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China’s Xpeng in the race to automate EVs with lidar

By Rita Liao

Elon Musk famously said any company relying on lidar is “doomed.” Tesla instead believes automated driving functions are built on visual recognition and is even working to remove the radar. China’s Xpeng begs to differ.

Founded in 2014, Xpeng is one of China’s most celebrated electric vehicle startups and went public when it was just six years old. Like Tesla, Xpeng sees automation as an integral part of its strategy; unlike the American giant, Xpeng uses a combination of radar, cameras, high-precision maps powered by Alibaba, localization systems developed in-house, and most recently, lidar to detect and predict road conditions.

“Lidar will provide the 3D drivable space and precise depth estimation to small moving obstacles even like kids and pets, and obviously, other pedestrians and the motorbikes which are a nightmare for anybody who’s working on driving,” Xinzhou Wu, who oversees Xpeng’s autonomous driving R&D center, said in an interview with TechCrunch.

“On top of that, we have the usual radar which gives you location and speed. Then you have the camera which has very rich, basic semantic information.”

Xpeng is adding lidar to its mass-produced EV model P5, which will begin delivering in the second half of this year. The car, a family sedan, will later be able to drive from point A to B based on a navigation route set by the driver on highways and certain urban roads in China that are covered by Alibaba’s maps. An older model without lidar already enables assisted driving on highways.

The system, called Navigation Guided Pilot, is benchmarked against Tesla’s Navigate On Autopilot, said Wu. It can, for example, automatically change lanes, enter or exit ramps, overtake other vehicles, and maneuver another car’s sudden cut-in, a common sight in China’s complex road conditions.

“The city is super hard compared to the highway but with lidar and precise perception capability, we will have essentially three layers of redundancy for sensing,” said Wu.

By definition, NGP is an advanced driver-assistance system (ADAS) as drivers still need to keep their hands on the wheel and take control at any time (Chinese laws don’t allow drivers to be hands-off on the road). The carmaker’s ambition is to remove the driver, that is, reach Level 4 autonomy two to four years from now, but real-life implementation will hinge on regulations, said Wu.

“But I’m not worried about that too much. I understand the Chinese government is actually the most flexible in terms of technology regulation.”

The lidar camp

Musk’s disdain for lidar stems from the high costs of the remote sensing method that uses lasers. In the early days, a lidar unit spinning on top of a robotaxi could cost as much as $100,000, said Wu.

“Right now, [the cost] is at least two orders low,” said Wu. After 13 years with Qualcomm in the U.S., Wu joined Xpeng in late 2018 to work on automating the company’s electric cars. He currently leads a core autonomous driving R&D team of 500 staff and said the force will double in headcount by the end of this year.

“Our next vehicle is targeting the economy class. I would say it’s mid-range in terms of price,” he said, referring to the firm’s new lidar-powered sedan.

The lidar sensors powering Xpeng come from Livox, a firm touting more affordable lidar and an affiliate of DJI, the Shenzhen-based drone giant. Xpeng’s headquarters is in the adjacent city of Guangzhou about 1.5 hours’ drive away.

Xpeng isn’t the only one embracing lidar. Nio, a Chinese rival to Xpeng targeting a more premium market, unveiled a lidar-powered car in January but the model won’t start production until 2022. Arcfox, a new EV brand of Chinese state-owned carmaker BAIC, recently said it would be launching an electric car equipped with Huawei’s lidar.

Musk recently hinted that Tesla may remove radar from production outright as it inches closer to pure vision based on camera and machine learning. The billionaire founder isn’t particularly a fan of Xpeng, which he alleged owned a copy of Tesla’s old source code.

In 2019, Tesla filed a lawsuit against Cao Guangzhi alleging that the former Tesla engineer stole trade secrets and brought them to Xpeng. XPeng has repeatedly denied any wrongdoing. Cao no longer works at Xpeng.

Supply challenges

While Livox claims to be an independent entity “incubated” by DJI, a source told TechCrunch previously that it is just a “team within DJI” positioned as a separate company. The intention to distance from DJI comes as no one’s surprise as the drone maker is on the U.S. government’s Entity List, which has cut key suppliers off from a multitude of Chinese tech firms including Huawei.

Other critical parts that Xpeng uses include NVIDIA’s Xavier system-on-the-chip computing platform and Bosch’s iBooster brake system. Globally, the ongoing semiconductor shortage is pushing auto executives to ponder over future scenarios where self-driving cars become even more dependent on chips.

Xpeng is well aware of supply chain risks. “Basically, safety is very important,” said Wu. “It’s more than the tension between countries around the world right now. Covid-19 is also creating a lot of issues for some of the suppliers, so having redundancy in the suppliers is some strategy we are looking very closely at.”

Taking on robotaxis

Xpeng could have easily tapped the flurry of autonomous driving solution providers in China, including Pony.ai and WeRide in its backyard Guangzhou. Instead, Xpeng becomes their competitor, working on automation in-house and pledges to outrival the artificial intelligence startups.

“The availability of massive computing for cars at affordable costs and the fast dropping price of lidar is making the two camps really the same,” Wu said of the dynamics between EV makers and robotaxi startups.

“[The robotaxi companies] have to work very hard to find a path to a mass-production vehicle. If they don’t do that, two years from now, they will find the technology is already available in mass production and their value become will become much less than today’s,” he added.

“We know how to mass-produce a technology up to the safety requirement and the quarantine required of the auto industry. This is a super high bar for anybody wanting to survive.”

Xpeng has no plans of going visual-only. Options of automotive technologies like lidar are becoming cheaper and more abundant, so “why do we have to bind our hands right now and say camera only?” Wu asked.

“We have a lot of respect for Elon and his company. We wish them all the best. But we will, as Xiaopeng [founder of Xpeng] said in one of his famous speeches, compete in China and hopefully in the rest of the world as well with different technologies.”

5G, coupled with cloud computing and cabin intelligence, will accelerate Xpeng’s path to achieve full automation, though Wu couldn’t share much detail on how 5G is used. When unmanned driving is viable, Xpeng will explore “a lot of exciting features” that go into a car when the driver’s hands are freed. Xpeng’s electric SUV is already available in Norway, and the company is looking to further expand globally.

Equity Monday: Microsoft buys Nuance, Uber isn’t dead, and Austin has a new unicorn

By Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here. It is good to be back!

There was a lot to get through, so, in order that we discussed the topics on the show, here’s our rundown:

Don’t forget that Coinbase is listing this week, yeah? Chat soon!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Jack Ma’s Ant called to end anti-competition in payments

By Rita Liao

The details for Ant’s overhaul have arrived. Ant Group, the fintech affiliate of Alibaba controlled by Jack Ma, will become a financial holding company that will bring more regulatory scrutiny over how it lends and generates profits, China’s central bank said on Monday.

Ant started as an online payments processor for Alibaba marketplaces and has over time blossomed into an empire of payments, lending, wealth management and insurance. Its encroachment onto the existing financial industry had not been particularly welcome in China, and a few years ago, the giant began positioning itself as a “technology provider” rather than one competing with big banks and conventional wealth managers.

Despite these efforts, the government wanted to further rein in the fintech giant.

As part of what the government dubs a “rectification plan” for Ant, of which initial public offering was called off in November as regulators sought to curb the power of the country’s internet giants, Ant will “correct its anti-competitive practices.” That entails giving consumers more options in payment methods and removing unscrupulous tricks that lure users into getting loans.

Ant, which has over 1 billion annual users around the world, most of whom are in China, is also asked to end its monopoly on user data and ensure the information safety of individuals and the nation.

As a financial holding company, Ant will also need to control the liquidity risk of its financial products and shrink the size of its money-market fund, one of the world’s biggest.

China gets serious about antitrust, fines Alibaba $2.75B

By Rita Liao

Chinese regulators have hit Alibaba with a record fine of 18 billion yuan (about $2.75 billion) for violating anti-monopoly rules as the country seeks to rein in the power of its largest internet conglomerates.

In November, China proposed sweeping antitrust regulations targeting its interent economy. In late December, the State Administration for Market Regulation said it had launched an antitrust probe into Alibaba, weeks after the authorities called off the initial public offering of Ant Group, the financial affiliate of Alibaba.

SAMR, the country’s top market regulator, said on Saturday it had determined that Alibaba had been “abusing market dominance” since 2015 by forcing its Chinese merchants to sell exclusively on one e-commerce platform instead of letting them choose freely among different services, such as Pinduoduo and JD.com. Vendors are often pressured to side with Alibaba to take advantage of its enormous user base.

Since late 2020, a clutch of internet giants including Tencent and Alibaba have been hit with various fines for violating anti-competition practices, for instance, failing to clear past acquisitions with regulators. The meager sums of these penalties were symbolic at best compared to the benefits the tech firms reap from their market concentration. No companies have been told to break up their empires and users still have to hop between different super-apps that block each other off.

In recent weeks, however, there are signs that China’s antitrust authorities are getting more serious. The latest fine on Alibaba is equivalent to 4% of the company’s revenue generated in the calendar year of 2019 in China.

“Today, we received the Administrative Penalty Decision issued by the State Administration for Market Regulation of the People’s Republic of China,” Alibaba said in a statement. “We accept the penalty with sincerity and will ensure our compliance with determination. To serve our responsibility to society, we will operate in accordance with the law with utmost diligence, continue to strengthen our compliance systems and build on growth through innovation.”

The thick walls that tech companies build against each other are starting to break down, too. Alibaba has submitted an application to have its shopping deals app run on WeChat’s mini program platform, Wang Hai, an Alibaba executive, recently confirmed.

For years, Alibaba services have been absent from Tencent’s sprawling lite app ecosystem, which now features millions of third-party services. Vice versa, WeChat is notably missing from Alibaba’s online marketplaces as a payment method. If approved, the WeChat-powered Alibaba mini app would break with precedent of the pair’s long stand-off.

Beyond Meat opens its first production plant in China

By Rita Liao

About a year after Beyond Meat debuted in China on Starbucks’s menu, the Californian plant-based protein company opened a production facility near Shanghai to tap the country’s supply chain resources and potentially reduce the carbon footprint of its products.

Situated in Jiaxing, a city 85 km from Shanghai, the plant is Beyond Meat’s first end-to-end manufacturing facility outside the U.S., the Nasdaq-listed company said in an announcement on Wednesday.

Over the past year, competition became steep in China’s alternative protein space with the foray of foreign players like Beyond Meat and Eat Just, as well as a slew of capital injections for domestic startups including Hey Maet and Starfield.

Beyond Meat seems undeterred by the rivalry. When asked by TechCrunch to comment on a story about China’s alternative protein scene, a representative of the company said “there are none that Beyond Meat considers their competitors.”

China not only has an enormous, unsaturated market for meat replacements; it’s also a major supplier of plant-based protein. Chinese meat substitute startups enjoy a cost advantage from the outset and don’t lack interest from investors who race to back consumer products that are more reflective of the tastes of the rising middle class.

Having some kind of manufacturing capacity in China is thus almost a prerequisite for any serious foreign player. Tesla has done it before to build Gigafactory in Shanghai to deliver cheaper electric vehicles. Localized production also helps companies advance their sustainability goals as it shortens the supply chain.

In Beyond Meat’s own words, the Jiaxing facility is “expected to significantly increase the speed and scale in which the company can produce and distribute its products within the region while also improving Beyond Meat’s cost structure and sustainability of operations.”

The American food-tech giant works hard on localization, selling in China both its flagship burger patties and an imitation minced pork product made specifically for the world’s largest consumer of pork. The soy- and rice-based minced pork could be used in a wide range of Chinese cuisines and is the result of a collaboration between the firm’s Shanghai and Los Angeles teams.

Besides production, the Jiaxing plant will also take on R&D responsibilities to invent new products for the region. Beyond Meat will also be unveiling its first owned manufacturing facility in Europe this year.

“We are committed to investing in China as a region for long-term growth,” said Ethan Brown, CEO and founder of Beyond Meat. “We believe this new manufacturing facility will be instrumental in advancing our pricing and sustainability metrics as we seek to provide Chinese consumers with delicious plant-based proteins that are good for both people and planet.”

Beyond Meat products can now be found in Starbucks, KFC, Alibaba’s Hema supermarket and other retail channels across major Chinese cities.

A trove of imported console games vanish from Chinese online stores

By Rita Liao

In the world’s largest gaming market, China, console games play a relatively small part as their revenue has been meager compared to mobile and PC games for years — at least by the official numbers (more on this later). There remains a community of hardcore console lovers, but they are finding it harder to get hold of devices and cartridges recently.

A handful of grey market videogame console vendors on Taobao stopped selling and shipping this week, according to checks by TechCrunch and online posts by gamers. Before we examine what might be happening here, a bit of industry history is needed.

In 2000, China banned the sale and import of videogame consoles as concerns over addiction in teenagers grew. Even with the ban, imported consoles still existed in the grey market targeting a group of loyal players. Meanwhile, the online PC and mobile gaming industry flourished, in part thanks to their affordability and the social experience built into their mechanics.

When China finally lifted its restriction on consoles in 2015, giants like Sony and Microsoft quickly responded by releasing Chinese editions of their products through local partners. Nintendo Switch hit the Chinese shelves in 2019 via a much-anticipated partnership with Tencent, which itself is the world’s largest gaming firm. But the grey market largely persisted because mainland Chinese versions of the consoles are subject to strict regulatory oversight, which limits users’ choice to a small friendly range approved by censors.

Many Chinese players thus resort to brick-and-mortar electronics bazaars and online marketplaces to find imported editions of PlayStation, Xbox, and Nintendo Switch, along with their games. These products normally enter China through parallel trading, the import of legitimate goods through unauthorized channels. The games that are brought in normally lack a Chinese gaming license, which is hard to obtain even by local publishers.

Several major videogame console importers on Taobao have suspended business. Screenshot: TechCrunch

It’s unclear how many imported consoles and console games were taken down from Taobao and what triggered the purge. Tgbus, one of the largest console game sellers on Taobao with 462,000 followers, currently has zero product listing. When asked by TechCrunch, a customer service staff said the store has temporarily halted shipping due to “a water leak in the warehouse.” When we pressed further, the person said it was due to “an electrical-equipment failure.”

Other vendors keep their responses vague, citing “special reasons” for the suspended services. One seller named the “Shanghai Gaming Console Store” said it suspended its business at the request of Taobao, without elaborating further.

Alibaba could not be immediately reached for comment.

The incident appears to inflict mostly console sellers with a sizable business at this moment. Imported cartridges and console devices can still be found on smaller Taobao stores and alternative platforms like Pinduoduo by searching the right keyword.

Some users see the move as China further tightening its grip on what gamers get to play. Over the past year, Apple’s China App Store removed thousands of games to wipe out games without China’s official greenlight. Other motives are politcal. Animal Crossing was pulled from grey market stores on Taobao and Pinduoduo after one of Hong Kong’s most well-known pro-democracy activists used the game as his protest ground.

Other users point out that customs officers regularly clamp down on parallel trading, which is designed to evade import tax because goods are carried by traders who appear as regular travelers. This isn’t the first time the console grey market has been hit, either. Some grey goods manage to fly under the radar before they attract critical sales. There are signs that the new Monster Hunter Rise, a Nintendo-Switch exclusive which isn’t available on the Chinese console edition, is stoking much interest among local players in recent weeks and may have driven some imports.

China wants to dismantle Alibaba’s media empire: reports

By Rita Liao

Over the years, Jack Ma has accumulated a media portfolio in China that rivals that of Jeff Bezos in the United States. But now the future of Ma’s media empire is in the crosshairs of the Chinese government, which is wary of the billionaire’s increasing media clout.

The Chinese authorities have ordered Alibaba to divest some of its media assets due to growing concerns about the company’s sway over public opinion in the country, The Wall Street Journal and Bloomberg reported citing sources.

Alibaba’s expeditions in media investments came under scrutiny when the firm announced the buyout of the South China Morning Post, an English-language newspaper launched 118 years ago in Hong Kong. Its notable media holdings in mainland China include New York-listed technology news site 36Kr, which is backed by Alibaba’s fintech affiliate Ant Group, as well as state-owned Shanghai Media Group, which has a strategic agreement with Alibaba.

Critics have questioned Alibaba’s stake in the South China Morning Post, a prominent paper in Asia. To assuage worries, Jack Ma has pledged to preserve the editorial independence of the news outlet.

In other media deals, Alibaba often focuses on the potential for digital collaboration with the publications. For example, it promised to utilize its data and cloud computing expertise to help the Shanghai Media Group, an influential financial media conglomerate, develop a financial data platform.

Alibaba has also sought out new media upstarts, taking substantial stakes in China’s Twitter equivalent, Weibo, and a video site popular amongst Chinese youths, Bilibili, which counts Alibaba nemesis Tencent as a major shareholder.

Concerns grew when Weibo appeared to have deleted scores of posts about an Alibaba executive‘s extramarital affair last June. Soon after, China’s top internet regulator reprimanded Weibo for “interfering with online communication order” without identifying a case.

The Chinese government has already initiated a wave of crackdown on concentrated power in the internet economy. In December, antitrust regulators slammed a small fine on Alibaba and Tencent respectively for failing to report past acquisitions for clearance. It remains to be seen which of Alibaba’s prized media assets needs to be shed.

Microsoft’s Dapr open-source project to help developers build cloud-native apps hits 1.0

By Frederic Lardinois

Dapr, the Microsoft-incubated open-source project that aims to make it easier for developers to build event-driven, distributed cloud-native applications, hit its 1.0 milestone today, signifying the project’s readiness for production use cases. Microsoft launched the Distributed Application Runtime (that’s what “Dapr” stand for) back in October 2019. Since then, the project released 14 updates and the community launched integrations with virtually all major cloud providers, including Azure, AWS, Alibaba and Google Cloud.

The goal for Dapr, Microsoft Azure CTO Mark Russinovich told me, was to democratize cloud-native development for enterprise developers.

“When we go look at what enterprise developers are being asked to do — they’ve traditionally been doing client, server, web plus database-type applications,” he noted. “But now, we’re asking them to containerize and to create microservices that scale out and have no-downtime updates — and they’ve got to integrate with all these cloud services. And many enterprises are, on top of that, asking them to make apps that are portable across on-premises environments as well as cloud environments or even be able to move between clouds. So just tons of complexity has been thrown at them that’s not specific to or not relevant to the business problems they’re trying to solve.”

And a lot of the development involves re-inventing the wheel to make their applications reliably talk to various other services. The idea behind Dapr is to give developers a single runtime that, out of the box, provides the tools that developers need to build event-driven microservices. Among other things, Dapr provides various building blocks for things like service-to-service communications, state management, pub/sub and secrets management.

Image Credits: Dapr

“The goal with Dapr was: let’s take care of all of the mundane work of writing one of these cloud-native distributed, highly available, scalable, secure cloud services, away from the developers so they can focus on their code. And actually, we took lessons from serverless, from Functions-as-a-Service where with, for example Azure Functions, it’s event-driven, they focus on their business logic and then things like the bindings that come with Azure Functions take care of connecting with other services,” Russinovich said.

He also noted that another goal here was to do away with language-specific models and to create a programming model that can be leveraged from any language. Enterprises, after all, tend to use multiple languages in their existing code, and a lot of them are now looking at how to best modernize their existing applications — without throwing out all of their current code.

As Russinovich noted, the project now has more than 700 contributors outside of Microsoft (though the core commuters are largely from Microsoft) and a number of businesses started using it in production before the 1.0 release. One of the larger cloud providers that is already using it is Alibaba. “Alibaba Cloud has really fallen in love with Dapr and is leveraging it heavily,” he said. Other organizations that have contributed to Dapr include HashiCorp and early users like ZEISS, Ignition Group and New Relic.

And while it may seem a bit odd for a cloud provider to be happy that its competitors are using its innovations already, Russinovich noted that this was exactly the plan and that the team hopes to bring Dapr into a foundation soon.

“We’ve been on a path to open governance for several months and the goal is to get this into a foundation. […] The goal is opening this up. It’s not a Microsoft thing. It’s an industry thing,” he said — but he wasn’t quite ready to say to which foundation the team is talking.

 

China’s draft payments rules put Ant, Tencent on notice

By Rita Liao

A string of recent events in China’s payments industry suggests the duopoly comprising Ant Group and Tencent may be getting a shakeup.

Following the abrupt call-off of Ant’s public sale and a government directive to reform the firm’s business, the Chinese authorities sent another message this week signaling its plan to curb concentration in the flourishing digital payments industry.

The set of draft rules, designed to regulate non-bank payments and released by the People’s Bank of China (PBOC) this week, said any non-bank payments processor with over one-third of the non-bank payments market or two companies with a combined half of the market could be subject to regulatory warnings from the anti-monopoly authority under the State Council.

Meanwhile, a single non-bank payments provider with over one half of the digital payments market or two companies with a combined two-thirds of the market could be investigated for whether they constitute a monopoly.

The difference between the two rules is nuanced here, with the second stipulation focusing on digital payments as opposed to non-bank payments in the first.

Furthermore, the rules did not specify how authorities measure an organization’s market share, say, whether the judgment is based on an entity’s total transaction value, its transaction volume, or other metrics.

Alipay processed over half of China’s third-party payments transactions in the first quarter of 2020, according to market researcher iResearch, while Tencent handled nearly 40% of the payments in the same period.

 

As China heightens scrutiny over its payments giants, it’s also opening up the financial market to international players. In December, Goldman Sachs moved to take full ownership of its Chinese joint venture. This month, PayPal became the first foreign company with 100% control of a payments business in China after it bought out the remaining stake in its local payments partner Guofubao.

Industry experts told TechCrunch that PayPal won’t likely go after the domestic payments giants but may instead explore opportunities in cross-border payments, a market with established players like XTransfer, which was founded by a team of Ant veterans.

Ant and Tencent also face competition from other Chinese internet firms. Companies ranging from food delivery platform Meituan, e-commerce platforms Pinduoduo and JD.com, to TikTok’s parent firm ByteDance have introduced their own e-wallets, though none of them have posed an imminent threat to Alipay or WeChat Pay.

The comprehensive proposal from PBOC also defines how payments processors handle customer data. Non-bank payments services are to store certain user information and transaction history and cooperate with relevant authorities on data checks. Companies are also required to obtain user consent and make clear to customers how their data are collected and used, a rule that reflects China’s broader effort to clamp down on unscrupulous data collection.

Alibaba shares jump on Jack Ma’s first appearance in 3 months

By Rita Liao

Alibaba’s billionaire founder resurfaced as he spoke to 100 rural teachers through a video, three months after his last public appearance in October, sending the e-commerce firm’s shares up more than 8% in Hong Kong.

The video was first posted on a news portal backed by the government of Zhejiang, the eastern province where Alibaba is headquartered, and the clip was verified by an Alibaba spokesperson.

Speculations swirled around Ma’s whereabouts after media reported in December that he skipped the taping of a TV program he created. Ma, known for his love for the limelight, has seen his e-commerce empire Alibaba and fintech giant Ant Group increasingly in the crosshairs of the Chinese authorities in recent months.

Ma last appeared publicly at a conference where he castigated China’s financial regulatory system in front of a room of high-ranked officials. His controversial remark, according to reports, prompted the Chinese regulator to abruptly halt Ant’s initial public offering, which would have been the biggest public share sale of all time.

Ant has since been working on corporate restructuring and regulatory compliance under the directions of the government. Alibaba, China’s largest e-commerce platform, also came under scrutiny as market regulators opened an investigation into its alleged monopolistic practices.

Some argue that the recent clampdown on Jack Ma’s internet empire signals Beijing’s growing unease with the super-rich and private-sector power brokers.

“Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States. And just like their American counterparts, the Chinese giants sometimes bully smaller competitors and kill innovation,” wrote Li Yuan for the New York Times.

“You don’t have to be a member of the Communist Party to see reasons to rein them in.”

In the 50-second video, Ma talked directly into the camera against what appears to be decorative paintings depicting a water town typical of Zhejiang. An art history book is shown amid a stack of books, alongside a vase of fresh flowers and a ceramic figurine of a stout, reclining man, looking relaxed and content.

Ma addressed the 100 teachers receiving the Jack Ma Rural Teachers Award, which was set up by the Jack Ma Foundation to identify outstanding rural teachers every year. The video also briefly shows Ma visiting a rural boarding school in Zhejiang on January 10. The award ceremony was moved online this year due to the pandemic, Ma told the teachers.

When Ma announced his retirement plan, he pledged to return to his teaching roots and devote more time to education philanthropy, though the founder still holds considerable sway over Alibaba. The legendary billionaire began his career as an English teacher in Hangzhou, and on Weibo, China’s Twitter equivalent, he nicknames himself the “ambassador for rural teachers.”

WeChat advances e-commerce goals with $250B in transactions

By Rita Liao

WeChat continues to advance its shopping ambitions as the social networking app turns 10 years old. The Chinese messenger facilitated 1.6 trillion yuan (close to $250 billion) in annual transactions through its “mini programs,” third-party services that run on the super app that allow users to buy clothes, order food, hail taxis and more.

That is double the value of transactions on WeChat’s mini programs in 2019, the networking giant announced at its annual conference for business partners and ecosystem developers, which normally takes place in its home city of Guangzhou in southern China but was moved online this year due to the pandemic.

To compare, e-commerce upstart Pinduoduo, Alibaba’s archrival, saw total transactions of $214.7 billion in the third quarter.

WeChat introduced mini programs in early 2017 in a move some saw as a challenge to Apple’s App Store and has over time shaped the messenger into an online infrastructure that keeps people’s life running. It hasn’t recently disclosed how many third-party lite apps it houses, but by 2018 the number reached one million, half the size of the App Store at the time.

From Tencent’s strategic perspective, the growth in mini program-based transactions helps further the company’s goal to strengthen its fintech business, which counts digital payments as a major revenue driver.

A big proportion of WeChat’s mini programs are games, which the app said exceeded 500 million monthly users thanks to a boost in female and middle-aged users, as well as players residing in China’s Tier 3 cities, WeChat said.

The virtual conference also unveiled a set of other milestones from China’s biggest messaging app, which surpassed 1.2 billion monthly active users last year.

Among its monthly users, 500 million have tried the WeChat Search function. The Chinese internet is carved into several walled gardens controlled by titans like Tencent, Alibaba and ByteDance, which often block competitors from their services. When users search on WeChat, they are in effect retrieving information published on the messenger as well as Tencent’s allies like Sogou, Pinduoduo and Zhihu, rather than the open web.

WeChat said 240 million people have used its “payments score.” When the feature debuted back in 2019, there was speculation that it signaled WeChat’s entry into consumer credit finance and participation in the government’s social credit system. WeChat reiterated at this year’s event that the WeChat score does neither of that.

Like Ant’s Sesame Score, the rating system works more like a royalty program, “designed to build trust between merchants and users.” For instance, people who reach a certain score can waive deposits or delay payments when using merchant services on WeChat. The score, WeChat said, helped users save more than $30 billion in deposits a year.

WeChat’s enterprise version has surpassed 130 million active users. Its biggest rival, Dingtalk, operated by Alibaba, reached 155 million daily active users last March.

The one-day event concluded with the much-anticipated appearance of Allen Zhang, WeChat’s creator. Zhang went to great lengths to talk about WeChat’s nascent short-video feature, which is somewhat similar to Snap’s Stories. He didn’t disclose the number of users on short videos because “the PR team doesn’t allow” him to, but said that “if we set a goal for ourselves, we will have to achieve it.”

Zhang also announced the WeChat team is weighing up an input tool for users. It’d be a tiny project given Tencent’s colossal size, but the project reflects Zhang’s belief in “privacy protection,” despite public skepticism about how WeChat handles user data.

“If we analyze users’ chat history, we can bring great advertising revenue to the company. But we don’t do that, so WeChat cares a lot about user privacy,” asserted Zhang.

“But why do you still get ads [related to] what you have just said on WeChat? There are many other channels that process your information, not just WeChat. From there, our technical team said, ‘Why don’t we create an input tool ourselves?'”

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