KrASIA Weekly: Regulation runs after Chinese tech giants

2018-08-26

Hi there, it’s Robin

Recent public floats among some of the biggest Chinese tech firms have not been as spectacular as some would have expected. Some reasons for the weak performance include the ongoing Sino-US trade wars; increasing regulatory catchup and public scrutiny; doubtful investors.

The Nasdaq-listed Pinduoduo responded to the burgeoning counterfeit controversy by removing 1,000 stores and 4 million of goods on its platform to take a huge step forward to attempt at dealing with the problem at hand.

Hong Kong-listed Xiaomi posted a surprise profit of $2.1b in its maiden financial reporting for Q2 2018 this week. Yet, certain key issues still remain. The increase in revenue for Q2 was mainly driven by the sale of its smartphones and hardware, not internet services despite the company’s claims of being an internet company. China’s P2P clampdown which could have an effect on Xiaomi’s platforms is also far from over.

These unintended consequences of the thriving internet market in China seemed to be attracting more public scrutiny and regulatory involvement, reflecting the growing trend of data privacy in the West.

These could be valuable lessons for those already-listed Chinese tech behemoths as well as for those Chinese tech unicorns who are heading for the public markets.

An example of the former could be Alibaba who is moving deeper into the Chinese automotive aftermarket sector and also venturing more into China’s medtech space. All of these nascent sectors might end up like the other industries such as the initially unregulated P2P sector and the ongoing counterfeit issue in e-commerce platforms.

While technology is here to stay, it appears that growing regulations is something that cannot be ignored either.

Southeast Asia’s tech scene is getting more and more vibrant, and it is perhaps important to glean from the lessons in China early on in the game, in terms of both the growth strategies and potential pitfalls.

Online shopping festivals, for instance, could be an example for Tokopedia.

P2P lending startups in Indonesia can also look to China’s clampdown as a case in point. In fact, just this week, KoinWorks, an Indonesian P2P lending startup just secured $16.5m in funding.

Grab who is spreading its tentacles across other sectors to become an everyday app can also draw some lessons from the likes of Meituan, and Tencent.

Read on to find out more interesting stories from last week, and feel free to tip us if you have news clue or you just want to talk with us, email us at hello@kr-asia.com and we are looking forward to hearing from you.

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China

China’s coffee wars: How Luckin Coffee & Coffee Box plan to take on Starbucks

China’s Meituan moves further on IPO, kicking off roadshow on Sept. 3

Will Google thrive in China even under censorships?

Jack Ma: P2P is not Fintech

Alibaba deepens partnership with Singapore Airlines in multiple areas

Alibaba sets up subsidiary involving Ele.me and Koubei to fight Meituan

Rest of Asia

E-commerce aggregator iPrice raises funds from South Korean Internet giant Naver

Innovation Factory and GREE Ventures set up startup accelerator in Jakarta

Which are best logistics startups in Southeast Asia?