China’s largest e-commerce company Alibaba Group on Thursday held its Investor Day 2017 at its headquarters in Hangzhou. Alibaba CEO Daniel Zhang spoke to around 350 investors and analysts from world leading organizations. Alibaba founder Jack Ma is scheduled to deliver a speech tomorrow.
Zhang spoke on the upgrade of Alibaba’s e-commerce platform Tmall, with the emergence of “New Retail”. First coined by Jack Ma in October 2016, New Retail refers to new retail business models that industry players create to improve the way they run their companies through the Internet, big data, and Artificial Intelligence (AI).
“New retail is Alibaba’s strategic blueprint for the future and it will be an integration of online and offline commerce, driven by big data,” said Zhang at the event.
According to Zhang, every single part along the new retail industry chain will be digitized. This will include product planning, R&D, logistics, marketing, and so on.
“Alibaba’s entire ecology is a vital support for Tmall,” said Zhang, “Alibaba consists of e-commerce, local services, digital media, and data technology. These are interconnected with each other.”
So far, there are more than 12,000 international brands on the Tmall platform, and 80 percent of all valuable brands on Forbes’ world most valuable consumer brand list have already opened their online stores on Tmall.
“Alibaba’s mid-term objective is to reach USD 1 trillion in gross merchandise volume by 2020, and its long-term objective is to attract 2 billion consumers by 2036,” said Zhang.
Alibaba CFO Maggie Wu also spoke at this event and said that the company predicts its revenue for the next fiscal year in 2018 will increase from 45 to 49 percent, and received applause from its investors, as it is 10 percent higher than what Wall Street predicted. Alibaba’s e-commerce arm saw its revenue grew 56 percent year-on-year, as of the end of its fiscal year in March. Alibaba held its first Investor Day last June.
AI is arguably the hottest sector in tech worldwide. From the consumer gadgets’ perspective, the world has evolved from a personal computer (PC) dominated era to the smartphone era where people chat with family and friends, and remotely work with coworkers on their smartphones. Business insiders predict that AI will be the next big thing after PCs and smartphones.
If a certain industry intends to prepare itself for the AI era, it needs to have large amounts of data to provide the necessary basis for AI technology such as machine learning.
Thanks to its hot and popular business, bike-sharing is worth paying attention to in China. Leading domestic bike-sharing startup ofo in late March announced that it has reached 10 million daily rides.
Shared bikes from various startups have added bright colors to China’s cities and have altered the way residents commute from place to place, especially for journeys shorter than 2 kilometers.
How should bike-sharing prepare themselves for the AI era?
“Our team did research on the industry chain of the bike-sharing industry. The core bug lies in the all-in-one lock, which is embedded with a GPS and communication chip,” said Li Feng, founder of Beijing-based venture capital FreesFund, in an article he wrote for Jiemian. Li is a former partner of iDG Capital Partners.
Millions of bikes alone do not make up the base of AI or form the Internet of Things. These bikes must be connected to the Internet and form the giant bike net via GPS.
GPS is one of the components that consumes the most electricity in these shared bikes. Different companies try to solve this problem with different approaches. These approaches include transforming pedaling power of riders to empower GPS, charging smart locks at nights, and placing solar charging panels on the basket of the bike.
All bike-sharing startups are seeking a GPS sensor that is low in electricity consumption and has high precision. Many companies once believed that there would not be such a sensor.
It is estimated that by 2045, there will be at least 100 billion devices connected to the Internet.
For the bike-sharing sector, Li predicted that the trendy bike-sharing industry will in turn promote the evolution of GPS sensors.
CB Insights recently posted its list of 197 world unicorns, also known as a private company valuing more than USD 1 billion. Here is the top 10 unicorn companies in China that AllChinaTech has picked by valuation from CB Insights’ list.
Founded in: 2012
Financing status: USD 5.5 billion in pre-IPO financing in April 2017
Didi Chuxing is China’s largest ride-hailing app and possessed 93.1% of the market share in August last year when it acquired Uber China.
The app has attracted 400 million users and offered services including taxi hailing, private car hailing, car pooling, car rental, and so on. In 2016, as many as 20 million rides were completed on DiDi on a daily basis.
Founded in: 2010
Financing status: undisclosed Series E round in April 2015
Xiaomi is founded by veteran engineer Lei Jun, who was previously the CEO of office software giant Kingsoft.
Xiaomi started its business by manufacturing smartphones at extremely low cost performance ratios and coined the term “Xingneng Guaishou”, which literally means “performance monster”. Its first batch of users are geeks and hardcore gadget buyers who are attracted to these high tech performance parts. Over the last few years, the company gradually added more products such as smart televisions, air purifiers, and e-scooters to its line.
Founded in: 2011
Financing status: USD 1.2 billion Series B round in January 2016
Shanghai is the financial center of China, and Lujiazui is the financial center of Shanghai. Lu.com is a fintech company based in Lujiazui, offering peer-to-peer personal loan services to its users.
Its latest investors include BlackPine Private Equity Partners, CDH Investments and China International Capital Corporation’s private equity division, according to a news release featured on Lu.com.
Founded in: 2010
Financing status: Undisclosed financing round of more than USD 100 million in July 2016
Meituan Dianping, or China Internet Plus Holdings Ltd (CIP), was formed when group buying platform Meituan and Dianping, also known as China’s Yelp, announced their merger in October 2015.
After that, the new company enjoyed 80 percent of China’s group purchasing market, and became the biggest online-to-offline company in China.
Founded in: 2012
Financing status: USD 1 billion Series D round in April 2017
Toutiao is a Flipboard-like news aggregator app that recommends news content using computer algorithms based on deep learning and data mining technology. When you read Toutiao, Toutiao also reads you, keeping track of your browsing history, your clicks, your comments, and time spent on every article.
The company claimed that it had more than 47 million daily active users in May 2016, having served more than 480 million users. It was valued at USD 500 million when it closed a Series C financing round worth USD 100 million, as reported by Tencent Tech in June.
Founded in: 2006
Financing status: USD 75 million Series C round in May 2015
This company is a world leader in camera drones and quadcopters, taking up 70 percent of the global consumer drone market. It has up to 3,000 employees in its Shenzhen headquarters and has branched out to Beijing, Hong Kong, the U.S., Germany and Japan.
Its official website says it now makes different types of drones that can be used in aerial photography, filmmaking, agriculture, search and rescue, energy infrastructure, remote sensing mapping and more.
Zhong An Insurance
Founded in: 2013
Financing status: USD 934 million Series A round in June 2015
This online insurance provider offers more than 200 insurance products and has written over 3.6 billion policies for over 300 million customers by the end of 2015. It is the first company that obtained an internet insurance license in China.
Zhong An Insurance is backed by Chinese e-commerce giant Alibaba, top Internet company Tencent and leading insurance provider Ping An.
Founded in: 2001
Financing status: RMB 3 billion (USD 441 million) Series D round in April 2017
Lianjia – or Homelink – is China’s leading real estate service platform. It has expanded its network to large Chinese cities including Shanghai, Guangzhou, and Chengdu via acquisitions and investments.
As of April 2016, it has covered 24 cities with 5,000 physical stores and 100,000 agents, achieving an annual Gross Merchandise Volume (GMV) of RMB 709 billion.
Founded in: 2003
Financing status: RMB 200 million (USD 29 million) Series B round in October 2016
Meizu started manufacturing MP3 players before it transformed itself to a smartphone company in 2007.
In February 2015, China’s e-commerce giant Alibaba bought shares in Meizu for USD 590 million to promote its “YunOS” operating system. Meizu sold more than 20 million phones in 2015.
Founded in: 2008
Financing status: RMB 1.25 billion (USD 285 million) Series F round in April 2016
Alibaba-backed Ele.me is a leading Chinese food delivery app. According to data released in December 2015 by Ele.me, its daily transaction volume has amounted to RMB 100 million with more than 3.3 million daily orders by the end of 2015.
According to Zhang Xuhao, CEO of Ele.me, the company has covered 1,000 cities in China and has a user base of 70 million people. Domestically, it competes with Meituan-Dianping and Baidu Delivery in food delivery.
The fitness trend has taken off in China as the enlarging middle class becomes more aware of their personal health and trendy young people enjoy posting workout selfies on their social media accounts. Here are the top five fitness apps in China that may give a glimpse of the booming sports industry in China.
This app provides training tutorials and has an online community. It has short indoor training plans to guide its users with step-by-step instructions. The app is basically a virtual coach for people who are too busy to go to the gym or those who want to workout but are unable to afford the fees of personal trainers.
What is worth mentioning is that the Keep team is pretty young, with an average age of 25. So far, it has raised tens of millions in USD for its Series C+ financing round and claims that its app has been downloaded 80 million times, demonstrating the power of youth.
Qiji literally means “cycling diary” in Chinese. This app is designed for cyclists, and it records their cycling routes, and provides data such as heart rate, accumulated mileage, calculation of route times, average cycling speed, and number of calories consumed.
Aside from recording data, it enables users to share their cycling experience. As more cyclists join in, the app builds a community where users share their cycling experience via live streaming, public posts, discussions, and more.
Marathons have gained popularity in China in the last few years, as many participants now have to go through the balloting process to be able to run. This is in contrast to the situation 10 years ago when marathon organizers could not find enough participants, as reported by Tencent Culture.
The app Maramara cashes in on this trend and provides users with information about marathons around the world. It has a running event application channel, where users can apply for events through the app. The app displays data such as daily running data, personal marathon scores, certificates, medals, and equipment.
JOYRUN is a social app centered on running. It builds a running community by providing users searches for running pals, formation of running groups, and sharing of running records.
As of February 2017, the app has attracted 30 million users and has held more than 150 activities and competitions in over 60 cities.
It is an app developed by a gym chain called SunPig, and has its gyms relatively smaller and closer to its clientele. This app records the user’s purchasing history, exercise data, and workout ranking among all its users.
The SunPig app also enables its users to book private trainers or exercise classes. The app has more than 100,000 registered users in over 80 SunPig gyms around China.
Inspired by the huge success of house and car sharing startups, new rental businesses for odd items continue to emerge from China’s sharing economy hype. Just as the heated and controversial debate of the power bank rental business continues, umbrella rentals have become the latest sharing fad.
Over the past month, three umbrella sharing startups have raised financing of several million RMB (around USD 1 million) as industry experts and insiders continuously question the business logic. How do these companies run umbrella sharing businesses? Is the business really profitable or just a market bubble? Here is a look at several startups in the sector and insights from industry insiders.
Why the large financing numbers?
Gongxiang Esan from China’s southeastern city of Guangzhou last Wednesday secured RMB 10 million (USD 1.5 million) of angel investment. Its app functions in a similar way as bike-sharing apps. The app shows the locations of nearby umbrellas, enabling the user to rent an umbrella after inputting the umbrella’s code into the app to unlock the password.
The company sets rental fees of the umbrellas at RMB 0.50 per half-hour use in addition to a RMB 19 deposit. Users are charged only when the GPS embedded umbrella is opened up for use. The startup also allows users the option of either returning the umbrellas to public locations or bringing them home.
Another Guangzhou-based startup Molisan provides umbrella rental services in a slightly different way. It has designated umbrella rental stations at public locations such as subway stations and cinemas, and one rental station can hold up to 50 umbrellas.
To rent a “Moli” umbrella (“san” is the English romanization of the Chinese word umbrella), the user does not necessarily need to download its app. The user can rent and return the umbrella by simply scanning a QR code at the station with WeChat. Molisan charges a RMB 20 deposit and offers free use within 15 days after the first use. After 15 days, it will charge RMB 2 per day.
Other than these two startups, Shanghai-based Chunsun last Monday raised RMB 5 million for its angel financing round and JJsan on Sunday secured around RMB 1 million in angel investment.
Will it work?
Deposits are one major source of profits for these startups, as Chinese analyst Panshi Zhixin was quoted in a report. “Deposits bring in massive capital and these companies can use the money to make investments,” said Panshi Zhixin.
Zhao Shuping, founder and CEO of Gongxiang Esan, told local media that the company can earn income by displaying advertisements on these umbrellas.
The drawback for this new umbrella rental business is whether there is real consumer demand for it.
Customers only use umbrellas depending on the weather conditions of certain days. It is still unknown to what extent consumers in China’s northern cities, where there are less rainy days, will welcome this new business model.
Another reason is that cheap umbrellas are sold everywhere in subway stations and other public locations on rainy days. The price of these umbrellas range from RMB 10 to RMB 40. Many people riding the subway can just purchase an umbrella at a cheap price.
From sharing bikes to power banks and now umbrellas, what will be China’s next sharing fad?
It is rare for angel investors to spot and invest in future unicorns, meaning private companies with valuations of USD 1 billion or more. Over the past few years, Zhu Xiaohu (also known as Allen Zhu) and angel investor Wang Gang have taken part in several angel investments together. The well known investment duo are behind several unicorns in China’s tech industry including Didi Chuxing, ele.me, and ofo. Zhu is also a Partner and Managing Director at venture capital GSR Ventures.
Here are five startups that Zhu and Wang have placed bets on, shedding light on their investment strategies.
Founded in: 2016
Financing status: RMB 350 million (USD 51 million) Series B financing in May 2017
As the whole world watches China’s heated bike-sharing war unfolding, power bank rentals soon caught public attention for its questionable hype and large overvalued investments. Xiaodian is one such major power bank rental startup.
Xiaodian offers power bank terminals at fixed locations in shops and restaurants for smartphone charging services. A user can scan a QR code on the Xiaodian power bank before getting his or her smartphone charged. The company does not require deposits, and sets the rental fee at RMB 1 (USD 0.14) per hour. The startup hopes to expand its power bank rentals to 25 Chinese cities by the end of this month.
Founded in: 2015
Financing status: USD 20 million Series B financing in March 2017
Think YCLOSET as China’s Rent The Runway. YCLOSET started its business by providing dress rental services to its users for certain occasions like parties and weddings. Now, the startup has shifted its focus to rentals for daily wear, targeting female professionals in China’s first and second tier cities.
The company purchases fashionable and chic clothes from clothing brands and franchises. The average price for each outfit on YCLOSET is around RMB 1,000. Users are charged a monthly fee of RMB 499 (USD 73), and they can rent as many clothes as they wish. It only allows a user to keep one outfit, and the user needs to return one outfit to get a new one. If a user likes an outfit, she can buy it at a discounted rate.
Founded in: 2014
Financing status: Tens of millions in RMB (a few million USD) for Series C round in July 2016
Just like food delivery apps that deliver restaurant food to your doorstep, Home-Cook delivers homemade dishes to you. Users on the app fall into two categories: hosts or amateur cooks, and diners. Diners can order meals straight from their neighbors’ kitchens and have them delivered.
The app mainly targets young working professionals in the city looking for healthier and tastier food, but are unwilling to step into the kitchen to cook themselves.
Founded in: 2014
Financing status: Tens of millions in USD for Series D round in May 2016
The startup provides services for automobile owners. Services on the app can be divded into two categories: basic services which include parking tickets payment and car insurance, and maintenance services at automobile service providers.
In order to provide standard car maintenance services to its users, the company has established around 100 physical service shops across China’s first and second tier cities. It has attracted several million users so far.
Founded in: 2013
Financing status: USD 200 million Series C round in October 2016
The company focuses on the education sector for children under the age of 12 (K12) and develops education platforms. The company claims that its products improve the management efficiency of education authorities, as well as the efficiency of students and teachers.
Its products keep track of students’ learning progress before and after classes, and records real time data and information for teachers. Xueleyun has provided services for more than 54,000 schools from 26 Chinese provinces and municipalities.
China’s leading smartphone manufacturer Xiaomi on Thursday launched its latest phone Mi Max 2, a year after it unveiled the first generation of the Mi Max. The new 6.44-inch phone is bigger than an iPhone 7 Plus which measures at 5.5 inch.
“Mi Max 2 is at 6.44-inch as the maximum limit that you can hold a smartphone with one hand stands at 6.44 inch” said Lei Jun, CEO of Xiaomi, at the press launch.
Just like the iPhone 7, this phone body has a metal frame. Xiaomi claims that its battery is much larger than an iPad mini’s and can even charge an iPhone 7 twice with the help of an on-the-go (OTG) cable.
In terms of convenient phone handling, the Mi Max 2 made similar user friendly functions like its competitors. In terms of an iPhone 7, double clicking on the home button will make all icons appear at the bottom half of the screen for easier handling. Similarly, Mi Max 2 users can also make the homepage screen much smaller and use it even in situations when they only have one hand for the smartphone.
Xiaomi started its business by making smartphones with extremely low cost performance ratios and coined the term “Xingneng Guaishou”, which literally means “performance monster”. Its flagship smartphones are often equipped with the best Android phone parts including processors and camera parts. Priced at USD 363, the Mi 6 phone is powered with a Qualcomm Snapdragon 835 processor. Xiaomi’s hardcore fans are attracted to these high tech performance parts.
The launch of the Mi Max series is a sign that the company is expanding its range to attract more customers. Today’s launch event was also more popular and entertaining, as Xiaomi invited members from China’s popular female girl band SNH 48.
“Mi Max 2’s big screen are for those people who use smartphones to watch videos, read, and work on office documents,” said Lei.
The price for the 64 GB model of Mi Max 2 is at RMB 1,699 (USD 247), and the 128 GB model at RMB 1,999. Both models will be sold on both its online and physical stores from June 1.
Co-working startup WeWork is reported to have received up to USD 4 billion financing from SoftBank in February, pushing its valuation to more than USD 20 billion.
Headquartered in New York City, WeWork provides co-working workspaces, also known as shared office spaces, and services for startups.
In preparation for its expansion into China and Asia, the co-working space giant secured USD 430 million financing in March 2016 led by Beijing-based investors which include Hony Capital Ltd. and Legend Holdings. This financing made WeWork, which was founded in 2010, the sixth most valuable private company in 2016 along with Snapchat.
In order to foresee the future, we need to learn from the past. It is highly possible that WeWork will repeat what Uber went through in China – fierce competition with domestic startups that Uber has never met with in other parts of the world.
In February 2016, Uber CEO Travis Kalanick said that Uber China was losing USD 1 billion a year in China. He also accused Uber’s main rival in China, Didi Chuxing, of burning even more cash than them.
Beijing-based UR Work is a major player in the co-working race among domestic and international startups in China.
UR Work was founded by Mao Daqing, formerly the senior vice president of real estate developer Vanke, who started the startup in 2015. The startup is now present in 20 cities including Beijing, Shanghai and Shenzhen, and has a total of 78 shared office venues.
In January, UR Work raised RMB 400 million (USD 58 million) in its Series B financing and valued at RMB 7 billion. On top of that, it formed a strategic partnership with co-working space provider New Space late last month, further pushing its valuation to RMB 9 billion.
In contrast, WeWork has only six shared office venues in Shanghai and Beijing so far. Domestically, UR Work also competes with other local competitors such as COWORK and SOHO 3Q.
The similarities between Uber and WeWork’s positions in China are that deeply rooted domestic startups can grow overwhelmingly fast and can come up with products and services that fit the China market.
Although it is too early to tell who the final winner is, the co-working space race in China will definitely be the next major battlefield between international players and Chinese startups.
LeSports, Chinese tech giant LeEco’s sports arm, on Thursday was rumored to cut its workforce to 200 from its current 700-strong workforce.
This is the latest sign that LeSports is undergoing a series of setbacks including losing key management executives and broadcasting rights of international games. Here is a look back at LeSports’ short five-year history during LeEco’s volatile development.
· 2012 – LeEco launched its sports arm LeSports to offer broadcasting and live streaming services for sports games including soccer, basketball, and tennis.
· December 2015 – LeSports signs a five-year contract for naming rights to name Wukesong Gymnasium, one of Beijing’s landmarks and China’s top-notch stadiums.
· February 2016 – Purchased copyrights for the Chinese Super League during the 2016/2017 season for RMB 2.7 billion (USD 392 million).
· April 2016 – LeSports raised RMB 8 billion (USD 1.2 billion) in its Series B financing round led by Chinese aviation and shipping conglomerate HNA Group.
· November 2016 – LeEco founder and CEO Jia Yueting sent a letter to LeEco employees, admitting LeEco’s “extremely quick expansion and great capital challenges”.
· January 2017 – LeEco lands USD 2.4 billion investment from Sunac China and becomes its second largest shareholder.
· March 2017 – Loses copyrights for a series of major sports games including Chinese Super League and Asian Football Confederation.
· April 2017 – Sunac China founder Sun Hongbin denounced LeSports’ purchase of Chinese Super League and said that “LeSports lost RMB 1.3 billion for its RMB 1.35 billion annual fee [for purchasing copyrights of the Chinese Super League].”
· May 16 – LeSports stops sponsoring naming rights for Wukesong Gymnasium in Beijing.
· May 18 – LeSports is rumored to have a massive layoff, and only 200 from its current 700 staff will remain. Hopefully, LeSports will be able to develop sustainable profit models after stopping its cash burning businesses.
Below is the visualization of the winding path of LeSports.
Prominent physicist Stephen Hawking expressed his concerns over AI at tech conference GMIC Beijing last month, saying “I believe that the rise of powerful AI will be either the best thing or the worst ever to happen to humanity.”
Beijing-based startup incubator New Space held an open class last Thursday, where three lecturers from tech and big data, industrial design, and human recognition shared their views on the future of AI.
New Space was founded in April 2014 by real estate veteran Wang Shengjiang, and co-founded by Chinese entrepreneur and educator Yu Minhong (Michael Yu) and senior banker Sheng Xitai. New Space launched the biweekly 99 degree class on March 16, which according to the company, provides support to help startups get the final one degree on the path to success. Here is a wrap-up of three speakers from this class.
Where: New Space’s Wang Jing offices When: May 18
She is a technician consultant of developer tools at Microsoft and has years of experience in the R&D of mobile apps and games. His current work involves developing Microsoft’s next generation products.
She believes webs are to personal computers is like what messaging apps are to smartphones. Therefore, bots like Cortana will play a bigger role in both work and life as well. A lot of commands such as arranging itineraries and ordering coffee – can be done by having a conversation with a bot inside a messaging app. Microsoft’s AI driven bots are able to recognize motions inside a video and can be used in production safety while controlled via a bot.
Zhou co-founded creative product design platform LKKER in February 2016, connecting company clients and more than 5,000 designers.
Zhou predicts that the future of robots will see three trends: multi-layer experience, change in robot appearance and character, and change in application scene.
“Robots will get rid of the concept of mimicking the human body. Robots of all kinds of shapes and sizes will appear depending on the application scene and its features,” said Zhou.
Wei is the founder of EmoKit, which offers free Application Program Interface (API) for emotion computing. EmoKit has won a series of awards in international contests including Finnish Slush World and MIT-CHIEF global startups competition.
Pixar’s film Inside Out demonstrated five basic emotions: joy, fear, sadness, anger, and disgust. The big data driven startup has gone one step further and categorised human emotions into as many as 24 kinds.
The class is held inside New Space’s spacious offices in Beijing’s Wangjing district, which is awashed with internet startups. There are startups working next door at New Space’s incubator.
Three speakers are all well prepared and gave in-depth analysis of the AI industry from various perspectives including developer tools and product design. Before the class, the host asked every attendee to briefly introduce themselves which took up too much time – almost 20 minutes.
The class only requires basic equipment like chairs and projector. The projector was fine, but it failed to work perfectly with speakers’ files and PPT. This kind of things happen when files are copied to a new computer.
It is good for people working in the internet and AI industry to learn some knowledge and views from the class, as well as to network with other attendees. The class also offers snacks and drinks, although sitting for three hours with no break was tiresome.