Techbuzz China By Pandaily

In episode 44 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about So-Young, an internet company that markets and facilitates plastic surgery and other medical cosmetic procedures to Chinese customers. The six-year-old company has a stated mission of bringing “health and beauty” to everyone, and its stock priced at $13.80 per American depositary share (ADS) last week but is now trading at about $20. Prior to listing, So-Young had raised over $250 million in venture capital funding, including some from Tencent. Last year, it claimed to have made $8 million in net income, plus a market share of 82 percent based on user time spent on similar apps. Rui and Ying-Ying begin by giving an overview of the scale of the plastic surgery market in China. In China, the industry is broadly known as “医疗美容” (yīliáo měiróng) or “医美” (yī měi), roughly translated as “medical cosmetology,” which includes procedures such as hair removal, hair transplants, and various kinds of laser- and ultrasound-enabled operations — th

In Episode 43 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into the world of gaming live streaming, which is a pretty big industry in China. Specifically, our co-hosts focus primarily on two companies, Douyu and Panda.TV. The former has just filed to go public on the NYSE at a valuation of $500 million, and the latter officially shut down on March 30 of this year. Notably, these and several other players mentioned in today’s episode have all received Tencent investment at one point or another — not a surprise, since gaming is in Tencent’s lifeblood. Our co-hosts, while both not gamers, acknowledge that the topic of today’s episode is interesting because it is one of the most global ones out there, with plenty of opportunities for cross-border capital. Rui and Ying-Ying begin by launching into the history of the industry, and by giving some topline stats about the current game-centric live-streaming platforms in China. They share that while Douyu claims to be #1, and while it has more users than Hu

In Episode 42 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma turn their attention to the developer-led movement 996.icu, one of the few viral China tech topics in the past few months that has made it to Western media in real time and gotten a good bit of coverage. The movement is so named because there is a popular saying that to work “996,” or at least 9 a.m. to 9 p.m., six days a week — as many tech sector employees do in China — is to end up in the ICU. Listeners will also hear from Arman Zand, a lecturer at UC Berkeley’s Haas School of Business. This episode is dedicated to the latest cohort of students from his international business course on China — who, by the way, are all TechBuzz listeners, debated the concept of 996 incessantly while on a recent immersion trip, and met with Pandaily CEO Kevin Zhou over dinner in Beijing. Thanks, all, for your support! Rui and Ying-Ying explain that what has widely been hailed in the West as one of China’s secret weapons to unseating Silicon Valley as the tech

In Episode 41 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Ruhnn (RUHN), a relatively small yet significant company that filed for IPO a few weeks ago in the U.S. on the Nasdaq. Ruhnn has become the clear leader in China’s fast-growing influencer marketing sector, an area in which — our co-hosts agree — China should be considered world-leading. Lauren Hallanan, a Chinese social media marketing expert focusing on influencer marketing, and a former livestreamer in China with over 400,000 fans, joins us with insightful commentary on Ruhnn and other influencer incubators. Rui and Ying-Ying begin by explaining that Ruhnn, known in Chinese as Ruhan 如涵, is “China’s No. 1. KOL Facilitator” — with “KOL” standing for Key Opinion Leaders, or the rough equivalent of what in the U.S. are known as influencers. Unlike influencers in the U.S., however, the term KOL has its roots in the advertising industry and is a more professional term that usually implies that the individual is an expert, has a distinct

In Episode 40 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about the new “Technology Innovation Board” on the Shanghai Stock Exchange, which formally announced its first set of rules last week. Rui and Ying-Ying explain that given its recent trajectory, this registration-based NASDAQ-style board could be launched in a few months, if not weeks — much more quickly than skeptics have assumed. With this news as the backdrop, this week’s episode serves as a quick primer into the differences between China and the U.S.’s capital markets, as well as how these contrasts may explain some of the differences in Chinese tech entrepreneurship and capital versus those in the U.S. Rui and Ying-Ying begin by walking through a brief history of Chinese domestic capital markets, which had a total market cap of $6 billion late last year and are still really young compared with those in the U.S.; in fact, both the Shenzhen Stock Exchange and the larger Shanghai Stock Exchange were founded in 1990. Notably, prior to las

Episode 39 of TechBuzz China is on a topic of special interest to our co-hosts, Ying-Ying Lu and Rui Ma: podcasting in China! It was sparked by two recent pieces of news within the podcasting industry. The first was the acquisition of Gimlet Media, a podcasting network, by the newly IPOed music-streaming service Spotify for $200 million; the second was the $100 million raised by the podcasting platform Himalaya. In fact, Himalaya’s main investor, China’s Ximalaya FM, boasts 23 million daily active users and is rumored to be going for an IPO soon. In contrast to our typical coverage here at TechBuzz, the above subject barely made a splash in Chinese media — but it was a big deal in English-language news, with quite a few articles mentioning China as a leader in the podcasting industry. One often-referenced article stated that the Chinese government estimated the “pay-for-knowledge” economy to be about $7.3 billion in 2017, with the bulk of it coming from paid podcasts. However, Rui and Ying-Ying ask: Is this a

In episode 38 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into this year’s Battle of the Red Packets. The name refers to the custom of money-giving, which is an important part of the Chinese New Year experience. It has also been taken over by Chinese internet companies as one of their main user acquisition events of the year. Rui and Ying-Ying begin by sharing the history of hongbao, or “red packet.” In the Ming and Qing dynasties, the traditional gift was simply a stack of coins tied up with red string. With the popularity of paper money came the introduction of the red envelopes we see now. The so-called Battle of the Red Packets emerged in 2014, when WeChat fundamentally changed the rules of the game by allowing users to send digital red packets to the chat groups they are in within the app. WeChat essentially gamified the experience, coining the term 抢红包, or “grabbing red packets.” In the first year, 5 million users grabbed 20 million WeChat red packets 75 million times, from New Year’s Eve t

In episode 37 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into the world of WeChat Mini Programs. Arguably some of the biggest innovations to come out of the Chinese internet, Mini Programs have no real Western equivalent. Ever since it was launched three years ago on January 9, 2016, the Mini Programs function, which is still in an experimental stage, has been touted as a key direction for WeChat. Rui and Ying-Ying begin by exploring the origin story of Mini Programs. They explain that, back in 2016, it was not immediately clear to the WeChat team what to do with the product after its launch. WeChat was observing that while the Official Accounts system was taking off, the main issue was that these accounts were not built to properly handle transactions. So Allen Zhang and his team began to ask themselves if there was something heavier than an Official Account but lighter than a native app that they could make to help businesses transact online, inside of WeChat. The goal was to create something

In episode 36 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about the dirty, risky, and more unseemly aspects of China tech, primarily focused on two stories that grabbed headlines recently: the “hack” at the ecommerce company Pinduoduo, and the corruption scandal at the drone designer DJI. Although the incidents differ greatly from each other, they have come on each other’s heels, so our co-hosts decided to bundle them together for an episode, reflecting what’s buzzing within the tech community in China right now. Rui and Ying-Ying begin by focusing on the Pinduoduo story. This past week, the company lost millions of dollars to hackers who obtained millions of $15 coupons and sold them for as little as $0.06. At one point, it was rumored that the platform lost over $3 billion in just a few hours, and users wondered if the company would go bankrupt. Pinduoduo has denied these rumors and insists that actual losses will be less than $1.5 million. However, what exactly happened? How did Pinduoduo deci

In episode 35 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about competitors to the reigning Chinese social media champion, WeChat. Specifically, they focus on three apps that all decided to launch on Tuesday, January 15, 2019, two weeks before Chinese New Year: Bytedance’s Duoshan, Wang Xin’s self-proclaimed “anti-WeChat” Toilet, and Bullet Messenger 2.0. Following their releases, WeChat promptly blocked links to all three. Our co-hosts ask: Does WeChat have a reason to be scared? Why was it so defensive? Is there truly a chance for any of these companies to topple Allen Zhang’s miraculous creation? And if so, how would that come about? Rui and Ying-Ying begin by giving their perspective on WeChat’s two main weaknesses. The first is its decreasing representation of young users, specifically, teenagers — a challenge that many other social networks that have been around for a while, including Facebook, also face. The second is the emergence of WeChat Moments as a battleground for user time. This de

In episode 34 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about the latest version of WeChat, which first came out on iOS the third week of December 2018, and on Android a few days later. It has been over four years since WeChat released an update this large, and since then, it’s added on over half a billion monthly active users. The latest updates included several widely expected features, namely, enhanced sharing of both video and content, which overlap with Bytedance’s core strengths — definitely not a coincidence. What’s the latest behind what is still arguably the most influential internet product of the past decade? And what has been the impact of WeChat's founder on its product development? Rui and Ying-Ying share that WeChat was created by Zhang Xiaolong, or Allen Zhang, who joined Tencent via the internet giant’s acquisition of Foxmail. He was originally tasked with heading up the Tencent R&D center and leading the QQ Mail team. As the now legendary — and publicly confirmed — story g

In episode 33 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Tencent Music (TME), which finally completed its $1.2 billion IPO after a two-month delay due to market volatility. The company rose 9 percent on its first day, but has traded below the initial offering price ever since. This episode covers the business model of TME, its market potential, and our co-hosts’ thoughts on its future outlook. Though often compared with Spotify, to what extent are these two companies truly similar? Rui and Ying-Ying begin today’s story by reviewing Tencent Music’s corporate history. The entity comprises four apps: QQ Music, Kugou Music, Kuwo Music, and WeSing, which today account for a combined 70 percent of China’s music market. However, once upon a time, these were disparate products that sometimes competed; in fact, they only came together through an entity known as China Music Corporation (CMC), which was formed in 2012 by Xie Guomin. CMC acquired Kuwo in 2013 and Kugou a few months later; Tencent turn

In episode 32 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Luckin Coffee, the hybrid online-offline coffee chain unicorn startup that’s turning heads in China with its rapid expansion and innovative business model. In fact, immediately after we completed recording this episode, news broke that the year-old company has raised another $200 million in fresh funding, upping its valuation to $2.2 billion. Throughout Luckin’s existence, Western media has had a habit of comparing Luckin to Starbucks, and describing Luckin as the “Starbucks challenger.” But just how accurate is this juxtaposition? Additionally, how has now-celebrity CEO Qian Zhiya, or Jenny, been able to attract tremendous amounts of venture capital and instill strong investor confidence as a first-time founder? Rui and Ying-Ying begin today’s story with Jenny’s background. Now 43 years old, she was previously best known as one of the hidden weapons of China’s leading transportation companies, the operations-heavy Ucar, where she ro

In episode 31 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Xiaohongshu, also known as RED, which had received a $300 million investment from Alibaba. Though the money was injected in June, the two companies have recently announced an additional cooperation that links them at the product level — an integration with Alibaba’s Taobao. What is the significance of these developments, and what is the story of Xiaohongshu? Listeners also hear from Elijah Whaley, the CMO of the Chinese influencer marketing platform PARKLU, which counts RED as a client. Rui and Ying-Ying share that Xiaohongshu’s tagline is “The world’s best lifestyle at your fingertips,” and people often refer to the site as “Instagram and Pinterest sprinkled with a dose of Taobao.” The site’s founders, Charlwin Mao and Miranda Qu, are only 33 this year. They first met a decade ago in a U.S. mall, though Xiaohongshu did not exist until Charlwin attended a Tencent-sponsored entrepreneurship camp in his first summer of business school.

In episode 30 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Renren Inc., the closest Chinese analogue to Facebook. The company — which once had a near-monopoly on the Chinese social networking space, and had raised $800 million in its 2011 IPO — recently announced that it would sell all of its Renren.com social networking assets to Beijing Infinities Technology, a holding company, for a mere $20 million in cash and $40 million worth of stock. This episode explores the question: What happened? Rui and Ying-Ying follow the winding history of Renren, starting with the background of its founder and CEO, Joe Chen, through its acquisition of Wang Xing’s Xiaonei social network and then to its NYSE listing — which, by the way, Rui’s investment banking firm at the time played a small role in. Though the public offering was successful, even hailed as a “prelude to Facebook’s IPO,” things started going downhill from there. By 2016, total revenues had dropped by half to $63 million, and the company was c

In episode 29 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about China’s version of “Black Friday,” the biggest ecommerce shopping festival of the year which Alibaba invented out of thin air in 2008 and now falls yearly on November 11. Rui and Ying-Ying delve into the history behind the “Double 11 Shopping Festival,” as Chinese media title it. How did it get started? Why does it have such mindshare in the world of China’s internet? How did it go this year? After reviewing the evidence, our co-hosts conclude that despite the large sales figures floating around, this single holiday is not an accurate reflection of the state of the ecommerce sector in China. Rui and Ying-Ying share that the original iteration of Singles Day was launched in 2008 by Daniel Zhang of Alibaba, who has since been promoted to CEO. His intent was to promote Tmall, Alibaba’s business to consumer (B2C) platform that was then known as Taobao Merchants. Since the selected date, November 11, was already known to some Chinese mill

In episode 28 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about the Chinese AI company that recently toppled Uber to become the highest-valued startup in the world: Bytedance. Having just closed on a $3 billion funding round led by SoftBank, the company is currently valued at $75 billion. Though our co-hosts have mentioned Bytedance across several previous episodes, including a focus on the company’s war with Tencent in episode 9, today’s episode is the first to delve into its founding story, and to give a snapshot of its key strengths and weaknesses. Bytedance’s parent company was founded in 2012 with the buzzy mandate to “combine the power of AI with the growth of mobile internet to revolutionize the way people consume and receive information.” Six years later, the company’s two main apps, news-oriented Toutiao and video-based TikTok, have over 260 million and over 500 million monthly active users, respectively. In fact, TikTok, which is just a bit over two years old, was the most downloaded ap

In Episode 27 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma discuss the latest scandal to come out of the Chinese internet — fake reviews on one of China’s leading travel websites, Mafengwo. Mafengwo had $1.5 billion in sales last year, 63k transactions, and over 100 million monthly active users. It’s already backed by some of the best investors in the business, including Temasek, Hillhouse, General Atlantic, and Capital Today, and in August, it was leaked that it was in the middle of raising $300 million at a valuation up to $2.5 billion. A controversy then blew up when analytics firm Shenzhen Hurui and a Wechat official account known for their exposés of the tech industry published a blog post that claimed 85 percent  — 18 out of 21 million — of Mafengwo’s user reviews were faked or plagiarized from other sites. Outrageously, some of them were so poorly plagiarized that they still retained the original website’s URL, or in other cases, scripts indicating that the review was translated using an online

In episode 26 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma discuss Koubei, rounding out a two-part deep-dive into the local services space in China. An Alibaba subsidiary, Koubei recently merged with ele.me, another Alibaba-owned (via acquisition) entity which was covered in episode 25 last week. Listeners will also hear from Ed Sander of ChinaTalk, a China trip leader and prolific writer on the topic of ecommerce and China. Rui and Ying-Ying tell the story of Koubei. Though the brand was started in 2004 by an early Alibaba employee, it was left for dead in 2011 before being revived in 2015 — for the explicit purpose of going after the local services market. The O2O market had reached only 4.4 percent penetration at the time, but already presented massive opportunity. When reborn, Koubei began with the F&B (food and beverage) restaurant business, but it always had grander ambitions — in fact, its very first press release said that it was eventually going to go into healthcare, supermarkets, and ve

In episode 25 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Alibaba’s recent moves to firm up its strategy around local services, putting pressure on Meituan-Dianping to defend itself. This war of “O2O,” or online-to-offline, is shaping up to be intense, with the latest battle round seeing the merger between food delivery rival ele.me (which Alibaba acquired for $9.5 billion in April) and Alibaba’s new retail subsidiary, Koubei.  This episode of TechBuzz is the first in a series of deep dives into the local services space in China. Rui and Ying-Ying begin with some background on Meituan’s “unstoppable roll” on its way to becoming the “Amazon of services” for China: the gargantuan super app is currently dominating several verticals including food delivery, movie ticket sales, bike sharing, and travel. However, its dominance is being challenged by Alibaba, and in the food delivery space this shows up in the form of the ecommerce giant’s support for and acquisition of ele.me. Rui and Ying-Ying t