Tag: China

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China’s Alipay digital wallet is entering 7,000 Walgreens stores

China’s payments heavyweights have been following tourists abroad as their home market gets crowded. Ant Financial, Alibaba’s financial affiliate with a said valuation of $100 billion, now sees its virtual wallet Alipay handling transactions at 3,000 Walgreens stores in the U.S. and is eyeing to reach a roster of 7,000 locations by April.

The alliance will make it breezier for Chinese tourists eager to pick up vitamin supplements and cosmetics from the pharmacy giant, doing away the hassle of carrying cash around. There’s also an economic incentive as Alipay and its payments peers typically charge lower foreign transaction fees than credit card firms.

Walgreens products are already available to Chinese shoppers through Alibaba’s Tmall online marketplace, which connects customers to brands. It competes with JD.com to bring high-quality overseas products to the country’s increasingly demanding consumers.

According to a Nielsen report released last year, more than 90 percent Chinese tourists said they would use mobile payment overseas if given the option. Digital payments have become a norm in China’s urban centers and top policymakers are planning to replicate that cashless ubiquity among rural villagers by 2020, announced a set of new guidelines this week.

Ant Financial is continuing its aggression in North America despite a major fiasco last year when the U.S. government killed its $1.2 billion plan to buy money transfer firm MoneyGram, a deal that could boost Ant’s global remittance capability. Within the American borders, Ant has tapped into its partners’ retail networks. By March last year, Alipay was accepting money across 35,000 merchants through its tie-up with local payments processor First Data.

alipay us walgreens

Alipay is currently available at 3,000 Walgreens stores in the U.S. / Photo: Ant Financial

Digital payments are especially popular with first-time outbound tourists, many of whom hail from smaller Chinese cities and may not own international credit cards. According to a recent report published by Ant, the number of people from third-and-fourth-tier cities who used Alipay abroad was up 230 percent during this past Lunar New Year.

“This really highlights how mobile payment is taking root in China’s outbound tourism market,” said Janice Chen, head of the business operation for Alipay’s cross-border unit. Overseas usage from travellers born between 1960 and 1979 similarly saw robust growth last week.

Alipay’s big push into North American also includes its foray into Canada. In one instance, diners in Vancouver, Calgary and Edmonton — destinations that draw a lot of Chinese tourist and students — can now use Alipay to order food and skip restaurant lines. The setup comes from a deal between Ant Financial and Canadian food startup ClickDishes.

Alipay’s archrival WeChat Pay has also flexed its muscles overseas. To chase after Chinese tourists, the Tencent-owned wallet recently pushed into Japan through a partnership with chat app Line. In Hong Kong and Malaysia, WeChat has attempted to get a slice of the indigenous payments market by running localized versions of the wallet and luring users with money. During Lunar New Year, WeChat Pay shelled out millions of digital hongbao — red packets filled with cash traditionally handed out during the festive period — to users in these two regions.

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China’s Alipay digital wallet is entering 7,000 Walgreens stores

China’s payments heavyweights have been following tourists abroad as their home market gets crowded. Ant Financial, Alibaba’s financial affiliate with a said valuation of $100 billion, now sees its virtual wallet Alipay handling transactions at 3,000 Walgreens stores in the U.S. and is eyeing to reach a roster of 7,000 locations by April.

The alliance will make it breezier for Chinese tourists eager to pick up vitamin supplements and cosmetics from the pharmacy giant, doing away the hassle of carrying cash around. There’s also an economic incentive as Alipay and its payments peers typically charge lower foreign transaction fees than credit card firms.

Walgreens products are already available to Chinese shoppers through Alibaba’s Tmall online marketplace, which connects customers to brands. It competes with JD.com to bring high-quality overseas products to the country’s increasingly demanding consumers.

According to a Nielsen report released last year, more than 90 percent Chinese tourists said they would use mobile payment overseas if given the option. Digital payments have become a norm in China’s urban centers and top policymakers are planning to replicate that cashless ubiquity among rural villagers by 2020, announced a set of new guidelines this week.

Ant Financial is continuing its aggression in North America despite a major fiasco last year when the U.S. government killed its $1.2 billion plan to buy money transfer firm MoneyGram, a deal that could boost Ant’s global remittance capability. Within the American borders, Ant has tapped into its partners’ retail networks. By March last year, Alipay was accepting money across 35,000 merchants through its tie-up with local payments processor First Data.

alipay us walgreens

Alipay is currently available at 3,000 Walgreens stores in the U.S. / Photo: Ant Financial

Digital payments are especially popular with first-time outbound tourists, many of whom hail from smaller Chinese cities and may not own international credit cards. According to a recent report published by Ant, the number of people from third-and-fourth-tier cities who used Alipay abroad was up 230 percent during this past Lunar New Year.

“This really highlights how mobile payment is taking root in China’s outbound tourism market,” said Janice Chen, head of the business operation for Alipay’s cross-border unit. Overseas usage from travellers born between 1960 and 1979 similarly saw robust growth last week.

Alipay’s big push into North American also includes its foray into Canada. In one instance, diners in Vancouver, Calgary and Edmonton — destinations that draw a lot of Chinese tourist and students — can now use Alipay to order food and skip restaurant lines. The setup comes from a deal between Ant Financial and Canadian food startup ClickDishes.

Alipay’s archrival WeChat Pay has also flexed its muscles overseas. To chase after Chinese tourists, the Tencent-owned wallet recently pushed into Japan through a partnership with chat app Line. In Hong Kong and Malaysia, WeChat has attempted to get a slice of the indigenous payments market by running localized versions of the wallet and luring users with money. During Lunar New Year, WeChat Pay shelled out millions of digital hongbao — red packets filled with cash traditionally handed out during the festive period — to users in these two regions.

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CEO of Rappler, a media company critical of the Philippines government, is arrested

There’s serious concern around press freedom in the Philippines after Maria Ressa, the CEO of independent media company Rappler, was arrested last night.

Ressa, who was CNN’s bureau chief in Manila and then Jakarta prior to starting Rappler in 2011, was arrested on cyber libel security charges for an article published in 2012, according to Rappler. The article in question centers around alleged links between Supreme Court Justice Renato Corona and wealthy businessmen around the time of his impeachment.

Wilfredo Keng, a Chinese-born Filipino named in the article, filed a lawsuit in protest at reports that he lent the justice a vehicle and allegations linking him to illegal activities. The National Bureau of Investigation last year concluded it had grounds to file a criminal complaint around the libel claim. That’s despite the fact that the law used to prosecute Rappler and Ressa was passed months after the story was published.

Rappler reports that Ressa, a Time Person Of The Year, was denied bail and spent the night in prison.

Rappler has made its name for its forward-thinking digital-first reporting but also, in no small way, for reporting criticism of controversial President Rodrigo Duterte. Elected in 2016, Duterte has made international headlines for policies that include a violent war on drugs while his diplomatic controversies have included homophobic slurs against diplomats and calling then U.S. President Barack Obama a “son of a whore.”

Duterte has clashed with Rappler regularly. He has accused it of being funded by the CIA and regularly referred to its reporting as ‘fake news’, while Ressa has regularly spoken out against the President in international circles. In a 2016 Bloomberg interview, she detailed how the Duterte administration had turned Facebook into a “weapon” and utilized “patriotic trolling” to silence critics online.

This is far from the first threat to Rappler’s business. Last year, the Philippines’ Securities and Exchange Commission (SEC) revoked its registration for an alleged breach of the country’s constitution.

The SEC’s issue centered around the ownership of Rappler. The company has taken investment from Omidyar Network, the philanthropic fund from former eBay founder Pierre Omidyar, and North America-based media fund North Bridge Media, which counts Quora and Disqus among its portfolio.

Philippines law forbids any overseas ownership of media companies, but Rappler claims its investors used a Philippine Depositary Receipt (PDR) to invest. PDRs don’t provide voting equity or board membership, making them a vehicle for media investments in the country. National broadcaster ABS -CBN is among others to have used them.

There’s plenty of cause for concern over media freedom in Southeast Asia. Two Reuters reporters in Myanmar were arrested in December 2017 and later sentenced to seven years in jail for handling state secrets. The duo, Wa Lone and Kyaw Soe Oo, published an investigation that exposed the execution of 10 Rohingya men by Buddhist villagers and members of the national army.

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CEO of Rappler, a media company critical of the Philippines government, is arrested

There’s serious concern around press freedom in the Philippines after Maria Ressa, the CEO of independent media company Rappler, was arrested last night.

Ressa, who was CNN’s bureau chief in Manila and then Jakarta prior to starting Rappler in 2011, was arrested on cyber libel security charges for an article published in 2012, according to Rappler. The article in question centers around alleged links between Supreme Court Justice Renato Corona and wealthy businessmen around the time of his impeachment.

Wilfredo Keng, a Chinese-born Filipino named in the article, filed a lawsuit in protest at reports that he lent the justice a vehicle and allegations linking him to illegal activities. The National Bureau of Investigation last year concluded it had grounds to file a criminal complaint around the libel claim. That’s despite the fact that the law used to prosecute Rappler and Ressa was passed months after the story was published.

Rappler reports that Ressa, a Time Person Of The Year, was denied bail and spent the night in prison.

Rappler has made its name for its forward-thinking digital-first reporting but also, in no small way, for reporting criticism of controversial President Rodrigo Duterte. Elected in 2016, Duterte has made international headlines for policies that include a violent war on drugs while his diplomatic controversies have included homophobic slurs against diplomats and calling then U.S. President Barack Obama a “son of a whore.”

Duterte has clashed with Rappler regularly. He has accused it of being funded by the CIA and regularly referred to its reporting as ‘fake news’, while Ressa has regularly spoken out against the President in international circles. In a 2016 Bloomberg interview, she detailed how the Duterte administration had turned Facebook into a “weapon” and utilized “patriotic trolling” to silence critics online.

This is far from the first threat to Rappler’s business. Last year, the Philippines’ Securities and Exchange Commission (SEC) revoked its registration for an alleged breach of the country’s constitution.

The SEC’s issue centered around the ownership of Rappler. The company has taken investment from Omidyar Network, the philanthropic fund from former eBay founder Pierre Omidyar, and North America-based media fund North Bridge Media, which counts Quora and Disqus among its portfolio.

Philippines law forbids any overseas ownership of media companies, but Rappler claims its investors used a Philippine Depositary Receipt (PDR) to invest. PDRs don’t provide voting equity or board membership, making them a vehicle for media investments in the country. National broadcaster ABS -CBN is among others to have used them.

There’s plenty of cause for concern over media freedom in Southeast Asia. Two Reuters reporters in Myanmar were arrested in December 2017 and later sentenced to seven years in jail for handling state secrets. The duo, Wa Lone and Kyaw Soe Oo, published an investigation that exposed the execution of 10 Rohingya men by Buddhist villagers and members of the national army.

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Indonesia-focused Intudo Ventures raises new $50M fund

Intudo Ventures, a VC firm focused on Indonesia, has closed a new $50 million fund. This is Intudo’s second fund to date following its $20 million debut last year.

The firm is a relative newcomer to Southeast Asia but a key differentiator is that it is solely focused on Indonesia, which is the world’s fourth most populated country with over 260 million people and the region’s largest economy.

It is also the dominant market for tech and the internet in the region. According to a much-cited report from Google and Singapore sovereign fund Temasek, Indonesia’s online economy will grow to $100 billion by 2025 from $8 billion in 2015. That’s a dominant chunk of the Southeast Asia market, which is predicted to reach $240 billion as a whole.

A Google-Temasek report forecasts significant growth across Southeast Asia, with Indonesia taking the lead

Another factor that separates Intudo from other firms is its approach to working with local partners. Most VC firms in Southeast Asia tend to source their LPs from Singapore, West Asia and China with a smattering of local families or conglomerates who wield influence on the ground in markets. In Indonesia, Intudo claims to have over 20 families among its LP base, as opposed to the conventional approach of two or three.

However, founding partners Eddy Chan and Patrick Yip told TechCrunch that the majority of its capital comes from U.S-based LPs, with no investor providing more than 10 percent of the fund’s capital. Some of its overseas backers include Founders Fund, the family office of former Walgreens CEO Greg Wasson, Japan’s World Innovation Lab and Taiwan’s CTBC Group, according to the partners.

“Indonesia is a market we feel is dominated by about 100 core families, we are back by 20-some of the most influential groups in the market,” Chan said in an interview.

The goal is to help Intudo’s portfolio companies tap into opportunities from those LPs and their business holdings.

“When we sign up LPs, first and foremost we want to be able to engage the network and resources for the startup we invest into. We find a fit and hopefully provide some kind of unfair advantage… a leg up when they want to compete,” Chan explained.

“We’re not biased to any one family, we invest in a purely financially-driven manner,” added Yip.

Intudo Ventures’ founding partners Eddy Chan and Patrick Yip

Yip provides the on-the-ground presence having returned to Indonesia from the U.S. 15 years ago. Chan is in the U.S. for eight months a year, he said, where he spends much of his time seeking out Indonesia talent studying in the U.S. for prospective hiring or incubating new projects.

“We have a long-term view that we either place them in our portfolio, found companies with them or put them in with a Bain, or McKinsey type company,” Chan explained.

Yip formerly operated an investment firm associated with Goldman Sachs and spent time at retail giant CP, Chan, meanwhile has spent time as an investor and co-founded smart light company Leeo before leaving in 2015 following a restructuring.

The fund itself is focused on Series A and pre-A with some Series B with an initial investment of $500,000-$5 million with more for follow-on rounds, the partners explained. But the focus is on doubling down on a few prospects, with the fund slated to do around 12-15 deals through its lifecycle.

Chan said that when it comes to going beyond the fund’s deal range the thesis is to involve its LPs who, he claimed, are keen to invest in Indonesia further down the line. With just a year since Intudo’s debut fund closed that theory has not been tested yet although one early bet, BeliMobilGue just raised a $10 million Series A. Others in the portfolio include co-working venture CoHive, payment gateway company Xendit and fitness startup Ride Jakarta.

For now, at least, Intudo intends to remain laser-focused on Indonesia.

“Down the road will we add other countries? Time will tell,” Chan said. “This is our bread and butter and where we’re strong and what we have committed to for our LPs.”

VCs give us their predictions for startups and tech in Southeast Asia in 2019

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Reddit says government data requests more than doubled in 2018

Reddit has said the number of government requests for user data has more than doubled in 2018 than on the previous year.

The news and content sharing site said in its latest transparency report, posted Wednesday, it received a 752 requests from governments during the year, up from 310 requests a year earlier.

Broken down, that’s 171 requests to preserve account data — up from 79 requests in 2017; and 581 requests to produce user data — up from 231 requests.

Reddit said it complied with 77 percent of requests to turn over user data, and 91 percent of preservation requests. However, the company says it “only processes preservation requests” that originate in the U.S.

For the year, the company said it was asked by the U.S. government to remove “an image and a large volume of comments made underneath it for potential breach of a federal law,” without saying what the post was. But Reddit said it did not comply with the “overbroad” request as the government didn’t demonstrate illegality.

Noticeably absent from the transparency report are any figures relating to national security. There hasn’t been an update since 2016.

The company had posted a warrant canary in its debut 2014 report, confirming that at the time it had “never received a National Security Letter, an order under the Foreign Intelligence Surveillance Act, or any other classified request for user information.” In its transparency report a year later, the notice was removed, indicating that Reddit had received a national security request but was permitted from disclosing it.

We contacted Reddit for comment but didn’t hear back at the time of writing.

Reddit, a platform known for its freedom of speech (sometimes infamously) has come under increase scrutiny by its users in recent days following a $300 million Series D investment from Chinese tech giant Tencent, prompting the mass posting of Winnie The Pooh, a symbol said to represent Chinese president Xi Jinping, as a protest against Beijing’s vast internet censorship.

In response to questions taken by users following the posting of its transparency report, Reddit chief executive Steve Huffman, who goes by the username u/spez, said:

Amazon’s barely-transparent transparency report somehow gets more opaque

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PayPal shutters Malaysia office as part of customer service reorg

Payment giant PayPal has closed its office in Malaysia as part of a restructuring of its customer support teams.

The office, located in capital city Kuala Lumpur, was home to a team of customer service agents that catered to PayPal users across Asian region and beyond. Now, its responsibility will be assumed by other offices, which include locations in the Philippines, China and India.

A PayPal spokesperson explained to TechCrunch that the move is aimed at consolidating a range of different employees at PayPal offices to help blend a range of employees under the same roof. The closure of the office doesn’t impact the PayPal service in Malaysia.

PayPal confirmed the office will close this year in a statement. The company emphasized its efforts to transition affected staff into new jobs both inside PayPal and with other companies:

We have made the difficult decision to close PayPal’s Operations Centre in Malaysia by the end of this year. The work currently being delivered at our Operations Centre in Malaysia will gradually move to other locations. This internal reorganization does not affect our customers in Malaysia, who can continue to use our products and services as normal.

We regularly review our global site structure and staffing to ensure the support and services we provide at each site best meet the evolving demands of our customers. Our Operations Centre in Malaysia has done a remarkable job serving our customers since the site opened in 2011. However, this decision was made to align our investment in sites that are better equipped to support the future needs of our customers and our company.

Our priority now is to do everything we can to set up our employees for future success and we are fully committed to helping them as they transition to the next step in their careers. As well as offering comprehensive separation packages, we have built an on-site careers center to promote job opportunities and provide immediate assistance to employees.

PayPal was the first company to pioneer digital payments but it has fallen behind in Asia and other emerging markets as mobile payment players and messaging apps have stepped up.

WeChat, which offers integrated QR code payments, dominates China, while WhatsApp is experimenting with payments in India, its largest market with 200 million active users, in a move that may well expand to other markets including Southeast Asia, where it is widely used. Other challengers with digital payments include Line, which offers payments in Japan, Taiwan and Thailand, and Alibaba’s Ant Financial, a major player in China that is making aggressive moves in Korea and Southeast Asia.

News of the Kuala Lumpur office closure was first reported by Malaysian media.

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Autonomous truck startup TuSimple hits unicorn status in latest round

Another autonomous vehicle unicorn has joined the herd.

TuSimple, a self-driving truck startup running daily routes for customers in Arizona, has raised $95 million in a Series D funding round led by Sina Corp. as the company prepares to scale up its commercial autonomous fleet to more than 50 trucks by June.

The startup, which launched in 2015 and has operations in San Diego and Tucson, Arizona, has a post-money of $1.095 billion (aka unicorn status). TuSimple has raised $178 million to date in rounds that have included backers such as Nvidia and ZP Capital. Sina, operator of China’s biggest microblogging site Weibo, is one of TuSimple’s earliest investors. Composite Capital, a Hong Kong-based investment firm and previous investor, also participated in this latest round.

TuSimple launched when the burgeoning AV ecosystem of investors, academics turned entrepreneurs, and early self-driving tech pioneers, were focused more on the development of autonomous passenger vehicles, namely robotaxis.

Autonomous trucking existed in relative obscurity until high-profile engineers from Google launched Otto, a self-driving truck startup that was quickly acquired by Uber in August 2016. Then came the reveal of the Tesla Semi and the founding of several autonomous trucking startups including Starsky Robotics and Embark.

Suddenly, it seemed people had woken up to the economic opportunity that could be achieved — just maybe — with trucks.

Meanwhile, TuSimple quietly scaled. In late 2017, TuSimple raised $55 million with plans to use those funds to scale up testing to two full truck fleets in China and the U.S. By 2018, TuSimple started testing on public roads, beginning with a 120-mile highway stretch between Tucson and Phoenix in Arizona and another segment in Shanghai.

“Autonomous driving is one of the most complex AI systems humans have ever built. After three years of intense focus to reach our technical goals, we have moved beyond research into the serious work of building a commercial solution,” TuSimple founder, president and CTO Xiaodi Hou said.

Today, TuSimple is taking three to five fully autonomous trips per day for customers on three different routes in Arizona. All of these trips have two safety engineers, one who is behind the wheel, and another monitoring the data pouring in during each trip. TuSimple says these daily trips allow it to earn revenue while it validates its Level 4 autonomous system, a designation by SAE that means the vehicle takes over all of the driving in certain conditions. TuSimple has 12 contracted customers.

Now, it’s ready to ramp up further, in terms of its fleet size and partnerships. TuSimple plans to expand its daily “fully-autonomous” commercial deliveries to Texas. The company also plans to use this influx of capital to fund what it describes as “critical joint production programs” with OEM, Tier 1 suppliers and sensors partners. Truck manufacturing suppliers are working with TuSimple on the integration of autonomous software with powertrain, braking and steering systems. The company says this is “an essential step for the commercial production and operation of self-driving trucks.”

TuSimple isn’t disclosing its customers or even suppliers yet. Although, TuSimple did reveal last month at CES that it’s working with Tier 1 supplier Cummins Inc. to enable powertrain integration with its autonomous technologies.

TuSimple’s focus on cameras

Other AV companies, namely low-speed autonomous passenger vehicles have focused on LiDAR (light detection and ranging lasers) to improve the perception of the vehicle, arguably one of the most difficult tasks of automated driving. But for TuSimple, “laser isn’t the sauce.”

Instead, TuSimple has developed a camera-centric perception solution. The company does use LiDAR for its mapping and some data collection. However, LiDAR has its limitations in the high-speed world of trucking, Hou explained to TechCrunch in a previous interview.

Even its name, which is an interlingual pun that essentially means “simple image” or simple image analysis, affirms TuSimple’s approach.

It appears that has paid off. LiDAR can detect objects like cars to about 250 meters, although the optimal quality falters past 150 meters. TuSimple says its camera-based system has a vision range of 1,000 meters.

As a reluctant participant in AV demos, this TechCrunch reporter headed to TuSimple’s Tucson operations recently armed with lots of curiosity and a healthy dose of skepticism.

The TuSimple truck, two safety engineers in the front, and Hou and myself in the back of the cab, entered into autonomous mode in the company parking lot as it approached a surface road. From here, the truck drove the route in autonomous mode for the entire 65-mile or so trip. This route began with a left turn onto a surface road, then onto an unprotected left at a traffic light, a railroad crossing, and finally an entrance onto the highway. The truck continued for 30 miles before exiting the interstate, then maneuvering back onto the highway from the trip back.

A display in the cab allowed us to see what the truck was seeing, or more specifically what the camera-based system sees. TuSimple’s camera combined with software algorithms allows the system to track distance, relative speed and vehicle type of the various objects spotted while on the road and has an intention prediction feature that allows the vehicle to understand what those objects might do.

The end result, at least for this demo, was a ride along in an autonomous truck that was able to accomplish a number of complicated tasks, including anticipating congestion ahead and making a lane change in a smooth, uninterrupted movement — no disc braking necessary.

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It isn’t just apps. China’s cinemas broke records during Lunar New Year

China celebrated Lunar New Year last week as hundreds of millions of people travelled to their hometowns. While many had longed to see their separated loved ones, others dreaded the weeklong holiday as relatives awkwardly caught up with them with questions like: “Why are you not married? How much do you earn?”

Luckily, there are ways to survive the festive time in this digital age. Smartphone usage during this period has historically surged. Short video app TikTok’s China version Douyin noticeably took off by acquiring 42 million new users over the first week of last year’s holiday, a report from data analytics firm QuestMobile shows. Tencent’s mobile game blockbuster Honor of Kings similarly gained 76 percent DAUs during that time, according to another QuestMobile report.

People also hid away by immersing themselves in the cinema during the Lunar New Year, a movie-going period akin to the American holiday season. This year, China wrapped up the first six days of the New Year with a record-breaking 5.8 billion ($860 million) yuan box office, according to data collected by Maoyan, Alibaba’s movie ticketing service slated for an initial public offering.

The new benchmark, however, did not reflect an expanding viewership. Rather, it came from price hikes in movie tickets, market research firm EntGroup suggests. On the first day of Year of the Pig, tickets were sold at an average of 45 yuan ($6.65), up from 39 yuan last year. That certainly put some price-sensitive audience off — though not by a huge margin as there wasn’t much to do otherwise. (Shops were closed. Fireworks and firecrackers, which are traditionally set off during the New Year to drive bad spirits away, are also banned in most Chinese cities for safety concerns.) Cinemas across China sold 31.69 million tickets on the first day, a slight decline from last year’s 32.63 million.

Dawn of Chinese sci-fi

wandering earth 2

Image source: The Wandering Earth via Weibo

Many Chinese companies don’t return to work until this Thursday, so the box office results are still being announced. Investment bank Nomura put the estimated total at 6.2 billion yuan. What’s also noticeable about this year’s film-inspired holiday peak is the fervor that sci-fi The Wandering Earth whipped up.

American audiences may find in the Chinese film elements of Interstellar’s space adventures, but The Wandering Earth will likely resonate better with the Chinese audience. Adapted from the novel of Hugo Award-winning Chinese author Liu Cixin, the film tells the story of the human race seeking a new home as the aging sun is about to devour the earth. A group of Chinese astronauts, scientists and soldiers eventually work out a plan to postpone the apocalypse — a plot deemed to have stoke Chinese viewers’ sense of pride, though the rescue also involves participation from other nations.

The film, featuring convincing special effects, is also widely heralded as the dawn of Chinese-made sci-fi films. The sensation gave rise to a wave of patriotic online reviews like “If you are Chinese, go watch The Wandering Earth” though it’s unclear whether the discourse was genuine or have been manipulated.

Alibaba’s movie powerhouse

This record-smashing holiday has also been a big win for Alibaba, the Chinese internet outfit best known for ecommerce and increasingly cloud computing. Its content production segment Alibaba Pictures has backed five of the movies screened during the holiday, one of which being the blockbuster The Wandering Earth that also counts Tencent as an investor.

Tech giants with online streaming services are on course to upend China’s film and entertainment industry, a sector traditionally controlled by old-school production houses. In its most recent quarter, Alibaba increased its stake to take majority control in Alibaba Pictures, the film production business it acquired in 2014. Tencent and Baidu have also spent big bucks on content creation. While Tencent zooms in on video games and anime, Baidu’s Netflix-style video site iQiyi has received wide acclaim for house-produced dramas like Yanxi Palace, a smash hit drama about backstabbing concubines that was streamed over 15 billion times.

Seeing all the entertainment options on the table, the Chinese government made a pre-emptive move against the private players by introducing a news app designed for propaganda purposes in the weeks leading to the vacation.

“The timing of the publishing of this app might be linked to the upcoming Chinese New Year Festival, which the Chinese Communist Party sees as an opportunity and a necessity to spread their ideology,” Kristin Shi-Kupfer, director of German think tank MERICS, told TechCrunch earlier. “[It] may be hoping that people would use the holiday season to take a closer look, but probably also knowing that most people would rather choose other sources to relax, consume and travel.”

A government propaganda app is going viral in China

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No, Tencent isn’t about to burn Reddit down

Ahoy, it’s doom and gloom for Reddit after the company welcomed investment from Chinese censorship overlord Tencent.

Well, not quite.

The reality is, in fact, it’s quite the opposite. In recruiting the company behind one of the internet’s largest and vibrant social networks — chat app WeChat — and countless blockbuster games, Reddit has pulled off a major coup and banked a huge amount of cash, both of which can help it grow to the next level.

But, right now, reports in the U.S. are suggesting otherwise. You might have seen a range of negative stories surface in the past week following Reddit’s latest round of investment — first reported by TechCrunch — which is led by Tencent and values the company at $3 billion.

Triggered by a Gizmodo story last week, fear is being stoked that a deal with the “Chinese censorship powerhouse” could lead Reddit awry and bankrupt its morality, well, whatever of that it has left. Reddit users, not ones to be slow on humor, have already plastered the site with content that would be forbidden in China, including Winnie the Pooh, the cartoon character often used to represent Chinese President Xi Jinping.

Gizmodo referred to Tencent as “one of the most important architects of the Great Firewall,” and that’s a refrain that has been repeated in countless other reports.

I get it, it‘s a delicious irony; one of the lawless parts of the internet combining forces with a company that aggressively monitors and censors its users. Plus, Reddit is already blocked in China.

But, unfortunately for Gizmodo, the fears are overblown and its descriptions of Tencent are at best naive and at worst deliberately misguided.

China’s censorship system

Tencent is no “architect” of China’s Great Firewall internet censorship program. It’s one of a number of companies which, from its success, finds itself a prominent target for the government with little room to wiggle out.

Tencent sits in an awkward position, for sure. It is the largest internet company in China — it became the first $500 billion firm in Asia last year — and that makes it a core part of the government’s ongoing campaign to control Chinese internet space.

After an unprecedented crackdown on the Twitter-like service Weibo in 2012, when the government closed down comments for three days, China’s censorship became more proactive rather than reactive. That approach leaves fewer traces, for one thing, and it allows Beijing to shift responsibility to the platforms themselves, which fear the repercussions of angering authorities.

That’s to say that today’s dynamic sees China’s top internet companies, including Tencent, instructed to monitor the content produced by their users and, where necessary, remove it.

Reddit CEO Steve Huffman delivers remarks on “Redesigning Reddit” during the third day of Web Summit in Altice Arena on November 08, 2017 in Lisbon, Portugal. Web Summit.

Censoring social networks is one thing, but censoring WeChat — Tencent’s prized asset and China’s top messaging app with more than a billion monthly users — is another thing altogether. Tencent has been roundly (and rightly) criticized for implementing a range of “silent” blocks that, for some terms, prevent messages from being sent or picked up by the receiver.

Likewise, it has also purged millions of accounts from WeChat following numerous rounds of government-led initiatives that crack down on media, pornography and unsubstantiated rumors.

Those crackdowns and censorship moves are not false, but Gizmodo is painting a picture that suggests Tencent is complicit in cleaning its slate.

The truth is that the company, even a company of its size, has no choice in the matter when the Chinese government comes knocking with demands. To ignore the summons, or fail to act, would cause Tencent — a publicly listed company — serious problems that would not reflect well for shareholders. Adhering to these demands is expensive and resource-intensive, as it requires a new “content checking” division with specialist employees hired and trained. In short, it is certainly not something companies willingly opt-in to.

Reddit confirms $300M Series D led by China’s Tencent at $3B value

A rite of passage

Tencent is definitely not in control of the agenda, as anyone with an eye on tech in China can tell you. The company suffered a poor end to 2018, in part because the Chinese government decided to freeze new game licenses.

That left Tencent unable to monetize its new roster of games, a situation that saw it lose countless hundreds of millions in revenue and saw its share price drop by nearly 50 percent between March and October. The freeze has only just thawed, with a handful of licenses tentatively distributed this year.

So much for the Chinese government looking after their own.

These issues affect every tech company in China with a meaningful presence. Getting hit by government demands and censorship requests is a rite of passage for tech startups in China, like a dreaded badge of honor that shows your service has grown suitably influential to be considered a threat.

That happened to ByteDance, the company behind TikTok, the current social darling for many U.S. media. Last year, its CEO was forced to issue a groveling apology after it had “overemphasized growth and scale over quality and responsibility.”

The company resolved to increase its content checkers (read, censorship police) from 6,000 to 10,000 people, a move likely made to appease the government. Still, it was made an example of, with a number of TikTok apps removed from app stores and shuttered on the word of authorities.

Welcome to the club!

But it isn’t just Chinese companies.

Tencent became Asia’s first $500 billion company thanks to a stock rally — today it is worth around $425 billion [Photographer: Qilai Shen/Bloomberg via Getty Images]

Choices

Apple, the self-proclaimed protector of freedom, removed every unlicensed VPN from its China-based App Store at the behest of the government in 2017. While, in a rare move that runs counter to its core privacy focus, it relented to state rules and agreed to store Chinese iCloud user data on Chinese soil, through a government-backed cloud service provider, no less.

The difference between Apple and the likes of Tencent and ByteDance is that the U.S. company has a choice. It entered China voluntarily and it has complied with free speech-quashing demands to keep its revenue flowing.

Tencent and ByteDance, as the biggest internet players, would have a tough time moving outside of their native China and remaining in business. Maybe, in today’s censorship-heavy era, some Chinese companies wish they had started out in Hong Kong or another domain, but few markets have the opportunity that comes with 800 million internet users.

The point is that they have no control over censorship demands and no leverage to push back. To blame them — and paint them as co-conspirators, even “architects” — is misleading.

Tencent, in fact, has a reputation as a skillful investor that can be an asset for non-Chinese companies.

Its capital and guidance helped Fortnite creator Epic Games completely revamp its business into the smash hit success that it is today. Elsewhere, Tencent is the largest single investor in Snap — CEO Evan Spiegel has said he often seeks its guidance — and its other deals include Tesla, Discord, Kik and more, none of which have resulted in the introduction of censorship.

Yes, Reddit and Tencent are strange bedfellows, but that’s exactly the point of venture capital. The best founders surround themselves with different opinions, perspectives and experiences to ensure that they are evaluating all possible strategies. Tencent can give Reddit unique insight which, for those who use it, can only be a net positive for the future health of Reddit’s business and continued service.