TikTok’s e-commerce ambitions are back to square one
Plus: how Huawei does government influence, Apple's newest China dilemma and more
Welcome back to ATR,
This week the main focus is on TikTok, which is dealing with the impact of Indonesia banning social commerce—depriving it of its largest e-commerce market.
Elsewhere, Apple is dealing with a potentially serious problem with how it runs the App Store in China. Details of how Huawei tried to influence government officials in Greece have emerged and Su Zhu, a co-founder at disgraced crypto VC firm Three Arrows, was finally arrested in Singapore where he was trying to leave the country.
Reminder, if you’re interested in Web3 (still) be sure to follow my new newsletter which I write with Gary Liu, the former CEO of SCMP
See you again next week with more news and developments from across Asia.
Jon
PS: You can follow news as it happens in the ATR Telegram news channel, there’s also a community chat which has crossed 500 people
News in focus
TikTok’s e-commerce ambitions are back to square one
The timing couldn’t be worse. Just as TikTok brought its Shop business, its most impactful feature and a potentially a very lucrative one, to the US, it lost its footing in Indonesia, to date its biggest e-commerce success story. The country’s government dropped the hammer on all social commerce, TikTok Shop including, due to concerns that it will negatively impact traditional, offline sellers due to predatory pricing and the potential to dominate through algorithms.
Indonesia has pioneered social commerce in Southeast Asia—a report from The Information estimates that TikTok was on track to gross $6B in transactions this year. The country accounts for one-third of Southeast Asia revenue, the report stated. TikTok has around 125M monthly users in Indonesia—which is one of its top markets—and it claims 6M merchants. There’s a suggestion social commerce can live in separate apps but it’s too early to see for sure.
TikTok has been busy, having been given a week to comply or get banned. It sent a team to Jakarta to respond. There’s a lot of moving pieces here right now, but certainly TikTok would have been hoping to put its full focus on growing the Shop business in the highly competitive market. Instead, it is performing emergency surgery in a key market that it likely ticked off as won.
Further reading: Want to Sell on TikTok? For Many Chinese Merchants, It Isn't So Simple. Link
Apple’s newest challenge in China: the App Store
Apple isn’t new to tough situations in China. Over the years, it has dealt with issues around maps, being forced to remove VPNs and other apps, local data storage requirements and more. But its newest challenges look trickier still.
The company is battling a backlash from the tech war between the US and China, with talk of some local governments banning staff from using iPhones. China has distanced itself from these claims, suggesting that there’s no formal restrictions. But the government is very much front and centre with new rules that will restrict what foreign apps can be listed in the App Store.
Apple has been told to remove ‘illegal’ apps from China before—such as VPNs in 2017—but this time around Apple will not be able to offer apps from companies that haven’t registered with the government, and thus must comply with censorship and data rules. The obvious examples are Facebook, Twitter and other services banned in China which would remove a loophole granting China-based users access. But beyond that, it means the Chinese government will effectively govern the App Store. Apps that don’t comply won’t be listed. Right now, China can (and as discussed has) had apps removed. That’s already problematic, but not allowing them to even exist is worse still.
Leaked messages lift the lid on how Huawei lobbied the government in Greece
In the communications, Huawei employees discussed providing gadgets to a senior Greek government minister and his son, giving devices to police and immigration officials and organizing transportation for Greek regulators during an industry conference in the United Arab Emirates in 2021. The messages did not say whether the gifts were ultimately delivered or if deals for the priority projects were signed.
Three Arrows Capital co-founder Zhu arrested in Singapore and sentenced to 4 months in prison
Teneo, a financial advisory firm controlling the liquidation and management of affairs for the defunct crypto hedge fund, said it got a “committal order” against Zhu after he failed to comply with court orders to cooperate with the liquidation investigation.
This sentence is just the start—it is for not being compliant in the bankruptcy process—but it’s crazy that this has taken so long. His co-founder Kyle Davies remains a free man. His whereabouts are unknown.
China
VCs, private equity firms, banks and other financial institutions in the US are pushing for greater clarity on “broad” laws that will restrict American investments in some Chinese technology sectors link
The proposed rule applies to U.S. persons - including U.S. citizens, residents, businesses and U.S. units of overseas businesses. They must notify the Treasury when making certain investments in China in the semiconductors and microelectronics, artificial intelligence and quantum information technologies sectors, and bans other such investments altogether.
Meanwhile China is relaxing rules on the transferring of data outside of the country amid complains from foreign companies and continued economic struggles link
Chinese streaming platforms were told to not broadcast some esports matchups at the Hangzhou Asian Games, casting a shadow over the billion-dollar arena of professional gaming—one reason platforms were told to only stream the finals and semifinals appears to be concerns around feeding internet addiction link
State investment firm China Reform Holdings is reportedly readying a new $14B fund to invest in “strategically important emerging industries in the country” link
But that’s not to say all state funds get backing—economic concerns are said to be the reason a $41B fund for domestic semiconductor investment is struggling to raise link
Tencent-backed AI chip startup Enflame raised $274M from state-linked investors link
Alibaba and Tencent have forged more links between WeChat and Taobao/Tmall—one fenced off from each other—to help each other battle tough economic conditions link
Cainiao—the Alibaba logistics unit—filed for$1B IPO in Hong Kong, that would be the the world’s second-biggest listing of 2023 link
TikTok employees are concerned that executives moving to the US demonstrate Chinese parent ByteDance still retains strong influence on the US business link
Suspected China-based hackers target Middle Eastern telecom, Asian government link
The US and Japan say ‘BlackTech’ Chinese government hackers are exploiting routers as part of new, sophisticated attacks link
The hacking group Budworm, also known as Emissary Panda and APT27, is believed to be based in China. Last year, it attacked a U.S. state legislature using a Log4j vulnerability.
In its most recent campaign in August, Budworm used a previously unseen version of its custom backdoor called SysUpdate to spy on the unnamed telecom company Asian government body, as reported by Symantec researchers.
The British government is moving to rip Huawei out of telecom networks, and this is apparently why Sky’s mobile service suffered an outage—industry experts predict many more will come as part of core network changes required by the government link
Hong Kong
Crypto custody business Mixin said hackers stole $200M in assets link
Experts say the JPEX scandal—which saw the crypto exchange implode, leaving customers without some $182M in assets—has eroded public trust in crypto currencies and set back Hong Kong’s ambition to be a hub for digital assets and Web3 link
India
Dunzo has been cost-cutting and it could raise $30-35M more from Reliance, Google, others but deal terms are thought to be rough and further downsizing may still be required after the cash infusion link
GIC in talks to lead a $40M funding for Vegrow, which runs a business-to-business marketplace for fruit link
Google launches earthquake alerts on Android in India link
Consumer fintech company Bright Money—which is backed by Peak XV—raised $62M, that’s double its Series A two years ago link
India’s fantasy sports industry, which was just hit with rising taxes, has seen a number of firms hit with notices demanding they pay millions of dollars in back tax link
India is planning to set up a separate body for data management, according to a draft bill link
Saregama, India’s oldest record label, has bought a majority stake in short video platform Pocket Aces for $20M link
Southeast Asia
Malaysia is aiming for chip comeback as Intel, Infineon and more pile in to offset their reliance on China link
Japan
Japan has allocated $1.2N in subsidies for Micron's Hiroshima chip plant link
A look at how TSMC’s new chip plant in Kikuyo is shaking up the small town in Japan with issues like congested traffic, a talent war, increasing salaries and less graduate migration. The plant is projected to create 1,700 jobs and generate $29B for the local economy over the next decade link
South Korea
US will reportedly extend an indefinite waiver to allow South Korean firms such as Samsung and SK Hynix to continue to send certain US chip-making tools to China link
China's wolf diplomacy is coming home to roost. What is the point of building global corporations if you sabotage your own reputation on the geopolitical stage?