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Your semi-weekly dose of China's tech
April 13, 2022
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"More than 30 Taiwanese companies including Pegatron Corp. and Macbook maker Quanta Computer Inc. have now halted production in the electronics hubs of eastern China to comply with local Covid-related restrictions, spelling more trouble for an already fragile global tech supply chain."


BNN Bloomberg on production halt as an omicron outbreak disrupts Shanghai and other parts of China
 
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TechNode stories

What's going on at TechNode

1. Chinese phone maker Vivo unveils its first foldable phone X Fold
Chinese smartphone manufacturer Vivo released its first foldable phone on Tuesday, targeting premium users with a price tag of around $1,500. 

Vivo follows the footsteps of rival brands such as Xiaomi, Huawei, and Oppo, releasing its first foldable phone. Global shipments of foldable phones will hit 15.7 million in 2022, forecasting a yearly growth rate of 107%, according to market research firm CINNO Research.

2. China resumes issuing new gaming licenses after 8-month freeze
On Monday, China resumed issuing new gaming licenses (in Chinese) after pausing it for eight months when the country began a broad crackdown on content, gaming, and the education sector last summer.

The halt on new gaming licenses led to an 8-month-long winter for the gaming industry in China, forcing many game makers to downsize, cutting down on development projects, and laying off staff. 

3. Nio, Tesla, and more pause production as omicron surges in Shanghai and China
Top automakers Nio, Tesla, and Volkswagen, are temporarily closing their plants in China as a new omicron-led coronavirus outbreak spreads through the country. Following China’s covid zero policy, cities rush to implement lockdowns, creating broken links in the local supply chain.

The spread of the highly transmissible omicron variant is the latest hit to automakers in China after struggling for months to cope with raw material and parts shortages resulting from continued high demand and now worsened by the Russia-Ukraine war.

4. Meituan begins job cuts to lower costs: report
Meituan is in the midst of job cuts that will affect nearly every business unit at the food delivery and life services giant, Chinese local media Caixin reported on April 9. Meanwhile, the company is hiring simultaneously for new positions created by “business adjustment,” the story said.

Meituan becomes the latest Chinese tech major to begin large-scale layoffs. Facing the twin headwinds of a cooling economy and regulatory pressures, Chinese tech giants are replacing higher-income veteran employees with cheaper and less-experienced new hands to lower operation costs.

5. China’s tech layoffs: How many people have been affected? (Feature)
After China’s ride-hailing giant Didi was put under a cybersecurity review by the Chinese authorities last July, the country’s internet sector quickly entered a period of painful adjustments. Companies began closing unprofitable units and cutting staff wherever they could. Layoffs have since become so widespread that some Chinese tech majors have been attempting to soften the blow by telling fired employees that they have “graduated,” but it has become increasingly difficult to put a positive spin on such moves, as China’s consumer-facing tech companies go through a significant upheaval.

Since July 2021, major Chinese tech companies have laid off at least 72,779 employees, TechNode research has found. After compiling news reports, company statements, and other sources from the past nine months, TechNode found 27 instances where major Chinese tech companies were reported to be making significant layoffs, with at least 10 such instances affecting more than 30% of employees at their respective companies. Some firms dismissed entire departments almost overnight.

News feed

Bite-sized news updates on China’s tech world

Monday, April 11
  • Chinese open-source gaming engine company Cocos has completed a Series B, 36Kr revealed on Monday. CCB Trust, GGV Capital, and Sound Net were among those joining the round to invest a total of $50 million. Cocos’ engine is one of three cross-platform gaming engines along with Unreal and Unity, which are widely used in gaming and 3D movie making. According to 36Kr, the company also has a cooperation agreement with Huawei to optimize the engine for the telecommunication giant’s Harmony OS and Hisilicon chips. Cocos has said the funding raised will be used to develop the core technology of its engine. [36Kr, in Chinese]

  • On April 9, Bao Yungang, deputy director of the Institute of Computing Technology at the Chinese Academy of Sciences, revealed the launch of the Beijing Open Source Chip Research Institute, which was formed at the end of 2021. Known as Kaixin Institute in Chinese, it was formed by leading tech companies and research institutes in China, and is aimed at accelerating the development of RISC-V technology, in particular the high-performance open-source processor project, Xiangshan. RISC-V is an open-source instruction set architecture for chips that has experienced wider adoption over the past decade. The introduction to the research institute notes that it has created more than 200 jobs related to the semiconductor industry. [ITHome, in Chinese]
Tuesday, April 12
  • Nio said on April 10 that it will raise the prices of its electric sports utility vehicles in China starting from May 10. It became the latest automaker to hike prices this year as the cost of raw materials soared, and a new covid outbreak in China disrupted production. Prices of Nio’s entire SUV lineup, including the ES8, ES6, and EC6, have all risen by RMB 10,000 ($1,569), while those of its two new sedans, the ET7 and ET5, remain unchanged for now. Nio’s chief executive William Li commented on the company’s user app, saying that Nio struggles to bear the rising costs of materials as a new omicron outbreak weighs on China’s auto sector. [Nio release, in Chinese]
     
  • Haomo.ai, a Chinese self-driving car startup controlled by Great Wall Motor’s chairman Wei Jianjun, said Tuesday that it has raised “hundreds of millions of RMB” in a Series A+ led by Bank of China Group Investment Limited. Shoucheng Holdings Limited, an investment fund backed by state-owned steel company Shougang Group, also participated in the funding round. The company said that “tens of thousands” of Great Wall Motor vehicles have been equipped with its advanced driver assistance systems as of April and expects that number to top one million vehicles in the next two years. [Haomo release, in Chinese]
     
  • Video creators on Bilibili are seeing significant drops in income, with some reporting a decrease of as much as 80%, according to a Monday report by industry insight company Yunying Research. The report also pointed out that the site’s content structure has become increasingly focused on recommending vloggers with large fanbases, in contrast to Douyin, the Chinese equivalent of TikTok, which regularly promotes lesser-known accounts. According to the company’s financial report, Bilibili had 271.7 million average monthly active users in 2021. [36Kr, in Chinese]
     
  • Chinese Q&A platform Zhihu filed a draft prospectus for a Hong Kong listing on Monday, 13 months after it raised $523 million in an IPO on the New York Stock Exchange. The company plans to raise HK$ 1.3 billion ($172 million) with a valuation that may reach up to HK$16.4 billion. The Quora-like platform is opting for a dual primary listing, through which it will be subject to full requirements in both Hong Kong and New York. Zhihu’s IPO comes at a time when US-listed Chinese stocks are reeling from increasing regulatory pressures. The US Securities Exchange Commission has threatened to delist overseas companies that fail to provide accounting access to the US regulators for three consecutive years. [Caixin, in Chinese]
 
Wednesday, April 13
  • Neil Shen, the founding and managing partner of Sequoia China, is the top Chinese investor on Forbes’ Midas List for the third year in a row, thanks to his bets in ByteDance, Meituan, and Pinduoduo. Sixteen other Chinese names made it into the annual list of the world’s top 100 VC investors, with four of those being women. That’s four fewer Chinese investors than last year. 5Y Capital, formally known as Morningside Venture Capital, has the most Chinese investors on the list. They are Richard Liu (ranked fourth), Fisher Zhang (19th), and Elwin Yuan (78th), thanks to their investment in Xiaomi and Kuaishou. Anna Fang, a partner and CEO of ZhenFund, is the top-rank Chinese female investor, ranking 12th on the list. She led the fund’s investment in Xiaohongshu, Perfect Diary, Horizon Robotics, VIPKID, NiceTuan, and others. [TechNode China, in Chinese]
     
  • Alibaba Cloud, the cloud computing arm of the Chinese e-commerce giant, is undergoing a major management reshuffle, according to Chinese media outlet Leiphone. Huang Haiqing, vice president of Alibaba Cloud, will replace Ren Geng as president of the unit, which is Alibaba’s second-largest source of revenue after its e-commerce business. At an executive meeting held on Tuesday, Huang highlighted the company’s self-developed products and profitability as the two top priorities for the company. Huang will report to Cai Yinghua, former president of Huawei Enterprise Business Group (EBG) China, who was named a senior vice president of Alibaba in March. Analysts expect more organizational shuffling to come as a new management team centered around Cai and Huang takes form, the report says. [Leiphone, in Chinese]
     
  • On Tuesday, Chinese car chip maker SemiDrive released its new high-performance microcontroller unit E3 series. The new series offers potential applications related to automatic driving capability, digital console displays, and braking systems. Based on Arm’s architecture, the new series E3 features six processing cores and will enter mass production in the third quarter, which the company hopes will “fill the gap” in domestically-produced high-end car chips in China. In addition, SemiDrive has said the new products are already available for customer testing on an application basis. [SemiDrive press release, in Chinese]
     
  • TikTok’s advertisement revenue is expected to triple to $11.6 billion in 2022, which would exceed the predicted amount of ad revenue for Snapchat and Twitter, according to market research firm Insider Intelligence. As part of its ad revenue forecast, Insider Intelligence also notes that the US market will account for over 50% of TikTok’s advertisement revenue. According to investment bank Piper Sandler’s Taking Stock with Teens survey for Spring 2022, TikTok is the most popular social media app among US teens, with 33% of respondents preferring to use the short video app over the likes of Snapchat and Instagram. [Insider Intelligence]

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