China Tech News

Apple made big news last week when its mobile payment service Apple Pay entered China. But China's upstart mobile phone brand Xiaomi is fighting back.

China's Xiaomi acquired a 65% stake in Jiefu Ruitong, a Chinese third-party payment service provider for an undisclosed sum.
Jiefu Ruitong reportedly completed an equity change on January 20, 2016, but it's only now that the full information about the deal is hitting the media. After the change, Xiaomi holds a 65% stake in the company and Hohhot's Shengyin Herui holds a 32% stake.
Lei Jun, founder of Xiaomi, is legal representative and chairman of Jiefu Ruitong. Meanwhile, the latest registered capital of Jiefu Ruitong has reached CNY100 million.

Jiefu Ruitong is the operator of the third-party payment system Ruifutong. By the end of November 2011, Ruifutong claimed to have over two million users, realized more than CNY2 billion annual trading, expanded over 100 cooperating partners, and established over 20,000 owned channels. This information comes from Ruifutong's website, and updated data is not immediately available.

Jiefu Ruitong was initially established by Hohhot's Shengyin Herui with an investment of CNY100 million. It is a high-tech enterprise engaged in third-party payments, and it has been approved by the People's Bank of China. It is also the only organization in Inner Mongolia that can operate Internet payment and mobile phone payment businesses across the country.


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U.S.-based hard drive manufacturer Western Digital Corp. announced that China's Unisplendour Corporation has cancelled the USD3.775 billion investment agreement it originally reached in September 2015.

According to the agreement, Unisplendour and its fully-owned subsidiary UNIS Union Information System Limited would subscribe Western Digital's 40.815 million new shares at the price of USD92.5 per share and the total transaction value would reach USD3.775 billion, which is about CNY24 billion. If the transaction was completed, Unisplendour would hold a 15% stake in Western Digital, making it the largest shareholder of the latter.

However, the transaction was aborted due to the intervention of Committee on Foreign Investment in the United States. Unisplendour received a written notice from CFIUS, stating that the committee intended to open an investigation into the investment. Based on the agreement between Unisplendour and Western Digital, if the investment was not free from the investigation of CFIUS, either party could unilaterally terminate the agreement. Therefore, Unisplendour's board decided to cancel the investment, as they appeared afraid of the eventual findings.
In spite of the investment cancellation, the joint venture project of the two parties will proceed on schedule. In November 2015, Unisplendour and Western Digital announced plans to establish a joint venture, with USD80.58 million investment from Unisplendour and USD77.42 million investment from Western Digital.


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Qualcomm reached a new patent license agreement with Lenovo Group.

So far, China's five leading smartphone manufacturers, including Xiaomi, Huawei, TCL, ZTE, and Lenovo, have signed new patent license agreements with Qualcomm.

Neither Qualcomm nor Lenovo released any financial details about the agreement. However, they said Lenovo will pay patent fees to Qualcomm for their 3G and 4G cellular technologies sold in China, which is in line with the anti-monopoly provisions agreed by Qualcomm in China in 2015.

Qualcomm said the company has signed over 80 new patent license agreement in China. As the world's leading smartphone processor and modem chip manufacturer, about half of Qualcomm's profits were from cellular technology patent licensing.

In February 2015, Qualcomm started a new round of patent license negotiations with Chinese smartphone makers after the anti-monopoly investigation in China. As the results of the anti-monopoly investigation were released, Qualcomm agreed to pay a penalty of USD975 million and changed some terms and conditions in its license agreement that influenced sales in China. Based on those terms and conditions, Qualcomm spent longer time in closing the agreements, which caused the company to lower its quarterly financial expectations in November 2015.

Chinese map and navigation services provider AutoNavi announced that by the end of January 2016, the number of its map users reached over 500 million and the number of its active users increased by over 100% in 2015.
According to Chen Yonghai, product vice president of AutoNavi, the Chinese map application industry will face a new era of heightened competition.

AutoNavi was established in 2002, and is the first Chinese private company that gained the class A mapping qualification for navigation electronic map. It is the only Chinese private company that has the class A qualification for aerial photography. So far, AutoNavi has collected over 50 million pieces of POI data and over 5.3 million kilometers of road data. In addition, it can realize real-time updates of traffic information of over 360 Chinese cities.
In July 2009, AutoNavi launched mobile map services and started providing mobile map navigation services to Chinese mobile users. To date, the company has accumulated over 500 million users.

Chen said for the year of 2016, AutoNavi will enhance innovative products while keeping its advantages in navigation and traffic data. The company will focus on user demands in more areas such as Internet of Vehicles, resorts, voice navigation, and external cooperation.

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Lianluo.com invested USD75 million to participate in the third round financing of Razer and the two parties will begin cooperating in the virtual reality sector.

According to the agreement signed by the two parties, Lianluo.com's investment will focus on supporting the development of Razer's VR business and its research and development in smart hardware. In return, relying on its branding and sales channels in North America and the world, Razer will help Lianluo.com develop overseas markets.
He Zhitao, chairman of Lianluo.com, said that the reason for investing in Razer is because of its achievements in the VR sector and the complementary advantages of the two parties. Razer's advantages in hardware will reinforce the existing VR ecosystem of Lianluo.com.

Chen Minliang, founder and chief executive officer of Razer, said that the new investment from Lianluo.com will become great help for Razer's expansion in VR and other smart hardware sectors.

The investment in Razer marks Lianluo.com's new move in the virtual reality market. Prior to this, the company established a smart home joint venture with Haier; acquired smart wearable medical enterprise Dehaier Medical; and invested in mobile hardware peripheral enterprise Kuner.

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Alibaba's Alipay affiliate controls how Chinese netizens spend their money; and now Alibaba Group owns a lottery operator and controls how Chinese consumers waste their money.

According to news from China Money Network, Hong Kong-listed lottery operator AGTech Holdings Ltd. is selling HKD1.68 billion of shares and HKD712.6 million of convertible bonds to a company owned by both Alibaba Group and Alibaba's affiliate Ant Financial.

AGTech claims to cover about 80% of mainland China, and the deal with Alibaba will help expand its services throughout the nation.
The lottery company also says only less than 10% of mainland Chinese consumers participate in the lottery, compared with 56% in Hong Kong. So the company says there is still lots of growth potential in spreading the ills of the lottery to many more people.


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South Korea's distribution company Youmi announced that they have signed an agent agreement with Chinese smartphone maker Xiaomi and the company will be fully responsible for the sale of some Xiaomi products in South Korea.

This agreement marks Xiaomi's formal entry into the South Korean market.

Under the agreement, Youmi will be responsible for the sales of several Xiaomi products, including sport wristbands and mobile power banks in South Korea. However, the agreement did not cover smartphones, TVs, tablets, or routers. Financial terms were also not disclosed.
Youmi said that Xiaomi has a large number of fans in South Korea, which proves Korean customers' recognition of Xiaomi's product quality and price competitiveness.

In 2015, Xiaomi launched its English-language online store. So far, this online store also only provides accessories like mobile power banks and earphones; and no smartphones or tablets are available.


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During the three months ended January 2016, the growth of Apple's iOS smartphones slowed in Chinese urban areas; however, it was still the most popular smartphone brand with 25% market share.

According to the latest statistics released by smartphone market research firm Kantar Worldpanel, Apple's growth slowdown may be attributed to Chinese consumers' waiting for the promotional activities during the Chinese New Year at the beginning of February.

In spite of the growth slowdown, which is the slowest since the end of 2014, Apple was still the most popular smartphone brand in Chinese cities and its market share was 25%. Its most popular models were iPhone 6s, iPhone 6s Plus, and iPhone 6.
Meanwhile, the report stated that Huawei was the second popular brand in Chinese cities with 24.3% market share; and Xiaomi, whose market share decreased by 10.2 percentage points year-on-year, ranked third.

In addition, Huawei showed outstanding performance in the European market and it was the second most popular Android smartphone brand in Europe. Its market share in Europe increased from 5% in the same period of last year to 14%. Huawei plans to launch its new flagship smartphone product on April 6, 2016.

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B2C e-commerce giant JD.com announced that they will develop opportunities in the huge Chinese rural market and plan to open physical specialty stores in 10,000 towns in 2016.

According to reports in Chinese local media, Yan Xiaobing, JD Group's vice president and president of the home appliances business unit, said that JD achieved a large growth by developing in the rural market and its home appliances business held nearly 30% share of the Chinese rural market. They aim to increase the ratio to 50% in 2016.

Yan revealed that JD will adopt the franchising model and serve the existing rural home appliances stores which want to transform to an O2O model. JD's home appliances specialty stores will be opened by towns, and each town will have only one such store to realize regional protection. JD will provide various services to those specialty stores, including warehousing, delivery, installation, and maintenance; while its franchisees only need to focus on sales.

With those specialty stores, JD will break the layers of price increases of traditional channels and regional price fixing to realize unified retail prices across the country, allowing rural consumers to enjoy the same products, services and prices as consumers in cities.


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Are more Chinese netizens using chat apps and VoIP than speaking on their mobile phones? The latest financial results from China Mobile appear to show traditional phone calls are not keeping pace with modernity.

Chinese telecom operator China Mobile published its annual performance for 2015, stating that the company achieved operating revenue of CNY668.3 billion in 2015, a year-on-year increase of 2.6%; and its profit attributable to shareholders was CNY108.5 billion, a year-on-year decrease of 0.6%.

China Mobile's communications service revenue was CNY584.1 billion, a decrease of 1.3% year-on-year. At the same time, the company's data business income exceeded voice service income for the first time, accounting for 52% of the total communications service revenue.

During the year, the company's mobile data traffic increased by 143.7% year-on-year; the data usage per user of its mobile Internet users increased by 118.5% year-on-year; and its mobile Internet revenue increased by 30.5% year-on-year to CNY200.9 billion. Mobile apps are a main driver for this surge.

While publishing its annual performance, China Mobile also released its operating statistics for February 2016. The report showed that China Mobile added 24.8 million new 4G users in February, reaching a total of 360.4 million; and it realized a net increase of 2.7 million mobile users, reaching a total of 831.3 million.

However, with the large increase of 4G users, the number of its 3G users continued to decrease. During February, the company lost 5.863 million 3G users to a total of 157.132 million.

In addition, China Mobile published its broadband user group stats for the first time. In January and February 2016, China Mobile achieved net increases of 1.496 million and 1.406 million cable broadband users, respectively; and the total number of its cable broadband users reached 57.931 million.


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