Weekly Business Roundup #7

News from: ByteDance, Tencent, Baidu, Kuaishou, Kweichow Moutai, Coca-Cola, Pepsi, Alibaba Group, JD.com, China Eastern Airlines, Meidong,...

Monday, May 27

• Alibaba’s cross-border e-commerce platform AliExpress announced soccer legend David Beckham as its global brand ambassador yesterday, just under a month before the start of UEFA Euro 2024.

• Starting July 1, Beijing residents can use their medical insurance to purchase OTC drugs on JD.com and Meituan platforms. Local authorities began testing these functions on May 25, with over 200 hospitals participating in the program.

Tuesday, May 28

• Chinese e-commerce giant JD.com will raise the salaries of its procurement and sales staff while also tightening its office policy. This move comes as the market becomes increasingly competitive with newer platforms like Douyin and Kuaishou, Xiaohongshu and also Pinduoduo, which more than tripled its net profit in the first quarter.

• JD Health, the healthcare arm of Chinese e-commerce giant JD.com, has closed its family doctor division. This division, launched during the Covid-19 pandemic to offer health consultancy and other services to the public, was shut down due to its inability to turn a profit. Other similar attempts, such as the doctor consultation app Chunyu Yisheng, healthcare software company Ping An Good Doctor, and online medical services platform Haodaifu, were also unable to succeed.

• China’s mobile phone shipments increased by 29% in April, reaching 24.1 million units compared to a year ago, according to the China Academy of Information and Communications Technology. Sales of 5G handsets surged by 52% to 20.2 million units, making up 84% of the total shipments.

• Porsche’s Chinese arm and its local dealers, including Meidong announced they will seek effective ways to address market changes together. Their focus will be on business policies, customer service, and the transition to electrification following a significant drop in sales in China.

• China Eastern Airlines celebrated the first anniversary of the commercial operation of the homegrown C919 jet by welcoming its sixth aircraft. Chairman Wang Zhiqing announced that the C919s have completed over 2,100 flights, accumulating more than 6,000 flight hours.

• China’s gaming market generated sales revenue of CNY 22.4 billion (USD 3.2 billion) in April, a decrease of 0.3% year-on-year and 4.2% from March, according to data provider CNG. Persona 5: The Phantom X was the highest-grossing new game of the month.

Wednesday, May 29

• Alibaba Pictures reported a 44% increase in revenue, reaching CNY 5 billion (USD 690 million) in the first quarter compared to the same period last year. According to the latest earnings report, the company achieved a net profit of CNY 297 million (USD 41 million), reversing a net loss of CNY 279 million from the previous year.

• Chinese air conditioner manufacturers, including Midea and Haier, are unlikely to raise prices this summer due to high inventory levels and low demand, despite rising copper costs. Prices of finished products have remained stable compared to last year and month-over-month. If manufacturers were to increase prices, it would negatively impact sales.

• The Internet Society of China has introduced draft regulations aimed at controlling spending by minors in online video games, marking the first industry-specific rules of their kind. China initially began addressing game addiction among minors a few years ago. In 2021, regulators limited online playtime for minors to three hours a week and mandated real-name registration by game developers, including Tencent and Netease, to prevent minors from bypassing these restrictions. However, excessive in-game spending by minors remains a significant issue.

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Thursday, May 30

• ByteDance, the owner of TikTok and Douyin, is reportedly advancing in AI-powered hardware projects with two key divisions leading the efforts. One team, codenamed “D line,” is led by Li Haoqian, founder of Oladance, a wearable stereo brand recently acquired by ByteDance. The other group, called “O line,” is a cross-functional team focused on AI-based consumer hardware products, collaborating closely with ByteDance’s AI software team “Flow” on integrated solutions. Additionally, ByteDance revamped its VR arm, Pico, late last year, two years after acquiring it, marking a significant move into the VR industry with hardware headsets.

• At the shareholders’ meeting, Kweichow Moutai Chairman Zhang Deqin emphasized that output, efficiency, and speed must all be subordinate to quality.

• Media reports indicate that both Coca-Cola and Pepsi have raised prices for their carbonated drinks in Shanghai’s Pudong New Area.

• Alibaba has sold its entire 14.4 percent stake in Baozun, a company that acquired Gap’s China business over a year ago. This move continues Alibaba’s strategy of streamlining its non-core assets portfolio.

• China’s commerce ministry plans to introduce new guidelines aimed at boosting cross-border e-commerce exports and developing overseas warehouses, spokesperson He Yadong announced today. Over the past decade, cross-border e-commerce trade in China has increased more than tenfold, he added.

Friday, May 31

• Tencent has launched an AI assistant app called ‘Yuanbao’. Yuanbao offers capabilities such as document analysis and summarization, Q&A, and text and image generation, similar to ChatGPT and other Chinese AI chatbots. I checked it out and I really liked it.

• Baidu’s Senior VP, He Junjie, announced that AI-generated content now makes up 11% of Baidu’s search results. Additionally, the number of intelligent entities in Baidu’s AI-powered search has increased by 267% month-on-month.

• Kuaishou has launched its self-developed billion-parameter ‘KeTu’ AI model, now available for public use. The model supports text-to-image and image-to-image generation for AI-assisted creation and customization, accessible through a WeChat mini-program and the web.

• Published by Tencent Games, the mobile version of Dungeon and Fighter has dominated the top spot on both the free and top-grossing games charts in the iOS App Store in China for ten days since its May 21 launch. Bloomberg reported that the game’s first-week revenue exceeded $140 million. If this momentum continues, the game could generate around one billion dollars in annual sales for Tencent Games.

• In the first quarter, global shipments of wearable wristband devices reached 41.2 million units, with Apple, Xiaomi, and Huawei leading the market, according to Canalys. Despite a 12% decline in year-on-year shipments, Apple retained its top position with an 18% market share. Xiaomi followed with a 15% share, experiencing a 38% year-on-year growth due to a varied product range and swift international expansion. Huawei ranked third with a 13% share, showing a 46% growth driven by robust domestic sales of the Watch GT4.