D.LIVE, The Wall Street Journal’s invitation-only technology event, brought many of tech’s most ambitious thinkers together in Hong Kong this week. With in-depth discussions and a tour of some of Shenzhen’s boldest and most exciting start-ups, the two-day event was an intense exploration of compelling ideas and investment opportunities. Here’s a snapshot of what sparked our interest:
Hong Kong Exchange reforms to attract tech IPOs
In its largest reform in 25 years, Hong Kong is updating its listing regime just in time for a busy summer of IPOs. From April 30, tech companies with dual-class shares and biotech firms with no revenue will be able to list in Hong Kong, as will Chinese and international companies already listed elsewhere. According to Charles Li, the chief executive of Hong Kong Exchanges and Clearing, this will help position Hong Kong to secure some of the biggest listings going, including secondary listings by the likes of Alibaba and Xiaomi. Dual-class listings are very attractive to high-tech companies, allowing founders to retain more control.
Asian VC on the up: capital and clout
- A China-US trade dispute would push Chinese tech companies to invest in emerging markets such as India and Southeast Asia, rather than the US, according to Fan Bao, chairman and chief executive of investment bank China Renaissance Partners.
- GGV Capital’s managing partner Jenny Lee says the China-focused venture-capital firm is bullish on the prospects for public listings and deals for tech companies in the region. Trends to watch include ‘new retail’, demographic-specific social networks, robotics, and automotive sector disruption.
- Two e-commerce companies at D.LIVE touted the benefits of having Alibaba backing, not just for its capital but also for its clout. India’s Paytm Mall is learning a lot from Alibaba, says the company’s chief strategy officer Amit Sinha. Singapore’s Lazada Group received $1 billion from Alibaba in 2016, along with priceless help to sign up new brands, explains chief international officer Hans-Peter Ressel.
Southeast Asia demonstrates homegrown strength
- That Singapore-based Grab has acquired the Southeast Asian operations of its rival Uber says a lot about the ability of Asian start-ups to develop world-class technology businesses, says Grab President Ming Maa. Grab’s local knowledge propelled it to the top in its markets, where it was the first to accept cash payments and then to roll out a mobile payments service and other fintech offerings, including micro-loans and insurance.
- In another session, Peng T. Ong, managing partner at Monk’s Hill Ventures, echoed this sentiment. He likens Southeast Asia to where China was a decade ago. The region has 600 million people and fast-developing start-up ecosystems. It has the potential to grow global companies, but it’s still early days.
Google accelerates mobile payments in India
Google’s Tez mobile payments service now has 16 million active users in India, with more than 350 million transactions performed since its September launch. Already number two in the market, the free app has a conversation-based interface and allows users to transfer money without a debit or credit card. Caesar Sengupta, vice president in charge of Google’s Next Billion Users initiative, hopes to soon extend Tez in Asia and Africa.
China takes the lead in live streaming
More than 100 million consumers in China pay monthly subscriptions for video content on Chinese platforms, up from virtually nothing two years earlier, says Patrick Grove. The co-founder of iflix, a Southeast Asian video-streaming service, compares this to Netflix, which took seven years to sign up 125 million people. He credits the popularity of mobile payments in China for this growth by making it simple for consumers to subscribe. Original content is also vital: iflix released seven original productions last year and plans to produce 50 this year.
Huawei Cloud sticks to its hands-off approach to data
“We don’t touch data,” states Yan Lida, the head of Huawei’s enterprise business. The Huawei Cloud provides hardware and infrastructure only. It does not monetize customers’ data or offer software. These strict boundaries are key to customer trust, helping Huawei earn business from 197 of Fortune 500 companies.
AI in ascendance
- Artificial intelligence is rapidly becoming a part of daily life. SenseTime, the world’s most highly valued AI start-up, is training computers to recognize faces and objects. And co-founder Bing Xu says they will inevitably be better than humans at identifying things. The company is contemplating an IPO, but its immediate priority is growth in Asia.
- Microsoft Asia president Ralph Haupter is confident that Chinese tech companies have the data, talent and drive to succeed in AI, but cautions that they face a unique challenge in determining when and how to expand internationally. He wants to see a standardized experience for the array of AI consumer devices in the home.
- AI is also changing the retail world, with the goal being to build a perfect profile of the customer. China is leading the online-to-offline revolution, says Connie Chan, a partner at venture-capital firm Andreessen Horowitz. She cited Walmart’s initiative to allow shoppers to pay for goods with the WeChat social-media platform. It then uses the data on consumers’ shopping habits to suggest shopping lists, coupons and other items.
Automotive disruption: care and collaboration
- Hyundai plans to have truly self-driving cars on the road in 2023. Youngcho Chi, Hyundai’s executive vice president, cautions there is a long way to go for cars with full-autonomous level-four capability, which don’t require human intervention. Overly optimistic rollout dates are not helpful when consumer safety should be the primary focus.
- Carlos Ghosn, chairman and chief executive of the Renault-Nissan-Mitsubishi alliance, says he is open to a merger of the companies—something he has long opposed—to ensure the sustainability of the partnership long term. The automakers, who share costs and technology but operate separately, are now working to accelerate the development of autonomous and electric vehicles.
- Chinese electric car manufacturer Xiaopeng Motors, which is backed by Alibaba and Foxconn, is looking to raise more than $1 billion in additional funding this year, according to president Brian Gu. Previously one of JPMorgan Chase’s top bankers in Asia, he cautioned companies to be careful when selecting shareholders and investors. China’s plans to open its automotive market to direct investment by foreign automakers puts pressure on domestic firms to solidify their positions now, he says.
Biotech in China: global growth; sharper focus
- On the back of extensive government investment in China’s biotechnology industry, Judith Li, a partner at Lilly Asia Ventures, expects Chinese companies to produce innovative drugs over the next five to 10 years, and to begin to challenge US rivals for global dominance in a further decade or so. But it could be sooner, she says, as China often moves faster than expected.
- China’s biotech environment is very supportive of innovators. However, too many companies are pouring money and resources into the same areas, such as immuno-oncology drugs, warns Nisa Leung, managing partner at Qiming Venture Partners.
Facebook fallout: fair competition; faithful content
- The privacy scandal at Facebook and concern over ‘fake news’ have far-reaching implications. People are now more aware of the importance of protecting their data, says Nicole Eagen, chief executive of the cybersecurity firm Darktrace, while Andreas Weigend, director of the Social Data Lab, puts the blame squarely on Facebook for failing to manage the data it gave to Cambridge Analytica.
- China may need to strengthen its antitrust regulations to counter the rising influence of its internet giants, says China Renaissance Partners’ Fan Bao. China is already increasing scrutiny of social media platforms, reports Zhen Liu senior vice president of Beijing’s Bytedance, a news aggregator and entertainment app company. She says that Bytedance is re-evaluating how it combines AI and human oversight to manage its content and ensures that the news it shares is trustworthy.
Virtual currencies: hard to value; difficult to regulate
- As a new asset category, cryptocurrencies are difficult for investors to value and this causes volatility, says Stefan Thomas, CTO at Ripple (the third-largest cryptocurrency). He warns against treating the space as a whole, and is skeptical that regulation is imminent as regulators struggle to come to grips with blockchain technology.
- BitPesa founder and CEO Elizabeth Rossiello is similarly cautious about regulation. She suggests that volatility can be a positive as it increases liquidity in the market. The bitcoin pioneer and market-maker across Africa, BitPesa shows that cryptocurrencies are particularly beneficial in less-regulated financial markets with higher transaction costs.
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July 13, 2018