA) announced it will offer free training, inferencing, and deployment services based on Meta's newly released Llama 3 open-source model. This limited-time offer is aimed at local enterprises and developers, as detailed in a WeChat post. The free services, which include eliminating computational costs for model development and usage, will be available on Alibaba Cloud’s Bailian platform. Bailian was launched last October at the Apsara Conference 2023. This initiative follows closely after Meta introduced Llama 3, with Alibaba’s ModelScope platform integrating Llama 3 "immediately" into its offerings.
Beijing-based AIsphere, a text-to-video startup, has secured over RMB 100 million ($13.8 million) in its A2 funding round from Ant Group (affiliated with Alibaba, BABA), according to LatePost. This investment follows a similar funding amount raised less than two months prior. Ant Group, also the owner of Alipay, is actively investing in standout Chinese AI companies like ZhipuAI and Moonshot AI and is developing its own AI foundation model. AIsphere, founded last April by Wang Changhu, a former ByteDance technology lead, aims to match OpenAI’s Sora with its tool PixVerse, which has garnered over 1.16 million monthly visits since its January launch.
Chinese mutual funds turned profitable in Q1 after three consecutive quarters of losses, reporting a net profit of CNY 22.3 billion ($3.1 billion), driven by rising stock prices and a growing interest in ETFs. Bond funds and money market funds were the top contributors, while stock-focused and hybrid funds reduced their losses. A significant February rebound in the Shanghai Securities Composite Index, which climbed 1.2% today and 3.8% year-to-date, helped equity funds recover. The overall scale of China's mutual funds grew to CNY 29.2 trillion by the end of March, marking a 9.4% increase from the previous year.
China's Guangdong and Anhui provinces are investigating two former top officials in their health and drug regulatory agencies for suspected corruption, according to reports from April 26. Duan Yufei, former head of Guangdong's health commission, and Liu Zilin, previously with Anhui’s branch of the National Medical Products Administration, are the subjects of these probes. Details of the alleged infractions have not been disclosed. This year, China has scrutinized at least 30 healthcare and drug officials, continuing a widespread anti-corruption campaign that intensified within the medical sector last summer. Duan stepped down in 2021 after nearly a decade in his role, while Liu retired in 2017 but had resigned from key positions as early as 2013.
Thursday April 25
NetEase (NTES) will begin beta testing the mobile version of Octopath Traveler, developed by Square Enix (SQNXF), on May 16, targeting a release on June 30. The game, featuring eight professions and strategic turn-based battles, has surpassed four million global sales since its 2018 debut.
According to Bloomberg, China's Meituan is set to expand its food delivery service internationally with the launch of its app KeeTa in the Middle East, starting in Riyadh, Saudi Arabia. KeeTa was initially launched in Hong Kong in May last year.
Hangzhou Robam Appliances reported a 10.2% increase in net profit to CNY1.7 billion (USD240 million) in 2023, driven by a rise in revenue to CNY11.2 billion (USD1.5 billion) and strong overseas sales. The growth marks a recovery in China's kitchen appliance market, which grew 5.3% last year after five years of decline. However, Robam's net profit growth decelerated to 2.4% in the first quarter of 2024. Despite government incentives to boost consumption through appliance exchanges and renovations, industry experts caution that significant growth acceleration is unlikely due to a sluggish property market.
Friday April 26
ByteDance, TikTok's parent company, would rather shut down the app than sell it if it loses its legal battle against U.S. government pressure, according to Reuters. The company is unwilling to sell TikTok's proprietary algorithms, vital to its success. Under China’s Export Control Law, selling the app with its algorithms without approval is unlikely. ByteDance recently denied plans to sell a majority stake in its U.S. operations without these algorithms.
In Q1 2024, China's smartphone market grew by 6.5% year-on-year with shipments reaching 69.26 million units, reports IDC. Honor led with a 17.1% market share, closely followed by Huawei at 17%. Oppo, Apple (AAPL), and Vivo had shares of 15.7%, 15.6%, and 14.6%, respectively. The foldable smartphone segment in China also saw significant growth, with shipments of 1.86 million units, an 83% increase year-on-year. Huawei dominated the foldable market with a 44.1% share, while Honor captured 26.7%.