Tech Roundup: CICC-Backed Chip Designer Fined for IPO Fraud
China stocks in Hong Kong gain on strong holiday spending, Alibaba seeks Middle East partners as Beijing deepens gulf ties
CICC-backed Chinese chip design firm fined over fraudulent IPO application
A semiconductor company sponsored by China International Capital Corp. Ltd., one of the country’s top investment banks, has been fined over IPO application fraud, the China Securities Regulatory Commission (CSRC) said in a statement on Feb. 9.
S2C Ltd., which specializes in electronic design automation, has been fined 4 million yuan ($563,095) for fraudulent activities in its attempt to list on Shanghai’s tech-heavy STAR Market. A CSRC investigation in 2022 found that the company had inflated its financial results.
The move marks the CSRC’s latest effort to enforce strict information disclosure requirements and tough penalties for market violations under its registration-based IPO mechanism.
China stocks in Hong Kong gain on tech boost, holiday spending
Chinese equities listed in Hong Kong gained as trading resumed after the Lunar New Year holiday, with positive consumption data aiding sentiment.
The Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, rose as much as 1.7% on Wednesday after dropping to start the session. Tech stocks led the advance, with Meituan being the biggest contributor after local media reported the delivery platform saw a jump in meal orders by travelers from a year ago in the first few days of the festival.
Alibaba seeks Middle East partners as Beijing deepens gulf ties
Chinese e-commerce giant Alibaba Group Holding Ltd. has sought to partner with local firms in Saudi Arabia and the United Arab Emirates as China deepens ties with Gulf states, Bloomberg reported.
“One of the things we’ve chosen to do, which is a little unusual for a Chinese company, is we partner,” Alibaba’s president, Michael Evans, said on a panel in Dubai’s World Government Summit, responding to how his firm navigates industrial policy initiatives.
Alibaba is trying to stage a comeback after years of government punishment and strategic missteps that cost the e-commerce operator its place as leader of the country’s tech industry. Co-founder Jack Ma in November urged the company to correct its course.
Huawei’s French offices searched by financial prosecutors
Huawei Technologies Co. Ltd. said its offices in France were searched as part of a preliminary investigation by French financial prosecutors.
The probe is into suspicions of atteinte à la probité, a justice ministry official said on Feb. 8, referring to a catch-all term that could include corruption, misuse of public funds or peddling influence among other infractions, according to Bloomberg. The official declined to give further details.
Huawei France, which is based near Paris, said in an emailed statement that the search occurred on Feb. 6 at its offices. It added that it had cooperated fully with the investigations and would continue to do so.
China’s software service providers bet on AI amid funding chill
The Chinese software service industry is heading into a capital winter as the buzz of the late 2010s and flood of investment have yet to generate any headline-grabbing success stories. But as downtrodden investors pull back from much of the sector, one niche is still attracting capital: software as a service combined with artificial intelligence (AI).
Embedding software tools with AI technology is allowing some firms to offer better standardized products and cut back on development costs, potentially serving as a last resort for startups trying to secure backing from the sector’s core venture capital funds.
Ford CEO highlights China as key export hub
During an earnings call Tuesday, Ford CEO Jim Farley highlighted the significant role of China as an export hub for the automaker’s profitable overseas markets, including both internal combustion engine vehicles and electric vehicles (EVs). In terms of its EV push in the highly competitive market, rather than opting to “jump in with both feet in China with EVs,” Farley said the company is keeping to a low capital approach while allowing its Chinese joint venture partners to take the lead in electrification. The company is also building a global capability team for digital experience, battery and sensing technologies in China that it will use globally.
China grabs spotlight at Saudi weapons show
A Chinese-made J-10 fighter soared into the sky as part of a showcase at Saudi Arabia’s annual arms exhibition, demonstrating the growing defense ties between the Asian power and the world’s fifth-biggest weapons spender. While U.S. companies like Boeing Co. and Lockheed Martin Corp. dominated the World Defense Show in the Saudi capital of Riyadh this week, China’s presence dwarfed that of most other countries. Exhibiting for the first time under a single brand — China Defence — state companies displayed a range of weaponry from drones to anti-aircraft and ballistic missiles, along with models of stealth fighter jets and amphibious assault ships.
Northeast China’s first EV battery base opens
BYD Co. Ltd. and China FAW Group Corp. Ltd. have opened a major EV battery plant in Northeast China, according to a government social media post. The joint venture, called FAW-FinDreams New Energy Technology Co. Ltd., put the first phase of the project into operation on Feb. 2 in Changchun, Jilin province.
The plant will produce BYD’s signature fast-charging blade batteries for a range of FAW’s auto brands.
China’s software service providers cut costs, prices as investors pull back
China’s cloud software vendors are feeling the brunt of the sharpest drop in venture capital investment in the sector in a decade, with many rushing to cut prices or costs to tide them over. The country’s 13 software as a service (SaaS) unicorns — startups valued at more than $1 billion — raised just 495 million yuan ($69 million) from investors last year, the lowest amount since 2014, according to ITjuzi, a domestic provider of data on tech companies and investments, based on announced deals. The amount pales in comparison to the peak of 9.3 billion yuan raised in 2021, when the Covid pandemic boosted demand for digital services.
ByteDance’s Douyin CEO steps down
Kelly Zhang is stepping down as head of ByteDance Ltd.’s Douyin business unit, Bloomberg reported. The move comes a week after ByteDance Chief Executive Officer Liang Rubo said the company needed to avoid complacency and make up lost ground in the artificial intelligence race. Zhang is relinquishing the post of Douyin Group CEO, a ByteDance spokesperson said on Wednesday, confirming an earlier report in Chinese media. She took the role in 2020, sharing responsibilities with ByteDance China Chairman Zhang Lidong. The company does not plan to appoint a successor. Zhang will remain at the ByteDance, but shift her focus to the video-editing app CapCut, according to Bloomberg citing a person familiar with the matter.
Alibaba’s $25 billion buyback fails to assuage nervous investors
Alibaba Group Holding Ltd. green-lit another $25 billion in stock repurchases, aiming to reassure investors worried about plateauing growth at the Chinese e-commerce and cloud pioneer struggling to fend off new rivals such as PDD Holdings Inc., Bloomberg reported. The company’s board approved the expansion of an existing buyback program, already one of China’s largest, encompassing about $9.5 billion last year alone. But its shares fell more than 4%, giving up an initial spurt in part because investors remain concerned about crumbling Chinese consumption and a drop in per-user spending. Alibaba posted a lower-than-projected 5% rise in December quarter revenue to 260.3 billion yuan, well off the pace of previous years. Net income fell 70%.
Hesai Technology to sue U.S. Defense Department for labeling it a “Chinese military company”
On Feb. 7, Hesai Technology Co. Ltd. announced plans to sue the U.S. Department of Defense, contesting what it called an unjust and unfounded decision to list it as a “Chinese military company.” On Jan. 31, the Defense Department updated its list of firms it accuses of aiding the Asian nation’s military, adding 17 more Chinese companies, including Hesai, operating directly or indirectly in the U.S. Hesai previously clarified that its LiDAR products are solely for civilian use, denying any sales or connections with any military forces globally.
Yum China soars as weak economy drives consumers to $2.80 meals
Yum China Holdings Inc.’s comparable sales beat estimates in the fourth quarter, as the fast-food restaurant operator rolled out new deals to lure cautious Chinese diners amid an economic downturn on the Chinese mainland, Bloomberg reported. Comparable sales were 4%, ahead of estimates of 3.24%. Adjusted earnings per share also topped expectations. Revenue from its KFC restaurants was up 18% year-on-year to $1.87 billion, while Pizza Hut revenue surged 23% to $496 million, the company reported. Yum China jumped as much as 17% in U.S. postmarket trading Tuesday and surged as much as 28% in Hong Kong on Wednesday.
Over 138 million Kuaishou users posted their first short video in 2023
Kuaishou Big Data Research Institute on Feb. 7 released its “2023 Annual Data Report,” which showed that more than 138 million users posted their first short video on the platform in 2023. Additionally, over 22 million creators earned income through the platform. Throughout the year, short videos on Kuaishou garnered over 1 trillion likes, 170 billion comments, 100 billion saves and 120 billion shares. The report highlighted gender preferences in engaging with content, with women favoring celebrity entertainment and beauty, and men preferring automotive and sports content.