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China’s largest Q&A platform, Zhihu, raises $434 million from investors including Kuaishou, Baidu and Tencent

China’s largest Q&A platform, Zhihu, raises $434 million from investors including Kuaishou, Baidu and Tencent

August 13, 2019

Zhihu, the largest question and answer platform in China, has raised a $434 million Series F. This is not only the company’s biggest round since it launched in 2011, but also one of the largest secured over the past two years by a Chinese internet culture and entertainment company, said China Renaissance, which served as the funding’s financial advisor.

The Series F was led by Beijing Kuaishou, the video and live-streaming app, with participation from Baidu . Existing investors Tencent and CapitalToday also returned for the round, which Zhihu will use for technology and product development. Baidu told Bloomberg that it will add 100 million Zhihu posts to its main app.

While Zhihu has downplayed reports that it is planning an IPO, it embarked on plans to hire a CFO and restructure last year.

Zhihu users tend to be educated with relatively high incomes and the platform has developed a reputation for hosting experts and organizations that are knowledgeable in tech, marketing and professional services like education. Like Quora and other Q&A platforms, Zhihu lets users post and answer text-based questions. But it also has other features, including discussion forums, a publishing platform and live videos for brands and companies to answer questions in real time. Instead of making its streaming video feature, called Zhihu Live, open to all users, it is available only to experts and organizations, differentiating it from other streaming apps like Douyin, the domestic version of TikTok (ByteDance is an investor in Zhihu but did not participate in this round).

In a post about the round on his Zhihu page, founder and CEO Victor Zhou wrote the company plans to keep up with rapid changes in China’s media and internet landscape. “Over the past 8 years, users have gone from expecting simple entertainment to …

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TikTok-parent is getting into mobile search

TikTok-parent is getting into mobile search

August 1, 2019

China’s ByteDance, which owns popular video sharing app TikTok, is already working to enter the smartphone business and the music streaming space. It appears the world’s most valued startup also has ambitions about developing its own search engine. Kind of.

A company spokesperson told TechCrunch on Thursday that it has introduced a search function in ByteDance’s Toutiao news app.

“The function is in line with Toutiao’s mission of ‘information creates value.’ Users can try the function in the app and provide feedback and suggestions on the new function,” the spokesperson said.

The search function gleans information from both content on Toutiao as well as the entire world wide web, TechCrunch understands.

From the looks of it, ByteDance’s current search functionality is more alike WeChat’s in-app search function than local giant Baidu’s or Google’s offering.

On WeChat, when a person looks up a keyword, they see news articles about that topic, followed by mentions of it from their friends. This is followed by random articles about the subject. When a user clicks on any of these article or news links, WeChat serves them the page through its in-app browser, giving them no option to leave the walled-garden.

The idea is to change the way people think about — and use — a search engine altogether. And in China, where apps such as WeChat and TikTok have gained gigantic reach on mobile, it seems logical to add all new functionalities within those apps.

ByteDance’s interest in a search engine became public on Wednesday after it published a recruitment post on its WeChat account. The startup said its “search engine” is aimed at “hundreds of millions of mobile users in China.”

“We will build a universal search engine with a better user experience from 0 to 1. Only you don’t want to …

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Lessons from the hardware capital of the world

Lessons from the hardware capital of the world

July 26, 2019

A week is obviously not enough time to truly understand a market as massive and fascinating as China. Hell, it’s not really even enough time to adjust to the 12-hour time difference from New York. That said, each of the three visits I’ve taken to the country in the past two years has yielded some useful insights into my role as hardware editor here at TechCrunch.

Late last week, I got back from an eight-day trip to Shenzhen in the Guangdong Province of South China and nearby Hong Kong. In some respects, the cities are worlds apart, though a newly opened high-speed rail system has reduced the trip to 30 minutes. Customs issues aside, it’s the height of convenience. Though for political and cultural reasons I’ll not get into here, some have bemoaned the access it’s provided.

This particular visit was sort of a scouting trip. In November, TechCrunch will be hosting its first Hardware Battlefield event in a couple of years. Previous events had been held at CES for reasons of easy access to young startups. This time out, however, we’ve opted to go straight to the source.

The birthplace of hardware

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Tencent brings cloud service to Japan in global push

Tencent brings cloud service to Japan in global push

July 26, 2019

The world’s largest video game publisher is looking outside its home country for growth. Tencent, the Chinese internet behemoth that operates WeChat and a few blockbuster games, announced on Friday that its cloud service has entered Japan as part of the firm’s international push in 2019.

Tencent Cloud was already serving clients in Japan prior to the announcement, TechCrunch has learned, but this is the first time it has officialized the entry, which might be a sign of Tencent’s ambition to speed up global expansion. The international push comes at a time when Tencent’s domestic business is under pressure following China’s new gaming regulation.

Indeed, Tencent’s cloud computing division is targeting up to five-fold growth in revenue this year and Japan will be a key market, said Da Zhiqian, vice president of Tencent Cloud.

Tencent’s cloud business is the second largest in China with an 11% market share, according to industry researcher IDC. That puts the Shenzhen-based company behind its arch-rival Alibaba, which accounts for 43% of the local cloud market. The cloud computing battle outside China is only more competitive, with the presence of giants AWS, Microsoft Azure and Google Cloud, which lead with respective shares of 31.7%, 16.8% and 8.5% in 2018, according to research firm Canalys.

But Tencent could be an appealing hosting solution for smaller gaming companies that look to the giant for lessons. The company’s attempt to replicate the success of Honor of Kings outside China fell apart, but it quickly shifted gears by launching Steam-like gaming platform WeGame X, focusing on Chinese games developed for overseas markets. Meanwhile, its mobile version of PlayersUnknown Battleground is making headway globally as revenue surges.

Tencent can also tap into its vast portfolio network around the world. Huya and Douyu, two top game live-streaming …

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White Star Capital eyes Asia growth with new Hong Kong office

White Star Capital eyes Asia growth with new Hong Kong office

July 22, 2019

For western startups looking to enter Asia and Asian startups expanding globally, more funding has become available as investors are increasingly looking to export local tech solutions to overseas markets.

Globally based venture capital firm White Star Capital has set up a new office in Hong Kong this month to capture entrepreneurs in the budding region as well as help its portfolio companies go to Asia. Founded by Eric Martineau-Fortin, who spent years conducting mergers and acquisitions at Merrill Lynch, and Jean-Francois Marcoux, who sold his gaming startup Ludia to FermantleMedia, White Star has over the last decade backed a spectrum of early-stage companies across several continents.

Currently investing with eight partners spread across seven cities, White Star’s portfolio spans from New York-based healthy meal startup Freshly, rewards app Drop out of Toronto, on-demand photo platform Meero from Paris and dog food startup Butternut Box in London.

Beginning in 2017, Martineau-Fortin and his partners began looking eastward. They decided to initially exclude China as the market was already crowded with no shortage of funding available, leading to much larger investment round sizes compared to the U.S. and Europe as well as notoriously high valuations.

The investor also believed “cultural differences in both consumer and enterprise behavior” require different regional strategies. Whilst certain Asian companies specializing in artificial intelligence, fintech, enterprise software and micro-mobility share some commonalities with Western counterparts, others such as e-commerce businesses remain, still, quite distinct in Asia.

“Having said this, there is also a number of fabulously interesting ecosystems and countries outside of Hong Kong and China that are sometimes forgotten by North American and European-based investors, such as Japan, Korea, Singapore and Taipei. Those are also very advanced regions with great schools, great engineers having certainly easy access to capital but not always the ability …

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After Baidu tie-up, BMW taps Tencent for autonomous driving in China

After Baidu tie-up, BMW taps Tencent for autonomous driving in China

July 19, 2019

China is BMW’s largest market, and the German automaker knows in order to capture the country’s demanding consumers, its future models must support robust autonomous driving capability.

But to build it itself in China is hardly possible. The success of autonomous driving relies in part on high-definition mapping, a process that requires an expansive collection of geographic information. By law, foreign entities can’t host China-based data without local partnerships. Apple noticeably works with a Chinese firm to store user emails, text messages and other forms of digital footprint in the country.

That appears to be one of the catalysts for BMW’s new partnership with Tencent. The Chinese tech giant, which is best known for WeChat and runs an expanding cloud computing business, said on Friday it’s setting up a data computing and storage platform for the German premium carmaker. Reuters reported that the pair plans to launch the computing center by the end of this year in Tianjin, a port city near Beijing.

The tie-up came months after BMW’s earlier data expansion in the world’s largest passenger car market. In February, Here — a Google Maps alternative partly owned by BWM — joined forces with Chinese navigation service Navinfo, which would help Here collect data locally. It’s perhaps by no coincidence that Navinfo and Tencent both bought small shares in Here three years ago.

As BMW gets more familiar with China’s road conditions, there’s no reason why it won’t apply the data to its freshly minted ride-hailing venture.

Teaming up with BMW can be a big win for Tencent, which has been placing more focus on enterprise-facing endeavors as its main gaming business copes with regulatory pressure. In the world of transportation, “Tencent is committed to assisting automotive companies …

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The need-to-know takeaways from VidCon 2019

The need-to-know takeaways from VidCon 2019

July 15, 2019

VidCon, the annual summit in Anaheim, CA for social media stars and their fans to meet each other drew over 75,000 attendees over last week and this past weekend. A small subset of those where entertainment and tech executives convening to share best practices and strike deals.

Of the wide range of topics discussed in the industry-only sessions and casual conversation, five trends stuck out to me as takeaways for Extra Crunch members: the prominence of TikTok, the strong presence of Chinese tech companies in general, the contemplation of deep fakes, curiosity around virtual influencers, and the widespread interest in developing consumer product startups around top content creators.

Newer platforms take center stage

Photo by Jerod Harris/Getty Images

TikTok, the Chinese social video app (owned by Bytedance) that exploded onto the US market this past year, was the biggest conversation topic. Executives and talent managers were curious to see where it will go over the next year more than they were convinced that it is changing the industry in any fundamental way.

TikTok influencers were a major presence on the stages and taking selfies with fans on the conference floor. I overheard tweens saying “there are so many TikTokers here” throughout the conference. Meanwhile, TikTok’s US GM Vanessa Pappas held a session where she argued the app’s focus on building community among people who don’t already know each other (rather than being centered on your existing friendships) is a fundamental differentiator.

Kathleen Grace, CEO of production company New Form, noted that Tik Tok’s emphasis on visuals and music instead of spoken or written word makes it distinctly democratic in convening users across countries on equal footing.

Esports was also a big presence across the conference floor with teens lined up to compete at numerous simultaneous competitions. Twitch’s Mike Aragon and …

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Meituan, Alibaba, and the new landscape of ride-hailing in China

Meituan, Alibaba, and the new landscape of ride-hailing in China

July 8, 2019

Instead of switching between apps to secure a ride during rush hour, people in China can now hail from different companies using a single app. Some of the country’s largest internet companies — including ride-hailing giant Didi itself — are placing bets on this type of aggregation service.

The nascent model is reminiscent of a feature Google Maps added in early 2017 allowing users to hail Uber, Lyft, Gett and Hailo straight from its navigation app. A few months later, AutoNavi, a maps app owned by Alibaba, debuted a similar feature in China. Other big names like Baidu, Hellobike, Meituan and Didi subsequently joined forces with third-party ride-booking services rather than building their own.

The trend underscores changes in China’s massive ride-hailing industry of 330 million users (in Chinese). The government is tightening rules around vehicle and driver accreditation, leading to a widescale driver shortage. Meanwhile, established carmakers including BMW and state-owned Shouqi are entering the fray, offering premium rides with better-trained fleet drivers, but they face an uphill battle with Didi, which gobbled up Uber China in 2016.

By corraling various ride-booking services, an aggregator can shorten wait time for users. For new ride-hailing players, riding on a billion-user platform like Meituan opens up wider user acquisition channels.

These ride-hailing marketplaces let users request rides from any number of third-party services available. At the end of the trip, users pay directly through the aggregator, which normally takes a commission of about 10%, although none of the players have disclosed how revenue is exactly divided with their mobility partners.

In comparison, a ride-hailing operator such as Didi charges about 20% from each trip since they take care of driver management, customer support and other dirty work which, to a great extent, helps build the moat around their business.…

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App revenue tops $39 billion in first half of 2019, up 15% from first half of last year

App revenue tops $39 billion in first half of 2019, up 15% from first half of last year

July 3, 2019

App store spending is continuing to grow, although not as quickly as in years past. According to a new report from Sensor Tower, the iOS App Store and Google Play combined brought in $39.7 billion in worldwide app revenue in the first half of 2019 — that’s up 15.4% over the $34.4 billion seen during the first half of last year. However, at that time, the $34.4 billion was a 27.8% increase from 2017’s numbers, then a combined $26.9 billion across both stores.

Apple’s App Store continues to massively outpace Google Play on consumer spending, the report also found.

In the first half of 2019, global consumers spent $25.5 billion on the iOS App Store, up 13.2% year-over-year from the $22.6 billion spent in the first half of 2018. Last year, the growth in consumer spending was 26.8%, for comparison’s sake.

Still, Apple’s estimated $25.5 billion in the first half of 2019 is 80% higher than Google Play’s estimated gross revenue of $14.2 billion — the latter a 19.6% increase from the first half of 2018.

The major factor in the slowing growth is iOS in China, which contributed to the slowdown in total growth. However, Sensor Tower expects to see China returning to positive growth over the next 12 months, we’re told.

To a smaller extent, the downturn could be attributed to changes with one of the top-earning apps across both app stores: Netflix.

Last year, Netflix dropped in-app subscription sign-ups for Android users. Then, at the end of December 2018, it did so for iOS users, too. That doesn’t immediately drop its revenue to zero, of course — it will continue to generate revenue from existing subscribers. But the number will decline, especially as Netflix expands globally without an in-app purchase option, and as lapsed subscribers …

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Pinduoduo cements position as China’s second-largest ecommerce player

Pinduoduo cements position as China’s second-largest ecommerce player

June 27, 2019

Alibaba and JD.com have been in a war over the Chinese e-commerce space for a decade or so, but a third player called Pinduoduo has managed to shake up the duopoly in recent times. The startup, which was founded in 2015 by an ex-Googler and went public on the Nasdaq last July, has further flexed muscles during the recent “6/18” shopping spree.

According to data provider QuestMobile, Pinduoduo’s daily active users have outnumbered JD’s for at least the past 12 months, and it came out of the mid-year sales festival — first popularized by JD as a counterpart to archrival Alibaba’s “11/11” shopping day — with 135 million DAUs.

JD, in comparison, ended with 88 million DAUs and Alibaba’s Taobao retained its top spot at 299 million. That result further solidified Pinduoduo’s position as China’s second-biggest ecommerce company by number of users.

The boom of Pinduoduo is in part attributable to ties with its investor Tencent — also a backer of JD — which enables it to sell via WeChat’s lite app and tap the giant’s vast social network. Alibaba, on the other hand, has for years been prevented from selling through WeChat.

In terms of sales, Pinduoduo still remains some miles behind JD, which focuses on large-ticket items like home appliances and targets China’s urban, deep-pocketed shoppers. Pinduoduo took a more rural tack and has built a reputation for hawking ultra-cheap goods at small-city consumers.

In 2018, Pinduoduo racked up 471.6 billion yuan ($68.6 billion) in gross merchandise volume, a somewhat problematic term for gauging sales as it totals the value of orders placed, regardless of whether they are actually sold, delivered or returned. (Alibaba stopped revealing GMV a few years ago.) JD’s GMV was almost four times that of Pinduoduo at 1.68 trillion yuan ($243.9 billion)

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