In our review #0000002 this week, we discussed why Hong Kong Stock Exchange is poised to be an ideal location for major Chinese technology companies to go public, the deal between Xiaomi and Facebook and how to follow the Chinese technology giants and SoftBank in their investments across Southeast Asia and India.
For the full newsletter, you can read it directly here with our host’s main commentary on why Tencent will beat Facebook in the long term where we examined Facebook’s over dependency on advertising and if you are new to our newsletter, you can subscribe here.
Here are the interesting news for the past week dated 8 Jan 2018 in the start of the new year:
Hong Kong Renaissance by Alec Macfarlane in Reuters
Summary: Hong Kong stock exchange will start atoning for missing Alibaba.
My Perspective: Both Hong Kong Stock Exchange (HKSE) and Singapore Stock Exchange (SGX) are vying to be the best exchange for technology companies within Asia to list in their turf. It has been expected by many that both exchanges are going to start allow companies with dual class shares to list last year, but nothing happened. Why is this important? To have dual class shares means that there is a possibility that founders can get more control over their shareholders with their company similar what Google and Facebook have done in the US. Hong Kong is in prime position if they finally pull the trigger to allow dual class shares because it incentivitizes Chinese technology companies to ditch US stock exchanges for Hong Kong instead.
WeWork banks on a local approach and Powered By We to crack Southeast Asia by Jon Russell in TechCrunch
Summary: WeWork expands to Southeast Asia by hiring and learning locally with China competitors looming on their toes.
My Perspective: WeWork has been successful as a real estate company hiding behind the facade of a technology company with its valuation of rumored US$20 billion after SoftBank’s investment with US$4.4 billion. Their initial business strategy is to take long term leases of real estate spaces and retro fit with their unique community operating model. No one seems to question the technologies behind WeWork’s success but most media outlets focus on their business model which is not very different from most real estate companies. In fact, they are a real estate management company and the best way to interpret WeWork is the Starwood hotel model: they don’t build hotels but they just manage the hotels in bringing their unique customer experience. Does that not sound like “Powered by We”?
Facebook is making a (virtual) comeback in China by Liza Lin in Wall Street Journal
Summary: Social-media giant teams up with smartphone maker Xiaomi to develop new virtual-reality headset
My Perspective: It is interesting that Facebook is now making a move into China through virtual reality. The surprise is that Facebook chose Xiaomi instead of Baidu given that the latter has been a partner to sell Facebook ads to Chinese companies going overseas. The article did not cover the missing link to why Facebook is working with Xiaomi. The link I believe that made this deal happen is Hugo Barra, who was the former vice president for international expansion in Xiaomi and he’s now heading the VR division for Facebook. One additional inference is that his exit from Xiaomi is an amicable one and has now paid off for Facebook to find a partner in China.
How Alibaba, Tencent, SoftBank are becoming the biggest allies of India’s digital entrepreneurs by Mandav Chanchani
Summary: Each of India’s four most-valued internet companies – Flipkart, Ola, mobile payments platform Paytm, and online travel agency MakeMyTrip – are more than 40% owned by Chinese corporations together with Naspers and SoftBank.
My Perspective: For me, without commenting on how the article is written, the essence of how we should look at the battle between Chinese and US tech giants in India and Southeast Asia are captured well. It rests on one simple premise: follow the money. The lines seem to be drawn that SoftBank, Alibaba and Tencent are aligning in stopping the momentum of US companies, for example, Amazon and Google with proxy wars against the local champions such as Flipkart and Paytm. The difference is that unlike China, India & Southeast Asia are very much open markets.
Picture Credits: Purchased from iStockPhoto.