A common belief is that the share divestments are due to increasing pressure from the Chinese government through regulatory crackdowns, especially through anti-monopoly laws. Such crackdowns have already led to a combined net worth loss of US$80 billion in 2021 for the top ten richest tech moguls in China.

Tencent’s stake sales

For context, Tencent had announced on Dec 23, 2021, that it will be paying out an interim dividend in the form of 457.3 million JD.com shares, which makes up 86.4% of Tencent’s stake in the e-commerce platform. The dividend payout is estimated to be worth HK$127.7 billion, or, about US$16.4 billion.

And two weeks later, Tencent announced a sale worth US$3 billion, disposal of 14.5 million shares of its stake in Shopee’s parent, Sea. It should be noted that this amounts to about 2.6% of the total shares of Sea, and that Tencent still holds an 18.7% stake in the Singapore-based company.

Tencent has also noted it intends to hold the majority of its stake in Sea for the long term.

Of note as well is that Tencent, along with Alibaba and Bilibili, were slapped with penalties for failing to properly report “about a dozen deals”. The penalties of 500,000 yuan (US$78,692) per deal are the maximum allowed under China’s 2008 anti-monopoly law.

After-sales effects

Tencent’s stake sales have led to drops in share prices not only for Tencent, Sea, and JD.com, but also for other Tencent-backed firms, such as Meituan and Bilibili. Forrest Li, chairman and chief executive officer of Sea, lost US$2 billion of his fortune in the past few days alone.

This comes as the latest blow to Li after losing about US$9 billion when share values fell 39% since October 2021.

Speculation and sentiment were that there would be continued stake sales, divestments, or disposals for Tencent as it looks to circumvent or counter the continuing regulatory crackdowns in China.

However, the share divestments have been noted as exit strategies by Tencent, with the funds going towards “other investments and social initiatives”.

Where to now?

As much as this sounds like a face-saving statement by Tencent, a fact of the matter is that the group has been putting funds into other markets, as much as China and Southeast Asia have felt like a focus for the group.

With China cracking down harder on its own tech giants, and with Sea having established itself as a leading player in Southeast Asia and looking to expand elsewhere, it only makes sense for Tencent to shift its focus towards untapped or upcoming markets.

Here’s where India comes into the picture, placing itself as an investment attraction with its large pool of well-educated entrepreneurs looking at new ways in which many businesses work using a fast-developing digital infrastructure.

The placement appears to have worked, considering the country has seen a doubling in its tech startup unicorn club in 2021 alone, having drawn US$39 billion in foreign investments.

Of note, however, is that Tencent has already been investing in the scene since 2016, with over US$2 billion put into Indian startups. Some examples include fintech startup Slice, as well as social media startups ShareChat and Lokal.

There was a temporary block on this plan, however. The Indian government put into place a requirement for approvals for Chinese investments, or really, investments from any countries sharing land borders with India, in a bid to prevent takeovers of imperiled Indian companies during the COVID-19 pandemic.

However, approvals started coming for Chinese foreign direct investment proposals in early 2021 on a case-by-case basis, cracking the gate open for Chinese investors to back tech startups in the country, with the results showing in 44 startups reaching the US$1 billion valuation and obtaining unicorn status in 2021 alone.

With that being said, it seems like Tencent is taking advantage in the midst of adversity.

By breaking up its high shareholdings in well-established companies in mature markets, thus abiding by Chinese regulations against monopolies, Tencent is then able to focus on investment opportunities like the Indian tech startup scene — an emerging market that has been earmarked for its untapped potential and similarity to the Chinese market, as well as its ability to generate long-term value for stakeholders.

The post What’s spooking Tencent and making them sell their shares off? appeared first on Tech Wire Asia.

Ransomware, everywhere

Tech trends in cybersecurity have generally edged towards targeting remote working victims.

The spike toward record ransomware attacks and data leaks in 2021 looks likely to spill over into the coming year.

Cyber-extortion heists break into a victim’s network to encrypt data, then demand a ransom, typically paid via cryptocurrency in exchange to unlock it.

A swathe of factors has fueled the trend, including the booming value of cryptocurrencies, victims’ willingness to pay and the difficulty authorities have in catching attackers.

Businesses and the most-at-risk retail sector should start now, rather than later, to prepare for the incoming onslaught.

James Forbes May, vice president for the Asia Pacific at Barracuda believes that there will be a renewed focus on governments prioritizing cybersecurity initiatives, building alliances with vendors, and sharing data with other countries.

More electric vehicles

We’ve seen how the devastating impacts of climate change exacerbated by the COVID-19 pandemic have wreaked havoc on lives in the Asia Pacific. 

One way nations here are looking to ameliorate climate change is to promote the replacement or at least, increase of zero-emissions vehicles on the roads. 

This picture taken on September 9, 2021 shows a Nissan Motor autonomous vehicle during a press preview for a field operation test of Easy Ride, a driverless mobility service, at the Minato Mirai business district in Yokohama, Kanagawa Prefecture. (Photo by Kazuhiro NOGI / AFP)

Tech trends in the Asian automotive industry are definitely moving towards increased EV design, manufacture, but uptake may be fragmented, depending on the country.

Some nations with growing EV markets include India and Japan.

But the spotlight will be on China, a huge player in the Asian EV industry, whose government has pushed for more EVs to curb carbon emissions.

More Chinese automakers and players are collaborating, whereas home-grown Chinese stalwarts like Nio are targeting richer overseas markets.

As of now, a plethora of companies, even those traditionally in consumer tech, have put one leg into the proverbial electric boat to start production and sales of EVs. They include Huawei and  Xiaomi. Smaller countries such as Malaysia have made some semblance of headway into promoting EVs too, with taxation policies.

However, the biggest issue impeding its adoption in Asia is simply, the cost required to acquire EVs, which is especially true for the economically developing SEA.

Global leading automakers have, however, expressed interest in smaller markets such as Malaysia, though.

The semiconductor complexity will go on

Experts say the global chip shortage is like to continue until 2023 at least. 

Key chip supply chain player Malaysia may see increased competition from manufacturing leaders such as Vietnam, although more investments are coming in, such as from Bosch and Intel. 

Malaysia’s semiconductor industry may need time to recover, though, given the impact of not just COVID-19 lockdowns, but the recent flash flooding which has displaced tens of thousands of people and wrecked chip plants there.

China is trying to reduce its reliance on Taiwan’s TSMC to grow its home-grown SMIC. China is the largest buyer of 5G smartphones and also supplies a majority of consumer tech to the world.

Chinese big tech brands are moving to in-house design and manufacture of their own chips, one of the tech trends seen in the West too. They include Oppo and Alibaba.

More Big Tech regulation in China

In China, the big tech crackdown has been going full steam, as regulators have slapped fines and withheld licenses for a litany of charges that Chinese big tech have flouted.

At the same time, the state authorities have come up with draft after draft of legislation to govern the movements and operations of big tech in the country.

Even foreign firms aren’t spared, prompting some to even leave China. Some of these laws include anti-monopoly, data privacy, foreign IPOs, and more. 

Trade sanctions on China-sourced goods to the US have resulted in a trade war that has affected Chinese and global supply chains. This dynamic arguably underlies these recent actions by Beijing, particularly where it concerns the movement of citizen information or data across borders.

As a result, China has been expanding its influence into SEA, where some nations have a more favorable disposition towards Chinese tech.

Part of China’s strategy to avoid the US and move to trade in other markets has resulted in their interest in being a part of regional trade agreements. China is now part of the Regional Comprehensive Economic Partnership (RCEP), which starts January 1.

They also aim to rejoin the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a post-Trump administration.

Meatless meat

Meat alternatives have become common in an increasing number of western households, thanks in part to Beyond Meat and Impossible Food plant-based products. They have improved taste-wise, and are cheaper now, partly because of increased awareness of the impact of meat production on the environment. 

In Southeast Asia, however, real meat still trumps plant-based or lab-grown meats — simply because it’s too expensive. 

Ironically, plant-based mock meat has been very popular in the region for decades, owing to a large number of vegetarians. Asia, is, after all, a region home to two of the world’s largest religions that eschew meat, namely, Buddhism, and Hinduism. 

However, most mock meat products suffer from sub-par texture, flavor, and closeness to real meat, which makes them unattractive to the mass market of meat-eaters. 

However, the demand is there — just not enough for manufacturers and developers to reach a critical mass production point where the prices match or even go lower than real meat products.

Producers are, however, taking stock of this trend as some Asian nations are already working on commercializing or at least, exploring these efforts, including Singapore, Thailand, and Vietnam.

Singapore-based Growthwell is one, and they aim to produce completely plant-based, nutritionally complete meat alternatives. 

With additional reporting by Joshua Melvin with Julie Jammot for Agence France-Presse

The post 2022: Five tech trends in the Asia Pacific appeared first on Tech Wire Asia.

According to SAFE, Tenpay had failed to submit relevant materials and handle foreign exchange sales services in accordance with regulations.

The company was also accused of conducting forex business beyond its scope of registration. 

The SAFE Shenzhen branch had recently unleashed another round of penalties on banks and securities firms violating forex transaction rules, with Tenpay being one of them.

Also known as Caitufong, the lesser-known fintech service Tenpay operates the globally popular digital payment platform WeChat Pay. 

This is not the first time Caitufong has gotten into trouble with the Chinese authorities, though. Since it was granted payment licenses in 2011 by the People’s Bank of China, the country’s central bank, Tenpay has been fined several times.

At the end of 2020, the central bank fined Tenpay 8.7 million yuan (US$ 1.36 million) for several breaches, including offering payment services for illegal transactions.

“The company has made an improvement plan and the necessary rectifications have been completed,” Tenpay said in a statement on Sunday. “We will further strengthen compliance management under the guidance of the Shenzhen branch of SAFE in the future.”

This fine comes amidst a flurry of even more crackdowns on Big Tech. Just last week, Beijing mandated these giants get state approval for new apps.

Earlier this month, the likes of Alibaba and Baidu, as well as Tencent, were fined for failure to disclose deals from years before, on top of monopolistic practices and questionable data privacy practices.

The People’s Bank of China (PBOC) will “deepen” its antitrust investigations into the nation’s mobile payments sector, which has been dominated by a few private financial technology firms, deputy governor Fan Yifei said in September.

Together with Ant Group’s Alipay, the two control a whopping 93% of China’s mobile payments market — Alipay 54%, and WeChat Pay 39%. 

Mobile payments power the thriving digital economy in China, with the duopoly processing over US$5.4 trillion in 2020 alone, according to SCMP. 

The post Tencent Holdings’ Tenpay flouts rules, fined millions – again appeared first on Tech Wire Asia.

As history has taught us, pandemics have been a key driver for massive societal transformation. 

Not only would it have a social and political impact on people around the world, but it will also transform the way economies function and impact nations at large.

The Covid-19 impact

Although it has been an economically and financially challenging period for most of the world, it has had an exceptionally devastating impact on vulnerable and marginalized communities. Whilst inequalities and inequities have always existed, the pandemic has not just exposed, but also exacerbated them.

This is especially prominent in emerging economies such as those within Southeast Asia (SEA), where impeded access to basic necessities is further compounded by financial and physical restrictions. 

This then signals a dire need for countries to drastically reduce and eliminate inequalities and inequities through strategies such as providing safety nets, social protections, and job opportunities in an inclusive manner. 

With better social mobility and wealth creation opportunities, these communities will stand a fighting chance to thrive and further contribute to economic growth down the road. 

Economic recovery: predicated on job availability

Many countries here still struggle to stimulate economic growth through a workforce that’s forced to function under restrictive, challenging conditions.

Unfortunately, the pandemic has severely affected multitudes of workers and businesses alike as they find that inter and cross-border movement restrictions have impeded their abilities to do business as usual. 

This, of course, negatively impacts the rice bowls of many, especially low-wage, low-skilled, and gig-economy workers, as if it isn’t already enough that these jobs are being threatened by automation and future technologies.

In order for growth to happen, countries often focus on improving the labour productivity of their workforce, such as through job retention, job creation and future-proofing the talent pool.

With the devastating impacts of the pandemic, these, together with private and public sector support such as subsidies and upskilling for workers, will prove to be even more crucial in the coming years. As aptly put by Director-General of the International Labour Organisation (ILO), Guy Ryder,

“To recover better and quicker, governments will need to increase public and private investments in employment-intensive sectors in order to create jobs, and increase labour productivity, consumer confidence and economic growth.”

Collaboration of public and private crucial to growth

According to Ahmed Mazhari, President of Microsoft Asia, the key to Asia’s rapid economic recovery lies in how the public and private sectors closely collaborate and leverage the region’s well-established digital ecosystems.

Businesses in the Asia Pacific (APAC) region comprise a whopping 97% of SMEs, employing over half of the combined regional workforce. 

Additionally, more than a third of the world’s unicorns are from Asia. Unicorns are startups that have a valuation of over US$ 1B.

In ASEAN, many emerging economies are seeing increasing and promising growth of digital sectors such as fintech, digital banking, and e-commerce.

Seen from this perspective, it is imperative that we recognize the critical role that these businesses play as well as their immense impact on these economies, and look towards supporting their growth.

Could startups be the dark horse for the digital economy?

The APAC region has responded and adapted to the pandemic with digital innovation, and many leaders agree that accelerated digital transformation is crucial for rapid economic recovery.

Startups are a prominent stakeholder of the digital economy at large, as their nature lies in the way they innovate and disrupt, often through digital means. Additionally, they often require a highly skilled and digitally savvy talent pool. 

However, some of the largest roadblocks to startup success include problems securing adequate financing, appropriate talent, and institutional backing to support their ability to scale up.

Without good scaling, the growth of these companies will be stymied, hence impacting job availability.

Economic recovery requires strong leadership

This is where Big Tech and the public sector can come in to lead and catalyze the growth of the digital ecosystem. 

As Big Tech possesses the infrastructure, financial capabilities, digital expertise, and experience to weather the pandemic storm, these privileges can be extended towards startups and SMEs to help them quickly recover.

This is particularly important as Big Tech needs to be cognizant of the massive profit gap that has existed prior to the pandemic.

Data by McKinsey & Company in their report “What’s next for consumers, workers, and companies in the post-COVID-19 recovery?” has shown that exacerbation of this profit gap will have dire consequences:

“If this concentration (of the profit gap) persists, there could be a repeat of the “great divide” observed after the global financial crisis when, at best, only a minority of companies, households, and regions enjoy productivity and income growth.

“More businesses will need to share in those gains for the changes prompted by COVID-19 to have significant impact on productivity growth.”

Together with sensible, supportive, and progressive policies by the public sector, this duality of forces will be able to push startups and SMEs to not just survive, but thrive. 

This will create more jobs, future-proof the talent pool with digital skills, and grow digital economies.

Ultimately, in this hyper-digitalized, post-pandemic world, flourishing digital economies will prove critical to a nation’s — and region’s — economic recovery, and eventual long-term prosperity.

The post Economic recovery in a post-pandemic Asia: What it will take appeared first on Tech Wire Asia.