China’s biggest ecommerce company Alibaba was again on the U.S. Trade Representative’s blacklist over suspected counterfeits sold on its popular Taobao marketplace that connects small merchants to consumers.
Nestling with Alibaba on the U.S.’s annual “notorious” list that reviews trading partners’ intellectual property practice is its fast-rising competitor Pinduoduo . Just this week, Pinduoduo founder Colin Huang, a former Google engineer, wrote in his first shareholder letter since listing the company that his startup is now China’s second-biggest ecommerce player by the number of “e-way bills”, or electronic records tracking the movement of goods. That officially unseats JD.com as the runner-up to Alibaba.
This is the third year in a row that Taobao has been called out by the U.S. government over IP theft, despite measures the company claims it has taken to root out fakes, including the arrest of 1,752 suspects and closure of 1,282 manufacturing and distribution centers.
“Although Alibaba has taken some steps to curb the offer and sale of infringing products, right holders, particularly SMEs, continue to report high volumes of infringing products and problems with using takedown procedures,” noted the USTR in its report.
In a statement provided to TechCrunch, Alibaba said it does “not agree with” the USTR’s decision. “Our results and practices have been acknowledged as best-in-class by leading industry associations, brands and SMEs in the United States and around the world. In fact, zero industry associations called for our inclusion in the report this year.”
Pinduoduo is a new addition to the annual blacklist. The Shanghai-based startup has over the course of three years rose to fame among China’s emerging online shoppers in smaller cities and rural regions, thanks to the flurry of super-cheap goods on its platform. While affluent consumers may disdain Pinduodou products’ low quality, price-sensitive users are hooked to bargains even when items are subpar.
“Many of these price-conscious shoppers are reportedly aware of the proliferation of counterfeit products on pinduoduo.com but are nevertheless attracted to the low-priced goods on the platform,” the USTR pointed out, adding that Pinduoduo’s measures to up the ante in anti-piracy technologies failed to fully address the issue.
Pinduoduo, too, rebutted the USTR’s decision. “We do not fully understand why we are listed on the USTR report, and we disagree with the report,” a Pinduoduo spokesperson told TechCrunch. “We will focus our energy to upgrade the e-shopping experience for our users. We have introduced strict penalties for counterfeit merchants, collaborated closely with law enforcement and employed technologies to proactively take down suspicious products.”
The attacks on two of China’s most promising ecommerce businesses came as China and the U.S. are embroiled in on-going trade negotiations, which have seen the Trump administration repeatedly accused China of IP theft. Tmall, which is Alibaba’s online retailer that brings branded goods to shoppers, was immune from the blacklist, and so was Tmall’s direct rival JD.com.
Taobao has spent over a decade trying to revive its old image of an online bazaar teeming with fakes and “shanzhai” items, which are not outright pirated goods but whose names or designs intimate those of legitimate brands. Pinduoduo is now asked to do the same after a few years of growth frenzy. On the one hand, listing publicly in the U.S. subjects the Chinese startup to more scrutiny. On the other, small-town users may soon demand higher quality as their purchasing power improves. And when the countryside market becomes saturated, Pinduoduo will need to more aggressively upgrade its product selection to court the more sophisticated consumers from Chinese megacities.
Aptiv, the U.S. auto supplier and self-driving software company, is opening an autonomous mobility center in Shanghai to focus on the development and eventual deployment of its technology on public roads.
The expansion marks the fifth market where Aptiv has set up R&D, testing or operational facilities. Aptiv has autonomous driving operations in Boston, Las Vegas, Pittsburgh and Singapore. But China is perhaps its most ambitious endeavor yet.
Aptiv has never had any AV operations in China, but it does have a long history in the country including manufacturing and engineering facilities. The company, in its earlier forms as Delphi and Delco has been in China since 1993 — experience that will be invaluable as it tries to bring its autonomous vehicle efforts into a new market, Aptiv Autonomous Mobility President Karl Iagnemma told TechCrunch in a recent interview.
“The long-term opportunity in China is off the charts,” Iagnemma said, noting a recent McKinsey study that claims the country will host two-thirds of the world’s autonomous driven miles by 2040 and be trillion-dollar mobility service opportunity.
“For Aptiv, it’s always been a question of not ‘if’, but when we’re going to enter the Chinese market,” he added.
Aptiv will have self-driving cars testing on public roads by the second half of 2019.
“Our experience in other markets has shown that in this industry, you learn by doing,” Iagnemma explained.
And it’s remark that Iagnemma can stand by. Iagnemma is the co-founder of self-driving car startup nuTonomy, one of the first to launch a robotaxi service in 2016 in Singapore that the public—along with human safety drivers — could use.
NuTonomy was acquired by Delphi in 2017 for $450 million. NuTonomy became part of Aptiv after its spinoff from Delphi was complete.
Aptiv is also in discussions with potential partners for mapping and commercial deployment of Aptiv’s vehicles in China.
Some of those partnerships will likely mimic the types of relationships Aptiv has created here in the U.S., notably with Lyft . Aptiv’s self-driving vehicles operate on Lyft’s ride-hailing platform in Las Vegas and have provided more than 40,000 paid autonomous rides in Las Vegas via the Lyft app.
Aptiv will also have to create new kinds of partnerships unlike those it has in the U.S. due to restrictions and rules in China around data collection, intellectual property and creating high resolution map data.
In China, the laws limit work to 44 hours a week and require overtime pay for anything above that. But many aren’t following the rules, and a rare online movement puts a spotlight on extended work hours in China’s booming tech sector. People from all corners of society have rallied in support for improvements to startup working conditions, while some warn of hurdles in a culture ingrained in the belief that more work leads to greater success.
In late March, anonymous activists introduced 996.ICU, a domain name that represents the grueling life of Chinese programmers: who work from 9 am to 9 pm, 6 days a week with the threat of ending up at ICU, a hospital’s intensive care unit. The site details local labor laws that explicitly prohibit overtime work without pay. The slogan “Developers’ lives matter” appears at the bottom in solemn silence.
A project called 996.ICU soon followed on GitHub, the Microsoft-owned code and tool sharing site. Programmers flocked to air their grievances, compiling a list of Chinese companies that reportedly practice 996 working. Among them were major names like e-commerce leaders Alibaba, JD.com and Pinduoduo, as well as telecoms equipment maker Huawei and Bytedance, the parent company of the red-hot short video app TikTok.
In an email response to TechCrunch, JD claimed it doesn’t force employees to work overtime.
“JD.com is a competitive workplace that rewards initiative and hard work, which is consistent with our entrepreneurial roots. We’re getting back to those roots as we seek, develop and reward staff who share the same hunger and values,” the spokesperson said.
Alibaba declined to comment on the GitHub movement, although founder Jack Ma shared on Weibo Friday his view on the 996 regime.
“No companies should or can force employees into working 996,” wrote Ma. “But young people need to understand that happiness comes from hard work. I don’t defend 996, but I pay my respect to hard workers!”
Bytedance declined to comment on whether its employees work 996. We contacted Huawei but had not heard back from the company at the time of writing.
996.ICU rapidly rocketed to be the most-starred project on GitHub, which claims to be the world’s largest host of source codes. The protest certainly turned heads among tech bosses as China-based users soon noticed a number of browsers owned by companies practicing 996 had restricted access to the webpage.
The 996 dilemma
The 996 list is far from exhaustive as it comprises of voluntary entries from GitHub users. It’s also hard to nail down the average work hours at a firm, especially a behemoth with tens of thousands of employees where policies can differ across departments. For instance, it’s widely acknowledged that developers work longer than their peers in other units. Anecdotally, TechCrunch has heard that bosses in some organizations often find ways to exploit loopholes, such as setting unrealistic KPIs without explicitly writing 996 into employee contracts.
“While our company doesn’t force us into 996, sometimes, poor planning from upper management forces us to work long hours to meet arbitrary management deadlines,” a Beijing-based engineer at a professional networking site told TechCrunch. This person is one of many sources who spoke anonymously because they are not authorized to speak to media.
BEIJING, CHINA APRIL 25, 2018: Passenger on a train in the Beijing Subway. Donat Sorokin/TASS (Photo by Donat SorokinTASS via Getty Images)
Other companies are more vocal about 996, taking pride in their excessively diligent culture. Youzan, the Tencent-backed, Shopify -like e-commerce solution provider, explicitly demanded staff to live out 996 work styles. Employees subsequently filed complaints in January to local labor authorities, which were said to have launched an investigation into Youzan.
A lot of companies are like Youzan, which equates long hours of work with success. That mindset can easily lure programmers or other staff into accepting extra work time. But employees are hardly the only ones burning out as entrepreneurs are under even greater pressure to grow the business they build from scratch.
“The recent debate over 996 brings to light the intense competition in China’s tech industry. To survive, startups and large companies have no choice but to work extremely hard. Some renown entrepreneurs even work over 100 hours a week,” Jake Xie, vice president of investment at China Growth Capital, an early-stage venture fund, told TechCrunch.
“Overtime is a norm at many internet companies. If we don’t work more, we fall behind,” said a founder of a Shenzhen-based mobile game developing startup. Competition is particularly cut-throat in China’s mobile gaming sector, where creativity is in short supply and a popular shortcut to success is knocking off an already viral title. Speed, therefore, is all it matters.
Meanwhile, a high-performing culture brewing in China may neutralize society’s resistance to 996. Driven individuals band together at gyms and yoga studios to sweat off stress. Getting group dinners before returning to work every night becomes essential to one’s social life, especially for those that don’t yet have children.
Photo source: Jack Ma via Weibo
“There is a belief that more hours equals more learning. I think some percentage of people want to put in more hours, and that percentage is highest for 22 to 30 years old,” a Shanghai-based executive at a tech company that values work-life balance told TechCrunch. “A few people in my team have expressed to us that they feel they cannot grow as fast as their friends who are working at companies that practice 996.”
“If you don’t work 996 when you’re young, when will you?” Wrote 54-year-old Jack Ma in his Weibo post. “To this day, I’m definitely working 12 to 12, let alone 996… Not everyone practicing 996 has the chance to do things that are valuable and meaningful with a sense of achievement. So I think it’s a blessing for the BATs of China to be able to work 996.”
(BAT is short for Baidu, Alibaba and Tencent for their digital dominance in China, akin to FANNG in the west.)
Demanding hours are certainly not unique to the tech industry. Media and literature have long documented the strenuous work conditions in China’s manufacturing sector. Neighboring Japan is plagued by karoshi or “death from overwork” among its salarymen and Korean companies are also known for imposing back-breaking hours on workers, compelling the government to step in.
Attempts to change
Despite those apparent blocks, the anti-996 movement has garnered domestic attention. The trending topic “996ICU gets blocked by large companies” has generated nearly 2,000 posts and 6.3 million views on Weibo. China’s state-run broadcaster CCTV chronicled the incident and accused overtime work of causing “substantial physical and psychological consequences” in employees. Outside China, Python creator Guido van Rossum raised awareness about China’s 996 work routine in a tweet and on a forum.
“Can we do something for 996 programmers in China?” He wrote in a thread viewed 16,700 times.
The 996 campaign that began as a verbal outcry soon led to material acts. Shanghai-based lawyer Katt Gu and startup founder Suji Yan, who say they aren’t involved in the 996.ICU project, put forward an Anti-996 License that would keep companies in violation of domestic or global labor laws from using its open source software.
But some cautioned the restriction may undermine the spirit of open source, which denotes that a piece of software is distributed free and the source code undergirding it is accessible to others so they can study, share and modify the creator’s work.
“I strongly oppose and condemn 996, but at the same time I disagree with adding discretionary clauses to an open source project or using an open source project for the political game,” You Yuxi, creator of open-source project Vue, which was released under the MIT license, said on the Chinese equivalent to Twitter, Weibo. (Gu denies her project has any “political factors.”)
Others take a less aggressive approach, applauding companies that embrace the more humane schedule of “9 am to 5 pm for 5 days a week” via the “995.WLB” GitHub project. (WLB is short for “work-life balance.”) On this list are companies like Douban, the book and film review site famous for its “slow” growth but enduring popularity with China’s self-proclaimed hippies. WeWork, the workplace service provider that bills itself as showing respect for employees’ lives outside work, was also nominated.
While many nominees on the 996 list appear to be commercially successful, others point to a selection bias in the notion that more work bears greater fruit.
“If a company is large enough and are revealed to be practicing 996, the issue gets more attention. Take Youzan and JD for example,” a Shanghai-based developer at an enterprise software startup told TechCrunch.
“Conversely, a lot of companies that do practice 996 but have not been commercially successful are overlooked. There is no sufficient evidence that shows a company’s growth is linked to 996… What bosses should evaluate is productivity, not hours.”
Or, as some may suggest, managers should get better at incentivizing employees rather than blindingly asking for more hours.
“As long as [China’s] economy doesn’t stall, it may be hard to stop 996 from happening. This is not a problem of the individual. It’s an economic problem. What we can do is offering more humane care and inspiring workers to reflect, ‘Am I working at free will and with passion?’ instead of looking at their work hours,” suggested Xie of China Growth Capital.
While a push towards more disciplined work hours may be slow to come, experts have suggested another area where workers can strive for better treatment.
“It seems almost all startups in China underfund the social security or housing fund especially when they are young, that is, before series A or even series B financing,” Benjamin Qiu, partner at law firm Loeb & Loeb LLP, explained to TechCrunch.
“Compared to 996, the employees have an even stronger legal claim on the above since it violates regulations and financially hurts the employee. That said, the official social credit and housing fund requirement in China appears to be an undue burden on the employer compared to the Silicon Valley, but if complied with, it could be understood as an offset of the 996 culture.”
A number of my interviewees spoke on conditions of anonymity, not because their companies promote 996 but, curiously, because their employers don’t want to become ensnarled in the 996 discussions. “We don’t need to tell people we support work-life balance. We show it with action,” said a spokesperson for one company.
A games publisher in China is following the path of its larger peer Tencent to back a wide spectrum of startups for financial gains. Beijing Kunlun Wanwei, or Kunlun, announced in a filing this week that it plans to inject $50 million into autonomous driving startup Pony.ai in exchange for a 3 percent stake.
Pony.ai confirmed the investment with TechCrunch in an email response, adding that the money contributes to its pre-B round of financing. The startup last pocketed $102 million that valued it at nearly $1 billion. It’s raised $214 million in total fundings to date according to data from CrunchBase.
Shanghai-listed Kunlun has its bets on one of China’s most aggressive smart driving companies. Pony.ai, co-founded by James Peng, formerly a leader in Baidu’s self-driving division, was only second to Baidu in total autonomous miles driven in Beijing last year (although by a large margin).
While neither Kunlun nor Pony.ai provided an inkling of possible strategic collaboration between them, next-gen vehicles have become a much sought-after space for hosting entertainment content, and without a doubt that includes video games.
Few outside China’s internet industry know of Kunlun, which has over the years been squeezed by industry leaders Tencent and NetEase . The 11-year-old company has, however, gradually earned its reputation as a savvy investor. Led by Zhou Yahui, a shrewd investor himself, Kunlun has backed companies that broadened distribution channels for its gaming titles. Other fundings appear more tangential. Here’s a taste of Kunlun’s lucrative portfolio:
Inke: Back in 2016, Kunlun invested 68 million yuan ($10 million) in live streaming company Inke. By 2017 it had sold all its stakes in the startup and was poised to cash out a total of 824 million yuan ($123 million) after the transaction completed, according to a filing. Inke is the currently third-largest live streaming app by monthly active devices in China, says data from iResearch.
Opera: Kunlun was part of a consortium that acquired the web browser in 2016 when it shelled out $600 million in investment. Through the consortium, Kunlun now owns a 48 percent stake in Opera, which floated on Nasdaq in 2018.
Grindr: Kunlun paid $93 million for a 60 percent stake in Grindr, the popular dating app for gay, bisexual, transgender and queer users, back in 2016 and completed the buyout with $152 million in fundings in 2018. Kunlun is reportedly looking to sell Grindr after the Committee on Foreign Investment in the United States decided its ownership of the dating app may threaten national security.
Qudian: Kunlun owned a 19.2 percent stake in Qudian when the micro-lender became one of the first Chinese fintech companies to list on Nasdaq. Kunlun has since been selling its stakes through a gradual exit and Zhou recently told analysts that his firm was expected to make around 2 billion yuan ($300 million) in profit from the Qudian investment.
While the world marvels at the first black hole image ever taken, a Chinese photo-sharing community is setting off a huge public outcry over its use of the landmark photo and a wider debate over copyrights practices in China.
As soon as the European Southern Observatory released the black hole photo on April 10, Visual China Group (VCG), China’s leading stock image provider that’s compared to Getty Images and owns Flikr’s one-time rival 500px, made the image available for sale in its library without attribution to the Event Horizon Telescope Collaboration (EHT), an array of radio telescopes that captured the image of the black hole.
“This is an editorial image. Please call 400-818-2525 or consult our customer service representative for commercial use,” said a note for the black hole image on VCG’s website.
Internet users took to social media slamming VCG for monetizing a photo intended for free distribution among the human race. Most of images on ESO are, according to the organization, under the Creative Commons license.
Unless specifically noted, the images, videos, and music distributed on the public ESO website, along with the texts of press releases, announcements, pictures of the week, blog posts and captions, are licensed under a Creative Commons Attribution 4.0 International License, and may on a non-exclusive basis be reproduced without fee provided the credit is clear and visible.
VCG swiftly revised the note to say the black hole photo should not be used for commercial purposes, but Pandora’s box was already open. The incident sparked a plethora of comments on Weibo, China’s equivalent of Twitter, condemning VCG’s opportunist business practice. The site is said to often play the role of the victim to obtain financial compensation, and it does so by seeking damages from users who inadvertently use a public domain photo that VCG has preemptively copyrighted.
Shares of VCG plummeted 10 percent Friday morning in Shanghai, giving it a market cap of 17.66 billion yuan ($2.63 billion).
Assets of VCG’s massive content library range from logos of large tech companies like Baidu, all the way to the Chinese national flag.
“Does your company also own copyrights to the national flag and national emblem?” remarked the Chinese Communist Youth League on its official Weibo account in a snarky response to VCG’s unscrupulous licensing practice.
The price tag of the national emblem image is, lo and behold, no less than 150 yuan ($22) for use in a newspaper article and at least 1,500 yuan ($220) on a magazine cover.
Screenshot: The image of the Chinese national emblem was for sale on VCG at 150 yuan to 1500 yuan
“Copyrights protection should definitely be promoted. The question is, why is VCG allowed to price photos of the black hole and the likes out of the market? Why is it able to exploit loopholes?” Du Yu, a Beijing-based freelance technology journalist, said to TechCrunch.
TechCrunch has reached out to ESO for comments and will update the story once we hear back.
Government intervention soon followed on the heels of online criticisms. On April 11, the cyberspace watchdog of Tianjin, where VCG’s parent company is based, ordered the photo site to end its “illegal, rule-breaking practices.”
VCG apologized on April 12 in a company statement, admitting the lack of oversight over its contracted contributors who allegedly uploaded the images in question. “We have taken down all non-compliant photos and closed down the site voluntarily for a revamp in accordance with related laws,” said VCG.
Tesla and Panasonic have paused plans to add more battery production lines at Gigafactory 1, its massive factory outside of Reno, Nevada that is a cornerstone to the automaker’s business.
The Nikkei Asian Review initially reported Thursday that Tesla and Panasonic were freezing plans to expand capacity. The partners had planned to increase capacity by 50 percent next year, but financial problems have forced a rethink, Nikkei reported without citing sources. Nikkei also reported that Panasonic was suspending a planned investment in Tesla’s automotive battery and EV plant in Shanghai.
Tesla has never announced Panasonic as an investor or partner in its China plant.
TechCrunch confirmed that Tesla has paused plans to add more battery production lines and will instead focus its efforts on existing equipment.
Tesla stressed that it will continue to make new investments into the plant as needed. However, the automaker noted that attention and investments might be focused on improving existing equipment to increase battery cell output.
“We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated,” a Tesla spokesperson wrote in an emailed statement.
As of November, Panasonic had 11 production lines operating at Gigafactory 1. Panasonic president President Kazuhiro Tsuga told Bloomberg that the company planned to add two more lines by the end of the year to bring total capacity up to 35 gigawatt-hours.
The last number shared by Tesla is from July, when the company reported an annualized run rate of 20 gigawatt-hours of capacity. It’s not clear if those two production lines were added.
Panasonic has not responded to a request for comment. TechCrunch will update the story if Panasonic responds or updated information on production lines is provided.
Gigafactory 1, which broke ground in June 2014, is a critical ingredient in Tesla’s goal to accelerate the world’s transition to sustainable energy by expanding global battery capacity and reducing the cost of electric vehicles. And Panasonic has been its most important partner as a supplier and partner in that project.
Gigafactory 1 produces Model 3 electric motors and battery packs, in addition to Tesla’s energy storage products, Powerwall and Powerpack. Panasonic makes the cells, which Tesla then uses to make battery packs for its electric vehicles.
The factory is being built in phases and is currently about 30 percent complete. It has a footprint of more than 1.9 million square feet and houses more than 4.9 million square feet of operational space across several floors.
Tesla has said that the factory is expected to reduce the per-kilowatt-hour cost of Tesla lithium-ion battery packs by more than 30 percent, which will in turn drive down the cost for its electric vehicles.
The report from Nikkei suggests that falling demand prompted the change in plans, which lies in contrast to comments previously made by Tesla CEO Elon Musk . In the company’s last earnings call, Musk said demand for battery cells has outpaced supply. According to Tesla, that demand hasn’t ebbed despite its recently released first-quarter delivery report that showed a nearly one-third drop from the previous quarter. Tesla has blamed the drop on problems delivering its Model 3 electric car to Europe and China, not demand.
While the public is asking, “When are we going to ride in autonomous cars?” Technology companies have been moving apace to test them on designated roads. In China’s capital city Beijing, eight firms drove a total of 153,600 kilometers (95442.6 miles) through their autonomous fleets in 2018, and Baidu, the country’s largest search engine service seen as a local answer to Google, has built a big lead.
That’s according to new data released by Beijing’s transportation regulators in their first report on the city’s licensed self-driving cars. While the authority did not specify conditions of the road tests, say, the number of instances when a human driver had to intervene to prevent an accident, namely the level of “disengagement” that California’s counterpart report asked for, Beijing’s data offers the public an early glimpse into a fledgling field.
Baidu registered nearly 140,000 kilometers in Beijing last year, representing about 91 percent of total self-driving distances traveled by the eight licensed transportation companies in the city. The firm’s leading position is closely linked to its pledge to go all out for artificial intelligence. When it comes to AI’s application in mobility, Baidu stays clear of making hardware and runs an open platform called Apollo that lets third-party developers tap its autonomous tech.
Apollo has joined hands with 135 car manufacturers, parts suppliers and other car allies at last count. Its partners range from international automakers Volvo and Ford, to local electric vehicle startups Byton and Nasdaq-listed NIO.
Baidu was also the first to nab a batch of L3 licenses to trial self-driving cars in Beijing, where Baidu is headquartered and is the country’s first city to allow such road tests. Robocars are now testing in more than ten Chinese cities, including first-tier Beijing and Shanghai as well as smaller urban centers like Changsha, where Baidu is working with the municipal government to bring 100 automated cabs to the city by end of this year.
The runner-up on Beijing’s road-test list, Pony.ai, lagged behind Baidu by a large margin at 10132.9 kilometers. But the three-year-old company has attracted large sums of investor money, in part thanks to the resume of co-founder James Peng, who was the former chief architect of Baidu’s autonomous driving unit. The southern China-based startup counts Sequoia Capital China as one of its seed investors and nearly reached $1 billion in valuation after raising $102 million in funding last July.
Other self-driving companies testing in Beijing included social and gaming giant Tencent, ride-hailing platform Didi Chuxing, and carmakers NIO, Audi AG, Daimler AG and Beijing’s state-owned BAIC Group. Didi, which made safety a priority across company divisions following two passenger murders last year, ran the least self-driving miles in Beijing last year but the company holds great potential to unlock mountains of car-hailing data that could help autonomous vehicles predict road conditions.
Notably missing from the list is Roadstar.ai, a self-driving startup that once rivaled Pony.ai and secured a record $128 million Series A round less than a year ago. Chinese tech news blog Liangziwei reported this week that shareholders are asking to dissolve and liquidate the Shenzhen and Silicon Valley-based firm following months of infighting among its senior executives.
Also unmentioned is Huawei, a potentially formidable player in autonomous driving. The telecom equipment maker’s foray into self-driving predates many other familiar names. Back in 2016, Huawei was among a group of tech firms and carmakers to form the Global Cross-industry 5G Automotive Association aimed at developing communications technology and commercial solutions for automated driving. Members of the alliance included Audi, BMW, Daimler, Ericsson, Intel, Nokia and Qualcomm. More recently, Huawei’s partnership with Audi brought more light to its ambition in autonomous tech, as it provided chipsets to power Audi’s L4 (which is more autonomous than L3) self-driving sedans.
Fast, affordable food delivery service has been life-changing for many working Chinese, but some still prefer to whip up their own meals. These people may not have the time to pick up fresh ingredients from brick-and-mortar stores, so China’s startups and large companies are trying to make home-cooked meals more effortless for busy workers by sending vegetables and meats to apartment doors.
The fresh grocery sector in China recorded 4.93 trillion yuan ($730 billion) in total sales last year, growing steadily from 3.37 trillion yuan in 2012 according to data collected by Euromonitor and Hua Chuang Securities. Most of these transactions still happen inside wet markets and supermarkets, leaving online retail, which accounted for only 3 percent of total grocery sales in 2016, much room for growth.
Ecommerce leaders Alibaba and JD.com have already added grocery to their comprehensive online shopping malls, nestling in the market with more focused players like Tencent-backed MissFresh (每日优鲜), which has raised $1.4 billion to date. The field has just grown a little more crowded with new entrant Meituan, the Tencent-backed food delivery and hotel booking giant that raised $4.2 billion through a Hong Kong listing last year.
Screenshots of the Meituan Maicai app / Image: Meituan Maicai
The service, which comes in a new app called “Meituan Maicai” or Meituan grocery shopping that’s separate from the company’s all-in-one app, set out in Shanghai in January before it muscled into Beijing last week. The move follows Meituan’s announcement in its mid-2018 financial report to get in on grocery delivery.
Meituan’s solution to take grocery the last mile is not too different from those of its peers. Users pick from its 1,500 stock keeping units ranging from yogurt to pork loin, fill their in-app shopping carts and pay via their phones, the firm told TechCrunch. Meituan then dispatches its delivery fleets to people’s doors in as little as 30 minutes.
The instant delivery is made possible by a satellite of physical “service stations” across neighborhoods that serve warehousing, packaging and delivering purposes. Placing offline hubs alongside customers also allows data-driven internet firms to optimize warehouse stocking based on local user preferences. For instance, people from an upscale residential area probably eat and shop differently from those in other parts of the city.
Meituan’s foray into grocery shopping further intensifies its battle with Alibaba to control how Chinese people eat. Alibaba’s Hema Supermarket has been running on a similar setup that uses its neighborhood stores as warehouses and fulfillment centers to facilitate 30-minute delivery within a three-kilometer radius. For years, Meituan’s food delivery arm has been going neck-and-neck with Ele.me, which Alibaba scooped up last year. More recently, Alibaba and Meituan are racing to get restaurants to sign up for their proprietary software, which can supposedly give owners more insights into diners and beef up customer engagement.
As part of its goal to be an “everything” app, Meituan has tried out many new initiatives in the lead-up to its initial public offering but was also quick to put them on hold. The firm acquired bike-sharing service Mobike last April only to shutter its operations across Asia in less than a year for cost-saving. Meituan also paused expansion on its much-anticipated ride-hailing business.
But grocery delivery appears to be closer to Meituan’s heart, the “eating” business, to put in its own words. Meituan is tapping its existing infrastructure to get the job done, for example, by summoning its food delivery drivers to serve the grocery service during peak hours. As the company noted in its earnings report last year, the grocery segment could leverage its “massive user base and existing world’s largest intra-city on-demand delivery network.”