Alibaba’s old boys continue to ring the changes
Nearly a decade after its record $25B IPO, the once dominant firm has been surpassed by nimbler rivals shein and temu
Welcome back,
This week’s issue is shorter (and later) than usual, with a focus on Alibaba—which still holds the record for an IPO in the US. That’s remarkable given that the prospect of any Chinese company listing in America is remote today. Simply existing in the US is tough for any firm with Chinese links—just ask TikTok.
Alibaba, though, is attempting a rebuild from the ground up via its original founders, who this week continued to jettison assets and reshape its business to compete more evenly with newer rivals including Temu and Shein. Those two companies are now setting their sights on Amazon, which is also having to adapt. It’s a tough ask for Alibaba, and we are certain to see a lot more changes coming.
Have a great week—we’ll be back in your inbox in the coming days with an original story.
All the best,
Jon
Alibaba’s old boys continue to ring the changes
It’s nearly a decade since Alibaba held the largest ever US IPO, raising around $25 billion from its listing on the New York Stock Exchange.
Incredibly, the company’s share price today ($71) is barely above the listing price of $68. It seemed improbable back then that Alibaba, with the world at its feet, could come full circle and be humbled by newer rivals but that’s exactly what has happened.
This week, we put the focus on how Alibaba continues to ring the changes to its business as it looks to rebuild and modernise. Notably, original Alibaba co-founders Jack Ma and Joe Tsai have become the company’s largest shareholders after a spree of share purchases pushed their holdings beyond SoftBank, which has been selling in contrast.
This change makes Alibaba a fascinating company to watch as it tries to find its touch again. We’ve already seen it divest offline retail assets, push more Temu and Shein-like services and this past week the changes continued to roll:
Alibaba sold $360M of shares in streaming service Bilibili reportedly at a significant discount as it continued to reshape its business and dispose of unwanted assets link
The company suspended operations of Ling Shou Tong, its online platform that helps mom-and-pop shops source their products link
It also brought five-day delivery on AliExpress to US via Cainiao in battle against younger rivals Shein and Temu link
On the more cutting-edge side, its Damo Academy technology arm plans to launch latest version of its XuanTie RISC-V processor this year link
Ant Group to restructure part of its operations into several independently run business units and promote its finance chief to oversee what China’s dominant electronic payments service calls a “series of organisational changes” to spur its growth. Ant International, OceanBase, and Ant Digital Technologies will each set up a board of directors as an independently operated business unit link
China
Temu aims to lessen its reliance on US shoppers link
The U.S. accounted for 60% of total merchandise sales on Temu last year, but Temu is now hoping to reduce that percentage to as low as 30% by next year, according to two people briefed by company executives. The site is expanding in markets including Europe, the Middle East, Japan and South Korea, the people said, and telling its merchants to prioritise stocking up on products that are popular in those regions.
E-commerce giant PDD beats quarterly revenue estimates as Temu shines link
PDD on Wednesday reported revenue of 88.88 billion yuan (US$12.35 billion) for the three months to December 31, compared with an average analyst estimate of 79.23 billion yuan.
The last quarter’s year-on-year revenue growth of 123 per cent follows a 94 per cent increase in the third quarter, with both comparable periods in 2022 impacted by China’s strict pandemic controls.
After finding success with small brands and retailers, Shein now plans to market its unique supply-chain technology to global brands to step on the toes of Amazon, Alibaba and others link
Hence why Amazon is training its attention on emerging e-commerce players Temu and Shein, viewing the newer platforms as significant threats to its online shopping dominance. link
Xiaomi Q4 2023 revenue rises 11%, beats estimates link
Xiaomi aims to begin deliveries of its first vehicles in China this month through 59 of its stores across 29 cities. Market watchers expect to learn the price at a March 28 launch event.
During the earnings call, Xiaomi President Lu said the company aims to secure third position in the battery-powered luxury sedan segment. He did not provide detail on how Xiaomi plans to achieve this goal.
Tencent posted weak revenue growth of 7% but the firm said it plans to double the size of its share repurchases from HK$49B in 2023 to over HK$100B ($12.78B) in 2024 link
Meanwhile its Tencent Music affiliate saw profit climb by 36% in 2023 to $735M despite revenue declining by 2% to $3.91B link
TikTok spent years developing a data security plan to appease US concerns but Washington ignored it link
In the past couple of years, TikTok has spent $1.5B and restructured its operations to appease a federal government committee reviewing national security risks posed by the company’s hugely popular app. TikTok has installed cumbersome internal restrictions on its U.S. operations, requiring a separate data security unit to review everything from app updates to creator emails, much to the frustration of employees.
The flaw in that strategy is now apparent. Last week’s lopsided vote in the U.S. House of Representatives in favor of a bill to force TikTok to either cut ties with its Chinese parent, ByteDance, or face a U.S. ban, illustrates how badly management misread the political situation in TikTok’s most important market by revenue. They thought they could solve the issue by focusing on technical issues around data security, walling off TikTok’s U.S. user data on servers managed by Oracle. TikTok leaders didn’t understand how politicized the issue had become, some employees say.
US is said to be weighing sanctions against Huawei’s secretive Chinese semiconductor supply network, which has enabled it to continue building devices—companies impacted could include chip makers Qingdao Si’En, SwaySure, and Shenzhen Pensun Technology link
Chinese chip maker SMIC ‘potentially’ broke US law to make Huawei’s 7-nm smartphone processor, lawmaker says link
Apple has held preliminary talks with Baidu about using the company’s generative artificial-intelligence technology in its devices in China. link
Meituan continued its comeback as Q4 revenue grew 23% white losses narrowed—the company posted 73.7B CNY (US$10.2B) in revenue for the three months ended December 31 link
China has produced a huge number of top AI engineers in recent years—new research shows that, by some measures, it has already eclipsed the US. link
India
Reuters looks at the drama behind India’s controversial move to force licences on electronics makers—a move that was quickly scrapped following pressure from the US government link
In August, India imposed rules requiring firms like Apple, Dell, and HP, to obtain licences for all shipments of imported laptops, tablets, personal computers and servers, raising fears that the process could slow down sales. But New Delhi rolled back the policy within weeks, saying it will only monitor the imports and decide on next steps a year later.
Nvidia has backed a little-known Indian AI startup, Yotta, in a deal described as its biggest bet on India to date link
Audio platform Pocket FM has secured $103M in Series D funding led by Lightspeed Ventures as it aims to expand into Europe and Latin America after looking at positive results in the US market link
That deal reportedly values Pocket FM at $1.2B, making it India’s newest tech unicorn link
Health monitoring device maker Ultrahuman raised $35M link
The entrepreneurs behind Microsoft-backed Builder.ai, one of the UK’s best-funded technology startups, have been named by authorities in India in relation to high-profile criminal probes in the country. Sachin Dev Duggal has been described as a suspect in a money laundering investigation, while Saurabh Dhoot is accused in the charge sheet of a loan fraud case, according to court documents. link
Sameer Brij Verma, a high-profile investor at the Indian venture firm Nexus, will leave the fund to launch his own with a planned initial kitty of $150M link
Southeast Asia
Shopping rewards startup ShopBack is cutting about a quarter of its workforce as it retreats from the buy-now-pay-later space link
GoTo plans to buy back as much as $200M of stock after recording its first-ever profit on an adjusted basis link
Logistics provider Ninja Van has put plans for a stock market debut on the back burner, the latest sign of tech startups’ struggles with falling valuations across the industry link
The Alibaba-backed delivery company is focusing on improving its profitability before going ahead with an initial public offering, Chief Executive Officer Lai Chang Wen told reporters in Singapore on Monday. The company expects to reach positive earnings before interest, taxes, depreciation and amortization in 12 months, he said.
Crypto gaming is heating up again in the Philippines link
Grab now lets users in Singapore reload their payment wallet using selected cryptocurrencies in what appears to be a trial limited to one country for now—rolling it out more broadly could be tricky since crypto for payments is banned in some Southeast Asian countries link
China-linked hackers target governments and more in Southeast Asia with new backdoors link
B Capital has closed its second Opportunities fund at $750M link
Indonesia’s e-bike shops are building their own batteries to overcome the current challenges of battery life and swapping link
The Philippines' new undersea internet cable network is expected to bring jobs to remote islands, boosting the country's BPO sector, which employed 1.7M in 2023 link
Japan
Sakana AI, a Tokyo-based artificial intelligence startup founded by two prominent former Google researchers, released open-source AI models it said were built using a novel method inspired by evolution link
TSMC is considering an advanced chip packaging capacity in Japan, sources say link
South Korea
Terraform co-founder Do Kwon is being released from prison in Montenegro, but he will remain in the Balkan nation as he faces criminal charges brought by authorities in several countries link
Samsung has set up a research lab dedicated to designing an entirely new type of semiconductor needed for artificial general intelligence link
Nvidia supplier SK Hynix begins mass production of next generation memory chip link
South Korea’s Nvidia wannabe, AI chip start-up Rebellions, to begin mass production of NPUs with support from Samsung link
Rest of Asia
The UN is probing 58 alleged crypto heists by North Korea worth $3B link