Pages Navigation Menu

The blog of DataDiggers

Categories Navigation Menu

Surging costs send shares of ecommerce challenger Pinduoduo down 17 percent

Posted by on Mar 14, 2019 in alibaba, alibaba group, Amazon, Asia, bytedance, China, e-book, E-Commerce, Earnings, eCommerce, online marketplaces, Qutoutiao, shanghai, supply chain, tiktok | 0 comments

China’s new tech force Pinduoduo is continuing its race to upend the ecommerce space, even at the expense of its finances. The three-year-old startup earmarked some big wins from the 2018 fiscal year, but losses were even greater, dragging its shares down 17 percent on Wednesday after the firm released its latest earnings results.

The Shanghai-based company is famous for offering cheap group deals and it’s able to keep prices down by sourcing directly from manufacturers and farmers, cutting out middleman costs. In 2018, the company saw its gross merchandise value, referring to total sales regardless of whether the items were actually sold, delivered or returned, jump 234 percent to 471.6 billion yuan ($68.6 billion). Fourth-quarter annual active buyers increased 71 percent to 418.5 million, during which monthly active users nearly doubled to 272.6 million.

These figures should have industry pioneers Alibaba and JD sweating. In the twelve months ended December 31, JD fell behind Pinduoduo with a smaller AAU base of 305 million. Alibaba still held a lead over its peers with 636 million AAUs, though its year-over-year growth was a milder 23 percent.

But Pinduoduo also saw heavy financial strain in the past year as it drifted away from becoming profitable. Operating loss soared to 10.8 billion ($1.57 billion), compared to just under 600 million yuan in the year-earlier period. Fourth-quarter operating loss widened a staggering 116 times to 2.64 billion yuan ($384 million), up from 22 million yuan a year ago.

Pinduoduo is presenting a stark contrast to consistently profitable Alibaba, which generates the bulk of its income from charging advertising fees on its marketplaces. This light-asset approach grants Alibaba wider profit margins than its arch-foe JD, which controls most of the supply chain like Amazon and makes money from direct sales. Pinduoduo seeks out a path similar to Alibaba’s and monetizes through marketing services, but its latest financial results showed that mounting costs have tempered a supposedly lucrative model.

Where did the ecommerce challenger spend its money? Pinduoduo’s total operating expenses from 2018 stood at 21 billion yuan ($3 billion), of which 13.4 billion yuan went to sales and marketing expenses such as TV commercials and discounts for users. Administration alongside research and development made up the remaining costs.

Pinduoduo’s spending spree recalls the path of another up-and-coming Chinese tech startup, Qutoutiao . Like Pinduoduo, Qutoutiao has embarked on a cash-intensive journey by burning billions of dollars to acquire users. The scheme worked, and Qutoutiao, which runs a popular news app and a growing e-book service, is effectively challenging ByteDance (TikTok’s parent company) in smaller Chinese cities where many veteran tech giants lack dominance.

Offering ultra-cheap items is a smart bet for Pinduoduo to lock in price-intensive consumers in unpenetrated, smaller cities, but it’s way too soon to know whether this kind of expensive growth will hold out long-term.


Source: The Tech Crunch

Read More

Alibaba challenger Pinduoduo is bringing imported goods to rural homes

Posted by on Feb 26, 2019 in alibaba, alibaba group, Amazon, Asia, China, E-Commerce, eCommerce, game publisher, Hangzhou, JD.com, netease, online marketplaces, pinduoduo, taobao, TechCrunch, Tencent, viral marketing, WeChat | 0 comments

Pinduoduo, the latest challenger to China’s ecommerce dominators Alibaba and JD.com, wants to bring affordable, imported items to shoppers in China’s smaller cities and rural areas.

The three-year-old Tencent-backed ecommerce upstart is recruiting importers to set up shop on its marketplace, shows a message on its website. The business is known for offering cheap, sometimes counterfeit goods that initially appealed to users from the less prosperous parts of China but have gradually garnered more price-sensitive urbanites. Its rise is closely linked to Tencent’s popular WeChat messenger, which lets it toy with viral marketing schemes like group deals, a level of access that’s unavailable to, say, Tencent rival Alibaba. Furthermore, the app’s focus on direct sales between manufacturers and consumers helps to keep costs down.

Pinduoduo’s social group-buying model works so well that it’s rapidly closing in on its larger rivals. It claimed 232 million monthly active users by the end of September. That represents only a fraction of Alibaba’s 700 million user base but the newcomer is growing at over 200 percent year-over-year. Pinduoduo already eclipsed JD.com in terms of market penetration according to data analytics company Jiguang. Over the past year, Pinduoduo was installed on 27.4 percent of all mobile devices in China, placing it ahead of JD.com which stood at 23.9 percent and behind Alibaba’s Taobao at 52.5 percent.

And now Pinduoduo becomes attuned to China’s booming cross-border business. People’s cravings for imported, higher-quality goods are surging along with their increasing disposable income. That new demand gives rise to a bountiful supply of “daigou”, or purchasing agents who send overseas goods to Chinese shoppers, and inspires ecommerce operators like Alibaba and JD.com to start their own cross-border businesses. The lucrative sector, estimated by market researcher iiMedia to have generated 9 trillion yuan ($1.34 trillion) in transactions last year, has even drawn unexpected players like NetEase. The Hangzhou-based firm is best known as one of China’s top game publisher but it’s made a dent in cross-border shopping in recent years with its Kaola service, which is reportedly buying Amazon China’s import unit.

TechCrunch has reached out to Pinduoduo for more information on its overseas shopping scheme and will update the story if we hear back. What we know for sure is that the ecommerce site plans to take on 500,000 small and medium-sized merchants for its overseas channel within the next three years, the company’s vice president Li Yuan announced at a November event. Pinduoduo was already delivering imported goods to customers, a business that it said had seen surging transactions last year. Consumers in the countryside have never been more ready to shop online, as Beijing is making a big push to grow digital payments in these regions.

Pinduoduo has yet to make a profit, and the cost of battling Alibaba and JD.com became more evident after it recently announced to raise more than $1 billion just six months after a $1.63 billion initial public offering in the U.S. Time will tell whether cross-border ecommerce — where it plans to replicate its direct sales model — will help it gain an upper hand over the industry giants.


Source: The Tech Crunch

Read More

Xiaomi-backed electric toothbrush Soocas raises $30 million Series C

Posted by on Feb 11, 2019 in alibaba, alibaba group, Asia, China, Companies, electric toothbrush, funding, Hardware, procter & gamble, shenzhen, Smartphones, toothbrush, Xiaomi | 0 comments

China’s Soocas continues to jostle with global toothbrush giants as it raises 200 million yuan ($30 million) in a series C funding round. The Shenzhen-based oral care manufacturer has secured the new capital from lead investor Vision Knight Capital, with Kinzon Capital, Greenwoods Investment, Yunmu Capital and Cathay Capital also participating in the round.

The new proceeds arrived less than a year after Soocas, one of Xiaomi’s home appliance portfolio startups, snapped up close to 100 million yuan in a Series B round last March. Best known for its budget smartphones, Xiaomi has a grand plan to construct an Internet of Things empire that encompasses smart TVs to electric toothbrushes, and it has been gearing up by shelling out strategic investments for consumer goods makers such as Soocas.

Founded in 2015, Soocas’s rise reflects a growing demand for personal care accessories as people’s disposable income increases. Electric toothbrushes are a relatively new concept to most Chinese consumers but the category is picking up steam fast. According to data compiled by Alibaba’s advertising service Alimama, gross merchandise volume sales of electric toothbrushes grew 97 percent between 2015 and 2017. Multinational brands still dominate the oral care space in China, with Procter & Gamble, Colgate and Hawley & Hazel Chemical occupying the top three spots as of 2017, a report from Euromonitor International shows, but local players are rapidly catching up.

Soocas faces some serious competition from its Chinese peers Usmile and Roaman. Like Soocas, the two rivals have also placed their offices in southern China for proximity to the region’s robust supply chain resources. Part of Soocas’s strength comes from its tie-up with Xiaomi, which gives its portfolio companies access to a massive online and offline distribution network worldwide. That comes at a cost, however, as Xiaomi is known to impose razor-thin margins on the companies it backs and controls.

According to a statement from Soocas’s founder Meng Fandi, the company has achieved profitability since its launch and has seen its margin increase over the years. It plans to spend its fresh proceeds on marketing in a race to lure China’s increasingly sophisticated young consumers with toothbrushes and its new lines of hair dryers, nasal trimmers and other tools that make you squeaky-clean.


Source: The Tech Crunch

Read More

First China, now Starbucks gets an ambitious VC-funded rival in Indonesia

Posted by on Feb 1, 2019 in alibaba, alibaba group, android, Apps, army, Asia, carsharing, China, Companies, East Ventures, economy, funding, Fundings & Exits, go-jek, Google, grab, Indonesia, Insignia Ventures Partners, internet access, Jakarta, JD.com, managing partner, mcdonalds, online food ordering, online marketplaces, Pizza Hut, Singapore, Southeast Asia, starbucks, temasek, Tencent, United States, WeWork | 0 comments

Asia’s venture capital-backed startups are gunning for Starbucks .

In China, the U.S. coffee giant is being pushed by Luckin Coffee, a $2.2 billion challenger surfing China’s on-demand wave, and on the real estate side, where WeWork China has just unveiled an on-demand product that could tempt people who go to Starbucks to kill time or work.

That trend is picking up in Indonesia, the world’s fourth largest country and Southeast Asia’s largest economy, where an on-demand challenger named Fore Coffee has fuelled up for a fight after it raised $8.5 million.

Fore was started in August 2018 when associates at East Ventures, a prolific early-stage investor in Indonesia, decided to test how robust the country’s new digital infrastructure can be. That means it taps into unicorn companies like Grab, Go-Jek and Traveloka and their army of scooter-based delivery people to get a hot brew out to customers. Incidentally, the name ‘Fore’ comes from ‘forest’ — “we aim to grow fast, strong, tall and bring life to our surrounding” — rather than in front of… or a shout heard on the golf course.

The company has adopted a similar hybrid approach to Luckin, and Starbucks thanks to its alliance with Alibaba. Fore operates 15 outlets in Jakarta, which range from ‘grab and go’ kiosks for workers in a hurry, to shops with space to sit and delivery-only locations, Fore co-founder Elisa Suteja told TechCrunch. On the digital side, it offers its own app (delivery is handled via Go-Jek’s Go-Send service) and is available via Go-Jek and Grab’s apps.

So far, Fore has jumped to 100,000 deliveries per month and its app is top of the F&B category for iOS and Android in Indonesia — ahead of Starbucks, McDonald’s and Pizza Hut .

It’s early times for the venture — which is not a touch on Starbuck’s $85 billion business; it does break out figures for Indonesia — but it is a sign of where consumption is moving to Indonesia, which has become a coveted beachhead for global companies, and especially Chinese, moving into Southeast Asia. Chinese trio Tencent, Alibaba and JD.com and Singapore’s Grab are among the outsiders who have each spent hundreds of millions to build or invest in services that tap growing internet access among Indonesia’s population of over 260 million.

There’s a lot at stake. A recent Google-Temasek report forecast that Indonesia alone will account for over 40 percent of Southeast Asia’s digital economy by 2025, which is predicted to triple to reach $240 billion.

As one founder recently told TechCrunch anonymously: “There is no such thing as winning Southeast Asia but losing Indonesia. The number one priority for any Southeast Asian business must be to win Indonesia.”

Forecasts from a recent Google-Temasek report suggest that Indonesia is the key market in Southeast Asia

This new money comes from East Ventures — which incubated the project — SMDV, Pavilion Capital, Agaeti Venture Capital and Insignia Ventures Partners with participation from undisclosed angel backers. The plan is to continue to invest in growing the business.

“Fore is our model for ‘super-SME’ — SME done right in leveraging technology and digital ecosystem,” Willson Cuaca, a managing partner at East Ventures, said in a statement.

There’s clearly a long way to go before Fore reaches the size of Luckin, which has said it lost 850 million yuan, or $124 million, inside the first nine months in 2018.

The Chinese coffee challenger recently declared that money is no object for its strategy to dethrone Starbucks. The U.S. firm is currently the largest player in China’s coffee market, with 3,300 stores as of last May and a goal of topping 6,000 outlets by 2022, but Luckin said it will more than double its locations to more than 4,500 by the end of this year.

By comparison, Indonesia’s coffee battle is only just getting started.


Source: The Tech Crunch

Read More

Chat app Line’s mobile payment service is getting its own Visa card

Posted by on Jan 30, 2019 in alibaba, alibaba group, alipay, Apps, Asia, China, E-Commerce, economy, Japan, King, mobile payments, money, online payments, payments, points, Tencent, visa, WeChat | 0 comments

Brown, Cony and the gang are coming to a credit card near you in Japan. Line, the messaging app company behind the cute sticker characters, announced today that it is bringing its payment service to plastic through a tie-in with Visa.

Line is Japan’s largest chat app with an estimated 50 million registered users. The cards will be released later this year and they’ll allow Line Pay, the company’s digital wallet service, to stretch beyond its existing merchant base to allow users to pay at any retailer accepting Visa . In addition, the first year of use will see customers get 3 percent of their spending back in Line’s ‘Points’ virtual currency, which is used to buy stickers and other content.

The partnership is a step up from Line’s own payment cards, which were introduced in 2016 and supported by JCB.

It’s an interesting deal because mobile is generally seen as being the future form factor for payments. In China, for example, using cash or card to pay is considered antiquated — you’ll get glares from other patrons forced to wait while you complete your transaction — but digital payments face a struggle in most other markets.

WeChat and Alipay have become de facto in China, but retailers — and particularly smaller ones — don’t always have the awareness, confidence or resources to add support for Line or other digital wallets. Japan, where cash is still king, is perhaps most emblematic of that struggle. The government is making a sustained push towards cashless — particularly ahead of the 2020 Olympics — and Line, as the country’s dominant chat app, may help that along with this partnership.

Line wrapped up a deal with WeChat last November that allows users of the China-based chat app to make payment via Line Pay points of sale. Tencent’s WeChat and Alipay from Alibaba have spent recent years developing a system that lets Chinese tourists pay while they are overseas.


Source: The Tech Crunch

Read More

Go-Jek makes first close of $2 billion round at $9.5 billion valuation

Posted by on Jan 25, 2019 in alibaba group, alipay, Asia, China, Co-founder, Collaborative Consumption, Companies, funding, Fundings & Exits, go-jek, Google, grab, Indonesia, JD.com, Philippines, Singapore, Softbank, Southeast Asia, TC, Tencent, Thailand, Uber, vietnam | 0 comments

Southeast Asia-based ride-sharing firm Go-Jek is making progress with its plan to raise up to $2 billion in fresh capital to fund its battle with close rival Grab .

Indonesia-headquartered Go-Jek has closed an initial chunk of that round after a collection of existing investors, including Google, Tencent and JD.com, agreed to invest around $920 million towards it, three sources with knowledge of the investment told TechCrunch.

The deal, which we understand could be announced as soon as next week, will value Go-Jek’s business at around $9.5 billion, one source told TechCrunch. With existing investors on board, the company is now actively soliciting checks from other backers to take it to its target. The capital is likely to go towards deepening its presence in new markets and furthering its fintech push.

A Go-Jek representative declined to respond when contacted by TechCrunch for comment on its fundraising efforts.

This incoming round excluded, Go-Jek has raised more than $2 billion from investors to date, including a $1.4 billion round that closed last year and valued its business at $5 billion.

Founded in 2015, Go-Jek began in motorbike taxis before expanding to four-wheels, service on demand and fintech. It decided to go after a $2 billion raise last year — having seen Grab gobble up Uber’s local business in Southeast Asia — but it has taken some time to make progress. That’s partially down to an effort to ‘clean the cap table’ by buying out some early investors and longer-serving or former staff with equity, two sources told TechCrunch.

Likewise, there has also been discussion around including the acquisition of JD.com’s local JD.id business, valued at over $1 billion, in the deal. As far as we know, a resolution hasn’t been found despite lengthy talks.

An acquisition of JD.id would not only see JD.com’s influence deepen with Go-Jek, but it would give the ride-hailing startup a strong position in Indonesia’s e-commerce space, which includes three other unicorns: Alibaba-owned Lazada, Tokopedia — which is backed by Alibaba and SoftBank’s Vision Fund — and Bukalapak, which also recently raised money for growth.

There is some doubt, however. Speaking to Reuters this week, co-founder Kevin Aluwi denied Go-Jek has plans to enter e-commerce.

Fundraising for Southeast Asia’s ride-sharing companies went up a few notches last year after Uber decided to exit the region through a deal with Grab, which saw the U.S. firm pick up a potentially-lucrative 27.5 percent stake in Singapore-based Grab.

Grab raised a $3 billion Series H round, anchored by a $1 billion injection from Toyota, but the company plans to increase that fundraising effort to as much as $5 billion, as we reported at the tail end of last year.

Why all the huge checks? At stake is a dominant position within a fast-growing online market.

Ride-hailing in Southeast Asia is poised to grow from an $8 billion annual business in 2018 to $31 billion by 2025, according to a report from Google and Temasek. Indonesia alone is tipped to account for nearly half of that figure.

The report from Google and Temasek forecasts major growth for ride-hailing in Southeast Asia

With a cumulative population of more than 620 million people and increasing internet access, Southeast Asia has emerged from the shadows of China and India to become an attractive market for startups and tech companies. Chinese giants like Tencent and Alibaba have stepped up investment areas in recent years, with e-commerce, fintech and other ‘ground zero’ infrastructure services among their targets as the region begins to turn digital in the same way China has.

That’s where Grab and Go-Jek get interesting because, beyond simply catering to transportation, both companies have expanded to offer services on-demand, like e-groceries, as well as payments and financial services such as loans, remittance and insurance. The goal is to become the region’s one-stop ‘super app’ like WeChat, Alipay and Meituan in China.

So far, Go-Jek has fanned out beyond ride-hailing to offer fintech and other services in Indonesia, but it is still getting to grips with the regional play. It expanded to Vietnam, Thailand and Singapore last year while the Philippines is a work in progress following a setback after it was denied an operating permit earlier this month.

Already, though, it is making plans for the Philippines after it acquired Coins.ph, a fintech startup that is likely to be the base for a local push into payments and financial services. The deal was officially undisclosed, but sources told TechCrunch that Go-Jek has paid around $72 million — that potentially makes it the company’s largest acquisition to date. That shows how serious Go-Jek is both about its expansion efforts and its fintech business.

Go-Jek CEO Nadiem Makarim worked at McKinsey for three years before starting the companyn[Photographer: Wei Leng Tay/Bloomberg]

In the here and now, Go-Jek claims more than 125 million downloads in Indonesia, over a million drivers and some 300,000 food merchants. It claims to process 100 million transactions per month, while Aluwi told Reuters that total transactions on its platforms crossed $12.5 billion last year. That doesn’t mean net income, however, since the company takes only a slice of customer’s ride-sharing fares and payment volumes.

Grab, meanwhile, operates in eight markets in Southeast Asia. It claims over 130 million downloads and more than 2.5 billion completed rides to date. Grab is assumed to not yet be profitable but it has said that it made $1 billion in revenue in 2018. It projects that the figure will double this year.

The company has raised around $6.8 billion from investors, according to data from Crunchbase, and Grab was last valued at $11 billion.


Source: The Tech Crunch

Read More

Indonesian e-commerce unicorn Bukalapak raises $50M

Posted by on Jan 18, 2019 in alibaba, alibaba group, Ant Financial, Asia, E-Commerce, eCommerce, economy, funding, Fundings & Exits, Indonesia, insurance, Naver, online marketplaces, Sequoia, Softbank, Southeast Asia, Tokopedia, traveloka | 0 comments

The chances are you may be familiar with Tokopedia, especially after it commanded a $7 billion valuation last November when it raised $1.1 billion from investors like Alibaba and SoftBank’s Vision Fund, but fewer people outside of Indonesia are aware of another sizable local online retail unicorn: Bukalapak.

Smaller than Tokopedia in size, the company is valued at $1 billion — it became Indonesia’s fourth unicorn one year ago. The country, which is Southeast Asia’s largest economy and has a population of over 260 million, also counts Tokopedia, Go-Jek and Traveloka in the billion-dollar club.

Founded in 2010, Bukalapak claims an impressive two million orders per day and 50 million registered users. On the seller side, it said its core e-commerce business covers products from four million SMEs, 500,000 kiosk vendors and 700,000 ‘independent’ micro-businesses in Indonesia. Bukalapak means ‘open a stall’ in Indonesia’s Bahasa language, and anyone can open a shopfront on the platform.

This week, Bukalapak landed another notable funding milestone after it raised $50 million Series D round from the Mirae Asset-Naver Asia Growth Fund, a joint vehicle operated by Korean mutual fund Mirae Asset and Naver, the firm whose businesses include popular messaging service Line. This is the first time Bukalapak has disclosed the size of an investment in its business, although it did not give an updated valuation. The startup counts Alibaba’s Ant Financial, Indonesia telco Emtek, Sequoia India and Singaporean sovereign fund GIC among its existing backers.

Bukalapak is one of Indonesia’s leading online commerce platforms with four million registered users, a claimed two million daily transactions and a valuation of more than $1 billion

Bukalapak said it plans to use its new funds to grow opportunities for its SME retail partners and build out its tech platform, that’s likely to mean digital services such as insurance and a mobile wallet.

The company made a major push last year to partner with local ‘warung’ kiosk store retailers — who sell items much like street vendors — in a bit to differentiate itself from Tokopedia, which is much like Alibaba’s Taobao service for Indonesia, and develop an offering for consumers.

Beyond its e-commerce marketplace, Bukalapak also offers streaming and fintech products.


Source: The Tech Crunch

Read More

New policy puts revenue squeeze on China’s payments giants

Posted by on Jan 17, 2019 in alibaba, alibaba group, Ant Financial, Asia, Bank, Banking, Beijing, China, E-Commerce, financial services, insurance, mobile payment, online payments, payment, payments, Tencent | 0 comments

The era that saw China’s mobile payments providers making handsome interest returns on client money has officially ended.

Starting this week, non-bank payments companies must place 100 percent of their customer deposit funds under centralized, interest-free accounts as Beijing moves to rein in financial risks. In the past, third-party payments firms were allowed to hold pre-paid sums from buyers for a short period of time before transferring the money to merchants. This layout allowed companies like Alibaba’s payments affiliate Ant Financial and Tencent to earn interest by depositing customer money into bank accounts.

Exactly how much money Ant and Tencent derived from these deposits is unclear. Both companies declined to comment on the policy’s revenue implications but said they have complied with the rules and finished transferring all customer reserve funds to a centralized clearing system.

Here are some numbers to help grasp the scale of the lucrative practice. The central bank gave a two-year window for all payments firms to complete the transition as it gradually raised the reserve funds ratio, which climbed to 85 percent in November. By then, total customer funds deposited by non-bank payments companies into central custodians hit 1.24 trillion yuan ($180 billion), while another estimated 260 billion yuan was yet to come under regulated control, shows data published by the People’s Bank of China.

Collectively, the giants account for more than 90 percent of China’s third-party mobile payments and 34 percent of all third-party, internet-based payments (which include both PC and mobile transactions), according to research firm Analysys.

While the regulatory control surely has measurable revenue implication on payments firms, some experts point to another adverse consequence. “Now that payments companies are no longer putting deposits into their [partnering] banks, they lose bargaining power with these banks that charge commissions for handling their mobile payments,” an employee from a major payments firm told TechCrunch on the condition of anonymity.

Tencent doesn’t break down how much it makes from payments but the unit has grown rapidly over the past years while its major income source — video games — took a hit last year. Meanwhile Ant Financial has been diversifying its business to go beyond financial services. It has earnestly marketed itself as a “technology” company by opening its proprietary technologies to a growing list of traditional institutions like banks and insurance companies. Reuters reported earlier that technology services will make up 65 percent of Ant’s revenue in about four years, up from an estimated 34 percent in 2017.


Source: The Tech Crunch

Read More

WeChat is quietly ranking user behavior to play catch-up with Alibaba

Posted by on Jan 15, 2019 in alibaba, alibaba group, alipay, Ant Financial, Asia, Bank, Beijing, China, credit score, Government, Messenger, mobile payments, online lending, online payments, payments, power bank, Tencent, WeChat | 0 comments

Over one billion people leave behind trails of information on WeChat every day as they use the messenger to chat, read, shop, hail rides, rent umbrellas and run many other errands. And the Tencent app has quietly started using this type of signal to determine whether a user is worthy of perks such as deposit-free renting services.

The rating system, which the company calls the “WeChat Payments Score” in Chinese, soft-launched last November across eight cities and has been piloting on a small number of apps. Among them is the Tencent-backed power bank rental service Xiaodian, which waives deposits for users if their points hit a certain benchmark. It’s easy to imagine how the rewards mechanism can help nudge customers to try out WeChat’s panoply of in-house and third-party offerings down the road.

Exactly how WeChat calculates these points is unclear, but a test done by TechCrunch shows it factors in one’s shopping and contract-fulfilling records. We’ve reached out to Tencent for more details and will update the article when more information becomes available.

Alibaba’s affiliate Ant Financial — WeChat’s biggest contender in online payments — has been running a similar assessment engine called the “Sesame Credit” since 2015. Like WeChat’s, it measures several dimensions of user data including purchase behavior and capability to fulfil contracts. People with higher scores enjoy perks like deposit waivers when staying at a hotel, incentives that could keep customers in the house. Sesame points are available through Ant’s Alipay digital wallet that recently claimed to have crossed one billion users worldwide.

The WeChat payments score is reminiscent of Tencent’s short-lived credit-rating scheme. Indeed, digital footprints can also help China’s fledgeling financial system predict creditworthiness among millions of people without financial records. That’s why Beijing enlisted tech companies including Tencent and Ant in 2015 to come up with their own “social credit” scores under state-approved pilot projects.

Over time, regulators became wary of the mounting personal information used by online lending companies and moved to assert greater control over the whole credit-rating matter. In early 2018, it changed tack to crack down on private efforts — including a Tencent-run trial. Beijing subsequently set up Baihang Credit, the only market-based personal credit agency approved by China’s central bank. The government holds a 36 percent stake in Baihang. Ant, Tencnet and several other private firms also got to be part of the initiative, though they play complementary roles and hold 8 percent shares each.

While most countries use credit rating mainly as a financial credibility indicator, China has taken things a few steps further. By 2020, China aims to enrol everyone in a national database that incorporates not only financial but also social and moral history, a program that has raised concerns about privacy and surveillance.


Source: The Tech Crunch

Read More

Lightspeed announces new $560 million fund for China

Posted by on Jan 3, 2019 in Airbnb, alibaba, alibaba group, Asia, China, consumer internet, E-Commerce, Finance, funding, Fundings & Exits, IDG Capital, India, lightspeed, lightspeed venture partners, Meituan, Meituan-Dianping, partner, pinduoduo, social networks, United States | 0 comments

Global investor Lightspeed is starting 2019 with its largest-ever fund for China, where it has backed a number of new internet challengers. The firm announced this week that its fourth China fund has closed with a total capital commitment of $560 million.

The firm had a massive 2018, with no fewer than five of its portfolio holding IPOs including two of China’s up-and-coming startups that are challenging the country’s internet establishment — they are Meituan, the super app firm that specializes in deliveries, and Pinduoduo, a group e-commerce company that is threatening Alibaba’s dominance.

Based on those successes, it is perhaps not a surprise that Lightspeed has pulled in a record new fund. TechCrunch previously reported that the new fund was aimed at $360 million based on filings, but it added more capital to give more options.

Lightspeed said it has $360 million for early-stage deals aimed at Series A and Series B stages, with an additional $200 million set aside for “growth investments.” The new fund dwarfs Lightspeed’s previous vehicles in China — the firm’s previous two China funds each closed at $260 million while it raised $168 million for its debut fund in the country in 2013.

Lightspeed Venture Partners is a well-known investor that is anchored in Silicon Valley with global funds in India, Israeli and — of course — China. Together, those funds manage around $6 billion in capital, according to the firm.

Led by partners Chris Schaepe, Herry Han and James Mi, the China operation has backed a range of unicorns, including the aforementioned Meituan, which raised over $4 billion via a Hong Kong IPO last year, and Pinduoduo, which raised $1.6 billion via a U.S. listing in 2018. Other Lightspeed China IPOs from last year were PPDai, Rong360 and InnoLight while the firm also counts $9 billion-valued Full Truck Alliance, real estate platform Fangdd and Airbnb-like Tujia, both of which are valued in the billions, among the more mature bets in its portfolio.

“We believe there are plenty of new opportunities in China consumer Internet given the depth of China’s mobile payment and social networks. Innovation and entrepreneurship in the next decade will bring more China-based startups to the world stage. This will be China’s first decade of truly global innovation. Chinese entrepreneurs are now developing business plans with global expansion in mind from day one,” said Han, one of the firm’s founding partners, in a statement.

Last year, Lightspeed Venture Partners — the U.S. entity — filed to raise a record $1.8 billion in new capital commitments. In December, it added five new partners to its consumer and enterprise investment teams, including Slack’s former head of growth and Twitter’s former vice president of global business development.


Source: The Tech Crunch

Read More