TikTok’s US struggle underlines the importance of Asia
TikTok’s US struggle underlines the importance of Asia
The US wants to ban TikTok; Indonesia encouraged union with its largest e-commerce firm
Welcome back,
The biggest story in Asia tech isn’t happening in Asia. It’s from the United States, as seems to increasingly be the case. This time we’re not talking about chip wars, it’s TikTok.
The US didn’t act on its long-standing concern that TikTok has access to 170 million US-based users' data, or that it has a platform to set the national agenda. It didn’t believe that its Singapore-based (and born) CEO can act independently, without influence from China. So now, it is weighing options that could force the sale of the app. Yep, that’s deja vu and a callback to the Trump White House era, but this time it could have consequences.
Elsewhere, Alibaba continues to rebuild the base of its battered business, Foxconn is looking like it’ll have a massive year, there’s more media dealings in India and Tesla might finally get serious about Southeast Asia. Finally, this is an insightful listen on the challenges of VC investing in Southeast Asia from two VCs in Southeast Asia.
That’s all for this recap, have a great week,
Jon
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China
Southeast Asia just became *even* more important for TikTok
The chaos around TikTok in the US is back again. In case you missed it, the White House passed a bill that would force ByteDance to sell the social media business or face a ban in the country—where it has 170 million users. Getting things done in American politics is a long and complicated process, but the bill passed by an overwhelming majority which indicates there could be something to worry about for ByteDance.
We’ve been in this position before, of course, when former President Trump tried to force investment from a US entity into TikTok to dilute the Chinese ownership. (Remember a highly-unorthodox Oracle and Walmart deal proposal from 2021?!) That plan collapsed when Trump left office, but now—to the surprise of few—Trump has taken a different perspective, that banning TikTok would be bad as it will enable Facebook to grow.
It’s hard to read the US political tea leaves but, given TikTok was booted from India in 2020, a couple of things become very clear: just how important Asia is to the TikTok business; and how different it is doing business with governments in Southeast Asia.
Indonesia, for instance, allowed TikTok to merge with local e-commerce firm Tokopedia without concern, even though it carries the same risk the US government is moving to combat—it probably also violates Indonesia’s new law on social commerce not to mention antitrust.
Other countries have embraced TikTok as an opportunity to encourage local business, and help put them on the map.
I idly wonder what the right approach is, and whether lesser economic powers than the US simply don’t have the same leverage. TikTok would love to be back in India, but that ship has sailed and it has indeed been a windfall for Facebook as Instagram has moved into the void. Its prospects in markets like Indonesia, where it has 125 million users and the opportunity to push its e-commerce business, looks far rosier.
We’ll wait to see what happens in the US, but I’m expecting that—once again—even greater emphasis will be placed on Asia, and Southeast Asia in particular.
In related news:
TikTok looks like it is testing an Instagram competitor in the US market
Former treasury secretary Mnuchin is assembling a consortium to potentially buy TikTok
TikTok’s US revenues hit $16B (not word on how sustainable that is, though)
China
Alibaba continues to rebuild its foundations with a new employee incentive plan starting in April that combines equity with cash, a significant adjustment designed to help the e-commerce giant attract and retain talent despite fierce competition link
Alibaba’s AliExpress is first online marketplace to face DSA investigation by EU link
As Temu, Shein and other low-cost e-commerce grow there’s more reporting on the negative impact: Wired looked at how influencers on TikTok, Reddit and other platforms earn incentives to sell “replica” products that originate from China link
Then there’s this FT story on how PDD, the parent company behind Temu, has enforced staff surveillance and non-compete clauses—rules for executive-level hires—to prevent any of their workers joining rival companies link
JD.com has walked away from a deal to buy British retail giant Currys after a disagreement on price—notably, its arch rival Alibaba is rethinking its offline commerce plan link
AI was a key topic discussed by the business and political elite attending China’s annual legislative gathering last week as the country tries to catch up with the US link
But China is said to being fall short of matching US advances in AI owing to ‘many challenges in theory and technologies’ link
Apple is enlarging its applied research operations in mainland China, as iPhone sales slow in the world’s largest smartphone market amid increased competition from Huawei and other domestic rivals link
Xiaomi will start deliveries of its first EV model—that news sent its share price soaring link
AI start-up AIsphere, which compares itself to OpenAI’s text-to-video service Sora, raised $14M link
How livestream realtors helped make ‘tropical’ town Xishuangbanna a hot real estate market despite an industry downturn in China link
China instructed EV makers including BYD to Geely to increase their purchases from local auto chipmakers link
Wired tested China's top three autopilot systems to see just how far ahead they are of GM, Tesla and other US rivals link
Hong Kong
Hong Kong launched its stablecoin sandbox aimed at further digitising its financial services industry link
Alibaba Digital Media and Entertainment Group (ADME) will inject $640M into Hong Kong’s entertainment industry, with funds to be spread across movies, TV dramas, events and training for the city’s emerging artists link
Taiwan
Foxconn expects a big revenue jump in 2024 after slow start to the year amid booming AI demand—Q4 net profit rose by 33% to $1.7B and there could well be more to come thanks to demand for AI servers link
Taiwan is racing to do what no country or even company has been able to: build an alternative to Starlink link
India
Chinese smartphone maker Transsion has ambitious plans for India after big successes in Africa, Pakistan, and Bangladesh link
Investment fund A91 Partners is raising its largest fund at $700M-$750M link
Teachers’ Venture Growth, the late-stage investment arm of Ontario Teachers’ Pension Plan, is investing $80M in Perfios, which provides real-time credit underwriting solutions to financial institutions, at a valuation of over $1B link
Paramount Global to sell stake in India’s Viacom18 to Reliance for over $500M—the deal comes weeks after Viacom18 announced a merger with Disney’s India unit link
Paytm secured a third-party app license that will enable it to continue to offer core services in its popular payments app, even as its banking unit, Paytm Payments Bank, ceases operations link
Newlands VC, the secretive investment firm bankrolled by WhatsApp co-founder Jan Koum, is leading a $10M investment into SuperAGI, an ambitious Indian startup with full-stack AGI ambitions link
India has dropped China-style plan to require approval for AI model launches link
India’s antitrust regulator has ordered an investigation into Google, alleging the tech giant abused its dominant position in the country’s online market by imposing unfair terms and discriminatory practices in its app store link
Southeast Asia
Malaysia is emerging as an unexpected winner in the US-China chip wars as tech firms seek more neutral ground for development and manufacturing—and the talent to make things work link
It has a 50-year history in the “back end” of the semiconductor manufacturing supply chain: packaging, assembling and testing chips. But it has ambitions to move up to the front end of a $520bn global industry that powers everything from televisions to smartphones and electric vehicles. That includes higher value activities such as wafer fabrication and integrated circuit design.
Peak XV is creating an “evergreen” fund bankrolled by its investment partners and extended team, as the venture firm seeks to become a significant LP in the firm’s future vehicles and explore investment in different asset classes link
Tesla official talks up Southeast Asia expansion as China's BYD pulls ahead link
OKX became the latest crypto exchange to snag in-principle license approval in Singapore link
Singapore-based startup Silicon Box plans to spend €3.2B ($3.5B) to build a chip factory in the north of Italy link
Japan
SoftBank is said to be exploring a potential investment in French AI startup Mistral AI, which has emerged as one of European’s hottest generative AI companies—having closed a $415M round at a $2B valuation in December link
CEO of the studio behind hit game Palworld explained his company’s success and why they’ll stick to smaller titles rather than going big budget link
South Korea
South Korea plans to build a crypto-focused asset management system by 2025 to prevent tax evasion ink
Samsung and SK Hynix, the world’s leading memory chipmakers, have stopped selling used chipmaking equipment for fear of falling foul of US export controls on China and western sanctions on Russia Link
Alibaba plans to invest $1.1B in South Korea over the next three years to build a logistics centre and expand businesses to take on local champion Coupang link
In related news: South Korea is getting tough with Chinese platforms, which are now required to set up local offices in Korea to properly handle customer issues link
Startups in South Korea are stepping up their efforts in designing chips to tap the fast-growing global market for AI computing—Samsung and the government are giving some a helping hand link
The US plans to award more than $6B to Samsung, helping the chipmaker expand beyond a previously-announced project in Texas link