Welcome back,
This week’s issue of Asia Tech Review is a little lighter than usual, thanks in part to last week’s delayed edition but also it has been a fairly quiet week across Asia.
Still, this issue looks at how Huawei is poised to dominate China’s mobile market, and why Chinese AI firms are going after US users. Elsewhere, India’s Pine Labs is tipped for a massive domestic IPO valuing it at $6B, a US fund is buying out a Japanese digital manga firm for $1.6B and Alibaba denied it is selling Lazada Thailand, the e-commerce firm’s largest market in Southeast Asia.
See you next week,
Jon
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Netflix sharpens its focus on Southeast Asia
Netflix is setting its sights on Southeast Asia as the region’s streaming landscape heats up again.
It’s been some time since there were multiple streaming platforms pushing hard in Southeast Asia, Netflix is now looking to increase its slate of local programming from the region. Spurred on by the global success of Squid Games in Korea and other content in Japan, it is looking to markets like Indonesia and Thailand.
Original content from Southeast Asia this year is expected to reach 10 series, up from just six last year, with even more to come.
But it isn’t only programming, Netflix is also looking at Southeast Asia as a potential market to test free versions of its service, supported by advertising. That seemed impossible a few years ago when local players like Hooq and iFlix—both of which were sold in fire sales after struggling to stay afloat—pioneered the idea.
The goal is simple: increase revenue in Asia Pacific. The region may account for a huge number of eyeballs, even after excluding China, but it remains Netflix’s weakest region, accounting for a mere 11% of revenue.
Netflix isn’t alone in targeting Asia, beyond Disney’s Hotstar, HBO and Chinese firms like WeTV, there is one last independent player standing: Viu.
French broadcasting giant Canal+ is a long-time backer of Viu, and it increased its ownership stake to 36.8% with an investment announced last week. That’s its third investment since June 2023 and it marks $300M invested to date. Canal+ retains a right to buy half of the business—something it looks increasingly likely to do.
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Huawei wants to dominate the Chinese mobile market with HarmonyOS
We wrote last week about Huawei’s rebirth as it rallied to find its own components and service to replace those that it was unable to use thanks to US sanctions, and now there’s another indication of the strength of its position. Huawei is close to an agreement with Tencent that would remove revenue sharing from WeChat, Tencent’s blockbuster chat app that rules China.
Essentially, that would give Tencent good reason to prioritise the HarmonyOS version of WeChat that runs on Huawei devices locally in China, since it is subject to Apple’s fees for transactions and revenue that it earns from iOS and other devices.
HarmonyOS has been a major success in China, giving Huawei a lead over Apple—the firm claims its platform has over 900 million active users and that gives it a platform to strike deals like this. Douyin, ByteDance’s version of TikTok for China, is another app that has a Harmony OS-specific app, too. Expect other firms to also prioritise the platform in the China market, as the country finally has its own rival to compete with iOS and Android.
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Japanese digital comic firm sells in $1.7B deal
You don’t often see two major pieces of Asia content news, but it is impossible to ignore Blackstone’s $1.7B acquisition of Infocom, which runs manga business Mecha Comic.
As Korea’s Webtoon prepares for a US IPO, US fund Blackstone is grabbing a slice of the action with this deal, which is the largest private equity transaction in Japan so far this year—not to mention the fund’s largest deal in Japan.
There’s not a huge amount of media coverage of this deal but here’s what you need to know:
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Blackstone is buying out Teijin—a Japanese conglomerate that’s active in chemicals, pharma and textiles—the majority owner with a 55% stake; it plans to take a full majority through share buybacks
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Digital comics account for 70% of Infocom’s $530M revenue—that grew 20% last year with a net profit of $41M
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Mecha Comic was started in 2006 and it claims to be the leading digital comic firm for women aged 30 and above
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Blackstone beat off competition from fellow investment firm KKR and Sony Music, which owns content platform Crunchyroll among others during a bidding process took a few months with the original price estimated at $1.2B
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Digital manga has grown to be worth double the paper-based industry, with estimated annual spending of $3B
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Teijin is selling as it is under pressure to reverse a major loss in 2022, and it sees increasingly little synergy between Infocomm and its other businesses
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The weak yen has made investing in Japan more alluring for overseas firms
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Shein’s IPO in jeopardy
There’s been serious coverage of Shein’s likely IPO since late last year, but there’s a new hitch. Its plan for a London IPO has reportedly stalled due to regulatory scrutiny and investor concerns—despite rosy financials that leaked last week, its valuation has fallen to $45B from a peak $100B in 2022 but it is potential from rivals and concerns around allegations of forced labour from US politicians that threaten to derail what could be a blockbuster IPO
Chinese tech companies are facing more scrutiny in the US than ever before. Yet some of China’s artificial intelligence startups are making a rush to grab American customers. The reason: it’s too hard to make any money in China link
One example is Beijing-based Moonshot AI, one of China’s most valuable AI startups. Its employees have been working on products that were recently launched in the U.S., including Ohai, an AI role-play chat app available on the Apple and Google mobile app stores, and the website of Noisee, a music video generator, according to an employee and another person briefed on the moves. The U.S. entry by Moonshot, which is on track for a $3 billion valuation, shows how Chinese AI startups are responding to an escalating price war in their domestic market for large-language models and AI applications. Its U.S. efforts haven’t previously been reported.
Related: China-developed AI apps gain foothold in US by helping kids do their homework link
But raising capital from US VCs will remain challenging after the US issued draft rules for banning or requiring notification of certain investments in artificial intelligence and other technology sectors in China that could threaten US national security. Link
China plans to introduce fresh measures to encourage venture capital into the country’s technology sector, including from overseas link
Apple’s ChatGPT partnership created ripples across the industry, except in China where it is not applicable. The Wall Street Journal reports that the US firm held talks with a range of firms to find a local alternative, including Baidu, Alibaba and AI startup Baichuan but with no deal to be found link
Chinese foundries, such as SMIC and Hua Hong Semiconductor Group, are ramping up production capacity amid fears of more US tech sanctions link
China’s 618 shopping festival ends with Alibaba, JD.com declaring victory amid ‘waning’ interest — Alibaba and JD.com touted impressive growth trends but declined to reveal total GMV figures for their midyear 618 shopping festival, as competition heats up and consumers grow weary of too many promotions link
TikTok says it offered the US government the power to shut the platform down in an attempt to address lawmakers’ data protection and national security concerns—it disclosed the “kill switch” offer, which it made in 2022, as it began its legal fight against legislation that will ban the app in America unless Chinese parent company ByteDance sells it link
Tencent is removing its hit mobile game “Dungeon & Fighter” (DnF Mobile) from selected Android app stores as its contracts have expired link
HeyGen, an AI startup that lets users quickly create realistic-looking avatars, raised $60M at a valuation of $500M link
We looked at the success of quick commerce in India last week and this week Zepto confirmed rumours of a $655M that values the company at $3.6B link
Silicon Valley VC General Catalyst expanded its presence in India by merging with local firm Venture Highway—they plan to deploy $500M-$1B link
Fintech firm Pine Labs has long been rumoured to be planning a domestic IPO (one of the many redomiciling, we wrote about recently)—the latest rumour is it could raise an initial $1B at a valuation of $6B for the listing link
AI startup OrbitShift raised $7M led by Peak XV’s Surge and Stellaris Venture Partners link
Google paused an experiment to allow new kinds of real-money games on the Play Store worldwide due to licensing struggles link
In January, the company said it would start allowing real-money apps widely in June in India, Brazil and Mexico. Notably, India has had a pilot program for fantasy sports and Rummy apps since 2022 and in Mexico since November 2023. The company said it would still allow the apps that were part of the pilot program to continue operating on the Play Store in India.
Alibaba denied a report claiming it plans to sell its Lazada’s business in Thailand, its strongest market link
Despite its size, Singapore is also profiting from the boom in chips link
Tiny Singapore is punching above its weight in global chipmaking. NXP Semiconductors and Vanguard International Semiconductor Corporation unveiled plans this month to build a $7.8 billion factory in the city-state. It follows fresh investments from GlobalFoundries, opens new tab, Micron Technology, opens new tab and others showcasing Singapore’s expertise in the industry
A range of startups in Singapore have developed lab-grown meat for a number of years and, with the industry fading in Silicon Valley, it is doubling down link
WeLab, the Hong Kong-based fintech unicorn backed by billionaire Li Ka-shing, is exploring the idea of setting up digital banks across Southeast Asia and providing its technology services to conglomerates in Malaysia, Vietnam, Thailand and the Philippines link
Memory chip maker Micron is building test production lines for advanced high-bandwidth memory chips in the U.S. and is considering manufacturing HBM in Malaysia for the first time to capture more demand from the AI boom link
The Washington Post looks at how criminal networks in Myanmar enjoyed the protection of Chinese officials as well as the military government in Myanmar link
SoftBank founder Masayoshi Son has profited from AI with investment in ARM but now he’s aiming bigger still with a plan to “foster an era of super AI” with his firm’s next investment drive link
Japan is looking to lure AI investment away from Europe and elsewhere by becoming the “most AI-friendly country in the world,” with a regulation-light approach link
US-headquartered VC Lightspeed lead a $10M investment in fintech startup Travel Wallet, which aims to serve overseas travellers with prepaid cards and favourable international currency rates link
TSMC (Taiwan Semiconductor Manufacturing Company) is nearing a $1T valuation after it announced a radical new design approach that could significantly boost the capacity of its chips link
Taiwan is investigating CCTV firm Dahua for alleged national security violations link
