Apple Archives · TechNode

TSMC sees strong demand for 3nm chips with orders from Apple, Intel, and AMD: report

Jessie Wu — Wed, 27 Mar 2024 09:42:22 +0000

Chip giant TSMC is seeing increasing orders from its three major clients – Apple, Intel, and AMD – for its 3nm chips, according to Taiwanese media outlet Economic Daily News. TSMC launched its 3nm process in late 2022, but up until the fourth quarter of 2023, Apple was its only customer for the technology, as the foundry slowly ramped up its production. As that situation changes, TSMC’s revenue share from 3nm chips is expected to surpass 20% of its total this year, positioning them as the company’s second-largest revenue contributor after its 5nm chips according to the Economic Daily News report.

Why it matters: With orders for its 3nm chips from major clients continuing to rise, TSMC is expected to experience significant short-term revenue growth and cement its dominance in the advanced semiconductor manufacturing sector.

Details: The Economic Daily News has analyzed the order status of TSMC 3nm chips from three key clients: Apple, Intel, and AMD.

The upcoming iPhone 16 series by Apple will feature the new A18 series processor, while its new Mac processor (the M4 series) is expected to launch in the first quarter of 2025. Both are 3nm chips scheduled for production by TSMC starting in the second quarter of this year.
In the second quarter of 2024, Intel will start the mass production of Lunar Lake CPUs (central processing units), GPUs (graphics processing units), and high-speed Input/Output chips at TSMC. This marks the first time that Intel has outsourced its complete range of chips for mainstream consumer platforms to TSMC. The CPU/GPU cores may also adopt 3nm technology, representing a new source of orders for TSMC’s 3nm process this year.
AMD this year will unveil its new Zen 5 architecture platform, which is expected to greatly enhance AI applications. The report suggests that AMD’s Zen 5 architecture utilizing TSMC’s 3nm process is scheduled for a release in the second half of 2024.
In the fourth quarter of last year, TSMC’s revenue contribution from 3nm chips already rose to about 15%, driven by the order of the 3nm A17 Pro processor for the Apple iPhone 15 series, according to TSMC’s financial reports.

Context: TSMC has secured over 90% of the total global AI chip foundry orders, as tech giants such as Nvidia, Google, Intel, Qualcomm, Microsoft, and AMD compete fiercely in the AI chip market, Economic Daily News reported.

Driven by the high demand for AI chips, the high utilization rates of advanced processes of 6nm, 5nm, 4nm, or 3nm will further improve TSMC’s performance, a company insider told Economic Daily News. TSMC’s revenue in 2024 may increase by 24% to 26% year-on-year, the source claimed.

Tim Cook opens world’s second-largest Apple Store in Shanghai during two-day China visit

Jessie Wu — Fri, 22 Mar 2024 10:19:45 +0000

On Thursday evening, Apple CEO Tim Cook attended the grand opening of the Apple Shanghai Jing’an store and engaged with a crowd of Apple fans who had flocked to the downtown location. The retail store is the second-largest Apple Store worldwide and the largest in Asia. The Jing’an store’s opening was part of a two-day visit to Shanghai from Cook, which comes amid falling iPhone sales in China.

Why it matters: Cook’s presence at the opening of the Shanghai store was intended to demonstrate the brand’s commitment to the China market. The country also plays a crucial role in Apple’s supply chain and manufacturing operations.

Details: During his two days in Shanghai, Apple CEO Cook shared various PR activities on the Twitter-like social media platform Weibo, where “Tim Cook encounters actor Zheng Kai” trended as a hot topic on Wednesday.

Cook wrote on his Weibo post, “Nonghao Shanghai! [Nonghao is hello in Shanghainese] Spent the morning walking the Bund with Zheng Kai and enjoying a classic Shanghai breakfast. I’m always so happy to be back in this remarkable city.”
Cook shared another photo on Weibo on Wednesday afternoon showing him being briefed on gaming products by Papergames staff and accompanied by Papergames CEO Yao Runhao. Known for mobile hits such as dress-up role-playing game Shining Nikki and female-centered romance game Mr. Love: Queen’s Choice, the company is a major developer on Apple’s App Store.
Later, Cook met with BYD CEO Wang Chuanfu at Apple’s Shanghai headquarters. During the visit, Apple suppliers BYD Electronics, Lens Technology, and Everwin Precision Technology exhibited advanced manufacturing technologies and manufactured components for Apple products. “BYD, Lens, and Everwin are great examples of companies who are pushing the boundaries of what’s possible every day and we’re excited for the opportunities ahead,” Cook said on Weibo.
On Thursday morning, Cook visited Shanghai Jiao Tong University’s Xuhui campus to communicate with student programmers. He then posted about meeting winners of the App Contest and Swift Student Challenge, highlighting their use of coding to address challenges and preserve traditional culture. The Swift Student Challenge from Apple is an annual event that invites student developers to showcase their coding skills by utilizing Swift programming. The Swift Student Challenge 2024 introduces a new category to honor 50 outstanding winners who submit exceptional works, according to Apple.
On Thursday evening, Cook opened the Shanghai Apple Jing’an store, as a crowd of customers gathered in front of the retail space, eager to be among the first to enter. With over 30 years of history in China, Apple has created over five million job opportunities through direct employment, supply chain business, and iOS app related businesses, according to data provided by the company to China Economic Weekly.

Context: In 2023, Apple achieved its highest-ever market share of 17.3% and secured the top spot in the Chinese smartphone market for the first time, according to market intelligence firm IDC. The report revealed that China’s smartphone shipments totaled 271.3 million units in 2023, a 5.0% year-on-year decline compared to 2022, marking the lowest volume in a decade due to sluggish economic recovery and weak consumer sentiment.

However, in the first six weeks of 2024, China witnessed double-digit declines in smartphone sales for Apple, Oppo, and Vivo, according to Counterpoint Research. During these six weeks, Apple’s iPhone sales in China declined by 24% year-on-year, ranking fourth among Chinese smartphone suppliers.

Apple’s retail store in Shanghai’s Jing’an District is about to open

Evan Huang — Tue, 19 Mar 2024 02:50:51 +0000

Note: The article was first published on TechNode China written by Evan Huang and translated by Zinan Zhang.

Apple’s retail store in Shanghai’s Jing ‘an District is about to open. Credit: Evan Huang

The Apple store in Jing’an district is still designed by the renowned British architectural firm Foster+Partners, which previously designed Apple’s new headquarters in California and created many innovative stores for Apple, such as the floating sphere in Singapore (Apple Marina Bay Sands), the Italian flagship store with a water curtain, and the bamboo-surrounded flagship store in Macao.

As the eighth Apple retail store in Shanghai, the opening of this store signifies that there are 57 Apple Store retail stores in Greater China. The opening of Apple Jing’an district store undoubtedly injects new vitality into Apple’s retail business in China.

The inspiration for the logo of this new store comes from the city flower of Shanghai, the magnolia, symbolizing the city’s innovation and pioneering spirit. Credit: Evan Huang

The inspiration for the logo of this new store comes from the city flower of Shanghai, the magnolia, symbolizing the city’s innovation and pioneering spirit. The opening of this new store further solidifies Shanghai’s position as an important market for Apple’s retail business. Since the opening of the Pudong distric store in Shanghai in 2010, Apple’s retail business has made significant progress in Shanghai. Over the past 14 years, the seven retail stores in Shanghai have served over 160 million customers, and the online store has also attracted a large number of visitors.

Apple has had a 31-year development journey in China, achieving significant success in the Chinese market and establishing deep connections with local communities. The Apple Jing’an district store is no exception. Previously, Apple has been inviting local artists, musicians, and creative individuals to participate in activities, showcasing and teaching their creative processes, further enriching the shopping experience for customers. The Apple store in Jing’an district will continue this tradition of engaging with the local community.

The Apple store in Jing’an district will continue this tradition of engaging with the local community. Credit: Evan Huang

This new Apple store has over 150 well-trained employees, including hearing-impaired individuals, musical theater actors (part-time), retired university professors, and etc. In addition to Mandarin Chinese, the team is proficient in English, Japanese, Korean, German, Spanish, and Malay for communicating with customers. Employees can also speak 25 dialects, providing personalized service to Chinese customers from all over the country. Additionally, nearly one-third of the team members are from Shanghai, providing them with a deep understanding of the city and its residents.

Additionally, nearly one-third of the team members are from Shanghai, providing them with a deep understanding of the city and its residents. Credit: Evan Huang

On March 12th, Apple announced on its official website that it would expand its application research laboratory in China to support product manufacturing. Apple stated that it would enhance the capabilities of its research center in Shanghai to provide support for reliability, quality, and material analysis for all product lines. Later this year, Apple will also open a new application research laboratory in Shenzhen.

In fact, despite the increasingly competition in the Chinese market, Apple still believes that this market holds significant opportunities worth cultivating, which is also the signal conveyed by this new store.

Apple asks major Chinese apps to avoid using gyroscopic motion for advertising purposes: report

Cheyenne Dong — Tue, 14 Nov 2023 09:34:06 +0000

iPhone maker Apple has reportedly asked China’s major app developers to refrain from using gyroscopic motion, a feature that tracks the motion of a user’s phone, for advertising, as it all too readily redirects users to third-party apps on detecting even the slightest shake of a device.

Why it matters: Open-screen advertising serves as a monetization method for many apps, while gyroscopic ads can boost the click-through rate of the target app. Those employing the feature have found that both parties can gain commercially, despite it taking control away from the user and thus impacting the user experience.

Details: Deployment of the function, criticized by numerous users, escalated during November’s three-week-long Singles Day shopping festival that has just ended. E-commerce platforms extensively used redirect ads across various apps, including the most widely used video and music streaming platforms, as well as social media apps. These ads can be triggered by clicking on an ad page or moving the phone, redirecting the user’s attention to another app.

A netizen on Weibo, a Twitter-like platform, jokingly wrote that the redirection speed was faster than if they had directly opened the app.
On-device gyroscopes help to achieve the ad redirect feature, though gyroscopes were originally designed to provide “experiences based on real-time, motion-based information in apps and games,” according to Apple.
Another form of advertising similarly concealed within social media during China’s largest online shopping event was activated by Weibo blog comments – – individuals would write related comments and attach seemingly relevant webpage links. Once users clicked, they would find their phones had already opened advertised shopping websites. It remains uncertain whether this type of promotional tactic is directly linked to e-commerce sites.
According to local media outlet Yicai, Taobao, JD, Pinduoduo, and Douyin have not explicitly said they received a notification from Apple, and Apple has not responded to the rumors.

Context: In February, China’s State Administration for Market Regulation made it clear in a guideline that advertisements should be clearly labeled using a closing icon, and should not deceptively induce users to click on or browse any advertisement. The new measures were supposed to further refine the norms of online advertising in China.

Qualcomm may source 3nm chips from TSMC and Samsung for new Snapdragon 8 Gen 4

Jessie Wu — Mon, 21 Aug 2023 09:37:04 +0000

Semiconductor giant Qualcomm is set to work with both TSMC and Samsung simultaneously to create a new 3nm version of its Snapdragon 8 Gen 4 chip, Taiwanese media outlet Commercial Times reported on Aug 17. It seems likely that Qualcomm will only be able to secure around 15% of TSMC’s 3nm production capacity for its chips, with Apple’s upcoming iPhone 15 Pro series expected to dominate the Taiwanese firm’s output. Samsung’s 3nm process yield has significantly improved in recent months, allowing it to catch up with sector leader TSMC.

Why it matters: Adopting 3nm technology will allow Android devices using Qualcomm’s Snapdragon 8 Gen 4 to narrow the performance gap with the forthcoming iPhone 15 Pro series and its A17 Bionic chip. Qualcomm’s Snapdragon system on chip (SoC) lineup currently powers the majority of Android smartphones on the market, with the Snapdragon 8 Gen 4 processor scheduled to launch in 2024.

Details: Qualcomm looks set to adopt a dual-source approach by partnering with both TSMC and Samsung for next year’s Snapdragon 8 Gen 4.

TSMC has indicated that demand for its 3nm process remains strong. The process will support HPC (High-Performance Computing) and smartphones in the second half of this year, accounting for an estimated 4% to 6% of TSMC’s wafer revenue in 2023. The firm has already received customized orders for its N3E process, its latest 3nm offering, which has successfully passed verification and is expected to start mass production in the fourth quarter.
To meet the demand for Apple’s A17 Bionic chip, TSMC aims to reach a monthly production capacity of 100,000 units for the 3nm process by the end of the year. Compared to the 5nm process, the 3nm process is set to deliver an 18% increase in speed, while reducing power consumption by up to 30% under the same performance conditions, according to TSMC.
Qualcomm’s Snapdragon 8 Gen 3 and MediaTek’s Dimensity 9300 are expected to be released in October using TSMC’s N4P (4nm) process, according to the report from Commercial Times. Both companies are projected to adopt the N3E (3nm) process in 2024.
According to Wccftech, a leak of the Qualcomm Snapdragon 8 Gen 4’s specs shows that it will feature custom Phoenix cores and TSMC’s N3E technology. The report mentioned that Qualcomm will apply its self-developed Nuvia CPU architecture to the new chipset.
Qualcomm opted for the 4nm process for this year’s Snapdragon 8 Gen 3 due to the high cost of TSMC’s 3nm process. Currently, Apple dominates the allocation of these cutting-edge 3nm wafers, according to media outlet Wccftech.
In July, Korean media outlet KMIB claimed that Samsung now boasts a 60% yield rate for its 3nm process, slightly higher than TSMC’s 55%. TSMC’s low yield rate has reportedly led Apple to commit to only paying for qualified wafer batches, instead of establishing a standard rate with TSMC.

Context: In the first quarter of 2023, the top three brands in terms of global smartphone chipset shipments were Mediatek with a 32% market share, Qualcomm with 28%, and Apple with 26%, according to market research firm Counterpoint.

Foxconn to exclusively supply Apple’s AI servers: report

Jessie Wu — Tue, 08 Aug 2023 10:08:41 +0000

Foxconn, Apple’s biggest supplier, has secured an exclusive order to supply Apple’s AI servers, which will ship from the company’s Vietnamese factory, Taiwanese media outlet Economic Daily News reported on Monday. Apple’s demand for AI servers and data centers has increased significantly as the company expands its investment in AI development.

Why it matters: The upsurge of generative artificial intelligence products has swept the technology industry in 2023. ChatGPT, the large language model from OpenAI, was estimated to have 100 million monthly active users in June, making it the fastest-growing application in history. In due course, Apple plans to apply its heavy investment in AI research to products including the iPhone and iPad, according to the Financial Times.

Details: As Apple’s largest supplier, Foxconn not only assembles iPhones but also acts as a server supplier for Apple’s data center, according to the Economic Daily News report. With Apple’s recent stepping up of its interest in AI applications, the need for Foxconn’s support has increased.

Foxconn has taken the global lead in the AI server market. The manufacturer already accounts for approximately 40% of the global server market, according to Reuters. Foxconn also provides AI servers for major tech companies including OpenAI, Nvidia, and Google.
Apple CEO Tim Cook confirmed last week that the company has been studying various AI technologies including generative language models for years. Industry observers have speculated that the tech giant’s increase in AI investment may have contributed to its R&D expenditure reaching $22.61 billion last quarter.
Apple is reportedly building a large-scale voice model named Ajax and is expected to launch a generative chatbot soon. Given Apple’s large user base around the world, this puts potential pressure on Google and Microsoft as the tech titans also look to launch similar AI offerings.
There are more than 1.46 billion active iPhone users worldwide as of 2023, according to data from analytics firm Demand Sage. iPhone users account for 21.67% of the world’s total smartphone population, according to the same report. Apple’s mature App Store ecosystem also gives it an advantage over other companies in rolling out AI applications.
Foxconn’s server revenue reached RMB 1.1 trillion ($138.64 billion) last year. According to industry estimates cited by the Economic Daily News, its AI server-related orders surged by billions of dollars in 2022.
Apple is recruiting for dozens of AI-related jobs in its offices across California, Seattle, and Paris. New recruits are expected to engage in the research of large language models that can generate text, images, or codes in response to simple user prompts.

Context: Securing an AI server order from Apple has solidified Foxconn’s leading position as a supplier of AI servers. On August 4, Nvidia shifted some of its AI server orders from its manufacturing partner Wistron to a subsidiary of Foxconn, due to concerns over Wistron’s insufficient production capacity.

Apple widely removing generative AI apps from China’s App Store

Cheyenne Dong — Wed, 02 Aug 2023 09:54:57 +0000

On Tuesday, Apple removed more than one hundred AI-related apps that offered ChatGPT-style services from its China App Store. In a notice sent to affected developers, Apple stated that the removal was “pursuant to orders by the Chinese government” as the related content is deemed “illegal” in China.

Why it matters: The targeted removal of AI-related apps comes two weeks before the implementation of China’s artificial intelligence regulations. The action may send mixed signals to AI developers who aim to offer AI tools for users in China while striving to comply with the country’s regulations.

Dozens of generative AI apps were removed in a single day from China’s App Store, data from mobile application analysis platform Qimai shows, including apps powered by ChatGPT and domestic-grown iFlyTek’s AI chatbot SparkDesk.

Details: A source close to Chinese regulators said the reason for taking the apps off the store is that they are not standardized enough in terms of data collection and usage, according to local outlet China Star Market. The source added that it is expected to “take a long time” before these apps are allowed back to the store.

A developer behind OpenCat, a popular AI app that had a rating of 4.8 before its removal early Tuesday, shared a screenshot from Apple entitled App Review on Twitter, which stated that the Chinese government has tightened regulations over deep synthesis technologies and generative AI. OpenCat, powered by ChatGPT, did not secure a license from the Ministry of Industry and Information, which may have contributed to its removal from the App Store.
SparkDesk, an AI application developed by voice recognition company iFlyTek and built on its proprietary large language model, has been relaunched on the iOS Marketplace 12 hours after it was taken offline.
Search giant Baidu’s ERNIE Bot is still available for download on the Chinese App Store, with only those with invitation codes having access to the chatbot service.

Context: As the latest wave of artificial intelligence-related products continues to spread worldwide, governments are racing to keep pace with the rapidly developing technology. China is set to implement new AI restrictions starting August 15, aiming to regulate the development and deployment of AI within the country.

The new AI rules in China require companies providing generative AI services to the public to “adhere to core socialist values,” and refrain from publishing content that jeopardizes national interests or spreads false information.
The regulations also emphasize that AI-related services will be treated with an “inclusive and prudent attitude,” indicating an attempt to foster innovation while ensuring compliance.

TSMC’s 3nm yield rate reportedly just 55%, with Apple only paying for qualified circuits

Jessie Wu — Mon, 17 Jul 2023 10:05:29 +0000

TSMC is struggling with the efficiency of its new 3nm manufacturing yield, with the semiconductor giant currently hitting a yield rate of just 55%, far below the standard expected, according to a July 13 report in technology media outlet wccftech. The low yield rate has reportedly led Apple to only pay for qualified wafer batches instead of establishing a standard rate with TSMC. Apple occupies 90% of TSMC’s 3nm process production capacity for its A17 Bionic and M3 chips.

Why it matters: The iPhone 15 Pro and iPhone 15 Pro Max are widely expected to become the first smartphones powered by TSMC’s 3nm process chipset. However, TSMC’s yield rate of 55% may cause it to lose customers to competitors such as Samsung, which has reported a 60% to 70% yield rate with its 3nm process.

Details: Brett Simpson, senior analyst at Arete Research, claimed that TSMC and Apple have reached a special deal, through which Apple will only pay for functional circuits, rather than paying standard pricing for the entire wafer. If the 3nm yield rate improves to a regular 70%, the deal may be adjusted so that Apple pays up to $17,000 per wafer in the second half of 2024.

The monthly production of TSMC’s 3nm wafers is expected to reach 100,000 pieces by the end of 2023 to meet the demand for the iPhone 15 series smartphones.
In 2024, Apple may switch to TSMC’s N3E process technology instead of N3B process technology, due to the lower production cost and higher yield rate of the N3E, according to the wccftech report. However, the N3E process may reduce the processor performance of the A17 Bionic and M3, and a final decision has therefore not yet been made. N3B is the original 3nm node created in partnership with Apple, while N3E is the simpler version produced for the majority of TSMC’s customers.
The iPhone 15 series will begin mass production in August, with the iPhone 15 Pro and iPhone 15 Pro Max using the A17 Bionic processor. As Apple’s first chip manufactured with a 3nm process, the A17 Bionic is expected to bring major performance and efficiency improvements over its predecessors the A14, A15, and A16 chips, which used a 5nm process.
Apple plans to release a 13-inch MacBook Pro with its M3 chip, as well as 14-inch and 16-inch models of the MacBook Pro with M3 Pro and M3 Max chips, according to a report from Bloomberg.

Context: In May, Samsung said in its first quarterly earnings report that its 3nm chip process had an impressive 60% to 70% yield rate. Samsung previously struggled with its 4nm process, which caused Qualcomm to partner with TSMC for the Snapdragon 8 Plus Gen 1 and Snapdragon 8 Gen 2 over the Korean company.

TSMC’s 4nm process yield rate was reported to be around 70% to 80%, while Samsung only achieved approximately 50%, according to Digitimes. As Samsung gradually improves its 3nm and 4nm process yield rates, the company may regain former customers it lost to TSMC.

Surging iPhone 15 series orders may boost TSMC revenue in the third quarter by 11%

Jessie Wu — Wed, 28 Jun 2023 10:38:34 +0000

Apple’s orders for the iPhone 15 series’ 3nm chips may boost TMSC’s revenue in the third quarter of 2023 by 11%, with a company representative estimating that the firm’s second quarter revenue will reach approximately $17 billion, according to Economic Daily News. Apple is the largest customer for TSMC and the consumer tech giant’s chip orders accounted for 23% of TSMC’s revenue in 2022, according to its yearly financial report. This proportion may be even higher this year.

Why it matters: With Apple’s new iPhone 15 series set to be released in September, industry analysts are predicting that iPhone 15 series shipments may reach 85 million units, which is 9% higher than the 78 million units of the iPhone 14 series shipped last year. This marks a growth opportunity for TSMC, as the company is the exclusive manufacturer of Apple’s 3nm advanced processor.

Details: Apple is widely expected to switch to a 3nm process for its A17 Bionic chip in this year’s flagship iPhone 15 Pro and iPhone 15 Pro Max. TSMC’s 3nm process is expected to lead to a combination of performance and efficiency improvements.

In order to meet the mass production requirements of the new iPhone 15 series, Foxconn has been stepping up its recruitment in Zhengzhou, the central Chinese city home to its largest facility. Currently, the number of recruits per day has reached around 1,000, according to Economic Daily News. The report suggested that the peak production period will run from July to September, by which time recruitment may reach 10,000 new workers per day.
Compared to the current 4nm process used in Apple’s iPhone 14 Pro chips, the ‌3nm‌ process brings both speed and efficiency improvements. The ‌3nm‌ technology is predicted to achieve a 35% power efficiency improvement and 15% faster performance compared to 4nm. Additionally, Apple’s M3 chip for new Macs and iPads is expected to use the ‌3nm‌ process, according to MacRumors.
Apple has booked nearly 90% of chip supplier TSMC’s first-generation 3nm process capacity this year for future iPhones, Macs, and iPads, according to industry sources cited by DigiTimes.
Due to the strong demand for the 3nm process, TSMC’s 3nm production capacity is in short supply, although the company has not announced many details about its monthly production capacity. The industry estimates that TSMC’s 3nm production capacity needs to increase to 100,000 pieces per month if they want to fully meet customer demand this year.

Context: On June 23, the US Department of Commerce announced the expansion of subsidies for the Chip Act, according to the Wall Street Journal. Originally, the subsidies were only for companies building new fabs in the US, but they now include support for supply chain manufacturers such as those working in chemicals, materials, and semiconductor equipment.

By the end of 2022, TSMC’s new production base in the US had attracted dozens of chip-related suppliers to follow suit by building factories in the area, including Dutch ASML, US Applied Materials, US Lam Research, Tokyo Electron, and Sunlit Fluto & Chemical.

TSMC starts 2nm pre-production, targets mass production by 2025: report

Jessie Wu — Mon, 05 Jun 2023 10:52:00 +0000

On Monday, leading chip manufacturer TSMC started pre-production operations on its 2nm process, according to Taiwan-based media outlet Economic Daily News. Sources revealed that the chip maker will use an advanced AI system to improve energy efficiency and accelerate efficiency. Apple and Nvidia are expected to be among the first batch of customers for the Taiwan-headquartered company’s 2nm production, putting significant pressure on its competitors such as Samsung.

TSMC did not comment on specific details in response to the report, but stated that the development of 2nm technology is progressing well and aims to hit mass production by 2025.

Why it matters: TSMC’s 2nm plan could bring it into head on competition with Samsung. Samsung, which beat TSMC to be the first chip manufacturer to widely employ 3nm processes, also announced last year that it expects to have 2nm chips in mass production by 2025.

Details: According to the report, TSMC is estimated to begin test producing hundreds of 2nm chips this year, laying the foundation for mass production in 2025. The 2nm production base will be established at TSMC’s Fab 20 at Hsinchu Science Park, with subsequent expansion to Taichung Science Park, encompassing a total of six phases of engineering.

TSMC has already begun to dispatch engineers to the Hsinchu Science and Industrial Park for the 2nm process, building a research and development team of over 1,000 employees, according to Economic Daily News.
In the initial stages, TSMC will set up a small trial-production line at its Hsinchu headquarters, with a target of taping out around 1,000 2nm chip pieces by the end of this year, the report said.
On April 26, TSMC showcased its latest technology developments at its 2023 North America Technology Symposium, including in the fields of 3nm and 2nm technology.
The 2nm process will be the first process node at TSMC to employ gate-all-around (GAA) transistors, nanosheet transistors which TSMC says will boost performance, energy efficiency, and transistor densities. The company claims this will offer an improvement in speed of up to 15% over 3nm at the same power, and up to 30% power reduction at the same speed.
Nvidia’s CEO Jensen Huang previously said at GTC 2023 that TSMC will bring the AI system that Nvidia and TSMC and other partners worked on into 2nm trial production this June. The system promises a computation time that is 1/40th of its predecessor.

Context: Samsung expects to have 2nm chips in mass production by 2025 and plans to deliver mass production using a 1.4nm process by 2027.

TSMC reported record revenue for 2022 of NT$2.26 trillion ($74.25 billion), a rise of 42.6% from 2021. It was the first time the world’s largest contract chip manufacturer reached NT$2 trillion in revenue for a year.
The Apple iPhone 15 Pro will be powered by the A17 Bionic chip based on TSMC’s 3nm technology, according to product review site Tom’s Guide. The chip is also expected to debut in this year’s upcoming MacBook models.

Apple pauses plan to source YMTC storage chips: report

Ward Zhou — Tue, 18 Oct 2022 08:29:00 +0000

Apple has paused its plans to use storage chips from Chinese supplier Yangtze Memory Technologies (YMTC) due to mounting geopolitical pressure and criticism from US policymakers, sources told Nikkei Asia on Monday.

Why it matters: Apple’s reported move comes a week after the US announced sweeping export controls on China’s semiconductor industry, largely cutting the country off from accessing advanced chips and parts to make them. Apple’s decision to put the brakes on its deal with YMTC is a major blow to China’s most promising chip maker in NAND flash memory, as well as to Apple itself, which favored YMTC’s offering as it was 20% cheaper than that of its rivals.

READ MORE: Chinese semiconductor firms bear heavy fallout of US chip sanctions

Details: Apple initially planned to use YMTC’s storage chips as early as this year and had already completed the process to verify the supplier’s 128-layer 3D NAND flash memory to use for iPhones, supply chain executives told Nikkei Asia.

In April this year, YMTC passed Apple’s verification process to become the American tech giant’s third storage chip supplier alongside US-based Kioxia and Korea-based SK Hynix, according to DigiTimes.
Apple was planning to use YMTC’s chip in iPhones sold in the Chinese market, Nikkei Asia’s report said, adding that the firm was originally considering buying up to 40% of the storage chips needed for all iPhones from YMTC.
Now, even if Apple was able to secure a license to use YMTC’s 128-layer storage chip, the Chinese firm may not be able to produce advanced chips due to the US’s newly-introduced export bans affecting its production process, analysts told Nikkei Asia.
Apple’s plans to work with YMTC were abruptly changed after US authorities announced comprehensive export bans on advanced chips in China Oct. 7. These measures included putting various Chinese firms on an Unverified List, which indicates that US officials cannot verify who the firms’ end users are; YMTC was one of those added to the list. US companies are barred from sharing any designs, technology, documents, or specifications with companies on the list without a license.
Apple first began talking to YMTC as early as 2018 for cheaper storage chips according to Nikkei Asia.
The discussions between Apple and YMTC drew US officials’ attention in September of this year, when the US government reportedly began to consider putting YMTC on a blacklist and starting an investigation into the Chinese company, the Financial Times reported.

Context: Founded in 2016, YMTC is a leading Chinese semiconductor firm focusing on storage chips with self-developed Xtacking architecture. Storage chips are a critical component in devices such as smartphones and personal computers.

The state-owned firm receives funds from China’s semiconductor “Big Fund,” according to the Chinese enterprise database Qichacha.
Since 2018, YMTC has seen significant advances in its storage chip technology, as it has skipped ahead twice in the critical field of nodes of chip layers – from 64 to 128 and from 128 to 232, according to the firm and Chinese state media Global Times.

China’s Sichuan to cut power use to deal with heatwaves, hitting electronics factories

Ward Zhou — Wed, 17 Aug 2022 10:35:00 +0000

Regional authorities in China’s central province of Sichuan said they will cut power supply to industrial factories for six days as the region suffers from heatwaves unseen in 60 years. The province saw a 25% surge in power consumption this year.

Why it matters: More than a dozen notable electronics and semiconductor manufacturing firms, including BOE, Foxconn, CATL, and Texas Instruments, have factories in Sichuan. The power cut will directly impact their production, affecting downstream firms like Apple, Tesla, and Nio.

Details: The power cut will go into effect from Monday to Saturday, with all factories in the 19 cities of Sichuan province asked to suspend production, including those listed on the so-called “protected whitelist.” But the level of impact seems to vary between companies.

Major Chinese display maker BOE confirmed that their factories based in Chengdu and Mianyang would “reduce their power usage to a minimum level” during the period, according to an announcement from the firm yesterday.
Foxconn also shut down its factories in Sichuan temporarily. Ming-Chi Kuo, an analyst at TF International Securities, said the cut would “affect iPad assembly plants in Chengdu.” He added that “impacts should be limited if the power outage can end on August 20” and that flexible production scheduling would help to lower the effects.
However, some semiconductor firms, including Chengdu Silan Semiconductor Manufacturing, Chengdu CORPRO Technology, and Square Route’s Chengdu sub-firm, told 21st Century Business Herald they are less affected by the policy.
CATL, a major Chinese battery maker, also paused production in its Sichuan-based factory yesterday, sources familiar with the matter told Jiemian.

Context: Sichuan is a top area for producing electronics in China’s midwestern region. It brought in RMB 1.5 trillion ($215.6 billion) in revenue in 2021, according to 21st Century Business Herald.

There are currently 717 registered firms in Sichuan focusing on hardware and smart devices, according to Qichacha.

Top 5 Chinese tech firms have lost nearly half of combined market cap in 2 years

Emma Lee — Mon, 09 May 2022 10:49:45 +0000

Chinese tech watchers and venture capitalists are growing increasingly concerned over the long-term market appeal of Chinese tech companies. Industry leaders are sharing and quoting a Chinese financial infographic comparing the changing market capitalization of Apple and top Chinese firms over the past two years to show just how much the value of China’s tech giants has dropped.

Why it matters: After two decades of enormous growth, the top five Chinese tech giants have lost at least 46% of their combined market cap over the past two years in the face of headwinds from saturating markets, pandemic outbreaks, trade tensions, and rigorous government regulations.

(Image credit: TechNode/Ward Zhou)

Details: Chinese tech companies are less valuable than they were two years ago. On April 26, Chinese financial media outlet Jin10 Data published an infographic (in Chinese) showing the drastic shrinkage in the valuation of China’s top tech firms. The infographic compared the market cap of US smartphone maker Apple with Chinese tech firms, showing that Apple’s $2.7 trillion valuation was worth more than double the value of China’s top 49 tech firms combined.

The graphic highlights the stark market cap difference by comparing Apple and Chinese tech firms’ April market cap data with those from two years ago. On April 27, 2020, Apple, valued at $1.2 trillion at the time, roughly equaled the combined valuation of the top five Chinese tech firms — Alibaba (which had a market cap of $548.2 billion), Tencent ($508.7 billion), Meituan ($74.9 billion), JD.com ($66.2 billion), and Pinduoduo ($59.4 billion). Two years later, Apple’s valuation has more than doubled while many Chinese tech firms’ valuation has decreased or stagnated, making the former now worth more than 49 top Chinese tech firms combined.
Chinese financial writer Wu Xiaobo cited the infographic in a post titled “What’s wrong with us?” lamenting the loss of the “upbeat spirit” of China’s business world.
China’s tech clampdown has wiped hundreds of billions off the valuation of Alibaba and Tencent, China’s two largest tech companies, amid the US-China trade war and the country’s antitrust clampdown since April 2020.
On Monday, the market cap of Tencent, currently the most valuable Chinese tech firm, slumped to $427.6 billion, while Alibaba’s market cap has more than halved to $247.5 billion. Pinduoduo also lost more than $10 billion in valuation.

A Chinese financial infographic showing the shrinking market value of Chinese tech companies sparked concerns among Chinese tech watchers. (Image credit: TechNode/Ward Zhou) Credit: Jin10.com

Context: The change in value of China’s biggest tech firms only reflects listed companies. Some of the country’s biggest tech players that remain private are not included in the comparison, such as ByteDance, Huawei, and Alibaba’s Ant Group.

China is recording slow growth in the number of unicorns, or startups valued at more than $1 billion and not yet listed on a stock exchange, according to the Global Unicorn Index 2021 released by Hurun Research Institute in December. In 2021, China counted 301 unicorns, or 28% of the 1,058 unicorns worldwide, down from 41% in 2019.

Apple’s supply chain in China hit hard by lockdowns in eastern China

Ward Zhou — Wed, 20 Apr 2022 09:36:34 +0000

Apple’s supply chain companies in China face major production disruptions as Chinese cities follow the country’s strict covid policies with full and partial lockdowns since late March to tackle a new wave of Covid-19 outbreaks. Although Shanghai and nearby cities have recently begun to assist manufacturers in resuming operations, analysts still expect major disruptions to Apple’s shipments.

Why it matters: China plays a vital role in Apple’s supply chain and its global shipments, with Chinese factories accounting for almost half of Apple’s total supply chain. iPhone shipments could fall behind by 6 to 10 million units, according to one analyst quoted by 9to5mac, an Apple daily news site. Meanwhile, expected arrival times for some iPad and Mac models have also been disturbed by weeks-long delays.

Credit: TechNode/Ward Zhou

Details: Shanghai began a two-step city-wide lockdown on March 28 as daily new Covid cases broke 4,000. The harsh control measures soon spread to neighboring provinces of Jiangsu and Zhejiang. These eastern regions are key to China’s high-tech manufacturing sector, including carmaking, semiconductors, and electronics.

Shanghai, its nearby Jiangsu province, and the southern province of Guangdong are home to more Apple supplier factories than anywhere else in the country, according to TechNode research on Apple’s supplier list. These three areas account for one-third of Apple’s total factories worldwide and 61% of China’s.
At least 30 companies in Apple’s supply chain have factories in Shanghai, including Foxconn, a major assembler for Apple. Foxconn previously halted production at its iPhone assembly factory in Shenzhen on March 14 due to a lockdown in the southern city, before resuming production after one week.
Quanta is another key supplier based in Shanghai, which produces the MacBook for Apple. The company told Nikkei Asia that it had stopped production to comply with the local government’s Covid-19 prevention measures, beginning in early April.
Apple’s second-largest electronic manufacturing services company, Pegatron, has also paused operations in Shanghai and neighboring city, Kunshan, according to Ming-Chi Kuo, an analyst for Apple.

Credit: TechNode/Ward Zhou

Context: Shanghai’s ongoing weeks-long lockdown has triggered severe cascading effects in various industries from automobile to semiconductor to e-commerce. The Shanghai municipal government encouraged several key industries to resume production on April 16. But manufacturers still expect delays in the future.

On April 18, Shanghai released a whitelist of 666 companies of key industries to make sure they restart production as soon as possible. Auto manufacturers and suppliers account for more than a third of the list, followed by pharmaceutical companies, according to a “whitelist” created by the Ministry of Industry and Information Technology last week and seen by Chinese media Caixin.
Following Shanghai’s footsteps, Suzhou also whitelisted 1,696 companies that play a key role in the region’s manufacturing supply chain to prepare to restart production, Foxconn was one of the companies on the list.

Chinese user sues Apple over app prices, citing antitrust law

Wei Sheng — Wed, 24 Feb 2021 07:29:17 +0000

A Chinese Apple user has sued the American tech giant over its higher prices for apps and services compared with Android marketplaces, citing China’s antitrust law, local media reported on Wednesday.

Why it matters: China has recently tightened regulations on tech companies’ anti-competitive practices. While those moves mainly targeting local firms, the suit may thrust Apple into the spotlight.

Firms that have been fined or investigated in recent months include Alibaba and affiliates of Tencent and logistics giant SF Express.

Details: Jin Xin, an Apple user has accused the company of “abusing its market dominant position” for charging developers high commissions, and barring users from using payment methods other than Apple’s in-app purchase feature, local newspaper Southern Metropolis Daily reported Wednesday.

Jin, whose gender and age were not disclosed, said in a court filing that pricing for apps and services like video-streaming app iQiyi, podcast app Himalaya, and music app NetEase Music are higher in Apple’s App Store than in Android app stores.
The plaintiff said that was because Apple charges app developers commissions as high as 30% of sales, which were ultimately transferred to consumers.
Users cannot choose payment methods other than Apple’s in-app payment so that they have to accept higher prices, Jin said.
Citing China’s Anti-Monopoly Law, the plaintiff said in the court filing that those practices were “anti-competitive behavior” and had deprived users of their rights of fair trade, according to the report.
The Shanghai Intellectual Property Court will hear the case, said the report, but the hearing date is not finalized.
Jin could not be reached for comment. Apple did not respond to a request for comment on Wednesday.

Context: China has recently formalized new antitrust guidelines targeting tech companies, which forbid online platforms from forcing merchants into exclusivity deals, and offering different prices based on user data.

State Administration for Market Regulation (SAMR), China’s top antitrust watchdog, in January 2020 proposed an overhaul of the country’s Anti-Monopoly Law to include internet-based services in the scope of antitrust regulations.

Apple to remove all unlicensed games from China App Store

Wei Sheng — Wed, 09 Dec 2020 07:15:16 +0000

Apple has told developers worldwide it would remove any remaining paid games that are not approved by Chinese authorities after Dec. 31, ending a six-month-long purge of unlicensed games.

Why it matters: The move means it will be almost impossible for international mobile games makers to access the Chinese market if they don’t comply with the country’s strict content rules. Chinese Android app stores have long required game makers to obtain such licenses if their apps contain paid features.

Details: In an email to developers on Dec. 2, Apple said that games without a valid game license number will be removed by Dec. 31, according to a report shared with TechNode Wednesday by AppInChina, a mobile services company that helps foreign apps enter the country.

“As you may know, Chinese law requires games to obtain an approval number from China’s National Press and Publication Administration,” Apple said in the email. “After Dec. 31, your game will no longer be available on the App Store in China mainland until an approval number is provided with your next submission.”
Apple did not reply to TechNode’s request for comment on Wednesday.
It is unknown how many titles will be affected. Apple has removed more than 90,000 games from the China App Store since July, according to AppInChina, though these may include removals for other reasons.

READ MORE: Apple purges 3,300 games from China App Store in 2 days

Context: The purge of unlicensed games kicked off in July when Apple started to act on a February warning to developers to submit a valid license number or face removal. The company removed some 1,571 and 1,805 games from its App Store in China on July 1 and July 2, respectively, versus an average of around 200 titles removed in June.

Since 2016, Chinese regulators have required all paid games or games that offer in-app purchases to obtain a publication license before they can be uploaded to app stores.
Foreign companies are not allowed to apply for the license. They have to partner with local companies to legally launch their paid games in China. So far, only 97 foreign games were issued game licenses this year, according to AppInChina.

Huawei’s Harmony OS: a third major mobile operating system?

Wei Sheng — Wed, 23 Sep 2020 09:25:11 +0000

Huawei’s long-awaited Android replacement is here. On Sept. 10, the company announced that its in-house mobile operating system, the Harmony OS, will be available on handsets starting next year.

The announcement came just days ahead of a US Commerce Department deadline which cut the company off from all possible sources of high-end chips, critical for its smartphone and carrier businesses. Analysts said the company may have to halt hardware production starting in the middle of next year.

The company first debuted Harmony OS in August 2019, shortly after new Huawei devices lost access to Google services on the official version of Android as a result of a May 2019 US ban. Harmony was widely seen as an alternative to Google’s Android mobile operating system, but at first Huawei only deployed it on devices like smart television sets and smart watches.

Starting from scratch

A third operating system outside of Apple’s iOS and Google’s Android could be an important source of revenue for Huawei’s consumer business to offset losses in hardware sales. In 2019, income from mobile services accounted for 10.5% of Google parent company Alphabet’s revenues and 17.8% of Apple’s, according to TechNode’s calculations.

Experts say that it will be difficult for Huawei to generate material revenue from the new operating system. The company faces challenges ranging from establishing a profitable business model to attracting app developers. If Huawei can no longer make smartphones, persuading other phone makers to adopt the system will prove challenging, they said.

Both Google and Apple take a 30% cut from transactions made on their platforms, which include sales of apps and digital content, as well as in-app purchases.

But there is a difference in China which makes earning revenue more difficult, according to Rich Bishop, chief executive officer of Appinchina, a company that helps overseas developers distribute their apps in China.

“All of the [third-party Android] app stores in China only make money from games. For any non-gaming apps, they don’t charge any fee.”

“But if they are able to make Harmony OS successful, for example, they have 500 million people around the world using Harmony OS to download apps and games from the Huawei store, then potentially they could make a lot of money,” Bishop explained.

“But that really depends on whether they can persuade everybody to sign up to Harmony OS.”

Will Huawei convince developers?

It is relatively easy for a developer to convert an Android app to a Harmony OS app, Bishop said. “Huawei obviously is a massive company with a lot of resources, and they are working very hard to try to persuade as many developers as possible to set up a Harmony version of their apps,” he said.

But according to Richard Yu, president of Huawei’s consumer business, the company’s mobile service ecosystem now has around 1.8 million developers, but only 96,000 apps. Most of these developers have yet to make an app for Harmony OS.

“Most developers are basically going to wait and see because they don’t particularly want to start assigning resources to develop for a third mobile OS,” Bishop said.

“I think they are just gonna see how successful the ecosystem is and whether other companies are making good money from Harmony OS, and then they may decide to develop Harmony OS apps too.”

Weighing politics and competition

The other challenge Huawei faces in promoting the Harmony OS is attracting new users. It is now the world’s largest smartphone vendor, but its handset capacity is under huge pressure because of the semiconductor restrictions.

Rumors spread that Huawei smartphone peers Xiaomi, Oppo, and Vivo could adopt Harmony OS, with a number of articles in Chinese either predicting that they would or calling upon them to do so in support of the company. Huawei denied that it had reached a deal to put Harmony on competitors’ phones, but none of the other companies have commented.

But they would have to be very patriotic to support a competitor.

“Smartphone makers like Xiaomi, Oppo, and Vivo have been facing great pressure from Huawei in the past year after it shifted its focus on the domestic market,” Will Wong, analyst at market research firm IDC, told TechNode.

“If they adopt Harmony OS, they are essentially helping Huawei. So I think the possibility is low.”

Bishop of Appinchina agrees. “I don’t think that other domestic manufacturers like Xiaomi and Oppo would want to use Harmony OS, because obviously, it is a much weaker ecosystem than Android. And it’s run by a competitor, Huawei,” he said.

Both Wong and Bishop reckon that the only reasons that other Chinese phone makers would use Harmony OS would be “political.”

“I don’t think Huawei’s competitors will say ‘absolutely no,’ to Harmony OS because the political risk is a very important factor in today’s market,” said Wong.

“The only way I can really see it working is if the Chinese government, because of the US-China decoupling, says: ‘all right, China needs its own mobile OS.’ And therefore, they kind of require every Chinese manufacturer to offer Harmony OS or to have it as an option,” said Bishop.

On Wednesday, Zhang Pingan, president of Huawei’s consumer cloud business unit, told reporters that the ecosystem of Harmony OS is always “open” to other smartphone makers.

“I think we will work together with all hardware makers to build a better ecosystem and help developers avoid switching back and forth between different platforms,” he said.

INSIGHTS | Smartphone makers race to 5G amid the post-covid Covid slump

Evan Huang and Heather Mowbray — Mon, 14 Sep 2020 05:57:53 +0000

The global economic downturn caused by Covid-19 was always going to hit the smartphone market. But as smartphone makers shifted their conferences online, pandemic conditions eased up in China, making it the only phone market in the world that saw sequential growth in the second quarter of the year.

But behind the dazzling results lurk some worrying realities that have cast a shadow over both China’s prospects and the global smartphone market. Chinese leader Huawei is trapped under sanctions. Oppo and Vivo have proved limited in their capacity to produce top-notch handsets.

Function fatigue has set in among consumers. For years, manufacturers have bet on camera technology to sell new devices. Consumers are eager for truly disruptive innovation to raise its head.

Editor’s note

The Insights column is a little different this week—we’re bringing you an overview of the state of play of China’s smartphone makers, courtesy of our colleagues at cn.technode.com. Translation by Heather Mowbray.

A ‘new’ 5G Iphone?

Apple’s Chief Financial Officer Luca Maestri told investors on a recent call, “Last year we started selling new Iphones in late September; this year we expect supply to be available a few weeks later.” The new phone may launch on time, but delivery and sales will face delays.

It may well be that Tim Cook isn’t worried about the delay. Last year, even though Apple was forced to accept price cuts and massive discounts, the new Iphone 11 became one of the best-selling phones in China. Alongside it came the revamped Iphone SE, whose strong value for money made it the most popular Apple model in the world. Global shipments of the new Iphone SE reportedly reached 12-14 million units in Q2 2020.

The success of these two phones gives Apple reason for confidence. According to data from market research firm CINNO, in Q2 2020, Iphone sales in China increased 62% year-on-year to 13 million units.

With this momentum, the launch of the 5G Iphone, expected in fall 2020, is hotly anticipated.

5G is becoming an essential selling point in the Chinese market. Statistics from the China Academy of Information and Communications Technology show that domestic 5G mobile phone shipments reached 13.911 million units in July. The data shows that 5G smartphones accounted for 62.4% of domestic mobile phone sales, exceeding 60% of the total for the second consecutive month.

The wave of 5G replacements is likely to build over the next few months. Analysis by research firm Counterpoint suggests that more than 50% of global 5G phone sales this year will come from China.

The survival of Huawei

At the end of March, Huawei rotating chairman Xu Zhijun said that 2020 was Huawei’s most difficult year, and called for the company to come together to overcome its difficulties.

When it rains, it pours.

According to international media reports, Huawei’s temporary reprieve from a ban on importing US technology expired on Aug. 13 this year. There has been no word of a renewal.

Its relationship with the Google Play Store has been severely disrupted. Huawei devices that came with pre-installed Google mobile services can still download and update Google applications through other channels. But newly released phones, such as the P40, cannot use such services.

Huawei is working to mitigate the loss of the Google Play Store. Its phones come equipped with a Huawei suite of mobile services, and a homegrown operating system called HarmonyOS, or HongmengOS in Chinese, is coming to smartphones in early 2021, the company announced Sept. 3.

On the existing foundations of the HarmonyOS ecosystem, breaking into overseas markets may take a while. Few of the world’s most popular apps are available in Huawei’s app store, although some can be installed independently. Richard Yu has predicted that apps like Facebook will eventually join the Huawei app store.

Harder to evade are the US’s new restrictions on the company’s semiconductor supply chains.

Huawei’s executive director Richard Yu said at the China Informatization Hundreds Conference 2020 that due to the second round of sanctions by the United States, Huawei will lose its chip making capacity on Sept. 15. As a result, the company’s smartphone shipments this year might be fewer than last year’s 240 million, Yu said.

The dwindling supply of chips will severely challenge Huawei’s market competitiveness in the phone business. Coupled with the ban on overseas GMS services, its vitality in overseas markets has been struck a heavy blow, and this has cast a long shadow over Huawei’s confident New Year vision.

Xiaomi at ten: a fork in the road

When Covid-19 hit China, Xiaomi’s shipments were already lowest among the four leading manufacturers, which also include Huawei, Oppo, and Vivo.

Despite strength in online sales channels, the epidemic era hasn’t been kind to it. In Q2 2020, the company accounted for only 10.4%, or 9.1 million, of the 87.8 million smartphone units shipped in China, its 21.9% year-on-year drop in sales second worst among the major brands, data from IDC said.

Xiaomi’s setbacks overseas have been worse as it lost production and order capacity due to the virus. In India, one of its strongest markets, Xiaomi’s overall shipments fell 48.7% year-on-year.

Xiaomi models do not have a reputation for value, and it hasn’t come up with an alluring flagship model to attract consumer attention. Its surround-screen model , announced with much fanfare last year, was indefinitely delayed in 2020. The same holds true for chips. After the first generation of its phone chips was released in 2017, Xiaomi hasn’t released any plans for a second generation.

Xiaomi also lags its peers in R&D spending. In 2019, Oppo and Vivo both increased their R&D spend to RMB 10 billion ($1.46 billion) . Xiaomi only invested RMB 7.5 billion in 2019, and plans to reach RMB 10 billion this year.

Lei Jun, Xiaomi’s co-founder and CEO, has pursued business diversification for a while. But despite growth in IoT sales prior to 2020, Xiaomi remains a smartphone company. Its handset shipments account for 50.1% of its total revenue.

Internet of Things (IoT) products have performed well in recent years. But even in this market, Xiaomi is slowing down, weighed down by excessive reliance on hardware sales and the complicated supply chain logistics of selling hundreds of products. Its Q1 2020 earnings report shows little growth in IoT.

Oppo is diversifying

Meanwhile, Oppo has increased its investments overseas and established a semiconductor company called Zheku Technology.

Zheku may be Oppo’s way out. The company has always focused on marketing and offline channels and has suffered a lot during the Covid year. Its eye-catching advertisements—often seen on other manufacturers’ gadgets—are increasingly unable to cover up performance shortcomings. These are now compounded by anti-China sentiment in India, which sent shipments to India plummeting in the second quarter by 51% year-on-year. Oppo has lost more than any other of the top five brands in India.

For Oppo, this year may be the most difficult since it got into smartphones. This is despite Oppo’s accomplishments in 2019: reorganizing its product line, strengthening finances, establishing an independent chip department, developing independent sub-brand Realme, and launching IoT products; it also began to increase R&D to compete with its rivals.

A painful readjustment is now necessary. In the face of these challenges, Oppo recently announced that OnePlus founder and CEO Pete Lau (who will remain founder and CEO of OnePlus) has returned as senior vice president of shared parent company Ouga Holdings, and is fully responsible for the Ouga ecosystem’s product planning and experience, including Oppo.

In desperate times, Oppo is rallying its troops, and wants to reorganize its product line by bringing back veterans of the brand, strengthen differentiation, guard its market share, and regain the attention of its customers—who have very much glanced away.

Apple purges 3,300 games from China App Store in 2 days

Wei Sheng — Fri, 03 Jul 2020 08:50:44 +0000

More than 3,000 games have been removed from Apple’s China App Store in the first two days of July, a move the company has warned developers about as it closes a loophole which allowed unlicensed paid games to list on the platform.

Why it matters: This is one of the biggest game purges on Apple’s App Store. It comes after the American technology giant moved to comply with China’s strict gaming regulations, requiring game developers worldwide to gain approval from Chinese regulators before being published in the Chinese store.

Foreign companies are not permitted to directly apply for the license. They have to partner with local companies to legally launch their paid games in China. It can take months for game makers to have their titles approved.

“We are seeing unprecedented numbers of games dropping off the Apple App Store China daily since Apple implemented this new policy on July 1. Sadly, because China only approves about 1,500 game licenses a year, and the process itself takes six to 12 months, most of these apps will be waiting a long time before they are allowed back on the store.”
— Todd Kuhns, marketing manager at AppInChina, to TechNode

Details: Some 1,571 and 1,805 games were removed from Apple’s App Store in China on July 1 and July 2, respectively, in a sharp surge compared with the end of June, when an average of around 200 titles were removed daily, according to figures from Appinchina.

Apple has started to ask game developers to provide a gaming license number from Chinese regulators before they file updates of their games, according to screenshots provided by Appinchina. Games lacking a number or with invalid numbers will be removed from the Chinese store after the update.
Games that don’t attempt to make an update will not be actively removed from the Chinese App Store for the time being, according to Kuhns.
Kuhns expects the daily number of removed games will “rise and plateau for a while” because the titles won’t be taken down until the unlicensed game is updated.
Titles removed on Friday already topped 700 as of the time of publication.
He estimates at least 21,000 titles will be affected in total.

Context: Since 2016, Chinese regulations have required all paid games or games that offer in-app purchases to obtain a publication license before they can be uploaded to app stores.

Before Apple took action in February, developers were able to list unlicensed games by submitting a random number instead of an official license number.
In a notice sent to game developers in February, Apple required license numbers for paid games or games offering in-app purchases before June 30 if they want to distribute in mainland China.
“Chinese law requires games to secure an approval number from the General Administration of Press and Publication of China,” Apple said in the notice.

Apple freezes updates for unlicensed games in China

Wei Sheng — Thu, 02 Jul 2020 08:27:26 +0000

Apple has frozen updates of mobile games that didn’t provide gaming licenses from Chinese regulators. The move came after a “loophole” used by foreign game makers to bypass China’s strict gaming regulations was closed by Apple at the end of June.

Details: The American tech giant said developers would not be able to update their games without a valid license issued by the Chinese government, Financial Times reported Thursday.

Games will not be removed from Apple’s App Store, and the company will allow games to be downloaded, said the report.
TechNode reported in February that Apple sent a notice to developers requiring them to submit valid license numbers for paid games or games offering in-app purchases before June 30 in order to distribute in mainland China.
In a notice sent to game makers that have titles listed on the Chinese App Store, Apple said: “Chinese law requires games to secure an approval number from the General Administration of Press and Publication of China.”

Context: The Chinese National Radio and Television Administration, China’s top content regulator, issued a notice in 2016 requiring mobile games to obtain approval before publishing.

Apple previously required developers to submit a license number to upload games to the store, but a report by The Information suggested in 2018 that Apple didn’t actually check the license numbers.
At the time of the report, developers were able to list unlicensed games by submitting a random number instead of an official license number.

Apple to remove unlicensed games from Chinese store in July

Wei Sheng — Tue, 23 Jun 2020 05:29:46 +0000

Apple will start removing unlicensed games from its China app store as a deadline given by the American technology giant passes on June 30. The company’s move to enforce Chinese game licensing regulations is expect to affect thousands of mobile games that have relied on a loophole to list on the Chinese app store.

Why it matters: Apple’s move will make it much harder for international mobile games developers to access the Chinese market, requiring them to find a Chinese partner to apply for a license from regulators.

Since 2016, Chinese regulations have required all paid games or games that offer in-app purchases to obtain a publication license before they can be uploaded to app stores.
Apple required developers to submit a license number to upload games to the store, but a report by The Information suggests that Apple doesn’t actually check the license numbers.
Developers were able to list unlicensed games by submitting a random number instead of an official license numbers.

Details: TechNode reported in February that Apple sent a notice to developers requiring them to submit valid license numbers for paid games or games offering in-app purchases before June 30 if they want to distribute in mainland China.

Apple is ready to take action next month as this deadline approaches, Bloomberg reported Tuesday, citing “people familiar with the matter.” Bloomberg reports that the company will start removing thousands of games from its App Store in China next month.
“Chinese law requires games to secure an approval number from the General Administration of Press and Publication of China,” Apple said in the notice sent to developers in February.

Context: The Chinese National Radio and Television Administration, China’s top content regulator, issued a notice in 2016 requiring mobile games to obtain approval from the administration before publishing.

Only Chinese companies can apply for licenses, meaning that international developers must find a domestic partner to apply.
It can take months for game makers to have their titles approved. Titles are often rejected for indistinct reasons. Chinese media has identified (in Chinese) some possible grounds for rejection, including erotic content, gambling, or traditional Chinese characters.
China froze mobile game approvals for nine months in 2018, causing the country’s gaming industry to record its slowest growth in at least a decade.

Apple backs Chinese supplier’s move to challenge Foxconn

Wei Sheng — Wed, 13 May 2020 05:00:00 +0000

Apple has advised one of its Airpod factories in China to make a major investment in a key supplier as the company moves to create an alternative to its longtime Iphone assembler, Taiwan’s Foxconn, according to a Nikkei Asian Review report.

Why it matters: The deal would bring Luxshare-ICT, a lesser-known Chinese assembler of Apple’s Airpods, closer to producing Iphones, grabbing share from Foxconn.

Hon Hai Precision Industry, known as Foxconn, is the world’s largest electronics contract manufacturer and a major Iphone assembler.

Details: Luxshare has been in talks with Taiwan’s Catcher Technology, the world’s second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations, according to the Nikkei report, citing a person familiar with the talks.

The deal in question covers some of Catcher’s facilities in China, its workforce, and its business opportunities with Apple, the report said.
The report cited anonymous sources as saying that Apple is keen to reduce its heavy reliance on Foxconn, which has accounted for more than 50% of iPhone production since 2007.

Context: Luxshare will help Apple produce 3 million to 4 million Airpod units in Vietnam in the second quarter as the California-based tech giant further diversifies its production out of China, according to another Nikkei report published last week.

Apple had previously asked suppliers to assess cost implications for shifting 15% to 30% of hardware production out of China at the peak of the trade conflict between the US and China last year.
Foxconn recently moved some of its Iphone production lines out of China and has started to produce some Iphone XR units in India.

Read more: Apple partner Foxconn struggles to reopen plants

Huawei is the lone winner as China handset sales plunge in Q1

Wei Sheng — Thu, 30 Apr 2020 06:48:59 +0000

Smartphone sales in China fell 22% in the first quarter as a result of the Covid-19 outbreak, according to a report released Wednesday, with embattled Chinese smartphone maker Huawei the only manufacturer that saw a growth in the quarter.

Why it matters: The coronavirus outbreak has accelerated a downward trend in the world’s largest smartphone market.

Analysts had forecasted a year-on-year drop of 15% to 20% in China’s Q1 smartphone shipments caused by delayed factory reopenings in February.
The report by market research firm Counterpoint Research also attributed the decline to “dismal sales” in February. But e-commerce platforms, it said, have helped smartphone vendors to recover some of the losses.

“The drastic fall in Q1 China market was primarily dragged down by the dismal sales of smartphones in February (-35% YoY)… However, during the lockdown period in China, local e-commerce giants such as Alibaba and JD.com managed to sustain efficient business operations and delivery services in major Chinese cities outside of Hubei province. For the strong support from these e-commerce players, China’s smartphone sales appeared less negative than our original expectation.”

—Flora Tang, research analyst at Counterpoint Research

Details: Huawei was the only smartphone vendor in the top five that posted positive year-on-year growth of 6% in the first quarter, according to the report. The Shenzhen-based company retained the top spot in China’s smartphone market with 39% share.

Sales of Apple’s iPhones fell 1% in the first quarter compared with the same period a year ago. The company sold less than half a million iPhones in China in February. However, sales surged in March, rocketing 406% from February to around 2.5 million units.
Sales of smartphones compatible with 5G networks grew 120% compared with the previous quarter, the report said, as Chinese carriers step up efforts to build more 5G base stations in urban areas.
“We expect 5G smartphones to rise to account for over 40% of total smartphone sales in China by the end of 2020,” said Mengmeng Zheng, research analyst at Counterpoint.

Context: Huawei said last week its total revenue for the first quarter grew only 1.4% year on year to RMB 182.2 billion (around $25.7 billion). During the same period, China’s GDP contracted 6.8%.

In a bid to boost sales, Huawei has teamed up with food delivery platform Meituan, allowing consumers to order its smartphones and tablets and receive them within an hour from flagship stores.
Observers were not optimistic about China’s smartphone market over the long term. According to a recent report by market research firm Strategy Analytics, 37% of Chinese consumers have delayed plans to upgrade their handsets.

China’s handset sales rebound in March but Covid-19 effect may linger

Wei Sheng — Tue, 14 Apr 2020 05:51:11 +0000

Handset sales in China surged 241% in March compared with the previous month though were still down 23% from a year earlier, according to official data released Monday.

Why it matters: China’s handset consumption has started to recover from the Covid-19 pandemic but its aftershocks continued to weigh.

The turnaround is partially because local smartphone makers refreshed their handset lineups in March, including Huawei’s P40 flagship and Xiaomi’s budget phone, the Redmi Note 9 Pro. In total, smartphone makers launched 34 new models in March, accounting for 87.2% of the new handsets launched in the first quarter, according to data released by China’s Ministry of Information Industry and Technology (MIIT).

Details: China’s handset sales in March were 21.8 million units including 6.2 million which are 5G compatible, according to the MIIT.

Apple’s iPhones saw a surge in demand during the month as sales rose 406% from February to around 2.5 million units, according to MIIT data and TechNode’s calculations.
Total handset sales in the country dropped 36.4% year on year to 49 million units in the first quarter, according to the data.

Context: Despite the rebound in monthly sales, observers were not optimistic about China’s smartphone market over the long term. According to a recent report by market research firm Strategy Analytics, 37% of Chinese consumers have delayed plans to upgrade their handsets.

“The supply chain and full ecosystem may be back up to speed as we enter Q2, 2020 but it is clear that a significant portion of consumers are not yet ready to return to previous patterns and purchase intentions. Operators, vendors and retailers will have to work extra hard to persuade hesitant smartphone owners that new devices and new 5G services are worth making an investment in relative to other priorities,” Linda Sui, director of smartphone research at Strategy Analytics, said in the report.
In a bid to boost sales, Huawei has teamed up with food delivery platform Meituan to allow consumers to order its smartphones and tablets and receive them within an hour from flagship stores.

INSIGHTS | The new normal isn’t that normal

John Artman — Mon, 30 Mar 2020 03:16:37 +0000

2020 did not start well. Covid-19 has created upheaval around the world and, while it started in China, the outbreak seems almost under control in the Middle Kingdom. Most of TechNode is back in China. As restrictions loosen, we’re all asking when will things go back to normal? What does the new normal look like? What happens in China may offer a rough timeline for the rest of the world, as well.

In order to answer that question, we’re working on compiling a list of indicators, including search queries, store openings, travel, and manufacturing. We’re planning to launch our Normalcy Tracker next week, but, for members, here’s a preview of what we’re seeing.

Bottom line: Everyone wants to go back to the “China dream” as soon as possible, including the government. Covid-19, provincial lockdowns, aggressive community isolation, and home quarantines have left their mark. The government, however, is close to declaring victory: travel restrictions for Hubei province have been lifted (except Wuhan), Beijing is telling its residents they can stop wearing masks, and many provinces are telling kids they can come back to school. However, it will be until at least June before the consumer market starts looking like it did pre-Covid. For industries that rely on global trade, the new normal hangover could be even longer: If the rest of the world is like China, then we’re looking at September this year before the global demand for China’s exports picks up again.

A brief timeline:

Jan 21: Zhong Nanshan, known for discovering the SARS virus, confirms person-to-person transmission of SARS-CoV-19.
Jan 23: Hubei, including Wuhan, goes into lockdown.
Feb 3: Extended Chinese New Year ends. China’s workforce begins remote work.
Feb 15: Hangzhou is the first city to end lockdown, with help from QR codes.
Feb 15: Beijing announces mandatory 14-day at-home-quarantine for anyone returning to the city from inside China.
Feb 24: Seven provinces lower their emergency level.
Feb 26: Beijing announces all passengers arriving to the city from abroad must also undergo 14-day at-home-quarantine.
Mar 3: Interprovincial travel restored in Yangzi River Delta as Shanghai, Jiangsu, Zhejiang, and Anhui sign a regional health Schengen-type deal.
Mar 26: China announces that foreign nationals will no longer be allowed to enter the country, except in rare circumstances.
Mar 26: The same day, China also announces a severe limitation on inbound and outbound flights.

Searching for normalcy: China wants to know when they can go back to work and school:

In a Feb. 18 report, Baidu said that “return to work”-related search queries increased eight-fold month on month, while those related to Covid-19 had started to decline.
In terms of industries, online education saw the greatest increases in searches on Baidu, ballooning nearly 250% compared to January as Chinese people looked to get their children’s education back on track while the effects of the outbreak subsided.

Travel coming back—within provinces: Tomb-sweeping day, a national three-day holiday, is right around the corner. Data from travel platforms suggests China is ready to travel again:

Fliggy, Alibaba’s travel booking app, shows railway and attraction ticket purchases for the week ending March 23 doubled from the week before.
As of March 17, tickets to nearly 1,500 popular tourist areas could be bought online, and 40% of the country’s top tourist spots had reopened.
Around 80% of hotels have reopened in most provinces, according to online travel site Trip.com. The hotel reopening rate in eastern Anhui and Zhejiang provinces, southern Guangxi region as well as central Hunan and northern Shanxi provinces reached 95%.
Qunar said that user searches for the upcoming May 1 holiday had increased by nearly 80% in a week.
One big caveat: Most of the uptick in bookings are for travel within the buyers’ province.
And: China’s tourism revenue is expected to drop by RMB 1.18 trillion (around $168 billion) in 2020, according to the China Tourism Academy.

Spring shoots for retail: Major retailers, including Apple and Xiaomi, are coming back to life:

Apple has reopened all of its 42 stores in China after they were shut in early February after China imposed measures to stop the spread of Covid-19. The company has gradually been reopening its stores since mid-February.
Xiaomi said on Thursday last week that it had reopened 1,800 stores across the country and 80% of its suppliers had resumed work. The company said that it plans to maintain a steady product release pace.
Ikea has also opened all of its stores except one, in Wuhan. The company has a total of 30 standard-format stores, two experience stores, and three LIVAT shopping centers in China.

Factories are revved up, but who’s buying? Factory owners are keen to get production lines back up:

90% of firms in Guangdong province had resumed operations as of March 2.
In total, 209 companies that are major suppliers to Huawei, 21 suppliers to ZTE, 167 suppliers to Mida, and 343 suppliers for GAC Group, have been given the go ahead to recruit workers.
China’s second-biggest automaker, Dongfeng Motor, resumed limited operations in Wuhan on March 11.
However: Overseas orders are taking a big hit as Covid-19 chews through trading partners.
Good Will Watch Case Manufacturing, a supplier to Fossil, has said they are putting their workers (over 600) on leave for at least three months.

A new normal? Tech companies, workers, parents, and regular people all want to get back to normal, but that will look quite different from just a few months ago.

Checkpoints at residential communities, consumer-facing businesses, and office buildings are still in effect.
Offices are still far from full (with some even banning foreigners from entering).
Cinemas and other performance halls are still closed despite bars, restaurants, and cafes re-opening.
Tencent is cooperating with provincial CDC offices to launch a health QR code system for students returning to school. Under this system, each school can stick a passcode at its entrance which parents can then scan for unimpeded access.
Alibaba’s fintech affiliate Alipay said on Wednesday that all cities in eastern Zhejiang, southwestern Sichuan, and southern Hainan provinces have adopted its health code system. The system is currently going national after being adopted in 200 cities.

Watch this space! This was just a preview of what we’re tracking. We’ll have the full new normal dashboard up on the site soon.

Emoji encryption app Boom is another China App Store casualty

Wang Boyuan — Fri, 20 Mar 2020 06:59:13 +0000

Boom, an iOS-only keyboard app that converts regular text into random emojis or Chinese characters, was taken down from Apple’s Chinese App Store on Thursday. This comes after reports about Chinese netizens skirting online content controls using similar technology.

Why it matters: The Chinese government is tightly managing global and domestic perception of its handling of the Covid-19 pandemic, including removing a video game which tasks players with spreading pathogens, and taking down personal accounts from netizens critical of the government’s response to the crisis.

On social media, there was speculation that the keyboard app was used to circumvent content controls.
Other apps removed from China’s App Store on the same basis include the popular pathogen genesis game Plague Inc, the Quartz news app, Chinese news aggregator Houxu, and hundreds of others throughout the years.

Details: Apple said in a notice to Boom developer Wang “Greyfish” Huiyu that the app was removed for containing content that is illegal in China, which violates App Store Review Guidelines.

Boom uses straightforward methods like text scrambling or simple symmetric encryption. It is a tool for amusement rather than data security as its icon suggests, although it is technically capable of tripping up keyword-matching searches.
Wang denied that Boom was used to evade content controls in a specific case, though he did confirm to TechNode that his app made it on to the Top 200 most-downloaded apps list on the Chinese App Store.
The keyboard app was live in the Chinese App Store for only 20 days. Pop, a wallpaper app Wang also created which has been on the App Store since March 2018, was also removed for the same reason.
Pop can convert video clips to “live” photos so that users can make dynamic wallpaper for their iPhones. The app also comes with some stock wallpapers consisting mainly of the developer’s illustrations of political leaders like US President Donald Trump, North Korean leader Kim Jong-un, and former Chinese Communist Party leader Jiang Zemin.
Prior to the removal of his apps, Wang’s official account on WeChat as well as his Weibo account were permanently removed.

Context: Apple has been criticized for its compliance with requests from Chinese authorities to remove offerings from emoji to apps.

The company’s transparency report showed that 194 apps were taken down for containing “pornography and illegal content” in the first half of 2019 and more than 700 were removed in 2018.
Many organizations have urged the Cupertino-based tech giant for transparency on legal violations cited in app removals.
The Chinese App Store earned gross revenue of $8.8 billion in 2019, but indie developers are struggling to comply with its rules. Developers were asked earlier this year to verify their identity by allowing Apple capture and store their facial images.
Apple announced at the end of February that all game publishers must obtain a Chinese gaming license by the end of June to stay on the store shelves. The requirement may throttle the nearly 20,000 unlicensed titles still on the App Store.

WeChat adding dark mode to iOS

Emma Lee — Tue, 10 Mar 2020 06:48:49 +0000

Chinese super app WeChat is adding a dark mode option to its iOS version, finally bringing the the long-anticipated feature to iPhone users.

Why it matters: The news drew widespread public attention online in China with many social media users speculating that the App Store’s importance to the mega chatting app pushed its decision to acquiesce on a feature it had avoided in the past.

Details: The development of dark mode on WeChat is complete and will launch in the next update, the company said in a post on its Weibo account on Monday, but did not specify a date.

“In order to optimize the user experience, WeChat has reached a cooperation with Apple to jointly explore the dark mode experience of WeChat in the iOS system,” the company said in the post.
Apple recently updated the App Store’s review regulations, asking all developers to use the iOS 13 SDK to fully adapt to the iOS 13 system before April 30. The update requires a series of changes including support for dark mode, sign in with Apple, and other features. Apps which fail to comply with the rules will be removed from the store.
Public discussion (in Chinese) about a possible removal from the App Store for Tencent’s WeChat, which boasts more than 1.15 billion monthly active users, began to catch on as netizens noticed the app’s lack of dark mode on iOS.
A Weibo user using the handle “Yelaiyuesezhanyi” commented on the announcement post that Tencent “wussed out” under pressure from the App Store. The WeChat responded that they indeed “wussed out” but to user demands.
WeChat’s pledge to add the new feature was reported by Chinese media as a sign that Tencent succumbed to App Store’s regulations.
Tencent spokesman Zhang Jun responded in a Weibo post, saying that Apple’s policy addressed all app developers and was not specifically calling WeChat out.

“My eyes are saved.”
— Weibo user “Its2h0u” commented under WeChat’s announcement

WeChat is losing the war for users’ attention

Context: WeChat rolled out dark mode for Android version in a December beta update.

Apple has been ceding ground to Chinese competitors including Huawei, Oppo, Vivo, and Xiaomi.
The US company shipped 27.5 million smartphones in China in 2019, accounting for 7.5% of the market in 2019 compared with 8.7% market share in 2018, according to research agency Canalys.
WeChat has also been losing its share of user attention to intense competition from short video platforms, particularly Bytedance’s Douyin and Tencent-invested Kuaishou.

Foxconn expects 15% hit to Q1 revenue from Covid-19

Wei Sheng — Wed, 04 Mar 2020 07:12:08 +0000

Foxconn warned Tuesday that its first quarter revenue may decline 15% as a result of the Covid-19 epidemic as the Taiwanese manufacturer struggles to restore normal production levels in its China factories.

Why it matters: The warning from Foxconn, China’s biggest private-sector employer, highlights the effect that the Covid-19 outbreak has had on the country’s economy, especially in the electronics industry.

Foxconn, formally known as Hon Hai Precision Industry Co Ltd., has been actively pushing to resume production in China. However, the Covid-19 epidemic has stopped many migrant workers from returning to work after the Spring Festival holiday.

Details: Foxconn said its revenue would drop 15% year on year in businesses including consumer electronics and enterprise products in the first quarter, Reuters reported, citing company Chairman Liu Young-Way.

The company said its revenue would recover after the first quarter as production returns to normal in China.
The virus will have a short-term impact on Foxconn’s business as the impact to its supply chain was “not that great,” the company said.
“Prevention of the outbreak, resumption of work and production are our top priority,” Liu said.

Context: Foxconn booked NTD 1.054 trillion (around $35.2 billion) in revenue in the first quarter of 2019.

In order to lure workers back to plants, Foxconn’s main iPhone assembly factory in the central Chinese city of Zhengzhou was reportedly offering bonuses of up to RMB 7,000 (around $1,005) to each new recruit.
Chinese officials have also urged factories to restart operations. Local governments and enterprises have been sending trains, buses, and planes to transport workers back to manufacturing hubs such as Shenzhen and Dongguan in Guangdong province.
Chinese President Xi Jinping has called for local governments to “continue to make unremitting efforts in various prevention and control work and resume work and production in an orderly manner,” according to state media Xinhua.

Apple to require licenses for games in China App Store

Wei Sheng — Tue, 25 Feb 2020 08:54:12 +0000

Apple is requiring game makers worldwide to submit their license numbers gained from a Chinese content regulator if they want to monetize their products in mainland China.

Why it matters: Apple is adhering more strictly to a Chinese government rule that requires all paid games or games that use in-app purchases to obtain a publication license before they can be uploaded to app stores.

Foreign companies are not allowed to apply for the license. They have to partner with local companies to legally launch their paid games in China.

Details: Apple has sent a notice to developers requiring them to submit license numbers for paid games or games offering in-app purchases before Jun. 30 if they want to distribute in mainland China, according to a report from AppInChina, a mobile service company that helps foreign apps enter the country.

“Chinese law requires games to secure an approval number from the General Administration of Press and Publication of China,” Apple said in the notice.
This may be the first time Apple has directly required developers to submit license numbers and it seems like that the company is tightening implementation of the Chinese government’s regulations on paid games, Todd Kuhns, marketing manager at AppInChina, told TechNode.
Foreign game makers were able to bypass the restrictions by submitting a random number. A report by The Information suggests that Apple doesn’t actually check the license numbers.
The game approval number for Mini Metro, a mobile game developed by New Zealand game studio Dinosaur Polo Club that is sold on the Chinese App Store for RMB 25 (around $3.6), cannot be found on the Chinese National Radio and Television Administration’s (NRTA) license database.
“I think [bypassing the review system has] been an open secret for a while now,” Kuhns said.
It is unclear how games without the approval number will be treated after the Jun. 30 deadline. Apple did not immediately reply to inquiries sent by TechNode on Tuesday.

Context: The NRTA issued a notice in 2016 requiring mobile games to obtain approval from the administration before publishing.

China froze mobile game approvals for nine months in 2018, causing the country’s gaming industry to record its slowest growth in at least a decade.

Foxconn offers $1,000 to new workers in bid to resume production

Wei Sheng — Tue, 25 Feb 2020 05:54:03 +0000

A factory of iPhone assembler Foxconn in central China is reportedly offering bonuses of up to RMB 7,000 (around $996) to each new recruit in an effort to lure workers back to plants and restore normal production levels.

Why it matters: The Taiwanese contract manufacturer is struggling to resume production in China after the deadly Covid-19 virus stopped millions of migrant workers from returning to work after the Spring Festival holiday.

Officials have also urged factories to restart operations. Local governments and enterprises have been sending trains, buses, and planes to help workers travel back to manufacturing hubs such as Shenzhen and Dongguan in Guangdong province.
Delays in Foxconn’s production, a key manufacturer for Apple, Huawei, Amazon, Google, and many others, are likely to affect supply chains for several major electronics brands.

Details: Foxconn’s main iPhone assembly factory in Zhengzhou in central Henan province is offering RMB 7,000 as an incentive to new workers who meet certain requirements, Chinese business news site Star Market Daily reported on Sunday.

New workers will have to clock in to work for more than 35 days to receive RMB 3,000 and more than 60 days to receive the remaining RMB 4,000, according to the report, citing an anonymous source working at a recruitment agency for the Foxconn plant.
The report said that there are currently around 20,000 to 30,000 workers working in the plant. At its peak, the plant’s workforce numbered nearly 450,000 to meet iPhone demand, Chinese media reported.
Foxconn, formally known as Hon Hai Precision Industry Co Ltd., declined to confirm the hiring bonuses, saying that it “does not comment on operation details of specific plants” when contacted by TechNode on Tuesday, citing a company policy.
The company said in a statement to TechNode that it is “closely cooperating with local governments’ call to resume operations” and is organizing workers to go back to work.

Context: China is pushing people to get back to work as the “world’s factory” tries to balance containing the Covid-19 outbreak that has killed more than 2,600 people and offsetting the hit to its economy.

President Xi Jinping has called for local governments to “continue to make unremitting efforts in various prevention and control work and resume work and production in an orderly manner,” according to state media Xinhua.

Apple partner Foxconn struggles to reopen plants

Eliza Gkritsi — Mon, 10 Feb 2020 07:03:38 +0000

iPhone assembly plants in China belonging to Foxconn will not return to normal production volumes for at least another week due to the novel coronavirus outbreak, multiple media reports have reported, with some factories remaining closed and delayed returns expected for significant parts of its labor force.

Why it matters: Foxconn, also known as Hon Hai Precision Industry Co., is China’s largest private sector employer and the world’s biggest iPhone assembler. Delays in Foxconn’s production, a key manufacturing contractor for Huawei, Amazon, Google, and many others, are likely to affect supply chains for several major electronics brands.

The coronavirus outbreak, first reported in Wuhan, the capital of central Hubei province, has infected more than 40,000 worldwide and killed 909, and brought China to a standstill.

Details: Local authorities in Shenzhen have ordered Foxconn to keep its factories closed over the next week due to “violation of epidemic prevention and control” which could result in the death penalty, Nikkei Asian Review reported on Saturday, citing anonymous sources familiar with the matter.

The local government of Longhua in Shenzhen, where Foxconn’s largest factory is located, denied the report in a WeChat post (in Chinese) on Sunday. It said that on-site inspections to determine whether Foxconn plants are adequately equipped to prevent the virus from spreading were still ongoing.
The Longhua government added that the company had applied for resumption of work on Feb. 6.
But labor shortages could continue to crimp Foxconn’s operations even after the plants re-open. As the number of infections rise, travel is limited and people across China remain in quarantine.
Apple analyst Ming-Chi Kuo said Foxconn’s Shenzhen factories will not open until at least next week, and that 40% to 60% of the workforce will resume normal operations.
In the northeastern city of Zhengzhou, about 10% of Foxconn’s factory workers or 16,000 people returned to work today, Reuters reported Monday quoting a person with direct knowledge of the matter.
About 30% to 50% of the workers in the Zhengzhou plant will return to work next week, Ming-Chi Kuo estimated.
Foxconn responded to reports saying they are working closely with local governments to fulfill requirements for the resumption of work. Factories will re-open in a piecemeal fashion, according to a statement the company sent to TechNode.

Context: Southern Guangdong province, where Shenzhen is located, has reported the second-highest number of coronavirus infections after Hubei. Shenzhen counts 368 confirmed cases, compared with 337 in Beijing and 295 in Shanghai, according to official data.

Foxconn’s labor and safety practices have been criticized in the past. In 2011, an explosion in a Chengdu factory working on Apple, Microsoft, and Samsung contracts led to three deaths and 15 injuries.
Up to eight factory workers sleep in the same room in Foxconn’s dormitories, according to a 2017 investigation by the Guardian.
Apple has closed all its retail stores in China until Feb. 13 or 14, Bloomberg reported on Friday.
In June, Foxconn announced it will be improving its production capacity outside mainland China to mitigate risks arising from the trade war, as well as rising labor costs.
South Korean manufacturers Samsung and LG were set to resume operations today, Korean media reported.

Apple says Chinese government requests for user data spiked

Chris Udemans — Tue, 21 Jan 2020 05:19:52 +0000

US tech giant Apple handed over more user account data to authorities in China than any other country in the first half of 2019, according to the company’s biannual transparency report.

Why it matters: Apple’s report details the number of times governments around the world request information about the company’s users.

While the report does not include detailed information about the kinds of information that is released to authorities, it provides insights into the relationship between big tech and governments around the world.

“Account-based requests generally seek details of customers’ iTunes or iCloud accounts, such as a name and address; and in certain instances customers’ iCloud content, such as stored photos, email, iOS device backups, contacts or calendars.”

—Apple’s transparency report

Details: Between Jan. 1 and June 30 last year China’s government petitioned for information relating to nearly 15,700 user accounts in 25 separate requests. Due to US regulations, Apple can only release transparency data six months after a reporting period.

Apple said that it complied with 96% of China’s petitions for account information.
The company did not specify the number of accounts in each of the 25 requests, only that it complied with the majority of them.
Only one request related to content from user accounts, the company said. It is unclear how many accounts were included in this request.
Meanwhile, authorities in the US, Apple’s home market, requested access to data from 15,300 accounts.
Apple’s legal team reviews requests to determine whether they have a valid basis, according to the company. If no basis is found, the request is challenged or rejected.
During the same period, Apple removed 194 apps from its App Store for legal reasons following requests from Chinese authorities, accounting for 90% of removals worldwide.
The majority of China’s requests related to apps with “pornography and illegal content,” the company said.

Context: The number of accounts included in China’s requests has more than doubled compared with the second half of 2018, while compliance rates have fallen by 2 percentage points from 98%.

Apple in October pulled from its Hong Kong App Store a crowd-sourced police-tracking map app after state-owned media People’s Daily blasted the company for “assisting rioters.”

China’s wearable devices market grew 45.2% in the past year

Eliza Gkritsi — Wed, 25 Dec 2019 03:15:32 +0000

The Chinese market for wearable devices reached 27.15 million units shipped in the third quarter of 2019, up 45.2% from 20.97 million units in the same time period last year, according to a report from market research firm International Data Corporation (IDC). The report predicts the market to reach 200 million units in 2023.

The IDC report predicts wearable devices shipments to reach 200 million in 2023. (Image credit: TechNode/Eliza Gkritsi)

Why it matters: The report highlights the fast growth of China’s wearable devices market, and the fact that Chinese companies are the biggest players in this field.

Xiaomi remains the market leader in wearable devices, accounting for a quarter of total shipments. (Image credit: TechNode/Eliza Gkritsi)

Details: Xiaomi is leading the market, with a quarter of all shipments, but Huawei saw the biggest increase in shipments. The Shenzhen-based telecoms giant saw its shipments almost double in the last year, doubling its market share from 10.7% in the third quarter of 2018 to 20.7% in the third quarter of 2019.

The market saw some consolidation in the time period , as the total share of the top five companies grew from 59.8% to 70.2% in that time period.
BBK Electronics, the parent company of Oppo, is the only company in the top five that saw its market share decrease, from 9.8% to 7.7%.

Context: Xiaomi overtook Apple as China’s largest seller of wearable devices in 2018.

China shipments for Apple’s iPhone fall 35% in November: report

Wei Sheng — Fri, 13 Dec 2019 04:35:12 +0000

Apple’s iPhone shipments in China dropped by more than 35% in November compared with the same period last year, Reuters reported, citing a report by Credit Suisse.

Why it matters: The November figures are the iPhone’s second consecutive double-digit decline despite Apple’s efforts to lure more Chinese consumers by significantly lowering the price of its newly released iPhone 11 series.

Apple priced the iPhone 11 at $50 less than the preceding model following a year of heavily discounting older iPhone models in a bid to offset aggressive competition from Chinese competitors such as Huawei and Oppo.
The overall Chinese smartphone market declined by 1.5% year on year in November, a modest recovery from the 6.7% year-on-year dip in October, according to a report by the China Academy of Information and Communications Technology.

Details: Total iPhone shipments in China in the September-November period dropped 7.4%, said Credit Suisse analyst Matthew Cabral in the report, citing data from China’s Ministry of Industry and Information Technology.

Total iPhone shipments in China are down 7.4% year on year in the period from September—when iPhone 11 hit the market—through November, according to the report.
The analyst also said Apple expects more tariffs imposed on its products sold in the US if the 15% tariffs on billions in Chinese-made goods come into effect on Dec. 15.
However, Apple could avert the duties after US President Donald Trump signed off on an initial trade agreement with China on Thursday, according to Bloomberg.

Huawei widens lead in China smartphone market after US ban: report

Context: Apple has had a tough time in China this year. The company’s smartphone shipments in China fell 28% year on year in the third quarter, while unit shipments for Huawei, its biggest rival in China, surged 66% in the same period, according to data from market research firm Canalys.

Apple held 5.2% of China’s smartphone market share in the third quarter, ranking fifth behind Chinese handset makers Huawei, Vivo, Oppo, and Xiaomi.

Huawei widens lead in China smartphone market after US ban: report

Eliza Gkritsi — Wed, 30 Oct 2019 11:08:13 +0000

Huawei’s handset shipments in China rose two-thirds during the third quarter, helping the firm to hit a market share of 42%, data from market research firm Canalys shows.

Why it matters: The data indicates that the world’s second-largest smartphone maker has fared well at home despite the US blacklisting that is impairing performance overseas.

Chinese consumers rallied behind the company after Washington moved to bar the Chinese telecoms giant from doing business with American companies.
A sense of patriotism is likely to be a key driver of the sales surge as 42.9% of Chinese consumers intend to choose Huawei when switching from iPhones.

Unchanged:

Details: This quarter marks Huawei’s sixth consecutive quarter of double-digit growth, and places the Shenzhen-based company way ahead of its competitors with a 25 percentage-point lead over second-placed Vivo.

Huawei smartphone shipments in China expanded 66% year on year to 41.5 million units, despite the overall market shrinking 3%.
As Huawei consolidated its position in the market, all other vendors lost ground. Vivo supplanted Oppo in second place, while Xiaomi fell to fourth, Canalys said.
Apple kept hold of fifth place in part due to September’s iPhone 11 launch. The new handset made up 40% of its shipments in the period.

“Huawei opened a huge gap between itself and other vendors. Its dominant position gives Huawei a lot of power to negotiate with the supply chain and to increase its wallet share within channel partners.”

-Nicole Peng, vice-president of mobility at Canalys

Context: The US ban, enforced in May, cut off Huawei from key suppliers, including chipmakers and Google’s Android operating system used in its devices.

In response, Huawei announced it was building its own OS and, most recently, entered the electric vehicle business.
As Washington officials urge world leaders in politics and business to shun Huawei from 5G networks, Huawei claims to have secured more than 50 contracts worldwide.
On Monday, a report by the Sunday Times claimed that the UK, one of the US’s closest allies, is preparing to allow Huawei to be involved in the development of next-generation communications.

Apple CEO Tim Cook assumes 3-year advisory post at Tsinghua University

Eliza Gkritsi — Wed, 23 Oct 2019 02:54:39 +0000

Apple CEO Tim Cook started a three-year term as a top adviser at Tsinghua University, China’s most prestigious academic institution, chairing his first meeting on October 18, according to the school website.

Why it matters: Cook’s appointment places him at the heart of Beijing’s goal to increase the gravitas of Chinese universities.

Apple’s relationship with Chinese authorities is under fire, after the Silicon Valley company pulled an app that tracks police activity in Hong Kong amid months-long protests.

“In the next three years, I will work with all of the board members to promote the development of Tsinghua University School of Economics and Management and to lead the effort to build it into a world-class school.”

—Tim Cook, CEO of Apple

Details: The university announced Cook’s participation in the advisory board meeting and his mandate on its WeChat account.

The board was established in 2000 with the aim to make the school a world-class institution. It is comprised of entrepreneurs, scholars, and Chinese Communist Party officials, among others.
The day before the advisory board convened, Cook met with Xiao Yaqing, director of China’s State Administration for Market Regulation in Beijing and “conducted in-depth exchanges on expanding investment and business development in China, protecting consumer rights and fulfilling corporate social responsibility,” according to the governmental body’s website.

Context: Apple is one of few Silicon Valley giants whose products are allowed in the Chinese market, along with Microsoft and Oracle.

The company has been criticized for its activities related to China, such as harsh working conditions at its manufacturing partner Foxconn’s factories, censorship, and privacy concerns.
On October 10, Apple removed a crowd-sourced map from its App Store that helped Hong Kong protesters keep track of police, following criticism from Chinese state-owned media outlets.
Cook defended the move, saying that it was removed because it was in breach of the law.
About two weeks ago, news site Quartz was also removed from the App store, a move that its CEO attributed to coverage of the Hong Kong protests.
Earlier in October, the Taiwanese flag emoji disappeared from the iOS keyboard.

Apple under fire for security feature which sends some user data to Tencent

Wei Sheng — Tue, 15 Oct 2019 06:07:22 +0000

Apple was again in the hot seat on Monday when its practice of sending web-browsing data including IP addresses to Chinese internet firm Tencent began to circulate, just as the public backlash for removing a police-monitoring app from its Hong Kong App Store on Wednesday was dying down.

Why it matters: News that Apple has been sending data to Tencent as part of a security feature that warns users about malicious websites have sparked privacy fears. Both companies have a history of conceding to the demands of the Chinese government.

After criticism from Chinese state media, Apple last week removed from its App Store an app that helps protesters in Hong Kong track police activities.
The app is among hundreds of others that the California-based company removed from its Chinese App Store to comply with Beijing’s internet regulations.
Tencent, owner of China’s most popular social networking app, WeChat, reportedly passes user information to the Chinese government to aid in efforts to capture individuals suspected of crimes, silence dissent, and create surveillance cities.

Details: In a new version of Apple’s iOS operating system, the company said that a security feature on iPhones and iPads may also log user IP addresses. This data could be obtained by Tencent, which makes the Safe Browsing System used in China.

The feature checks site addresses against an existing list of sites known to be malicious. The list is maintained by Google for users outside of China and by Tencent for those in mainland China.
Apple’s partnership with Tencent is under fire by users who fear that their web browsing data might be shared with Tencent and the Chinese government.
Apple said in a statement that the company doesn’t send information to Google or Tencent. Instead, it receives a list of problematic sites from both companies and then uses it to protect users from malicious sites.
“The actual URL of a website you visit is never shared with a safe browsing provider and the feature can be turned off,” said Apple.

“The more I keep reading about this #Safari and #China issues, the more I start to question @Apple and what else they give China about their users we don’t know yet.”

—Twitter user @Coulton74 on Tuesday

Context: This isn’t the first time Apple has faced criticism for handing data over to Chinese companies.

Apple partnered with China’s Guizhou-Cloud Big Data to store iCloud data for users in mainland China starting in 2018, giving Chinese authorities far easier access to text messages, emails, and other data.

Apple pulls Hong Kong police-tracking app after Chinese state media criticism

TechNode Staff — Thu, 10 Oct 2019 08:41:26 +0000

Apple on Wednesday has removed from its App Store an app that helps protesters in Hong Kong track police activities, two days after Chinese state-run newspaper the People’s Daily blasted the tech giant for helping pro-democracy protesters.

Why it matters: Apple is the latest foreign company to be caught in the rising tide of Chinese nationalism amid the months-long anti-government protests in Hong Kong after allowing the HKmap.live app on its App Store last week.

Some Chinese tech companies, including Tencent and Alibaba, have suspended ties with the National Basketball Association this week following a tweet from a Houston Rockets executive in support of the Hong Kong protests.
On Tuesday, the People’s Daily said in a commentary (in Chinese) that by allowing the app, Apple was “assisting rioters in Hong Kong” and sought to be an “accessory” of protesters.

Details: The real-time map, which was officially launched in early August, shows a map of Hong Kong with crowd-sourced updates on the location of police, as well as water cannons and tear gas deployment.

In a statement on Thursday, Apple said the app had been used “in ways that endanger law enforcement and residents in Hong Kong.”
The company said that Hong Kong’s Cyber Security and Technology Crime Bureau (CSTCB) verified the app was being “used to target and ambush police, threaten public safety, and criminals have used it to victimize residents in areas where they know there is no law enforcement.”
“This app violates our guidelines and local laws, and we have removed it from the App Store,” said Apple.
The app’s developer said on Twitter that it disagrees with Apple and the CSTCB’s claim that the HKmap.live endangers law enforcement and residents in Hong Kong, saying the move was a political decision to suppress freedom and human rights in Hong Kong.

Context: Apple has a history of acquiescing to the strict internet regulations in China, the company’s second-largest market after the United States.

The company has removed hundreds of apps from the Chinese App Store in recent years, including those from The New York Times in 2017 and news outlet Quartz this week.
Earlier this month, Apple removed the Taiwanese flag emoji from its iPhone keyboard for users in Hong Kong in a recent update of its iOS operating system.

Apple reverses plans to make Mac Pro in China after securing tariff exemption

Wei Sheng — Tue, 24 Sep 2019 03:40:19 +0000

Apple said on Monday it will keep making new Mac Pro desktop computers in the United States after the company was granted certain tariff exemptions from the US government, reversing earlier plans to move production to China.

Why it matters: The California-based tech giant has been embroiled in a trade war between the US and China, with the American President Donald Trump pressing the company repeatedly to move more of its production from China to the US and imposing billions of dollars in tariffs on Chinese-made goods.

Many of Apple’s products are designed by the company in the US but are imported from China after assembly, meaning that they are subject to the US tariffs.
The $6,000 Mac Pro desktop, which was introduced in 2013, is Apple’s only major device assembled in the US.

Details: The Mac Pro desktops will continue to be manufactured in its Austin, Texas facility, said Apple in a statement on Monday.

The company said it would begin production of the latest Mac Pro, which was unveiled at Apple’s annual Worldwide Developer Conference in June, at the same facility “soon,” without specifying a date.
Texas Governor Greg Abbott said in a statement that he was grateful for Apple’s investment and that the move was a testament to the state’s workforce and business climate, according to the Wall Street Journal.

“…every Apple product is designed and engineered in the US, and made up of parts from 36 states, supporting 450,000 jobs with US suppliers, and we’re going to continue growing here.”

—Tim Cook, Apple CEO, in the statement

Context: Apple had tapped Taiwanese contractor Quanta Computer to manufacture the Mac Pro and was ramping up production at a factory near Shanghai, according to a Wall Street Journal report in June citing people familiar with the plans.

The Monday decision follows the Trump administration’s move last week to grant 10 tariff exemptions on items Apple imports from China, including its Magic Mouse 2, Magic Trackpad 2 and some internal components.
But that will not change the fact that the company’s major products such as iPhones and MacBooks will face tariffs after December 15.

Chinese buyers shrug off lack of 5G as orders for Apple’s iPhone 11 surge

Wei Sheng — Mon, 16 Sep 2019 06:43:54 +0000

Advance orders for Apple’s new iPhone 11 series soared over the weekend after pre-orders kicked off on Friday, data from e-commerce sites Tmall and JD.com showed.

Why it matters: The absence of 5G compatibility did little to damp the appeal of Apple’s newest handset to Chinese consumers.

Chinese internet users have been critical of Apple for its lack of a 5G device since the California-based electronics maker presented the iPhone 11 series on September 10.
China’s three major carriers were granted commercial licenses for the next-generation wireless technology in June, but there has been no publicized launch date for 5G network services.
A United States export ban on Chinese telecommunications equipment maker Huawei, which is also a major 5G gear supplier for Chinese carriers, may delay their 5G network rollouts.

Details: Day one pre-sales for the iPhone 11 series—which include the iPhone 11, iPhone 11 Pro, and the iPhone 11 Pro Max—on Chinese e-commerce site Tmall surged 335% compared with those for the iPhone XR models launched a year ago, according to Chinese media outlet Yicai.

Sales for the new devices on the site reached RMB 100 million (around $14.1 million) in less than a minute, according to Tmall.
The day one pre-sales for the iPhone 11 series also jumped 480% on JD.com, another Chinese e-commerce site, said the report.
Pricing for the iPhone 11 series starts at RMB 5,499, cheaper than the launch price for the XR models by RMB 1,000.

Context: Apple’s rivals in China such as Huawei, Xiaomi, and ZTE have already launched their 5G smartphones for the country’s early adopters.

Huawei and Xiaomi both have one 5G smartphone model on sale in the Chinese market, and Huawei plans to launch another 5G device in the country this year.
ZTE was first to the market with the early August launch of China’s first 5G smartphone.
Greater China, which includes mainland China, Hong Kong, and Taiwan, will account for 34.0% of global 5G smartphone shipments in 2023, according to research firm Canalys.

Apple eyes China’s BOE for cheaper OLED iPhone screens

Wei Sheng — Thu, 22 Aug 2019 03:53:35 +0000

Apple is testing advanced screens from leading Chinese display maker BOE for iPhones next year, as the United States tech giant attempts to cut costs and reduce reliance on South Korea’s Samsung, the Nikkei Asian Review reported on Wednesday.

Why it matters: If Apple chooses BOE’s screens, the Chinese state-owned company could begin to challenge Samsung’s supremacy in the display panel sector.

The sector has been propped by Beijing with billions of dollars of state and public funds over the past decade.
The global display panel market is expected to rise from last year’s $25.5 billion to more than $30 billion this year, according to IDTechEx Research.
However, BOE is still vulnerable to a potential clampdown from the US, possibly restricting supplies of crucial materials from Corning, 3M and Applied Materials, said the report.

Details: Apple is “aggressively testing” BOE’s flexible organic light-emitting diode, or OLED, displays, and will decide by the end of this year whether to take BOE on as a supplier of this single most expensive component, said sources quoted by Nikkei.

Apple is currently testing BOE’s flexible OLED displays from the company’s facility in the southeastern Chinese city Chengdu, said the sources.
BOE is also building another facility in Sichuan Province, which would be allocated to Apple if it places orders, they said.

Context: An OLED display is the most expensive component on the iPhone. It accounts for nearly 30% of the total cost of the iPhone X released in 2017 and was sourced from Samsung.

BOE-made OLED displays could be 20% cheaper than Samsung’s products, said Nikkei, citing a source familiar with the matter.
BOE was founded in 1993 in Beijing as a military and defense supplier and has become a major recipient of Chinese government’s grants and subsidies. The company received over RMB 2 billion (around $283 million) in subsidies last year, said the report.

Chinese market drives strong Apple results despite trade tensions

Wei Sheng — Thu, 01 Aug 2019 07:49:14 +0000

Apple shares rose 4.4% intraday on Wednesday after the company’s financial results for the third fiscal quarter beat Wall Street estimates thanks to a “marked improvement in greater China,” according to CEO Tim Cook.

Why it matters: China has been a problem market for the US firm as iPhone demand has waned amid strong competition from domestic challengers such as Huawei and Xiaomi. However, Apple’s measures to boost sales, including price cuts, have borne fruit.

iPhone sales in China fell nearly one-third in the first quarter of 2019 to 6.5 million units, marking the firm’s largest decline in two years, stated market research firm Canalys.
Apple cut the price of some models on Chinese e-commerce platform JD.com in January by up to RMB 800 ($116).

“I’d like to provide some color on our performance in greater China, where we saw significant improvement compared to the first half of fiscal 2019 and return to growth in constant currency.”

Tim Cook at Apple’s Q3 2019 earnings call on Tuesday.

Details: Apple’s revenue across greater China, which includes mainland China, Hong Kong, and Taiwan, fell 4% to $9.2 billion in the third fiscal quarter ended June 29, after declining 22% in the second.

Cook told CNBC that the reduction of value-added tax in China from 16% to 13% had been a big help, and he saw no signs of a boycott of Apple products in the country following US trade tensions.

Context: Apple’s smartphone shipments in China declined 14% after hitting 5.7 million units in the second quarter, according to Canalys.

Though smartphone shipments from Chinese competitors Oppo, Vivo and Xiaomi also tumbled, those of Huawei soared 31%. Analysts said the US-China trade tensions have made Huawei the “patriotic choice” in the country.
Chinese netizens had called for a boycott of Apple products after the US government put Huawei on a trade blacklist on May 16.

Chinese iPhone users are increasingly opting for Huawei: report

Rachel Zhang — Wed, 24 Jul 2019 09:47:38 +0000

In this screenshot of the report, most iPhone users opted for Huawei models when they changed smartphones. (Image credit: TechNode)

Close to half of China’s iPhone users that switched devices in the first half of the year chose Android handsets, according to a report from mobile data research firm QuestMobile. Of those, nearly half opted for a Huawei smartphone.

Why it matters: Against a backdrop of impending tech restrictions from the US, it appears that a shift in brand loyalty toward domestic brands⁠—particularly Huawei⁠—is intensifying among Chinese consumers.

Rising demand for products at home could help Huawei as it faces the possibility of a ban on its purchase of US components next month.
The Shenzhen-based telecom giant is bracing itself for steep drop-off in international sales in the second half of 2019, expected to fall between 40 million and 60 million devices compared with last year.

Details: Some 46% of iOS users that invested in new devices in H1 opted for an Android, a rise of 2.8% compared with the same period a year earlier.

42.9% of iPhone X users in China choose Huawei when switching to Android in H1 2019, according to the report.
Less than one-fifth of Android users that bought new handsets chose Apple products in the period, a slight decrease on last year.
Apple’s smartphone market share in China dipped to 23.5% in H1 2019 compared with 25.5% the same period a year ago. Huawei’s market share meanwhile grew to 21.6% from 17.0% in H1 2018.
Additionally, the report found that Tencent’s grip on users is weakening. Users spent 3.6% less time on Tencent apps in the first half compared with a year ago, though its services such as WeChat, QQ, and games still take up 42.3% of user screen time.
User time spent on Bytedance apps, including Douyin and Toutiao, rose slightly to 11.7% from 10.3% a year ago.

Apple gives up ’tax’ on medical apps after outcry

Wei Sheng — Fri, 19 Jul 2019 06:19:32 +0000

Apple said on Thursday it will not charge the 30% App Store commission for several Chinese medical consultation apps after an outcry from developers.

Why it matters: The 30% so-called “Apple tax,” or commission from every transaction made through its App Store, has long been loathed by developers and its far-reaching implementation fails to address innovations in business models.

“We do not charge a commission for apps that exchange physical goods and services. Following a thorough review of DingXiang Doctor and several similar apps we have verified they are delivering medical consultations and they have not been charged and should not be charged… this was a new situation and we wanted to be sure we applied our guidelines correctly and consistently, and we’re sorry it took us longer than usual to make sure we got it right.”

—Apple in a statement emailed to TechNode

Details: Several apps that offer online medical consultation services had railed against Apple for restricting them to the company’s in-app purchase (IAP) system and applying the 30% commission to its consultation fees, according to a report (in Chinese) by China Youth Daily, the official newspaper of the Communist Youth League of China.

Apple requires developers to exclusively enable its own payment system when users make payments for virtual services, ensuring that Apple can take 30% commission from each purchase.
The Chinese medical apps in question, including popular DingXiang Doctor and Chunyu Doctor, help doctors provide online medical consultations over the phone or internet to users for a fee, a business model they have argued is different from virtual services such as in-game purchases or paid content.
Apple told app developers the medical consultation services are the same as virtual goods, so users can only buy these services via Apple’s payment system, according to developers cited by the newspaper.
Developers argued that each consultation is unique and can not be replicated and therefore should not be classified as virtual services.
Apple said on Thursday it would not apply its commission to these apps because they are delivering medical consultations.

Context: Apple’s App Store commission has faced criticism by developers both in China and overseas.

Swedish music streaming app Spotify filed in March a complaint with the European Commission arguing that the 30% fee by Apple gave its own music streaming service an unfair advantage over rivals.
Mega chatting app WeChat had to block a function where users can send tips to original content creators on the platform’s public accounts in April 2017 after it was deemed in violation of Apple’s in-app purchase rules. The function was brought back in June 2018 after an outcry by Chinese netizens.

Briefing: Microsoft, HP, Dell to shift production away from China

Eliza Gkritsi — Thu, 04 Jul 2019 02:30:05 +0000

HP, Dell and Microsoft join electronics exodus from China – Nikkei Asian Review

What happened: A new set of companies which produce notebooks, game consoles, e-readers, home assistants, and smart speakers plan to join the exodus from China, Nikkei Asian Review reported citing anonymous sources. Microsoft, HP, Dell, Sony, Nintendo, Google, and Amazon think the renewed promises of reconciliation coming from last week’s G20 meeting are too uncertain, the report said. Lenovo and Asustek are also considering similar moves. Meanwhile rising labor costs in China have already lowered production demand and will continue to do so. Companies are eyeing Southeast Asia as an alternative.

Why it’s important: Leaders from the US and China made an effort to appear reconciliatory at the G20 meeting. But observers have said no solid details have been announced, while there are many issues left to be resolved for a trade deal. The US-imposed hiked tariffs on Chinese exports have landed a severe blow to China’s position as a tech powerhouse. Apple and China’s largest private sector employer Foxconn have already announced plans to move more than 30% of production out of China. Meanwhile, other American companies are fighting to maintain access to the Chinese market.

Briefing: Apple acquires self-driving startup Drive.ai days before shutdown

Jill Shen — Wed, 26 Jun 2019 03:51:37 +0000

Apple buys self-driving startup Drive.ai just days before it would have died – The Verge

What happened: Apple on Tuesday confirmed it has acquired the struggling self-driving startup Drive.ai, which was set to shut down after four years. Drive.ai’s Mountain View headquarters was to close and 90 employees laid off later this week. Apple is said to have purchased the company’s assets including its autonomous cars, and hired a “handful” of its hardware and software engineers to work at the company’s special projects division this month.

Why it’s important: Drive.ai was founded in 2015 by former graduate students from Stanford’s AI lab run by renowned AI expert and former Baidu chief scientist Andrew Ng. It developed self-driving software systems, using deep learning to avoid objects on the road. It later shifted focus to creating kits that converted regular cars into autonomous vehicles. In total, it raised about $77 million for a $200 million valuation, and was once considered one of the most promising self-driving car startups. Apple’s autonomous driving efforts have stuttered over the years, and it cut more than 200 employees from its AV initiative Project Titan earlier this year, CNBC reported.

Briefing: Foxconn chairman steps down ahead of presidential run

Eliza Gkritsi — Fri, 21 Jun 2019 04:35:07 +0000

Foxconn chairman hands over reins ahead of presidential bid – Reuters

What happened: Terry Gou, founder and chairman of Foxconn, announced today he is handing the reigns of the world’s largest electronics contract manufacturer to a new operations committee. Gou, 68, was expected to withdraw from the daily operations of Foxconn since he announced his bid for president of Taiwan, where the company is based. He is expected to keep a seat at the board, but the company said at its first investors relations conference today that his presidential candidacy will affect his future role there.

Why it’s important: The news of Gou’s resignation has been expected since he announced his presidential bid. It comes a week after Foxconn unveiled a leadership overhaul and plans for increased transparency towards investors. The new nine-person committee is comprised of key figures in Foxconn’s various businesses, and speculation is high as to whether one of them will replace him as chairman of the board. As the largest assembler of iPhones, Foxconn is likely to undertake serious changes in its supply chain operations. The US-China tariffs impart a heavy burden on iPhones, which are mainly made in China. The Taiwanese company has said it is ready to shift production out of China.

Briefing: Apple assesses moving up to 30% of production out of China

Wei Sheng — Thu, 20 Jun 2019 07:43:31 +0000

Apple weighs 15%-30% capacity shift out of China amid trade war – Nikkei Asian Review

What happened: Apple has asked its major suppliers to evaluate the cost implications of moving 15% to 30% of their production capacity from China to Southeast Asia as it prepares to restructure its supply chain. People cited by Nikkei said that the decision was made by Apple as a result of the ongoing trade tensions between the US and China, but things won’t change even if the disputes were settled. Apple has decided the risks of relying heavily on manufacturing in China are too great and even rising.

Why it’s important: It’s claimed that 90% of Apple’s products, including popular iPhones, iPads, and MacBooks, are assembled in China. Apple supplier Wistron has already been assembling cheaper iPhones in India since 2017 and key iPhone assemblers Foxconn said last week that 25% of the company’s production capacity is outside China. Analysts said moving iPhone production entirely outside of China is not impossible but would be difficult considering the cost and the difficulty of finding new component suppliers in a new country.

Trade war drags on business sentiment in Asia-Pacific, reaches 10-year low: report

Eliza Gkritsi — Wed, 19 Jun 2019 07:08:29 +0000

Business confidence among top companies in the Asia-Pacific region has fallen to its lowest point since the 2008-2009 financial crisis, according to the Asian Business Sentiment report, a survey by Thomson Reuters and Singapore’s INSEAD business school.

The business sentiment index fell to 53 in the quarter ended June from a rating of 63 held in the two previous quarters. The measurement tracks companies’ outlook for the next six months and a score above 50 indicates an overall positive outlook.

The fact that this quarter’s number remained just over 50 indicates that companies do not expect a global recession, but are cautious about the future as the trade war escalates.

Uncertainty over Brexit is the second biggest concern, with 25% of firms naming it as the biggest risk for the next six months.

The report was a survey of 95 companies in 11 countries which make up a third of the world’s GDP output and 45% of its population. It was administered between May 31 and June 14. Companies surveyed include South Korea’s Samsung, Japan’s Nikon, and Thailand’s state-owned oil and gas company PTT PCL.

The global trade war has become the top perceived business risk, when a little over a year ago it was only a “worry.” The report from the first quarter of 2018 found that 14% of surveyed firms put “worries” about an impending trade war at the top of their concerns. The next quarter the “worries” became a reality and in the last three months, the trade war was the top concern for 57% of surveyed firms.

The trade war has had a significant impact on global supply chains, as many companies are looking to move production outside of China. Smartphone production has been severely affected by the tariff war. Taiwanese Foxconn, the biggest assembler of iPhones and China’s biggest private sector employer, announced last week that it is ready to expand productive capacity outside of China to minimize tariff impact.

Manishi Raychaudhuri, the Asia-Pacific equity strategy for BNP Paribas, the world’s eighth-largest bank in 2018 by asset size according to Standard & Poor’s, told Reuters that the trade war is unlikely to be solved in 2019. He added that the changes that must be made to supply chains “will not happen overnight.”

Briefing: Tim Cook thinks Apple will not be targeted by tariffs

Eliza Gkritsi — Wed, 05 Jun 2019 06:51:58 +0000

Tim Cook on tariffs, immigration and whether we spend too much time on our iPhones – CBS News

What happened: Neither Chinese nor American authorities have targeted Apple with import tariffs, the company’s CEO Tim Cook said in an interview with CBS News last night, adding that he doesn’t expect they will. He argued that because iPhone components are manufactured in several countries and the final product is assembled in China, tariffs on iPhones would hurt many countries, but especially the US. Should American authorities decide to impose a tariff on the smartphone, which is assembled in China, the company’s business would certainly suffer a blow, Cook said, but he thinks that this scenario is unlikely. He added that he doesn’t expect China to use Apple as a retaliation tool as the Huawei standoff escalates.

Why it’s important: Cook’s comments come at a time when Apple’s position in global smartphone manufacturing is facing difficulties. New tariffs launched by the US against China earlier in May could affect iPhone sales, increasing the price of Apple’s line of smartphones by more than $100. At the same time, if Apple becomes a target of the Chinese government in an attempt to retaliate for banning Huawei, the Silicon Valley tech giant could face strong headwinds. Apple’ s revenue fell in the first quarter of 2019, largely due to decreased sales in greater China.

Briefing: US-China trade war could inflate iPhone costs by 3%

Jill Shen — Wed, 15 May 2019 08:36:56 +0000

Apple’s iPhone Could Cost 3% More to Produce Due to China Tariffs – Fortune

What happened: The US-China trade war could results in a 2% to 3% increase in Apple’s iPhone production costs, said Dan Ives, an investment analyst at Wedbush during a Fortune event on Tuesday. Ives attributed the increase to the tariffs on batteries and other components made by Chinese suppliers, and expects Apple’s costs could increase further if the US government take steps to impose fresh 25% tariffs on $325 billion in Chinese goods. If that happens, iPhones would cost as much as $150 more each to produce, Ives said.

Why it’s important: The escalated trade war between China and the US could hit Apple hard, as it manufactures most of its products, including its iPhone and Macs, in China. The company’s Greater China sales for the first three months of the year sank 22% year-on-year to $10.22 billion, though it managed to slow the rate of decline compared with the 27% year-on-year drop in the fourth quarter of last year. The US electronics maker lowered prices for three iPhone models including the newer XS and XR as much as RMB 1,200 ($175) per device, according to a report from The Beijing News.

Briefing: Tech stocks slip in the wake of new tariffs as trade war escalates

Eliza Gkritsi — Tue, 14 May 2019 04:31:55 +0000

Tech stocks tumble as China retaliates in latest salvo of the trade war – TechCrunch

What happened: Stocks of US and European tech companies sank yesterday after China retaliated in equal measure to new US tariffs. Beijing announced 25% import tariffs on $60 billion of US goods starting on June 1. European companies shed 1.2% of share value, but the Dow Jones Industrial Average and S&P 500 fell by 2.4%, and Nasdaq by 3.4%, the worst daily percentage loss it has seen in the past year. Apple fell 5.8%, Netflix by 4%, Amazon by 3.6%, Facebook by 3.6%, and Alphabet by 2.7%.

Why it’s important: At the beginning of last week, an agreement between the world’s two largest economies seemed possible but, on Friday, import duties Trump had threatened to hike on $200 billion worth of Chinese goods from 10% to 25% were triggered. Industrial chemicals, machinery parts, and consumer goods are amongst the worst hit. Tech products like iPhones will face higher manufacturing costs, while tariffs on finished goods will make them more expensive for Chinese consumers.

Briefing: Renewed trade tension exposes Apple’s vulnerabilities

Wei Sheng — Mon, 13 May 2019 04:45:04 +0000

Apple and the iPhone Near Trade Crosshairs Again – The Wall Street Journal

What happened: US President Donald Trump last week threatened a tariff of 25% on $325 billion in Chinese imports that haven’t previously been targeted by duties, which would affect almost all Chinese exports to the US, including Apple’s most important devices, including iPhones, iPads, and Macs, that are assembled in China. Apple also counts on Greater China for about one-fifth of its sales, making it vulnerable if China fights back with higher duties against American companies. Apple would also be a likely target of China’s punitive actions as iPhone has 7.4% of the country’s smartphone market.

Why it’s important: As an American company that manufactures most of its devices in China, Apple is exposed in the escalating trade war. Apple last month posted its first consecutive drop in quarterly sales and profit in more than two years as iPhone sales fell 17% in the first quarter of 2019. The trade war does not appear to be resolving anytime soon as the US-China trade talks ended last week without a deal. Although Apple is diversifying its supply chain by planning to assemble devices in India, it will take time for the company to transfer production from China, making it unlikely to avoid the US tariffs this year.

No Huawei 5G chips for Apple after settling Qualcomm dispute

Wei Sheng — Wed, 17 Apr 2019 04:45:30 +0000

Apple and Qualcomm reached a settlement on Tuesday to drop all litigation over patent royalties that extended over two years, clearing the way for the American electronics maker to use Qualcomm’s 5G chips in its new iPhones.

Apple is reportedly planning to purchase 5G modem chips from Qualcomm for use in its 2020 iPhones. Nikkei Asian Review quoted a source as saying that Apple will purchase modem chips, including 5G, from the chipmaker for iPhones in 2020 after the deal is finalized.

The report also said that the deal came too late for Apple to use Qualcomm chips in its 2019 iPhone lineup, but the company has already started testing Qualcomm’s 5G chips for 2020 devices.

Before the Apple-Qualcomm dispute was settled, Apple was facing a 2020 release date for 5G iPhones, well behind competitors including Samsung, which will launch the Galaxy S10 5G in May, and Huawei, which will launch its first 5G smartphones, the Mate 20X and the foldable Mate X, this summer.

Apple’s rival Huawei had indicated on more than one occasion that it was willing to sell its 5G Balong 5000 chipsets to Apple. Huawei CEO Ren Zhengfei said the company was “open to Apple in this regard” in an interview with CNBC that aired Monday.

However, Apple gave no indication of taking Huawei up on its offer. Huawei’s rotating Chairman Ken Hu said on Tuesday at an annual analyst summit in Shenzhen that the company hadn’t held discussions with Apple on 5G chips. Hu also added that he looked forward to Apple’s competition in the 5G phone market.

Huawei also plans to release another 5G smartphone before October, said Shawn Sheng, the vice president of Huawei’s Handsets Product Line and Consumer Business Group, on Tuesday’s Huawei analyst summit.

Briefing: Huawei is “open” to selling 5G modems to Apple

Wei Sheng — Tue, 09 Apr 2019 04:42:34 +0000

Huawei is ‘open’ to selling its 5G modems, but only to Apple – Engadget

What happened: Huawei is reportedly “open” to selling its 5G Balong 5000 chipsets, but only to its rival Apple. The chipset is said to be the world’s first 5G modem that fully supports interoperability over 5G networks built on 4G infrastructure and dedicated 5G equipment. Chinese media reported Tuesday that Huawei refused to comment on the issue and a Huawei chip business insider said that this might be Apple’s “wishful thinking.”

Why it’s important: Following its feud with Qualcomm, a leader in 5G-enabled chips, Apple will not be able to offer a 5G iPhone until 2020 should be unable to find a ready supply of modems. Apple’s new supplier Intel won’t have chips available in time to support the 2019 release of 5G iPhones. Meanwhile, Samsung turned down Apple’s request to supply its 5G modem chip, with the South Korean smartphone giant saying that the supply volume was insufficient. As a result, Huawei has become one of the few options left for Apple. The Balong 5000 is “already available” to support Huawei’s 5G phones—the Mate 20X and the foldable Mate X—that will launch this summer, according to Huawei’s announcement from this year’s Mobile World Congress.

Ask China Anything: What Chinese consumers think of Apple’s pivot to software

Shi Jiayi — Wed, 03 Apr 2019 09:54:30 +0000

If you can’t see the YouTube player above, try watching here.

Chinese media have called this year’s Apple product launch event the “softest” one yet. Unlike Apple’s previous hardware-focused launch events, 2019 was all about the services—Apple News+, Apple Arcade, Apple TV and Apple Card. The company is pivoting away from hardware and toward content-based services.

This strategy, however, may ignore the desires of Chinese consumers, who may not have access to these new services.

Only a portion of Apple software products are available in China—iTunes Movies, iBooks Store and Apple News are all blocked on the mainland. After Apple’s March launch event, netizens joked that they looked forward to trying Apple’s new “404 not found” services.

In Shanghai, a consumer said he was not interested in Apple’s new services. “These services are already common in China,” he said. Within the Chinese firewall, citizens have become accustomed to homegrown services—social media platforms like WeChat and Weibo, mobile payments like Alipay and WeChay and a slew of video platforms—many of which they deem superior to Apple’s.

Alipay and WeChat Pay dominate China’s e-payment, and Apple Pay has only a 16% market share.

A worker from Shanghai’s financial area surnamed Qian said, “I think if Apple wants to launch its credit card, it will be difficult for them to expand in the Chinese market.”

Apple does, however, still have loyal fans eager to try hardware the company released a week before the event: the updated iPad mini and iPad Air as well as the new AirPods. A sales representative in a Shanghai Apple store told TechNode there was still a waiting list to purchase the new iPad mini.

While some Chinese citizens still say Apple is their ideal phone, others are ready to switch to Chinese phone brands like Huawei and Xiaomi.

One Shanghai resident surnamed Zhou said, “Overall, mobile phones are just tools… I think domestic phones have reached this level of quality through nonstop hard work. I’m not necessarily saying people who buy Apple products are worshiping foreign things, but it’s a good thing to buy products from your own country.”

Briefing: WeChat-Apple stalemate over mini-programs continues

Bailey Hu — Thu, 14 Mar 2019 02:54:45 +0000

Apple, WeChat Tussle Over How to Divvy Up Mini Program Revenue – Caixin Global

What happened: Powerhouse messaging platform WeChat has been trying to downplay rapid growth in the number of mini-programs—stripped-down ‘apps’ that run within WeChat—because of an impasse with Apple over a revenue split dating back to May. Apple was reportedly demanding 30% of in-app purchase revenue, and it seems the spat is unlikely to resolve anytime soon, Caixin said Wednesday citing unnamed sources. According to WeChat open platform executive, Du Jiahui, the argument is over the nature of mini-programs, which numbered 1 million as of July. A Caixin source said that widespread adoption of mini-programs since launching in 2017 took Apple by surprise.

Why it’s important: Tencent’s WeChat has previously battled with Apple over another form of in-app revenue: tips for content producers in WeChat’s public account media ecosystem. In June, Apple finally ruled that iPhone users could begin tipping again, as long as all of the proceeds went directly to individual account operators. The dispute over mini-programs may be harder to resolve, however. For one, the WeChat ecosystem is growing fast and lightweight mini-programs lower the barrier for entry for developers compared to the App Store. Many popular apps in China have also launched smaller versions within WeChat. As the potential pool of revenue grows, Apple may find it increasingly hard to let go.

Briefing: Apple Store now offers interest-free payment option to Huabei users

Nicole Jao — Wed, 20 Feb 2019 03:47:45 +0000

Apple Store目前已支持蚂蚁花呗24期免息服务 – TechNode Chinese

What happened: Apple China is now offering a 24-month interest-free payment option for shoppers using Huabei, Alipay’s virtual credit card service. The financing offer applies to all products in Apple’s online store, but only applies to iPhone products at Apple’s physical stores.

The Apple Store also offers interest-free financing options to customers of other partner companies in China, such as China Merchants Bank, Industrial and Commercial Bank of China, and China Construction Bank.

(Image credit: 动点科技)

Why it’s important: Huabei, officially launched in 2015, is a consumer financing service that allows shoppers to pay for online purchases during the month after delivery. Through Huabei and its micro-lending unit, Jiebei, Ant Financial doubled the value of its consumer lending in 2018 to RMB 600 billion, despite increasingly tightened financial conditions. The Chinese government is taking measures to regulate the country’s rapidly growing financial sector.

Briefing: Apple pulls networking platform Maimai and other social apps from China App Store

Bailey Hu — Tue, 12 Feb 2019 04:02:56 +0000

脉脉、音遇等大批社交软件iOS版下架，或因违反苹果支付规范 – 36kr

What happened: Work networking platform Maimai, karaoke app Yinyu, voice-messaging and entertainment platform Hello, as well as other social apps were recently taken down from Apple’s China App Store, 36kr reported. A Maimai representative said that the iOS version of its app is currently being updated to fulfill the App Store’s technical requirements. A Yinyu spokesperson said that its platform previously had a bug, while Hello representatives said the company is in talks with Apple. An unnamed investor told 36kr that as many as 700 apps may have been removed from the App Store this time, and that past takedowns have usually involved hidden in-app purchases—for which Apple requires a 30% cut.

Why it’s important: Although the incident brings to mind Apple’s high-profile disagreement with WeChat over its tipping feature last April, it appears to be unrelated, according to app representatives at least. While the takedown will certainly affect the targeted social platforms, some are already in the process of re-applying for App Store listings: Yuyin has submitted a new version which is currently undergoing review. The app Hello may have face a tougher route to regaining consumer confidence; just last month, it was among five voice-streaming platforms taken down by authorities for vulgar or pornographic content as well as other issues, Southern Metropolis Daily reported (in Chinese).

Briefing: Apple’s main assemblers shift production away from China

Nicole Jao — Mon, 28 Jan 2019 04:52:01 +0000

Apple’s Partners Quicken Shift From China as Trade Tensions Rise – Bloomberg

What happened: Taiwanese iPhone supplier Foxconn announced over the weekend that it is investing more than $200 million in India and Vietnam as it shifts more of its output to Southeast Asia. Foxconn’s smaller rival Pegatron Corp. also announced on Sunday that it has moved part of its manufacturing of networking gear to Indonesia and is now looking to expand its production base to Vietnam and India.

Why it’s important: Taiwanese electronics manufacturers, which are responsible for making a large portion of the world’s electronics, have been shifting production bases outside of China and into other countries as US tariffs on Chinese imports escalate. Many of these companies are turning to countries in Southeast Asia to decrease their dependence on China. The tension between the world’s two largest economies is a delicate situation, especially since a new round of trade talks is scheduled at the end of the month. The White House has threatened to raise the tariff rates significantly on $200 billion in Chinese goods if a deal isn’t reached by March 1.

Briefing: iPhone assembler Foxconn prematurely laid off 50,000 contract workers

Bailey Hu — Mon, 21 Jan 2019 02:06:59 +0000

Foxconn cuts 50,000 contract jobs in China: Nikkei -Reuters

What happened: Foxconn, Apple’s biggest iPhone assembler, has prematurely laid off 50,000 contract workers in China. According to a source, layoffs began in October, much earlier than normal for the company’s China-based factories. Typically, assembly line employees don’t leave their posts until the end of the year, the source said.

Why it’s important: The news comes after Tim Cook’s admission that Apple is losing ground in its biggest market, China. While that’s in part due to the ongoing trade war, it’s also a result of high prices and competition from domestic brands. Earlier this month, Apple cut its production targets for this quarter by 10% due to flagging sales. Along with price cuts on platforms such as e-commerce JD.com, it may hope to recover some of its lost ground in a now-saturated market.

Apple slashes iPhone prices on e-commerce platform JD.com

Nicole Jao — Fri, 11 Jan 2019 10:48:06 +0000

Screenshot of the reduced prices on JD.com’s website (Image credit: JD.com)

Apple has reduced the price of some iPhone models on Chinese e-commerce platform JD.com, shortly after cutting its sales forecast and blaming flagging revenue on trade tensions and China’s slowing economy.

The price of the iPhone 8 has dropped by about RMB 600 (around $90) with a starting price of RMB 3,999. The iPhone 8 Plus saw a steeper drop of RMB 800.

The reduced prices for the iPhone 8 models are more than $150 lower than the prices listed on Apple’s China website.

On Thursday, rumors that Apple would lower iPhone prices, including those for the latest models, began to circulate online (in Chinese). The news was later denied by electronics wholesaler Huaqiangbei. Apple customer service representatives also responded by saying they were not aware of any price reduction for wholesalers or authorized retailers.

Chinese news reports point out that this is a price strategy to boost sales in China rather than a limited time offer, as it originally appeared to be part of JD.com’s Chinese New Year sales promotions.

Apple has had a rough start to the year. Last week, the US multinational tech company announced that it would cut its quarterly sales forecast by a $5 billion, blaming its week performance on the ongoing trade tension between the US and China and on China’s weakening economy. It also reportedly cut its production plan for January to March by 10%.

What Cook and company are still getting wrong about Apple in China

Apple’s smartphone sales in China declined 8% in the third quarter of 2018 compared to the same period last year.

Analysts note that Apple’s increasing price tag for its smartphone line could have also contributed to slowing sales in China. China’s smartphone market has been cooling over the past year, and many local brands have filled the mass market with devices at a more affordable price tag.

What Cook and company are still getting wrong about Apple in China

John Artman — Fri, 04 Jan 2019 11:12:15 +0000

Apple CEO Tim Cook’s letter to investors certainly has come as a surprise, admitting as it did that global sales are weak and that revenue is likely to be $5 billion less than originally projected.

By pointing out that the company’s sales in China are declining and by providing the financial proof that the company has failed to localize effectively, the letter served up even more material to Apple bears.

Clearly, Apple is facing a dire situation—but not for the reasons many people assume. Contrary to what’s widely cited as a reason, including from Cook himself, Apple’s hard time in China is not because of the trade war that’s raging between the US and China. Instead, the company’s woes have been a long time coming.

Cook, and many outside of China, have placed too much emphasis on the trade war for the decline in sales. In the Apple letter and in recent media interviews, Cook blamed the trade war for having a negative impact on China’s economy, and linked this macroeconomic situation to the fall in sales in the market. But this fails to consider the real situation in China’s smartphone market.

The Chinese smartphone market is mature and saturated. To date, most of the growth has come from first-time smartphone buyers. As more Chinese people get onto the mobile internet, and phone quality improves, the total number of purchases will inevitably decline as new purchases and replacement rates decline as well.

There are also so many options on the market. While globally, Apple and Samsung continue to lead (third and first respectively with Huawei coming in second), the amount of competition in China has grown exponentially. And we’re not just talking about budget phones either. Every serious smartphone player, including Huawei, Xiaomi, Oppo, and Vivo, have released their own mid-range and high-end phones.

Apple is no longer the status symbol it used to be in China. Having the latest iPhone is still a big deal and can certainly engender status envy where “keeping up with the Joneses” is still a thing, but Apple products in general have become more ubiquitous. This demonstrates not only Apple’s success in the market, but also the increasing affordability (yes, you heard me right) and ease of access.

As I pointed out in 201 7, Apple has not done a good job responding to local expectation s. While the US and EU markets may be similar, the China market is full of locally developed hardware and software that do a really good job of solving Chinese pain points.

China also has a thriving second-hand market, not only for used products, but also refurbished electronics and battery replacements, which Cook did mention in the letter.

In addition, the country has a thriving installment-finance market. Almost all the fintech IPOs we saw this past year were companies who built their business on the “not-quite-affluent-but-want-to-spend-like-I-am” set.

Apple has faced these headwinds for some time—even before the current tension over trade. As much as the leaders of both countries would like to take responsibility for such dramatic changes, this just isn’t the case.

That doesn’t mean, however, that the trade war won’t play an increasing role in their declining sales in China. Apple’s American citizenship is now a hindrance. Previously, the Chinese fetish for foreign products helped push Apple to its success, but now the trade war and domestic political situation is beginning to turn people away from American brands in favor of Chinese ones.

Chinese smartphones, for example, not only provide services Chinese consumers now expect, but also produce models of similar build quality to Apple’s at a fraction of the price.

Still, if Apple hopes to reverse its fortunes in China, Cook and senior management need to face up to an uncomfortable reality—that they’ve dropped the ball in China and failed to localize fast enough. Getting it back may be harder than they, and investors, could imagine.

Briefing: Apple cuts sales forecast following weakened China sales

Chris Udemans — Fri, 04 Jan 2019 04:35:35 +0000

Apple cuts sales forecast as China sales weaken; iPhone pricing in focus – Reuters

What happened: In a rare move, Apple has cut its quarterly sales forecast, blaming its poor performance on trade tensions between China and the US, as well as economic deceleration in Greater China. In a letter to investors, Apple CEO Tim Cook said the company had not anticipated the magnitude of the slowdown in the region. Cook also that Chinese consumers may have elected not to buy iPhones because Apple is an American company, instead opting to support the firm’s Chinese competitors.

Why it’s important: While Apple has blamed support for Chinese brands and a slowing economy on its revenue drop, analysts pointed out that the company itself may be to blame. Increasingly high prices could have also played a role. Some of the company’s iPhones have passed the $1,000 mark while Chinese brands look to fill the mass market. The drop in sales was also not entirely a surprise. In November, the company said it would stop reporting unit sales data for iPhones and other products. The move led analysts to believe a drop was coming.

Huawei to increase focus on consumer business after record-breaking smartphone sales

Jill Shen — Sat, 29 Dec 2018 10:15:51 +0000

Huawei plans to go “all in” on its smart ecosystem in 2019, following an expected 50% year-on-year increase in revenue from its consumer business in 2018, according to a company executive.

In a year-end letter to employees, CEO of Huawei’s consumer business Yu Chengdong said the company saw record-breaking results in 2018, with revenue expected to reach $50 billion. Boosted by demand for its P20, Honor 10, and Mate 20 smartphones, Huawei shipped more than 200 million devices during the first three-quarters of 2018.

As a result, the company plans to increase its focus on its consumer-facing business, going “all in” on its smart ecosystem, which will encompass 5G, artificial intelligence, and the Internet of things (IoT).

Last month, Huawei overtook Apple to become the second largest smartphone manufacturer in the world, according to market research firm International Data Corporation (IDC).

The peak in performance comes amid increased stress on its overseas operations. The Trump administration is reportedly pondering an executive order that would include prohibitions on purchasing equipment from China’s Huawei and ZTE. Apart from the US, countries including the UK, Australia, New Zealand, and Japan have implemented measures to limit the inclusion of Huawei equipment in their 5G infrastructure.

“Huawei’s consumer business will aim to provide smart life experiences of all kinds to global consumers in the next five to 10 years,” Yu wrote in the letter.

He said he believes smart devices would form a trillion dollar market, and that Huawei hopes to be a leading force in the industry.

Yu said consumers would expect “a total revolution of [user] experience” in 2019, highlighting the importance of consistent research and development, and timely use of new technologies. The company plans to seek more partnerships with industry players, universities, and institutions for innovation in core components.

In China, the company has seen growing support following the arrest of its CFO Meng Wanzhou. Earlier this month, a tourist site in the inland province of Henan gave free entry to Huawei smartphone users as part of a promotion. Additionally, Shenzhen-based company vowed to provide subsidies to employees for purchasing Huawei handsets while penalizing staff who buy iPhones.

Apple includes Android devices in Tmall trade-in program

Emma Lee — Fri, 28 Dec 2018 04:05:49 +0000

Apple has launched a large-scale trade-in program on Alibaba’s Tmall marketplace to boost its sales in China, allowing Android users to jump ship and buy into the US tech giant’s ecosystem.

Previously, Apple’s Giveback program was only available through the company’s retail stores. Its Tmall trade-ins make the initiative more accessible for users and all major product categories, from iPhone to Mac, are included.

The trade-in program is not only restricted to Apple products. It covers nearly all of the mainstream Android phones manufactured by major smartphone makers, including Samsung, Huawei, Xiaomi, OPPO, Vivo, HTC, OnePlus and Lenovo.

After entering Apple’s flagship store on Tmall, a user’s device will be automatically identified and given a valuation accordingly. The service will also offer a free pickup and delivery service.

Although Apple conducts trade-in initiatives every year, it’s rare for the Cupertino firm to push it at such a scale, including various promotion channels and products covered.

The company is under growing pressure to maintain its dominance in the global smartphone industry. Competition in China is especially fierce given the rise of domestic rivals.

China’s homegrown smartphone brands like Huawei and Oppo continue to overshadow their international peers on domestic turf. Also, the trade-in program comes shortly after a court in the eastern Chinese city of Fuzhou banned the sale of some iPhone models following accusations the company infringed on disputed Qualcomm patents.

Despite the ban, Apple continues to sell its smartphones in the Chinese market. It attempted to resolve the dispute by updating its software. Qualcomm said it would take further action if Apple continued to disobey the court’s injunction.

Over the last few weeks, Apple has unveiled new marketing offers for iPhone XS and iPhone XR in a number of key markets, including the US and Japan.

Apple releases iOS update to resolve Qualcomm patent dispute

Runhua Zhao — Tue, 18 Dec 2018 09:16:15 +0000

Apple has released an update to its mobile operating system iOS in an effort to settle a patent dispute brought to a Chinese court by US chipmaker Qualcomm.

The company released iOS 12.1.2 on Monday, which aims to address Qualcomm’s concerns. It also forms part of a broader update to resolve eSIM issues.

Qualcomm responded by saying that Apple is violating the court’s ruling even with the update.

“Apple’s statements following the issuance of the preliminary injunction have been deliberate attempts to obfuscate and misdirect,” Don Rosenberg, executive vice president at Qualcomm, said in a statement to Reuters.

The company said Apple has not yet been given permission to sell its devices in China.

Apple last week announced that the update would be released after a court in the eastern city of Fuzhou granted two preliminary injunctions to Qualcomm requiring Apple to cease selling certain model iPhones in China.

Apple then lodged an appeal. The company also said that the disputed patents, which include features related to photo editing and swiping on touchscreen displays, will not affect iPhone’s latest software.

It also said that the sale of iPhones in the country continued as normal, with offline and online retailers stocking its products.

Nevertheless, according to a court document (in Chinese) acquired by Chinese media Yicai, the Fuzhou Intermediate Court’s decision mentioned no specific mention of an operating system but did specify the patents.

The document also shows that Qualcomm’s case against Apple was filed on Nov. 15, 2017. The company had appealed to the court to ban the sale of seven iPhone models in China as far back as July 2018.

While iPhones have so far remained unaffected by the US-China trade war, US President Donald Trump said last month that tariffs could be imposed on smartphones and laptops that are made in China. Apple’s suppliers have said they would consider pulling production from China if higher tariffs are imposed amid the trade war between the US and China.

According to Apple’s fiscal report for the fourth quarter 0f 2018, sales revenues in the Greater China area were $11.4 billion, 18.1% of the company’s total sales recorded for the period.

Briefing: Apple China to update iOS in a bid to resolve patent case

Chris Udemans — Fri, 14 Dec 2018 07:45:10 +0000

Apple says it will update software in response to China iPhone injunctions – SCMP

What happened: In order to avoid compliance issues, US technology giant Apple has said it will release a software update next week after a Chinese court issued an order instructing the company to stop selling certain iPhone models in China. The move comes after the court granted US chipmaker Qualcomm two preliminary injunctions against Apple in an ongoing patent dispute.

Why it’s important: Apple is still currently selling its phones in the country through its online and offline stores. As a result, Qualcomm says it has contacted to court to enforce the ruling. The spat comes as Apple is already under pressure in from competitors in the region, which offer high-spec models at lower price points. Apple suppliers have also said they would pull production from China if higher tariffs are imposed amid the trade war between the US and China. Should the rates rise to 25%, with the US giant absorbing the costs, Apple would face an earnings-per-share (EPS) decline of $2.50.

Briefing: Apple suppliers to move China iPhone production if tariffs reach 25%

Chris Udemans — Thu, 13 Dec 2018 04:34:52 +0000

Apple suppliers to consider moving China iPhone output if tariffs hit 25% – Bloomberg

What happened: Apple suppliers in China will consider shifting production out of the country if US tariffs reach 25%. The American tech giant and its partners are assessing their supply chains in the US and China amid tensions between the two countries. A 10% tariff could result in an earnings-per-share (EPS) decline of $1 for Apple if all its hardware in the US is subject to the levy and the company absorbs the costs. However, a 25% tariff would result in an EPS decline of $2.50.

Why it’s important: iPhones have so far remained unaffected by the US-China trade war. However, President Donald Trump said last month that tariffs could be imposed on smartphones and laptops that are made in China. The country has long been Apple’s primary production base for the majority of its hardware. Its supply chain spans hundreds of companies, with firms including Hon Hai Precision Industry and Pegatron assembling its products.

Chinese internet split over Qualcomm’s Apple ban

Runhua Zhao — Tue, 11 Dec 2018 10:32:57 +0000

The Chinese internet is divided after a court in the eastern Chinese city of Fuzhou banned the sale of some iPhone models following accusations that the company infringed on disputed Qualcomm patents.

Qualcomm, an American semiconductor and telecommunications equipment producer, brought the case, relating to two patents in photo editing and touch-screen swiping tech, against Apple in 2017.

On Chinese microblogging platform Weibo, a group of netizens advocated for the formal implementation of the ban, though Apple lodged an appeal earlier today. So far, the court has released no decision regarding Apple’s appeal, and no government department has commented on the lawsuit.

“Great job! [We should] do more instead of just talk. Are foreigners’ slaves happy?” netizen Muyang Yezi, commented on an article by Chinese Sina Tech reporting the issue, referring to Chinese people that are believed to blindly attempt to please foreigners.

“Release Huawei (Meng) and [we’ll] loosen Apple [charges], or there’s more to come,” netizen Haishipangzi said. The comment came amid the bail hearing of Huawei CFO Meng Wanzhou, who faces fraud charges related to violating US sanctions on Iran.

Other netizens refused to relate the court’s decision with Huawei’s charge directly. “Apple is made in China, in fact. Think about workers at Foxconn,” said netizen Axianer.

Qualcomm is the major semiconductor and telecommunications manufacturer behind Chinese smartphone brands including Xiaomi and OnePlus, which use the company’s components. State-backed Huawei is also an important client for Qualcomm, though the two companies also quarreled over patents in March.

Other netizens voiced concerns over possible retaliation by the US. The court that ruled against Apple also issued an injunction against US chipmaker Micron in July. The ruling prevented Micron’s Shanghai branch to sell products that were suspected for infringing on patents owned by Fujian Jinhua, an integrated circuit manufacturer which was accused of stealing Micron IP by the US.

The US Commerce Department later banned Fujian Jinhua from sourcing American-made components and software.

JD Finance mobile app pulled from iOS App Store

Nicole Jao — Fri, 07 Dec 2018 11:03:55 +0000

JD Finance’s iOS app was removed from China’s Apple App Store this morning (Dec. 7), Chinese media is reporting (in Chinese), the latest in a slew of removals affecting Chinese companies.

“We are in contact with Apple to clarify the situation and will make the app available for download again as soon as possible,” the company said in a statement cited in Chinese media, adding that the beta version of the app is available in the meantime.

The app is still available for Android users. It is unclear whether the app is removed from all App Stores outside of China.

Apple has been increasing scrutiny over mobile apps in China—one of its biggest markets. Last month, it removed 700 plus apps from the country’s App Store. Popular social e-commerce platform Pinduoduo and search giant Sogou were affected by the purge.

The apps in question were pulled for skirting Apple’s policy that any updates must pass through the App Store before rolling out to the public, which the company started imposing last year. Some of the apps removed were found back in the China App Store less than 24 hours later.

In August, Apple removed 25,000 gambling apps from China’s App Store for flouting its policies. Last year, a large number of VPN apps were pulled in order to comply with Chinese government regulations, the company said at the time.

According to app tracker Analysys Qianfan, JD Finance’s app reached nearly 16 million monthly active users) in February (in Chinese), placing it at top of investment and finance app charts.

JD Finance, a spinoff from China’s e-commerce giant JD.com, began operating independently in October 2013. The company offers online financial services, including wealth management and consumer credit products.

Briefing: Sharp lays off 3,000 foreign staff as it relocates production to China

Nicole Jao — Tue, 04 Dec 2018 04:16:24 +0000

Sharp lays off 3,000 foreign staff as it relocates production to China – Nikkei Asian Review

What happened: Japanese electronics manufacturer Sharp Corp has laid off more than 3,000 foreign workers in Japan as it shifts production of iPhone components to a Foxconn plant in China. Sharp won a contract to assemble sensor components for facial recognition features on the iPhone X last year. The company had to ramp up hiring to meet production expectations for the iPhone X. Many temporary workers hired during that time period were foreigners of Japanese descent.

Why it’s important: This year, Foxconn, the parent company of Sharp, decided to move its sensor production to its factories in China. The production shift has resulted in revenue loss and deep job cuts, which come as Japan debates on whether to allow more foreign workers into the country amid a nation-wide labor shortage.

Briefing: Apple seeks tune lover to head its China music business

Runhua Zhao — Thu, 29 Nov 2018 04:35:31 +0000

Apple Music招募中国区负责人，暗示发力中国市场？– 36Kr

What happened: Apple Music posted a recruitment notice to hire a head for its China business, a Chinese music industry information platform reports. According to the job description, the ideal candidate is a music lover that has expansion experience in complex business environments, and is familiar with both the global and Chinese music worlds. The person should be able to cooperate with both musicians and music labels so as to improve Apple Music’s user experience. The recruitment advertisement is no longer available on Apple’s official site.

Why it’s important: The recruitment posting signals Apple’s greater ambition for its music business in China, where Apple Music arrived in the autumn of 2015. With China as Apple’s biggest app download market, the company hopes to expand its music businesses in the country and has formed a partnership with Bytedance’s Douyin (known as “TikTok” outside China). The agreement allows Apple Music users to play music in the Douyin app. Apple Music faces strong competition in China. NetEase Cloud Music now has around 600 million registered users. Meanwhile, QQ Music, which is backed by Tencent, is expected to go public soon.

Updated: Pinduoduo removed from Apple’s China App Store

Chris Udemans — Tue, 27 Nov 2018 09:50:14 +0000

Chinese social e-commerce platform Pinduoduo is among around 700 apps removed from Apple’s China App Store after the latest version of the PDD app was found to contain a technical bug, our sister site is reporting.

No details have been provided indicating the nature of the bug, but the company says it has been in contact with Apple and the app will be back online after the issue has been resolved. The removal only affects buyers on the platform and not its merchant’s app. Users of numerous Chinese Android stores also remain unaffected, as well as iOS users who have already downloaded the app.

Update: The app reappeared in the App Store around 11 pm on November 27.

Pinduoduo is not the only online platform impacted by the purge. B2C car maintenance platform Tuhu, Soguo Maps, and Sogou Navigation were among those also removed. According to reports, 718 apps in the Chinese App Store were suspended.

This is not the first time this year Apple has initiated removals of this kind. In May, more than 10,000 apps were dropped, some of which were relaunched up to two days later. A vast number of these apps did not meet Apple’s standards for in-app purchases, which allow users to buy virtual goods within in-app or game.

Pinduoduo has had a turbulent year. Shortly after listing on the Nasdaq, the company found itself under investigation by Chinese regulators for listing fake goods. The news led to a spate of lawsuits in which investors claimed the company had misrepresented or concealed in its listing documents, resulting in financial losses after its share price plunged after going public.

The company responded by closing 1,000 stores and removing four million listings that it said contained fake goods. It also reported 36 companies to the market regulator in Shanghai’s Changning District.

The company has seen momentous growth in the past few years. The company claims it exceeded a gross merchandise volume of $100 million in 2017, just three years after being founded. The same milestone took Taobao five years and JD.com 10 years to reach.

Chinese smartphone market sees fourth consecutive quarter of declines

Chris Udemans — Fri, 23 Nov 2018 04:51:25 +0000

China’s smartphone market is down 13% year-on-year amid its fourth consecutive quarter of year-on-year declines.

According to a report by market research firm Counterpoint Research, overall sales have not been optimistic, though Huawei and Honor saw double-digit growth compared to the same time last year. Chinese manufacturers filled the ranks the top five brands. The most popular was Vivo, taking nearly 20% of the market in the third quarter, followed by Oppo, Honor, Huawei, and Xiaomi, collectively making up 78% of the market.

Apple saw its year-on-year growth decline by 17% and made up just 7.7% of the market. The company saw sales decrease following the release of the iPhone XS and XS Max. Counterpoint says this was due to the price of the devices.

According to Counterpoint, the strong performance from Vivo, Huawei, and Honor are as a result of product innovation, which includes AI processors and the introduction of flagship-like features to cost-effective devices.

However, analysts believe this all may change in the fourth-quarter of 2018, which is seen as a time for promoting more expensive flagship devices during a host of shopping festivals. Sentiment is expected to shift from a price war to that of a battle between premium devices. As an example, Apple topped over smartphone makers regarding sales on Tmall during Double11. The company also commands 65% of the market for smartphones priced at more than $600.

Huawei, which overtook Apple in Q2 to become the world’s second largest smartphone manufacturer has begun focusing on the premium market. This is especially true in India, where the company plans to start manufacturing phones from 2020.

In April, smartphone shipments in China dropped to under 100 million for the first time since 2013. The decline was attributed to rampant imitation and intense competition, contrary to Counterpoint’s report, which associated strong performance in the top 5 brands with innovation.

Briefing: Chinese iPhone users part of the country’s “invisible poor”

Chris Udemans — Thu, 22 Nov 2018 04:09:30 +0000

Research highlights class divide between ‘poor’ Apple iPhone and ‘rich’ Huawei users in China – SCMP

What happened: Chinese iPhone users are less well-off than individuals who use other phone brands, including Huawei and Xiaomi, according to research firm MobData. The company found that iPhone users are perceived to be part of a group called the “invisible poor,” those who don’t look as poor as the reality of their financial situation. The research found that most iPhone users are unmarried females who make less than RMB 3,000 ($433) a month, while Huawei buyers are usually married males who earn between RMB 5,000 and RMB 20,000.

Why it’s important: Apple usually raises the price of its iPhones every year, pushing users to cheaper alternatives. The move has driven users to buy older iPhones, such as the 6, 6S, and 6S Plus, as well as second-hand iPhone models. Apple has been struggling to get a foot up on its competitors in China, where it controls just 9% of the market. The company has reduced orders from two component suppliers in China after its slightly lower-priced iPhone XR model failed to perform.

The rise and fall of iPhone warranty fraud in China

Bailey Hu — Mon, 12 Nov 2018 10:45:54 +0000

In 2015, Xinmin Evening News reports, a local resident stumbled on a business opportunity. Two years later, he recruited three others and even managed to get a round of investment, allowing him to expand the scope of his growing company. There was just one problem: his business was based on iPhone warranty fraud.

A recent verdict by a Shanghai court has landed the main culprit, identified only by the surname Wei, with 10.5 years of jail time and an RMB 100,000 fine. His three partners received similar sentences of 10 years’ imprisonment and RMB 80,000 each in fines, while 20 others received lesser punishments for being accessories to the crime.

The fines may not seem like much, however, considering that in a 1.5-month span from September through October last year, Wei’s company managed to exchange 154 modified used iPhones for new models in Shanghai and Jiangsu, making over 640,000 yuan in sales by undercutting Apple prices.

Wei’s business depended on buying up used phones, modifying them, and falsifying documents in order to qualify for Apple’s warranty exchange policy. Other Chinese warranty fraud operations, based on an October report by The Information, are known to have stolen phones or hired passersby outside Apple stores to pretend to be customers.

The volume of falsified warranty claims from China created a huge headache for Apple five years ago. In May 2013, Shenzhen’s Apple Store alone reported 2,000 weekly warranty claims, the highest rate of any store in the world. That year, a company employee discovered that over 60% of newly replaced phones in China switched Apple IDs afterward – seemingly indicating they’d been resold.

Local fraudsters weren’t only making money from reselling new devices. Phone parts from used devices were also harvested and resold, with original processors, screens, and logic boards replaced by fakes (or in at least one case, a gum wrapper).

After Apple began investing significant sums to prevent warranty fraud around the world, the industry appears to have declined in China, with occasional cases like Wei’s also getting called out by authorities.

The fall of fraud cases may also have something to do with the ascent of Chinese smartphone brands in recent years. Ironically, though, at least one of the country’s biggest brands built its business up by mimicking Apple, highlighting the mix of entrepreneurial ingenuity with the not-so-flattering imitation that is seemingly a trademark of local tech.

China Telecom launches limited eSIM service for Apple Watch

Chris Udemans — Fri, 09 Nov 2018 03:43:53 +0000

State-run carrier China Telecom will become the second mobile operator in China to support eSIM functionality for Apple Watches, launching today (November 9) to provide service for locally-registered phone numbers in Shanghai, Guangzhou, Chengdu, and Nanjing.

China Mobile, the world’s biggest mobile operator, is the only carrier that does not offer the service in China, with China Unicom supporting use only in Shanghai, Guangzhou, Changsha, Shenzhen, Tianjin, Wuhan, and Zhengzhou, according to local media.

eSIM, or embedded SIM, allows devices without a SIM slot to access a mobile network. It also allows an additional SIM to be added to a device without the need for a physical SIM slot. The information that is usually stored on SIM card is instead kept on a chip inside a device. The chip is rewritable, allowing for SIM information to be added and removed.

In the case of the Apple Watch, the eSIM shares a phone number with its owner’s iPhone, allowing it to use the network without the paired smartphone around. The functionality is available on cellular-enabled Apple Watch models.

Chinese eSIM adoption got off to a rocky start in 2017 when the Apple Watch 3 was released. At the time, China Unicom had received a probationary license to offer eSIM services and did not pass the Ministry of Industry and Information Technology’s formal approval process. The carrier was unable to handle large-scale use of China’s Apple Watch Series 3 users and had to suspend the service. Apple also decided that Apple Watch Series 3 customers are eligible for a refund in China.

China Unicom later relaunched its eSIM service in March 2018.

Apple showed it had learned from the eSIM debacle when releasing new iPhone models in September. Despite almost all new iPhones released worldwide supporting dual SIM functionality—one physical SIM slot and an eSIM—the new models in China, including the XR and XS Max, allow for two physical SIM cards.

Huawei remains the world’s second largest smartphone maker

Runhua Zhao — Fri, 02 Nov 2018 10:41:43 +0000

Counterpoint Research released earlier today the latest report on global smartphone shipments.

The research shows a 3% annual decline regarding total global shipments. Counterpoint Research suggests that “this is the first time that the global smartphone market has declined for three consecutive quarters.”

Chinese manufacturer Huawei’s global shipments for the period hit 52 million, up 33% year-over-year, making the company the second largest one on the global shipment units list. Xiaomi, which just completed a 100 million global shipments goal for 2018 on October 26, recorded 35.7 million global shipments for the period, up 25% year-over-year.

Oppo and Vivo both report quarterly international shipments over 30 million, making the two and Xiaomi the wining Chinese manufacturers with their own “highest ever shipments in a single quarter”.

Lenovo, a Chinese brand well-known for PC technology, saw a 26% decline in shipment units, and a 25% decline in shipment market share.

Industry leader Samsung remained on top of the list in terms of shipment units (72.3 million) and shipment market share (19%), though both units and share declined year-over-year. Apple’s performance remains flat.

Global smartphone shipments ranking and market share for 2018 quarter three. (Image Credit: Counterpoint Research)

Another highlight of the report is top Chinese smartphone manufacturers’ declining reliance on domestic markets.

Xiaomi’s shipment growth domestically dropped 16%, whereas global shipment growth increased 83%. Xiaomi ranked 4th with a 9% global market share for the period on the global list, but was 38.1% behind Oppo and Vivo which both acquired 21% in-China shipment share on the domestic list.

Major Chinese multinational smartphone manufacturers’ domestic and international growth compared. (Image credit: Counterpoint Research)

As Huawei, Apple, and Xiaomi all released new models recently, a report on the 4th quarter and the whole 2018 year will be worth looking forward to.

Briefing: US lawmakers call for probe into Chinese microchip hack allegations

Bailey Hu — Fri, 02 Nov 2018 05:53:48 +0000

US senators demand probe into China’s alleged hacking of tech giants’ supply chains–South China Morning Post

What happened: In mid-October, SCMP reports, two US senators sent a letter to Department of Homeland Security secretary Kirstjen Nielsen and FBI director Christopher Wray, requesting that they look into allegations that China has used tiny chips embedded in motherboards to spy on major US tech companies. The letter also asks for a classified briefing on the matter no later than October 25. Both senators lead the Committee on Homeland Security and Government Affairs, which previously held a hearing on the hacking allegations. During the hearing, Nielsen and Wray suggested that there was insufficient proof of China infiltrating the US’ tech supply chain. A representative of one of the letter’s authors said that the request has been received and is being processed, although neither the Department of Homeland Security nor the FBI have commented to media on the matter.

Why it’s important: Although experts have cast doubt over whether the motherboard microchip hack is actually feasible, the aftershocks of Bloomberg’s explosive report earlier this month apparently still continue. In its story, Bloomberg BusinessWeek alleged that companies including Apple and Amazon have been hacked, and that motherboard supplier Supermicro was the unwitting key to the espionage effort. All three have vigorously denied the report. However, Bloomberg continues to stand by its story, which has gained considerable attention. That’s likely because it falls in line with a larger American narrative of tech trade secret thefts by China that have escalated the ongoing tariff battle.

Premium liquor Kweichou Maotai now 2nd largest shareholder of China’s iCloud operator

Runhua Zhao — Fri, 02 Nov 2018 03:41:21 +0000

Kweichou Maotai Co., Ltd, a Shanghai-listed top luxury liquor producer, will invest RMB 450 million ($64.9 million) into a newly established group company of Guizhou-Cloud Big Data (GCBD), the data management firm which is handling iCloud data for mainland Chinese Apple accounts.

According to industrial due diligence information (in Chinese), the group company was established on October 19, around 8 months after GCBD took over iCloud operations on February 28. The State-owned Assets Supervision and Administration Commission of Guizhou Province is the biggest stakeholder with 38.24% total shares worth RMB 600 million. Kweichou Maotai, with 26.47% total shares, ranks second among the total 5 stakeholders.

The shareholders’ promised investment, according to the group company’s registration record, needs to be in place by May 30, 2019.

Kweichou Maotai’s new equity in the data firm is widely seen as an extension of the company’s ties with the government, and a strong alternative to diversify portfolios. On November 1, a rumor (in Chinese) spread that a former officer from the Party’s Standing Committee in Anshun, Guizhou, would be appointed as a new general manager at Kweichou Maotai. The company has not replied to media inquiries by the publication of the article.

Guizhou is quickly becoming a tech hub. The province hosted China’s 2018 International Data Industry Expo directly backed by top national governing bodies including the National Development and Reform Commission, the top power deciding China’s development and investments in strategic sectors.

In 2017, Kweichou Maotai paid a total tax of over RMB 23 billion, the most among all liquor and spirit companies in China for the year, more than 200% of the second place Sichuan-based Wuliangye.

However, as Beijing continues to crack down on corruption and the Chinese economy slows, higher-end alcohol companies have seen significant stagnation.

According to the third quarter fiscal report ended September 30, Kweichou Maotai reported a 2.71% growth of net earnings paid to shareholders of the parent company Kweichou Maotai Spirit Factory Co., Ltd, less than one-third of the figure for the years before 2017. The company’s revenues for the third quarter were RMB 19.7 billion, up 3.8% compared to the same period last year, below market expectations.

Briefing: Apple investigates illegal student labour at supplier’s Chongqing plant

Nicole Jao — Mon, 29 Oct 2018 05:31:07 +0000

Apple investigates illegal student labour at Watch assembly plant – Financial Times

What happened: Apple has launched an investigation after a workers’ rights group alleged that one of Apple’s suppliers, Taiwan-based Quanta Computer, was illegally employing students to assemble Apple Watches at its Chongqing factory. The “student interns” said they often worked overtime and night shifts, in violation of Chinese law.

Why it’s important: As companies struggle to keep cost low while wages rise, using illegal student labor has become an increasingly common practice in China’s factories. Suppliers of the Silicon Valley company are often under great strain to meet the demands of new Apple products, which usually launch in October. Chinese authorities have tightened regulations on the use of labors and work conditions in recent years. In June, Foxconn, a Taiwanese supplier for Apple and Amazon, was criticized for the harsh working conditions at one of its China factories.

Domestic brands beat Apple again in China’s smartphone market this year

Bailey Hu — Fri, 26 Oct 2018 10:39:47 +0000

On Tuesday, Umeng.com (友盟+) released a report on China’s smartphone market that reveals Oppo and Vivo, along with Huawei and its sub-brand Honor, dominated the domestic field from January through August of this year.

Apple wasn’t left entirely in the dust but the next-best foreign competitor, Samsung, didn’t make much of an impression in the rankings. According to Umeng’s chart of the top six smartphone brands, Oppo and Vivo were nearly head-to-head with 20.7% and 20.1% of the market, respectively.

Apple follows with a respectable 14.2%, trailed by Huawei. However, if Huawei and its ranking sub-brand Honor are combined, they beat out all other competitors with 22.6% of China’s smartphone market.

Together the top 6 brands took up a large majority of the entire market, fluctuating between a low of 82.6% and a high of 89.6%.

Image credit: Umeng.com

Umeng also ranked brands in order of new users, user retention, and a “competitiveness” measure based on the two previous values.

While Oppo and Vivo proved the strongest in attracting new users, Apple still outranked all other players in terms of user retention, despite a drop from last year. That gave it a boost in the competitiveness chart, where its 79.9 rating fell not far behind Vivo and Oppo.

Image credit: Umeng.com

Huawei, Xiaomi and Honor made up the next tier of top-rankers, while 360 vied with OnePlus, Smartisan, and Meizu (in that order) in the third tier.

In terms of the “competitiveness rating” of individual phone series, Vivo’s X and Oppo’s R ranked the highest, followed by the iPhone 7 line. Huawei and Xiaomi series performed similarly, lagged by Honor and in last place, Meizu.

Image credit: Umeng.com

In the overall market, Umeng reported that new smartphone prices fell mostly in the under-RMB 3,000 range, although RMB4,000-5,000 and under-RMB 1,000 saw new growth.

Not-so-surprisingly, phones and screens in the domestic market have continued to grow in size. Over one-half of new phones from January through August are 5.6 inches or bigger, while some 79% had screens that took up over 70% of the phone body.

Image credit: Umeng.com

And finally, new phones have seen an upgrade in features despite overall “sluggish” growth. Demand for NFC is gradually growing in first-tier cities. Front-facing cameras are now higher-quality than before, most likely reflecting the demand for better-looking selfies.

Briefing: Supermicro examines motherboards for Chinese malware chips “despite lack of proof”

Chris Udemans — Tue, 23 Oct 2018 04:08:19 +0000

Supermicro tells customers it is looking for Chinese spy chips on motherboards ‘despite lack of proof’ – SCMP

What happened: Computer hardware firm Supermicro said yesterday (October 22) that it would review its motherboards for malware chips, which according to a report by Bloomberg had been planted by Chinese spies during the manufacturing process in China. The company said that it was undertaking a “complicated and time-consuming” review of its products the lack of proof that the chips existed.

Why it’s important: Compromised Super Micro motherboards allegedly made their way into the servers of multiple US government agencies and 20 companies, including Amazon and Apple. Bloomberg claimed that their use would give Beijing access to internal networks. However, Supermicro has denied the claims, while Apple CEO Tim Cook has said the article should be retracted. Amazon Web Services CEO Andy Jassy joined Cook in suggesting a retraction. Analysts have said that the placement of the chips is plausible, but would result in very high costs. Additionally, every compromised motherboard increases the risk of detection.

Briefing: After Apple ID hack, Apple faces fraudulent claims

Masha Borak — Wed, 17 Oct 2018 05:58:38 +0000

Apple on guard against fraudulent refund cases after scammers hack into accounts in China—SCMP

What happened: After over 700 Apple users had their Apple IDs compromised and money stolen from their accounts, Apple has advised its Chinese customers to adopt more stringent security measures when making payments with their Apple ID accounts. Apple only refunded money to a few users while rejecting the claims of the rest. The company also added that they have seen rise in false and fraudulent refund claims trying to take advantage of this incident.

Why it’s important: The theft was originally uncovered when some users saw notifications from their Alipay payment service. Apple users later discovered that the default agreement inside the Alipay app did not list Apple’s responsibilities and obligations nor were the default settings set to a more safer option, according to reports from local media. This brings to question if consumer rights were fully protected. The total amount of money taken varies from a few hundred to RMB 10,000.

Briefing: Tim Cook meets with China official as trade war continues

Bailey Hu — Fri, 12 Oct 2018 05:21:55 +0000

Apple Boss Tim Cook Stays Low-Key in Busy Visit to China–Caixin Global

What happened: Besides shaking hands with Bytedance’s founder and visiting a Beijing middle school on his latest China trip, Tim Cook also found time to meet with Shanghai government official Li Qiang. According to a Chinese statement, the two discussed cooperation between the city and Apple. The official statement also expressed the hope that the company would take a bigger role in bringing the US and China closer together. According to at least one source, however, the political meeting wasn’t Cook’s main objective for the trip – instead, it was his responsibilities as the board director at Tsinghua University’s School of Economics and Management.

Why it’s important: So far, Apple hasn’t been affected by the massive tariffs leveled on both sides of the ongoing US-China trade war. However, President Trump has stated that he wants companies such as Apple to move their manufacturing out of China. On the other side, the Chinese government previously encouraged US companies to take a proactive role in protecting their interests in the country. Caught in the crossfire, Cook is undoubtedly feeling the pressure; the China market still makes up a significant portion of Apple sales, despite the latest iPhone’s disappointing performance.

Hundreds of Chinese iPhone users are believed to have had their Apple IDs compromised

Chris Udemans — Thu, 11 Oct 2018 11:40:58 +0000

Over 700 Chinese iPhone users have inexplicably had money deducted from their Apple ID-bound payment channels, with the highest being RMB 10,000 ($1,440), according to local media.

Alibaba-owned Alipay, whose users were also affected, said that some Apple IDs were stolen, resulting in financial losses. The company reached out to Apple to find out the reasons for the theft, with Apple responding saying that it is addressing the situation.

Some users received Alipay notifications informing them that purchases had been made in the App Store and Apple Music. The stolen funds were used to purchase lesser-known games and in-app purchases, as well as subscription services. The total amount of money taken varies from a few hundred to RMB 10,000.

Other payment channels that can be bound to an Apple ID include WeChat Pay, debit card, and credit card.

Records show that some users’ Apple IDs were used to log into devices other than their own to make purchases. Nonetheless, some users who have attempted to apply for refunds through Apple have been told that reversing the purchases is not possible, even after one user requested assistance from the Shanghai Consumer Protection Committee.

While incomplete numbers show that over 700 people were affected, it is possible that this total is higher.

Data security has become an increasingly significant issue in China in the past few years. The country has surpassed the US as the biggest creator of digital data in the world. This can be attributed to the rise of the digital economy and more specifically, online-to-offline (O2O) service platforms that collect data from the internet and offline world.

Most recently, police from Wuxi, Jiangsu Province uncovered a sophisticated network of data brokers that show how complex operating structures are being used to evade law enforcement. The group reportedly trades over RMB 1 million in personal data each data, with members moving to Southeast Asia to avoid capture and punishment.

Briefing: Apple denies claims its servers were hacked by China

Chris Udemans — Mon, 08 Oct 2018 03:30:20 +0000

Apple tells Congress it found no signs of hacking attack – Reuters

What happened: Apple’s top security chief, George Stathakopoulos, told Congress in a letter yesterday (October 8) that the company had found no evidence of suspicious transmissions or that it had been penetrated by China through an attack on its supply chain. The company denied claims that servers sold to the American tech giant by Super Micro Computer Inc contained chips that allowed backdoor transmissions to China.

Why it’s important: Last week, news broke that Super Micro Computer Inc allegedly had its supply chain compromised by its Chinese manufacturers. According to a Bloomberg Businessweek report, tiny chips were installed on the company’s motherboards, compromising the hardware. The attack reportedly affected 30 US companies, including Apple and Amazon. However, the companies, along with the Department of Homeland Security (DHS), have denied the claims. Whether the report is accurate or not, it won’t do any favors for Chinese tech companies operating internationally.

Briefing: Foreign criticism of iPhone XS’ “beauty filter” stumps Chinese media

Bailey Hu — Sun, 30 Sep 2018 03:45:47 +0000

“我的颜值配不上iPhone XS”，国外用户吐槽新iPhone的美颜功–搜狐新闻

What happened: Chinese media outlets are reporting on some user backlash against a perceived skin-smoothing feature on the new iPhones. Coming mainly from English-speaking Apple customers, the complaints say that new models XS and XS Max automatically brush up selfies without users’ consent. Apple has yet to confirm or deny such a feature, but users have shared photos apparently comparing selfies taken by older models with ones shot on the newest iPhones. The pictures show users’ skin looking both brighter and smoother, with blemishes blurred out. In China, of course, beauty filters are common features for domestic smartphone brands and often turned on in new phones’ default settings.

Why it’s important: The author of the Sohu News article writes that Apple has ignored “cultural differences” by apparently adding an automatic beauty filter to its new models. Features that whiten skin, slim faces, enlarge eyes, and more may be popular in China, but the Western market is different. The commentary further drives home the fact that selfie-enhancement is a booming business in the PRC and even the basis for many online celebrities’ popularity. For Chinese users, a new, automatic beauty filter in the new iPhones might seem commonplace – it’s others’ backlash that’s surprising.

Briefing: Scalpers lose their shirts as price of latest iPhone models drop below official price

Emma Lee — Fri, 21 Sep 2018 03:41:44 +0000

黄牛亏惨了？iPhone XS黄牛价暴跌卖得比官网还便宜 – Tencent Tech

What happened: The prices of iPhone XS and iPhone XS Max dropped below official prices as the US smartphone maker start to ship its largest product in mainland China this week. Price drop not only happened on the grey market but also in Apple’s reseller networks.

Why it’s important: Unlike previous iPhone manias, China’s once lucrative grey market for the latest iPhone models has cooled down over the past few years. It’s a combined effect of Apple’s shipping policies as well as a changing Chinese smartphone market landscape. On the one hand, Apple has been trying to solve the problem by getting better prepared with abundant stock and tightened sales policies for Hong Kong, the source market for most scalpers to purchase the phones. At the same time, iPhone is no longer considered a luxury product that shows one’s social status, or even the coolest gadget, when a raft of Chinese smartphone makers like Huawei, Xiaomi, Vivo, and Oppo are elbowing into the premium smartphone market.

Sorry Apple, your “most advanced” features are already commonplace in China

Gang Lu and Jiefei Liu — Fri, 14 Sep 2018 09:15:04 +0000

Recently, for work-related issues, I’ve used the flagship phones of several major Chinese Android phone manufacturers, ranging from Xiaomi 8 and OPPO Find X to OnePlus 6. They all have their own advantages. Xiaomi’s MIUI operating system is easy to navigate, OPPO Find X’s borderless screen is stunningly beautiful, and OnePlus 6 is thin and light and feels good to hold. All of a sudden, I realized I haven’t used my iPhone 7 Plus for nearly 2 months. At least in my heart, the iPhone has fallen from grace.

I have been a loyal fan to iPhone. I’ve used iPhones as my primary phone since the first-generation iPhone. I changed my laptop to MacBook Air from Thinkpad and used it for a long time. At the moment, I am writing this on my iPad Pro. For a long period of time, I thought iPhone was my only choice as my primary phone and even though I didn’t update my phone to iPhone 8 or iPhone X, my next phone would still be an iPhone. However, after watching Apple’s September event on Thursday (September 13th), I started feeling uncertain about that thought I had because, for the first time, I found iPhone is replaceable.

Apple disappointed us several times in recent years, but, like the Chinese national football team, we placed higher hopes after being disappointed each time. However, this time, I feel more lost than disappointed.

When Tim Cook used the usual “the most advanced” type of phrases to describe their newest iPhone models, what I saw was a weak argument no matter how eloquent Cook was. Apple seems to be digging a hole for those who don’t know about Chinese smartphone manufacturers and transporting those people to the bottom of the hole, telling them Apple’s the most innovative.

Maybe those people aren’t aware that OnePlus is the best selling phone model in the high-end smartphone markets of countries include Finland and India. Xiaomi tops the Chinese and Indian phone market. Apart from strong sales momentum, OPPO and vivo are also surprisingly innovative. Those who praise iPhones’ borderless screens, they should take a look at Find X; those who claim iOS is the only smooth operating system, they should at least try MIUI; those who commend the big screen of iPhone Xs Max may have not heard of Samsung, Huawei, Xiaomi, all which have bigger screens. Those who compliment iPhone’s dual-camera system may not know that Huawei’s P20 Pro already supports tri-camera. Those who are stunned at a dual-sim card may not understand dual-sim card has been extremely normal in China for years and it’s totally a Shenzhen-developed tech.

Cook has visited China several times and the Apple Events become more and more Chinese characteristics – mentioning only Apple’s advantages and ignoring its weakness. I don’t understand why Apple is so proud of building the biggest iPhone of all time. Why don’t they mention the aspect ratio? Furthermore, I can’t figure out why emphasizing the battery of the new iPhones can last 30 more minutes than iPhone X. Why not tell if new iPhones support the quick charge function?

I believe Apple is still competitive as one of the world’s most innovative companies. Apple is indispensable because it has its own chip, a smartwatch that allows consumers to give themselves an electrocardiogram, MacBook, iPad, and most importantly, a closed ecosystem built on iOS and MacOS. In terms of constructing a closed ecosystem, Chinese companies look fairly naive in comparison.

However, iPhone is no longer the shiniest jewel in Apple’s crown. iPhone has become optional.

I wanted to buy an Apple Watch 4, but suddenly I feel embarrassed. If I don’t use an iPhone, why would I buy an Apple Watch?

Translation by Jiefei Liu

Briefing: Foxconn factory in Zhengzhou to give production priority to iPhone XR

Runhua Zhao — Fri, 14 Sep 2018 04:25:51 +0000

富士康每条产线每小时生产590台新iPhone，产能优先分配iPhone XR – Jiemian

What happened: Electronics contract manufacturing company Foxconn’s factory in Zhengzhou, China, is reportedly giving production priority to Apple’s new model iPhone XR. A staff working in the factory says there are 27 production lines working 19 hours a day. Each line, with 1,200 workers, can produce 590 iPhone XRs every hour. The current production yield is 93%. The staff also says that the production is now in a shortage of good-quality aluminum back body components, and this has to be solved before the formal sales launch in October.

Why it’s important: New iPhone models were announced on September 13th with pre-orders starting on September 14th. Local positive response to the new models, particularly the dual-sim model, is expected. Amid China’s slowing economic growth, Apple’s contract partners are grabbing the chance to boost production and revenues. Whether production material deficits will affect Apple’s ability to meet demand is still unclear.

In China? Here’s what you need to know about the new iPhones

Nicole Jao — Thu, 13 Sep 2018 03:46:16 +0000

Apple has unveiled the details of the new iPhones—iPhone XS, iPhone XS Max and iPhone XR—as well as the new Apple Watch Series 4.

We’ve rounded up everything you need to know about the new iPhone XS, XS Max, and XR in China:

Specs

The 5.8-inch iPhone XS and 6.5-inch iPhone XS Max come with same features, just in two different sizes. Both models feature Super Retina displays, OLED screens, a “faster and improved” dual camera system. Both phones are powered by the A12 Bionic CPU, the first commercially available 7nm processor.

The “lower-end” XR features a 6.1-inch LCD ‘Liquid Retina’ screen, and like the other new iPhones, is powered by the A12 Bionic chip.

Almost all the new iPhones released worldwide will support two SIM cards, even though they have only one SIM card slot—the second SIM support comes from the eSIM technology. In China and Hong Kong, however, the XS Max and the XR will have the dual-SIM setup, meaning they will come with two physical SIM slots. The iPhone XS in China will only support one SIM card.

In China, all three iPhone models support GSM and CDMA-based carriers–the same as the iPhone models that will be available in the US. As for 4G standards, the XS and XS Max support Gigabit-class LTE while the XR supports 4G LTE Advanced.

Release date

In China, iPhone XS and XS Max will be available for pre-order beginning Friday, September 14 at 3:01 pm and in stores beginning Friday, September 21.

Pre-orders for the XR will begin on 19 October before the phone starts shipping on 26 October.

The Apple watch Series 4 will be available to pre-order from September 14th at 3:01 pm, with shipping to begin on 21 September.

Price

(Image Credit: TechNode)

A comparison of prices, features, and carriers for the different models across regions (Image credit: TechNode)

The iPhone XS and XS Max will be offered in 64GB, 256GB, and 512GB configurations. In China, the XS will be priced at RMB 8699, RMB 10099, and RMB 11899, while the XS Max will be priced at RMB 9599, RMB 10999, and RMB 12799, respectively.

The XR will be offered in 64GB, 256GB, and 512GB capacities, which is priced at RMB 6499, RMB 6999, and RMB 7499, respectively.

The starting price for Apple Watch Series 4 is around RMB 3199.

Chinese telco advertisements hint at dual-sim iPhone

Runhua Zhao — Wed, 12 Sep 2018 06:06:15 +0000

A day before Apple is expected to release its new iPhone models (September 13), Chinese telecom companies are circulating posters of a new dual-SIM card feature, though no information on exactly which model would carry the function has been leaked, our sister site is also reporting. If true, it is unclear whether the feature will be limited to China.

China Unicom’s poster describes the dual-SIM card function as a long-awaited feature.

China Unicom’s poster for the countdown to the new iPhone launch. (Image Credit: China Unicom)

China Telecom confirms that the new iPhone it sells will allow a dual-SIM card function that supports 4G.

China Telecom’s poster confirming the availability of a dual-SIM iPhone to be released soon. (Image Credit: China Telecom)

China Mobile Hong Kong (CMHK), as already reported by some tech media, released a poster where a digital figure with a CMHK label sits on a giant apple and asks “New apple species, two cards?”

China Mobile Hong Kong’s poster hinting a dual-SIM iPhone. (Image Credit: China Mobile Hong Kong)

The dual-SIM card feature is not just a popular localized function in China, but a by-product of competition and monopoly of the three national telecom service providers – China Unicom, China Telecom, and China Mobile.

Though they also collaborate, the three companies have their own advantages based on geography, where China Mobile plays a dominant role in the North, while China Telecom and China Unicom are more powerful in the South. Not officially admitted, the services one provides when a user travels around China will create tacit regional barriers such as signal issues and package price differences.

A willingness to separate work from personal life is another reason that boosts dual-SIM’s demands in China. A culture that heavily relies on “guanxi (connection)” can draw potential partners close and will require friends-for-interest to keep frequent contact. However, the culture also values family and direct contacts more than acquaintances for a few deals.

Over 200 million smartphone users have purchased more than one telecom companies’ services, reports ifeng.com (in Chinese), soaring from 20 million in 2013. Among the current dual telecom service users, 20% carry two single-card phones, and the rest choose devices supporting the dual-SIM function. Apple cannot ignore this growing trend in China, though the company is famous for not changing designs or tech standards for specific local market preferences.

Earlier in February, Forbes quoted analysts’ comments which expected 2018 to be a tough year for the company. With a strong contribution from the $13 billion revenue made in the Greater China region, however, Apple’s fiscal performance for the second quarter beat expectations, despite the slowing down of Apple’s global smartphone sales.

Some from the Chinese tech industry also suspect the dual-SIM iPhone model’s launch might signal a subtle shift in Apple’s local strategy in China, which will weigh marketing and localization more than technology itself. This is also a concern regarding the increasing power inside Apple, which Angela Ahrendts, former CEO at luxury fashion brand Burberry and current Senior Vice President at Apple, holds.

Meanwhile, another poster from China Mobile Hong Kong suggests new Apple models will have new colors for users to choose from.

China Mobile Hong Kong’s poster hinting more iPhone colors available. Image Credit: (China Mobile Hong Kong)

Further according to information our sister site has acquired from insiders, the new iPhone models to be released will be 5.8-inch iPhone XS, 6.5-inch iPhone XS Plus, and 6.1-inch iPhone XC, all expected to be priced over RMB 5,800 ($844.0).

Tipping WeChat content creators returns to iOS and Android

Frank Hersey — Wed, 06 Jun 2018 04:53:12 +0000

Tips for original content creators on WeChat is back on both iOS and Android after the WeChat team reached an agreement with Apple. The tips will go directly to the author of the individual piece or article, not to the public account itself. Tencent blocked the function in the iOS version of WeChat in April 2017 after Apple found it was at odds with its in-app purchasing rules.

Given the huge sums of money given to popular live streamers, this could prove highly lucrative to content creators. Tencent itself has recently been pushing content creation hard across its many divisions.

WeChat users will find an orange button at the bottom of the content page with a thumbs up symbol and “Like the author” (our translation of “喜欢作者”, the English wording is not available yet). Readers can enter any amount they wish, with a few suggested amounts as buttons.

Authors need to set up an account via an invitation from an eligible public account. The account is activated and then managed using a purpose built mini program. (TechNode authors have not yet done this, in case you were rushing to grab your e-wallet. Editor’s note: We will soon.) When a public account is preparing an original piece of content to post, there will be a setting for that piece to earn tips which go directly to the named author.

All types of public accounts that publish 3 articles by one author are now eligible to set up tipping accounts on behalf of their public account. All public accounts can create up to three tipping accounts at present, according to the press release.

The invitation feature in the mini program. (Image credit: WeChat)

According to the FAQ in WeChat’s announcement, WeChat will hold any tips for 7 days before adding them to the author’s WeChat Pay account.

WeChat hopes that the changes will usher in more original content as individual authors will be incentivized. This model has allowed live streamers to generate huge incomes.

WeChat had not responded to questions about the cooperation with Apple by the time of publishing.

We went to Suzhou to find AI’s biggest breakthroughs and bottlenecks

Masha Borak — Sat, 12 May 2018 02:50:39 +0000

Artificial intelligence experts from Apple, Microsoft, MIT, and more gathered on May 10 at the 2018 Global AI Product Application Expo in China’s rising big data mecca Suzhou.

Aside from the experts, over 1000 artificial intelligence products made by 200 companies hailing from 10 countries and regions demonstrated the power of AI in the slick new business center of this ancient city marked by the famous Suzhou Pants (or as the local officials would prefer us to call it, the Gate to the East).

Here is what speakers had to say about the biggest breakthroughs and bottlenecks in different fields affected by AI technology.

Dr. Guo Di, Machine Learning at Apple, Beijing R&D Center

Smartphones could be a very good platform for AI, said Dr. Guo. Apple is working on smart mobile apps which is a good scenario for AI: first, smartphones are mobile and interconnected and second, the computing power of current phones has exceeded many computers.

Smartphones also have a lot of sensors which can collect data. The difficulties are going to be computing power and data, we have to move from general data to scenario-specific data.

Dr. Guo Di (Image credit: Global AI Product Application Expo 2018)

“For the next generation we would switch from big data to small data, and another possibility is that we do not need data at all. An assistant would just find data automatically. The next generation of technology will be data technology.”

Prof. Polina Golland, Professor of Electrical Engineering and Computer Science at MIT

The most important technology in AI has not been invented yet, said Prof. Golland. Hopefully, in the next few years, algorithms will be able to learn as they go on and bootstrap their learning. Golland also noted that the bottlenecks are the same as they always been with new technology: it’s figuring out what value does it bring to companies.

“From what I see, the technologies are new but the challenges are old. Many companies are excited about using AI but few ask what value does this tech add to consumers.”

Boaz Sacks, Director of Mobileye Aftermarket Division

Mobileye, the autonomous vehicle company that was bought by Intel last year, sees themselves as in the life-saving industry. One of the first AI applications to be commercialized will be collision avoidance and autonomous driving, said Sacks. However, one company cannot do it alone and AI is not enough to achieve autonomous vehicles.

“AI is a derivative of human behavior, what we are lacking is an open transparent standard that defines a common sense of human notions. In our industry, this is: ‘What does it mean to drive safely?’ This is not a commercial problem, it’s a human issue.”

(Image credit: Global AI Product Application Expo 2018)

Prof. Charles Ling, Professor of Computer Science, University of Western Ontario

The major breakthrough during the recent years is deep learning, said Prof. Ling. But the technology is still in trial—we cannot fully explain conclusions reached by neural nets trained by deep learning. That’s why we are still not using deep learning in very important technologies like autonomous driving and nuclear control, he noted.

When it comes to the bottlenecks in AI application, Prof. Ling says that the biggest ones are actually economic and social. He is now working with a startup company on data analysis solution for managing diabetes and obesity. But the bottleneck is that doctors and the pharmaceutical companies in Canada do not want to work with them—for them, healthy people means less business, said Prof. Ling.

Dr. Norbert Gaus, Executive VP, Head of Research and Development in Digitalization and Automation at Siemens AG

AI is not only changing the factory floor but helping us make the industry more efficient. We are now at the process of defining the domain, collecting a lot of different datasets, and accumulating a lot of knowledge, said Dr. Gaus. The next step is taking all this data and describing how it relates to each other as well as putting mechanisms in place that will enable the discovery of links automatically by observing and learning.

“The next step will be automatically discovering links and structures and in the future is what we dare see is learning memories, what we call knowledge graph technologies. This to us is the most exciting and important tech for industrial AI applications.”

Panel at Global AI Product Application Expo 2018 in Suzhou, May 10, 2018 (Image credit: Global AI Product Application Expo 2018)

The biggest bottleneck is that there is a shortage of data which in part can be mitigated with other kinds of knowledge. However, the first practical step is making sure everyone understands what they are doing. AI should be more explainable, not just for the public but for the workers themselves who will have to go through certification programs.

Dr. Chen Tianshi, CEO and Founder of Cambricon

“I think the relationship between hardware and software is like a relationship between water and cups. If you just have a water without a cup you cannot drink it. If you just have a cup without water you have nothing to drink,” said Dr. Chen during the panel. “Without progress in processors we will not see AI but without algorithms, we would not have AI as well.”

Cambricon is a part of China’s new wave of startups working on chip technology with Huawei one of their clients. The crucial task for them are meeting the requirements of the industry of their clients to help them use their microchips better, according to Dr. Chen.

He also believes that aside form deep learning, the next generation of important technology will be related to cognitive technologies—technologies that are able to perform tasks traditionally assumed to require human intelligence: perceiving visual and audio cues, planning, learning, and reasoning.

Chinese smartphone shipments see record-breaking decline

Chris Udemans — Fri, 27 Apr 2018 03:08:57 +0000

Smartphone shipments in China dropped to 91 million units in the first quarter of 2018, representing the largest single quarter decline on record. This is the first time since the end of 2013 that shipments have fallen below 100 million units.

Technology market analysis firm Canalys said eight of the ten major smartphone manufacturers were hit with annual declines. The company said the record-breaking slump is due to rampant imitation resulting from intense competition in the market.

Chinese smartphone shipments 2012 -2018 (Image Credit: Canalys)

Smartphones manufacturers Gionee, Meizu, and Samsung were hit the hardest. All three vendors’ shipments fell to less than half of their respective Q1 2017 numbers.

Samsung was recently banned from selling a number of its handsets in China after a court ruled that it had infringed on Huawei patents. Even so, Huawei saw a 2% decline in shipments after overtaking Apple to become the world’s second-largest supplier of smartphones in September 2017. Oppo and Vivi also had a bad quarter, with both suppliers experiencing a 10% decline in shipments.

Xiaomi was the only manufacturer to defy the trend, growing its shipments by 37% to 12 million units. The company overtook Apple to become the country’s fourth-largest smartphone supplier.

“Xiaomi is the only vendor in the top-5 that is focused on the sub-RMB 1,000 (about $160) price segment and it owes close to 90% of its shipments to Redmi,” said research analyst Hattie He. The company is trying to shake its budget smartphone image and recently announced it would limit its net profit margins from its hardware sales to 5%.

China’s smartphone market by shipments (Image Credit: Canalys)

The Chinese smartphone market is increasingly dominated by Huawei, Oppo, Vivo, and Xiaomi. All four companies saw their market shares increase, while other manufacturers, including Apple, lost footing.

Despite the decline, analysts expect the market to recover with the launch of flagship phones from Oppo, Vivi, and Huawei in the second quarter of 2018.

Apps in China survive longer on Apple than Android app stores… for now

Jiefei Liu — Thu, 12 Apr 2018 08:37:51 +0000

When it comes to removing apps, Apple’s China App Store seems more resistant to state criticism than Android stores, but this might be just for now as more compliance with local rules is expected.

In China’s recent move to “clean the internet”, apps ordered to be taken down from app stores disappeared quickly from domestic Android stores. Their iOS versions, however, stayed up past the deadline and some still remain.

Authorities ordered online app stores to take down four news apps by 3 p.m. Monday, including Jinri Toutiao (今日头条), the flagship product of the unicorn startup ByteDance Inc., and Tiantian Kuaibao (天天快报) owned by Tencent Holdings, China’s most valuable tech giant. The apps disappeared in different Android stores by the deadline but were still available in Apple’s App Store until Tuesday.

The domestic Android platforms respond faster because they are under stricter scrutiny and hold greater responsibility for the apps to authorities than Apple, according to Songlin Li, an analyst at iiMedia Research, a consulting firm focusing on the new economy.

Similar things had happened a week ago when China’s media regulator, the State Administration of Radio and Television and China Central Television criticized two short videos apps, Huoshan Short Video (火山小视频) and Kuaishou (快手), for displaying vulgar content. These apps disappeared in Android stores the following day but remain accessible in the Apple App Store even now.

“Local third-party Android stores comply with government regulation changes quickly and more thoroughly, as Android competition is fierce and compliance potentially can help an app store gain an advantage over their rivals,” says Antony Chang, marketing manager at AppInChina, a mobile service company that helps foreign apps enter China.

“Even though Kuaishou and Huoshan are still available on the App Store, expect them to be removed in the near future or similar cases to be resolved differently in the near future,” Chang said.

The Chinese Android app market is divided by multiple players, most of whom are backed by local tech giants. Qihoo360 took up 26 percent in 2017, Tencent 21 percent, Huawei Technologies 12 percent, and Baidu 12 percent, according to ZesMob, a local app marketing agency.

Apple’s App Store, on the other hand, doesn’t have any direct competitors and faced less pressure from local authorities and “has been very strategic and more reluctant to act in certain cases”, said Chang.

However, the resistant Apple has been changing. Last July, their China App Store removed a group of VPNs. ExpressVPN, one of the service providers, had received a notice from Apple that the application was to be removed due to a violation of local laws. In late March, Apple “improved and complied with Chinese regulations” by handing the country’s iCloud services to Guizhou on the Cloud Big Data Industrial Development Co., a local internet services company.

The change came with Apple’s declining sales amid market share gains from local brands such as Huawei and Oppo. Before the launch of iPhone 8 last year, Apple’s sales in China had been declining for 18 months, and even with the spikes from the new iPhones, analysts remained suspicious about whether growth could continue.

In the fourth quarter of 2017, Huawei took the biggest 19 percent of China’s smartphone market share, followed by Oppo’s 17 percent, Vivo’s 15 percent, and Apple’s 15 percent, according to Counterpoint Research.

Despite intensifying local competition, an analyst who closely follows Apple warned that China’s Oppo has been keeping up with the augmented reality technology that Apple’s CEO Tim Cook once referred to as “profound.”

Xiaomi CEO reacts to Apple’s public transport card announcement

Chris Udemans — Fri, 30 Mar 2018 07:53:00 +0000

Xiaomi CEO Lei Jun has said that the company’s smartphones already enable commuters to pay for public transport in over 60 cities around the country. He made the comment shortly after Apple announced that its iOS 11.3 update would allow for the integration of Beijing and Shanghai-based transport cards in Apple Pay.

Taking to Weibo, Lei said, “Xiaomi’s nine NFC-enabled mobile phones already support the use of 63 cities’ public transport cards!”

Earlier today, Apple announced support for the addition of new transport cards and the transfer of user’s existing balances from their cards to their mobile wallet. Dubbed Express Transit, the feature allows Apple users to use their iPhones or Apple Watches to pay for trips on public transport.

The feature is also available in Shenzhen and Guangzhou.

In 2016, Xiaomi and UnionPay announced an NFC-based service for public transport payments. Initially, the platform was only available in Shanghai and Shenzhen but later expanded to other cities around China.

Numerous cities in the country now offer mobile payments on public transport, among them are Hangzhou and Xi’an. Additionally, Shanghai began accepting Alipay in January while Tencent’s payment platform is accepted in over 20 cities. Both Xiaomi and Apple are small players in a market dominated by Alipay and WeChat.

New iOS update allows commuters in Shanghai and Beijing to use Apple Pay for metro and bus rides

Nicole Jao — Fri, 30 Mar 2018 03:18:37 +0000

The new iOS 11.3 update now allows commuters in Shanghai and Beijing to use Apple Pay on iPhone and Apple Watch to ride the subway and buses, according to the company’s press release.

Apple Pay’s Express Transit feature allows users to add new transit cards or transfer the balance on their current transit card to their mobile wallet. Commuters can top-up their card for a minimum of 10 RMB and maximum of 500 RMB.

(Image Credit: Apple)

Last year Apple Pay debuted in Hangzhou and Guangzhou’s public transits. With Shanghai and Beijing on board, Apple Pay now is available in four city subway networks in China.

In January, Shanghai Metro started accepting Alipay as a fare payment method. Tencent also debuted WeChat at Guangzhou metro network last November and are available in 23 cities so far. The two mobile payment apps have already dominated China market for quite some time — taking over 90% share combined — making it more difficult for Apple Pay to capture a significant share. China’s domestic mobile payment apps are so popular that even Apple stores in China accept Alipay. On top of that, iOS has a smaller share of the Chinese market compared to Android system which means a large percentage of smartphone users in China doesn’t have access to Apple Pay.

Although the mobile payment app’s scrimmage over China’s public transport is still playing out, it is certain that Apple Pay is in for a tough fight.

Inside Xiaomi’s everything store

Masha Borak — Fri, 09 Mar 2018 06:25:16 +0000

Have you ever walked into a store, saw the products on display and thought you entered the wrong place? That’s what happened when I visited Xiaomi’s store at The Place in Beijing…. until it dawned on me: I was exactly where I meant to go.

Sports shoes, toothbrushes, and mattresses are not the kind of products you would expect to find in a store selling high tech consumer electronics. But during the past year, Xiaomi has been churning out all kinds of goods, from smart appliances to pillowcases.

The smartphone maker seems intent on breaking the rules on what a tech company should look like. Although the company was once dubbed the Apple of China, visiting one of 300+ Mi Home stores across the country is now more akin to a walk through Japanese retail store MUJI than an Apple Store.

There is the already ubiquitous low-cost air filter, water purifiers, and Roomba-style robot vacuum cleaners. There are smartphones, VR headsets, smart TVs, and drones. There are electric bikes and self-balancing scooters made with Ninebot, the Chinese company that bought Segway. And then there are other things.

Xiaomi’s Mi Store at The Place shopping mall in Beijing (Image credit: TechNode)

Xiaomi’s product line now covers three areas—smartphones, smart devices connected to Xiaomi’s IoT platform, and non-smart products. It’s the “dumb” products that captured our attention—how does a company that sells smartphones turn to selling sofas? More importantly, how does it break the RMB 100 billion ($15 billion ) annual sales threshold within just 7 years of existence and become the most anticipated tech IPO of the year?

“Xiaomi had huge success with their phones but then they lost a lot of market share in 2016,” Peking University professor and Chinese consumer specialist Jeffrey Towson told TechNode. During 2016, Xiaomi saw stiff competition from low-cost phone makers Huawei, Oppo, and Vivo and decided to change its strategy. It opened its Mi Stores.

“They made the decision to no longer be just a smartphone company, they became a smart devices ecosystem company and now they are making another advance into a more lifestyle company,” Towson said.

Xiaomi has so far invested in 89 companies that make items in the Mi Ecosystem beyond their core products such as smartphones, smart TVs, and routers. According to the company, many of those have been incubated by Xiaomi from their founding. This means that Mi Stores, which suspiciously resemble Apple Stores, have been steadily filling up with products and attracting curious shoppers.

Xiaomi’s Mi Store at The Place, Beijing (Image credit: TechNode)

“Every time you go into a Xiaomi store there’s something new to discover,” said Towson.

Xiaomi reminds Towson of the old days of Apple when he used to go see what were the new products on display. But the similarities with Apple don’t stop at that or even at the design of Mi Stores and Xiaomi products (described as “simple, peaceful and humble” by senior director of industrial design of Mi Ecosystem Li Ningning).

According to Towson, Apple’s success was based on the relationship with its fans. This is how Apple turned itself from a consumer electronics brand into a luxury brand whose financials are not so different from Gucci and Prada. As Warren Buffet would put it, brands such as Apple own a piece of the consumer’s mind—they get into our heads and make us think positively about them. Xiaomi is halfway there, Towson believes.

Xiaomi fans or Mi Fans (米粉 which translates literally to “rice noodles” in Chinese) have indeed played an important part in Xiaomi’s growth. Mi Fans in China contribute to the design of Xiaomi’s products and participate in tweaking MIUI, Xiaomi’s smartphone operating system. They also participate in regular nationwide and city-level events.

But what drew fans to Xiaomi is not just good quality for an affordable price. As Xiaomi fan and TechNode’s Creative Director Liu Teng put it, Xiaomi is China’s “shanzhai (山寨) terminator”, the one company that is stopping counterfeit consumer goods.

“That is its biggest contribution to China’s manufacturing industry,” said Liu. “In the past, if you wanted to buy a new category of products, like a TV box or a Bluetooth audio converter, you would sometimes only have shanzhai goods.”

Liu does not see Xiaomi as China’s Apple but China’s Belkin—a US consumer electronics manufacturer that specializes in connected devices. He also sees differences in how Xiaomi approaches its consumers.

Some of Xiaomi partner products are designed with smart features. The running shoes have a chip that helps track runners’ activity and the suitcase can be located and opened via Bluetooth (Image credit: Mi.com)

“I think Xiaomi is aiming for two types of consumers,” said Liu. “One is young people that want a higher quality of life. They buy products which are relatively inexpensive but have better design and manufacturing or have intelligent functions added to traditional products. It’s like China’s Belkin or China’s MUJI. Products such as rice cookers and projectors, these are for students or workers that have a lower budget. Xiaomi provides better quality for products such as smartphones and earphones but offers the same price as shanzhai.”

Will the sofas sell, however? Liu believes that some of China’s Mi Fans is not inclined to buy things like towels from a tech company. Other Mi Fans have raised eyebrows over Xiaomi’s increasingly colorful product palette. During Chinese New Year holiday, Xiaomi presented the latest products from its partners: a traditional Chinese lucky gourd made of copper. Xiaomi’s big thing might not be cloning MUJI or Belkin but selling fengshui, as Mi Fans have joked.

A lucky gourd made by Xiaomi’s partner Tong Shifu (Image credit: Xiaomi Forum)

For now, Xiaomi does not offer all of its partner products in every country. In its biggest market outside of China is India. Xiaomi has opened its 25th store in the country called Mi Home Experience to test which of products besides phones might take off. The company also opened its first store in western Europe in Spain in November last year, and, according to media reports, the US might be next.

Looking at Xiaomi’s Indian success (in 2017 the company saw a 696% sales surge to $1.3 billion), there is reason to be optimistic about the international spread of Mi fandom: In China, companies such as Xiaomi have already driven prices of high tech products down so much that the term “cabbagification” (白菜化) has entered the Chinese vocabulary. A recent viral video of a farmer in rural China driving to her field on a Ninebot self-balancing scooter showed that technology products that were once expensive and advanced have become as widespread as cabbage. International shoppers may not say “shut up and take my money” for the copper gourds but they won’t mind the cabbagification of high tech.

Apple replies to recent privacy accusations

Timmy Shen — Fri, 09 Mar 2018 03:11:53 +0000

Apple has caught fire from the public after an article written by an Apple customer went viral (in Chinese) this week in China, where he accused an Apple employee of allegedly hacking into his iCloud account and threatening to leak the data.

Apple responded yesterday through local media Sina Tech with the following statement (our translation):

“We fully respect the trust given to us by our customers and the fact that our customers entrust us with privacy protection and information security. Our incentive for our system design is to protect the privacy of customers. Any Apple Care technical support staff would not be able to get access to customers’ passwords, email content, or photos, etc. We will investigate the incident together with the customer, and ensure Apple’s employees and contractor personnel to adhere to the strict standards we’ve set up in contacting customers.”

According to the Weibo user “America in the past 1999″ (our translation; 美国往事1999 in Chinese), the incident started on February 28 when he called Apple’s customer service line to consult about his iCloud account but eventually got into a dispute with the technical support staff.

The employee, who claimed to be senior technical support advisor, later sent threatening notes to the customer’s three email inboxes and said that if the customer failed to add him on messaging app QQ within one hour, he would leak the personal data the customer stored online. “I used my job to copy your information,” said the employee in a phone conversation recorded and posted online by the customer.

Apple technical support blackmailing “America in the past 1999”

“America in the past 1999” later posted again on Weibo on March 7, saying that Apple has contacted him and said that the employee had been fired. However, the employee had reportedly submitted his resignation a month ago (in Chinese) and was not fired due to the incident, as reported by Sina.

China Unicom launches eSIM, allowing full use of both phones and wearables

Eva Yoo — Wed, 07 Mar 2018 04:42:21 +0000

China Unicom announced that it has officially launched the “eSIM One Phone Number Dual Terminal (eSIM一号双终端)” (in Chinese) business in six Chinese cities including Shanghai, Tianjin, Guangzhou, Shenzhen, Zhengzhou and Changsha.

“eSIM One Phone Number Multi-Terminal (一号多终端)” means that one phone number can shared with the user’s smartphone and wearable devices, without the need for a physical SIM card. For example, using eSIM users can go out exercise without carrying an additional mobile phone; the data recorded by the watch can be synchronized to the phone in real time.

China Unicom’s ad says Apple Watch Series 3 users can now use eSIM

Apple Watch 3 was the first end-product to support the eSIM. Last year November, this caused connection failure problems as Chinese carriers were not ready, and one month later Apple decided that Apple Watch Series 3 customers are eligible for a refund in China. The problem was that the eSIM allows users to subscribe to any carrier they choose and thus loosening the government’s ability to tracking users. The previous two generations of Apple Watch must be connected to the iPhone via Bluetooth to receive calls. Now that China Unicom also launched eSIM, Apple Watch 3 users can independently access the mobile cellular network.

China Unicom is currently the only operator that launched eSIM business in China, and made its first eSIM wearable product after two years’ work. From this date until December 31, 2018, China Unicom users who initiate this service can pay a lower fee on secondary eSIM card, from the activation date to 12 months later.

Weibo user accuses Apple’s official technical support staff of stealing his data

Eva Yoo — Wed, 07 Mar 2018 03:15:13 +0000

A Weibo user named 美国往事1999 is claiming that one of Apple’s official tech support people illegally stole their personal information. The news is spreading across China’s internet where many are expressing concerns over data security. The user said that the case happened on February 28th, the first day that iCloud services in mainland China being transferred to cloud company in Guizhou, GBCD (Guizhou-Cloud Big Data Industry Development Co., Ltd) under Apple’s partnership with the company.

“On the first day Apple switched from iCloud to cloud company in Guizhou, Apple’s official tech support illegally stole my personal information and data and blackmailed me,” 美国往事1999 wrote and even added a phone recording (Baidu Cloud) of Apple’s Apple technical support consultant threatening the user.

Many are pointing out that 美国往事1999’s account the user’s account wasn’t secure: He didn’t turn on two-step authentication and he didn’t use Hotmail e-mail for many years while his iCloud e-mail was never used.

Here’s what we understand of the incident:

On February 28th at 15:55 pm, 美国往事1999 called the Apple customer service hotline to consult iCloud related issues, but was then transferred to the Apple technical adviser. 美国往事1999 says (our translation):

“At 21:56 that night, the technical support consultant called me from a Xi’an cell phone number. He said that he was the same person I talked to that afternoon. He said that he used his access to invade my iCloud, copy my personal information and data. He said he sent an email to my 163, Hotmail, and iCloud accounts that included his QQ. He said he will give me an hour and I did not add him on QQ, he said he will remove my personal information and data. And said that he will make it impossible for me to use my Apple devices again.”

美国往事1999 added the support consultant on QQ, but they refused to respond. 美国往事1999 then called back, but the person no longer took the initiative to mention anything and hung up the phone.

“Later, I checked the Internet access mail and found that Hotmail e-mail password has been modified … To be sure my Hotmail mailbox has also been invaded. After checking the mail, I saw the threatening letter he sent to me in Hotmail and iCloud’s mailbox,” 美国往事1999 wrote.

The blackmail from Apple’s technical adviser reads (our translation):

“You can guess who I am. You should be afraid. I’m going to share your account and data with the world. If you’d like to chat, add this QQ. I do not want you to login in China again haha.”

Apple technical support blackmailing 美国往事1999

Five days later, the user called the Apple customer service many times, but they refused to give a response.

“Here, I hope that all Apple users can see this post and pay attention to and protect their own personal information security even though for this case, it didn’t matter how much attention I put into it. I also hope that China’s relevant state departments investigate Apple’s bad behavior and deal with it,” 美国往事1999wrote, and he called the police and filed the case. On March 6th, the user posted on his Weibo that Apple had fired the employee.

“Apple contacted me this morning saying the employee was fired but declined to give any details. They refused to disclose how much my personal information and data that employee stole, what he had done with it,” he said.

We have reached out to Apple to confirm the veracity of this account, but they have not yet responded. We will update as soon as we get a response.

Chinese laptops market share drop, while US players rise in H2 2017

Eva Yoo — Tue, 13 Feb 2018 07:50:34 +0000

In the second half 2017, Chinese laptop maker Lenovo showed 20.2% market share, a year-on-year drop of 4.9%, while the market leader HP showed considerable growth, driving the overall performance of notebook shipments beyond previous expectation, market research firm TrendForce is reporting.

For 2018, the market share of the top six brands is expected to rise to 89.1%, squeezing the room for other brands to develop. On the other hand, Xiaomi and Huawei recorded growth in Chinese market, but the results of their overseas deployment are not clear yet. Xiaomi’s laptop Mi Air was launched in July 2016, with a bold design, not revealing its logo on the laptop cover.

Two weeks ago, Chinese company Lenovo voluntarily recalled about 80,000 ThinkPad X1 Carbon 5th Generation laptops due to a potential fire hazard last week. Officials said about 78,000 ThinkPad X1 Carbon Laptops were included in the United States, as well as about 5,500 in Canada, according to Fox. These 12-inch touchpad computers feature detachable keyboards for tablet functionality and even come with Active Pen styluses.

Taiwanese multinational electronics company ASUS’s market share dropped to 9.5%, ranking the fifth. ASUS has adjusted its product strategy in recent years and shrink the production of models with low profits.

Acer continues to expand aggressively in the Chromebook market, and its notebook shipments growth in North American market raised its annual shipments by 0.6%. Its market share recorded 8%.

Apple and HP recorded double-digit growth in 2017. HP has demonstrated its ambition since the second quarter and recorded new highs of shipments in 2H17. With a market share of 24.3%, HP has retained first place in the shipment ranking.

The updated MacBook Pro in Q2 2018 helped Apple expand shipments by 18% for the whole year, the highest growth rate among all the notebook brands.

A sign of defeat for Apple Pay? Apple brick and mortar stores in China now accept Alipay

Frank Hersey — Wed, 07 Feb 2018 05:52:04 +0000

Shoppers can now use Alipay in all of mainland China’s 41 Apple retail stores, the first time a third-party payment system has been accepted by the firm in store. The Alipay app now has a new section where users can link their Apple accounts to their Alipay account and find special offers for spending in physical Apple stores.

Apple has seen mixed success in China. Its products are doing well, its mobile payment system Apple Pay less so. The country is Apple’s second largest retail market after the US and sales have grown for the last two quarters, an increase of 11% in its combined fiscal first-quarter revenue (which includes Taiwan and Hong Kong) to a record $17.9 billion. Much of this comes from demand for the iPhone.

The new Apple area within the Alipay app. Search for 苹果. (Image credit: TechNode)

Adding Alipay as a payment option in store is in line with making sales as convenient as possible for shoppers. WeChat Pay is on a trajectory to surpass Alipay in terms of total transaction volume, though shoppers have a tendency to use Alipay for larger purchases (Apple products, for example) and WeChat for day-to-day shopping such as groceries and convenience stores.

Despite there being an estimated 243 million iPhone users in China as of July 2017, the take-up of Apple Pay has been limited. Shoppers were already firmly in the habit of using Alipay and then WeChat Pay via QR codes, leaving little space for Apple and its NFC approach, despite (or because of) some unusual promotions.

Link your Apple account to your Alipay account for offers–China App Store accounts only. (Image credit: TechNode)

A report by Bloomberg found that only 1% of one Chinese bank’s 10 million online banking customers had even activated the service. Even in Apple’s homeland of the US only 13% of users were thought to have tried the service by April 2017 and it is believed to have peaked in March 2016.

Ant Financial’s Alipay has been available as a payment method in Apple’s App Store since November 2016. Tencent’s WeChat Pay is also an option for making app store payments. Alipay users with Apple IDs linked to the China App Store can now bind the two accounts with a newly-created area with the Alipay app (we had to do a search to find this). According to Ant Financial, those who activate the function will be able to make payments in the App Store with Alipay and receive offers for spending in Apple Stores with Alipay.

Apple has yet to make any comment on the move though we thought our readers may find its most recent retail announcement of interest: Apple’s first ever store in South Korea opened on January 27, 2018.

Apple’s new China iCloud data center to begin construction this year, ready for launch in 2020

Nicole Jao — Thu, 01 Feb 2018 03:55:59 +0000

Apple China is building its very own data center according to reports from Guizhou City News (in Chinese). The data center construction is said to begin this year and is expected to complete and be in operation as soon as early 2020.

An estimated $1 billion investment will be poured into the construction of the data center with the complex planned to cover over approximately 1000 mu of land (equivalent to 164.7 acres). The construction will be completed in two phases and so far Apple has decided on the location. When complete, all data owned by iCloud users in China will be migrated from overseas data centers to Apple’s new data center which will be operated by Guizhou-Cloud Big Data Industry Co. Ltd. (GCBD), a company owned by the Guizhou provincial government. Before then, GCBD will partner with three of the largest cloud operators in China, renting their cloud servers to provide services for Apple’s iCloud users.

Earlier this month, Apple announced that starting from 28 February it will hand over the operation of its iCloud data center in mainland China to the government-owned internet service provider. Apple said the partnership would improve the speed and reliability of its cloud services and while true to a degree, it was mostly to comply with increasingly stringent local laws. The new cybersecurity regulations, passed in July last year, require companies to store all user data within the mainland.

Apple’s move will make sure iCloud user data owned by Chinese users remain inside the country. However, quite expectedly, Apple’s decision sparked data privacy concerns since all data transferred will be reviewed by Chinese regulators before transferring abroad.

As China began to tighten its local data regulations last year and clamp down on companies that store Chinese user data overseas, foreign tech companies are finding new unique challenges for doing businesses in the country. Last November, Amazon.com agreed to sell their public cloud computing unit to a mainland enterprise hoping to continue those services in China.

Operations of Apple’s iCloud services in China are about to be transferred to a company in Guizhou

Eva Yoo — Wed, 10 Jan 2018 08:55:26 +0000

According to Apple Inc., iCloud services in mainland China will be transferred to cloud company in Guizhou and will be responsible for the operation starting from February 28 this year, Chinese media People’s Daily is reporting.

Guizhou-Cloud Big Data Industry Development Co., Ltd. (GCBD, 云上贵州公司) will be responsible for iCloud operations in mainland China and will have legal and financial relations with iCloud users in mainland China. The company was approved for operation by the People’s Government of Guizhou Province in November 2014, meaning that the company is sponsored by Guizhou Big Data Development Administration and supervised by the Board of Supervisors of Guizhou State-owned enterprises.

In July 2016, Apple set up its first data center in China in an effort to comply with country’s newly passed cybersecurity regulations. The data center project is part of the tech giant’s planned $1 billion investment in Guizhou province and is operated in partnership with GCBD.

“Chinese users like to use iCloud to securely store photos, videos, documents, and applications and stay in sync on all devices. We believe new partnerships will improve the Chinese iCloud user experience by reducing latency and improving reliability,” Lisa Jackson, Apple’s vice president for environment, policy and social affairs said.

While moving iCloud to China will improve the speed and reliability of Apple’s services, it raised data protection concerns since all data will be required to be reviewed and approved by Chinese regulators before transferring abroad.

In the meantime, Apple emphasized in its statement that “Apple has a strong data privacy and security mechanism and will not create a backdoor in any of our systems.” In addition, Apple also said that they will collaborate with Guizhou on the cloud and will only respond to legal requests for data. Apple also said that it can not unlock unlocked iPhone or iPad.

Within a seven-week period from January 10, users will receive this notice by e-mail and push notifications from Apple and iCloud’s system will make sure the users have received at least one notice, in order to complete the user’s service migration. As of February 28 this year, if the user has not received the notice, their accounts will not be moved to Guizhou’s cloud and will remain in the disabled state. During deactivation, data previously stored by the user in iCloud will also be stored in iCloud and will not be lost. If a user disables the iCloud service after February 28, Apple users will need to accept the new terms and conditions to ensure that your account is reactivated and moved to Guizhou’s cloud.

In the new terms and conditions of iCloud operated by GCBD, GCBD comes out four times. Basically, it tells you all the data you store with iCloud, including photos, videos, documents, and backups, will be transferred to GCBD.

Here are the 4 major additions to the TOS for Chinese users:

Welcome to iCloud operated by GCBD
THIS LEGAL AGREEMENT BETWEEN YOU AND GUIZHOU ON THE CLOUD BIG DATA INDUSTRIAL DEVELOPMENT CO., LTD (“GCBD”) GOVERNS YOUR USE OF THE ICLOUD PRODUCT, SOFTWARE, SERVICES, AND WEBSITES (COLLECTIVELY REFERRED TO AS THE ‘SERVICE’).
Upon receipt of a copy of a death certificate your Account may be terminated and all Content within your Account deleted. Contact iCloud Support at Electronic Information Industry Park of Gui An New Area, Guizhou province, P.R. China for further assistance.
If while using the Service, you encounter Content you find inappropriate, or otherwise believe to be a violation of any copyrights, or of this Agreement, you may report it by contacting GCBD at Electronic Information Industry Park of Gui An New Area, Guizhou province, P.R. China.
To terminate your Account and delete your Apple ID, contact GCBD Support at Electronic Information Industry Park of Gui An New Area, Guizhou province, P.R. China.

Why Guizhou?

Foxconn bases in China (Image Credit: Nikkei)

You might wonder, why is iCloud’s Chinese partner based in Guizhou, not other provinces in China? Located in Southwest China, Guizhou is one of the first provinces in China to have developed a big data industrial sector to lift its people out of poverty.

Leveraging the local government’s support, numerous tech giants also have chosen Guizhou province to place their servers. Prior to Apple, Apple’s smartphone rival Huawei established their data centers in Guizhou in August. More importantly, Apple’s main supplier in Asia, Foxconn also holds several tens of thousand servers in the region. As you can see from the map, Guiyang is geographically the belly button of Apple’s device manufacturing factories in China, surrounded by Chengdu, producing iPads, Shenzhen producing Macs, and Zhengzhou and Taiyuan, producing iPhones. In November, Apple has been accused of relying on students working illegal overtime to build the iPhone X, through Foxconn, which manufactures the devices in Zhengzhou.

Apple Watch Series 3 eligible for refund in China due to LTE setbacks

Emma Lee — Tue, 19 Dec 2017 04:24:13 +0000

When Apple released its Series 3 model this September, the cellular capabilities were the biggest selling point for the smart watch. It still is in most of the world–except China.

As furious early adopters are growing impatient after three months of waiting, Apple decided that Apple Watch Series 3 owners in China could return the product, unrestricted by the 14-day return policy.

After brief availability through telecom carrier China Unicom, owners of the new model found that cellular connectivity was cut off abruptly without a timeframe for comeback. The suspension of this feature last for a couple of months and there’s no sign that the ban will be lifted any time soon.

Chinese Carrier Information for Apple Watch Series 3

At the very beginning of Series 3’s release, Unicom specified the following: “Cellular service available only for mobile lines opened in Guangdong, Henan, Hunan, Shanghai, and Tianjin.” Apple updated the page with reference to support later in 2017 after the September 28 ban. Now, all Chinese carriers — China Mobile, China Telecom, and China Unicom, show the support is coming in 2018, Apple Watch Series 3 cellular support site shows.

Now, Apple Watch Series 3 with LTE, which priced at RMB3188, is now no different to a more affordable Apple Watch Series 3 with GPS (RMB 2588).

The ban is essentially caused by the new technology that Apple uses in the Series 3 called an eSIM, a tiny chip that allows users to subscribe to any carrier they choose, and thus loosing the government’s ability in tracking the users.

iPhone X’s Face ID now available on Alipay

Rita Liao — Wed, 29 Nov 2017 05:04:54 +0000

Users of Alipay, China’s top mobile payment solution provider, can now make purchases by scanning their faces with the bezel-free iPhone X.

Alipay announced on November 28 that iPhone X’s Face ID has become available on its latest version. The payment giant’s arch-rival WeChat Pay already started implementing Face ID into its payment system shortly after iPhone X’s China release last month. The most common payment authentification methods have been passwords and fingerprints.

The much anticipated face recognition payment technology, however, has not saved Apple from its tanking sales in China. iPhone is losing its charm as a symbol of status amongst the Chinese middle class as Chinese manufacturers like Huawei and Xiaomi are making quality phones at more affordable price tags.

Despite the cold response from consumers, the Chinese press and social media saw a buzz around the face recognition technology since its debut. Discussions range from how safe Face ID is, to the tongue-in-cheek inquiry into whether Face ID is capable of distinguishing between two twins.

Alipay first revealed its face recognition payment solution during the Singles Day shopping spree on November 11 last year. Face recognition has also won the hearts of the government as the technology enables a more efficient nation-wide surveillance system.

Founder of Huawei thanks Apple for allowing them to dominate the market

Masha Borak — Fri, 24 Nov 2017 10:35:38 +0000

Founder and president of Huawei Ren Zhengfei recently visited Huawei’s Research Institute in Japan where he touched upon the relationship with its rival Apple, Chinese media has reported.

Speaking of Apple, Ren said that Apple has opened up three eras: the first one was introducing the first PC, the second was Apple’s image processing technology, and the third one was its products iPhone and iPod Touch.

“Apple has changed the world, we really need to thank them for that,” he said noting that without the mobile internet economy, Huawei wouldn’t be where it is now. But now Apple’s decline is giving Chinese smartphone producers new opportunities.

Ren also said that these days Apple’s overconfidence and the arrogance towards its users is leading to a decline in iPhone sales in the global market. In the Chinese market, the decline has been severe giving Huawei and other domestic mobile phone manufacturers an opportunity to free themselves from iPhone’s pressure, said Ren.

Huawei has topped Apple in global smartphone sales since June becoming the world’s second-largest smartphone brand, next only to Samsung. On the other hand, Apple’s sales figures have been going down despite the iPhone X launch, which costs double the average salary in China. iPhone’s reputation in China is just not what it used to be.

China Tech Talk 27: Can the iPhone X save Apple in China?

John Artman — Mon, 13 Nov 2017 07:01:45 +0000

After a lackluster response from China for the iPhone 7, and consecutive quarterly declines in market share, many have wondered if we are watching the beginning of the end for Apple in China.

This week, Matt and John revisit their discussion about Apple in China to look at how the country’s consumers have responded to the iPhone X.

Links

Masha Borak: The iPhone in China isn’t the status symbol it used to be
TechNode Staff: Wedding proposals, cracked screens, and scalpers: Live blog of iPhone X’s rollout in China
Ben Thompson: APPLE AT ITS BEST
Jon Russell: iPhone 8 launch propels Apple to growth in China after 18 months of sales dips
Rajesh Pandey: iPhone Shipments Jumped by 40 Percent in China Following iPhone 8 Launch
Celia Chan and Meng Jing: Costing nearly US$200 more than in Hong Kong, iPhone X fails to sell out in China
How to leave an iTunes review

Hosts

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

Download this episode

The iPhone in China isn’t the status symbol it used to be

Masha Borak — Sat, 04 Nov 2017 01:31:04 +0000

iPhone X has hit the shelves in Mainland China, but it remains to be seen if Apple’s new flagship will win the hearts and minds of the Chinese people. This, however, will likely more depend on changes within consumers themselves rather than the actual technology the new iPhone X is offering.

iPhone has long been the phone in China. Men bought iPhones to propose to their girlfriends (and got turned down), Chinese nouveau riche, derogatorily called “tuhao,” bought golden iPhones to match their golden Ferraris, shopping platform Taobao hawked Apple-branded toilet seats, lighters, and slippers–this was the power of Apple in China. Chinese consumers have earned the reputation of having a “keeping up with the Joneses” mentality caused by increasing wealth and standards and this has served Apple well. But this time, the new iPhone is priced double than the average salary in China.

“Compared to several years ago, I think the iPhone may be less of a status symbol, but that all depends on who you talk to,” said Jessica Rap, Senior Writer at Jing Daily which follows China’s luxury market. “Chinese consumers now have more options when it comes to phone tech. Discerning Chinese consumers, in general, are becoming less focused on branding and more concerned with quality buys. When local phone companies like Huawei and Xiaomi are offering similar technology for a much more affordable price point, it leaves consumers more money to spend on other purchases, especially when phones like the iPhone X are priced so high.”

Despite that, Rap did mention that Apple has remained among top gifts for gifting among Chinese millionaires just after Bulgari, according to the Hurun Report published earlier this year. This goes along with some commentators’ claims that the iPhone X will sell like hotcakes regardless of the price. Tech In Asia editor Charles Custer has said that Apple probably isn’t ever going to become the top smartphone seller by units sold again. It will, however, regain its crown as the ultimate status-symbol phone. Maybe they won’t get it in “tuhao gold” anymore, but “yuppie black.”

Of course, it would be very wrong to say that the sole source of Apple’s status in China is its potential to show off. iPhone is a great product after all, and many have recognized that. Apple has also made it hard to escape its ecosystem once you’re there.

“I found that the people I talked to tend to love the iPhone more or less because they’re hooked on the phone or the brand itself, so they ‘have to’ have the next one regardless of the price,” said Rap.

China has also imported from the US a somewhat puzzling reverence towards Steve Jobs and the brand he built. Apple fans are a strong bunch in China. Technology lovers too. But even among them, there are many who are reluctant to cash out $1000 for a new iPhone model.

“I know many of my friends placed an order when the pre-order was available,” said Kai, a long-time Apple buyer and technology writer. From his own point of view, getting a new phone seems unnecessary. He also doesn’t believe that iPhone is so much about status anymore.

“The iPhone showed up in Chinese market 10 years ago, I don’t think there are a lot of Chinese customers buying iPhone to show their economic capabilities. For example, the 11.11. [Double 11 or Singles’ Day, a shopping festival organized by Alibaba] is coming and Xiaomi and Huawei both show a larger influence than Apple in the smartphone industry,” he said. “Because of this, iPhone X truly has new and advanced technologies, but whether it can be applied in most of our day-to-day life and whether it is worth paying the highest price in the history for that, I hold a negative view.”

iPhone has indeed been falling behind other players in the Chinese market. Huawei recently surpassed Apple’s smartphone sales by shipping over 112 million phones in the first three quarters of this year. This is probably by far the loudest indicator that Chinese consumer are increasingly making more mature shopping decisions, and putting practicality before brand.

And while Apple fans are standing in line to buy their favorite product, another news that has largely flown under the radar are protests in front of Apple’s stores against the company’s labor malpractices during the past 10 years of iPhone production. Students & Scholars Against Corporate Misbehaviour (SACOM) an NGO based in Hong Kong have called on Apple to take action against corrupt trade unions, student intern abuses, and extremely low wages in Apple’s suppliers’ factories. However, this is unlikely to dent the enthusiasm for Apple in China.

Wedding proposals, cracked screens, and scalpers: Live blog of iPhone X’s rollout in China

TechNode Staff — Fri, 03 Nov 2017 01:22:34 +0000

The iPhone X is perhaps the most anticipated iPhone in years, especially in China. Join us as we track how China reacts to the release.

Chinese retailers are cutting iPhone 8 prices before iPhone X release

Frank Hersey — Wed, 01 Nov 2017 03:09:42 +0000

Major retailers in China have significantly cut the price of the new iPhone 8 and 8 Plus models before the release of the more eagerly anticipated iPhone X on November 3. Yet iPhone shipments are up 40% in China according to Reuters.

Response worldwide has been muted and in the US figures suggest that the iPhone 7 has outsold the iPhone 8 since its release as people wait for the more advanced iPhone X (pronounced ‘ten’). In China there were no signs of queues on the model’s launch and, as we reported, scalpers were having to discount the handsets they’d prematurely snapped up.

Suning cuts prices across the iPhone 8 range

Now the price cuts have gone mainstream. Apple is still selling the handsets at the original asking price, but other major retailers are making cuts of up to 20%, neutralizing and even dropping below the price difference in Hong Kong.

Suning has cut the price of the most basic 64GB iPhone 8 from RMB 5,888 to RMB 4,768, a saving of RMB 1,120 or 19%. The top of the range 256GB 8 Plus has dropped from RMB 7,988 to RMB 6,878, saving shoppers RMB 1,110 or 13.9%.

JD.com offers discount on iPhone 8 ahead of iPhone X release

JD.com has cut the cost of the iPhone 8 in its authorized reseller store. They’ve knocked off RMB 1,111 (to match the 11/11 sales day) to make the 64GB iPhone 8 RMB 4,777 and the 64GB 8 Plus is down RMB 900 to RMB 5,788.

The above price cuts have nudged the cost of the handsets to below the official price in Hong Kong, the traditional preferred shopping ground for mainland customers (and smugglers).

Despite the discounts, research firm Canalys has been quoted by Reuters as finding that iPhone shipments in China have increased 40% in Q3 YoY to reach 11 million units, making it Apple’s most successful quarter in China for 8 quarters.

Chinese smartphones increasing market share in India in Q3: report

Eva Yoo — Mon, 30 Oct 2017 03:39:28 +0000

India’s market has become another battlefield for China’s mobile phone manufacturers. The second largest market after China showed 36 million units of smartphone sales, a 7% increase YoY. Four of China’s companies are putting greater pressure on Samsung, according to an Indian smartphone market third-quarter report released by Yonhap news agency on Sunday.

The report shows that Samsung mobile phone is still veteran in India market taking the first place, with a third-quarter share of 26%. Chinese player Xiaomi ranked second with its share increasing to 25%. In the second quarter of this year, Samsung had a market share of 21.2%, while Xiaomi recorded only 15.6%.

Three other Chinese companies monopolized the other positions in the top five. Vivo had 10%, OPPO 9%, while Lenovo’s market share fell to 7%.

“As China’s market saturates, the fast-growing India market will become a much more important market for smartphone manufacturers next year,” the report said. The Indian market is growing fast in both consumption and retail sector, as India’s retail sector surpassed China with anticipated growth of $1.3 trillion by 2020.

Statistics show that the most popular smartphone prices between $100 to $150 in the Indian market. Chinese manufacturers have launched a large number of products within this price range, cultivating Indian fans.

Replicating the pattern in the Chinese market, Chinese mobile phone manufacturers in India have had great success, as they launched high quality Android mobile phones, which have the same configuration with that of iPhone, but with a much lower price tag.

Red Mi 4

The Red Mi Note, Red Mi 4, Red Mi 4A were the three most popular mobile phones from Xiaomi (in Korean) in India, and Samsung’s low-end mobile phone Galaxy J2 ranked fourth.

Huawei may have beat Apple in global mobile phone sales since June, becoming the world’s second-largest smartphone brand, next only to Samsung. However, Huawei failed to enter the top 5 in India.

Huawei beats Apple’s sales despite iPhone 8, X release

Masha Borak — Tue, 24 Oct 2017 07:34:33 +0000

Looks like even the launch of Apple’s newest models iPhone 8 and iPhone X which costs almost double China’s average monthly salary could not beat Huawei’s global ascendance. Local media has called the event the worst iPhone launch date in history. After one month on the market, iPhone 8 and 8 Plus sales are not only below iPhone7 and 7plus, they are even lower than 6S/7plus, according to data cited by Lieyunwang (in Chinese). Numbers show that shipments have been cut by 50% because of dismal sales.

On the other hand, Chinese leading smartphone maker Huawei has released its newest sales figures showing that it shipped over 112 million phones in the first three quarters of this year, a 20 percent increase from the previous year. The company’s shipments rose 19 percent while its revenue soared by 30 percent. Global shipments of Huawei Mate 9 series have exceeded 10 million units

Huawei has overtaken Apple in global smartphone sales since June to become the world’s second-largest smartphone brand, next only to Samsung, according to a report by consulting firm Counterpoint Research.

In the first half of 2017, Huawei has increased mobile phone shipments to Southeast Asia, Japan and South Korea increased by more than 45% while shipments in Europe increased by 18% year-on-year. According to reports, Huawei will try to crack the US market beginning with 2018. To win western markets, the company has been investing heavily into R&D and shifting to high-end products while cutting the proportion of low to mid-end phones.

The progress is impressive considering that 5 years ago, Huawei had less than a 1% share of global mobile phone sales. In 2016, Huawei’s share in the global smartphone market increased from 7.3% in 2015 to 8.9%, while Apple’s market share fell from 15.9% in 2015 to 14.4%, according to data from Gartner.

Apple Watch Series 3 rollout hits speed bumps in China as carriers still not ready

Eva Yoo — Tue, 10 Oct 2017 02:31:09 +0000

China’s early adopters who tried out Apple Watch Series 3 cellular connectivity with China Unicom are furious after connection failures and China Unicom’s passive reaction. The connection issue, however, seems to be China Unicom’s fault: they still have not gotten formal approval from China’s Ministry of Industry and Information Technology for “one phone number multi-device (一号多终端)” business, essential to support Apple Watch Series 3 cellular connectivity.

Tian purchased the Apple Watch Series 3 through Apple’s official website and China Unicom’s SIM card to pair with it. To his disappointment, after pairing China Unicom’s data service with Apple Watch, he couldn’t receive any calls.

“It’s been two weeks. I called China Unicom seven times, no use. I’ve also visited two China Unicom stores, got a new SIM card with same number, but still no use,” he told TechNode.

Apple announced in its official news room that customers will be able to order Apple Watch Series 3 (GPS + Cellular) beginning September 22 in China. At the beginning of the new Apple Watch Series 3 release, Apple said they would provide LTE cellular network via China Unicom in five areas in China, namely, Shanghai, Guangdong, Henan, Hunan and Tianjin on its official website.

Apple Watch’s network activation problem in China was first reported by Chinese media The Paper on September 23rd, saying a user that can not complete the real name authentication on Apple Watch 3. Only a week after Apple Watch Series 3 release, Apple’s official website has backtracked from its initial announcement and shows that China Unicom’s cellular network will be available later (今年稍后推出).

Apple’s official website states that China Unicom’s cellular network will be available later (Image Credit: Apple)

Apple Watch Series 3 users who purchased China Unicom SIM card failed to make phone calls using the watch and expressed their anger on Weibo.

“When I was buying the Apple Watch at Apple Store, it said Shanghai Unicom supports data service on the Apple Watch. Now that line is gone. So I’m definitely entitled to return the Apple Watch because it’s not working in the way Apple advertised it at the time point when I was placing the order. But the Watch is working fine, besides this issue, so I don’t want to return it,” Tian says. “If they haven’t tested it, they shouldn’t have advertised it.”

The reason behind the issue

Zhongguancun Online’s interview with a China Unicom’s staff (in Chinese) explains the issue. Apple Watch Series 3 uses eSIM independent cellular data, which required access to China Unicom’s “one phone number multi-device (一号多终端)”. However, China Unicom’s “one phone number multi-device” has only received “probationary” license, and did not pass the formal approval of the Ministry of Industry and Information Technology. China Unicom had no way to handle large-scale use of China’s Apple Watch Series 3 users, and had to immediately suspend the service.

Both Apple and China Unicom have not yet given the official explanation on the cause of the connection failure. China’s Apple Watch 3 users rage over China Unicom’s poor reaction to the people who suffered loss by purchasing China Unicom’s SIM cards.

“I’m just angry at China Unicom’s ignorance and incompetence in reacting and solving this simple issue. If China Unicom was not prepared for the service, they shouldn’t have offered it in the first place,” Tian said. “I don’t even want to use data service on Apple Watch 3 any more. So disappointed. I just want my SIM card back to normal service.”

iPhone 8 Plus cracks open for two users in Asia, batteries may be to blame

Timmy Shen — Sat, 30 Sep 2017 09:30:53 +0000

The iPhone 8 and iPhone 8 Plus have been available for just a couple of weeks, but reports of alleged battery issues have emerged in Asia.

A Taiwanese Apple fan noticed her newly-bought iPhone 8 Plus was bulging while charging, and soon cracked open, Taiwanese media Apple Daily reported.

The owner surnamed Wu told local media that she was using the official Apple charging cord. The smartphone started swelling after about three minutes and then split open. The phone was later recovered by the carrier and will be shipped to Apple for analysis, local media reported.

Another iPhone 8 Plus owner in Japan experienced something similar but this time without even charging the mobile device. Twitter user Magokoro0511 uploaded a few photos on Twitter of his broken device. He tweeted that “it was already slightly split open when I received the iPhone 8 plus.”

Apple has yet to confirm if these cases were caused by batteries, but iPhone 8 Plus might use the same battery manufacturer, Amperex Technology Limited (ATL), as the Samsung Galaxy Note 7, said The Next Web citing unconfirmed reports. However, if these cases turn out to be isolated incidents, there’s not much to worry about. After all, Samsung Galaxy Note 7 explosions were reportedly caused by faulty design rather than the manufacturing flaws from the battery makers.

Even though these cases may just be some unlucky consumers getting some individual broken devices, the incidents may as well reflect part of the hardware supply chain problems Apple has. Apple is expected to see delays in iPhone X shipment, given that its OLED edge-to-edge screen design may lead to more production difficulties.

Chinese scalpers are already selling the iPhone 8 for $75 cheaper

Rita Liao — Wed, 27 Sep 2017 08:23:20 +0000

Chinese scalpers are feeling the squeeze. Seven years ago, a generation of them struck it rich by reselling the iPhone 4 for as much as RMB 10,000 (around $1,500 for a phone that launched for up to $699) to Apple fanatics and curious consumers. One day after iPhone 8 hit the shelves in China last week, scalpers were offering the 4.7-inch gold model for RMB 500 ($75) cheaper than the shelf price.

“It’s the first time this has happened, that the [scalper] price slipped below the launch price within one day,” a scalper from Beijing’s tech hub Zhongguancun told local media (in Chinese).

In stark contrast to the swarm of buyers and scalpers outside Apple Stores in the past, the queuing railings set aside for iPhone 8 launch across China are far from being filled. The tepid reception of the new model has sent Apple’s stock down the worst weekly performance during the week of a major product launch since the first iPhone release in 2007.

Apple has not published any official sales figure on iPhone 8 yet, but a survey done by Tencent’s research unit Penguin Intelligence predicted the cold shoulders. Only 16% of existing iPhone users are planning to replace their phones, down 27.8% year-on-year. A similar trend is observed among Android users, signaling the calm-down of China’s smartphone crave.

Analysts are split in their projection for iPhone X. Some are hopeful that the arrival of the premium-tier phone will pick up the slack left by iPhone 8. Others caution iPhone X’s high price tag—almost doubling China’s average monthly salary. Local smartphone brands, which are on average more affordable than iPhones, are also going strong. Domestic smartphone makers are gobbling up 87% of China’s smartphone shipments in Q2 2017. Xiaomi overtook Apple’s fourth place in that same period.

Scalpers are suffering from slumping demand also because China has become one of the first in Asia to receive the new iPhones in store. “The era for scalpers has gone,” says the Zhongguancun scalper.

Apple removes controversial App Store policy taking 30% cut on tips

Eva Yoo — Mon, 18 Sep 2017 05:03:18 +0000

Apple has removed its controversial App Store policy of taking a 30% cut on tipping from users to content creators in China, The Paper is reporting (in Chinese)

App Store Review Guidelines on Apple’s official website updated its tipping policy on section 3.2.1 article 7:

(vii) Apps may enable individual users to give a monetary gift to another individual without using in-app purchase, provided that (a) the gift is a completely optional choice by the giver, and (b) 100% of the funds go to the receiver of the gift. However, a gift that is connected to or associated at any point in time with receiving digital content or services must use in-app purchase.

The newly modified policy shows that Apple will not allow Weibo, WeChat and other platforms, to monetize from original content creator getting tips from users. Apple clearly says reward behavior only involves “monetary gifts,” so the beneficiaries should be content creators on WeChat public account, Zhihu, or Weibo. Live streaming platforms will still charged 30% commission from Apple, because the live streamers are awarded with virtual currency used in such platform, rather than monetary gifts.

Apple previously required its iOS applications to either change “Reward (打赏) to “In-app purchase (应用内购买)” or provide 30% cut to Apple on all transactions inside iOS apps.

“. . . Apple will play as a partner of the content creator who is rewarded, and doesn’t want to make other specific content or service to monetize on the reward. If a WeChat public account is directly attached to the WeChat reward plug-in, then Apple will take 30% of the reward given to the content creator. If the developer really want to avoid this, then they should choose another interface so that Apple will not charge 30% commission,” an insider at Apple The Paper.

Apple’s new rules are now in effect, but application developers also need some time to develop a new reward interface, so original content creators will have to wait for some time to 100% receive the reward without getting commission cut.

10.7% of the WeChat users have used tipping feature (Image Credit: WeChat’s Economic and Social Impacts in 2016 report)

According to WeChat’s Economic and Social Impacts in 2016 report, 10.7% of the WeChat users have used tipping feature, and 22% of the users were tipping more than RMB 10 ($1.45) every month.

Announcing the official TechNode podcast: Node Worthy

John Artman — Mon, 18 Sep 2017 04:15:09 +0000

This has been a long time coming. Coming from a radio background, I have a deep passion for audio content and when I first joined TechNode I knew I wanted to do a podcast. The problem with podcasting, much like any quality content, is that you can’t just do it; you have to prepare first: choose a name, design a logo, decide the format, choose music, and acclimate writers to talking (surprise surprise, they’re much more comfortable with the written word!).

After months of discussion and preparation, we are finally ready to bring to you Node Worthy, a weekly podcast going deeper into our most interesting stories. The name “Node Worthy” not only invokes the intersection of ideas, technology, and culture of our TechNode brand but also highlights our commitment to quality (even though we’re still a small team of mostly writers), a commitment we take very seriously.

Admittedly, this first episode isn’t everything we wanted it to be, but there are times when you just have to live with the imperfect. As always, we want to hear your feedback; please do leave a comment below or get in touch to let us know what you think.

—John Artman, Editor-in-Chief

This week we talk about the iPhone X announcement, including how it will fare against competitors, the second-hand phone market, and how likely Chinese are going to buy a new phone.

Download this episode

Links

Podcast information

iTunes (coming soon)
RSS feed
Music: “Taking the Day Off” by Lee Rosevere, Hold Music

Didi adds Apple Pay integration. Is it enough to boost Apple Pay adoption in China?

Emma Lee — Fri, 15 Sep 2017 07:36:19 +0000

Chinese ride-summoning giant Didi has recently reached a partnership with Apple to allow iPhone users to make payment with Apple Pay for all of its ride-hailing services from Didi Premier, Didi Express, Didi Luxe, as well as ofo, the bike rental service that’s been embedded in Didi’s main app since April.

Screenshot of Apple Pay on Didi

In addition, the firm is also adding English service for Didi Luxe to provide high-end limousine services through its ride-hailing platform. After launching the original Chinese version several months ago, Didi Luxe is now available in both Chinese and English. The service is currently only operating in Beijing, but it will arrive in Shanghai in the coming months. It will extend to other cities throughout 2017 and 2018, Cai Jingyan, Didi’s senior manager for product communications told TechNode.

This is one of the few cooperations that has been announced since Apple’s billion-dollar investment in Didi was publicized in 2016. Although we have been expecting the news for quite some time—media has predicted the Apple Pay integration upon Apple’s investment announcement one year ago—it may still be translated as a signal for further cooperation between the two big names.

“The main goal of our investment and strategic partnership with Apple is to provide users with better products and service. As a developer in the iOS community ourselves, we are excited that since 2016 Didi has integrated a number of iOS features to its service, including ride-hailing by using Siri, from within the Maps app and from your wrist via Apple Watch. We look forward to strengthening this productive relationship,” Cai told us.

Obviously, support for Apple Pay will be a major step forward for DiDi, which has been pushing its globalization initiatives aggressively. The integration of English version for Didi Luxe also shows the company’s effort to go more international and expat-friendly.

“More flexible and convenient payment options is a core element of user experience. China is home to one of the world’s largest iOS user communities, as well as the world’s largest rideshare market. Today Didi app accepts international credit cards, Union Pay, CMB OneNet, and WeChat and Alipay, plus Apple Pay—probably the most diversified payment structure in our industry; plus cash is accepted for our taxi business. Most of these payment options on our app also have growing influence abroad,” Cai noted.

Along with Didi’s globalization plan, it has partnered or invested in a raft of regional ride-hailing leaders to prompt its ambitious drive. Will these partners benefit from the Apple-Didi tie-up as well? The logic behind proposition makes sense, but it seems it will take time before it can be realized.

Cai gave a vague response: “Didi has invested in seven ride-hailing companies across the world. The network of regional ride-hailing leaders now extends to over 60% of the population across over 1,000 cities in North America, Southeast Asia, South Asia, South America, Middle East, Africa and Europe. These are all very promising markets going through a mobile revolution, a consumer revolution, with expanding purchasing power. We believe that lifestyle revolution will continue to offer excellent opportunities for great products and services. We are sure our partners are proactively seeking those opportunities.”

This is also a major step for Apple which has launched a series of efforts to localize its services for China, an important but slowing market for the smartphone maker. In addition to naming a new China head in July, Apple has launched its largest promotion for Apple Pay in the country and added WeChat Pay earlier this month. Support for Didi, a dominating and high-frequency usage app in China would not only help Apple’s overall China strategy but also the development of Apple Pay, which has suffered fierce rivalry from local competitors of Alipay and WeChat Pay.

Chinese becoming less likely to replace their phones: report

Emma Lee — Thu, 14 Sep 2017 08:54:50 +0000

iPhone users planning to replace their phones annually dropped from 27.8 percent to 16.0 percent over last year (in Chinese), according to a report from the research unit of Tencent Penguin Intelligence. The same figure for Android users suffered a similar plunge from 34.7 percent to 23.5 percent, but still on a higher replacement rate than iPhones.

Percentage of users trading their smartphones annually in 2016-2017 (Image credit: Penguin Intelligence)

Even though Chinese smartphone market is quickly nearing its saturation point, it still constitutes a significant driver for the global market as an active replacement market. But as the landscape continues to evolve, the new driving force in smartphone replacement is losing momentum while Chinese users are replacing their smartphones less frequently.

Although this is a general trend in China’s smartphone industry, the feeling is especially strong among iPhone users given it’s usually pricier and sturdier. In a sense, this is good news for Apple which enjoys a better reputation as a more sustainable gadget. However, this is also a bitter news for the smartphone maker which is betting on its new iPhone 8 and iPhone X to turbocharge the slowing Chinese market.

Brand-wise, the replacement cycle of most smartphone brands stood at around two years, the report noted. iPhone features the longest replacement cycle with 40.9 percent of the researched iPhone users are changing their phones after three years of usage or even longer. Xiaomi has the shortest cycle with 80 percent of the users replace their phones within two years.

Chinese user’s answer to whether they will buy the new iPhone model (Image credit: Penguin Intelligence)

Interestingly, the report also shed some light on Chinese users’ attitude towards Apple’s latest smartphone products iPhone 8 and iPhone X. Among the existing iPhone users, 33.8 percent said they want to buy the new models after the release event. Only 5.2 percent of non-iPhone users are considering to buy a new model and over 80% said they wouldn’t buy.

Here’s how Chinese media are reacting to the new iPhone lineup

Timmy Shen — Wed, 13 Sep 2017 09:28:28 +0000

So here comes iPhone X and iPhone 8, but none of them comes with real surprise other than making Apple’s smartphone lineup more complex than ever. Media outlets in China are also not so optimistic about the new model’s future, jokingly calling the iPhone X “a smartphone with hair bangs.” Here’s what China’s media are talking about the new iPhone lineup.

The Paper reports that the iPhone X is the most expensive iPhone in history but the Face ID and the Animoji features deserve some applause. The state-owned media Huanqiu reports that it’s complicated for consumers to choose from Apple’s lineup of eight different smartphone products, which may have gone off course from Steve Job’s principle “less is more.”

Huanqiu also suggests that Apple had led the smartphone innovation trend in the past, where the firm would announce some cutting-edge design which would inspire the industry until its big action the next year. However, over the past two years, Apple’s products seemingly see some lack of innovation. In general, Apple this time only shows off its Face ID and full-screen display technology and doesn’t show the world any significant breakthrough, Huanqiu suggests.

In addition, with Xiaomi launching this Monday its Mi Mix 2 that comes with a full-screen display, it’s fair to say that the era of “full-screen display” is here. Now, the iPhone X is equipped with pretty much the same type of display.

Huxiu, a Chinese media outlet, reports that both Apple and Xiaomi are playing with full-screen display setup and it’s the consumer’s decision to go with “bangs” or “a chin.” People in the industry are saying that Mi Mix 2 is like a smartphone coming with a chin, given its narrow bezel on the bottom of the phone body.

While the new iPhones will only be available weeks after the launch event, the scalpers are seeing some great opportunities to make a profit out of this. Local media reports that the pricing for a latest iPhone from a scalper might go over RMB 20,000 (roughly $3062). The high price tag of the iPhone X is indeed a legitimate concern for Chinese consumers, where local media are reporting that the new iPhone lineup comes with no surprise but the Face ID and the high price tag.

In fact, after Xiaomi announced Mi Mix last year, smartphones with full-screen displays has seemingly become the new fad, Huanqiu reports. Aside from Xiaomi, smartphone manufacturers like Samsung, Vivo, and Nubia are going to release their new models that come with full-screen displays. Samsung S8 has added in the facial recognition technique, and Vivo will equip its upcoming X20, which will be released in a few weeks, with the same technique, according to local media.

iPhone X costs almost double China’s average monthly salary

Timmy Shen — Wed, 13 Sep 2017 04:15:45 +0000

Apple’s September event is always a big one that attracts the world’s attention—especially those from the world’s largest smartphone market: China. However, the high price tag this time may come as the main hurdle for the smartphone giant to pump its market share in China.

Apple just announced its latest lineup of smartphones. The new iPhone X is priced at RMB 8,388 (roughly $1,284) and RMB 9,688 ($1,483) in China, much pricier than those in the United States where it goes for $999 and $1,149. That’s almost double the average monthly salary of China.

Local media in China are reporting that the new iPhone lineup comes with no surprise other than the Face ID and the high price tag. Meanwhile, the iPhone 8 also doesn’t show much innovation compared to the iPhone 7, local media reports.

In fact, just a day before the iPhone reveal, the local smartphone manufacturer Xiaomi launched the latest Mi Mix 2, which also boasts its large full-screen display with a much lower price at RMB 4,699 ($719) for its most high-end model. The Chinese consumers indeed have many local smartphone options, and the Mi Mix 2 is among those to beat.

It’s worth noting that the Chinese leading smartphone maker Huawei has overtaken Apple in global smartphone sales since June, according to Counterpoint Research’s report. The report also suggested that the iPhone’s share of China’s smartphone shipments fell to 9 percent in the period of January to June, down from 14 percent in 2015, which was when iPhone 6 took over the country by storm.

The Cupertino-based firm has slipped to the fifth position in China, falling behind local rivals Huawei, Oppo, Vivo, and Xiaomi, Reuters reported. Given the high price tag of iPhone X, it remains uncertain if Apple can turn around its business in China this time.

China’s game developers take the stage at Steve Jobs Theater

Emma Lee — Wed, 13 Sep 2017 04:05:18 +0000

The long-awaited Apple event has come to an end, offering the world some pretty cool tech. But while most of the world is still savoring Apple’s latest hardware updates, we can’t overlook the increasingly important roles that Chinese gaming companies are playing in Apple’s—or even the world’s—content ecosystem.

Even a company as great as Apple can’t do it all and can only focus on the things it’s good at. Therefore, it’s a common practice for Apple to invite content partners to demo their products at the mega launch event and share their experiences about how Apple’s latest software and hardware updates can enable greater user experiences.

At today’s release, two gaming companies were honored to pitch onstage at Steve Jobs Theater. They are either coming from China or founded by Chinese entrepreneurs. Here’s a quick wrap-up of their demos.

Sky by Thatgamecompany

Jenova Chen pitching Sky at Apple event (Image credit: Apple)

Thatgamecompany’s newly launched title Sky is a romantic social adventure game, which features its signature artistic designs that could be commonly found in previous works. Light and dark are important themes of the game. Playing as children of the light, the player’s goal is to bring light to where it is needed the most while flying above the clouds to explore the wonders of the mysterious world, introduced Jenova Chen, the company’s CEO. With the aim to be easy for casual players to pick up, the control is simple and intuitive. Social is another important factor in the title, allowing up to eight players from the world to play together.

Thatgamecompany should be a fairly familiar name to hard-core indie game players. The studio is engaged in creating video games that provoke emotional responses from players. Its video games include the award-winning Flash title Flow, Flower, and Journey. Originally coming from Shanghai and now working in the US, the company’s co-founder and creative director Jenova Chen tries to make games that tap into feelings that are universal and independent of culture.

The Machines – by Directive Games

Directive Game CEO Atli Mar pitching The Machines at Apple event (Image credit: Apple)

Shanghai-based VR/AR game developer Directive Games demoed The Machines, one of the world’s first competitive multiplayer games designed to be played entirely in augmented reality, at Apple’s iPhone keynote today. In the game, players can battle their friends in real time, playing the rebels against the dominators. The gamers are able to play in any new angle and to point-and-shoot an iPhone to create the battlefield. Sound added another layer to the immersive experience. As players leaned into the battle, the volume would increase.

With core-team from Ice Land, Directive Games is now headquartered in Shanghai with offices in Reykjavík and Hong Kong. The firm was being recruited in Vive X, HTC VIVE VR accelerator program last year. TechNode got a chance to talk with the team on VR landscape early this year.

Gaming from China

Witnessing Chinese game companies forming a rising force in the world is, by all means, an exciting phenomenon for us who are following local tech scene, but it’s not quite a surprise: the country has already overtaken the US as the gaming capital of the world in terms of market size. The 600 million Chinese gamers have contributed $24.6 billion of the industry’s $101.1 billion global market value in 2016, just ahead of the US’s $24.1 billion, a report from venture capital firm Atomico shows.

Where there’s high demand for gaming content, there will be more quality content providers and a mature ecosystem surrounding the industry. In Directive Game’s case, the fact that an Icelandic team moved all the way around to set up a company in China speaks to the traction that China has gotten for gaming companies, especially in the VR/AR field.

Apart from gaming startups, Tencent has already marked a milestone for China’s gaming developers with its mega-hit Honour of Kings. The title has become the world’s top grossing game earlier this year.

The new iPhones are here and China’s secondhand market is ready

Rita Liao — Wed, 13 Sep 2017 03:45:43 +0000

On September 12, one day before the much anticipated new iPhones were scheduled to launch, the secondhand trading unit of Chinese Craigslist 58.com Zhuan Zhuan (meaning to pass on in Chinese) sealed a deal with Foxconn, the Taiwanese electronics manufacturer behind Apple and other tech giants, to work on vetting used phones exchanged over the platform.

The news comes at a critical time as consumers are projected to sell off old handsets during the big launch season. Xiaomi rolled out Mi Mix 2 a day before the new iPhone reveal, and Samsung, Vivo, and Huawei are in line to release their new models in the following weeks. In August, transaction volumes on Zhuan Zhuan reached 2.48 billion RMB ($380 million) with cellphones taking up the majority at 31% (in Chinese). When the iPhone 7 was released last year, trading volume for iPhones on Huishoubao (meaning treasure of recycling in Chinese), a recycling service startup started by former Tencent employees, surged by 300%. Increases for Samsung and Xiaomi reached 500% over the same period as Android users looked to convert to iOS.

Chinese consumers crave new phones. A survey by iiMedia shows that nearly half of the participants buy a new phone within 1-2 years. In total, Chinese consumers replace 400 million to 500 million phones a year, according to the China Academy of Information and Communications Technology. Around the world, there have been 7.1 billion smartphones manufactured since 2007—the year when the first iPhone came out—according to Greenpeace. This is enough to equip nearly every person in the world with a device.

But financial returns for smartphone manufacturers is giving rise to ever mounting environmental costs generated by e-waste. When it comes to recycling, Chinese people are hardly the biggest proponents.

“There are currently about 1 billion discarded cellphones in China,” said Xiong Zhou, partner at Huishoubao, to Xinhua News, adding that less than 2% are being recycled. Unlike in the US, where carriers and chains such as Best Buy run disposal programs, there haven’t been easy ways to deal with old phones in China until recent years.

Over 75% of recycled goods on Huishoubao come from megacities Shenzhen, Guangzhou, Shanghai, and Beijing. Consumers in big cities have higher purchasing power to chase after fancier gadgets, but they also tend to be more environmentally conscious. Moreover, a well-developed courier network in big cities makes recycling much easier. With recycling apps like Zhuan Zhuan, users can request to have their used phones pick up with just a few taps on the screen.

Another hurdle to phone recycling is security concerns. Most consumers lack general knowledge over personal data protection, and rather than risking information leakage, they let their handsets languish in the drawer. This is why a strategic partnership with Foxconn—who Apple designated as the official reuse and recycle channel in China—will help inject trust into Zhuan Zhuan’s peer-to-peer platform. The manufacturing giant will undertake Zhuan Zhuan’s phone inspection service and hand pick used iPhones dropped off at offline Apple Stores to put on sale via the online trading platform.

As smartphones in China become increasingly affordable and people continue to pursue new, sleeker designs, tech giants are eyeing the largely untapped market for used gadgets. In April, Tencent invested a hefty $200 million in Zhuan Zhuan in exchange for a minority stake. Its arch-rival Xianyu (meaning idle fish in Chinese, homophonic for “salted fish”) was acquired by Alibaba for a $15 million price tag in March 2016. Aihuishou, who runs Xiaomi’s smartphone trade-in program, is backed by JD.com from its early days and announced plans to go IPO following its series D round of 400 million RMB financing last December. As the electronics recycling market in big cities becomes saturated, Aihuishou is expanding to China’s lower-tier cities where smartphone penetration rate is growing rapidly.

Huawei surpasses Apple to become second largest smartphone brand

Emma Lee — Thu, 07 Sep 2017 03:45:14 +0000

Chinese leading smartphone maker Huawei has overtaken Apple in global smartphone sales since June to become the world’s second-largest smartphone brand, next only to Samsung, according to the latest report by consulting firm Counterpoint Research.

The August sales haven’t been released yet, though the report points out it’s looking strong for the Chinese vendor. With Apple’s major iPhone launch scheduled in less than one week, however, the US smartphone maker is expected to record a rebound in September.

Image credit: Counterpoint

Still, this is a big deal for Huawei—more commonly known as a network infrastructure manufacturer previousl—to rocket to the top of the industry over the last three to four years. Counterpoint attributes the quick surge to its consistent investment in R&D and manufacturing, which brings excellent design and rich feature sets, aggressive marketing, and sales channel expansion.

Huawei enjoys the leadership position in China and operator-centric markets in Europe, Latin America, and the Middle East, but its presence in South Asian, Indian and North American markets are relatively weak, limiting its potentials to take a sustainable second place position, the report pointed out.

Despite the striking performance in sales, Huawei still lacks a true hero device although it already features a multiple SKU portfolio that ranges from low to high-end products. “While Huawei climbed to be the world’s second largest brand overall, it is surprising to see none of its models breaking into the top ten rankings. While having a diverse portfolio allows Huawei to fight on multiple fronts, it does little to build overall brand recognition; something Huawei badly needs if it is to continue to gain share. While Huawei has trimmed its portfolio, it likely needs to further streamline its product range like Oppo and Xiaomi have done – putting more muscle behind fewer products,” Counterpoint Research senior analyst Pavel Naiya commented.

Image credit: Counterpoint

Huawei’s surge comes with the rise of a raft of Chinese smartphone makers, like Oppo, Vivo, and Xiaomi, which have been challenging market incumbents with the latest innovations in bezel-free and full displays, augmented reality, in-house chipsets, and advanced camera features.

Apple’s new China head, Isabel Ge Mahe, is officially on board

Emma Lee — Mon, 04 Sep 2017 03:09:49 +0000

Whith the next iPhone event is fast approaching, Apple has recorded a major change in China, a market of increasing importance for the smartphone maker. In the latest update of its website, the company has added Isabel Ge Mahe to the management team as Vice President and Managing Director of Greater China.

Apple announced Ge Mahe’s appointment back in July but did not disclose the specific date when she would assume the role. The July announcement pointed out that Ge Mahe will report directly to CEO Tim Cook and COO Jeff Williams. Along with the update on Apple’s site, the company told TechNode that Isabel Ge Mahe has already relocated to Shanghai and started working with the local team.

In its most recent move to fit adapt to the Chinese market, Apple allowed WeChat Pay for making payments on its App Store and Apple Music last week.

Born in Shenyang, Liaoning, and fluent in Mandarin, Isabel earned bachelor’s and master’s degrees in Electrical Engineering from Simon Fraser University in British Columbia. She holds an MBA from the University of California, Berkeley. Isabel has led Apple’s wireless technologies software engineering teams for nine years, focusing on the development of cellular, Wi-Fi, Bluetooth, NFC, location and motion technologies for nearly every Apple product. She has also overseen the engineering teams developing Apple Pay, HomeKit, and CarPlay.

How do Inner Mongolia residents use their smartphone? We asked

Eva Yoo — Thu, 31 Aug 2017 09:33:00 +0000

Inner Mongolia is an autonomous region of China, located in the north of China. While the area might be unknown to a lot of China observers, it is a thriving region: per capita GDP reached RMB 28,350 in 2015 ranking 10th among all 31 provinces with an annual growth rate of 9%. It also has an abundant land area: While the area holds only 24 million people, it takes 12% of China’s total land area.

The area will see more growth as China Railway Corp plans to launch a high-speed train that connects Inner Mongolia’s capital city Hohhot to Beijing, reducing its average nine hours travel time to less than three hours.

According to a statistics released by 21 Caijing, Oppo (40%) and Vivo (30%) phones are the most sold phones in third tier cities, followed by iPhone (29%). The order goes same for fourth tier cities, as Oppo, Vivo, and Apple take 31%, 25% and 22% market share, respectively.

We hit up local people on the bus, train and on the streets of Hohhot, the capital city of Inner Mongolia and a third tier city as well as Xilingol, the fourth tier city famous for its vast grasslands near the city. Are Oppo and Vivo phones really popular in Inner Mongolia? Read on to find out; the answer may surprise you!

Oppo store in Xilingol city, a fourth tier city in Inner Mongolia (Image Credit: TechNode)

Oppo and Vivo brick and mortar stores were easily seen in Inner Mongolian cities. As these cities were going through rapid urbanization, Hohhot city was constructing first subway station on its main street, and Xilingol city was building new apartments and shopping areas. As a fourth tier city in China, Xilinggol didn’t have Starbucks, but it did have 2 KFCs and 1 McDonald’s. There were no city buses in the Xilingol, and people were moving around the city with taxis, easily caught on the streets, paying only 6 yuan. Mobile payment has not penetrated deeply in these cities yet, as some restaurants and taxi drivers only accepted cash. For delivery times, many locals said that it takes 3-6 for a Taobao order to arrive.

Ethnically, Han—China’s main ethnicity—comprises 79% of the population in Inner Mongolia, followed by Mongol at 17%, and Manchu at 2%.

We interviewed 5 Mongol people, 4 Han people, and 1 Manchurian person (all in Mandarin Chinese!). Among them, 6 used an iPhone, 2 used a Vivo, 1 used an Oppo, 1 used a 2G Gionee phone. iPhone interviewees were all younger generation, from 13 years old to 31 years old.

Dolina Boroton (13), Mongol, student

I use the iPhone5 my parents gave me. Most of my classmates have their own phone, too. I cannot download Alipay yet, so I used my mom’s account to buy a pair of soccer shoes on Taobao; it took about 6 days to get to my home. I don’t play games on my phone, just chat with friends on WeChat and take photos.

Oyundalai (28), Mongol, singer

I am a singer at a live bar in Hohhot city and perform here every night. I’m from Xilingol and moved to Hohhot in 2011. I use an iPhone7, and my favorite app is YouTube. I watch how other music bands perform at rock festivals.

(Continue reading on the following pages)

Apple now accepts WeChat Pay

Eva Yoo — Tue, 29 Aug 2017 06:30:47 +0000

Apple is now allowing WeChat payment for the App Store and Apple Music.

WeChat payment supported on iOS App Store (Image Credit: 微信派)

On November 2016, Apple allowed Chinese users pay for apps using Alipay. With today’s announcement, Chinese two biggest payment software are now supported by Apple.

This feature is only supported on iOS 10 and the latest iOS 11 system. The experience will be similar to Alipay payment, and users won’t have to type in the password, rather they can use their fingerprints to confirm a purchase.

Cash is now being replaced by mobile payments in China. A recent study conducted in China by WeChat showed that 74% of respondents felt they could survive on less than 100RMB in cash. Alipay was the pioneer to bring mobile payment in China, but 13-year-old Alipay is losing market to Wechat Pay, which was born in August 2013. In Q1 2017, Alipay’s market share dropped to 54 percent, while WeChat Pay claimed 40 percent.

Beijing opens whole subway system to mobile phones

Eva Yoo — Tue, 15 Aug 2017 08:44:30 +0000

From now on, all Beijing subway lines will support NFC-enabled mobile phone entrance. The passengers no longer need to use public transport cards or tickets, and can just swipe their phone to enter the subway, Chinese media Beijing Youth Daily is reporting.

Smartphones installed with NFC (near-field wireless communication) module can support the public transport smart card function. When you use it, it’s just like how you swipe your transport card to the reader. In addition, users don’t have to pay a deposit to use this service.

Since Fangshan line of Beijing subway promoted the use of mobile payments phone ride in June, they reportedly added new 200,000 mobile cards in a month. This feature got very popular from the trial period, and from today all the Beijing subway lines will provide this service.

Although theoretically all NFC-enabled mobile phones can be used, at present Apple has not released public transport card function in China. The latest news says that Apple may support the public transport card function for iOS 11, which is said to be launched in October.

This feature can be used by all NFC-enabled Android mobile phones. Beijing subway supports Xiaomi, Huawei, Samsung, Meizu and other 160 brands of mobile phones. Different mobile phones have different ways of activating this service. Xiaomi 5 users need to open the Xiaomi wallet while Samsung Galaxy S8 Plus users need to download the Yikatong (一卡通) app or use Samsung’s own designated application that supports the same function. If an Android phone doesn’t support NFC, then users can go to the telecom company reception desk, replace the original mobile phone SIM card with an NFC-SIM card.

Hinterland Guizhou to advance Apple’s first data center in China

Rita Liao — Mon, 14 Aug 2017 11:01:12 +0000

A month after Apple revealed its plan to open its first China-based data center in Guizhou, the Guizhou provincial government announced today (in Chinese) that it is setting up a “leading small group” dedicated to advancing Apple’s iCloud project.

This marks another step forward for the Apple-Guizhou data collaboration run by Guizhou-Cloud Big Data Industry, a data management firm with backing from the Guizhou government. The announcement, released on the website of Guizhou Provincial People’s Government, says that the leading small group will “plan and advance the landing and building of Apple’s iCloud project, deepen collaboration with Apple, meet to advance the project upon circumstances, and solve key issues arising from the project.”

Guizhou, located in the southwestern hinterland of China, is ideal for setting up a data center. “Naturally, it is immune to solar storm and sunspot activity. Socially, it is so remote that crimes and attacks are rare. Its mild average temperature also yields lower energy consumption,” a government official from the state security unit told TechNode.

After China enacted a new law in June (in Chinese) requiring companies to store user data in the country, Apple followed the footsteps of Amazon, Microsoft, and IBM who had already formed partnerships with Chinese companies to offer China-based cloud computing services.

Apple’s move has raised concerns over Chinese users’ data privacy. In response, Apple told the New York Times that the new systems will not create ways for the government or other organizations to get around Apple’s encryption protecting the data. Rather, its new gesture is a sign of complying with Chinese laws.

In addition, Apple says its Chinese data center will “improve the speed and reliability” of its products and services. This means, for instance, Chinese users will have a smoother experience syncing data to iCloud. China has been a sore spot for Apple in the past year, as its Q3 financial results (in Chinese) show that the company posted sixth quarter sales drop in greater China while local competitors like Huawei and Xiaomi were closing in fast.

Apple has taken steps to regain momentum in the region, from appointing its first China head, launching a large Apple Pay promotion, to other law-abiding acts like removing VPN apps from its China App Store.

Analyse Asia 196: Apple WWDC 2017 and its impact on Asia with Ben Bajarin

Guest Editor — Tue, 01 Aug 2017 02:01:37 +0000

Editor’s note: This originally appeared on Analyse Asia, a weekly podcast hosted by Bernard Leong, dedicated to dissecting the pulse of business, technology, and media in Asia. The podcast features guests from Asia’s vibrant tech community.

Ben Bajarin from Creative Strategies & Techpinions joined us in a two part conversation on post-Google I/O & Apple WWDC 2017 and its impact on Asia. In the second part of our conversation, we discussed the major announcements from Apple WWDC 2017 and how their focus on Homepod, AR Kit, and hardware will influence their roadmap going forward. We also examined whether WeChat in China can bypass the two major mobile operating systems: iOS and Android in the road ahead.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Ben Bajarin (@benbajarin, LinkedIn, Techpinions profile) from Creative Strategies and Techpinions.
- Check out part one of our conversation on Google I/O 2017.
Apple WWDC 2017 [0:51]
- What are the key announcements in Apple WWDC this year? [0:51]
- Why has Apple chosen to target the Homepod in the sound speakers space and downplaying the Siri component? [6:16]
- Given that the complaints from the Apple base on the Mac Pros, they have beefed up their iMacs, macbook pros and related PCs, do you see a strategic shift from Apple in how they differentiate the iPad and PCs? [8:34]
- IOS 11 seemed to focus on making the iPad more macOS like with files and drag and drop, where do you see Apple’s direction with the iPad go? [11:22]
- What’s Apple AR and VR roadmap heading in 2017? [13:10]
- There seem to be less opening up to new areas but doubling down in both Apple WWDC and Google I/O this year, does that mean that they will totally focus on their competitive advantages instead of focusing on what the other side do best, for example, there is a lack of Apple talking about Siri but putting a lot more on hardware this year? [17:30]
- Given that Apple has focused on China in the past few years with the WWDC events, where does a messaging app such as the Wechat ecosystem sits in iOS and Android and will it be able to bypass both mobile operating systems: iOS and Android? [20:01]

Editor’s note: We experience some recording difficulties coming from Skype lately not just for this one, hence if the quality is not so good, our apologies in advance.

TechNode does not necessarily endorse the commentary made in this program.

Apple removes VPN apps from China App Store

Rita Liao — Mon, 31 Jul 2017 04:48:04 +0000

The reality of internet freedom in China has grown grimmer this year. In January, new state regulations ruled that only authorized VPNs could be used in China, making most existing VPN services in China illegal. The international community in China was shocked on July 14 when Waldorf Astoria Beijing stopped providing VPN service to its hotel guests “due to legal issues.” On July 29, the country was hit hard again when Apple announced that it is removing VPN services that do not comply with Chinese law from its China App Store.

Most major VPN providers have been cleaned from the China App Store by now. ExpressVPN, affected by the crackdown, published a blog post condemning Apple’s act as “unfortunate.” Users in China are still able to download VPN apps from their non-Chinese App Store accounts, although they will need an overseas billing address.

Screenshot of ExpressVPN’s tweet about Apple’s notification

Apple’s announcement comes as the 19th Communist Party Congress to be held this fall gets closer, which might explain the heightened censorship development recently, Reuters is reporting. Apple has shown a willingness to comply with Chinese rulings amid its new localization efforts. In response to China’s new strict law that requires companies to store customer data within the country, Apple announced on July 12 that it is opening its first data center in the southwestern province of Guizhou. On July 18, Apple named its new Greater China head—a brand new position—to bolster growth at a time the giant is gradually losing ground to Chinese smartphone manufacturers.

Q2 2017: Xiaomi regains market share, Apple continues to lose ground

Rita Liao — Tue, 25 Jul 2017 09:22:19 +0000

Sales of China’s domestic smartphone market continues to grow, but the spoils of the increase are not going to international brands like Apple and Samsung. Instead, domestic smartphone makers are gobbling up 87% of the smartphone shipment in Q2 2017, according to a new report from research firm Counterpoint. The top four Chinese brands—Huawei, Oppo, Vivo, and Xiaomi—have eaten away close to 69% of the market.

One notable change is Xiaomi’s comeback. After declining for a few quarters, Xiaomi, once called the Apple of China, is showing a positive uptick at 20% YoY growth. 2016 was the first time the privately-held company did not disclose its annual sales. Based on data published by research firm IDC, Xiaomi slipped to the fifth spot in the home market as demand for its smartphones declined 40.5% YoY in Q4 2016. In Q2 2017, Xiaomi overtook Apple’s fourth place.
“The key reason behind the [Xiaomi] comeback can be attributed to strong demand for its latest flagship Mi 6 and low-tier models such as Redmi Note 4X as well as focus on diversifying distribution channels,” says Tarun Pathak, Associate Director of Counterpoint. Xiaomi had traditionally relied only on online channels for smartphone sales, whereas its rivals Vivo and Oppo have found increasing success in investing heavily in offline stores and expanding their reach to tier-2 and tier-3 cities. Xiaomi has responded by opening more Mi Home stores to drive offline growth.

Apple’s smartphone sales are also under attack on a global scale. According to research company Gartner, the top three Chinese brands Huawei, Oppo and Vivo have a combined global market share of 24% in the first quarter of 2017, up 7% YoY. Samsung comes in at 20.7% followed by Apple at 13.7%. Top Chinese brands are edging in closer to their international counterparts with competitively priced, high-quality smartphones, aggressive marketing and sales promotion, reckons Anshul Gupta, research director at Gartner.

Despite Chinese smartphones’ widening margins both at home and globally, analysts from IDC believe that Apple’s weak performance is seasonal, as most Apple users are expected to be holding out for the new iPhone 8 launching in 2017 at iPhone’s 10th anniversary.

Apple may stop taxing in-app tipping in China

Emma Lee — Wed, 19 Jul 2017 07:56:54 +0000

Apple is planning to remove its controversial App Store policy of taking a 30 percent cut on tipping from users to content creators in China, local media The Paper is reporting (in Chinese), citing several sources they identified as execs at Chinese internet firms. Several game developers also got wind of Apple’s plan to change its tipping policies, the report noted.

By classifying tipping or donation as a form of in-app purchase, the US company demanded app makers earlier this year to disable the tipping function per its new App Store rules, allowing Apple to take a 30% cut.

The Paper made public an unconfirmed new App Store policy that people who want to make donations to others without making in-app purchase should meet the following requirements: a) the donation decision is made by the donor; b) the donor will be charged 100% for tipping; c) the tipping is not exchange for any digital content or services. Under the new policy, the tipping will be treated as a means of personal donation.

Since the boom of live streaming, virtual gifting has become a popular form through which users interact and show their gratitude to performers writers, developers and other content providers who give out stuff for free.

Apple’s move of taking a sizable portion of the donations has upset the country, where industry insiders called it an “Apple Tax”. For many, turning a means of expressing personal appreciation into a revenue source is not only unjustified but also reflects the company’s failure to fully understand the Chinese market.

To some extent, this is understandable given that there’s no tipping service in American live streaming apps like Facebook Live and Periscope. Facebook, however, does allow broadcasters to show ads in their streams and to keep 55 percent of the revenue.

After slowing market growth over the past few months, Apple has made several major moves to reinvigorate its Chinese business, including the largest promotion campaign for Apple Pay China-wide yesterday, it named a new China head today.

We have reached out to Apple for comment and will update when we get a response.

Apple names new China head to bolster slowing China growth

Emma Lee — Wed, 19 Jul 2017 06:18:31 +0000

Amid slowing growth in China, Apple is creating a new head position for its Chinese team to invigorate the Chinese business. The global smartphone giant announced today the appointment Isabel Ge Mahe, formerly vice president of Wireless Technologies, as vice president and managing director of Greater China.

Isabel will report directly to CEO Tim Cook and COO Jeff Williams. She will assume her new role later this summer and will be based in Shanghai, the firm says.

“Apple is strongly committed to invest and grow in China, and we are thrilled that Isabel will be bringing her experience and leadership to our China team,” said Tim Cook, Apple’s CEO. “She has dedicated a great deal of her time in recent years to delivering innovation for the benefit of Apple customers in China, and we look forward to making even greater contributions under her leadership.”

This appointment comes when the global tech giant is gradually losing ground to local smartphone manufacturers like Huawei, VIVO, and OPPO. Apple’s Q1 report revealed that its revenue from China, which lost its status as Apple’s second-largest market to Europe last year, slumped by 14 percent year on year, compared with a 1 percent drop globally.

Apple’s decline as a foreign smartphone maker in China isn’t a single case. Something very similar happened to Samsung, only it’s worse for them. A report from Counterpoint shows that Samsung’s smartphone sales in China dropped around 60 percent in Q1 this year. Samsung Note 7’s battery failure and the company’s belated recall plan in China play no small part to the shattering of the Samsung brand.

The rise of local smartphone brands also plagued the foreign competitors. In 2016, a total of 559.7 million mobile phones were shipped in China, of which local smartphone makers account for a dominating 497.8 million or 88.9% of the total shipments.

Apple Pay launches its largest, weirdest promotion in China

Frank Hersey — Wed, 19 Jul 2017 01:00:48 +0000

As of yesterday, customers using Apple Pay in China can benefit from a range of offers of up to 50% off if they can understand what they are and where to use them. Apple has launched its largest ever promotion for Apple Pay in China since its launch, according to a report by the SCMP. Participating retailers include Starbucks, Costa Coffee, Zhen Gongfu and the Guangzhou Friendship Store.

Brick and mortar retailers offering discounts in certain places as part of Apple Pay’s promotion

Apple has made little headway in the mobile payments market in China where Alipay and WeChat Payments dominate, making up around 95% of the market. It does not help that iPhones—the only handsets that support Apple Pay—made up only 9.6% of the country’s shipments in the first quarter of the year. A Bloomberg report in March found that at one major Chinese bank just 1% of its 10 million digital banking customers had signed up for Apple Pay.

The promotion runs from July 18 to 24 in retail stores and online. During this time period, the promotion also gives credit card points bonuses at 50 times the usual rate when spending via Apple Pay at the stores covered or, for some banks, anywhere.

Banking partners offering 50x points on credit card spending through Apple Pay

So far so good. But for any potential Apple Pay spenders who manage to hear about the promotion (registered users at TechNode have yet to receive notification) may have trouble using it. Promotions are limited to particular cities, groups of cities or even particular stores.

Details of 7-Eleven promotion—limited to RMB 10

Some discounts are relatively straightforward. Starbucks nationwide is offering RMB 15 off a spend of RMB 60 or over (yet with different daily store limits in different parts of the country) and Mobike is giving a RMB 10 top-up for RMB 5. Yet many of the discounts sound promising at 50% off, but have a raft of restrictions. Stores such as 7-Eleven limit that to just RMB 10. Decathlon, the sports equipment retailer, is offering 50% off but only in Shanghai, for 8,000 customers and its website asks its customers to check each Shanghai store for its individual take on the offer.

After Toutiao and Zhihu, Weibo decides to compromise with Apple over tipping

Masha Borak — Mon, 10 Jul 2017 10:20:33 +0000

Apple’s crusade against the tipping function continues; the company has updated its regulations concerning voluntary in-app tips for content creators, according to TechWeb (in Chinese). Apple stands by its decision that tips are in-app purchases (IAP) and reserves the right to take 30% of each transaction. Applications that refuse to obey the rule may be taken off the App Store

News aggregation app Toutiao and the Chinese version of Quora, Zhihu, have already reached a compromise with Apple, while Weibo Q&A has also agreed to make adjustments. Weibo Q&A’s onlookers function will use the in-app purchase mechanism to enable payments.

Apple’s decision to take 30% of every transaction will have a negative impact on content creators’ earnings which is why Weibo has decided that it will cut its share of revenue from 10% to 5% on iOS devices. Revenue payout will also be postponed since Apple’s payment cycle is between one and three months. Users on Android systems will not be affected by these changes.

The decision to take tax in-app tipping has caused a stir among China’s internet stars and content creators. The function was not just helpful for content creators, it has enabled apps such as Toutiao, Zhihu, Weibo, and WeChat to create a thriving community around user-generated content.

After Apple’s decision to implement the 30% tax in April, WeChat disabled its tipping function for iPhone users following failed attempts to reach a compromise with the US giant.

6 of the world’s top 10 smartphone brands are Chinese

Frank Hersey — Tue, 04 Jul 2017 09:10:56 +0000

Chinese manufacturers took six of places in the global top ten smartphone manufacturers in the first quarter of 2017 with one in ten phones sold worldwide made by Huawei, according to a report by market research agency IDC. Three of the top five were Chinese, from zero just five years ago.

While the global heavyweights Samsung and Apple still hold first and second place—and by quite a margin—the gap between second-place Apple and third-place Huawei is beginning to narrow as Apple’s sales fell 1% to 50.8 million units compared to the previous year whereas Huawei’s sales surged 22% to 34.6 million. At the top, Samsung managed 1% growth year on year to reach 80 million handsets.

Top 5 global smartphone shipments. From top: Samsung, Apple, Huawei, OPPO, Vivo. (Image credit: IDC)

The real growth came from the final two firms making up the top five: fourth-place OPPO saw a whopping 93% leap to 25.5 million shipments and fifth-place Vivo saw 82% growth up to 22.7 million shipments.

52 countries saw shipments of Chinese smartphones grow by over 50%, 32 by over 100%. This means that in 31 countries Chinese brands make up more than 15% of the market and 21 where market share is more than 20%.

Smartphone shipments within China show that the top three spots are taken by local brands with Huawei making up 20%, OPPO taking 18.2% and Vivo claiming 14.1% market share. Apple limped in fourth with 9.6% of the market share, just ahead of local rival Xiaomi at 9.3%.

With their figures combined, Chinese brands have dominated for the past five years with the country’s mobile phone brands making up an ever larger percentage of global shipments, standing at 61% in 2016.

Smart device makers in China must now include bloatware removal instructions

Frank Hersey — Mon, 03 Jul 2017 09:08:07 +0000

A government guideline has now come into effect in China which states that certain software and apps that come pre-installed—often termed “bloatware”—on smart devices must now be uninstallable, and must not pass on user data without user approval. Instructions for their removal must also be included with new devices.

Manufacturers now have to open up the settings for pre-installed apps to allow users to delete them; failure to comply will be punishable. New phones and devices will have to ship with the software already removable and accompanying instruction books must detail how to remove the software. If no instruction booklet is included with the handset then the instructions must be included on the device’s packaging.

Manufacturers cannot push uninstalled software back to phones when a user upgrades the operating system and the deletion of any software must not interfere with the phone’s connectivity to any networks.

Smart device manufacturers and internet service providers cannot collect any data on their users without permission. Any charges made by apps will have to be clearer, in terms of what those charges are, how they are collected and that they warnings must be “eye-catching” and charges must require the user’s approval.

The “Interim Provisions for Mobile Smart Device Application Software Pre-sets and Distribution Management” (our translation) were first drafted by the Ministry of Industry and Information Technology in December 2016 but only came into effect July 1.

This follows a constant stream of stories making the news in China about user data being “leaked” at many different touch points in daily life, particularly from mobile phones.

In 2014 South Korea passed similar laws to make it possible to delete pre-loaded content, often called “bloatware” and in September 2016 the release of iOS10 finally made it possible for iPhone users to dump (or at least remove from their screens) unwanted bundled software such as the Stocks and Find Friends apps.

Samsung and Huawei’s Honor score top honors in China Mobile report

Eva Yoo — Fri, 30 Jun 2017 06:40:35 +0000

China Mobile (中国移动), China’s largest mobile network operator, released a report today ranking China’s mobile phone brand (in Chinese). According to the report, Chinese brands have caught up with international brands in some areas.

China Mobile surveyed 42 million users from 15 provinces and used 18 network indicators for their analysis and evaluation. They also randomly surveyed some of China’s 60 million active mobile phone over the phone.

According to the report, quality improvement of Xiaomi, Meizu, Smartisan is the most obvious, while customer satisfaction for OPPO and Vivo mobile phone was the best.

Smartphone manufacturers are now trying to establish their brand image and enhance communication performance. Apple, Huawei, Samsung have shown good antenna performance and network compatibility. OPPO and Vivo meanwhile made great progress in network compatibility.

The report says that smartphone manufacturers are increasingly concerned about personalized user experience. For example, Samsung C series was optimized for the local users, showing good performance on system usability while the selfie function of the Meitu phone also achieved high customer satisfaction.

Evaluating the 22 brands’ 57 mobile phone models, Samsung and Huawei’s Honor brand had the top score.

WeChat unveils new plans to allow creators to monetize their content

Masha Borak — Thu, 29 Jun 2017 06:12:52 +0000

WeChat ddsnnounced today that it plans to increase the number of advertisements in original articles posted through subscription accounts. For five months (July 1st to December 31st), the area at the bottom of articles in WeChat will be significantly bigger to host more ads.

The new measure means that authors could make up for some of their income decline from iOS devices caused by Apple’s decision to take 30% of all in-app purchases, including tips.

Voluntary tips through WeChat’s platform is one of the sources of revenue for authors posting through subscription accounts along with advertisements. Tipping also brought popularity to WeChat Wallet and gave authors and designers a reason to provide users interesting content. In April, Apple’s decision to tax tips prompted Tencent to abolish its tipping feature on iOS entirely.

With more ads at the bottom of the article, authors will be able to get higher returns, but the specific proportion of income authors can claim is still unknown. WeChat also said that it will protect copyrights of original authors in order to ensure their gains. The measure is aimed at ensuring higher quality articles posted on WeChat.

WeChat has also announced that its subscription accounts will finally be able to schedule the publication of their content. Previously, content creators had to manually send out their WeChat posts. The Official Account and Service Account back-ends have been difficult to use. This could be one sign that WeChat is finally taking steps make their features more user-friendly.

Why product design is more important than your manufacturing partner

Eva Yoo — Wed, 28 Jun 2017 06:48:38 +0000

How can a hardware startup with good technology and enough money still fail to deliver? According to research conducted by the Wharton School of the University of Pennsylvania in March 2015, the broad failure rate of technology projects on Kickstarter—meaning at least one backer considered the project a failure—was over 10%. Chad Xu, the co-founder and managing director of Shenzhen Valley Ventures (SVV) argues that the majority of hardware delivery fails because it is not designed properly.

Importance of inner design

SVV office in Shenzhen (Image Credit: TechNode)

“It’s not the factory, it’s the design that determines whether the production is feasible or not,” Chad says. “Outsiders, like investors and customers don’t understand why hardware startups can’t deliver the product. But inside people like us, we know if a product is properly designed on the inside or not. If it’s not properly designed inside, even Foxconn can not deliver it.”

If the hardware’s design is not done properly, it will be difficult for a factory and its suppliers to manage the supply chain and production. This can affect the entire production from parts and components subcontractors to the factory.

“When Smartisan’s founder built its phone, he saw how Foxconn was helping Apple to manufacture and that the delivery was very smooth. He thought if Smartisan uses Foxconn, then his smartphone will be in a good shape,” Chad explains.

However, this thinking led to a failed launch. They were using the same factory as Apple, yet they couldn’t deliver the product.

“The reason was the design. When we say design, this can be divided into mechanical housing and the electronic parts. Apple has a good design for both, which allowed a smooth production,” Chad remarks. “The core value is created by the software and algorithm. The hardware serves as a carrier.”

What China needs

Chad Xu, co-founder and managing director of Shenzhen Vally Ventures (SVV).

Spending 25 years in the hardware industry, Chad Xu co-founded Zowee technology in 2004, to help in R&D, manufacturing and sales of 3C products (communication, computer, and consumer electronics). The company was listed on the Shenzhen Stock Exchange in 2010. Chad started Shenzhen Valley Ventures in March 2015 to invest in hardware startups, but he wanted to do more than that. He wanted to help them deliver their products to the market.

The hardware companies that SVV has invested in include Waterbit, a US company providing soil monitoring solutions for farmers to improve farming efficiency, Arraiy, which creates complete computer vision for the film industry, and GeoEar, which is developing an earthquake forecasting algorithm that can predict earthquakes 7-15 days before they happen. According to SVV, GeoEar’s system is now being deployed by the State Seismological Bureau of China. Still, many companies that SVV invested in hail from outside of China.

“I’d say that for the foreseeable future, the US will be in the lead in fundamental research,” Chad says. “China is still putting effort into catching up, especially in basic science research. The country is still falling behind in basic math, chemistry, semiconductors, new materials, and physics.”

Chad, however, remarks that China is taking the lead in some parts, such as mobile payment technology and application.

“The good part is that China has a huge market, and the market itself is creating the demand. And it has the most comprehensive hardware ecosystem in the world,” Chad says. “Comparison between the countries is not necessary, now that all the fundamental research and other resources are shared and everything is becoming a global asset and we have access to it. What matters is how to take advantage of these research achievements and resources.”

How to deliver your product

These machines allow startups to test their hardware’s EMC and EMI. (Image Credit: TechNode)

“We are investors, but fundamentally, we want to help them deliver their product 100% to their customers,” Chad says.

In order to help startups with their expertise, SVV invested millions of dollars in developing and testing machines that a startup may not be able to afford. These machines allow startups to test their hardware’s ability to endure high and low temperatures, humidity, EMC (electromagnetic compatibility), and EMI (electromagnetic interference).

“Startups need these testing machines. They normally have to make a reservation at third-party institutions to test their hardware. It’s expensive and takes a long time. If you fail one test, you still have to come back and go through the test again,” Chad says.

The test lab is only available for portfolio companies that SVV has invested in.

“We don’t want to be just the money guy, we also want to be the design guy. We have mechanical engineering, electronics, and firmware people in-house to help startups design and deliver the product on time,” Chad says.

SVV is also building up hardware engineering and commercialization platforms for startups, VCs firms, and schools. They are now investing in AI and IoT, which Chad believes will improve their core business value and efficiency.

22 arrested in theft and sale of iPhone users’ personal data

Sheila Yu — Thu, 08 Jun 2017 09:38:33 +0000

Police in east China’s Cangnan county recently arrested 22 people on suspicion of stealing and selling iPhone users’ personal information online, bringing public attention once again to the country’s rampant personal information leaks (in Chinese).

Among the 22 suspects, 20 are employees at Apple’s local direct-sales and outsourcing companies. These people took advantage of Apple’s internal system platform to illegally access iPhone users’ data including their phone numbers, names and Apple IDs. It is reported that they sold each piece of the information for RMB 10 to RMB 180, with the total amount of money involved in the case topping RMB 50 million.

It remains unknown how many Apple users’ personal data have been stolen, and the case is pending further investigation.

What is the use of stealing iPhone users’ information? In a case cracked last May by Jiangsu police, stolen Apple IDs were found to be used by criminals to top up their online game accounts and ransom blocked phones.

Although an IMEI number is printed on the packaging box of an iPhone, criminals can do nothing unless they get assistance from moles who have access to Apple’s internal platform to acquire users’ Apple ID registration information after inputting the IMEI number. In a similar personal information theft case in Anhui province last year, the mole was a staff member of a customer service company outsourced by Apple.

Police warned that any illegal acquisition, sale or provision of 50 and above pieces of information pertaining to personal whereabouts, communication content, credit and property shall constitute a crime, starting June 1, 2017. And for those who work in financial, telecommunications and medical care sectors, 25 pieces of information leak will be considered a crime if they leak out personal information for personal benefits (in Chinese).

Driven by money, the theft and sale of personal data has become a ‘black industry chain’ in China. In 2016 alone, Chinese police across the nation busted more than 2,000 personal data theft operations, capturing over 5,000 suspects. Of the total, as many as 450 were internal staff working for banks, education institutions, telecommunications, couriers, securities, and e-commerce firms. They use their position to illegally collect customer information and sell the information for profits.

Apart from these moles, information is also stolen by hackers using technical means, or collected under the guise of job recruitment, sending gifts, and links to fake websites, among others.

A report by the Internet Society of China revealed personal information leaks caused an economic loss of RMB 91.5 billion to those victims last year (in Chinese). In the first quarter of this year, the number of calls marked up as crank ones rose by 65.8% from a year earlier, according to Chinese internet security firm Qihoo 360. Crank and fraud calls have been increasingly threatening cellphone users’ security.

Experts say iPhones users currently don’t have to worry about the information theft of their bank cards linked to their Apple IDs because the moles can only obtain data of users’ phone number or mailbox tied to their Apple IDs. But they suggest Apple users set up two-step verification for their Apple IDs to enhance account security protection (in Chinese).

Apple recently released a new policy specifying that beginning on June 15, app-specific passwords will be required to access your iCloud data using third-party apps such as Microsoft Outlook, Mozilla Thunderbird, or other mail, contacts and calendar services not provided by Apple.”

Apple plays catch up with new iOS 11 features for China

John Artman — Tue, 06 Jun 2017 03:44:34 +0000

While Apple did talk a lot about China, almost completely glossed over at the announcement (taking up less than 30 seconds in a 2.5-hour presentation), were some very interesting feature additions to iOS 11 for Chinese customers. Will this be enough to shore up their defenses and decrease their rate of market share loss?

Image credit: Bajiahao

Here’s a quick breakdown of the features and what it could mean for customer gain and retention in China.

TL;DR: Many of these features have existed in China for some time; Apple is just playing catch up.

QR code support

While QR codes have been a bit of an oddity in the West, they have exploded in China. Remember, it wasn’t until recently that URLs could actually have Chinese characters in them. To combat this, many Chinese sites used long and almost indecipherable combinations of letters or just resorted to numbers. QR codes were a great way to reduce the friction and, as we have seen since, are now used in super interesting ways, including possibly AR.

While many Chinese apps now have this functionality, Google only just introduced it into Android last year via Google Now. As noted in the China Tech Talk podcast, Apple’s China woes boil down to non-existent or completely irrelevant services ecosystem. The introduction of QR code support shows that Apple is taking this weakness seriously and could see users choosing the native function over the myriad options they have in various apps (there is a very strong counter-argument to this, but for the sake of brevity, I will leave it out).

SMS fraud extension

This is a function first introduced by local phone makers and enhanced by Xiaomi. Indeed, many of the SMS features in Xiaomi phones were some of the strongest selling and retention points for many users; the best was crowdsourcing the origin of phone numbers, whether that was a delivery person, a telemarketer, or a fraudster. However, this feature and other features were quickly copied by local makers; many are now standard on phones sold in China

Traffic camera alerts

This feature had a lot of people shaking their heads in confusion as the slide itself is quite confusing. However, Redmond Pie has a good breakdown of the new features announced and one of those is traffic camera alerts in China. This is a feature present in almost all Chinese map and navigation tools. It is rare to see a Chinese police officer giving tickets; instead, the state relies on traffic cameras to dole out fines and punishments for traffic violators. CCTV cameras of all types are ubiquitous and are seen as a way to increase safety in a country with an unreliable police force.

Shanghainese dictation

China, from the outside, may seem homogenous. However, the opposite is quite true. Not only does China have 57 distinct ethnicities (the main one is Han), but almost every part of China has its own dialect, ranging from slightly different vocabularies to almost completely alien languages. Mandarin, the official language, is commonly spoken across the country, but areas like Guangdong, Hong Kong, and Shanghai have held tight to their heritage. Sharing some similarities, it can be difficult for a Mandarin speaker to read or speak these two dialects (Cantonese in Guangdong and Hong Kong, Shanghainese in Shanghai).

iOS has supported Cantonese voice input for some time, but the introduction of Shanghainese could provide some needed help. Shanghai is a very affluent city and arguably one of the most international. If Apple can gain in this market, their market share could be bolstered.

English on a 10-key pinyin keyboard

This is another feature that is highly prevalent on many China keyboards available for iOS and Android. This inclusion means that users may be less likely to switch to a 3rd party keyboard. However, they have other reasons to do so anyway, including dictionary migration from Android and better prediction that includes internet slang.

Phone number as Apple ID

This is huge. As with the PC, China has pretty much skipped over email with many local email providers innovating little on the experience. Now, with WeChat, there is very little reason to use email for regular communication and many people may never have even created an account. What everyone does have, however, is a phone number.

In China, phone numbers can be used to register for almost any online service and are typically used to also verify accounts, for both registration and security. For service providers of all types, the phone number is actually preferable: China has gotten serious about real-name registration and phone numbers are the most basic. In order to access social networks, buy train tickets, and make payments, your accounts need to be tied to an ID. The Chinese government has put a lot of time and effort into ensuring that phone numbers are tied to IDs with very few SIM cards now not tied to an ID.

For businesses, including Apple, this is a boon: with a phone number, they can be reasonably sure that the user is who they say they are.

Final thoughts

These new features will make users think twice before switching their primary phone to a local one. These iOS features, however, are not enough to stem their continued market share decline. They need more localized services and, more importantly, they need a completely separate China strategy.

[Podcast] China Tech Talk 07: WeChat’s pivot in-progress

John Artman — Fri, 02 Jun 2017 07:43:57 +0000

John and Matthew talk about the future of Tencent and WeChat, including:

What a WeChat hardware device might be
Possible AR features and products
The role of mini-programs in the WeChat ecosystem
WeChat team learning how to make partnerships with big brands

Links

John Artman: WeChat feature shows Starbucks is no longer an international brand
Tracey Xiang: WeChat introduces gold hongbao to promote new financial product
Juro Osawa: WeChat Deal With Starbucks Points to Cultural Shift at Tencent (paywall)
Sheila Yu: On “I love you” day, WeChat continues to dominate hongbao
Matthew Brennan: Mobike White Paper Report Released
How to leave an iTunes review

Hosts

John Artman, @knowsnothing, TechNode
Matthew Brennan, @MattyBGoooner, ChinaChannel

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

China Tech Talk is a TechNode x ChinaChannel co-production

Check out this episode!

[Podcast] China Tech Talk 06: Smartphones in China – Apple’s growing weakness

John Artman — Fri, 26 May 2017 09:20:58 +0000

John and Matthew talk about Apple’s challenges in China, including:

A brief history of the iPhone in China
A look at some strong competitors and their ability to appeal to Chinese customers
Apple’s non-existent services ecosystem
Tensions between Apple and Tencent (hint: half of Apple’s China app store revenue comes from Tencent’s games)

Download this episode.

Links

Emma Lee: One year on, Apple Pay finding little traction in the Middle Kingdom
Kayla Matthews: Why Apple is coming under fire for its Chinese app offerings
Matthew Brennan: WeChat is building an augment reality app store
Steven Millward: It’s looking really grim for Apple in China
App Annie: Market Forecast 2016-2021
How to leave an iTunes review

Hosts

John Artman, @knowsnothing, TechNode
Matthew Brennan, @MattyBGoooner, ChinaChannel

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

China Tech Talk is a TechNode x ChinaChannel co-production

Check out this episode!

Huawei looks to lure more female customers by hiring more female marketers

Eva Yoo — Mon, 22 May 2017 09:23:37 +0000

According to data from GlobalWebIndex in 2015, men are the primary customers of Huawei, while women are more likely to own an iPhone. According to research institute IDC, Huawei’s phone is the top iPhone alternative in China. In fact, Chinese male users strongly supported Huawei in our informal survey last year, and some related Huawei to their best homemade smartphone brand to battle against Apple.

In 2017, men still use Huawei phones more than women, as Shao Yang, President of Cloud Services at Huawei’s Consumer Business Group pointed out on the Huawei Smartphone Open Day event held on May 16th.

“We divide their target group into gender and age. More and more high-end users are using Huawei, and there are more male users than female users. Most of them are older. We haven’t had great performance for younger female users, and we are now putting effort to increase our female user base,” Shao Yang told TechNode.

Huawei’s plan to get more women

Huawei’s first prong is to recruit more female employees to join their marketing team.

“Tech workers from 18 top tech companies are young, highly paid, and mostly male,” is the conclusion from the 2016 data from Payscales. Only one-third of the tech companies including eBay (43%), LinkedIn (42%), Samsung (37%), Facebook (32%), Apple (31%) and Google (30%) had more than 30% of women in their workforce.

Improving the company’s image is one thing, but female employment in marketing department could also help company’s device sales. Samsung attributes its initial Galaxy Note sales increase in 2012 to marketing effort done by its female marketing executive director, Kisun Kim, who worked in the South Korean company since 1990 (Korean source).

“Technology is the core of our brand, however, female users tend to put less emphasis on this. Plus, many of our engineers are men. We start from the root to change, and we encourage female users to join our marketing department,” Glory Cheung, CMO of the Huawei Consumer Business Group told TechNode. “We will pay attention to users’ daily life cycle to catch the opportunity to invite new users. Women these days are independent and have a strong mindset to control themselves, and it goes along with Huawei’s brand image.”

Huawei’s second prong is to push forward its partnership with Leica camera to appeal to female users. Huawei’s flagship P10’s dual camera, made in partnership with high-end camera-maker Leica, allows users to take high-quality selfies.

Taking selfies is more than just a cultural trend, it’s also a huge business: Meitu, maker of a photo beautifying app and phone, listed in Hong Kong Last year at a US$ 4 billion valuation. In China, you are exposed to huge smartphone advertisement on the streets and subway, featuring top star’s human-size picture with an advertising line that always mentions the camera’s capacity to take beautiful photos.

[Podcast] China Tech Talk 05: Steve Hoffman – From the Valley to China, Shifting Gears

John Artman — Fri, 19 May 2017 06:38:07 +0000

John and Matthew talk with Steve Hoffman, Founder and Captain of Founders Space. Steve has tons of experience in the Valley and has been spending more and more time in China. Here are some highlights from our conversation:

How Chinese government policy gives Chinese startups an advantage
Why business people are so popular in China
How innovation is different in China compared to the Valley
Why WeChat is so much better than every other social network

Links

Steve Hoffman: Making Elephants Fly: The Process of Radical Innovation
Yuval Noah Harari: Homo Deus: A Brief History of Tomorrow
Emma Lee: Tencent reports 58% profit surge on strong Q1 driven by WeChat and gaming
Matthew Brennan: 2017 WeChat User Report Is Out!
Eva Xiao: WeChat just launched a search engine. Baidu should worry.
How to leave a review on iTunes

Hosts

John Artman, @knowsnothing, TechNode
Matthew Brennan, @MattyBGoooner, ChinaChannel

Podcast information

iTunes
RSS feed
Music: “Theme from Penguins on Parade” by Lee Rosevere, Music for Podcasts 3

China Tech Talk is a TechNode x ChinaChannel co-production

[Podcast] Analyse Asia 183: The Apple Supply Chain in Asia with Tim Culpan

Guest Editor — Tue, 09 May 2017 04:07:29 +0000

Tim Culpan from Bloomberg Gadfly joined us in an interesting discussion to shed a light on Apple’s supply chain in Asia. We discussed Apple’s recent Q2 2017 earnings and its impact on Asia, the tight schedule in how Apple and their suppliers such as Foxconn, TSMC, and Samsung operate before the major launch of their products in September. Last but not least, we discuss on how Samsung’s strangling hold on the OLED screens might delay the next Apple iPhone launch.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Tim Culpan (@tculpan, Linkedin, Bloomberg), Columnist at Bloomberg Gadfly [0:38]
- Since our last conversation, what have you been up to? [0:56]
- Check out his recent columns in Gadfly:
- Tim’s thoughts on bicycles rental and ridesharing. [1:35]
The iPhone supply chain in Asia [2:11]
- Summary of Apple Q2 2017 Earnings [2:19]
- Quick Intro: Every September, Apple will launch the latest iPhone model worldwide, and typically, the rumor mill will run from December of the past year to that time, and in Asia, Ming-Chi Kuo from KG Securities (happened to be in Taiwan) will make some guesses of the upcoming features of iPhone models from the supply chain.
- How many different suppliers are involved in making an iPhone? (See Apple list of suppliers) [3:52]
- Who are these suppliers? Intel, Foxconn Group (aka Hon Hai Precision), TSMC, Qualcomm, Pegatron and etc. [4:52]
- Apple is very secretive. Yet it’s quite unique in opening up its list of suppliers and putting up metrics recently to measure their suppliers. Why does it do this, and what can we learn from these lists? [5:38]
- Apple’s focus on supply chain management through their corporate social responsibility commitment [6:55]
- Can you tell us more about the relationship that Apple has with its suppliers? [8:00]
- How does Apple differ from other electronics brands? [10:40]
- It’s now May 2017. We expect the next iPhone around September. What is happening right now at Apple and its suppliers? [15:15]
- How does Apple decide the demand for their products, specifically for the iPhone? (Note: For Apple Watch and Airpods, they clearly underestimated the demand, whereas, for iPhones, they have managed the expectations pretty well) [19:20]
- The curious cases for OLED and LCD screens: many rumors have been circulated across the supply chain, what can we infer from Apple’s perspective on adopting OLED or LCD for their phone screens? [21:42]
- Can Samsung make Apple’s life difficult with the OLED screens given that they are the largest suppliers? [24:05]
- What are the biggest risks and troubles Apple will face as it gets closer to launch date, and after it’s launched? [25:52

References:

Notes of Interest from Apple Q2 2017 Earnings Call by AppleInsider
Jon Gruber’s interview with Lisa Jackson.

TechNode does not necessarily endorse the commentary made in this program.

Why Apple is coming under fire for its Chinese app offerings

Guest Editor — Mon, 08 May 2017 02:01:24 +0000

Editor’s note: This was written by Kayla Matthews, a freelance writer focusing on technology and online media. You can find more of her work on VentureBeat, MakeUseOf, Motherboard and Gear Diary.

The mobile smartphone application industry has been growing in China, and the market for apps in the country has huge potential. Besides fierce competition, companies and entrepreneurs that offer mobile apps in China also face challenges related to government regulations.

China has been making an effort recently to further regulate Internet content, and a recent part of that effort includes an inquiry into Apple’s app store content.

Prohibited Apps, the Chinese Government, and Apple

A recent report by Xinhua News Agency, China’s official press agency, said Chinese officials from the Beijing Cyberspace Administration, the Beijing Public Security Bureau and Beijing Cultural Market Administrative Law Enforcement Team planned to call on Apple to urge the company to perform more stringent checks on applications available in its app store.

According to the report, the inquiry seems to have been prompted in response to the actions of three third-party live streaming apps available in Apple’s app marketplace. The three apps from Chinese websites toutiao.com, huoshanzhibo.com and huajiao.com allegedly violated several Chinese regulations.

Some of the apps reportedly provided content that is banned in China including pornographic content. The article said that some violations would be referred to police.

A Lifted Ban With More Regulations

This isn’t the first time that Apple has run into trouble with the Chinese government. Apple’s iBooks Store and iTunes Movies launched in the country about a year and a half ago but were shut down just six months after they started. Apple also removed news app from the New York Times in December 2016 because of requests from Chinese officials, Apple said.

The company has also lost patent and trademark disputes in the country to Chinese competitors. China Central TV even called the iPhone a “national security concern” in 2014. These challenges are a big deal to Apple since around one fifth of its revenue comes from the country.

Apple isn’t the only tech company facing difficulties in China. In fact, it’s faced less than many others. Foreign services including Facebook, Google and Twitter are blocked in China. Apple is one of the few foreign companies allowed to offer its services there.

Last year, it seemed things were looking up for foreign companies looking to enter the Chinese market. In June 2016, China lifted its ban on foreign investments and a few outside companies were allowed to begin operating there.

At the same time, more regulations for mobile developers were introduced. A rule enacted last year to monitor postings and report any that include prohibited content to the authorities has tied the hands of some app developers.

It also requires developers to authenticate users’ identities through information such as cell phone numbers and compels app makers to maintain user logs for 60 days.

In January, China’s Cyberspace Administration began requiring government registration for all app stores. More recently, it enacted a bill that disallows apps that “endanger national security” or “disrupt the social order.” The New York Times app was the first to fall victim to the new law.

What This Means for App Developers

Although there are some challenges to launching apps and other tech products and services in China, that doesn’t mean it isn’t worth it. In 2016, the country contributed nearly half of all the iOS App Store’s annual growth. In fact, China is now the largest market for the iOS App Stores by over 15 percent. Users in China have on average more apps than a typical American user.

Changes in billing programs of China’s biggest carriers have made it easier for app developers to make money.

The recent incident with Apple, and the others before the latest one, give app developers some signs about what they should do to succeed in China. It shows us, first of all, that China has its own rules, and the environment for mobile developers is different than it is the U.S., Southeast Asian countries and anywhere else in the world.

This incident highlights what can happen if developers don’t follow the rules set by the Chinese government. It might not take much for the government to remove an app from the marketplace, which could be devastating after all the hard work developers put into their apps. Even more serious is the possibility of facing criminal punishment for violations.

Tips for App Developers

Since China’s app market is so potentially lucrative, it makes sense for developers to want to get in on the action. It can be tricky, so here are a few tips for breaking into the Chinese app market.

Learn to Navigate the Fragmented Market

Since Google’s app store is banned in the country, lots of third-party app stores have popped up to serve Android users. These marketplaces have begun to consolidate in recent years, but there are still quite a few of them. Apple’s iOS market, on the other hand, has about 18 percent market share.

It’s easier to focus on either Android or iOS to start. Since iOS users seem to pay more, if your app requires paid users, focus on Apple. If user count is more important, focus on Android. You might find it helpful to hire a Chinese company or establish a team in China that’s already knowledgeable about the complicated Chinese app market.

Know What’s Works in China

Getting a handle on what’s popular in China and what Chinese consumers respond well to can help you successfully break into the market. Games are especially popular in China. In the third quarter of 2016, they made up 75 percent of all app revenue.

Entertainment, video, social media and messaging apps have also begun gaining popularity. It’s important to have an understanding of Chinese culture before trying to reach Chinese users.

Understand Marketing in China

China doesn’t have Facebook, Twitter or Google, so you can’t use those channels for your marketing. Instead you have to invest in advertisements in popular Chinese social media and messaging platforms like WeChat and Weibo. Keep your advertising casual, and make your copy sound natural, even if it’s been translated.

Didi Chuxing lands US$5.5 billion new funding

Sheila Yu — Fri, 28 Apr 2017 10:38:02 +0000

Chinese ride-hailing service giant Didi Chuxing confirmed today that it has finalized a funding round of over US$ 5.5 billion, local media is reporting.

Although the company did not reveal its investors or valuation in the new round, it is estimated that the company’s valuation may top US$ 50 billion.

The new funds will be used to promote the company’s global expansion strategy and investment in the field of cutting-edge technologies.

Investors in this round reportedly include Silver Lake Kraftwerk, SoftBank, and China Merchants Bank.

In addition, Didi made no comment on an earlier report that new investors will not have traditional voting rights as Didi’s management reserves voting control under a proxy arrangement. After this new round of funding, the company management’s shares will be further diluted to 7.48% from 8.4% following the previous round.

Didi Chuxing said they have already had the capability to make systemic breakthroughs in intelligent driving and smart transportation fields, with its advantages in AI technology.

The company has formed a research institute in Silicon Valley in the United States, aiming to attract top talents and unleash more investment opportunities in core technologies.

Didi has raised over US$ 10 billion in debt and equity from investors including conglomerates such as Apple, Tencent and Alibaba.

Weekly Briefing: The rise and fall of the LeEco empire and a platform conflict goes public

John Artman — Sat, 22 Apr 2017 02:05:05 +0000

Editor’s note: This originally appeared in our weekly newsletter. Sign up here to get our updates straight to your inbox.

After streams of negative publicity and protests from drivers, on April 17, Yidao Yongche’s (易到用车) CEO publicly admitted they were in the midst of a cash crunch. Given recent restrictions around the country on drivers, past subsidy wars, and a market share of a mere 3.6% (Didi’s is 94.6%), this should not come as a surprise. What was surprising was how he explained it: He claimed that LeEco, the company’s controlling shareholder, diverted an RMB 1.3 billion fund originally earmarked for the company so they could service their own debts. While LeEco and other representatives of Yidao have denied the veracity of the claim, the founding members, including the CEO, have publicly resigned.

This yet another nail in the coffin for LeEco. Not only have they delayed payment to US employees, but TechNode has also heard from Chinese employees that their pay has been delayed as well. And the list goes on:

It is difficult to say how this saga will end, but what is clear is that they lost focus and expanded much faster than their company or business could handle. Rather than focusing on their core business of content delivery and the devices to deliver it (read: phones and TVs), Jia Yueting was overtaken by his ambition to lead the world into a new age. This leap, however much inspired, was built on shaky ground that is now crumbling.

Apple vs WeChat

Another conflict to go public this week is the one between the declining king of smartphones and the ascending emperor of social: WeChat announced this week that they have disabled the tipping function on the iOS version of their app.

In June of 2016, Apple changed their App Store developer TOS to include stipulations that apps could not link to payments outside of iOS’s in-app purchase (IAP) system. For Tencent (and any other merchants processing payments on iOS), 30% of all revenue made inside iOS goes to Apple. In the announcement, the WeChat team claimed that they had been in negotiations with Apple to exclude the tipping function from the “Apple tax” (my words). However, the two companies were not able to come to any agreement.

This is an interesting and concerning development for a few different reasons:

The tipping function was a Patreon-like system that allowed content consumers to directly reward content creators. This could be further inducement for creators to look to other platforms to release their content. WeChat is already saturated with content, making it more and more difficult for content creators and brands to effectively leverage their reach to engage with their audience and customers.
It is interesting that WeChat chose to argue with Apple about this specific feature and then to publicly state that the Apple’s rules forced them to remove it. WeChat claims that they were not making any money off this, so in a direct monetary sense, it really is no skin off their nose if people get tipped or not. For creators, it was just one perk of being on the platform.
There have been discussions and rumors surrounding the relationship between Apple and WeChat for quite some time. Many in the local developer community have speculated that the mini-programs (小程序) are actually a precursor to WeChat creating their own mobile OS. It is also believed that this recent spat reveals deeper tensions between the two companies, with WeChat feeling the chafe of having to compromise on their platform just to ensure they can still exist on another.

While Apple’s overall market share has declined, their products are still seen as a status symbol. That being said, almost all of their software services have been supplanted by local offerings, including Apple Pay. Making an operating system and jumping into the smartphone platform fray would be no easy task, but the incentives for WeChat to do just that may have already started aligning.

WeChat tipping feature runs afoul of iOS App Store rules

Sheila Yu — Thu, 20 Apr 2017 09:28:35 +0000

The on-going tension between WeChat and Apple has finally gone public after the WeChat team announced a halt to the “tipping” feature due to the App Store’s policy on in-app purchases (IAP), our sister site TechNode Chinese is reporting.

Originally, the WeChat team encouraged Official Account owners to use QR codes embedded in posts from Official Accounts, allowing users to transfer funds to authors’ individual accounts. These codes began to appear yesterday afternoon. However, the latest announcement states that all tipping functions have been disabled on the iOS version of the app.

The tipping QR codes no longer appear on the iOS version. The Android version of WeChat has not been affected.

WeChat launched a cash reward feature for WeChat official accounts in 2015, enabling authors of popular posts in some Official Accounts to receive tips through the reward function. WeChat itself doesn’t take a cut from these financial transactions. The new feature, meant to encourage the creation of original content, has become a source of revenue for some authors.

A WeChat insider revealed that the difference on the matter lies in whether the cash reward feature is viewed as a service purchasing behavior. It seems Apple considers the feature as a purchasing behavior of readers for their favorite posts, while WeChat deems it as a sole cash transfer to individual accounts.

Apple made updates to the terms and conditions of its app store last June, requiring that “apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than IAP”, under its 3.11 In-App Purchase terms.

As such, iOS device users can only make payment through App Store’s in-app purchase if they want to purchase any content such as music or novels. Through this payment method, Apple charges a 30% commission on all in-app purchases from its iOS app developers. Thus, authors who provide original content to WeChat official accounts will see their rewards income cut 30% off if the reward feature is connected to App Store’s IAP mechanism.

WeChat’s “Reward” button actually falls into the category of the “external links”, while the alternative reward function plan it proposed is “other calls”, both obviously in violation of Apple’s rules.

The matter is a sign of anxiety that has been gnawing Apple, whose Apple Pay, though enjoying great popularity in the United States, has been relegated to pipsqueak status and did not even make it to the top ten in China’ mobile payment market, dominated by e-commerce magnate Alibaba’s online payment arm Alipay and WeChat Payment.

The App Store now supports two payment methods in China: UnionPay and Alipay. WeChat is nowhere to be found. Tencent said that the new announcement does not apply to WeChat’s other popular feature hongbao (红包 or “red envelopes” in English).

China’s foldable selfie drone Hover Camera coming to Apple Store with updated UX

Emma Lee — Thu, 13 Apr 2017 00:00:49 +0000

Zero Zero Robotics, the Chinese self-flying camera drone maker, announced that its flagship flying camera Hover Camera Passport is now available exclusively on Apple.com and in Apple stores.

The device will hit the shelves of Apple stores today in five countries and regions of United States, Canada, China, Hong Kong, and the United Kingdom, the company told TechNode, adding that the gadget will be available in additional countries next month.

The company is also offering a discount price for the Apple-exclusive bundle (US$ 499.95), which includes a Passport, the flagship travel-friendly size flying camera, along with the essentials: two batteries, one charger, adapter and an easy-carry bag.

Launched in October last year, Passport is among a slew of AI-enabled camera drones which allow users to close-up photos and videos. Now entering a new partnership with Apple, the company has made several updates to enable better integration with Apple’s video capabilities like iMovie and Final Cut Pro X as well as easier sharing and editing from Apple devices. In addition, a new user interface has been integrated into the Passport and its companion app, which supports automated media editing.

Driven by the drone boom, portable flying-camera startups have gained a lot of traction last year. Many of the similar companies, such as Snap, Lily, Staaker, have received a lot of attention, doing well with booking preorders, however, that’s no guarantee for success. Lily, the autonomous camera drone that sold a whopping $34 million in preorders, shut down in January this year. Hover Camera is one of the first to ship their product.

Currently, Hover Camera has limited distribution channels in overseas markets with its official website only supporting shipment to the U.S. The new partnership with Apple will significantly enhance its presence in the global market.

More importantly, there’s an obvious customer crossover in the tie-up. A majority of Apple users are Hover Camera’s potential buyers, who would use Apple devices to control shoot and edit footages from the startup’s product. Actually, this is also the logic that works with Apple’s partnership with another Chinese drone manufacturer DJI one year ago.

“We’re thrilled to bring autonomous flying photography into the hands of consumers who are excited by truly innovative technology that impact their everyday lives,” said MQ Wang, founder and CEO of Zero Zero Robotics. “We want more customers to capture their memories in a near-effortless way through breathtaking perspectives that can only be achieved through Hover Camera Passport.”

Zero Zero Robotics was co-founded in 2014 by former Twitter software engineer and Stanford Ph.D., MQ Wang, and Stanford Ph.D. Tony Zhang.

Apple CEO visits Chinese startups Ofo and Keep

Sheila Yu — Wed, 22 Mar 2017 07:21:29 +0000

In his recent visit to China’s capital, Apple CEO Tim Cook went to bike-rental company ofo’s offices on Tuesday, fueling speculation about whether the American technology giant may invest in the Chinese bike-rental startup, our sister site TechNode Chinese is reporting (in Chinese).

Accompanied by ofo CEO Dai Wei, Cook visited the startup’s headquarters in Beijing yesterday morning and tried out a yellow two-wheeler.

Up to this point, Apple has not shown any direct interest in ofo. However, Apple is a major investor in Didi Chuxing (US$ 1 billion in Didi in May 2016) and Didi has invested heavily in ofo starting from their B+ round in Septemeber last year worth US$ tens of millions. The ride-hailing giant also participated in ofo’s US$ 450 million Series D financing this March, led by Moscow-headquartered DST.

With bike-rental services going viral in major Chinese cities in less than one year, a fledgling bike-rental market like China may be of great interest to Apple, which has been proactive in seeking new growth engines as iPhone sales are flagging.

Ofo has registered 20 million users with the number of its yellow fleet bikes topping 1 million since June 2015. The bike-sharing startup has leapt to the top spot in the sector with a 51.2 percent share, followed by its arch-rival Mobike with a 40.1 percent share, according to data released in February by third-party research firm BigData-Research (in Chinese).

The scramble for market supremacy between ofo and Mobike has expanded outside their home turf. While ofo has expanded its footprint in Singapore, the U.S. and the U.K., Mobike announced yesterday the launch of its bike-sharing service in Singapore, marking its first foray into foreign markets.

As one of the largest technology firms in the world, how to maintain sustained growth is now the biggest problem Apple is facing, and the formation of a sound app eco-chain has become a top priority.

Mobile fitness app Keep has also attracted Cook’s attention. He paid a visit to the startup’s Beijing office the same day, illustrating the attention Apple is giving to iOS app development (in Chinese).

The mobile fitness app was on the 2015 Best of App Store list and is preinstalled on Apple devices in all Apple franchise stores.

Keep has snapped up five funding rounds worth US$47 million since it went online in February 2015 (in Chinese).

[Podcast] Analyse Asia 167: The Apple Anomaly & Narrative with Horace Dediu

Guest Editor — Fri, 03 Mar 2017 03:53:39 +0000

Horace Dediu from Asymco & Clayton Christensen Institute is back with the second Asymco trilogy on our podcast to discuss the major topics that dominate the world of business and technology: modular revolution, startup strategy, Apple & cars. In the second part of the second trilogy, Horace discussed the company Apple as an anomaly to the theory of disruptive innovation, where they are in terms of business performance and narrative from the press, and his thoughts on how to spot the symptoms of Apple declining hypothetically.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Horace Dediu (@Asymco), senior fellow at Clayton Christensen Institute and his main site:Asymco.com and do check out Horace’s three podcasts: The Critical Path, Asymcar and Significant Digits with Ben Bajarin which we highly recommend.
The Apple Anomaly & Narrative [0:45]
- Apple has always defied gravity with respect to all the theories in disruptive innovation. For that matters, Apple has solved the jobs to be done piece pretty well with the iPhone and seems to get the timing right most of the time with your startup strategy. Has there been any attempts to reconcile Apple the anomaly with disruptive innovation? [1:11]
- In recent years, Apple as a company faces two ends of the spectrum with pundits who offer their crystal ball gaze to Apple’s future: either it’s doomed or it’s going to be very bright. My view is that it falls somewhere in the middle and more in the positive than what most people predict. Where is this narrative falling to and what is your assessment to Apple’s performance in the past few years? [13:29]
- I should add the point that the reason why Apple is so vulnerable to the bad narrative. A recent article on AppleInsider editorial made the point that Apple encouraged the bad narrative by being secretive to their product launches, and made some mistakes in their communication. I have a question which I always want to ask you via the critical question in your podcast. I can’t get that question in because I happen to sit in the wrong time zone. Forget about the narrative. Forget about the current perception of Apple. What are the first signs hinting that Apple is beginning to decline? [30:35]

Author’s note: I have re-recorded my parts with the exact words spoken to ensure the quality of the podcast to be good. A shout out to some of you out there who have dropped me a note on this. ?

TechNode does not necessarily endorse the commentary made in this program.

Foxconn solidifies pivot to OBM with Guangzhou government deal

Sheila Yu — Thu, 02 Mar 2017 07:10:12 +0000

Foxconn recently inked a deal with the Guangzhou Municipal government to build an 8k LCD panel production park in the city’s Zengchen District, signaling its intention to monetize the technology and brand strength after its takeover of Japanese electronics firm Sharp last year.

Under the deal, Foxconn will invest 61 billion RMB in the 10.5-generation 8k LCD panel production park (in Chinese) via its subsidiary Sakai Display Production (SDP). The production park is expected to start mass production in 2019, with output value estimated at around 92 billion RMB per annum once the production reaches capacity.

In January, Foxconn reported its first annual revenue decline since it listed in 1991. Its revenue dropped 2.81 percent from a year earlier to US$ 136.38 billion for 2016 (in Chinese), dragged down by declining orders for Apple’s iPhone 7. As a major contract manufacturer of the U.S. smartphone maker, Foxconn derived more than 50 percent of its operating revenue from Apple.

To get rid of its Apple-reliant woes, Foxconn has been shifting from a contract manufacturer to an original brand manufacturer (OBM); the big-ticket investment is part of its efforts to diversify its income away from overdependence on a single client.

Sharp is the world’s only firm that owns operation capacity of and has experience with the 10.5-generation LCD line. This will help Foxconn shorten construction and running-in period in its new Guangzhou SDP plant.

One year on, Apple Pay finding little traction in the Middle Kingdom

Emma Lee — Tue, 28 Feb 2017 08:41:33 +0000

After a slow start, Apple Pay is now dominating its home country, the United States. Data from Boston Retail Partners shows that Apple Pay is now accepted by 36 percent of merchants in the United States, becoming the most popular mobile payment method in the nation. However, it’s only recording lukewarm or even cold reception in China, which is estimated to be the world’s largest mobile payment market.

When Apple Pay first landed in the Middle Kingdom one year ago, the smartphone giant was expected to make a serious dent in China’s highly consolidated mobile payment market; more than 30 million bankcards were added to Apple Pay during the first day of its official launch.

After one year of operation in China, however, it seems that Apple Pay has failed to become a real threat to the dominance of Alibaba’s Alipay and Tencent-backed Tenpay (operator of WeChat Pay), two leading payment tools in the country.

In Q3 last year, Alipay and Tenpay took 50.42% and 38.12% of China’s mobile payment market, data from research institution Analysys showed. With the two leading payment tool taking monopoly, the rest of the players only recorded single-digit shares of the market. Apple Pay did not even make to the top-ten list with shares so small that can be overlooked.

Here are some of the pitfalls that stood in the way of Apple Pay in China.

QR codes rule in China

Technologically speaking, NFC, used by Apple Pay, enjoys many advantages over QR code with its touch-and-go approach and built-in security. But QR code payment has become the widely adopted and deep-rooted practice for Chinese users. Once these habits are formed, they prove difficult to change.

China UnionPay, Apple Pay’s Chinese partners and a long-time proponent of NFC, even succumbed to the QR code pressure and launched its own solution late last year. This is an even bigger surprise given that UnionPay has already partnered with smartphone makers Huawei and Xiaomi to push NFC adoption in China. However, as we can see, this hasn’t changed users habits.

In addition, NFC’s reliance on NFC-equipped smartphones and NFC-compatible POS terminals are also roadblocks for its wide application.

Open payment platforms VS iPhone only service

As a third-party payment services, both Alipay and Tenpay are cross-platform services that are open to users regardless of operating systems and smartphone brands. Hundreds of millions of people are using their smartphone apps to pay both offline and online. Alipay claimed a whopping 450 million users, with Tenpay coming in at a close second.

In comparison, Apple Pay, which only works with Apple hardware, automatically excludes a majority of the China market that only use Android-based phones. What’s more, Apple Pay only supports iPhone 6 or higher. Couple this with iPhone’s slowing sales in the country and it is no surprise the payment option isn’t doing so well.

Extensive offline expansion VS limited offline visibility

In just one day of shopping in China, you will come across legions of Alipay and WeChat Pay logos adorning storefronts and cash registers in department stores, boutiques, and even the small shop down the street.

On the other hand, Apple Pay has much less offline presence due to the limited support. It is usually only available in larger chain brands like Starbucks, Costa Coffee, Carrefour, and 7-Eleven. Even then, many of these stores will also accept both Alipay and WeChat.

Furthermore, Alipay and Tenpay’s offline presence are fueled by their heavy-subsidized expansion plan. Although it’s clear that subsidized expansion is not sustainable, this model has proven a successful way to attract users in many verticals, including ride-hailing, bike-rental, group buying, and other O2O services.

[Podcast] Analyse Asia 162: Huawei in 2016 with Carolina Milanesi

Guest Editor — Tue, 14 Feb 2017 03:59:22 +0000

Carolina Milanesi from Creative Strategies & Techpinions joined us for a two-parter discussion from Huawei to artificial intelligence & Internet of Things. In the first part, we discussed Huawei, the leading hardware technology giant from China on their global focus on the consumer sector with smartphones in 2016, and what to expect from them in 2017 particularly in their global expansion and enterprise push with Internet of Things.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Carolina Milanesi, Consumer Tech Analyst, Creative Strategies (@caro_milanesi, LinkedIn, Techpinions) [0:38]
- How did you start your career? [1:22]
- From your various roles from Kantar, Gartner and now Creative Strategies, what are the interesting career lessons learned? [3:00]
- What is your current role and coverage in Creative Strategies and the areas of focus? [4:43]
Huawei Technologies, China in 2016 & now in 2017 [5:42]
- Introduction to Huawei (Wikipedia)
- As Huawei is a private company, why does it hold an annual summit for analysts? What is its motivation to show their financial numbers in public? [6:25]
- What kind of information does Huawei share with the analysts in their summit? [7:25]
- What have you learned about Huawei during their annual summit in 2016? [8:34]
- Huawei Technologies are broadly broken into three categories: Carrier, Enterprise, and Consumer, in last April, how was each of these business lines doing? [11:29]
- Huawei’s competency with hardware technology from chips to carrier and is vertically integrated similar to Apple. [14:43]
- Huawei is a combination of Cisco, Alcatel, and Apple in one company. [15:26]
- Focusing on the consumer aspect, can you talk about the different smartphones from Huawei, particularly the Honor and P9? (Reference: Huawei’s Push into the High End Depends on Continued Growth of its Honor) [16:25]
- Do you see Huawei creating its own mobile OS instead of depending on Android? [20:17]
- Huawei should just buy Xiaomi for their software competency with MiUI. [22:19]
- Where do you see Huawei’s focus will be in 2017? [22:57]

Huawei’s Financial Performance in 2016:

TechNode does not necessarily endorse the commentary made in this program.

[Podcast] Analyse Asia 161: Post CES 2017 Part 2 with Ben Bajarin

Guest Editor — Fri, 10 Feb 2017 03:00:09 +0000

Ben Bajarin from Creative Strategies and Techpinions joined us in a two part conversation to discuss the recent Consumer Electronics Show (CES) 2017 in Las Vegas. In the 2nd part of the conversation, we dived deeper into the themes that Ben has summarized in the earlier episode focusing on the TV, home automation, digital assistants and self driving cars.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

Ben Bajarin (@benbajarin, LinkedIn, Techpinions profile) from Creative Strategies and Techpinions.
CES 2017 Part 2
- On Bigger, Brighter, Thinner TVs
  - How are the Asian OEMs leading and how has the technology from TV are evolving, for example, Samsung with screens, and Foxconn now with Sharp LEDs? [1:05]
  - TV screen technology moving from OLED to Quantum dots [3:03]
  - Market entry strategy into the US for China technology companies or OEMs such as Xiaomi and Huawei using televisions. For example, LeEco is going into the US through the television. An interesting example is with Walmart selling TVs that are made by Philips brand. [5:32]
- On Year of the Smart Home
  - Voice hubs such as Echo & Google Home have dominated the conversation. Where does that lead with Apple TV or other home automation gadgets such as NEST? [8:40]
    - Lenovo smart speaker
  - Should Apple make a speaker similar to the Google Home or Amazon Echo? [11:07]
  - Are robotics part of the smart home narrative, for example, we see a lot of home robots: Softbank’s Pepper, LG’s Hub Robot? [13:30]
- Cars are interesting again
  - Do you have to go to CES or move onto a car show such as Detroit Motor Show afterward to see where mobility and transportation are going? [17:27]
  - Are we going to see a self-driving car soon? Is that car coming from the traditional automotive companies or technology companies (Uber, Google, Tesla, Apple)? [19:40]
    - Tesla as the best example of the reality of a self-driving car.
References:
- A Few Big Themes from CES by Ben Bajarin (Requires Subscription)
- A very Producty #CES2017 by Steven Sinofsky
- Cars as feature phones by Benedict Evans
- Podcast: US Retail Trends – what sold and what didn’t in US Consumer Tech

TechNode does not necessarily endorse the commentary made in this program.

Tactics to make sure you get your hongbao this Chinese New Year

Eva Yoo — Fri, 27 Jan 2017 09:06:18 +0000

Editor’s note: This article originally appeared on our sister site, TechNode Chinese.

If you’re working in a Chinese company, then you’d better be prepared for Chinese New Year’s Eve, the best time of the year to grab red envelopes on your WeChat group.

Chinese people give red envelope (hongbao, 红包) with money to their younger children and co-workers as a wish for good luck in the new year. Nowadays, Chinese people give hongbao using WeChat and Alipay, and it’s also the best time for Chinese companies to run on hongbao marketing bringing the term ‘hongbao wars‘.

Over the six-day Chinese Spring Festival period last year, 516 million people sent and received 32 billion digital red envelopes, which is 10 times the number as over the same period in 2015. Forecasters are expecting up to 100 billion digital envelopes to be sent and received around the world this year.

On Chinese New Year’s Eve day, your Chinese boss will send out a digital red envelope on WeChat group, which is then often grabbed by your peers in only a few seconds. Three things matter: your hand speed, the speed of your phone, and the network speed. If you cannot guarantee any of these three conditions, then these tactics might be useful to you to compete against your colleagues to secure your hongbao.

Use these apps or features on your phone to grab hongbao

1) iPhone

The latest version of iOS allows user to automatically grab the red envelope using iTools. How to: open the iTools click on the bottom bar “more”, open automatically grab red packets.

A WeChat’s plug-in called “Fun-multiplier For WeChat” can help you too. Go to the WeChat settings, where it supports a variety of plug-ins: for example, to prevent the withdrawal of information, to alarm you specific time, to automatically grab red packets, to prevent typing state, and to edit your custom location.

Grabbing Hongbao using different brands of Android phones

Many Chinese mobile phones, such as Xiaomi, Meizu and Nubia have provided “red envelope assistant” (红包助手, hongbaozhushou).

2) Huawei

Huawei recently released the latest red envelopes application, supporting WeChat, and sending out hongbao reminders on Alipay. The software supports Huawei EMUI version of EMUI 3.0 and above.

3) Meizu

Meizu phone will instantly notify the user with a notification saying, “You received a red envelope.” When the user clicks on the reminder, they will be able to grab a red envelope. Activation for the click is; Settings – Accessibility – Red envelope assistant, open the red envelope assistant.

4) Xiaomi

When received a red envelope on Xiaomi phone, it will give you a reminder on your screen. In addition, MIUI supports major online platforms to grab red envelopes, set an alarm, and provide you the timetable to grab a red envelope to give you more opportunities to grab red envelopes. MIUI developer ROMs already comes with the function, and the users using stable ROMs of Xiaomi phone can download “Xiaomi Red Envelope Assistant (小米红包助手)” on the Xiaomi app store.

Use DIY Robot arm

Chinese makers grab hongbao using a DIY robot arm. You can grab the red envelope as well as observe how it moves so magically to grab it. Props and methods are as follows:

Materials: Arduino Mega2560 (with USB interface, the core circuit board with 54 digital input and output, suitable for a large number of IO interface design), bread board model, DuPont line, key switch, acrylic board, rubber band, sausage × 1 (Key props).

How to: Using open source computer vision library open CV analysis of picture signals, determine whether there is a new red envelope to click on. When the red packets appear, then send instructions to Arduino. Arduino will control the sausage robot arm to click on the screen three times to grab red packets.

Robot arm grabbing the hongbao

iPhone Explosion Ignites Customer Rage In China

Emma Lee — Mon, 05 Dec 2016 08:37:58 +0000

While the turmoil surrounding Samsung’s exploding phones has yet to settle down, the Chinese Internet is again ablaze (pun-intended!) with rage as customers complain after a series of iPhone explosions.

The incident first caught public attention after China’s state media reported the explosion of an iPhone6 Plus on August 31st this year in Zhejiang Province. The owner, identified as a Ms. Chen, says that her phone exploded while she was in the car with her family. She reports that the phone began to “puff up” and emit smoke. She was able to quickly kick the phone out of the car before any damage could be caused.

Apple offered Ms. Chen a new smartphone, but did not give any explanation.

Image from Ms. Chen (via Xinhua)

A similar case happened with Ms. Liu from Jiangsu Province.

“While I was charging my iPhone 6 Plus with the original charger, the rear cover of the phone cracked and melted together with the chair. They nearly caught on fire.” she said to local media.

Image from Ms. Liu (via Xinhua)

These incidents are not the first case, nor would they be the last, of spontaneous iPhone combustion. In the three-months period ending on Nov. 30^th, the Shanghai Consumer Council has received complaints from eight customers who reported their phones igniting, even while charging properly.

Apple’s hard-earned reputation on quality products is in danger as more and more concerns is raised about iPhones. Data from Shanghai Consumer Council shows that the number of complaints addressing Apple surged to 2,763 since the beginning of this year, nearly doubling from the same period last year. In addition, the complaints were mainly focused unusual shutdown iPhone 6 series smartphones.

For a growing numbers of iPhone 6s devices with shutdown problems, Apple has announced a free repair program. This applies to devices that were manufactured between September and October 2015; the company citied battery over-exposure to ambient air during the manufacturing process as the reason for the unexpected shutdowns. However, the company has refused to acknowledge this is as a safety issue.

The news comes when Apple is losing ground to domestic smartphone makers, like Oppo, Huawei, Xiaomi, and Vivo. Although the global smartphone maker is quickly being eclipsed by local competitors in terms of market share, it still holds a top place in the high-end market for quality products and services.

However, the current complaints have led Chinese customers to start doubting whether the phones are worth their high-price. If Apple fails to offer a plan that the public feels comfortable with in a timely manner, like Samsung did, it could be damaging to the global conglomerate.

Image Credit: Shutterstock

The E-Ink Keyboard Is In The Future, Whether Or Not Apple Is In The Picture

April Ma — Wed, 26 Oct 2016 10:30:51 +0000

Rumors have been swirling that Apple is about to acquire yet another tech startup, the Australian company Sonder Design, arousing intense interest and speculations that dynamic e-ink keyboards, able to shift between different interfaces depending on the application, will be incorporated into the next generation of Macs.

Much like the way you can switch between languages on a keyboard on your mobile screen, the E-ink display, the same kind used for Kindle, will allow the keyboard to shift between not only languages, but photoshop shortcuts, emoticons, game controls, and anything else developers see worthy to create.

Fransisco Serra-Martins, founder of the company, is confident that unlike kindle which “blinks” between pages, a timing control device means there will be no or little time-lapse as you toggle between keyboard interfaces. “You could play a video on there,” he says.

Pretty neat, eh? The next question is line of course is, will they really be featured on the next generation Macs? Though a meeting between Tim Cook and Sonder reported by the Guardian, was denied by the company in a statement, its founder only pointed out that the context of the meeting was inaccurate, without disclaiming the actual talks, in an interview with Technode.

Naturally for a seed phase startup like Sounder, the prospect of being acquired by Apple is both thrilling and intimidating.

It almost seems as if the the keyboards were designed with a destination in mind, as a promotional clip for the product cites the late Steve Jobs vision from 2007: “They all have these keyboards and control buttons that are fixed and plastic…every application wants a slightly different user interface a slightly optimized set of buttons just for it.” Design-wise, the customizable keyboard’s polished and clean appearance would chime with Apple’s style, a cousin to Apple’s Magic Keyboard

Imaginably, becoming a subsidiary of Apple carries an aura that would pave a smooth path for personal business ventures to come, eradicate all money anxieties, and the possible satisfaction of seeing your idea delivered by one of the best loved PCs in the world.

But the clout of a hardware giant that allows for all of the above also means that small fry gobbled up are vastly over-shadowed, perhaps to the point of oblivion. “If you look at nuanced technology like the team behind Siri, the company still exists, but they don’t operate under their name,” was all Fransisco would tentatively say, tiptoeing around the topic of acquisition–Apple disapproves of startups blurting out the details of courtship.

By convention, Apple like to keep a low profile whenever it buys a startup–”Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans”– is the protocol answer from the Cupertino company. In 2015, Apple announced that they had bought 15 companies, but the names and identities of 6 were never made public－if Sonder’s deal carries through, we might never hear Apple holler about it until the new Mac with customizable keyboards is trotted out by Tim Cook.

On average, Apple buys 10-20 startups each year, and some are hard to miss, such as Beats Electronics headphones, its technology incorporated into iTunes and iPhones. Others are fused with existing products and a never heard of again in their maiden name–think Silicon Color, whose technology enhanced Final Cut Studio, the search engine OttoCat, which powers the iOS app store,VocallQ which allows Siri to better understand what you dictate, and thanks to Snappy Labs, acquired in 2014, your iPhones can take slo-mo clips.

But then there are the countless others whose technology Apple merely sits on, perhaps they just wanted the talent, or want it stashed away to get ahead in the unforeseeable future.

For Sonder, the priority is to bring the keyboard into existence, by any means necessary. “For us, it really depends on what Apple’s intentions are, if it aligns with our vision. If not, then we have other options we can pursue”, Fransisco said.

In an era where when the laptop design has reached a bottleneck, a smarter keyboard is an attractive marketing point and unmistakable opportunity for product differentiation–and in the meanwhile streamlining the supply chain. Right now, Apple has more than 32 different language keyboards in their supply chain, Fransisco tells us, and that means it has to forecast sales in different regions to cope with the demand.

Perhaps the actual value of an e-ink keyboard a bit overhyped. After all, those bilingual and polyglots have probably mastered typing methods without a stack of different keyboards, while Dota gamers and CAD designers have the controls memorized by heart at this point. But as long as a laptop maker eager to woo the crowds and show that they can still innovate buys Sonder’s tale, then eventually so will the rest of us.

Didi Chuxing Lands $119M Funding From Apple Supplier Foxconn

Emma Lee — Fri, 09 Sep 2016 02:36:22 +0000

It seems that the epic merger between Didi Chuxing and Uber China is not going to end the fundraising spree in China’s ride-hailing industry.

After countless financing rounds, Didi Chuxing, China’s dominant ride-hail startup, just received another $119.9 million USD from Foxconn, the world’s largest contract manufacturer of electronics.

The news was revealed in a stock exchange filling by Foxconn under their trading name, Hon Hai Precision Industry Co., Ltd. The investment was made through its subsidiary Foxtec Holdings for a 0.355% stake in Didi Chuxing at a valuation of $33.7 billion USD.

As one of the most highly valued startups in China, Didi’s star-studded investor list includes a growing number of global tech giants from locals Alibaba, Baidu and Tencent, to global ones such as Apple and Uber. The Chinese government is also an investor via their sovereign wealth fund, China Investment Corp.

The name Foxconn often draws connection to Apple, one of Foxconn’s largest clients, which also poured $1 billion USD in Didi this May. Although it is still unclear whether Apple facilitated Foxconn’s investment or whether there is a possible collaboration plan between the smartphone icon, manufacturer and ride-hailing company, the tie-up definitely unites their ambitions in the auto industry.

Foxconn has already worked with modeling, circuiting and batteries for automobiles. It’s also the manufacturer for some of the components used by Tesla.

Together with Tencent and China Harmony Auto, Foxconn established an internet car company, Harmony Futeng (和谐富腾), this year. To take on the car sales boom in China, the joint venture operates two subsidiaries: Future Mobility, a high-end smart car project and Aiche, a consumer electric vehicle company.

At the same time, Apple is also working on its own smart car project that involves a few hundred employees.

For Didi Chuxing, investors with a global presence may ease the way for a global expansion. Like Apple’s May investment, neither company have divulged what the strategic partnership could potentially involve.

“Foxconn is a global electronics and mobile technology leader. With the support of Foxconn and other value investors home and abroad, DiDi will continue to push the frontier of innovation for the mobile transportation market and create ever stronger driver and rider communities.”said Didi in a statement.

Will Chinese Consumers Consider Buying The New iPhone 7? We Asked.

Eva Yoo — Thu, 08 Sep 2016 10:12:36 +0000

Apple’s having a hard time in China this year. For the first time ever, it reported a decline in year-on-year revenue and lost the iPhone patent case. Beijing also imposed strict rules on online publishing and Apple’s online stores for iBooks and movies were closed in April.

China is the largest iPhone market in the world by the number of activated smartphones in China in 2015. This might change, however. Now Apple ranks fifth in China in smartphone market share, elbowed out by local vendors Huawei, OPPO, Vivo, and Xiaomi. According to Apple’s third quarter 2016 report, China ranks third in revenue, behind the Americas and Europe.

On Thursday, the iPhone 7 was released, but there was a less buzz among Chinese netizens compared to when the iPhone 6 launched. To find out the offline reaction of Chinese consumers, we hit Sandbox, a co-working space in Shanghai, and asked Chinese people (five male, five female interviewees) if they would consider buying a new iPhone 7.

Here are their answers. Only one person out of ten people considered buying the new iPhone 7.

Qing Liu (27) Sports socks brand entrepreneur

I don’t want to buy the iPhone 7. I have an iPhone 6 and I’m happy with it. I currently have an iPhone 6 Plus and OPPO. The iPhone 6 Plus is for personal use and the OPPO phone is for work. Our company gave me the OPPO phone. The OPPO phone is slow to react when I swipe from one screen to another, but now the OPPO phone reacts smoothly as well. Before, when I clicked an app on my phone, I needed to wait five seconds to open it, but now it opens instantly.

The China market is now leaning towards domestic brands like Huawei. These days, Chinese entrepreneurs like Huawei phones more. There’s not a lot of differences between smartphone brands now. It’s almost the same. Many people now think buying a ‘Made in China’ phone is more economical.

Roy Lee (30) film website business development

I don’t want to buy an iPhone 7. I already have an iPhone 6S and I don’t want to buy the new one. I chose to buy an iPhone over a Chinese smartphone because of the iOS network – it’s linked to my Apple devices. (He is using a MacBook Air).

Weiqi Qian (61) Seawater electricity generating company CEO

I don’t want to buy an iPhone 7. Huawei’s phones are now better than [Apple’s]. Apple is now falling behind. We like Huawei. We love China-made products and Huawei is made in China.

I’m using a Lenovo phone. The government gives out a 2,900 yuan ($434 USD) monthly pension for retired people like me and I couldn’t afford a Huawei phone. That’s why I bought a Lenovo phone with 500 yuan ($75 USD). […] I don’t have money and that’s why I started a startup. I want to make my dream come true. Would you invest in my company?

Jiaojia Wei (24) App “WeChange” Product Manager

I watched the keynote of the iPhone 7 release. I saw the new iPhone 7 and it didn’t satisfy me. I use an iPhone 6. I don’t want to buy an iPhone 7. Apple dropped the headphone jack and instead added an adapter that will enable traditional headphone users to connect their existing headset to the new iPhone.

That means you can either plug in your headphone or charge your phone but you cannot do both. That means I cannot watch a movie while charging my phone. I watch movies using my phone, so it was an important part of my decision not to buy the iPhone 7. The waterproof feature is really useful though. Water can easily smear onto your phone so I think it’s a good feature.

Bowang Lee (19) University freshman, doing research

I don’t want to buy the iPhone 7. I’m using the Huawei Honor. I bought it because it’s the product of my country and in some ways it’s better than the iPhone. It’s true. The internal memory of the iPhone is only 1 GB, but Huawei’s is 4 GB. If you have more memory you can run more apps at the same time and it works more smoothly. I’d say Huawei’s quality-to-price ratio is better than the iPhone’s.

Mia Klum Liu (24) app UI designer

I’m an app UI designer and the details of a phone really matter to me. I want to buy the iPhone 7. I want to experience what it’s like. I saw the pictures of the new iPhone this morning. It didn’t reach my [expectations] of an ideal phone. There weren’t many differences or changes made to it than previous ones. Now I think Android is better than iOS. I’m okay with the iPhone [hardware] itself, but I feel like Android has gone through more improvements, and I think there was not much improvement made to iOS.

I mentioned the weak points of the iPhone, and yes, there’s a gap between the iPhone 7 and my ideal phone, but still I want to experience the new iPhone and I still like the iPhone. I have an iPhone 5. I bought it with the money I saved from when I was working at the university helping other students. So if I have a chance later, I will consider buying the iPhone 7.

Nuria Ni (26) Business group Project manager

This morning I read about iPhone 7’s release on Weibo, but I don’t want to buy the iPhone 7. I already have an iPhone 6S Plus. Chinese phones are also good, like Huawei is really good. But I’m now used to Apple’s iOS, so I won’t consider buying a Chinese phone. Apple’s system is much more convenient. I also bought a MacBook and it’s really convenient to link the two devices.

Vera Yang (22) New media operation

I don’t want to buy the iPhone 7. I’m using an iPhone 6 and I can still use it and I’m satisfied with the features. I have another phone, a Meitu phone made by Meizu. Meitu is for work and I bought it myself. When I take a selfie, I look more beautiful on pictures taken with my Meitu phone. I bought two phones because I don’t want to see my personal phone when I’ m working. The features I use in both phones are the same – WeChat, QQ – I have them all on both phones. It’s just the contact lists that are different on two phones. If my iPhone 6 is out of order, then I might consider buying a new iPhone.

Apple Lee (35, female) HR in a startup

I don’t want to buy the iPhone 7. I have never used an Apple product in my life. I’m using Xiaomi 4C, which came out last year. I would rather buy Huawei or Xiaomi than the iPhone, because if I buy an Apple product and leave it on my seat for awhile, another person will steal it.

At first, I used a Nokia phone, but it was not a smartphone. Then my friend sent me a Samsung smartphone, but the screen broke when I dropped it. Then I started to only buy Xiaomi phones. I previously used a Xiaomi 4.

Sherry Shen (23, female) Event planning

I don’t want to buy the iPhone 7. I’m using a Huawei MateS and I bought it this year in March. Huawei has a better reputation among my friends and the iPhone is too expensive. Huawei has a better quality-to-price ratio. When I used the iPhone 5, I thought it was very smooth and had many apps. Using Wi-Fi on an iPhone is not so convenient.

Image Credit: TechNode

Lyft Looks To Didi, Apple, G.M. For An Exit Lane

Cate Cadell — Sun, 21 Aug 2016 05:57:05 +0000

When Uber and Didi Chuxing orchestrated their market-shifting alliance last month, it put Lyft in a very tough position.

The U.S.-based ride-hailing service that aligned themselves strongly with Didi both financially and strategically, now has to come to terms with the fact that their largest ally is now in cohorts with their largest competitor, Uber.

It’s a trying time for the U.S.’s second-biggest ride-hailing company, and Lyft is now trying to do what one might expect: shop around for a buyer.

According to sources who spoke to the New York Times, Lyft has approached Didi Chuxing in hopes of selling the company, as well as high-profile Didi investor Apple. The company has also been in discussions with General Motors, Google, Amazon and even Uber itself, the same people said.

The acquisition of Uber’s China operations by Didi Chuxing effectively flipped the ride-hailing market upside down overnight. Before, the competitive pressure point lay between Uber and Didi, along with their network of loosely affiliated strategic partners, including Lyft, India’s Ola Cabs and Singapore’s Grab.

In the wake of Uber and Didi’s armistice, the weight of competition has shifted to the market between Uber’s global operations and the number of independent hailing services that now find themselves on the periphery of the empire, including Lyft.

It’s still not clear what the future of Lyft and Didi’s relationship will look like. With Uber and Didi retaining separate apps in the China market for now, Lyft still acts as Didi’s trans-pacific partner, with Didi users able to hail Lyft cars in the U.S. through the Chinese app and vice versa.

Prospects for the U.S. company are tightening. Lyft has neither the stashed funds or investor prospects to even consider taking on the Uber-Didi alliance, meaning their easiest bet is to broker a sale with one of their own strategic investors, which includes G.M. and Didi.

Lyft is reportedly working with Silicon Valley-based banking firm Qatalyst Partners to manage the sale, and as of January is valued at $5.5 billion USD.

Xiaomi Unveils A MacBook Air – No, Sorry, It’s A Mi Notebook Air

Cate Cadell — Thu, 28 Jul 2016 02:28:00 +0000

Xiaomi has revealed their first laptop. Like the mobile handsets that rocketed the brand to cult status, it’s cheap, simple and looks a hell of a lot like an Apple.

The Mi Notebook Air (yes – Air), makes no secret of which consumers they are looking to target, those with not enough coin to buy a MacBook Air. The laptop comes in two sizes, 13.3-inch and 12.5-inch with a Windows OS and a very familiar metal shell with full-HD display.

All credit to Xiaomi, the company has capitalized on Apple’s brand-power in China to make budget products for the local Chinese market that generally exceed expectations in terms of performance, and there’s no law against that.

The use of Windows is also a smart choice for the company. In Beijing’s western districts there’s a number of merchants who specialize in replacing Apple operating systems for Chinese consumers who prefer a Windows experience with the status of an Apple device.

The laptop will retail for 3599 yuan (about $540 USD), for the smaller model and 4,999 ($750 USD). Like its Apple counterpart, the Mi Notebook Air features a full-sized keyboard with backlit keys. It comes in silver as well as gold, which has also proved a popular color option for the MacBook Air in China.

The Mi Notebook Air will go on sale in China on August 2, and like other Xiaomi products will likely sell through periodic flash sales. For those outside China, it’s not worth holding your breath. Xiaomi has only released a handful of products to western markets, and they are usually the ones that pose no issues in terms of patent suits and marketing costs.

Here are some of the more detailed Mi Notebook Air specs released by Xiaomi:

Size: 306.9 mm x 210.9 mm x 14.8 mm (13.3-inch)

Weight: 1.28kg

Price: $750 USD ($540 for smaller model)

Processor: Intel Core i5 Processor (Intel Core M3 for smaller model)

RAM: 8GB DDR4 (4GB for smaller model)

Drive: 256GB PCIe SSD (128GB for smaller model)

USB: 2 USB slots plus type-C USB charging

Apple Is Finally Opening A Flagship Store In Taiwan

Cate Cadell — Sun, 24 Jul 2016 00:29:12 +0000

Taiwanese manufacturer Foxconn is synonymous with the Apple as a primary assembler of their products. Which is why it’s somewhat surprising that the country doesn’t host a flagship Apple store – until now.

Apple’s Taiwanese job site posted a series of listings on Friday, including customer support, sales and leadership positions for an upcoming Apple store.

It follows the company’s listing of a 30-year bond on the Taipei Exchange last month, which raised $1.38 billion USD.

While Asia’s appetite for Apple products has given the company a major boost over the past five years, the region has hosted relatively few flagship stores.

Japan was the first country to open a series of stores, followed by China in 2008, the same year as the Beijing Olympics. Before Taiwan, the most recent territory to gain a store was Macau, where the first Apple store opened its doors on June 25th.

Apple saw their first ever decline in iPhone sales in Q2 2016, as they struggle to come to grips with an increasingly stagnant smartphone market.

The company faced a 26 percent decline in smartphone sales for Greater China, which includes Taiwan and Hong Kong. Apple claims that the drop was largely attributable to poor sales in Hong Kong, where many Chinese mainlanders purchase their devices.

Would You Sell Your Kidney For An iPhone? [Lost In Translation]

Eva Xiao — Sat, 23 Jul 2016 11:33:06 +0000

At a mere $492 USD*, Apple is offering its latest iPhone at a much more palatable price for its fans in mainland China than previous iterations. Nevertheless, the term “kidney machine” (肾机, our translation) is still used to refer to Apple’s smartphones.

Bought a new phone. I’m no longer a ‘kidney phone-ian’, gonna use the leftover money to buy games.

Sh*t, got water into my “kidney machine”!

I finally have money for a “kidney machine”, though only enough to buy a “kidney machine” 6.

A Kidney For An iPhone

Four years ago, a 17-year-old boy from Anhui province sold one of his kidneys in order to buy an iPhone. Through Tencent’s QQ messaging app, he connected with several black market kidney agents who found a buyer for his kidney and made arrangements for the surgery. After the operation was over, the 17-year-old received 22,000 RMB for his kidney (link in Chinese). Subsequently, his health began to deteriorate.

Thus, the term “kidney machine” was born. It’s worth noting that at the time, iPhones weren’t exclusive just because they were insanely expensive. Even if you had the money – in those days, an iPhone ran for about 10,000 RMB or almost 1,500 USD – you might not be able to buy one due to a limited stock of iPhones in mainland China. Hardcore Apple fans from China, as well as enterprising Apple resellers, would sometimes travel all the way to New York City to line up for an iPhone (or several).

Though iPhones are much easier to get a hold of nowadays, the term “kidney machine” has stuck. Even with the rise of higher end Chinese phones, such as Huawei’s Mate series, iPhones are still the most expensive smartphone in China. For now, the “kidney machine” label belongs to Apple.

‘Lost In Translation’ is a weekly column that covers netizen-speak from China’s Interwebs. China’s internet slang is a fast-moving linguistic phenomenon and staying fresh has never been harder. Here, you’ll find new words or phrases every week with a breakdown of what they mean, how they’re used, and how they came to be.

*This price refers to the 16 GB iPhone 5SE. The 64GB version is sold for about $612 USD in mainland China.

Beijing Rules To Ban iPhones In Patent Spat

Cate Cadell — Mon, 20 Jun 2016 00:47:45 +0000

Apple’s meteoric success in the Chinese market has hinged on a golden rule for foreign tech firms: stick to hardware, stay away from content, and you should be fine.

That premise broke down at the end of last week, when Beijing’s Intellectual Property Office revealed a ruling against Apple in a patent case brought by little-known Chinese smartphone vendor Shenzhen Baili. The Chinese company claims the iPhone 6 and 6s infringed on a patent held for their 100C phone.

The gravity of the order is enormous, as it could potentially halt sales of the iPhone 6 and 6s in Beijing. Apple says that they have appealed to a higher court, and the phones remain on sale across China. The case was settled late last month, though the decision was only revealed at the end of last week.

It’s the latest storm cloud in an increasingly complex relationship between the U.S tech company and Chinese authorities. Beijing has recently being coaxing foreign tech firms to extend their strategic cooperation in China, singling Apple out by name on multiple occasions. Apple CEO Tim Cook has made a series of symbolic and strategic moves to charm the country’s regulators, including numerous visits to the capital.

Apple’s Path To The Chinese Consumer Is Becoming More Complex

It’s been a tumultuous six months for Apple in China. In May, a drop in sales on the mainland contributed to the company’s first revenue decline in 13 years, as China’s purse strings tightened amid market saturation. In April the U.S company received a very public blow, when their iBooks and iTunes movie services were banned under a sweeping crackdown on foreign content by the Chinese government.

Last month the U.S. smartphone vendor laid deep roots in the market with a $1 billion USD strategic investment in Chinese Uber competitor, Didi Chuxing. The investment saw Apple join a club of investors which includes several top Chinese tech companies as well as a handful of state-backed investors, including sovereign wealth fund China investment Corporation.

According to the Wall Street Journal, the company behind Apple’s latest patent dispute, Shenzhen Baili, appears to be affiliated with better-known brand Digione, which counts Baidu as their largest investor. Baidu is also Uber’s biggest strategic partner in the Chinese market.

The latest patent roadblock shows that Apple’s passage in the Chinese market continues to be perilous, despite their deepening commitment.

Chinese Firms Are Taking Advantage Of Stronger Intellectual Property Laws

Interestingly it’s not Apple’s first brush with the law this year. In May, Beijing’s Municipal High People’s Court ruled against the U.S. smartphone maker in a bizarre case of trademark infringement. A Chinese leather goods maker called Xintong Tiandi successfully defended their claim to the ‘iPhone’ name, which they had trademarked in 2010. Apple said they would continue to pursue legal action against the company, which currently sells leather wallets and phone cases imprinted with the iPhone trademark.

It’s one in a series of cases highlighting the newfound confidence of Chinese companies, who are increasingly expressing their intellectual property rights. In May Chinese smartphone vendor Huawei filed a series of high-level patent suits against Samsung, marking their first patent dispute against the South Korean electronics maker.

Analyse Asia Podcast: LINE IPO And SoftBank’s Divestments

Guest Editor — Fri, 17 Jun 2016 06:07:20 +0000

http://media.blubrry.com/analyseasia/content.blubrry.com/analyseasia/Episode_120__LINE_IPO_SoftBank_s_divestments_with_Serkan_Toto.mp3

Serkan Toto from Kantan Games joined us for a conversation on three recent events that impacted the mobile gaming market in Japan and the rest of world. We analyzed the progress of Nintendo’s new mobile games following the changes in Apple’s app store, the upcoming LINE IPO, and why SoftBank is divesting their gaming portfolio: Gungho and Supercell.

Download MP3 here (21.4 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

Serkan Toto, CEO of Kantan Games JP
State of mobile gaming in Japan [1:19]
- How is the mobile gaming scene moving in Japan since we last spoke? [1:23]
- Any updates on Nintendo’s continued foray into mobile gaming? [2:00]
- Nintendo’s new mobile games: Fire Enblem (strategy) and Animal Crossing (farming simulation game) available in iOS and Android [2:30]
- Niantic Labs (funded under Alphabet), Pokemon and Nintendo’s joint venture: Pokemon Game. What happened with their field test? [3:30]
- Any new business models or concepts coming out of Japan’s mobile gaming industry with the introduction of AR and VR? [5:23]
- Apple’s new app store changes and how it’s impacted the mobile gaming space worldwide. [6:40]
LINE IPO [8:50]
- Why did LINE attempt a dual listing in U.S and Japan? [9:13]
- They currently have 215M monthly active users, with ARPU $5.10 vs Twitter ($7.27) & Facebook ($11.27). How are they going to demonstrate growth by revenue or new products? What is their growth story going to be? [10:00]
- Interesting numbers: Kakao Talk has 50% monthly active users (MAUs) less than LINE, Wechat has 4x more MAUs (800 MAUs) than LINE.
- Will LINE end up like Mixi being overwhelmed by Facebook? [11:18]
- What’s LINE’s impact in the mobile gaming market? [13:05]
- LINE’s focus on O2O services. [14:00]
- Is this going to be the biggest tech IPO of the year? [15:16]
- Should we be bullish or bearish about the IPO? [15:35]
SoftBank’s divestments [16:22]
- Recently, SoftBank has been divesting their assets in the gaming industry: Gungho, known for Puzzle and Dragons; Supercell known for ‘Clash of Clans’ (to Tencent); their stake in Alibaba: US$8.9B (acquired by various major players, Alibaba, Temasek and GIC Singapore). What’s going on? Are they just trying to reduce their debt or raise money for something else, for example, Sprint in the U.S? [16:55]
What excites Serkan in the mobile gaming market? Reference with Square Enix [21:00]

Local Rivals Bite Into iPhone’s Market Share In China

Emma Lee — Mon, 06 Jun 2016 09:47:47 +0000

Having an Apple device is synonymous with being wealthy and fashionable for many Chinese people. And while the mindset remains, a declining number of customers are willing to pay the price, and local competitors are lining up to offer comparable alternatives at a more affordable price.

This is evidenced by the iPhone’s sinking market share in China, a market of huge strategic importance for the U.S. vendor. In addition to toppling sales worldwide, iPhone’s China market share declined from 16% in Q1 2015 to less than 13% in the same period of this year, according to research institute IDC.

When looking at these numbers, you may wonder why Apple is losing ground and who’s taking over the market. Leveraging on survey results from thousands of smartphone users, Tencent Penguin Intelligence went on a mission to answer these questions.

There’s Still Room For Growth In The Chinese Smartphone Market

Although China’s smartphone market has passed the period of dizzying growth, the field is still robust thanks to high smartphone trade-in rates. Tencent’s research shows that 75.4% of interviewees change their smartphones at least twice a year, of which 34.4% of people buy new smartphones once a year. Only 24.6% of interviewees reported that they used the same smartphone for more than three years.

The report also shows that non-iPhone users change phones more frequently than iPhone users. The report attributes this to the fact that users can expect an iPhone to be fully operational for two years with regular system upgrades, while Android phones may need a complete overhaul in that period. Most of the survey’s iPhone users were well aware of this, as 58.7% of them choose Apple’s iOS system when asked which iPhone feature they would be most reluctant to give up.

Huawei Is The Top iPhone Alternative

Chinese companies have spent years attempting to elbow their way into the high-tier smartphone markets. Companies, including Huawei, are now seeing the fruits of those efforts, as iPhones are no longer the exclusive choice in this lucrative sector.

Among thousands of former iPhone users that have switched to other brands, 25% are using products made by Huawei, whose high-tier smartphones have gained momentum in recent years.

Samsung took the second spot with 17.7%, which shows that the Korean company is still a competitive rival in the high-end market. However, Chinese companies take the lion’s share as the rest of the top-five list was occupied by local companies: Xiaomi (15.1%), OPPO (14.4%) and Vivo (14.2%).

Didi And Uber Can’t Agree On Who Owns What In China’s Fierce Ride-Hailing Market

Cate Cadell — Sat, 04 Jun 2016 03:30:05 +0000

Digging up the correct figures on China’s ride-hailing market can be a challenge for onlookers, though it’s apparently also a struggle for the companies themselves.

According to Liu Zhen, the Senior Vice President of Strategy at Uber’s China division, the U.S.-founded company will overtake Didi Chuxing to become China’s top provider of private-car ride hailing services within 12 months.

“Last year we were only operating in eight cities with only a 1 percent market share,” she said at a Wall Street Journal conference on Friday, noting that the company has since accelerated to take over a third of the market.

True to the fierce competition in China’s ride-hailing market, Uber’s statistics are at sharp odds with how much of the market Didi Chuxing believes they own.

Just two days earlier, President of Didi Chuxing, Jean Liu, casually announced that Didi owns almost 90 percent of the country’s private-car ride-hailing market. “They’re [Uber] actually in the industries we are in which is the private car service, where we have [an] 87 percent market share,” said Liu in a conversation with Recode’s Kara Swisher and Walt Mossberg.

Didi Chuxing originally found dominance in securing the ride-hailing market for taxis, a market it now claims to own “almost 100 percent.” Taxi services aside, the two companies compete directly in virtually every other aspect.

The confusing myriad services run by both companies in China has further muddied the distinction between which company owns what in a landscape of varied ride-hailing options. Both companies operate carpooling services alongside private car and black car services. However each company is also working on a handful of initiatives, from Didi’s foray into bus services to Uber’s latest route-oriented carpooling service.

It’s also important to note that drivers in China are not necessarily loyal to neither service, using whichever option is most busy or profitable on the day. One Didi driver told Technode that while she earned more using Uber’s service per ride, she found herself often driving Didi passengers because they were more frequent, swapping between the two apps.

The two companies also disagree on another factor that lies at the heart of a successful China campaign: their relative abilities to phase out subsidies. Both companies have relied heavily on subsidized services to expand rapidly on the mainland, and the race is now on to see which service can successfully transition into a more sustainable model.

On Friday Ms. Liu noted that UberChina will break even in China “soon”, spending 80 percent less per trip it did a year ago. In March this year Uber CEO Travis Kalanick noted that UberChina will break even within two years, and that they are spending roughly a billion USD per year in the market. Didi Chuxing claims to be profitable in 200 of the 400 cities they currently operate in, noting that less mature markets receive higher subsidies than some of the company’s more mature markets.

Both companies continue to fundraise at a breakneck speed, funneling funds into subsidies as well as technology. Recently Uber’s global operation received a $3.5 billion USD boost from a Saudi Arabia’s Public Investment fund, some of which would be spent on UberChina’s operations Liu Zhen confirmed on Friday. Last month Didi Chuxing sealed a 1 billion USD investment from U.S. tech giant Apple as part of a larger fundraising effort.

Analyse Asia Podcast: Why Did Apple Invest In Didi?

Guest Editor — Fri, 03 Jun 2016 10:32:17 +0000

http://media.blubrry.com/analyseasia/content.blubrry.com/analyseasia/Episode_117__Why_Apple_Invest_in_Didi_with_Josh_Horwitz.mp3

Josh Horwitz from Quartz joins us in a discussion on Apple’s recent decision to invest in China’s largest ride hailing app, Didi Chuxing and the implications for Uber in their plans to conquer China and the rest of the world. We move beyond the obvious reasons, such as managing their diplomatic relations with the Chinese government, and dive into Apple’s preparation for their entrance into China similar to other automotive makers. In this episode, Josh also takes us through the intricacies of the Chinese government’s regulations of the transportation industry. Last but not least, we also discuss the power players behind Didi and Grab and how traditional “old” money are boiling into technology startups in Asia.

Download MP3 (30.1 MB) or Subscribe via RSS

TechNode does not endorse any commentary made in the program.

Notes:

Josh Horwitz, Writer from Quartz
- What interesting news has Josh been covering in Asia recently? [1:12]
  - Alibaba is buying not building its way into Southeast Asia
  - Netflix faces rivals in India and Southeast Asia that are better adapted to local realities.
  - A brief history of Chinese accounting shenanigans in America.
The On-Demand Transportation Wars [2:09]
- Since our last conversation, what’s the status of the industry’s dominant players? (Uber, Didi, Ola and Grab/Go-Jek) [2:28]
- Grab and Go-Jek founders share a common story [3:30]
- Uber vs Google Waze: What happened when self-driving cars met on-demand transportation? [4:38]
Apple’s US$1B investment into Didi and Didi vs. Uber in China [8:34]
- Why did the deal happen? What are the possible reasons? [8:58]
- Is Apple’s investment in Didi really an investment into its own future?
  - Does Didi need Apple? [13:22]
    - A symbolic appeasement with the Chinese government or a way to buy “guanxi”?
  - The Chinese government has regulated the automotive industry since the 1980s and places strict restrictions on automotive OEMs with a 50:50 joint venture. [15:30]
  - Example of 50:50 joint ventures in China’s automotive industries: car companies with state owned enterprises in China. For example, Ford has a joint venture with Changan [17:00]
  - How Apple plans to enter China by leveraging a partnership
    - What does Apple gain from investing in Didi? Counter example: Tesla is facing problems in China without a partner to sell their electric cars. [19:11]
  - Didi used a varied interest company (VIE) business structure similar to Alibaba – how does that affect its partnership with Apple? [20:00]
  - What does this mean for Uber in the online transportation wars? [24:20]
  - The power players behind Didi vs. Uber and Grab [27:14]
    - Didi: Who is Jean Liu who did the deal with Tim Cook from Apple and Wei Zheng, founder and CEO of Didi? (she’s the daughter of the Lenovo founder, Liu Chuanzhi).
    - Uber China: Liu Zhen, director of strategy, is Jean Liu’s cousin.
    - Grab’s Anthony Tan is the grandson of the founder of Tan Chong Motors, which owns the exclusive distribution to Nissan, a Japanese automotive company.
    - Jerry Yang is an adviser to Uber and did the deal with Alibaba when he was the CEO of Yahoo! [28:50]
  - Uber and leasing out cars and controlling the supply chain [29:51]
    - Is Grab doing the same thing as Uber in controlling the supply chain with their competitive advantage with Nissan through Tan Chong Motors?

Analyse Asia Podcast: Will Apple’s Asia Focused Car Strategy Work?

Guest Editor — Tue, 31 May 2016 09:30:26 +0000

http://media.blubrry.com/analyseasia/content.blubrry.com/analyseasia/Episode_114__Will_Apple_s_Asia_and_Car_strategy_work_with_Sameer_Singh.mp3

Sameer Singh from Tech-thoughts.net analyzed the recent Apple Q1 2016 earning and challenged the notion whether Apple’s Asia (India and China) and their rumored car strategy will bring them back to growth. Through the lens of the Apple’s rumored car strategy, we dove deeper into a conversation on artificial intelligence and autonomous vehicles from the China to the U.S.

Download MP3 (32.6 MB) or Subscribe via RSS

TechNode does not endorse any commentary made in the program.

Notes:

Sameer Singh
Apple’s iPhone Blip and will their Asia strategy with China and India work?
- Apple’s recent Q1 2016 earnings: What happened? [1:47]
- How did the Apple miss the forecast of the iPhone earnings? [3:00]
- Apple’s upgrade cycle is not a cause but an effect. [4:11]
- Has the switch from Android back to Apple during the iPhone 6 been saturated? [5:25]
- Is iPhone SE the solution to push up the upgrades? Is Apple using screen size as a way to price their ASP in the Asia context? [6:10]
- Has the smartphone industry reached a structural change when the technology is now good enough? [8:30]
- iPhone 6 cycle depressed the entire Android premium phone industry and allows Samsung to return to profitability with the Galaxy S7. [9:40]
- What does that mean for Apple in the next iPhone 7 iteration? [10:33]
- Apple’s “services” narrative will not work in Asia. [11:15]
- Apple watch as a trojan horse with the watch bands rather than the watch. Taiwanese (happened to be in Asia) Apple analyst Ming Chi Kuo predicts Apple watch sales will fall in 2016. [13:00]
- Is Apple’s expansion to India (with their current focus to China) going to save them? [14:48] Note that China has just banned Apple movie and books services.
- Can Apple’s rumored car restore their growth? [17:50]
Self Driving Cars, Business Models & Regulation [18:25]
- The best autonomous cars has to be electric. [18:50]
- The different models for autonomous and electric vehicles [19:30]
  - On demand transportation which destroys car ownership: Uber, Lyft (and their recent deal with General Motors).
  - Internet services model with web and mobile: Baidu, Google using maps and search linking it with cars.
  - Car OEMs and hardware makers: Tesla, Apple, and car makers such as Toyota, Nissan, VW Group, Audi, BMW.
- What is the path forward for self driving cars? Full Autonomy vs Incrementalism [20:18]
- Asia governments testing the concept of self driving car zones. [22:17]
- Self driving cars are more focused on creating fixed and optimized routes rather than creating complexity to transportation. [23:40]
- Google’s self driving car and potential ride sharing service. [24:30]
- AI and self driving cars. [26:23]
- When a car turns into a computer, how much semiconductors does OEM need? [28:10]
- Tesla’s hybrid model OEM and services with their supercharging stations. [28:48]
- China’s foray into electric cars, and the launch of LeSee, with the same backer to the Faraday car. [29:20]
- Tesla’s model 3’s successful crowdfunding campaign and what does it mean for the automotive industry in the next few years? [30:00] (Tesla sees 300K orders upon crowdfunding).
- Uber submits 800 COEs bids in Singapore, changing the game for cars. What does that mean for countries viewing car ownership as a prestige? [33:15]

Didi Chuxing Could IPO As Soon As 2017

Cate Cadell — Mon, 16 May 2016 05:01:41 +0000

Fresh off the back of a $1 billion USD injection from Apple, Didi Chuxing is now considering a 2017 IPO, according to sources who spoke to Bloomberg.

The Chinese ride-hailing giant is eying a New York listing as soon as next year in a bid to outpace Uber, their top global competitor, said the source. Didi is in the process of sealing a $3 billion USD round which could value the company at around $26 billion USD.

Didi Chuxing “does’t have any such plan or schedule,” according to a statement from the company today referring to the IPO rumors.

An IPO could add significantly to the company’s war chest as they seek to expand globally in markets already dominated by Uber. The company’s new involvement with Apple could also fast-track the company’s U.S. entry, which previously relied on a strategic partnership with Lyft.

The potential IPO could also be the biggest China tech listing in the U.S. since one of Didi’s core backers, Alibaba, listed on the NASDAQ for $25 billion USD in late 2014. Since 2014, enthusiasm for U.S. listing among Chinese tech companies has dwindled, with several high-profile Chinese companies choosing to de-list in favor of local markets, including Qihoo 360 and Momo.

According to Bloomberg’s sources, the timing of Didi’s IPO could ultimately still depend on how their battle with Uber plays out. Uber CEO Travis Kalanick has said publicly in the past that the U.S. ride-hailing company will hold off plans for an IPO as long as possible.

Apple Invests $1 Billion In Didi Chuxing Strategic Partnership

Cate Cadell — Fri, 13 May 2016 03:39:31 +0000

Didi Chuxing, China’s biggest ride-hailing app and Uber’s top global competitor, has confirmed today a $1 billion USD investment from Apple.

The funding is part of a larger $2 billion USD investment round that the Chinese ride-hailing service is hoping to close soon, potentially valuing the company at around $25 billion USD.

Didi Chuxing, formerly known as Didi Kuaidi, has been expanding aggressively both locally and abroad in a services war with Uber. Didi currently dominates China’s ride-hailing market, and has partnered with complimentary services in other countries as part of a global strategy, including Ola Cabs in India, GrabTaxi in Singapore and Lyft in the U.S. Didi counts Chinese tech giants Alibaba and Tencent among their core strategic investors.

“The endorsement from Apple is an enormous encouragement and inspiration for our four-year-old company,” said Didi founder and CEO Cheng Wei in a statement.

“DiDi exemplifies the innovation taking place in the iOS developer community in China,” said Apple CEO Tim Cook. “We look forward to supporting them as they grow.” Tim Cook was in China last week for meetings with the Chinese government.

Neither company have divulged what the strategic partnership could potentially involve, though the pairing invites Apple into a coveted ecosystem of well-connected mainland investors. Aside from Alibaba and Tencent, the Chinese government is also an investor in Didi Chuxing via their sovereign wealth fund, China Investment Corp. Apple has maintains a relatively positive relationship with the government, though they experienced several upsets recently including a ban on Apple’s content services: iTunes Movies and iBooks.

A strategic partnership with Apple could help Didi realize their global expansion goals. Didi recently launched a dual service through their Lyft partnership, meaning Didi users traveling in the U.S. can use the local Chinese app and payments systems while Lyft users can use the U.S. app in China.

Though Didi maintains a strong lead over Uber in the Chinese market, servicing over 400 cities, they are still a long way off from competing with Uber globally.

Didi Chuxing were not available for comment at the time of publishing.

The Chinese Government Eyes 1% Stake In Tencent, Baidu, NetEase

Eva Xiao — Wed, 04 May 2016 10:11:52 +0000

The Chinese government might soon own a 1% stake in major tech companies such as Tencent Holdings Ltd., Baidu Inc., and NetEase Inc., according to anonymous sources who spoke to the Wall Street Journal.

The 1% stake is part of a proposal around content distribution and censorship, which is still being discussed internally. According to Bloomberg, the proposal gives government representatives board seats and stakes of at least 1 percent at major internet portals in exchange for news licenses. Under the proposal, these news licenses would be mandatory for all providers and distributors of “current affairs news,” which includes politics, economics, military, foreign affairs, and social issues.

Chinese tech companies, such as Tencent and Baidu, already comply with government regulations around content censorship, filtering out sensitive keywords, rumors, and what the government deems ‘gossip’. However, this new proposal is an aggressive reassertion of government oversight. If implemented, government officials would have even tighter control over online content, proactively blocking and monitoring content before it’s published.

Though the Cyberspace Administration of China (CAC) and the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) regulate online media in China, “illegal” articles occasionally slip through, albeit temporarily. In March, Beijing-based Caixin Media Company published an article on free speech, featuring Jiang Hong, a member of the Chinese People’s Political Consultative Conference. A few days later, the CAC ordered the removal of the article, according to Caixin.

This proposal is the latest in a series of tightening regulations around content by the Chinese government. April was particularly eventful, as iTunes Movies and iBooks were blocked in China and online video celebrity Papi Jiang, whose latest video ad auction raised 22 million RMB (about $3.4 million USD), apologized publicly on Weibo after several of her videos were removed due to her use of curse words. These incidents align closely with a speech recently delivered by Xi Jinping at a symposium on cybersecurity , in which the President of China called for a more “clean” and “righteous” cyberspace.

Image Credit: Michel Temer

LeEco CEO Jia Yueting Takes Aim At “Outdated” Car Manufacturers, US Tech Giants

Cate Cadell — Mon, 25 Apr 2016 05:29:36 +0000

LeEco’s auto projects are extremely ambitious. The company hopes to squeeze five years of vehicle development into three to release their electric Aston Martin super car by 2018, at the same time they are racing to release their own consumer vehicles with a view to surpass Tesla.

They are goals that CEO Jia Yueting isn’t afraid to rub in the face of his competitors.

In an interview with CNBC, Jia Yueting said traditional car companies, like BMW and Mercedes Benz, “cannot fundamentally change themselves” to meet the requirements of the modern auto industry.

He also singled out Apple, calling their ecosystem of individual apps “outdated”, and pointed to the company’s faltering sales in China.

“Having separate apps just means great obstacles in the user experience. We hope to break down these obstacles,” said Mr. Jia.

LeEco, formerly known as LeTV, is often compared to Netflix in western media, though the company has expanded heavily into other internet-enabled verticals, including electric and connected cars. Mr Jia said that LeEco’s current model is the “ultimate combination of Tesla, Uber, Apple, Amazon and Netflix.”

Mr Jia’s comparison did not stretch to involve Google, who are leading US developments in autonomous driving technology. Last month the CTO of Autolink, LeEco’s auto ecosystem project, told Technode that the company is “working closely” with Google, and have been invited to trial their technology.

When asked about LeEco’s hearty appetite for funding in the pursuit of their auto projects, Mr. Jia said he was confident that their autos ecosystem would reap dividends for those “visionary” enough to invest in it. He also said that the capabilities of LeEco cars would exceed Tesla rivals, but would remain a cheaper alternative, monetizing through the resources gathered from their internet ecosystem.

Mr Jia’s comments follow last week’s public unveiling of the LeEco LeSEE, their highly-anticipated electric sedan. The company said the car was built with autonomous technology in mind. The company’s other flagship project, an electric supercar being developed with Aston Martin, is slated for release in 2018. LeEco is working closely with Faraday Future, the secretive electric vehicle company in which Mr. Jia is a personal investor.

China’s Apple Stores Now Stock Air Quality Monitors As Pollution Surges

Cate Cadell — Fri, 04 Mar 2016 08:43:33 +0000

Beijing has once again been shrouded in smog this week, with pollution levels reaching hazardous levels over the past two days. It’s perhaps unsurprising then that the country’s Apple stores have decided to stock a piece of hardware primed for urban China: air quality monitors.

As of Wednesday, the Origins Laser Egg hit the shelves in 29 Apple stores across China, and will be available online from the 24th. The 499 yuan (about $76 USD ) air monitor allow users in congested cities to measure air pollution and take protective measures.

The Origins Laser Egg hit Apple shelves in China this Wednesday

China’s air pollution problem came to the forefront in December when the government’s public health warning system hit red alert for the first time since the system began in 2013, encouraging workers to stay home and offices to provide protective masks.

When Origins co-founder Liam Bates decided to start building air quality monitors two years ago there was no color code warning and only a handful of high-priced air purifiers on the market.

He had been visiting China since he was in high school in 2004, but it wasn’t until his girlfriend’s childhood asthma was reignited on a visit in Beijing that he realized how serious the pollution problem was.

“We went to a park in Beijing and we climbed to the top of a hill. We couldn’t see because it was so polluted. She was having a super hard time breathing.”

Liam Bates, co-founder of Origin, started the company after his girlfriend’s childhood asthma returned in Beijing.

Looking for a solution, he set out to buy an air purifier. “At the time I said, If I am going to spend this much money I want to know how it works…I thought, this is silly. This shouldn’t cost so much, and I don’t even know how if it works.” He called his partner Ken Ying and started work on the company the next day.

“We had no money and we knew nothing about air purifiers at the time” he says.

Two years later Origins now sells both air purifiers and air quality monitors. According to Liam, the monitors, which are popular among expats, caught the attention of China’s Apple operations when staff started to bring them to work. “It’s one of those thing you buy for your home but you invariably end up taking it to your office,” he says.

The Laser Egg features a small fan that pushes air past a laser, the laser refracts off minute particles in the air and uses an algorithm to calculate the air’s AQI, an index measuring air pollution. Origin’s accompanying app Breathing Space by Origins allows users to track the Egg’s readings and compare them to outdoor measurements.

Apple themselves have taken on strong environmental commitments in China. The company recently pledged to construct a 200 megawatt solar project across China’s north, east and southern regions. They will also partner with suppliers to build a further 2 gigawatts worth of clean energy projects in the coming years, hoping to avoid a total of 20 million metric tons of greenhouse gas, roughly equivalent to removing 4 million vehicles from the road for one year.

DJI Just Released The World’s Most Idiot-Proof Consumer Drone

Cate Cadell — Wed, 02 Mar 2016 03:20:16 +0000

Drone-flying has been an elusive hobby for those with little faith in their flying ability.

The idea of fishing a thousand-dollar-plus flying machine out of trees and gutters is enough to turn the most hardy beginners off drones, but DJI’s newly released Phantom 4 could change that.

The $1400 USD addition to the DJI line is the most expensive Phantom model yet, but it comes with a serious upgrade: it can autonomously avoid obstacles.

The drone features five cameras, two forward facing, two on the underside along with the 4K central camera. Together the images are compiled in the DJI’s software to produce a 3D model of the surrounding environment, allowing the drone to maneuver around obstacles.

The DJI Phantom 4 represents a new milestone in the era of consumer drones.

While autonomous obstacle avoidance technology has already been a beta feature of specialized professional drones and limited concept releases, the DJI Phantom 4 represents the first ever consumer-ready iteration of such software, bringing complex maneuvers and filming techniques within reach of the beginner drone pilot.

The drone is capable of avoiding buildings, trees, other drones, aircraft and even humans. Test footage of the drones show it making graceful arcs around buildings, crowds and pine trees. The autonomous feature allows amateur flyers to take ambitiously close footage without risking damage to the $1400 USD vehicle, bringing down a major barrier for new entrants.

“With the Phantom 4, we are entering an era where even beginners can fly with confidence,” said DJI CEO Frank Wang. The feature can also be disabled for more experienced pilots.

Autonomous object avoidance isn’t the only beginner-friendly feature added to the latest Phantom: ‘TapFly’ allows the drone users to set a maximum distance and simply tap the screen to reorientate the drone, meaning that users no longer have to tackle the dual stick controller to get a smooth video capture.

The drone also added ‘ActiveTrack’ , a feature that can 3D map a moving object or person and automatically adjust to keep it (or them) in frame. The follow mode allows the drone to track at just 4-5 feet from the subject.

The Phantom 4 also features a larger battery, with over 28 minutes of fly time as well as an updated 4K camera with wide angle lens and 12-megapixel still shots.

DJI will be teaming up with Apple to sell the latest drone. DJI CEO Frank Wang is a self-professed fan of Apple and Steve Jobs, incorporating the brands minimalistic design into the DJI models long before the partnership.

The new pairing will boost the brand into the offline space. DJI opened their first flagship store in Shenzhen last November, though an overwhelming majority of the company’s sales are still online.

Note: You may need a VPN to watch this video within China

Visa and UnionPay Partner Up Amid China’s Crowded Mobile Payments Market

Eva Xiao — Thu, 25 Feb 2016 11:41:35 +0000

China UnionPay International and Visa Inc. signed a Memorandum of Understanding (MOU) in Shanghai today. The companies will collaborate on payment security, innovation, and financial inclusion, according to a release.

The Chinese government said last year that they would open up the market to foreign payment networks from June 2016. The latest MOU will allow Visa increased access to the market for bank card transactions.

“This is a unique collaboration between two leading industry players to address major challenges facing the payments industry,” said Visa’s CEO, Charlie Sharf. “We are excited to be working together on innovation as digital payments transform commerce, resulting in safer, faster and more convenient ways for consumers to pay.”

Mr. Sharf’s comment on “major challenges” may have been a reference to the growing number of mobile payment systems in China. Last Thursday, Apple Pay joined China’s crowded mobile payment market in an agreement with UnionPay. The market also includes established players such as Alipay and WeChat Wallet. Samsung is planning to launch its own system, Samsung Pay, in China as well.

China’s central bank, the PBOC, also recently revealed they would be considering a bank-sanctioned digital currency, though they have ruled out blockchain in the past.

UnionPay has been working hard to modernize and digitize its services in the face of increasing competition. In 2013, UnionPay partnered with China Mobile to launch its mobile payment service QuickPass for NFC-enabled phones. In December 2015, the company announced separate partnerships with Apple Pay and Powa Technologies, a London-based mobile commerce company specializing in QR code technology.

According to consulting firm China Internet Watch, Alipay and TenPay accounted for 89.1% of the third-party mobile payment market in Q3 2015. Through partnerships, as well as aggressive third-party payment policies, UnionPay is hoping to own more of China’s crowded mobile payment market.

1955 Capital Seals $200 Million Fund Targeting Sustainability In China

Cate Cadell — Thu, 25 Feb 2016 00:38:47 +0000

1955 Capital, a freshly-minted VC founded by former Khosla Ventures partner Andrew Chung, has closed a $200 million USD fund aimed at helping developing countries, and the first country on the fund’s roadmap is China.

The fund will draw on innovations from America and Europe to solve a diverse set of challenges, including China’s air pollution, food contamination, manufacturing sustainability and the healthcare issues associated with an aging population.

“We believe that China, India, and other developing countries face fundamental challenges that put the future of their societies at risk and place severe pressure on governments and business leaders for solutions,” said Mr. Chung in a release on Wednesday. “We founded 1955 Capital because we believe disruptive technology is critical to solving these issues.”

1955 Capital takes its name from the year that several tech titans were born, including Bill Gates, Steve Jobs, Eric Schmidt and Vinod Khosla.

China has seen an upsurge in sustainable investment from tech titans over the past year. Following the December 2015 Paris climate change talks, Alibaba Chairman Jack Ma and Sequoia Capital Partner Neil Shen joined US billionaires including Mark Zuckerberg and Bill Gates to create a coalition aimed at developing zero carbon energy. During his speech at the talks Mr. Ma also discussed a similar coalition of investors within China working on sustainable goals.

In October 2015 Apple announced construction plans for several high-power solar energy facilities in China aimed at eventually offsetting 20 million metric tons of greenhouse gas annually, roughly equivalent to removing 4 million vehicles from the road for one year.

Despite a drop in China’s overall manufacturing, driven by a slowing economy, the country still suffers from the environmental pains of an emerging manufacturing hub, including unsustainable work practices, low wages and high carbon emissions. A study released in August 2015 revealed that outdoor air pollution contributes to an estimated 1.6 million deaths every year in China.

During his time at Khosla Partners, Mr. Chung invested in LanzaTech, a US company working in China that specializes in converting exhaust from steel mills into less harmful gasses. Mr. Chung said the investment was one of the inspirations for his new fund, noting that supporting American innovation with Chinese capital was one of the primary goals of the project.

Mr. Chung and 1955 Capital have not confirmed who contributed to their $200 million USD fund, though they did note that the fund intends to expand beyond China, potentially targeting India, South East Asia and Africa.

Huawei Will Overtake Apple, Samsung In 5 Years: CEO Richard Yu

Cate Cadell — Mon, 22 Feb 2016 04:46:21 +0000

A turbulent economy and saturated market can make smartphone shipments hard to predict, but apparently not for Huawei chief executive Richard Yu.

Mr. Yu expects Huawei to overtake the world’s biggest smartphone sellers for the number one spot by 2020.

“Our competitors have strong brands, but we have much better products,” Mr. Yu told journalists at this week’s Mobile World Congress in Barcelona.

“Before, we were getting share from smaller players, but with time, we will get market share from Apple and Samsung,” he said.

Huawei is currently ranked number three globally behind Samsung and Apple, though they are now the largest vendor in China after recently overtaking Samsung. Huawei held 7.3% of the global market in 2015, meaning they will have to almost triple their market share to become the global leader by 2020.

Huawei’s success hinges on successfully marketing their brand outside of China and emerging markets. Like fellow Chinese telecommunications equipment maker ZTE, Huawei has previously shipped a large number of handsets in western countries through ‘white label’ agreements, meaning their hardware is sold under different brands, primarily carriers. This means that while Huawei sells a lot of handsets, their brand awareness is low relative to their market share.

In September 2015 Huawei made an aggressive brand-driven play for the high-end market, releasing the first Mate S at €600-€700, with several features that compete directly with the iPhone 6. The company also strengthened links to their western audience in 2015, releasing a Nexus device with Google and hiring a former Apple design executive to improve their smartphone interface.

The realignment paid off, with Huawei accelerating to more than 100 million shipments in 2015 while competitors in the Chinese market, including Samsung, Xiaomi and Lenovo, struggled to meet sales goals.

Mr Yu. also praised Apple CEO Tim Cook at the event for his tough stance on data privacy in light of the latest riff with the FBI, however he didn’t go as far as to comment on Huawei’s official stance. Huawei was previously blacklisted from selling telecommunications equipment in the US following spying allegations.

2016 Predictions For China’s Digital Gaming Industry

Eva Xiao — Wed, 17 Feb 2016 11:30:28 +0000

China has the most active gaming community in the world. Despite a 15 year ban on gaming consoles – and a generation of kids who grew up without an XBox, Playstation, or Nintendo 64 – China’s game industry raked in about $22 billion USD in revenue last year, more than any other country, according to market research firm Newzoo.

Drawing from a list of predictions by Niko, a market intelligence firm specializing in Asia’s gaming industry, we’ve compiled five predictions for China’s digital gaming industry that we think you should know about:

1. Growth in China’s Mobile Gaming Industry is Slowing

Image credit: DataEye

This year, China’s mobile gaming industry is expected to continue growing, but not as sharply as it has in the past. Smartphone sales, which add more paying gamers to the market, are slowing as the domestic smartphone market saturates. China’s overall digital gaming industry will be affected, as mobile gaming made up 36.6% of China’s digital gaming market in 2015.

In 2015, revenue from China’s mobile gaming industry surpassed that of the U.S, bringing in $6.8 billion USD of combined domestic and export revenue. The industry also enjoyed a year-on-year growth rate of 22.9% last year, according to a report by big data mining and analytics firm, DataEye. Revenue from China’s mobile gaming industry has increased steadily and rapidly over the past few years, growing from $2.3 billion in 2013 to $4.4 billion in 2014.

2. Virtual Reality Games Will Take Off In China

A woman trials a VR headset by Chinese VR-maker ANTVR

You’ve probably heard this a million times, but 2016 might finally be the year for virtual reality gaming to excel.

That’s because VR hardware and software are finally ready for it. In China, VR headsets and equipment are now widely available and accessible thanks to Chinese companies including ANTVR, LeVR, DeePoon, and Baofeng. This year, Facebook’s $2 billion VR darling, the Occulus Rift, will finally launch with shipments coming out on March 28th (pre-ordering has already started!).

VR content is also becoming more accessible. Foreign companies like Jaunt, Immersive Media, and NextVR are offering games, videos, and live-streaming in virtual reality. In 2015, Jaunt received $65 million USD from Walt Disney, China Media Capital (CMC), and Evolution Media Partners, a sign that the company might target the Chinese market soon. Cheap panoramic cameras like the Insta360 and platforms like Immersive Media’s im360 Server Platform have also helped to lower the barriers to entry for VR content production and publishing.

3. China’s E-Sports Ecosystem Will Expand

China’s 2015 League Of Legends Tournament. Image Credit: Kotaku

Niko says e-sports are defined as “professional or amateur tournaments and organized competitions involving specific game genres,” which the Chinese Game Publishers Committee specifies as Massive Online Battle Arena games, Action, Shooting, Casual, Poker and Trading Card Games.

According to Newzoo, more than 170 million people worldwide watched e-sports in 2014. In 2016, China’s e-sports ecosystem, dominated by tech giants including Tencent and NetEase, is expected to expand as more people in China become e-sports spectators.

China’s e-sports ecosystem has grown rapidly. Already, it encompasses a wide variety of industrial players, such as developers, publishers, e-sports clubs, organizers, e-sport platforms, and live broadcasting sites.

The e-sports industry is a lucrative one in China, with some e-sports commentators earning up to 10 million RMB (about $1.5 million USD) each year. In 2014, the World Cyber Arena (WCA) hosted an e-sports event in China where prize pool estimations varied between $95,000 USD and $1.1 million USD.

4. China’s Gaming Market Will Consolidate

China’s gaming market is incredibly crowded. In 2015 alone, the SAPPRFT (State Administration of Press, Publication, Radio, Film and Television) in China approved 750 games.

In 2016, consolidation in China’s gaming market is expected, especially among small to mid-sized gaming companies, while bigger companies like Tencent and NetEase continue to battle each other for the top 10 titles in mobile gaming.

Similarly, we expect more small and medium-sized gaming companies to dig into new market segments, like girl games, warfare strategy games, and animation or comic games, as they face increasing pressure from competitors and market preference for quality products.

5. Pan-Entertainment Will Drive IP Monetized Content

In 2016, Chinese gaming companies are expected to invest more in pan-entertainment strategies, which can provide opportunities for IP (intellectual property) monetization.

Pan-entertainment is cross-sector collaboration across different media such as books, movies, games, animation, and comics. For example, “Hua Qian Gu,” a popular Chinese T.V series, was jointly released with a mobile game of the same name in June 2015.

For tech giants like Tencent, who own stakes in animation, digital books, and film, pan-entertainment can be a way to leverage content across different platforms. The company announced its plans to create pan-entertainment businesses during the 2015 ChinaJoy tradeshow, and hired two famous Chinese authors, Nanpai Sanshu (南派三叔) and Liu Cixin (刘慈欣) last March as part of their strategy.

Apple Pay Will Launch In China Tomorrow

Cate Cadell — Wed, 17 Feb 2016 09:09:19 +0000

It’s the eve of a new battle for Apple in the Chinese market, with the first launch of Apple Pay set for tomorrow.

The service has the backing of 19 major and regional banks as well as a core partnership with Union Pay, the biggest central payment network in China. Apple Pay will be available for Industrial and Commercial Bank of China Ltd. (ICBC) customers this Thursday, said the bank in a public social media post.

“You no longer need to rummage around your wallet or waste time looking for the right card,” says Apple’s China-facing website. Though it’s been a long time since China’s digitally-enabled middle class did much wallet rummaging, with a highly-consolidated market of existing mobile payment systems.

Alibaba’s Alipay and Tencent’s WeChat Wallet have expanded aggressively with the backing of their respective e-retail and social empires. Currently the two payment systems cover all aspects of the digital retail market, including the country’s booming offline-to-online services sectors such as ticketing, ride-hailing and food delivery.

China marks Apple’s third official Apple Pay market following the US and Canada. While the service is technically available in other markets including Hong Kong, Singapore and Australia, local banks have shied away from strategic deals with Apple meaning that users must still use an American Express card.

Apple may face an uphill battle against China’s local payment giants, but they are holding steady in smartphone sales, which could boost their position as a payment provider.

Asia Hardware Battle 2016: Now Accepting Applications!

Eva Xiao — Wed, 20 Jan 2016 01:12:46 +0000

Here in Asia, we’re the first to see the sun rise. We’re the continent with the most people and some of the oldest civilizations in human history.

We’re also home to some of the most innovative hardware startups in the world. From “Startup Nation” Israel to high-tech Japan, Asia is a hotspot for exciting hardware, and it’s about time we had our own hardware competition.

At TechNode, we’re delighted to invite you to this year’s Asia Hardware Battle in Chengdu, where the top 15 hardware startups in Asia will present their products.

Most people know Silicon Valley as the heart of technological innovation, but what most don’t know is how more and more Valley tech giants are buying up technology from Asia. For example, in 2015, Apple acquired Israeli imaging company LinX and their 3D scanning technology, PrimeSense. The year before that, Google acquired an information security company called SlickLogin, also from the “Startup Nation.”

China is starting to see innovative hardware across all verticals: wearables, virtual reality, smart transportation, artificial intelligence, and more. And despite headlines of a winter in the Chinese economy, various tech industries in China are continuing to receive generous financing.

In the virtual reality industry, Noitom Ltd., a motion capture solution provider, and ANTVR, a VR hardware company, received $20 million USD and $300 million RMB in rounds of Series B funding, respectively.

China’s artificial intelligence industry got a nod from Google last October when the tech giant invested $75 million USD in Mobvoi, a speech recognition and natural language processing startup based in Beijing.

China’s UAV industry was especially well endowed with financing in 2015, as DJI, YUNEEC, and EHang all received millions of dollars in funding. Guangzhou-based startup Ehang also wowed everyone at this year’s CES in Las Vegas with their autonomous helicopter drone. Of course, investment money is just the start – what hardware startups do with it will determine their future.

If you’re an early stage, pre-Series A funded startup with an exciting product, we’d love to have you at this year’s Asia Hardware Battle. Not only will you meet hardware startups from all over Asia, you’ll also have the chance to meet investors from top-tier VC firms, like Sequoia Capital, Silicon Valley Bank, GGV Capital, and others.

Online applications are open until the end of February. We look forward to seeing you in Chengdu!

Asia Hardware Battle Timeline

Applications accepted: January 11th – End of February
Application screening period: March 1st – 5th
Finalist preparation period: March 6th – 30th
Final Presentation in Chengdu: March 31st

(Note: Due to visa processing, the timelines for Chinese startups and overseas startups are different)

Qualifications

Must be a hardware startup in Asia (see accepted regions below)
Must be early stage, pre-Series A funding
Must have released a prototype already

Regions

Mainland China
Japan
South Korea
Singapore
India
Israel
Taiwan
Hong Kong

What We’re Looking For

Disruptive companies with innovative technology
Companies that haven’t had a lot of media exposure yet

Rewards and Perks

Tickets for our “VC Meetup” (50 top tier VC firms )
A chance to attend 2016 ChinaBang Awards
15 Finalists have a chance to present on the main stage
15 Finalists will receive tickets to the 2016 ChinaBang Awards
15 Finalists will receive a roundtrip plane ticket to Chengdu and
hotel lodging for 3 days
15 Finalists will receive feedback from a distinguished panel of judges
Media coverage
….and more!

Click HERE to apply!

Alibaba Hires Ex-Apple Investigator To Stamp Out Fakes

Cate Cadell — Tue, 22 Dec 2015 02:52:51 +0000

Alibaba has appointed a former Apple investigator to head up their anti-counterfeit operation, as the company ramps up efforts to pull fakes from their popular platforms.

Mathew Bassiur, who is leaving his role as Deputy Chief Security Officer at Pfizer, will become Alibaba’s Head of Global Intellectual Property enforcement as of January.

Prior to his time at Pfizer Mr. Bassiur was a senior director at Apple for two years, serving as a counsel for intellectual property rights enforcement. He also spent time teaching IP law at Renmin University in Beijing.

“Matthew’s appointment is the latest step in Alibaba Group’s comprehensive and industry-leading efforts to fight counterfeits,” said Alibaba Chairman Jack Ma in a statement. “We will continue to be relentless.”

This month Alibaba avoided being named on the U.S. Trade Representative (USTR) blacklist for counterfeit goods, though the government body did note that they were “increasingly concerned” about the ongoing status of Alibaba’s enforcement programs.

Alibaba.com has been off the list since 2011, while the company’s retail-focussed Taobao.com platform was removed in 2012.

Apple Pay China Will Go Live In Early 2016 With UnionPay

Cate Cadell — Fri, 18 Dec 2015 04:08:26 +0000

Following months of speculation Apple Inc. has finally confirmed that Apple Pay will come to China in early 2016 through a partnership with UnionPay. Apple has long been seeking to tap the payments market, which is currently dominated by wallet systems from Alibaba and Tencent.

“China is an extremely important market for Apple and with China UnionPay and support from 15 of China’s leading banks, users will soon have a convenient, private and secure payment experience,” said Eddy Cue, senior vice president of Internet Software and Services at Apple in a public post.

The company said the service would be available “as soon as early 2016” pending “tests and certification required by Chinese regulators.”

The announcement comes as UnionPay inked another mobile payments deal this week with Powa Technologies, a London-based venture-backed mobile commerce company. UnionPay will take a 51% share of the strategic partnership, which will initially focus on transactions within the online-to-offline (O2O) market.

Powa’s technology is based on specialized QR codes, unlike the Apple Pay system which uses NFC antenna technology and a dedicated chip within the device to conduct point-of-sale purchases without keeping bank data on Apple servers.

Apple’s relationship with UnionPay could see the rollout expedited. The company will be hoping to launch the service before Chinese New Year in February, when retail spending peaks around the holiday.

Global Smartphone Growth Drops Below 10% As Chinese Market Saturates

Cate Cadell — Fri, 04 Dec 2015 07:38:34 +0000

The global smartphone growth percentage will drop below double-digits for the first ever full year in 2015, according to market research company International Data Corporation (IDC).

IDC predicts that smartphone shipments will grow just 9.8% globally in 2015 to a total of 14.3 billion units, with no upturn in sight.

The Chinese market has been a significant driver in smartphone growth in the past few years. As China’s untapped millions became mobile, both internet companies and the vendors themselves experienced an intense growth period, which saw companies like Xiaomi and Alipay become household names on the mainland.

The market has since saturated. According to IDC China is now a “replacement” market, meaning that the core group of consumers who previously drove smartphone adoption are already mobile.

“The main driver has been and will continue to be the success of low-cost smartphones in emerging markets,” said IDC program director Ryan Reith. “This, in turn, will depend on capturing value-oriented first-time smartphone buyers as well as replacement buyers.”

Following the meteoric rise of Xiaomi and Apple within China, two distinct smartphones sales patterns have emerged dominant: the first are the vendors who sell low-end products on a mass scale for a drastically reduced price, including Xiaomi’s Mi series.

The second are those who are tapping the disposable wealth of China’s growing middle class by offering high-end phones, including Apple’s iPhone and Huawei’s Mate S.

Low-cost smartphones will continue to motivate growth, according to the report. They will also continue to drive replacements. The sub-$100 phones deteriorate quicker, which could bring the average replacement cycle to less than two years, according to IDC.

The Android market share is expected to rise a percentage point in 2015, despite the best efforts of alternate platforms including Linux-based Cyanogen and Xiaomi’s own MIUI.

Apple Pay Wants To Launch In China By February

Cate Cadell — Thu, 26 Nov 2015 13:47:53 +0000

Apple is looking to enter the highly competitive electronic-payments market in China by February 2016, according to several reports.

Technode reported in September that Apple registered a local entity called Apple Technical Service Shanghai Ltd (苹果技术服务 [上海] 有限公司) which would oversee the development of Apple Pay in China.

At the time the entity listed Gary Joseph Wipfler as legal representative. Wipfler currently serves as vice president and corporate treasurer for Apple. The established company reportedly registered capital worth $13.4 million USD.

According to sources who spoke to the Wall Street Journal, Apple has already forged relationships with China’s four major banks, as well as possibly Union Pay, the current market leader in credit and debit payments.

Earlier in the year Apple’s Tim Cook told state media outlet Xinhua that he was “bullish” on introducing Apple Pay to China. The country already hosts a series of local payment options, most notably Alipay, the payment brand of Alibaba’s finance unit Ant Financial.

Like Apple Pay, Alipay has excelled as a mobile payment method, allowing users to spend at a host of brick and mortar stores using queues from QR codes that interact with Alipay’s wallet system, linked to bank accounts and debit cards. Apple Pay uses a near field communication antenna embedded within the iPhone 6 itself to communicate with specialized terminals.

Apple Pay’s experience will be vastly different in China than in their home market. Penetration rates for credit cards remain low in China, while debit card-linked digital wallet systems have excelled in the absence of other methods. The Apple Pay system favors users of multiple cards.

Alipay dominates the payment market across online platforms, O2O apps and brick and mortar stores. A much larger percentage of China’s consumers also still use Android phones, which could constrict Apple Pay and related hardware to first tier cities.

Image Credit: Bloomua / Shutterstock.com

Huawei Has Hired An Ex-Apple Executive To Improve Their Interface

Cate Cadell — Fri, 30 Oct 2015 04:37:17 +0000

Fresh of the back of their blockbuster third-quarter results, Huawei is wasting no time establishing itself as a market contender in the high-end smartphone space.

According to a statement on the company’s public Weibo account, Huawei has hired a former Apple design executive to lead the interface design of Huawei’s smart devices. Abigail Brody served almost 10 years as a Creative Director at Apple where she consulted on the interface for the first iPhone as well as Mac Os X among other projects.

Huawei is making bold moves in the high-end smartphone arena, escalating their brand to the third largest vendor in China this quarter and beating out local superstar Xiaomi to become the top local vendor in the country.

Huawei’s third quarter results revealed a 63% year-on-year jump in sales to 27.4 million handsets, comparing to a 22% jump from Apple and a disappointing 6.1% from Samsung.

The company has now set their sights on the international competition, including Apple’s iPhone, which holds the second largest share of the Chinese market behind Samsung.

This September Huawei released their Mate S, a 5.5-inch high-end offering ambitiously priced in the same bracket as the iPhone 6. The price isn’t the only competing feature. Huawei launched the Mate S with Force Touch, a feature similar to Apple’s which was released just one week later.

While the Mate S is made up of solid hardware specs, its interface received mixed reviews. The company revealed that it is in the process of establishing an R&D centre in Silicon Valley, hoping to improve UI design.

A handful of Chinese vendors have made a play for the high-end market recently, as overall smartphone sales slump and companies seek to increase their brand power overseas. Xiaomi’s top-tier flagships (still priced well below other premium offerings) performed relatively poorly compared to their budget offerings, the later of which drove their growth this year.

ZTE, who compete with Huawei in the telecoms and white label device sectors, have also made a strong bid for the top-tier market in 2015 with the release of their Axon series. The company has aggressively marketing their phones in the U.S. following a rebranding in the late 2014.

Image Source: Ivan Garcia / Shutterstock.com

Huawei Hits 100M Shipment Goal As Samsung Is Set To Record First Ever Decline

Cate Cadell — Fri, 16 Oct 2015 01:43:34 +0000

2015 has been a tough year for smartphone vendors in China, with an economic slowdown taking its toll of country-wide sales. However some vendors have been more successful than others.

Huawei reached one of its major milestones this quarter, shipping 100 million units in 2015, becoming the first Chinese vendor to do so, according to research firm TrendForce. Given the current climate for phone sales in China, meeting goals is a quite an achievement. Some of the biggest contenders in the industry have been forced to lower expectations.

Samsung held tight to their top spot in global smartphone rankings, accounting for 25% of total shipments in Q3. However their global shipments are expected to decline a percentage point in 2015 to 324 million units, while rival Apple will see a 16% boost, shipping 223.7 million.

While Huawei’s expected shipments for 2015 are less than half of Apple’s, the company is speeding up where others are struggling, with TrendForce estimating a growth rate of more than 40% over 2014.

That said, China’s smartphone market has not been particularly kind to any of the big smartphone vendors, and it is expected to stay that way until at least mid 2016.

Several Chinese vendors have attempted to stave off market saturation woes by introducing high-end models at a premium price in an attempt to edge into Apple and Samsung’s territory. Xiaomi attempted to crack the premium market with its Mi Note series, positioned as a slightly less pricey alternative to the foreign brands.

However 2015 revealed that Chinese consumers are willing to pay more for the premium names rather than take a price cut for something with less brand appeal. Xiaomi is still set to achieve a 14.6% shipment growth this year due to steady sales in their budget models, however they will fall short of their 100 million yearly target.

Huawei also made an attempt to crack the high-end market, aggressively targeting features in other name brand devices. The Mate S series, which was released just before the iPhone 6s, is Huawei’s most expensive flagship yet, retailing within the iPhone’s price range. They also unveiled a Force Touch feature similar to Apple’s 3D Touch, along with Knuckle Sense technology and fast charging.

While Huawei may have had more success in pushing their high-end smartphone offering, their market share in China did fall almost 1% to 17.9% in Q3 while Xiaomi gained close to 1.5% to reach 14%.

Total third-quarter global smartphone shipments were up 9.1%, reaching 332 million.

Apple Disables News App In China To Keep A Good Thing Going

Cate Cadell — Sun, 11 Oct 2015 23:00:03 +0000

Apple may have a better relationship with the Chinese government than some of its contemporaries, but it appears they are not taking any chances.

The U.S. -based company has evidently disabled their news app in China, hoping to circumvent he censorship discussion all together.

Users who attempt to access the app on the mainland without the aid of a VPN (virtual private network) will now see the error message “Can’t refresh now. News isn’t supported in your current region.”

Apple launched the news app in June, which is currently only available for users who have registered in the U.S. and some test markets in Britain and Australia. However those who had already loaded the app on their device have been able to use it globally without interference, with China now the only exception.

The app, a reader that compiles a customized news feed based on the readers’ preferences, features major western news outlets that are restricted or banned in China behind the Great Firewall. While some companies, including Linkedin, have agreed to allow selective censorship of their content, it appears Apple will avoid the debate entirely by making the service completely unavailable to Chinese users.

Apple Avoiding Controversy In China

Unlike some of its U.S. tech contemporaries, including Google and Facebook, Apple has maintained a relatively positive relationship with China’s regulatory authorities, due in large part to the fact that it is not a content creator at heart.

However despite being their second-largest market, China is still frequently left out of batch-one releases for major Apple software. Late last month, Apple finally launched Apple Music on the Chinese mainland, almost exactly three months after its global launch. The company also opened iTunes Movies and iBooks on the same day.

It’s unclear whether Apple received a request to remove the feature in China, or if they were making a preemptive move to avoid potential backlash. Many content producers, including media outlets, game makers and social platforms, provide ‘lite’ versions of their products in order to appease government censors. Google has reportedly been working on a modified Play Store for the Chinese market, while Linkedin has attracted controversy in the past for censoring posts on its Chinese language platform as well as their localized app.

China already has complex laws requiring foreign tech companies to host servers within the country if they intend to create locally available content. Considering Apple News is not a core product, especially in the Chinese market where it has not yet been officially launched, it’s likely the company will not attract the ire of either consumers or government by attempting to make the news app available in any form.

Image Credit: skyme / Shutterstock.com

Apple China Pays Back $71 Million In Back Taxes Following Audit

Cate Cadell — Fri, 11 Sep 2015 05:12:12 +0000

Tim Cook may have been singing the praises of their China division on stage this week, but its been revealed that Apple China underpaid on their taxes by 452 million yuan ($71 million USD ) dues to reporting errors during their 2013 operations.

According to a report from the Chinese Ministry of Finance on Wednesday, which was released yesterday through state media outlet Xinhua, Apple had already rectified the mistake and was required to pay a further 65 million yuan in late fees ($10.1 million USD).

Apple had apparently underestimated their revenue by 8.79 billion yuan, as well as overstating its profits by 5.4 billion yuan.

This week Apple CEO Tim Cook noted that sales on the iPhone had increased by 75% in China over the past year, making it the biggest market for their flagship. The iPhone 6S is set for release in China on the 25th of September as part of the second wave of releases.

As foreign tech companies gain increasing momentum in the Chinese market the government is stepping up its scrutiny of taxable foreign operations.

In November last year, they claimed $140 million USD in back taxes from US technology group Microsoft. While they had again employed state media newspaper Xinhua to make the announcement, they redacted the name Microsoft, instead opting to call the company ‘M.’ Microsoft then contradicted the report, claiming the amount was a “bilateral advanced pricing agreement”, and not due to any tax violation on the U.S. company’s part.

Apple has instead confirmed the misreported values, as well as confirming they have paid the back taxes reported by the 2013 audit.

@CateCadell

Image Credit: Shutterstock

China Plans Forum With Jack Ma, Tim Cook Ahead Of Xi Jinping Visit

Cate Cadell — Thu, 10 Sep 2015 01:20:00 +0000

Amid tensions over hacking allegations ahead of Xi Jinping’s first state visit to the U.S., Beijing is now reportedly organizing a tech conference in Seattle on September 23rd to show off its tech prowess.

According to the New York Times, who cited unnamed sources, some of the biggest names in Chinese and American tech are expected to attend, including Alibaba’s Jack ma, Apple’s Tim Cook and Robin Li from Baidu. Representatives from Uber, Google, IBM and Facebook have also been invited to the forum which is co-hosted by Microsoft.

The meeting will be headed by China’s ‘Internet Czar’, Lu Wei, who is responsible for deciding the extent of restrictions on foreign tech companies. It is worth noting that a number of the invited companies are currently struggling to have such restrictions lifted.

It was revealed this week that Google, whose services have been progressively blocked in China since 2010, is seeking to introduce a ‘China-friendly’ version of their Play Store in China this fall, marking progress with censors.

Uber has also come close to clashing with the Chinese government over banned ride-sharing models, while Facebook remains blocked in the country, despite efforts to target cross-border businesses. Apple will also be keen to maintain a health relationship with Chinese regulators, with CEO Tim Cook praising China sales.

Following a series of recent data hacks, tension over tech remains high between China and the U.S. ahead of Xi’s visit this month. The possibility of sanctions are hanging over the Chinese leader’s head after data was stolen from the U.S. Office of Personal Management this year, including the personal records of over 20 million American workers. The Chinese ambassador has already publicly warned against sanctions ahead of Xi’s visit.

While it’s not clear whether the high-profile tech event is a means of retaliating against possible sanctions, it certainly highlights possible tension points between the U.S. government and U.S. tech giants. Tech will likely become a major bargaining chip in China’s soft-power arsenal, with billions of dollars at stake for U.S. businesses who do not comply with Chinese demands and restrictions.

@CateCadell

Related Articles:

‘KeyRaider’ Malware Steals Record 225K iOS Logins, Holds iPhones For “Ransom”

No Tunes For The Mainland: China Left Out Of Apple Music

Alibaba Shares Stumble As Sales Estimates Are Cut

Image Credit: Shutterstock

‘KeyRaider’ Malware Steals Record 225K iOS Logins, Holds iPhones For “Ransom”

Cate Cadell — Thu, 03 Sep 2015 02:50:53 +0000

A malware family dubbed ‘KeyRaider’ has stolen over 225,000 iOS account login credentials, mostly from Chinese jailbroken iPhones, according to a report released this week from Palo Alto Networks.

The breach is the biggest so far in the history of iOS devices, and has affected users in 18 countries total. According to the report, up to 20,000 users are taking advantage of the tweaks that use stolen data to download and pay for items from the iTunes App store.

“The purpose of this attack was to make it possible for users of two iOS jailbreak tweaks to download applications from the official App Store and make in-app purchases without actually paying,” said Palo Alto in a blog post.

“Some victims have reported that their stolen Apple accounts show abnormal app purchasing history and others state that their phones have been held for ransom”

The malware was originally discovered by a student from China’s Yangzhou University along with a member from tech group WeipTech which is affiliated with well-known Chinese Apple fan site Weiphone. The report identified a user of Weiphone’s Cydia Repositories, a service for jailbroken devices, who they believe to be the author of the malware.

Weiphone has cooperated in the past with Palo Alto in identifying Wirelurker, another of the largest attacks to hit iOS devices, again mostly in China. The country is susceptible to malware because the inability to access software on official platforms makes jailbreaking an attractive option for users.

Wirelurker was the first malware of its kind to infect iOS devices that were not jailbroken. At the time Palo Alto Network noted that it was a sign “bad actors are getting more sophisticated.” Wirelurker infected 450 apps on a black market app store and was downloaded over 365,000 times, potentially affecting a similar number of users as KeyRaider.

Palo Alto Network has posted details on how affected iOS users should handle the the KeyRaider malware once it has been identified.

@CateCadell

Related Articles:

Huawei Releases Their Answer To The iPhone 6 With Force Touch

Chinese iPhone Hacker PanGu Releases iOS8.1 Jailbreak

How Korean Startup CEOs Joined Forces To Track The MERS Virus

Image Source: Shutterstock

No Tunes For The Mainland: China Left Out Of Apple Music

Cate Cadell — Wed, 01 Jul 2015 12:43:21 +0000

Apple has released iOS 8.4 with ‘Apple Music’, spurring global excitement over the new service. But one market won’t be celebrating, and it happens to be the second biggest consumer of Apple products: China.

People in 100 countries and territories were able to download the update last night, but China did not make the list despite early reports that they would. Meanwhile, both Hong Kong and Taiwan have made the cut for the first release.

The company didn’t explicitly reveal why the Middle Kingdom was not included, but it’s likely to do with the competitive nature of China’s existing streaming ecosystem. Dominant players Tencent and Baidu already feature strong streaming services, as well as many other smaller players.

The market is also notoriously for its piracy culture, making the monetization of music, film and tv challenging. It’s for these reasons that Apple Music competitors such as Spotify have stuck to surrounding markets including Hong Kong, Singapore and Malaysia.

Likewise, in 2012 Google shut down its China-exclusive music service after 3 years, citing poor performance in a company blog. “The influence of this product turned out to be lower than we expected, and as a result we decided to transfer our resources to other products instead,” said the company.

Aside from market competition, streaming services in Asia also have the tough job of adapting to regional music tastes where local players perform better. While Apple Music will not be a feature in the latest update for China users, it will likely seek out a solution to the issue in the future given the market potential of the country’s growing middle class. Early this year, iPhone sales outstripped local and international competitors to become the most popular smartphone in urban China.

Image Credit: Shutterstock.com

Chinese Companies Smear Western Tech On Weibo: Uber, Apple

Cate Cadell — Mon, 29 Jun 2015 22:06:35 +0000

Uber is beginning to gain traction in China. A leaked memo from the company’s COO revealed last month that the Middle Kingdom will be Uber’s focus market over the coming years. After years of toe-dipping, it seems that the ride-share giant may finally have an inroad in the world’s largest economy.

So how does a competing local company with a medium-to-small market share attempt to nip Uber in the bud? Last week, one of China’s homegrown services released a particularly aggressive ad campaign to do just that.

Car service company Shenzhou gathered together ten high-profile celebrities and released a series of posters on their Weibo page with the slogan ‘Beat U: I’m Afraid Of The Black Car.’

The ads have a distinct PSA feel, and warn against illegal car services, calling on women to avoid the services for their own safety. Uber’s for-profit civilian ride-sharing model is banned nationwide in China, but they have adapted with low cost black car services and not-for-profit ride-sharing, both of which fall in a legal loophole.

The company apparently underestimated China’s netizens however, and in the past few days the company has received a digital lashing for scaremongering, while the celebrities have been attacked for being “money grubbing.” There was even a series of mock ads using the same template with the slogan ‘Beat Shenzhou.’

All in all, it was a swing and a miss for Shenzhou on the front of self-righteousness, but they did manage to occupy a viral corner of the Chinese web for a few days, which can’t hurt in a market as competitive as China.

And it’s not the first time this year that a Chinese company has shelled out major dollars to fund a smear campaign against a western company. In April, one of the country’s largest video streaming companies released a parody of Apple’s iconic 1984 ad as part of a promotion for its new smartphone, the ‘Le Superphone.’

LeTV’s high-budget parody of Apple’s iconic 1984 went viral just as the company hosted a US launch.

LeTV CEO Jia Yueting was criticized for posting a Hitler cartoon with an Apple sash on Weibo in April

Unlike Shenzhou’s PR blunder, the high-budget LeTV parody was a bit more tongue and cheek, pointing out the iPhone’s growing cult-following in China. Unfortunately, the company’s CEO also released an image on Weibo of a Hitler cartoon with a red Apple arm sash in the same week, which attracted widespread criticism.

Blunders aside, both the Shenzhou and LeTV campaigns point to the growing number of Chinese companies that are looking to push back against new western counterparts entering the market. For over a decade, Chinese censorship and rampant IP theft has kept Western companies wary, but as the market begins to modernize foreign players are finding new footholds.

However, while Uber and Apple have managed to make headway, it still remains a tough market to localize in. Linkedin, another successful entrant, is still ironing out issues on the mainland, despite entering several years ago. Last week, it released a China-exclusive app, Red Rabbit, it’s first dual-brand strategy in a foreign market. Banned services like Twitter, Facebook and Google are attempting back door acquisition by targeting companies who are trying to promote globally.

Both Shenzhou and LeTV’s campaigns also point out that there is a lot of maturing to do in China’s advertising market. Netizens are becoming increasingly critical of the scaremongering that is commonplace among some company strategies. Last week, Chinese internet giant Qihoo 360 was dragged through the mud by online consumers when they released a ‘pregnancy safe’ router. The company later acknowledged that they “were not scientists” and were unaware that WiFi routers are not harmful to unborn babies.

Image Credit: Shenzhou/LeTV/Weibo

Tencent Comes Out On Top In China Mobile Game Wars

Eva Yoo — Wed, 06 May 2015 06:17:00 +0000

As mobile connectivity surges in China, a handful of companies are battling it out for top spot in one of the country’s fastest growing revenue makers: mobile gaming.

Internet giant Tencent currently owns 14 of the top 30 most downloaded games in China, according to game-industry media company Gamegrapes, however other players including Netease and Chanyou are vying for the spot.

Internet giant Tencent has come out on top by successfully leveraging its triple-roles as a game developer, publisher and game platform using WeChat. NetEase listed four apps among total 30. 3D games such as MMORPGs are largely produced by Sohu’s online game subsidiary Changyou, developer of Tianlong, seizing users with games based on classic Chinese novels.

Perfect World developer of classic IP games, acquired its rival Shanda Games last year, now boasting its 600 million users. Supercell’s Clash of Clans started from Helsinki, Finland is now a worldwide favorite topping several charts in China.

Other games such as One Hundred Thousand Bad Jokes is gaining popularity for its familiarity, made from serialized comics from Chinese website YouYaoQi. Buying the license from a renowned animation or movie has found favor with game developers, since the people put great value on brands.

Smartphone OS market share in China shows that Android takes 72.8%, while iOS takes 25%, Window and Blackberry phones hardly show mere percentage, while in the U.S., Android takes 51.9% and iOS takes 42.8%. With a handful of app stores in the market like UC, 360, Baidu, Mi, Wandoujia, competition is hot in game distribution. Tencent’s Wechat proved mobile messaging platform a great money making platform for game distribution attracting revenue from its self-developed games and acquired game companies. To make a diversion, Wandoujia announced a new revenue share structure that benefit game developers last year. Recently, Xiaomi’s App Store MiUi reported its 100M userbase, which helped its third-party mobile games to reach high sales revenue last year.

To foreign companies, GameGrapes’s partner, Tianxiao Shi highlighted on localizing the games apart from translation. “Foreign companies should understand China’s users when localizing the product. You need to analyze the trend, discover why people like certain game, and try to adapt to your games to cater to China users. For example, South Korea’s games are strong on design capacity, so they should focus more on the story. It’s better to provide free games since Chinese users are not yet used to paying model.” Shi pointed out, adding that “It’s important for foreign companies to find a good publisher to launch their product. “

Shi released information on the state of the gaming industry on the Chinese game market at a conference held in Seoul co-hosted by Money Today and AppAnnie.

Image Credit: GameGrapes

Apple Is ‘Tyranny’: A Close Look at LeTV’s Anti-Apple Campaign [PICTURES]

Cate Cadell — Fri, 17 Apr 2015 03:21:25 +0000

Nothing says ‘look at me’ quite like a Chinese tech brand appropriating a Hitler cartoon to take a shot at the world’s biggest technology company.

If you live in a Chinese city, watch Chinese video streams or peruse the local social media, chances are you’re familiar with LeTV’s anti-Apple campaign. From Nazi satire to a high budget parody of Apple’s iconic ‘1984’ ad, LeTV is making it clear that they know who their biggest rival in the local smartphone market is – and that they’re willing to take it on.

This week, LeTV launched three new premium ‘Le Superphone’ models which appear to be the world’s first USB type-C enabled smartphones. The event was simultaneously webcast in Beijing, San Francisco and Los Angeles, highlighting what the company calls its ‘BLS’ (Beijing, Los Angeles, San Francisco) strategy.

On CEO Jia Yueting’s personal Weibo account, he attacked Apple for lacking innovation and stifling developer communities with their closed OS, taking the same approach as Android’s fierce supporters.

Chinese Smartphones Breaking Into Foreign Markets

If you’re a foreigner looking at Chinese smartphone makers, you may not recognise a good number of them. The quality and diversity of Chinese phones has grown substantially over the past five years, with local brands trying hard to shake off the low cost, low quality image that comes with being a Chinese smartphone in the west.

As the Chinese middle class grows, the market for the cheap-and-nasty tech is shrinking. Premium products are gaining traction, and high-end brands – both local and foreign – enjoy a cult following. This Chinese New Year, iPhones sales outstripped competitors in urban China for the first time ever, according to a report form Kantar Worldpanel released this month. Over the same period, local brands released a spate of ‘premium’ 5.5 and 6 inch alternatives, hoping to dip into the same pool of the increasingly wealthy Chinese urban population.

Despite the general surge in quality, however, Chinese smartphone brands are still struggle to expand to the west. Even if they can manage to avoid the Huawei nightmare of publicly vetted for security issues, they still face a wall of consumers who see little benefit to buying a Chinese smartphone. Especially one that eventually intends to price itself into the premium range.

Which puts LeTV’s oddly obsessive campaign into perspective. For a company that doesn’t even intend to launch its new phones in the U.S. until late 2015, they’ve sure managed to put their name next to Apple’s in a lot of headlines. Playing the role of the active challenger – no matter how ludicrous – has bought LeTV a ticket to the fight, at least in the arena of possible Chinese contenders.

The LeTV ‘1984’ Parody

Despite several flaws in its logic, the parody is surprisingly on-point. It opens with a crowd of chalky, white-faced worshipers in hazmat suits mimicking the original 1984 Apple ad – except they’re idolising a green Apple on a pedestal.

A man in a red shirt runs from a hallway behind the dark room, fighting off heavily armoured S.W.A.T-style special forces police. He breaks through the crowd and takes a bite out of the apple. The walls slowly slide open to reveal blinding sunlight. The final shot shows a gnawed apple core.

While the Hitler gag drew criticism at home and abroad for obvious reasons, the ‘1984’ parody is playfully geeky – even if it’s a bit self-indulgent of the part of LeTV. But we’ll let you be the judge – on the left is Apple’s ‘1984’, on the right, LeTV’s parody:

To view both ads on LeTV’s video streaming service, click here.

While the concept is cheeky, the unfortunate eyebrow-raiser of the parody is the fact that the Le Superphone looks a bit too much like the Apple iPhone 6 to be making jabs about innovation. Even the billboard marketing here in China shares Apple’s distinctive minimalistic vibe. Giving LeTV the benefit of the doubt, here’s to hoping the innovation is in their hardware-software combo.

Image sources: Sina Weibo, Apple ‘1984’ & LeTV

Apple Adds UnionPay to Chinese App Store

Emma Lee — Mon, 17 Nov 2014 08:51:41 +0000

Apple today announced that it has added UnionPay, China’s most popular payment card, as a payment option for App store customers in China. The new option allows Chinese Apple ID users to link their accounts with UnionPay’s debit or credit cards as a simple and convenient way to pay for apps.

Before this, the App Store supported payment in China only through the Visa, MasterCard and American Express bank networks . Although credit card penetration rate is on the rise in China, it is yet to become a universally used household service as it is in North America, Europe and Japan.

China UnionPay has a virtual monopoly over bank card transactions in China. To date, the total number of UnionPay Cards issued both at home and abroad has exceeded 4.5 billion, enabling UnionPay Card acceptance in over 140 countries and regions.

“The ability to buy apps and make purchases using UnionPay cards has been one of the most requested features from our customers in China,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services, in a statement. “China is already our second largest market for app downloads, and now we’re providing users with an incredibly convenient way to purchase their favorite apps with just one tap.”

In addition to UnionPay, Apple is also seeking a partnership with Alipay, the payment affiliate of Alibaba Group. This tie-up may help Apple in introducing its homegrown payment service Apple Pay into the Chinese market, given the government backing of China UnionPay.

Edited by Mike Cormack (@bucketoftongues)

Apple Gets Approval from Chinese Regulators to Sell iPhone6 in China Since Oct. 17

Emma Lee — Tue, 30 Sep 2014 08:59:05 +0000

Apple is going to bring iPhone6 and iPhone6 Plus to Chinese users after receiving a license for the devices to be used on China’s wireless networks. China’s Ministry of Industry and Information Technology (MIIT) had approved the sale iPhone 6 in China after the U.S. smartphone maker addressed potential security risks that could cause personal data leakage, according to the MIIT announcement.

Both iPhone6 and iPhone6 Plus are offered in 16GB/64GB/128GB versions and three colors of silver, champagne and space gray. iPhone6 will be sold for 5,288 yuan (around US$860)/6,088 yuan/6,888 yuan, while iPhone6 Plus are priced at 6,088 yuan/6,888 yuan/7,788 yuan, respectively.

The products will be on sale at the retail stores of Apple and the three Chinese telecom carriers, as well as other authorized outlets since October 17. Chinese Apple fans can pre-order since October 10 online or October 14 at the physical stores.

The four iPhone6 models going to be on sale in China are:

A1586: iPhone 6, supporting TD-LTE, FDD LTE, WCDMA, TD-SCDMA, CDMA2000 and GSM;
A1524: iPhone 6 Plus, supporting TD-LTE, FDD LTE, WCDMA, TD-SCDMA, CDMA2000 and GSM;
A1589: iPhone 6 China Mobile version, supporting TD-LTE, TD-SCDMA, GSM, roaming support WCDMA and FDD LTE;
A1593: iPhone 6 Plus China Mobile version, supporting TD-LTE, TD-SCDMA, GSM, roaming support CDMA and FDD LTE.

The Apple craze used to drive Chinese users to buy up the latest Apple products overseas and bring them to China. The huge demand in China has enabled smugglers and sellers to profit heavily off the devices, but that’s apparently not the case this time. The price of smuggled Apple smartphones began to slump even before the devices are available in China.

The price of smuggled iPhone6 dropped from around 12,000 yuan upon the release to around 6,500 yuan now, and that of iPhone6 Plus tumbled from 15,000 yuan to 8,800 yuan, according to a Tencent report.

Apple App Store to Add China Mobile Direct Carrier Billing

Tracey Xiang — Mon, 05 May 2014 06:14:19 +0000

China Mobile, China’s largest telecom operator by subscriber base, disclosed recently that its direct billing will be available for purchases on Apple’s App Store in near future. It is reported that China Mobile will take 15% of the total sales generated through this payment option. (report in Chinese)

Currently App Store supports credit card and prepayments through online banking, both of which are not widely used by Chinese for micropayments online.

Alipay, one of the most widely adopted online payment services in China, isn’t available for Apple services. It’s not that it’s difficult to introduce Alipay or other local online payment services — Shortly after Uber entered China market, Alipay was added as a payment option for the taxi service.

Direct carrier billing, which was the only mobile payment option long before Internet-enabled payment services emerged in China, has been well accepted in China. And it’s considered very convenient.

However, direct billing hasn’t been available for App Store purchases although China Unicom and China Telecom, the other two Chinese carriers, introduced iPhone way earlier than did China Mobile.

China Mobile began selling iPhones as lately as in early this year. It is expected its huge user base would boost adoption of iPhones and other Apple mobile devices in China.

iPhone5s Accounts for 12% of iOS Devices in China as of Dec 2013: Umeng Report

Tracey Xiang — Thu, 09 Jan 2014 08:56:59 +0000

iPhone 5S and iPhone 5C account for 12% and 2% of the total iOS devices in mainland China as of December 2013, according to the report by Umeng, the Chinese mobile analytics and service provider. iPhone 5S seems more popular among Chinese users as iPhone 5 only gained 6.7% a share four month after the launch.

40% iOS devices had been updated to 7.0.4 version. Jailbreak rate decreased to 12.7% from 14.1% one month ago. Umeng concludes that more users chose to upgrade the operating system on their own rather than turn to a jailbreak provider.

One thousandth of Android devices in use in December 2013 were via 4G network. Umeng estimates that about 2 million smart devices are using 4G network daily.

China Mobile Begins Taking Preorders of “A 4G Phone Star”, Not Saying the Name of iPhone

Tracey Xiang — Thu, 12 Dec 2013 10:49:38 +0000

Interesting.

It was rumored earlier this week that China Mobile, the only Chinese telecom operator that hasn’t started selling iPhones yet, would begin taking pre-orders for iPhone 5S on this Saturday (today). China Mobile responded saying it hadn’t reached final agreement with Apple then.

China Mobile Beijing did launch a webpage today taking pre-orders for a “star in 4G phones”. But you can tell the phone in the screenshot below is the very iPhone 5S. It’s unknown whether it’s due to unsettled issues between China Mobile and Apple.

What’s more interesting is the webpage shows 17179 orders have been submitted as of this writing.

China Telecom Openning up Pre-orders for iPhone 5S/5C

Tracey Xiang — Thu, 05 Sep 2013 13:54:28 +0000

Chinese carrier China Telecom announced to open up pre-orders for iPhone 5S/5C this afternoon. The prices are not shown on the webpage. The image and introduction on it can hardly tell how different the new models are from iPhone 5.

It is expected Apple will release the new iPhones at a upcoming event on September 10th. Apple China will hold a event several hours later in Beijing. Chinese telecom operators reportedly will attend it.

Apple CEO Tim Cook Visits Chinese Telcos for the Second Time This Year

Tracey Xiang — Wed, 31 Jul 2013 07:24:16 +0000

News broke yesterday that Apple CEO Tim Cook was in China visiting Chinese telecom operators. China Mobile spokesperson later confirmed Cook’s visit yesterday morning. Sina Tech reports today that Cook also visited China Telecom yesterday. It is expected he’d visit China Unicom today or later as it’s the first carrier partner of Apple’s in China (report in Chinese)

It’s the second time Cook visited China this year. It is speculated that this visit is partly due to the comparatively poor performance of Apple product sales in Greater China. Apple’s latest earnings release shows that its revenues in Greater China in last fiscal quarter declined by 14% QoQ and 43% YoY. Tim Cook later explained during the conference call that decrease in sell-through was only 4% YoY and that in mainland China, actually, was up 5%. The company also saw double digit unit growth in China for iPad.

China Mobile hasn’t officially introduced iPhone due to TD-SCDMA, the 3G format developed by several Chinese organizations and adopted by China Mobile that average chips don’t support. But it is reported that China Mobile always wanted to introduce iPhone. Early this year Tim Cook visited the biggest Chinese telecom operator for the first time. The upcoming low-cost iPhone with Qualcomm Snapdragon chip built-in reportedly will support TD-SCDMA.

Update: Cook reportedly visited China Unicom on August 1st (in Chinese).

Rumor: Baidu Is Talking To Apple to Have Its Mobile Input Method Pre-installed in iOS for Chinese

Gang Lu — Thu, 31 May 2012 18:14:51 +0000

One big reason for me to have my iOS device jailbroken is that its pre-intalled input method for Chinese is not convenient to use. Using QWERTY keyboard to input Chinese is slow; you can not really input a long sentence with it, and it is a headache if you need input English & Chinese mixed message as you have to switch between English and Chinese input method.

Good news is that Apple seems to realize this issue and wants to introduce a solution. Instead of developing a new input method for Chinese, Apple might be working with Baidu to have Baidu’s mobile input method pre-installed into iOS. We heard this rumor yesterday from an experienced entrepreneur, but he refused to tell us who’s his news source.

We contacted Michale Wong, the founder of Touchpal, a Shanghai-based startup which claims the No.2 popular input method in the world. He told us, in Chinese local market, Sogou is clearly the No.1 in input method market, and Baidu now has taken the 2nd in terms of number of downloads. The newly released Baidu input method supports iOS5.1.1, and comes with cool features such as voice input, cloud library, pinyin input, stroke input etc.

What I am quite curious about is that, if the rumor is confirmed, does that mean Chinese version of iOS will also have Baidu search as the default search engine, and Baidu map the replacement of Google Map? That would be another sad story for Google in China.

I ‘Know’ Apple Won’t Release an iPad Mini

Guest Editor — Fri, 02 Mar 2012 06:22:02 +0000

Editor: I am always wondering when Apple will release a pocket size (~7′ inch) iPad. If iPad 3 comes with two size, I would go for the Mini one. But, obviously Andrew Sykes, Founder of GizChina does not think so. Here are his reasons.

Rumor and guesstimation have determined that Apple may release an iPad mini next week at their March 7th iPad event, but we’re not too convinced!

Ever since Apple released the original iPad, there have been those who have anxiously waited for the company to release a smaller version. Even after Steve Job’s himself openly mocked 7-inch tablets fans have still kept hoping (he didn’t mock 8 inch tablets after all!). Now, with March 7th less than a week away there has just been enough time of tech sites to speculate on how they believe a smaller iPad with 7.85inch screen will accompany the next generation iPad on Wednesday (could be an iPad 2S!).

But next week there will be no iPad mini to compete against the Android in the small tablet market, a market which Android owns!

No Leaked Physical Proof

“Apple are notorious for keeping a tight lid on their products”, if you have heard this line before you will no to make a half assed effort to make your cry of “BS!” sound like a cough!

Apple are terrible at keeping their latest products a secret, we now have more of an idea what Apple will be up to for the next 12 months than, for example, Blackberry, Samsung, HTC, Motorola, Nokia, HP, ASUS, ACER etc!

This year Apple will release an new iPad and an iPhone 5 which will actually feature some new hardware (possibly a new dock connector), there looks to be an improved Apple TV on the way, I hope there is a new iPod touch, Apple iTV looks set for release and (please,please,please) improved Macbook Pro’s with a more ‘Air’ design!

Why do we know all of this? Well leaked physical proof, Steve Jobs and talkative Chinese and Taiwanese Apple suppliers, none of which have offered real proof of a mini iPad.

Fragmentation

Apple don’t want to fall in to Android’s trap of fragmentation. For an Android dev to get it’s app working on the numerous Android display sizes available today is an absolute nightmare!

For an Apple Dev however it’s as easy as pie! The current iPad has the same PDI as the Retina display on the iPod touch and iPhone 4/4S so apps work and look great on both!

As for the iPad 3’s (iPad 2S!) Retina display upping the pixel count shouldn’t be too much bother, but most importantly Apple are leaving the old iPad screens behind and they will be pretty much obsolete this time next year while everyone is clambering over the iPad 4, so they’re not worried about them.

The iPad is “Perfect” its bloody “Magical”

No one describes their companies products as “Magical” not unless you are brimming with pride because you have just launched the dream product you have always wanted to make!

Well the iPad was Steve Job’s baby, and not to sound too British but he was well chuffed to show it off!

To Apple, the iPad is the perfect size, it’s big enough for consuming, and is more than capable of creating thanks to the generous screen real estate, yet it’s small enough to fit in to all buy the tiniest of “fanny packs”.

For Apple to release a smaller iPad would be to admit 2 things to customers:

1) They were wrong about the iPad’s original size

2) “Perhaps those smaller and cheaper Android tablets are worth looking at now Apple is making smaller tablets” is also a bad message!

The March 7th Invitation

The biggest clue to that Apple is not planning a smaller iPad launch next week is the fact they didn’t show, or even hint at it on the invitation for the March 7th event!

What they have shown is an new iPad with what appears to be a much better Retina display, or it could be a camera trick, either way this is what Apple wants us to speculate about.

If Apple were planning a 7.85 inch iPad for launch next week wouldn’t they have added a tagline to the event invitation such as “It’s not the size it’s how you touch it” ? (too cheap?)

Let us know what you think in the comments section below, and don’t forget to flame, or troll or whatever it is you do, when I turn out to be wrong!

(source: GizChina)

Facebook’s Trademark Strategy in China, Sounds Smarter Than Apple

Guest Editor — Sun, 26 Feb 2012 09:46:23 +0000

This post is written by Guest Writer, Mr. Luo Yanjie of Debund Law Office (@BridgeIP), and edited by Gang Lu.

Although it has not been officially admitted operating in China, Facebook, the social networking service giant, is carrying its trademark plan in China when Apple is trapped in the iPad trademark battle in this country, According to a report from local media, Facebook has applied for more than 60 trademarks in Chinese or English in China.

Below show some of the trademarks Facebook applied for and the related classes.

No.	Name	Class	applicant
1	FACEBOOK	9、25、35 、38 、42	Facebook Inc.
2	FACEBOOK	9、35、36、38、41、42、45	FACEBOOK UK LTD
3	F	9、35、38、41、45	Facebook Inc.
4	THE FACEBOOK	35、38	Facebook Inc.
5	脸书 (one of the translations of Facebook in Chinese)	9、35、36、38、41、42、45	Facebook Inc.
6	面书 (one of the translations of Facebook in Chinese)	9、35、36、38、41、42、45	Facebook Inc.
7	飞书博 (the homophic translations of Facebook in Chinese)	35、38、42	Facebook Inc.

Note that Facebook actually applied for these trademarks in various categories, not just for Internet business:

Class 9 – Software; Class 25 – Clothing; Class – Ads; Class 36 – Finance; class 38 – Telecommunication, Internet communication; Class 41 – Education; Class 42 – Software and Hardware service of PC; Class 45 – Social Service.

It’s quite interesting to see that Class 25 of clothing is also applied by Facebook, which indicates that the company has been fully conscious of any possible free-riding on its trademark’ s reputation. According to our knowledge, the most applied field of the well-known trademark is the manufacturer of clothing and stationery. Therefore Class 16 of stationery is also covered. We would even suggest Facebook to register the trademark in Class 18 of feather products, Class 28 of toy, Class 26 of ornaments and Class 30 of food, which fields are all easy to be infringed.

The applied trademark by Facebook includes not only those in English but also the ones in Chinese, like “脸书”. Although, the most widely spread localized name of Facebook is the phrase of “非死不可”, which means Dooms to Die. Few foreign companies would put attention on the localized trademark of its existing sign before entering the Chinese market, which may hinder the propaganda of its localized brand due to others squatting. But, Facebook’s application shows that foreign investors have realized the importance of the brand localization.

It’s also found out that the trademark of Facebook has been first applied in Class 9 by other companies, which by our opinion, Facebook could take back the trademark through judicial methods. For any squatted trademark, the relief procedure of the trademark regulated by China laws is available to foreign investors other than the purchase of the trademark as the case of Apple.

[Editor: Nobody knows that how long it will take for Facebook to officially enter China, maybe it’s a Never, but good to know that Facebook is still seeking the way and preparing for it, at least the way of its protecting its trademark in China sounds smarter than Apple.]

This post is also co-published on ChinaIPlawyer.

China Unicom Offering FREE iPhone 4s with 3 Year Contracts

Jason Lim — Wed, 11 Jan 2012 09:57:43 +0000

China’s 3G telecom provider, China Unicom, will be offering customers a free iPhone 4s when they sign up for a three-year contract. The deal will start from January 13.

With iPhone crazed Chinese squeezing through buildings and clamoring to get their hands on one, this will make things even crazier. What Chinese person doesn’t like FREE right?

Since China is Apple’s 2nd largest market in the world now, Apple is trying to capitalize on the enormous growth opportunity that China represents. Locking people into a three year contract and blocking them from switching to the increasingly popular Android phones is a good strategy.

According to Bloomberg, contracts in China are offered at $45 (286 yuan) per month for a 32-gigabyte iPhone 4S on a three year contract and $60 (386 yuan) per month for 16-gigabytes on a two year contract. In China, the iPhone costs roughly $800 (6,000 yuan).

The 3 year contract is greater than the standard 2 year contract because China Unicom needs to make up for the loss they incurred when they launched iPhone 4 in the first 2 years. “Subsidizing the iPhone at as little as 286 yuan a month ‘would hit their near-term subsidy expense,’ said Alen Lin,” reports Bloomberg.

China Unicom to Allow Apple iPads to Make Calls

Jason Lim — Fri, 23 Sep 2011 09:42:05 +0000

China Unicom Research Vice President, Huang Wenliang, revealed yesterday at the Macworld Conference that they have launched an Institute for R&D for iOS products. Some projects will be just experiments and some will go to market. 6 of the most recent developments have or will soon hit the App Store.

One radical feature to be released is Woxin 1.0, a piece of downloadable software the gives iPad or iPod Touch devices to make calls. If this is the case, what is really the difference between an iPhone of an iPod Touch that can make calls? Will this cannabalize sales of iPhones because iPod Touches are cheaper? Perhaps they don’t care as long as it drives them more traffic and users.

Huang Wenliang said “we hope to develop more outstanding APP application, and further stimulate the use of user traffic.”

Apple Gives Sneak Peek Into New Hong Kong Store

Jason Lim — Thu, 22 Sep 2011 11:35:09 +0000

I recently wrote about Apple opening up a Hong Kong flagship store. Today, local media were given a sneak peak to generate buzz and whet the appetites of hardcore Apple fans.

The store itself is two floors based in IFC Mall and in true Apple style, looks clean and sophisticated. Staff rigorously conducted identity checks to make sure no one leaked any important info. Apple has hired 300 workers to manage the 16,000 square foot store.

The store will officially open on Saturday and will give away 3,000 limited edition T-shirts. A new Shanghai Apple store is to be opened tomorrow.

New Apple CEO, Tim Cook has said that the Greater China region including the mainland, Hong Kong and Taiwan have greatly boosted the company’s performance. In fact Q2 revenue grew 6 times to an amazing US$3.8 billion for Greater China.

“I see an incredible opportunity for Apple there.” Said Cook.

Oops, No One Queues for iPad 2 (3G) in China

Gang Lu — Wed, 21 Sep 2011 16:11:28 +0000

Apple’s revenue from China for the 2nd quarter increased by more than six times from the same period last year, and Apple COO Tim Cook even believes “There is incredible opportunity for Apple there”. But, things seem not going that well as everyone expected.

iPad 2 (3G) is available in Apple Store in China starting from today. As usual, Apple hired tens of safe guards standing outside the Apple Store waiting for the long queue and exciting Apple fans. The store opened at 8am (2h earlier than usual opening time), but surprisingly, there was just no queue. Only several iPad 2 (3G) were sold, reported by a local TV channel.

Reading the comments over the net, there are several reasons for Chinese to say No to Apple for the first time.

1. Too expensive. iPad2 (3G) 16G version is sold at rmb4688 which is around rmb1000 higher than iPad2 Wifi-only version;

2. No Jailbreak. People worries that the Jailbreak for this 3G version is not available yet;

3. iPad is not the only choice. Several other brands are also in the market and with cheaper price;

4. China Unicom does not come with any data plan for iPad2 (3G). Some people think it might be a cheaper option.

Apple Shop Controversially Added to Peking University Library

Jason Lim — Wed, 14 Sep 2011 06:21:12 +0000

Yesterday, Peking University added an Apple Store in the unusual and controversial location of the library.

As one of the most prestigious educational institutions in China, some of the studious students are outraged that Apple would disrupt their valuable study area. “Learning and shops should be separate,” said one student. Other views are less harsh and don’t see it as a problem, “as long as the price is reasonable and does not affect the study environment, its alright.” Another student said. I remember in my University in Sydney, we also had an Apple Shop next to but not inside the library.

Titled “Liangyu Apple Experience Center” it is meant to showcase the latest range of products, but will not allow on-site sales. However if people do want to purchase something, they can order through the store and must show student ID to get a discount. The store itself is an authorized distributor but not an official Apple store.

Other Apple stores exist on university campuses around Beijing, but they are all in non-academic areas. Some examples are Tsinghua University, Beijing Film Academy, Beijing Normal University and Capital Normal University.

This could be just a wild prediction, but in the future, there might not even need to be a library full of physical books. Students of the future could very well likely be walking around with their tablets and downloading content to use at their leisure. Imagine not having to carry around a stack of heavy books in your bag or having to remember when to return them, or worry about losing them and paying a fine. I know the library is often the centrepiece of a university campus and some people love them, but in the future they probably won’t be a real need for them at all.

Apple’s Flagship Store to Open in Hong Kong on September 24

Jason Lim — Thu, 08 Sep 2011 08:07:45 +0000

For Apple crazed fans in Hong Kong, their dreams will come true when its first Apple flagship store open on September 24^th in the International Financial Centre in Central.

Most people know that if you want Apple products, Hong Kong is one of the cheapest places to get them. Even people from China prefer to get Apple products there. This is because there is no sales tax. Additionally the price in Hong Kong is roughly the same as America since the HKD$ is pegged to the USD$.

A friend from Hong Kong is indeed an Apple fanatic and proudly displays his collection of products on a table. One time, we were at a restaurant in Sanlitun Village and his head was surrounded by the bright illuminated Apple sign, like a kind of Apple angel. He will likely be one of crowd eagerly lining up in front of the new flagship store, come open day.

I remember when the Sydney Apple flagship store opened, everyone marvelled at how simple but sophisticated it was. With a totally glass exterior and positioned on the main street of the city, passersby could see all the action happening inside. They even have some private music concerts held in the flagship store.

Apple Flagship Store – Sydney

In Beijing’s flagship Apple store, people young and old go there to play with everything iOS. It’s actually a good place to kill time or surf the net. I see many kids just playing with iPads until they get hooked and then beg their parents to buy one.

Apple Flagship Store – Beijing

Given the architectural attraction of most flagship stores, it will be exciting to see what the Hong Kong one has in store!

Apple Flagship Store – New York

Apple Flagship Store – Shanghai

What is your favorite Apple flagship store?

Nokia is Losing Leadership Grip in China

Jason Lim — Wed, 17 Aug 2011 04:24:40 +0000

Research firm IDC, recently reported that Apple now has 19.1% of the smart-phone market share compared to the incumbent, Nokia with 15.7% market share.

On July 20, Nokia announced in its second quarter earnings from phone shipments in China totalled only US$11.3 million, a drop of nearly 52% for the quarter and 41% year on year. Strategy Analytics reported that for the second quarter of this year, Nokia sold 88 million units worldwide, its lowest point since 1999.

This grim outlook has caused many phone distributors to stop stocking Nokia’s in favour of more popular phones such as Samsung or Apple.

Nokia CEO, Stephen Elop has acknowledged the drops are due to intense completion across all price segments and will take measures to stem the revenue bleeding.

An anonymous Nokia China sales source has said there is “only really bad news for the past six month, there is no good news.”

Conversely, the future is bright for Apple, where it is expected to start selling iPhone’s through China Mobile as soon as this year. The carrier is the largest in the world with 611 million wireless subscribers with 68% market share in China.

Fake Apple Stores Face Logo Ban. Really?

Jason Lim — Mon, 08 Aug 2011 10:34:59 +0000

By now you’ve already heard the stories of fake Apple stores in Kunming and Chongqing. Although many criticized such copyright infringements, equally as many were impressed by the ability to shanzhai or copy not just a product but a whole store!

But following on from the discovery, unauthorized sellers of Apple products in Beijing’s Zhonnguancun have been ordered to cover up Apple logos, as the city’s ‘quality’ watchdog ‘attempts’ to tighten control over the massive electronics distribution centre. It is ‘strange’ however that they would only stop at forcing stores to cover up a logo, instead of closing the whole store. But of course that would put revenue making in jeopardy for everyone.

It has been reported that officials from Beijing’s quality and technical supervision bureau will prohibit unauthorized retailers from using the Apple logo or using any brand name associated with Apple, such as “Apple authorized reseller” or “Apple direct retailer”. But more likely, the drill will be a public scare tactic with temporary frequent inspections with weak enforcement. Already, some unauthorized Apple shop owners have merely covered logos up with blank sheets of paper while they wear fake Apple t-shirts. One owner has even admitted, “If you come back a few days later, everything will be back as it was.”

It is estimated that there are 50 Apple product vendors, many of them suspected of being unauthorized. But Apple China has shown little response to the obvious copyright infringements. Perhaps they are too busy trying to manage the overflowing amount of customers fighting to buy legitimate products from the Sanlitun Village Apple store.

Unauthorized re-sellers have a clear advantage over authorized ones because they offer smuggled real products called ‘shui huo’, at cheaper prices. These products come from across international borders illegally, by ship to avoid customs tax.

I would suggest enforcing a new rule for unauthorized Apple resellers to change all logos to a new fruit. I like mangos.

Rumor: YouKu Talking To Apple to Replace YouTube App on iPhone in China

Gang Lu — Fri, 06 May 2011 05:57:20 +0000

Apple has YouTube app pre-installed on its iPhone since the first day. But in China, the YouTube app is removed as the service is blocked anyway. So you may be wondering who might replace YouTube.

We just heard a rumor from a trusted resource saying Victor Koo of YouKu, the leading online video service listed on NYSE, has met Steve Jobs to discuss of the possibility of having YouKu app pre-installed for iPhone officially sold in China. Interesting! It’s always good to work with Apple.

We are trying to gather more information about this, so please stay tuned.

Some thoughts on Apple’s lawsuit against Samsung

Sherman So — Fri, 22 Apr 2011 11:42:06 +0000

I guess most of Technode readers are aware of the lawsuit between Apple and Samsung. Interestingly, Samsung has just counter-sued Apple for iPad. (http://tech.fortune.cnn.com/2011/04/22/samsung-counter-sues-apple/)

A few days ago, Tim, one of our readers, discussed with me about the Shanzhai iPad. If Apple is suing Samsung, what about the Shanzhai iPad suppliers ?? I think it is an interesting topic, so I share it here:

Any readers wish to share their opinions are welcome.

Tim:

…

If any of the Chinese tablets do achieve significant success it would also be interesting to see how Apple would react. If they have the will to chase after Samsung and sue their own supplier it might be interesting to see how they might treat a successful shanzhai player.

Sherman:

…

I am not a lawyer, so I don’t know if Samsung has broken any laws. But to me, as an end user, I definitely think Samsung’s Galaxy is a copy cat of Apple’s iPhone.

Apple probably is aware of the Shanzhai players, too, but they are too small to pursuit legal action against. So, it sues Samsung. To set example that there are consequence for stealing other’s ideas. Whether the judges will agree with Apple is, however, questionable.

But, in spirit, I am with Apple. Companies should innovate rather than copy what is hot.

Tablet Mania! Opportunity for Developers

Jason Lim — Tue, 22 Feb 2011 17:03:14 +0000

I was at the Innovation Works Social Gaming talk on Monday and heard some interesting predictions by AJ Redmer, CEO of WeMadeEntertainment USA Inc., a huge game development company specializing in MMOG (Massively Multiplayer Online Games) such as the Legend of Mir.

AJ presented on what he sees as the new frontier of opportunity for game developers. In the US, he says the sales trend is already huge and foresees it to continue. Of course the spark was lit by the release of the Apple iPad in 2010, which sold 2 million units in the first 2 months and its Q1 sales exceeded all tablet sales combined for the past 3 years. It is projected to reach astonishing US$17bn revenue in 2014 and that’s just in America. Already Apple is doing big business in China and the iPad is definitely a hot product. I work amongst a group of early 20’s Chinese people and many of them carry an iPad – more than my friends back in Australia.

But the point being made by AJ, is that there is a huge opportunity for developers in China to take advantage of this wave of tablet popularity. Many manufacturers are releasing Tablets, many based on the Android platform such as the Dell Streak, Samsung Galaxy Tab, Motorolla Xoom. The Motorolla Xoom has been considered the first major challenger to the Apple iPad, which was unveiled at the CES Conference in Las Vegas in January. AJ said there is a big software opportunity because there is no dominant social network or social game optimized for tablets. Previous products were based on keyboard inputs and not touch screen, so there is big space for new software and apps to interact with the device.

Already an iPad app has been developed for cats, yes that’s right, your pet cat! Game for Cats developed by Hiccup is a game for cats to catch a mouse or a laser dot. Now that’s creative blue ocean strategy! Can someone please develop an app for pandas?

iPad custom duty cut by half – lower to 10%

Sherman So — Sun, 30 Jan 2011 13:08:16 +0000

When you travel with your iPad to China, you can be taxed RMB 1000 in custom duty, which is 20% of the item’s price in China. But a new law has just passed and lowered the custom duty of computer, camera and video camera to 10%. And it means you need to pay only RMB 500 for your iPad. However, the new law does not include another hot item, iPhone, which still charge RMB 1000 in custom duty. (Here is an article in local media about it: http://tech.sina.com.cn/n/2011-01-28/11501646479.shtml?from=iasknominate)

As there is considerable price different between iPhone and iPad in China and in places like Hong Kong, many people bring them home whenever they travel aboard. In fact, there are more iPhone coming from aboard (called parallel import) than sold by its official channel, China Unicom, in China. China Unicom sold about 1 million iPhone so far, but there are about 3 million parallel imported ones.

In my opinion, the best way to fight parallel import (or struggling) is to lower the price of iPhone and iPad in China, so that there is no more significant price differences. Actually, I don’t quite understand why iPhone and iPad have to be more expensive in China than in places like Hong Kong. After all, they all come from the same source, Apple.

Apple Store is Now In Red, the Chinese Red to Fight Against Grey Market

Gang Lu — Wed, 27 Oct 2010 17:41:34 +0000

You probably never saw Apple’s using the pure Red color to decorate its online store. But today, Apple changes its style. With the Chinese online Apple Store official launched, you finally find some red elements there. And I would think it’s going to be in more red soon as it’s the Chinese red.

Although it still says iPhone 4 is out of stock and the new Macbook Air is not available, many Apple’s products can be purchased online and got delivered for free the next day, including iPad which was reported sold out in China.

Many foreign media seems quite excited about this and reported it in details (you may read WJS, AppleInsider etc). But what I would love to add one point here is they seems wrong at one thing, the payment system. WSJ says “But other hurdles remain, including the requirement for users to have dual-currency credit cards in order to make purchases within the store”, which is actually not true. I’ve tested it out, the most popular online payment gateway in China, Alipay has been well integrated into its payment system. In other words, it’s convenient enough for most users to pay online.

Obviously, with Apple Store launched in China, Apple is more aggressively targeted at this massive market and also officially announced the war against the long-time grey market where most of iPhone in China came from. Why should I buy from grey market if there is not much price difference?

WSJ says, According to research firm Analysys International, Apple had 7.1% of China’s smartphone market as of the second quarter, ranking fifth after Nokia Corp., Samsung Electronics Co., Motorola Inc. and Sony Ericsson; also according to research firm IDC, Apple has less than 1% share of unit shipments in the PC market. The figures sound a bit small, but if you take a look at the photo (left) I took days again in a friend-gathering party, what would you say?

$300 Only, Bandit iPad May Swarm Into The Market in May

Gang Lu — Mon, 05 Apr 2010 02:27:27 +0000

Apple iPad is definitely a big hit in the market. However, if you are aware of the culture of Shanzhaiji (Bandit Phone), you will not be surprised by the “efficiency” of Chinese manufacturers. To make a thing which at least looks like iPad is not a difficult job.

Some Chinese media expected that these iPad-clones from different manufacturers which are mainly based in Shenzhen might swarm into the market in May. The design may be not as nice as Apple iPad, but they obviously look similar. The most interesting points are they are much cheaper (expected only $300), coming with some cool features such as GPS and even micro-projector and powered by Windows Mobile or Android.

Here is the comparison (click for large image):

When Apple’s iPhone just arrived at the market, it soon became the target of many phone manufacturers. It is almost impossible for them to compete with iPhone, but it does not really imply all of them must be labeled “Failures”. Take M8, the best iPhone-liker as an example, it already has street shops open in Shanghai. And recently I found my engineer had one, he is a geek from a tier-2 city; My cousin who lives in my hometown, a small town close to Chengdu and is nothing to do with IT industry, has one too. They want something fancy like iPhone, but are not willing to pay that much of money for it. With M8, they are happy enough.

After Netbook, a new wave of iPad clones is coming…

Confirmed, iPhone 3GS Available In China In Q4 2009. Sorry, No Wifi

Gang Lu — Fri, 28 Aug 2009 09:10:02 +0000

Official announcement from China Unicom just reached us:

“China Unicom and Apple have reached a multiyear agreement for China Unicom to sell iPhone in China. The initial launch is expected to be in the fourth calendar quarter of 2009. We will share more details at that time.”

The announcement was given by China Unicom in its “Q1/Q2 2009 Financial Result Press Conference”. According to a friend onsite, we can also confirm that it’s 3-years exclusive contract and the iPhone model to be sold in Q4 will be iPhone 3GS, but still not clear if it will be Wifi enabled or not. So stay tuned, we will update here once we get more details.

Update: According to Chang Xiaobin, chairman of China Unicom, the iPhone coming to China in Q4 will be Wifi Disabled! 🙁

All About iPhone In China/Asia, Interview with iPhonAsia

Gang Lu — Sun, 02 Aug 2009 17:11:37 +0000

iPhone is so attractive and Asia holds such a huge mobile market. In Japan, iPhone is getting quite popular; nobody knows the exact date yet but we know it is stepping closer to China; it is not very clear about iPhone in South Korea, but at least they are in talk for a long time; and it is already rocking HongKong and Singapore. Recently, we had a great pleasure of interviewing with Dan Butterfield, managing editor of iPhonAsia. We talked about lots of things, actually almost every interesting topic about iPhone in China/Asia, including WiFi function for China Unicom’s iPhone, local version of App Store for China, the pricing plan, the opportunity and also challenge for iPhone in China/Asia, the ecosystem for iPhone in Asian and Western market, the grey market in China, the booming Shanzai Ji (bandit phones) industry, the difference among the Asian markets etc.

Dan gave us very informative and broad views of iPhone and mobile phone market in general in Asia. He believes:

we are at the beginning stages of a mobile revolution. A new breed of smartphones is opening up an ocean of information, entertainment and communication to wireless consumers. The iPhone is at the forefront of this revolution and I’m optimistic that Apple’s smartphone, and devices to be unveiled later, will soon “officially” be launched in the People’s Republic of China (PRC).

1) Can you give us a brief introduction of yourself, your experience in mobile telecom industry and iPhonAsia?

I am the Managing Editor of iPhonAsia – a website covering iPhone with particular emphasis in China, Japan and Korea. I live in the San Francisco Bay Area and enjoy business and leisure travels to the Far East.

Over the years I’ve held senior management positions in the financial services industry and was responsible for development of numerous Web 2.0 applications. My current focus is technology and telecom in the Pacific Rim. I’ve written several dozen articles on iPhone and mobile telecom and have developed friendships with journalists, telecom analysts and app developers across Asia. You can read my complete bio on iPhonAsia.

(2) Regarding Chinese market, the coming 3G iPhone seems to be without WiFi function? If it is true, what’s your view on this?

There have been several rumors about WiFi being disabled on a customized iPhone for China (model A1324) that is reportedly in production right now. This rumor is most likely true. The only way for Apple to meet China’s requirements would be to develop an iPhone that includes China’s proprietary WAPI (Wireless LAN Authentication and Privacy Infrastructure). China’s past policy has prohibited WiFi on handsets. However in May, China’s Ministry of Industry and Information Technology (MIIT) changed the rules and approved a WiFi capable handset by Motorola. There was just one “catch.” This handset had to include WAPI. It seems that going forward, China will allow a WAPI/WiFi combination but not WiFi alone. The inclusion of WAPI adds extra expense to the manufacturing process and will require royalty payments. There may also be some user privacy concerns.

For China’s most tech-savvy power-consumers, WiFi will be important. As a result, I suspect smuggling of WiFi-enabled iPhones will continue to be a profitable enterprise. Apple will be a prime beneficiary as grey-marketers will continue to acquire full-price WiFi enabled iPhones in Hong Kong. In fact, on July 10, the iPhone 3GS went on sale in Hong Kong. The iPhone 3GS was also available SIM-unlocked via Apple’s online store in Hong Kong. The SIM-unlocked models sold out in a matter of hours! But not to worry, Apple (Foxconn/Hon Hai) will soon make more.

To keep things on the “up and up” (legal requirements) many of these SIM-unlocked iPhones have to make a two-way swim across the channel. They are manufactured by Foxconn in Shenzen, then shipped to a Hong Kong address and later smuggled back to the People’s Republic of China (PRC) for sale on the grey-market.

The HK price for SIM unlocked iPhone 3GS:

16GB HKD 5,388 ($695 US)
32GB HKD 6,288 ($811 US)

While some consumers in China may prefer grey-market iPhones with WiFi, there are many millions that have never used WiFi on their phones and have only experienced 2G speeds. For this group, WiFi might be a less important feature. They may be more interested in iPhone’s enjoyable user-experience, entertainment value and status.

I am certain that Apple and China Unicom have carefully considered the implications of selling a non-WiFi iPhone in the PRC. I suspect the official iPhone will come pre-loaded with many special “for China” apps, such as Youku and Hanwang’s HWPen (although nothing has been confirmed re the localization of iPhone for China). The official iPhone will also be less costly as no jail-breaking or hacking will be necessary to activate the iPhone or to load popular apps via Apple’s China App Store.

What are the keys to make the official iPhone for China a success?

Price – The non-WiFi iPhone must be priced below the grey market (WiFi-enabled) iPhones. It is possible that, as part of their negotiations with Apple, China Unicom has agreed to subsidize the retail price of iPhone. This subsidy will allow the “official” iPhone to be priced below grey-market iPhones.
During launch promotions, China Unicom and Apple must emphasize the benefits of owning an official iPhone with a warranty. An official iPhone will not have the “bricking” concerns that accompany grey-market iPhones.
China Unicom and Apple should promote how the iPhone is not a prisoner to fixed buttons and is designed to evolve. I have loaded software updates to my own iPhone several times and I have been amazed how my iPhone improves with age. Apple’s iPhone software updates often add new features/functions and speed. My iPhone is more valuable to me today than the day I purchased it (June 29, 2007).

(3) We’ve heard that a local version of App Store for China is under development. Can you share more details/opinions with us how the Apple store and iTunes would run in China?

Apple has now opened their App Store in many countries including Hong Kong and the PRC. Apple’s China App Store has been live for several months now. Many Chinese Netizens are unaware of the store as it is currently limited to iPod Touch owners only. I’m optimistic that Apple will be allowed to open their China App Store to iPhones. But this won’t happen until a deal is made official and China’s MIIT issues a network access license to iPhone.

I know that Apple has been working hard behind the scenes to further localize iTunes and their China App Store. I also believe that we will soon see many more apps, games and music for Chinese consumers.

There is some sensitivity around the inclusion of “games” on mobile devices (on Apple’s China App Store all games called “apps”). Right now the Nintendo DS is the only mobile gaming device that China has authorized. The iPod Touch and iPhone were not originally conceived as gaming platforms; yet, it’s hard not to notice how compelling the gaming experience can be on Apple’s mobile devices. I do not believe China’s MIIT will attempt to classify iPhone or iPods as gaming devices. The “genie is out of the bottle” (meaning that it is nearly impossible to go backward) and virtually every manufacturer’s handset could be classified as a gaming device. As a sidebar, I believe that Apple will launch an iTablet device (9.7 inch screen) within the next 12 months. This will be a powerful computer/e-book reader/gaming/music/entertainment/communications device.

As the saying goes – “imitation is the sincerest form of flattery.” I believe the success of Apple’s iPhone platform is a key reason China’s carriers have moved aggressively to develop their own:

App store
Android-based mobile operating systems designed to promote the carriers’ own wireless value-added services (WVAS),
Customized Android-based handsets designed to promote the carriers’ WVAS

China Unicom clearly has plans for their own mobile music services and app store. There is a possibility that Apple would be required to make use of China Unicom’s platform to deliver apps and music downloads. I’m sure this was batted back and forth during several rounds of negotiations. Yet I remain optimistic that China’s iPhone owners will be authorized to use Apple’s iTunes/App Store and that Apple won’t have to take on the extra expenses of integrating China Unicom’s nascent platform into the China iPhone’s OS.

In the final analysis, Apple and China Unicom will need to strike a balance between competition and cooperation when it comes to their respective platforms.

(4) In your opinion, what kind of pricing plan would be attractive to Chinese users?

I will have to defer to those more knowledgeable on handset/services pricing in China. One thing I do expect is a modest subsidy for iPhone that will reduce the cost to consumers. This is not unprecedented in China. China Mobile is presently subsidizing all TD-SCDMA handsets.

One clue to possible pricing in PRC is the iPhone prices/plans now posted in Hong Kong. You can do some comparison-shopping here:

http://iphone.three.com.hk/website/en/iplan.html
http://www.apple.com/hk/en/iphone/buy/ (English)
http://www.apple.com/hk/iphone/buy/ (Mandarin)

There are several attractive plans via Hutchison “3” in Hong Kong. You can buy the 16GB iPhone 3GS for HKD 4,080 ($526 USD) with a monthly tariff of HKD 138 ($17.80 USD). There is also one plan where the 16GB iPhone 3GS is “free” if you pay a monthly tariff of HKD 398 ($51.35 USD) for two years.

One thing I would like to see from China Unicom is an unlimited data-plan for iPhone. Virtually all carrier plans in China now charge users by the amount of data they consume (e.g. time spent visiting websites, downloading, etc.) and I’m sure iPhone owners would be interested in an unlimited data-plan option. This would also be important if the iPhone does not include WiFi.

One sidebar item: On July 8, an MIIT Vice Minister pronounced that mobile plans in China are “too high” and need to be reduced. China Unicom publically acknowledged the MIIT’s point and they have pledged to reduce plan costs.

(5) From your observation, what’s the key opportunity/challenges for iPhone in Chinese market?

– Key opportunities for Apple in China:

There are over 700 million wireless consumers in China. The majority are youthful, status conscious, and they want to own cool smartphones loaded with the latest apps/games and mobile technologies that allow them to interact with one another.

While incomes are lower in China compared to western markets, China still has tremendous consuming power. There are an estimated 340,000 millionaires in China and there is also a growing middle-class. An estimated 290 million Chinese households can be classified as middle-class with monthly incomes ranging from 5,000 CNY to 15,000 CNY ($732 to $2,196 USD). Chinese tend to save a relatively high share of their monthly take home pay. Rainy day savings can sometimes be spent on more expensive items, particularly if the product has status and is used every day … think iPhone J.

All of this adds up to a tremendous potential market for Apple’s iPhone. Using conservative estimates*, I believe Apple can capture a full 2% share of the wireless market in China within the first 12 months of an official iPhone launch. That’s 14 million iPhones and perhaps another 2 million or so coming via grey-market iPhone sales.

There has been some speculation that Apple may introduce a new low-price iPhone model sometime in 2010. This model might be an unlocked “2G only” iPhone designed for prepaid markets, where the majority of wireless consumers prefer to “pay-as-you-go” (not on contract). A low-priced iPhone could double or triple my iPhone sales projections. If a low-price iPhone model is introduced in the first half of 2010, I would project that Apple can capture 4 to 6% of China’s handset market by the end of 2011. That’s 28 to 42 million iPhones.

*I should emphasize that there are many unknown variables at present that can affect iPhone sales prospects. We will know much more once the official “iPhone in China” details are revealed.

– Key challenges for Apple in China:

First and foremost is Apple (iPhone) obtaining a network access license (NAL) from China’s MIIT. The NAL is currently gating a formal iPhone deal announcement and an official iPhone launch. If recent rumors are true, the NAL may be issued before the end of summer.

One challenge for both China Unicom and Apple will be to ensure that the WCDMA 3G network coverage is fully deployed. On May 17 China Unicom rolled out the first 55 cities on their new WCDMA 3G network. On June 30, China Unicom announced the secondary rollout to 44 additional cities. By year-end 2009 there should be 284 cities in China with WCDMA 3G coverage.

Building regional infrastructure (staff and facilities) and an iPhone sales network in China is an important task for Apple. Apple has store locations in Beijing at Sanlitun and soon at Qianmen Street, but the scarcity of Apple stores make this an impractical way to sell iPhones in the PRC.

iPhones will most likely be distributed through China Unicom’s vsnes.com division and may require partnerships with Wal-Mart and Best Buy (Five Star Appliance). There was also a media report that Foxconn’s Cybermart would sell iPhones in China, although both Apple and Foxconn denied this rumor

It will also be important for Apple to work with Chinese authorities to protect Apple’s intellectual property. Shanzhai ji counterfeit phones (“Shanzhai” culture is a rebellion against the monopoly sectors) are everywhere and many of these cheap knock-offs cross the boundary of imitation and into the realm of outright rip-off. While there are many Shanzhai ji iClones (iPhone look-alikes), no major manufacturer is immune to the bandit phones phenomena.

As a side point of interest, the Shanzhai Ji (“bandit phones”) market in China has grown exponentially in the last few years. Virtually all brand name phones have a Shanzhai Ji look-alike. Government authorities will admit that approximately 25% of all phones sold are Shanzhai Ji knock-offs, but the real numbers may be closer to 50%. The Shanzhai Ji economics are compelling. A bandit phone entrepreneur can drive his Ferrari over to Hong Kong and acquire chipsets and components from MediaTek and other suppliers and quickly set up an assembly line. These backroom operations often sprout up and disappear in a matter of months. It only takes a small team of engineers a few weeks time to prototype their next bandit phone. A Shanzhai entrepreneur might knock out a phone for about 300 CNY ($44 USD) and sell it for 600 CNY ($88 USD) with no pesky government taxes or licensing fees to cut into the fat profit margin. If the entrepreneur sells 23,000 units, he is now a millionaire. The bandit production operation will then shutdown only to appear again in another obscure warehouse. Rinse and repeat.

Of course you get what you pay for. I had an iPhonAsia reader write to me recently to complain about the “iPhone” she purchased while on holiday in Shanghai. It had poor audio quality, a screen pixilation problem, and after six weeks of use, it no longer worked. When I wrote her back inquiring about how/where she came to buy this phone, she confessed that it “really looked like an iPhone” but when she took it to the Apple store, the Genius instantly recognized she had purchased a counterfeit iClone. “Ah, that explains why it was so inexpensive.” Yep, there’s one born every minute.

Another matter for Apple’s legal team is the iPhone trademark. The iPhone name in China is partially owned Hanwang Corporation. I believe this naming rights issue will be resolved amicably. Apple and Hanwang have played nice together before. Apple bought the rights to Hanwang’s specialized iPhone character recognition app in 2008 and demoed the technology during the 2009 WWDC Keynote.

Another challenge for Apple is to get China’s telecom industry to understand that Apple’s platform is not a threat to carriers’ own services. If anything, iPhone has spurred a tremendous acceleration in carriers’ plans to build out their own eco-systems. You can read more on this topic on iPhonAsia.

In the end, I expect that iPhone’s official introduction in China will benefit both Apple and their carrier partner(s) in China. Perhaps the biggest beneficiary will be China’s wireless consumers.

(6) Regarding the ecosystem for iPhone, can you talk about the difference you have observed between Asia and western market?

Apple’s iPhone platform or “ecosystem” consists of several important value-added services, including:

iTunes (music, videos, podcasts, e-books & courses via iTunesU)
App Store (apps and games)
MobileMe (cloud storage and file sharing)

Chinese consumers often find pirated MP3 music and cracked apps/games on torrent sites. Consequently there are far fewer paid downloads in China than in western markets. Despite this problem, when content delivery is tightly controlled (e.g. ringtones) it can be very profitable for carriers and other value-added services providers.

Another major difference between China and the west is the method of paying for goods and services. Transactions in China are primarily “cash and carry.” The vast majority of in China do not own a major bank credit card. Consequently, Apple may need to craft some creative ways (e.g. some type of prepaid iTunes plan) for consumers to pay for music and app downloads. If Apple can make it convenient for those without credit cards to pay for content, this might stop some of the download piracy.

Given the major youth demographic in Asia (majority of the population is under age 30), a large share of disposable income is spent on mobile phones when compared to western markets. One reason that phones are so popular in China and many markets in Asia, is the simple fact that many do not own desktop or laptop computers. Cyber cafes can be expensive and mobile handsets are often the only way to connect to the world. As a side note: Since computer ownership is rare in China, Apple and China Unicom may need to provide in-store kiosks or other means for iPhone owners (who don’t own a computer) to easily complete their own software updates or app downloads.

Young people love to chat on the phone, connect on the Net, play games, listen to music, and send instant messages. While IMs are popular in all global markets, Asian youth are in the lead when it comes to the sheer number of text messages they send. The average urban mobile user in China sends 4 text messages per day. During the Chinese New Year there were over 1 billion text messages sent in China!

Mobile gaming is also extremely popular throughout Asia. Social gaming in particular is a fast-growing segment. So too are social network sites where youth can interact. It is interesting how China’s one child policy may have affected the popularity of social gaming. Without siblings to play with, many children turn to mobile games to interact with peers.

(7) Is there big difference between Asian countries? We know iPhone in Japan is doing very well, how about Korea and other areas?

3G networks are very mature in both Japan and South Korea. As a result, mobile TV, wave-to-pay (phone as a payment card) and other advanced 3G services are widely in use in both countries. There are also many advanced 3G handsets in Japan and Korea, but they seem to suffer from a fatal flaw. The user interface and software are not always intuitive, and many get lost attempting to use handset features. In contrast, the iPhone is highly intuitive. Most new iPhone owners never bother to consult the instruction manual. No need. It just works, and in such a logical and clever fashion.

iPhone received a modest but positive reception Japan. It has been estimated that iPhone 3G sold about one million iPhones in Japan since the 2008 launch. The recent (June 26) iPhone 3GS launch in Japan was a major success. The launch day lines were long and many stores rapidly sold out of their initial supply. The enhanced camera and video capability on iPhone 3GS appear to be very popular with Japanese consumers.

Apple has not yet reached an iPhone accord in South Korea. The deal is still being negotiated, but here have been some encouraging developments. iPhone has now completed extensive radio research laboratory testing, and in May, the Korea Communications Commission (KCC) formally approved the iPhone 3G. More recently (July 12) the KCC also approved the new iPhone 3GS. Both iPhone models include WiFi.

Korea Telecom has been the most aggressive in pursuing a deal with Apple, but SK Telecom may also be in the running. I suspect there will be a race between China and South Korea to see which country is the first to officially launch iPhone. The smart bet might be on South Korea. It’s going to be a close race!

(8) What are the most impressive achievements in your mind for iPhone in Asia? How would you foresee the trends of iPhone application in the coming years?

iPhone is too new in Asia to count off a list of impressive accomplishments. I guess you could count as “impressive” the approximate 1.3 million real albeit “jail-broken” iPhones now in use in China. The average selling price of these grey-market handsets has ranged from 3,075 to 6,150 CNY ($450 to $900 USD) and despite the grey-market mark-up, the demand has been quite strong.

It was also impressive to see the positive reception that iPhone 3GS has experienced in Japan and in Singapore. For a better appreciation of numbers in line for iPhone in Singapore, have a look at the video made on a new iPhone 3GS by Satya, who was 10th in line for the July 10 launch.

Regarding trends in applications? … Games and massively multi-player online games (MMOGs), such as World of Warcraft, are hot and I expect that new MMOGs will be introduced in China with versions for iPhone. The iPhone 3.0 software allows for “in app” purchases and new revenue opportunities (e.g. virtual goods) for gaming companies. Many who would not initially pay to download the game, are eventually drawn into the game and find that they are willing to buy virtual goods. For example, gamers can use virtual currency to buy a prettier dress for their dance character or a more intimidating weapon for their warrior. Many gamers in China have even traded virtual currencies and exchanged them for real goods. Last year, nearly $2 billion in virtual currency was traded in China. This has caught the attention of authorities and China is moving to regulate virtual currency.

I am also looking forward to mobile payments and wave-to-pay apps on iPhone. Wave-to-pay would be convenient for those who buy lattes at Starbucks or fast-food at KFC. Wave-to-pay on handsets might also replace public transportation IC cards for regular commuters. I expect that in the future it will be possible to swipe your iPhone across a scanner to pay for almost any item.

There is literally no end to the possible directions and numbers of games and applications that might be developed for iPhone, iPod Touch and future Apple devices. Just think about the astounding growth we’ve seen in just one year. The Apple App Store turned 1 year-old on July 10 and there are now over 100,000 registered developers who have created 65,000 iPhone apps. Most impressively, the App Store has now surpassed 1.5 billion downloads!

The future possibilities are as wide and deep as the Pacific Ocean.

China Unicom Is Promoting iPhone 3G

Gang Lu — Fri, 26 Sep 2008 08:09:33 +0000

iPhone is stepping closer to China. A very interesting finding in China Internet Conference is that China Unicom is promoting its 3G (WCDMA) with iPhone and Blackberry.

The evidence is found on a leaflet for promoting China Unicom’s WCDMA service. We reported several days back Apple is recruiting in China for iPhone business, the guess we made China Mobile will be the partner of Apple now apparently is wrong. Apple’s negociation with China Unicom must be easier than with China Mobile. China Unicom can give a better offer to Apple since iPhone can help it win a better market share in China 3G market.

Apple Is Recruiting In China, Preparing For iPhone Launch

Gang Lu — Fri, 19 Sep 2008 08:54:02 +0000

Reports say Apple nears the Chinese iPhone deal, and the latest news I heard today: Apple is actually recruiting technical staff in China, preparing for the iPhone launch in China.

A friend’s friend who actually went to the interview said, Apple clearly mentioned the job is for the iPhone business in China, but Apple also said they were not 100% sure that the job would be eventually available since the contract with Chinese ISP (which most likely will be China Mobile) had not been signed yet.

So there is some uncertainty, but iPhone surely is one step closer to China, the biggest mobile market.

Apple Archives · TechNode

TSMC sees strong demand for 3nm chips with orders from Apple, Intel, and AMD: report

Tim Cook opens world’s second-largest Apple Store in Shanghai during two-day China visit

Apple’s retail store in Shanghai’s Jing’an District is about to open

Apple asks major Chinese apps to avoid using gyroscopic motion for advertising purposes: report

Qualcomm may source 3nm chips from TSMC and Samsung for new Snapdragon 8 Gen 4

Foxconn to exclusively supply Apple’s AI servers: report

Apple widely removing generative AI apps from China’s App Store

TSMC’s 3nm yield rate reportedly just 55%, with Apple only paying for qualified circuits

Surging iPhone 15 series orders may boost TSMC revenue in the third quarter by 11%

TSMC starts 2nm pre-production, targets mass production by 2025: report

Apple pauses plan to source YMTC storage chips: report

China’s Sichuan to cut power use to deal with heatwaves, hitting electronics factories

Top 5 Chinese tech firms have lost nearly half of combined market cap in 2 years

Apple’s supply chain in China hit hard by lockdowns in eastern China

Chinese user sues Apple over app prices, citing antitrust law

Apple to remove all unlicensed games from China App Store

Huawei’s Harmony OS: a third major mobile operating system?

Starting from scratch

Will Huawei convince developers?

Weighing politics and competition

INSIGHTS | Smartphone makers race to 5G amid the post-covid Covid slump

Editor’s note

A ‘new’ 5G Iphone?

The survival of Huawei

Xiaomi at ten: a fork in the road

Oppo is diversifying

Apple purges 3,300 games from China App Store in 2 days

Apple freezes updates for unlicensed games in China

Apple to remove unlicensed games from Chinese store in July

Apple backs Chinese supplier’s move to challenge Foxconn

Huawei is the lone winner as China handset sales plunge in Q1

China’s handset sales rebound in March but Covid-19 effect may linger

INSIGHTS | The new normal isn’t that normal

Read More:

Emoji encryption app Boom is another China App Store casualty

WeChat adding dark mode to iOS

Foxconn expects 15% hit to Q1 revenue from Covid-19

Apple to require licenses for games in China App Store

Foxconn offers $1,000 to new workers in bid to resume production

Apple partner Foxconn struggles to reopen plants

Apple says Chinese government requests for user data spiked

China’s wearable devices market grew 45.2% in the past year

China shipments for Apple’s iPhone fall 35% in November: report

Huawei widens lead in China smartphone market after US ban: report

Apple CEO Tim Cook assumes 3-year advisory post at Tsinghua University

Apple under fire for security feature which sends some user data to Tencent

Apple pulls Hong Kong police-tracking app after Chinese state media criticism

Apple reverses plans to make Mac Pro in China after securing tariff exemption

Chinese buyers shrug off lack of 5G as orders for Apple’s iPhone 11 surge

Apple eyes China’s BOE for cheaper OLED iPhone screens

Chinese market drives strong Apple results despite trade tensions

Chinese iPhone users are increasingly opting for Huawei: report

Apple gives up ’tax’ on medical apps after outcry

Briefing: Microsoft, HP, Dell to shift production away from China

Briefing: Apple acquires self-driving startup Drive.ai days before shutdown

Briefing: Foxconn chairman steps down ahead of presidential run

Briefing: Apple assesses moving up to 30% of production out of China

Trade war drags on business sentiment in Asia-Pacific, reaches 10-year low: report

Briefing: Tim Cook thinks Apple will not be targeted by tariffs

Briefing: US-China trade war could inflate iPhone costs by 3%

Briefing: Tech stocks slip in the wake of new tariffs as trade war escalates

Briefing: Renewed trade tension exposes Apple’s vulnerabilities

No Huawei 5G chips for Apple after settling Qualcomm dispute

Briefing: Huawei is “open” to selling 5G modems to Apple

Ask China Anything: What Chinese consumers think of Apple’s pivot to software

Briefing: WeChat-Apple stalemate over mini-programs continues

Briefing: Apple Store now offers interest-free payment option to Huabei users

Briefing: Apple pulls networking platform Maimai and other social apps from China App Store

Briefing: Apple’s main assemblers shift production away from China

Briefing: iPhone assembler Foxconn prematurely laid off 50,000 contract workers

Apple slashes iPhone prices on e-commerce platform JD.com

What Cook and company are still getting wrong about Apple in China

Briefing: Apple cuts sales forecast following weakened China sales

Huawei to increase focus on consumer business after record-breaking smartphone sales

Apple includes Android devices in Tmall trade-in program

Apple releases iOS update to resolve Qualcomm patent dispute

Briefing: Apple China to update iOS in a bid to resolve patent case

Briefing: Apple suppliers to move China iPhone production if tariffs reach 25%

Chinese internet split over Qualcomm’s Apple ban